Michele Metcalf v. Transperfect Global Inc.

Background

Michele Metcalf and Hannah Lawson asserted New York labor-law claims on behalf of themselves and proposed class members. They alleged that the defendants failed to pay required overtime wages and failed to provide required wage notices and wage statements. The proposed class consisted of the defendants’ salaried employees who earned less than $1,125 per week, worked in the defendants’ New York offices from December 31, 2018, onward, and worked more than 40 hours in a workweek.

The complaint named TransPerfect Global, Inc., TransPerfect Translations International, Inc., TransPerfect Document Management, Inc., TransPerfect, Inc., and TransPerfect Remote Interpreting, Inc. The plaintiffs alleged that the corporations held themselves out as joint employers in some employee agreements. Metcalf was alleged to be a California citizen, and Lawson was alleged to be a New York citizen. The defendants were alleged to be Delaware corporations with their principal place of business in New York, New York.

The action was first filed in the Central District of California and was later transferred to the Southern District of New York under 28 U.S.C. § 1404(a) based on the parties’ stipulation. After Lawson was added as a plaintiff, the plaintiffs amended the complaint to rely on the Class Action Fairness Act of 2005, which provides federal jurisdiction over certain large class actions.

Subject-Matter Jurisdiction

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which addresses subject-matter jurisdiction. The court found that the requirements for jurisdiction under the Class Action Fairness Act were met: the proposed class had at least 100 members, minimal diversity existed because at least one class member and one defendant were citizens of different states, and the amount in controversy exceeded $5 million.

The defendants argued that the court had to decline jurisdiction under the Act’s local-controversy and home-state exceptions because the alleged conduct and injuries occurred in New York and many proposed class members were New York citizens. They also argued that the court should use New York as the relevant state because the case had been transferred there, because an employment agreement allegedly required suit in New York, or because the plaintiffs first asserted Class Action Fairness Act jurisdiction after the transfer.

The court rejected those arguments. It held that “the State in which the action was originally filed” meant the state where the action was first filed—California—not the state where the case was later transferred, the state named in a forum-selection clause, or the state where the complaint first asserted Class Action Fairness Act jurisdiction. The court also stated that the transfer under Section 1404(a), rather than a transfer for improper venue, supported the conclusion that the California venue had been proper. Because the relevant state was California and the defendants’ own account showed that fewer than one-third of the proposed class members were California citizens, the court held that the statutory exceptions did not apply.

The court therefore denied the defendants’ motion to dismiss for lack of subject-matter jurisdiction.

Joint-Employer Claims

The defendants alternatively moved under Rule 12(b)(6), which permits dismissal for failure to state a legally sufficient claim, of all claims against the defendants other than TransPerfect Translations International, Inc. The New York Labor Law imposes liability on employers. To plead that multiple entities were joint employers, the plaintiffs needed to allege facts plausibly showing that each entity exercised formal or functional control over the workers.

Formal control includes such matters as the power to hire and fire, supervision of work schedules or employment conditions, setting pay, and maintaining employment records. Functional control may include providing the premises or equipment, supervising the work, determining whether work could be shifted between subcontractors, and whether the workers worked exclusively or mainly for the alleged employers.

The court held that the plaintiffs had not plausibly alleged joint employment by all of the TransPerfect corporations. Allegations that the corporations held themselves out as joint employers in some agreements and shared a principal office in New York City did not, by themselves, show that the other corporations hired, fired, supervised, paid, or set working conditions for the plaintiffs or proposed class members. The complaint also did not allege facts showing that the other corporations provided equipment or workspace or that the plaintiffs worked for more than one corporation.

The court therefore granted the motion to dismiss the claims against the TransPerfect corporations other than TransPerfect Translations International, Inc. The defendants had not moved to dismiss the claims against TransPerfect Translations International, Inc. and admitted that it was the plaintiffs’ employer, so those claims survived.

Disposition

Judge Alison J. Nathan denied the motion to dismiss for lack of subject-matter jurisdiction and granted the motion to dismiss all claims against all defendants except TransPerfect Translations International, Inc. The court also administratively denied the defendants’ motion to dismiss the First Amended Complaint. The court lifted the discovery stay for purposes of case management and ordered the parties to submit a joint letter and proposed case-management plan by December 18, 2020.