United States District Court, D. Maryland
EVAN G. FORD, ET AL., Plaintiffs,
KARPATHOES, INC., ET AL., Defendants.
ELLEN LIPTON HOLLANDER, District Judge.
In March 2014, plaintiffs Evan G. Ford, Zac Trautman, Troy M. Greensfelder, and Maggie Desmond filed suit against their alleged former employers, defendants Karpathoes, Inc., George Sakellis, and Roula Rigopoula Sakellis. ECF 1 ("Complaint"). They allege violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., and related State-law claims under Maryland's Wage and Hour Law ("MWHL"), Md. Code (2008 Repl. Vol.), § 3-401 et seq. of the Labor and Employment Article ("L.E."). Plaintiffs, who worked either as servers or as a hostess at Fratelli's Italian Restaurant in Hempstead, Maryland, allege that it is owned and operated by defendant Karpathoes, Inc., which in turn is "owned and operated" by the individual defendants. Second Amended Complaint, ECF 23 ¶¶ 4, 5.
On July 8, 2014, I granted plaintiffs leave to file a second amended complaint. See ECF 22 (Order); ECF 23 ("Second Amended Complaint"). The Second Amended Complaint contains four counts. Count One alleges that defendants failed to pay plaintiffs the minimum wage required by FLSA §§ 206 and 203(m). ECF 23 at 7. Count Two alleges failure to pay overtime, as required by FLSA § 207. Id. In Count Three, plaintiffs allege an alternative theory showing failure to pay overtime as required by FLSA § 207. Id. at 7-8. Count Four asserts failure to pay the minimum wage pursuant to the Maryland Wage and Hour Law, L.E. §§ 3-413, 3-419. Id. at 8. Plaintiff Desmond has not joined in the overtime counts (Counts Two and Three). Id. at 7-8. Further, plaintiffs assert that defendants George and Roula Sakellis are, in their individual capacities, "employers" within the meaning of FLSA § 203(d) and L.E. § 3-401(b). Id. at 3.
Now pending is defendants' "Motion to Dismiss Plaintiffs' Second Amended Complaint." ECF 25 ("Motion"). In their Motion, defendants argue that plaintiffs' complaint must be dismissed under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. In their memorandum supporting the Motion ("Memo, " ECF 25-1), they posit, first, that plaintiffs "have not alleged sufficient facts that would push their claims that Mrs. Sakellis or Mr. Sakellis were their employers from the speculative to the plausible, as required to state a claim under" Supreme Court precedent. Memo at 7. Second, they argue that each of plaintiffs' wage claims should be dismissed because plaintiffs have failed to allege facts sufficient to support plausible claims for relief under federal or state law. Memo at 15-21, 24. Finally, they maintain that plaintiffs' claims should be dismissed as "de minimis, " Memo at 21-24, and that plaintiffs have not alleged facts sufficient to support the allegation that defendants acted willfully. Memo at 24-26.
Plaintiffs have opposed the Motion ("Opposition, " ECF 29), and defendants have replied ("Reply, " ECF 32). The Motion has been fully briefed, and no hearing is necessary to resolve it. See Local Rule 105.6. For the reasons that follow, I will deny the Motion.
Standard of Review
Defendants' Motion is predicated on Fed.R.Civ.P. 12(b)(6). A motion to dismiss pursuant to Rule 12(b)(6) constitutes an assertion by a defendant that, even if the facts alleged by a plaintiff are true, the complaint fails as a matter of law "to state a claim upon which relief can be granted." Whether a complaint states a claim for relief is assessed by reference to the pleading requirements of Fed.R.Civ.P. 8(a)(2). It provides that a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." The purpose of the rule is to provide the defendant with "fair notice" of the claim and the "grounds" for entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 n.3 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662 (2009).
A plaintiff need not include "detailed factual allegations" in order to satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555. Moreover, federal pleading rules "do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted." Johnson v. City of Shelby, ___ U.S. ___, No. 13-1318, slip op. at 1 (Nov. 10, 2014) (per curiam). But, the rule demands more than bald accusations or mere speculation. Twombly, 550 U.S. at 555; see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013). To satisfy the minimal requirements of Rule 8(a)(2), the complaint must set forth "enough factual matter (taken as true) to suggest" a cognizable cause of action, "even if... [the] actual proof of those facts is improbable and... recovery is very remote and unlikely." Twombly, 550 U.S. at 556. In other words, the complaint must contain facts sufficient to "state a claim to relief that is plausible on its face." Id. at 570; see Iqbal, 556 U.S. at 684; Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 768 (4th Cir. 2011).
In reviewing a Rule 12(b)(6) a motion, a court "must accept as true all of the factual allegations contained in the complaint, '" and must "draw all reasonable inferences [from those facts] in favor of the plaintiff.'" E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011) (citations omitted); see Kendall v. Balcerzak, 650 F.3d 515, 522 (4th Cir.), cert. denied, ___ U.S. ___, 132 S.Ct. 402 (2011); Monroe v. City of Charlottesville, 579 F.3d 380, 385-86 (4th Cir. 2009), cert. denied, 559 U.S. 991 (2010). However, a complaint that provides no more than "labels and conclusions, " or "a formulaic recitation of the elements of a cause of action, " is insufficient. Twombly, 550 U.S. at 555. Moreover, the court is not required to accept legal conclusions drawn from the facts. See Papasan v. Allain, 478 U.S. 265, 286 (1986); Monroe, 579 F.3d at 385-86.
A Rule 12(b)(6) motion will be granted if the "well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct." Iqbal, 556 U.S. at 679 (citation omitted). "A court decides whether [the pleading] standard is met by separating the legal conclusions from the factual allegations, assuming the truth of only the factual allegations, and then determining whether those allegations allow the court to reasonably infer" that the plaintiff is entitled to the legal remedy sought. A Society Without A Name v. Virginia, 655 F.3d 342, 346 (4th Cir. 2011), cert. denied, ___ U.S. ___, 132 S.Ct. 1960 (2012). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.'" Hartmann v. Calif. Dept. of Corr. & Rehab., 707 F.3d 1114, 1122 (9th Cir. 2013) (citation omitted); accord Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Reg. Sys., Inc., 680 F.3d 1194, 1201-02 (10th Cir. 2011) ("Dismissal is appropriate if the law simply affords no relief.").
A motion asserting failure to state a claim typically "does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses, " Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999) (quotation marks omitted), unless such a defense can be resolved on the basis of the facts alleged in the complaint. See Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007) (en banc). "This principle only applies, however, if all facts necessary to the affirmative defense clearly appear [ ] on the face of the complaint, '" or in other documents that are proper subjects of consideration under Rule 12(b)(6). Id. (quoting Richmond, Fredericksburg & Potomac R.R. v. Forst, 4 F.3d 244, 250 (4th Cir. 1993)) (emphasis in Goodman ).
As noted, the individual defendants seek dismissal of all counts against them on the ground that they were not plaintiffs' employers and therefore cannot be liable under the FLSA and the MWHL. Under the FLSA, an employee is defined as "any individual employed by an employer, " and an employer is defined as "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d), (e). Although the MWHL does not define the term "employee, " its definition of "employer" is quite similar to the FLSA definition. L.E. § 3-401(b) provides: "Employer' includes a person who acts directly or indirectly in the interest of another employer with an employee."
This statutory text indicates that "individuals such as corporate officers may be personally liable under the FLSA if the individual acts directly or indirectly in the interest of an employer.'" Smith v. ABC Training Center of Md., Inc., JFM-13-0306, 2013 WL 3984630 (D. Md. Aug. 1, 2013) (quoting Brock v. Hamad, 867 F.2d 804, 808 n.6 (4th Cir. 1989)); see Pearson v. Prof'l 50 States Prot., LLC, No. 09-3232, 2010 WL 4225533, at *3 (D. Md. Oct. 26, 2010). More specifically, as defendants correctly observe, "[i]n determining whether an individual is an employer' for purposes of the FLSA, courts look to the economic realities' of an individual's role within a corporation." Memo at 6 (citing Schultz v. Capital Int'l Sec., Inc., 466 F.3d 298, 304-05 (4th Cir. 2006) and Pearson, 2010 WL 4225533, at *3). Defendants add: "In analyzing the economic realities, courts look to the totality of the circumstances and consider such things as the individual's job description, [the] individual's financial interest in the enterprise, and whether the individual exercises control over the employment relationship." Memo at 7 (citing Pearson, 2010 WL 4225533, at *3).
Generally, "[w]here an individual exercises control over the nature and structure of the employment relationship, or economic control over the relationship, that individual is an employer within the meaning of the [FLSA] and is subject to liability." Boucher v. Shaw, 572 F.3d 1087, 1091 (9th Cir. 2009); s ee also Haybarger v. Lawrence Cty. Adult Prob. & Parole, 667 F.3d 408, 418 n.8 (3d Cir. 2012) (explaining "economic reality" test); Barfield v. N.Y. City Health & Hosps. Corp., 537 F.3d 132, 142 (2d Cir. 2008) (discussing the four-factor "economic reality" test for control with respect to corporate officers); Harker v. State Use Indus., 990 F.2d 131, 133 (4th Cir. 1993) (stating that "a true employer-employee relationship" involves a "bargained-for exchange of labor' for mutual economic gain") (citation omitted). Because the MWHL is the state analogue to the FLSA, this same "economic realities" test is used to determine the applicability of that ...