Ballast v. Workforce7 Inc.

Background

Victor Ballast, Luis Simone, Richard Walker, and Orlando Obret brought a collective and class action on behalf of construction-site flaggers against Workforce7 Inc., Consolidated Edison Company of New York, Inc. (Con Ed), Vali Industries, Inc. (Vali), and Ronald Hilton. They alleged violations of the Fair Labor Standards Act and New York Labor Law, including failure to pay for waiting time, travel, equipment and timesheet-related activities, and required overtime. The motion at issue concerned Counts 10 and 11 of the Second Amended Complaint, which sought prevailing wages under contract and quasi-contract theories.

Count 10 alleged that contracts involving Con Ed, Workforce7, and Vali required payment of prevailing wages and that the plaintiffs were intended third-party beneficiaries—people who were not parties to a contract but whom the contract intended to benefit. Count 10 also relied on New York City Department of Transportation street-opening permits containing prevailing-wage language. Count 11 alternatively alleged that Defendants were unjustly enriched by failing to pay prevailing wages.

Rule 12 Issue

The plaintiffs argued that Federal Rule of Civil Procedure 12(g)(2) barred Defendants from making another motion to dismiss because Con Ed had previously moved to dismiss an earlier complaint. The court rejected that objection. It concluded that the rule does not necessarily prevent a later motion raising different failure-to-state-a-claim arguments, and that the court could consider Defendants’ arguments in this motion.

Count 10: Breach of Contract

The court dismissed Count 10 insofar as it was based on the street-opening permits. The plaintiffs had not pleaded the alleged agreements made to obtain the permits, and they could not add that theory for the first time in their opposition brief. The court also concluded, following New York authority cited in the opinion, that the permits did not support the plaintiffs’ breach-of-contract claim as third-party beneficiaries.

The court dismissed Count 10 against the Workforce7 Defendants because the contracts between Workforce7 and Con Ed expressly limited third-party-beneficiary rights and stated that there were no other third-party beneficiaries. The court also dismissed Count 10 against Con Ed because the contracts with Vali placed the obligation to pay prevailing wages on Vali, not Con Ed.

The court denied Vali’s request to dismiss Count 10 insofar as it was based on Vali’s contracts with Con Ed. Those contracts expressly referred to New York City Administrative Code § 19-142 and prevailing wages. The court held that the plaintiffs plausibly alleged that Vali’s contracts required payment of prevailing wages and that they could qualify as third-party beneficiaries. Vali’s argument that the plaintiffs worked too far from the construction site raised a factual question that could not be resolved on a motion to dismiss.

Count 11: Quasi-Contract

The court dismissed Count 11 against Con Ed. It held that the plaintiffs could pursue a quasi-contract claim against Con Ed only if Con Ed had directly obligated itself to pay them. The plaintiffs’ allegations that Con Ed supervised, directed, and controlled their work were insufficient because the complaint acknowledged that Workforce7 set payroll policies and paid the plaintiffs. The court also rejected reliance on third-party-beneficiary cases because Count 11 was a quasi-contract claim, not a breach-of-contract claim.

The court denied Vali’s and the Workforce7 Defendants’ motions to dismiss Count 11. Their argument—that they had not received amounts above the prevailing wage and therefore had not been unjustly enriched—depended on factual matters. On a motion to dismiss, the court had to accept the plaintiffs’ allegations as true and could not conduct fact-finding.

Other Ruling and Disposition

The court granted Defendants’ request for an extension of time to answer or otherwise respond to the remaining claims. It directed Defendants to serve their responsive pleading within fourteen days of the opinion, by February 9, 2024.

The court’s final disposition was that the motion to dismiss was granted in part and denied in part. Count 10 was dismissed except insofar as it was asserted against Vali based on the Con Ed Contracts with Vali. Count 11 was dismissed as against Con Ed but could proceed against Vali and the Workforce7 Defendants.