Mangahas v. Eight Oranges Inc.

Background

Jessy Mangahas, along with opt-in plaintiffs, brought a putative class action and Fair Labor Standards Act (FLSA) collective action concerning alleged wage violations at The Bao and Uluh. The existing complaint asserted claims under the FLSA and New York Labor Law involving minimum wages, overtime, tip practices, deductions, uniform costs, spread-of-hours pay, wage notices, and wage statements. Mangahas also asserted individual retaliation claims under both laws.

The court had conditionally certified the FLSA collective and authorized notice to potential collective members. Twenty-seven plaintiffs had joined the action by the time of this motion. The scheduling order set September 28, 2022, as the deadline for motions to amend, although discovery deadlines were later extended.

Proposed Amendments and Arguments

The proposed second amended complaint would make three main changes. First, it would add food packers to the positions allegedly ineligible to share tips. Second, it would add Pitchaya Wohlfahrt as a named plaintiff and assert FLSA and New York Labor Law retaliation claims based on the alleged termination of her employment after she joined the case. Third, it would allege that the defendants filed a retaliatory and frivolous defamation lawsuit in New York State Supreme Court against Mangahas and two other opt-in plaintiffs.

The defendants argued that the plaintiffs had not shown the required good cause for amending after the deadline. They also argued that the proposed amendments would be futile, cause undue delay, and prejudice the defendants. According to the opinion, the defendants argued that food packers should have been identified earlier, that Wohlfahrt’s termination was based on her inability to memorize the menu, and that the state-court lawsuit was not retaliatory and was supported by factual allegations.

Court’s Analysis

Because the amendment deadline had passed, the court applied Federal Rule of Civil Procedure 16(b), which requires good cause to modify a scheduling order. The court explained that good cause generally requires diligence: despite the party’s efforts, the deadline could not reasonably have been met. The court also considered the standards under Rules 15 and 21, which generally allow amendments and adding parties when justice requires, unless the amendment would cause undue delay, prejudice, bad faith, or be futile.

The court granted the request to add Wohlfahrt as a named plaintiff and to include her retaliation allegations. It found good cause because she would not necessarily have known about the case or her rights until notice was sent to potential collective members, and the motion followed shortly after the notice period closed. The court found no undue delay or prejudice. It also held that the proposed retaliation claims were not futile at this stage. Accepting the allegations as true, Wohlfahrt had alleged protected activity by joining the lawsuit, an adverse employment action through her termination, and a close timing connection between the two. The court noted that the defendants’ competing explanation for the termination could not defeat the proposed amendment at this stage.

The court also granted the request to add allegations concerning food packers. It accepted the plaintiffs’ explanation that they obtained enough information to make those allegations only through the opt-in process after the amendment deadline. The court found little apparent prejudice because the amendment would likely require only targeted document requests and additional deposition questions. It also stated that, at this stage, it had to accept the allegations as true rather than resolve whether food packers were legally ineligible to share tips.

The court denied the request to add allegations concerning the state-court lawsuit. A lawsuit can potentially be a retaliatory action if it is baseless or frivolous and would discourage a reasonable worker from pursuing an FLSA claim. But the court held that calling the lawsuit frivolous was a legal conclusion, not a factual allegation, and that the proposed complaint did not allege facts showing the state-court claims lacked a factual or legal basis. The state-court complaint identified allegedly defamatory statements and included factual allegations linking the defendants in that case to those statements. The court therefore declined to allow the federal case to become a separate forum for litigating whether the state-court claims had merit or were retaliatory.

Disposition

The court granted in part and denied in part the motion to amend. It permitted the amendments adding Wohlfahrt as a named plaintiff, her FLSA and New York Labor Law retaliation allegations, and the food-packer allegations. It denied the amendment concerning the state-court lawsuit. The plaintiffs were ordered to file a second amended complaint limited to the permitted amendments within seven days after May 1, 2023.