Zambrano v. Strategic Delivery Solutions, LLC

Background

Christian Zambrano, Luz Durango, Moira Riveros, and Rigoberto Romero filed a proposed collective and class action against Strategic Delivery Solutions, LLC, David Kronick, Andrew Kronick, and Mike Ruccio. They alleged that the defendants improperly treated them as independent contractors and violated the Fair Labor Standards Act and New York Labor Law by, among other things, failing to pay overtime and minimum wages, making unlawful wage deductions, and requiring drivers to pay work-related expenses.

Twenty-three additional plaintiffs later filed written consents to join the federal wage action. Two of them, Blanca Alulema and Maria Tacoaman, filed the motion addressed in this opinion. They sought to amend the complaint to add individual New York minimum-wage claims and individual claims under New Jersey wage-and-hour and wage-payment laws. They also proposed pursuing certain New York claims individually while excluding themselves from the proposed New York class.

In 2016, the court had granted the defendants’ motion to compel arbitration as to the lead plaintiffs and stayed the case. The defendants had not moved to compel arbitration as to the opt-in plaintiffs. After Alulema and Tacoaman filed their motion, the defendants produced vendor agreements containing arbitration provisions that they said the two plaintiffs had electronically signed. The plaintiffs disputed the validity of the signatures and agreements. The court also noted that the defendants had filed arbitration demands against Alulema and Tacoaman only after the plaintiffs sought to lift the stay and amend the complaint.

Party Status and Arbitration

The court held that an employee becomes a party plaintiff in a Fair Labor Standards Act collective action by filing a written consent to join. Conditional certification—the court’s preliminary decision that potential plaintiffs may be similarly situated and should receive notice—is not required for an opt-in plaintiff to have party status. Because Alulema and Tacoaman had filed their consents, they had standing to seek amendment and had their own individual claims.

The court concluded that the earlier arbitration order did not, at that stage, prevent Alulema and Tacoaman from amending the complaint. The defendants had not properly moved to compel these plaintiffs to arbitrate, and the plaintiffs had not yet had an opportunity to raise contract defenses concerning the arbitration provisions. The court declined to decide at that time how the Supreme Court’s decision in New Prime v. Oliveira affected the earlier arbitration ruling. It also did not decide whether the arbitration agreements were valid or ultimately enforceable.

Leave to Amend

Under Rule 15 of the Federal Rules of Civil Procedure, courts generally allow amendments when justice requires, unless there is a reason such as undue delay, prejudice, bad faith, or futility. The court found no undue delay or prejudice sufficient to deny amendment. It noted that the case had been stayed at an early stage, discovery had not begun, and the defendants had not shown prejudice from defending the additional state-law claims.

The court found that the proposed individual New York and New Jersey claims were not futile. The claims arose from the same alleged independent-contractor classification and working conditions described in the original complaint. The court also held that the claims related back to the dates Alulema and Tacoaman filed their written consents to join the action, rather than only to the date the original complaint was filed.

The court did not allow the proposed structure under which Alulema and Tacoaman would pursue the same New York claims individually while excluding themselves from the proposed Rule 23 class. No Rule 23 class had yet been certified, but the court concluded that the proposed class structure could create the kinds of inconsistencies that class-action rules are intended to prevent. The court therefore denied permission to proceed with that formulation at that time.

Disposition

Judge Edgardo Ramos granted in part and denied in part the motion to amend. The court permitted Alulema and Tacoaman to add the proposed Fifth Cause of Action for New York minimum-wage violations, Sixth Cause of Action for New Jersey wage-and-hour violations, and Seventh Cause of Action for New Jersey wage-payment violations. The court did not permit them to exempt themselves from the proposed class action at that time. The plaintiffs were directed to file an amended complaint by October 19, 2021. The opinion did not determine the ultimate merits of the wage claims or the enforceability of the arbitration agreements.