Graczyk v. Verizon Communications, Inc.

Background

Rodney Graczyk, Don Davis, and Jerry Riddle brought a putative class and collective action against Verizon Communications, Inc. and PS Splicing, LLC. They alleged violations of the Fair Labor Standards Act and District of Columbia wage laws based on the defendants’ alleged failure to pay overtime compensation. The plaintiffs alleged that they worked as replacement wireline workers in Washington, D.C., between April and June 2016, during a strike by unionized workers employed by Verizon Communications subsidiaries.

The plaintiffs alleged that they were treated as independent contractors even though they were employees, earned $75 per hour, regularly worked 90 or more hours per week, and did not receive overtime pay for weeks exceeding 40 hours. They sought to pursue the federal claims collectively and the District of Columbia claims as a class action.

Venue Challenge

Verizon Communications moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), 12(b)(3), and 12(b)(6), including on the ground that venue was improper in the Southern District of New York. The court considered declarations and other materials outside the pleadings in deciding the venue issue.

The complaint relied on the general venue provision covering a district where a defendant resides, but that provision applies only if all defendants reside in the state where the district is located. Because PS Splicing was based in North Carolina, the court concluded that this provision did not establish venue in New York.

The plaintiffs relied instead on the provision allowing venue where a substantial part of the events or omissions giving rise to the claims occurred. The court found that the plaintiffs performed the work underlying their wage claims in Washington, D.C., not in the Southern District of New York. It also found that Verizon Communications’ headquarters in New York, standing alone, was insufficient to establish venue.

The court further explained that the complaint’s allegations primarily concerned Verizon Communications’ subsidiaries rather than Verizon Communications itself. Unrebutted declarations stated that Verizon Communications was a holding company with ten employees, did not provide services to the public, and did not operate or repair the wireline systems involved. The declarations also stated that Verizon Sourcing LLP, not Verizon Communications, entered the contracts through which the plaintiffs were hired, and that no work related to those contracts occurred in New York to the contract coordinator’s knowledge.

Transfer Rather Than Dismissal

Because venue was improper, the court considered whether to dismiss the case or transfer it under 28 U.S.C. § 1406(a). The court declined to dismiss because the alleged violations occurred more than three years earlier and dismissal could prevent the plaintiffs from refiling within the applicable limitations periods.

The court concluded that venue would be proper in the United States District Court for the District of Columbia. It found that the District of Columbia was the location of the plaintiffs’ work and the alleged wage violations, that the District of Columbia court would be familiar with the District of Columbia wage laws, and that related contract and training activities occurred in nearby Virginia. The court therefore concluded that transfer served the interests of justice.

The court did not reach Verizon Communications’ remaining arguments for dismissal, including arguments concerning personal jurisdiction or the merits of the wage claims. It also did not address the proposed settlement involving PS Splicing.

Sealing Request

The plaintiffs separately moved to seal portions of their opposition brief and exhibits containing contracts used to hire replacement wireline workers. The court treated the contracts as judicial documents but found that the financial terms had little bearing on the court’s decisions, so the presumption of public access was low. The court concluded that protecting sensitive financial information from competitive harm outweighed the public’s interest in that material.

The court directed the plaintiffs to re-file the declaration and exhibits with redactions consistent with Verizon Communications’ proposed redactions. Because the opposition brief did not contain sensitive financial information, the court directed the plaintiffs to file an unredacted version of that brief.

Disposition

Judge Paul G. Gardephe granted Verizon Communications’ motion to dismiss to the extent that the case was transferred to the United States District Court for the District of Columbia. The plaintiffs’ motion to seal was granted to the extent that the contract exhibits were to be redacted and re-filed, and was otherwise denied as to the opposition brief. The clerk was directed to terminate the two motions and transfer the case.