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., and Ronald Hilton. They alleged violations of the Fair Labor Standards Act (FLSA), including failures to pay minimum wage and overtime, as well as violations of New York Labor Law. The opinion states that the plaintiffs worked as construction flaggers or supervisors from approximately August 2017 through April 2021.

The plaintiffs alleged that Workforce7, Con Ed, and Vali were joint employers. They alleged that Con Ed or Vali supervisors directed their work at job sites, controlled breaks, signed timesheets, disciplined them, and required uncompensated travel between work sites. They also alleged that Workforce7 and Hilton controlled payroll policies and paid the plaintiffs.

Earlier dismissal and motion for reconsideration

Con Ed previously moved to dismiss Counts 10 and 11 of the Second Amended Complaint. Count 10 asserted a contract claim for prevailing wages. Count 11 asserted, alternatively, a quasi-contract claim based on unjust enrichment.

The court previously dismissed Count 10 as to Con Ed for three stated reasons: the contracts identified by the plaintiffs did not require Con Ed to pay prevailing wages; the plaintiffs had not pleaded the existence of an agreement made before the Department of Transportation permits were issued; and the permits themselves were not contracts. The court dismissed the contract claim based on Con Ed's contracts and the permits with prejudice. It dismissed without prejudice the portion based on a possible pre-permit agreement and granted leave to amend Count 10 only on that basis.

The court also dismissed Count 11 as against Con Ed. It reasoned that, under the authorities cited in the opinion, a quasi-contract claim against an owner or higher-tier contractor required an allegation that the defendant directly obligated itself to pay the workers. Allegations that Con Ed supervised, directed, and controlled the plaintiffs' work at job sites did not establish that direct payment obligation, particularly because the plaintiffs alleged that the Workforce7 defendants approved paychecks and set payroll policies.

The plaintiffs sought clarification about the earlier dismissal, reconsideration of the dismissal of Counts 10 and 11, and certification of the earlier opinion for interlocutory review if reconsideration was denied.

Count 10: Contract claim

The plaintiffs challenged the conclusion that the Department of Transportation permits could not serve as contracts supporting a third-party-beneficiary claim. A third-party-beneficiary claim is a claim by someone who was not a party to an agreement but asserts that the agreement was made for that person's benefit.

After the plaintiffs filed their reconsideration motion, the First Department decided a case discussed in the opinion involving a similar prevailing-wage claim. That decision held that the plaintiffs could pursue a claim based on agreements between Con Ed and New York City made under New York City Administrative Code § 19-142 before the permits were issued, but it also held that the permits themselves were not contracts giving rise to third-party-beneficiary rights.

The court treated that First Department decision as controlling and directly relevant. It therefore declined to reconsider the dismissal of Count 10 insofar as it was based on the permits. The court also stated that repeating arguments already considered or disagreeing with the earlier ruling were not grounds for reconsideration.

Count 11: Quasi-contract claim

The plaintiffs argued that Con Ed's alleged status as a joint employer made it responsible for their pay even without an express agreement to pay them. The court rejected that argument. It explained that the joint-employer analysis under the FLSA is different from the question whether Con Ed directly obligated itself to pay the plaintiffs under a quasi-contract theory.

The court emphasized that the plaintiffs alleged that Con Ed's involvement was limited to supervising work at the sites. They did not allege that Con Ed approved their paychecks or set their payroll and employment policies. The court therefore declined to combine FLSA joint-employer principles with the separate quasi-contract inquiry and denied reconsideration of the dismissal of Count 11.

Interlocutory review and disposition

The plaintiffs asked the court to certify the earlier opinion for interlocutory appeal, which is an appeal before the case is otherwise finished. The court declined to do so, stating that the First Department's decision had reduced uncertainty about whether the permits could support the plaintiffs' contract claims.

The court's conclusion states: "the motion for reconsideration is DENIED." It also allowed the plaintiffs to amend the complaint by April 22, 2024, if they wished to add factual allegations concerning an agreement allegedly made before the Department of Transportation permits were issued. The Clerk was directed to terminate the reconsideration motion.