Gillett v. Zara USA, Inc.

Background

Latrell Gillett brought a proposed class and collective action against Zara USA, Inc. and Inditex USA LLC, which the opinion calls “Zara.” He asserted claims under the Fair Labor Standards Act and the New York Labor Law concerning overtime pay, spread-of-hours pay, wage notices, wage statements, and the timing of wage payments.

Gillett alleged that he worked hourly positions at Zara retail locations from approximately March 2018 through August 16, 2019. He also alleged that he performed substantial physical tasks and that Zara paid hourly workers every two weeks, even though New York Labor Law Section 191 generally requires manual workers to be paid weekly and within seven calendar days after the end of the workweek, unless an authorized alternative schedule applies.

The motion addressed only Gillett’s claim that Zara failed to pay wages on time under Section 191. Zara argued that Gillett lacked constitutional standing because he ultimately received all wages owed; that the claim was preempted, meaning displaced, by federal labor law because of collective-bargaining agreements; and that Section 191 did not give employees a private right to sue.

Standing

The court treated Zara’s standing argument as a challenge under Federal Rule of Civil Procedure 12(b)(1), which concerns federal subject-matter jurisdiction. At the motion-to-dismiss stage, the court accepted the complaint’s material factual allegations as true.

The court held that Gillett adequately alleged a concrete financial injury. Even though he eventually received the wages, the alleged delay temporarily deprived him of money to which he was entitled and deprived him of the money’s use during that period. The court therefore denied Zara’s motion to dismiss for lack of Article III standing.

Federal Labor Law Preemption

Zara argued that the alleged biweekly pay practice had become part of collective-bargaining agreements with a union. It contended that interpreting those agreements would trigger preemption under Section 301 of the Labor Management Relations Act and that the National Labor Relations Act’s preemption doctrine applied as well.

The court declined to consider the collective-bargaining agreements on a Rule 12(b)(6) motion because they were not attached to, incorporated into, or integral to the amended complaint. The court also declined to convert the motion into one for summary judgment because resolving the preemption issues would require discovery into the alleged past practice and the parties’ history of operating under the agreements. The court therefore denied the motion to dismiss based on federal labor law preemption. It also expressed skepticism about the preemption arguments but did not finally resolve those issues on the merits.

Private Right of Action

The court rejected Zara’s argument that Section 191 could not be privately enforced. Applying the New York Appellate Division’s decision in Vega v. CM & Associates Construction Management, LLC, the court concluded that New York Labor Law Section 198(1-a) permits an employee to recover for an underpayment resulting from a violation of Section 191(1)(a), even when the employer later pays the wages owed. The court found no persuasive reason to depart from the decisions in the circuit following Vega.

Disposition

The court denied Zara’s motion to dismiss the amended complaint. It ordered the defendants to answer by August 31, 2022, lifted the stay on deadlines for distributing notice to potential collective members, and ordered the defendants to provide information about employees within the putative class. Judge Katherine Polk Failla did not determine whether Zara was ultimately liable for violating Section 191; the ruling addressed whether Gillett’s claim could proceed past the dismissal stage.