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D.Kan.: Plaintiff May Serve Amended Complaint Asserting Successor Liability In FLSA Case

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Andrew Frisch

Chao v. Concrete Management Resources, L.L.C.

Plaintiff filed this wage and hour suit against defendants alleging violations of the overtime and recordkeeping provisions of the Fair Labor Standards Act (FLSA). In her complaint, plaintiff alleged that defendant Concrete Management Resources, L.L.C. (CMR) was formerly known as Concrete Masonry & Restoration, L.L.C. Defendant CMR moved to dismiss the complaint on the grounds that it was not a proper party to the action. Specifically, CMR contended that it has never operated as Concrete Masonry & Restoration, L.L.C. and that CMR is a separate legal entity from Concrete Masonry & Restoration, L.L.C. CMR contended that any FLSA violations were committed by Concrete Masonry & Restoration., L.L.C. and that CMR has no relationship with that entity.

The Court entered an Order permitting Plaintiff leave to file an Amended Complaint, asserting successor liability, stating, “[t]he court believes that the Tenth Circuit, if faced with the issue, would conclude that successor liability exists under the FLSA. Indeed, the Circuit had little difficulty extending the doctrine to the Title VII context-long before the Ninth Circuit’s decision in Steinbach. Trujillo, 694 F.2d at 224-25. In doing so, the Circuit emphasized that the “same policy considerations” supporting the application of the doctrine in the labor law context mandated the application of the doctrine to remedy violations of Title VII. Id. at 224. The Circuit also cautioned, however, that “successor liability is not automatic but should be determined on a case by case basis” through application of the ” MacMillan factors,” including whether the successor company had notice of the charge; the ability of the predecessor to provide relief; and whether there has been a substantial continuity in operations, work force, location, management, working conditions and methods of production. Id. at 225 & n. 3. The court, then, rejects defendant’s suggestion that plaintiff’s amendment is futile because the Tenth Circuit has not recognized the theory of successor liability under the FLSA.”

In so doing, the Court joined other Courts, namely the Ninth Circuit in expressly recognizing the existence of successor liability in an FLSA context.

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