Coleman v. Optum Inc.

Background

Plaintiffs Vernaize K. Coleman, Cynthia Holmes, Daniela Porcino, Rebecca Angulo, Terry Powell, and Nancy Shusterman worked remotely as case investigators and monitors for a New York City COVID-19 contact-tracing program between 2020 and 2022. H+H coordinated the program, Optum operated a virtual call center, and staffing agencies supplied some of the workers. Plaintiffs alleged that defendants terminated their employment between March 1 and April 29, 2022, without the 60 days’ notice required by the federal Worker Adjustment and Retraining Notification Act or the 90 days’ notice required by the New York WARN Act. Coleman and Holmes also alleged that H+H failed to provide their final pay statements as required by New York’s Wage Theft Protection Act.

The pending motions included motions to dismiss and motions to compel arbitration. The opinion states that the plaintiffs had not alleged their states of residence or where they were located while performing their remote work.

Arbitration Rulings

The court granted the motions to compel arbitration of Angulo’s, Porcino’s, Powell’s, and Shusterman’s federal and New York WARN Act claims against Apex, Insight, Equity Staffing Group, and Adecco, respectively. Each of those plaintiffs signed an employment or dispute-resolution agreement containing an arbitration provision covering employment-related disputes. The court concluded that the federal arbitration law required enforcement of those agreements and that the WARN Acts did not contain a contrary congressional command preventing arbitration.

The court also addressed representative or class claims. It held that the class-action waivers in the agreements with Apex, Insight, and Adecco barred Angulo’s, Porcino’s, and Shusterman’s representative claims. Powell’s agreement with Equity Staffing Group did not contain a class-action waiver, so he was not barred from pursuing a representative claim in arbitration. The claims of Angulo, Porcino, Powell, and Shusterman were stayed pending arbitration.

Motions to Dismiss

The court granted Optum’s motion to dismiss Coleman’s and Holmes’s federal and New York WARN Act claims against Optum. Regarding the New York WARN Act claims, the court held that the complaint did not state where the plaintiffs performed their remote work. Because the New York WARN Act applies to work performed in New York and uses a single-site-of-employment framework, the court found that the allegations did not clearly establish a basis for those claims.

Regarding the federal WARN Act claims, the court held that the plaintiffs had not adequately pleaded that Optum and H+H were a single employer. The single-employer doctrine can extend WARN Act liability between separate entities, but the complaint did not allege common ownership or common directors and officers. The court also found that the allegations about Optum’s control over work, equipment, hiring, firing, job descriptions, and some personnel policies did not sufficiently establish the required control of labor relations, operational dependency, or unified personnel policies. The court therefore granted Optum’s motion to dismiss for failure to state liability under that doctrine and did not reach the remaining federal WARN Act requirements.

The court denied H+H’s motion to dismiss Coleman’s and Holmes’s Wage Theft Protection Act claims. H+H did not deny that the plaintiffs had not received their final pay statements, and the court held that the complaint adequately alleged a violation.

Leave to Amend and Disposition

The court denied the plaintiffs’ request to amend the complaint, finding that amendment would be futile because of the flaws in their WARN Act allegations. The case remained stayed as to Angulo, Porcino, Powell, and Shusterman pending arbitration. The parties concerning Coleman’s and Holmes’s claims against H+H were encouraged to discuss settlement and were required to provide a joint status report.

Classification Rationale

This is a procedural order because the court ruled on arbitration, motions to dismiss for pleading deficiencies, and leave to amend without deciding the underlying WARN Act liability on the merits. The surviving Wage Theft Protection Act claims were allowed to proceed after the court denied H+H’s motion to dismiss.