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S.D.Tex.: Defendant’s Motion to Dismiss Collective Action Allegations Denied; Argument Inappropriately Raised at Pleading Stage

Richardson v. Wells Fargo Bank, N.A.

This case was before the court on the Motion to Dismiss Collective Action Allegations, or, in the Alternative, Motion for More Definite Statement (“Motion”).  Plaintiff, a former personal banker for Wells Fargo, filed this collective action alleging that Defendant violated the Fair Labor Standards Act (“FLSA”) by failing to pay him overtime compensation for hours worked in excess of forty (40) per week. Plaintiff purported to sue also on behalf of all Wells Fargo personal bankers throughout the United States.  Defendant filed the Motion, asserting that Plaintiff failed to plead sufficient facts to support the collective action allegations.

Holding such a motion was inappropriately made at the pleading stage, the court explained:

“Plaintiff alleges sufficient facts in his Complaint to satisfy the pleading requirements for collective actions under the FLSA. Plaintiff alleges that he and other similarly-situated personal bankers working for Wells Fargo were improperly classified as non-exempt, regularly worked more than forty hours per week, and were not paid overtime compensation for those additional hours. These are all factual allegations that, if proven, state a plausible claim for relief under the FLSA. See, e.g., Hoffman v. Cemex, Inc., 2009 WL 4825224, *3 (S.D.Tex. Dec.8, 2009) (Rosenthal, J.).

Additionally, dismissal of the collective action allegations under Rule 12(b)(6) is not appropriate. Whether the case should proceed as a collective action is properly addressed when Plaintiff moves for conditional certification and issuance of notice to the class. Id. at *4 (citing Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1212 (5th Cir.1995)).

For the same reasons that dismissal under Rule 12(b)(6) is unwarranted, there is no need for Plaintiff to file a more definite statement. Plaintiff alleges an adequate factual basis for the FLSA claim and the Federal Rules require no more at this stage.

Plaintiff has adequately pled his FLSA claim. Whether the case should proceed as a collective action will be determined if and when Plaintiff moves for conditional certification and the issuance of notice.”

Armed with recent Supreme Court jurisprudence (Iqbal and Twombly), FLSA defendants are making more and more motions to dismiss as here.  However, as this court correctly held, such motions, in effect, to “decertify” collective actions before they reach “stage 1” or the conditional certification stage are inappropriately made at the pleading stage of a case.

Click Richardson v. Wells Fargo Bank, N.A. to read the entire Memorandum and Order.

E.D.Mo.: First-Filed Rule Inapplicable to FLSA Case For A Variety of Reasons

Arnold v. DirecTV, Inc.

This FLSA putative collective action was before the court on defendants’ motion to dismiss.  The opinion is of interest, because it discusses an issue raised more and more frequently in recent years, given the proliferation of FLSA cases around the country- the so-called first-filed rule.  Here, the defendants were sued in state court in the first action.  Nine (9) days later, the plaintiffs in this case filed a second case, alleging similar claims.  The defendants moved to dismiss this second-filed case, in favor of the first-filed case, in part based on the first-filed rule.  The court rejected the applicability of the first-filed rule in this context and suggested that given the opt-in procedures applicable in FLSA cases, the first-filed rule may not be applicable to FLSA cases in general.

The court reasoned:

“To conserve judicial resources and avoid conflicting rulings, the first-filed rule gives priority, for purposes of choosing among possible venues when parallel litigation has been instituted in separate courts, to the party who first establishes jurisdiction.” Nw. Airlines, Inc. v. Am. Airlines, Inc., 989 F.2d 1002, 1006 (8th Cir.1993). The rule “is not intended to be rigid, mechanical, or inflexible, but is to be applied in a manner best serving the interests of justice.” Id. at 1005 (citation omitted). The prevailing standard is that “in the absence of compelling circumstances the first-filed rule should apply.” Id. at 1005 (citation omitted). However, district courts enjoy wide discretion in applying the first-filed rule. Id. at 1004.

Upon review of the record, the relevant case law, and the arguments of the parties, this Court declines to apply the first-filed rule to dismiss or stay the present case, for several reasons. Although several district courts have applied the first-filed rule to FLSA collective actions, see, e.g., Abushalieh v. Am. Eagle Exp., Inc., No. 10-211, 2010 WL 2301150 (D.N.J. Jun. 7, 2010), this Court is not convinced that the rule is a good fit for such actions. Generally, the rule is applied when the two cases are between the same parties litigating essentially the same issue, with one party being the plaintiff in one case and the defendant in the other, and vice versa. The decision of whether to apply the first-filed often turns on whether one party unfairly “raced to the courthouse.” See, e.g., Innovation Ventures, L.L.C. v. Custom Nutrition Labs., 534 F.Supp.2d 754 (E.D.Mich.2008). This is not the case here.

Application of the rule in the FLSA opt-in collective action context would, in theory, limit all potential members of a nation-wide class to opt into just one and the same collective action in all the federal district courts. Defendants have not pointed to anything in the FLSA itself that indicates that such a situation was intended. The Court notes that the prejudice claimed by Defendants resulting from having to defend against two (or more) contemporaneous lawsuits raising the same FLSA claims could be mitigated by Defendants availing themselves of multidistrict litigation options. See, e.g., In re Wells Fargo Home Mortg. Overtime Pay Litig., 571 F.3d 953 (9th Cir.2009) (multidistrict litigation arising from three putative collective actions and one putative class action against home mortgage company on behalf of current and former home mortgage consultants seeking overtime pay).

In addition, the Court is not convinced that in this context, the date that Lang was filed in state court should be the operative date for determining which case, i.e., Lang or the present case, was filed first for purpose of the first-filed rule. Clearly, had Lang remained in state court, this Court would not dismiss or stay the present action in deference to Lang. In light of the fact that the first-filed rule is one of comity as between the federal district courts, it seems to this Court that the question is which federal court first obtained jurisdiction over the issues and parties. At least one federal district court has so held. See N. Am. Commc’ns, Inc. v. Homeowners Loan Corp., No. CIVA 3:2006-147, 2007 WL 184776, at *3 n. 1 (W.D.Pa. Jan. 22, 2007) (“In applying the first-filed rule, the first-filed case is the federal civil action which is first in time, whether by removal or the actual filing of a civil action in federal court. Since the rule the Court follows today is limited to federal district courts, the plaintiff in a state civil action can avoid being the second-filed matter by simply filing a complaint in a federal district court, not a state trial court at the outset.”).

Lastly, but not of least significance, the present case has a defendant, DTV Home Services II, LLC, that is not a defendant in Lang and Lang has two defendants that are not defendants here. Although DTV Home Services II, LLC, is a wholly-owned subsidiary of DIRECTV, it is a separate party. See Martin v. Citizens Fin. Group, Inc., No. 10-260, 2010 WL 3239187, at *2 (E.D .Pa. Aug. 13, 2010) (declining to apply first-filed rule to a FLSA case where one of the defendants was not a defendant in an earlier case raising the same issues); Gardner v. GC Servs., LP, No. 10-CV-997-IEG, 2010 WL 2721271, at *5-6 (S.D.Cal. July 6, 2010).

Although not determinative, the Court also notes that with the filing of the amended complaint in Lang, the nature of that suit has changed. In addition, the class action aspects of the two suits are different-one brought under Missouri law and one brought under Louisiana law. See Gardner, 2010 WL 2721271, at *5-6. In sum, the Court declines to dismiss or stay this action under the first-filed rule, and turns to consider the merits of Defendants’ motion to dismiss for failure to state a claim and on other grounds.”

Click Arnold v. DirecTV, Inc. to read the entire opinion.

S.D.Fla.: FLSA Case Pled As Collective Action May Not Be “Decertified” At Complaint Stage

Sarti v. Protective Services, Inc.

This case was before the Court on Defendants’ Motion to Dismiss Plaintiff’s Complaint, which was brought as a putative collective action. The Count dismissed the count sounding in conversion, based on Defendants’ failure to pay Plaintiff overtime, stating that such a claims was inappropriate under Florida law. However, noting that a putative class is neither certified or decertified solely based on a Plaintiff’s Complaint, the Court denied the branch of Defendants’ Motion seeking dismissal of the class allegations stating:

“In his Complaint, Plaintiff alleges that the present action is also being brought by ‘those similarly-situated to recover from the Employer unpaid overtime wages, as well as an additional amount as liquidated damages, costs, andreasonable attorney’s fees …’ (Compl.¶ 5.) Defendants seek to dismiss Plaintiff’s Complaint on the grounds that Plaintiff failed to properly certify a class under the FLSA. However, the Court may not decertify a class at the Complaint stage. See generally Simpkins v. Pulte Home Corp., No. 6:08-CV-130, 2008 WL 3927275 (M.D.Fla. Aug. 21, 2008). First, the Plaintiff must file a motion to conditionally certify a class and provide notice to similarly situated employees. See id After Plaintiff files his motion to conditionally certify a class, then the Defendant may Respond with arguments aiming to deny Plaintiff’s motion. See id.”

Accordingly, the Court denied Defendants’ Motion to Dismiss Plaintiff’s class allegations.

M.D.Ga.: Settlement Agreements Entered Into Without Benefit Of Counsel Not Binding; Defendant’s Motion To Dismiss Denied

Dowling v. Athens Ahmed Family Restaurant, Inc.

Plaintiffs April Dowling, William Smith, and Debra Scott initiated this action against Defendants, seeking to recover minimum wage and overtime compensation allegedly withheld from them by Defendants in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. After filing the lawsuit, all three Plaintiffs terminated their relationship with legal counsel, received money from Defendants in an attempt to satisfy their FLSA claims, and expressed disinterest in continuing the litigation. Therefore, Defendants contended that all three Plaintiffs’ claims against Defendants should be dismissed with prejudice. Plaintiffs, on the other hand, opposed the dismissal of any FLSA claims and request that the Court not approve any alleged settlements. Before the Court were: (1) Defendants’ Motion to Dismiss with Prejudice April Dowling’s Claims against Defendants and Approve Settlement Agreement between Dowling and Defendants (Doc. 37, hereinafter Mot. to Dismiss Dowling) and (2) Defendants’ Motion to Dismiss Debra Scott’s and William Smith’s Claims against Defendants (Doc. 38, hereinafter Mot. to Dismiss Scott & Smith). For the following reasons, Defendants’ motions are denied.

The Court denied Defendant’s Motion to dismiss applying the framework from Lynn’s Foods, requiring the Plaintiffs to return any money received under the “settlements.” Interestingly, the Court did note, that if the Plaintiffs failed to return the money paid to them, it would revisit the Motion to Dismiss:

“Since these claims remain pending for adjudication or proper settlement, the Court orders Plaintiffs Dowling, Smith and Scott to return any money paid to them by Defendants in the attempted settlement of their claims if they have not already done so. That money shall be returned to Defendants within 21 days of the date of this Order. If that money is not returned as ordered, the Court will reconsider its decision not to dismiss these Plaintiffs’ claims.”

D.Minn.: Whether Defendant Is An “Employer” Under 216(b) Is Element Of The Claim, Not Jurisdictional

Saleen v. Waste Management, Inc.

Plaintiffs brought this action to recover overtime compensation under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq. The matter was before the Court on the Defendant’s motion of to dismiss for lack of subject-matter jurisdiction. WMI argued that, because plaintiffs were employed by two of its subsidiaries, and not by Defendant itself, Defendant is not plaintiffs’ “employer” within the meaning of the FLSA. Defendant further argued that, because Defendant is not an “employer” within the meaning of the FLSA, the Court lacked subject-matter jurisdiction over this action. The Court disagreed with the latter argument, and thus the Court did not take up the former argument at this time.

The Court held that Defendant’s assertion that it is not an “employer” under the FLSA is a defense on the merits and not a challenge to subject-matter jurisdiction. Therefore, Defendant’s motion to dismiss for lack of subject-matter jurisdiction was denied.

The Court declined to treat Defendant’s motion as one for summary judgment, because plaintiffs had not yet had an opportunity to conduct discovery.