Thompson v. Elev8 Foundation Inc.

Background

Shaun Thompson and Marcella Watt brought a collective action under the Fair Labor Standards Act (FLSA), a federal wage law, and the New York Labor Law (NYLL). The defendants named in the caption were Elev8 Center New York, LLC, doing business as Elev8 or Elev8 Centers; Urban Recovery House, LLC, doing business as Urban Recovery; Lee Weiss; and Donna Mae Depola. The opinion states that Weiss had not been served and had not appeared.

Thompson alleged that he frequently worked more than 40 hours per week, worked beyond scheduled shifts, and worked during meal periods without receiving full pay. Watt alleged that she frequently worked more than 40 hours per week, worked before scheduled shifts, worked through meal periods, and performed other unpaid work. The plaintiffs also alleged that the defendants rounded employees’ time downward and automatically deducted meal breaks. They further claimed that the defendants failed to provide proper wage notices and wage statements required by the NYLL.

Procedural History and Magistrate Judge’s Recommendation

The defendants moved to dismiss the Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(1), which concerns subject-matter jurisdiction, and Rule 12(b)(6), which concerns whether a complaint states a legally sufficient claim. The motion was referred to Magistrate Judge Cott, who issued a Report and Recommendation on July 17, 2023.

Judge Cott recommended that the motion be denied as to the plaintiffs’ claims for unpaid overtime and unpaid wages under the FLSA and NYLL, and their NYLL claims for improper wage notices and wage statements. He concluded that the allegations and attached time records plausibly alleged unpaid overtime and unpaid work. He also concluded that the plaintiffs alleged enough harm from the alleged wage-notice and wage-statement violations to establish standing, meaning their right to bring those claims in federal court.

Judge Cott recommended granting the motion as to the NYLL claims for spread-of-hours pay and failure to compensate manual workers weekly. He reasoned that the plaintiffs had added those claims to the Second Amended Complaint even though the court had granted leave to amend only to supplement and strengthen their existing claims. He also concluded that the plaintiffs had failed to respond to the defendants’ argument for dismissing those claims, which supported treating them as abandoned.

Plaintiffs’ Objection

The plaintiffs objected to the recommendation concerning the spread-of-hours and weekly-pay claims. They argued that attorney error caused the late addition of the claims, that the defendants had addressed them on the merits, and that resolving them would not unfairly burden the defendants. The defendants argued that the plaintiffs had exceeded the scope of the permission to amend and had failed to address the issue in their briefing before Judge Cott.

Court’s Analysis

Judge Gardephe reviewed the challenged portions of the recommendation for clear error because the plaintiffs’ arguments about attorney error and the preference for deciding claims on their merits had not been presented to Judge Cott in the original briefing. The court agreed that the plaintiffs exceeded the scope of the order permitting the amendment. The court also stated that the delay in asserting the new claims further supported dismissal because the plaintiffs knew or should have known the underlying facts earlier.

As to the remaining claims, the court found no error in Judge Cott’s conclusion that the Second Amended Complaint plausibly alleged that the plaintiffs worked more than 40 hours in particular weeks without proper overtime pay. The court also found sufficient allegations that the defendants required work before shifts, after shifts, and during meal breaks without compensation, and that the defendants rounded down work hours. The court further agreed that the alleged delay in receiving proper compensation supplied the harm needed for the wage-notice and wage-statement claims to proceed.

Disposition

The court adopted Judge Cott’s July 17, 2023 Report and Recommendation in its entirety. It denied the defendants’ motion to dismiss the plaintiffs’ claims for unpaid overtime and unpaid wages under the FLSA and NYLL, and for failure to provide proper wage notices and wage statements under the NYLL. It granted the defendants’ motion to dismiss the claims for unpaid spread-of-hours pay and failure to compensate manual workers on a weekly basis under the NYLL. The opinion does not state that either disposition was with or without prejudice.