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Lora v. Ledo Pizza System, Inc.

United States District Court, D. Maryland

July 27, 2017

LENIN LORA, et al.


          DEBORAH K. CHASANOW United States District Judge

         Presently pending and ready for resolution in this employment case are: (1) a motion to dismiss filed by Defendant Ledo Pizza Systems, Inc. (ECF No. 5); (2) a motion to dismiss filed by Defendants PV Shah, Trupti Prakash Shah, and Annapurna, Inc. (collectively, the “Owings Mills Defendants”) (ECF No. 7); and (3) a motion for leave to amend filed by Plaintiffs Lenin Lora and Jazmyn Miller (“Plaintiffs”) (ECF No. 21). The issues have been briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motion for leave to amend will be granted, and the motions to dismiss will be granted in part and denied in part.

         I. Background

         A. Factual Background[1]

         Defendant Ledo Pizza Systems, Inc. (“Ledo”) is a corporation that franchises Ledo's Pizza restaurants. (ECF No. 21-2 ¶ 12). Defendants PV Shah and Trupti Prakash Shah (“the Shahs”) own and operate Annapurna Incorporated (“Annapurna”). (Id. ¶ 16). Annapurna operates a Ledo's Pizza franchise in Owings Mills, Maryland (the “Owings Mills Store”). (Id. ¶ 13).

         In 2008, Mr. Lora began working at a Ledo's Pizza restaurant in Colesville, Maryland. (Id. ¶ 18). After Mr. Lora worked at the Colesville location for years and was promoted to the role of the general manager, he eventually accepted a job with another employer in early 2016. (Id. ¶¶ 18-19). Shortly thereafter, at the recommendation of Ledo President James Beall, Annapurna hired Mr. Lora as the general manager of the Owings Mills Store on March 14, 2016. (Id. ¶¶ 21-22). Later that month, Mr. Lora met with the Shahs and Damon Richards, a corporate Ledo employee, to ask if he could hire Ms. Miller as a bartender at the Owings Mills Store. (Id. ¶ 26). Mr. Lora and Ms. Miller were in a romantic relationship, which he disclosed to Defendants before hiring her. (Id. ¶¶ 26-28).

         Even though Mr. Richards was a Ledo employee, he worked occasionally at the Owings Mills Store. (Id. ¶ 24). Mr. Richards directed Mr. Lora as to which items to stock in the bar, prepared inventory lists, and provided training, consultation, and operational support. (Id.). Mr. Richards also required that Mr. Lora provide him with daily and weekly reports on the status of the Owings Mills Store for Ledo. (Id.). Plaintiffs allege that Mr. Richards also hired at least one server at the Owings Mills Store, and that he set the work schedules for Mr. Lora and his assistant. (Id. ¶ 24).

         In March 2016, Mr. Lora hired 64-year-old Jacki Gray as a bartender for the Owings Mills Store. (Id. ¶ 29). Mr. Richards told Mr. Lora that Ms. Gray was “too old” and “grandma like, ” suggested that she would not be able to make and serve drinks at a fast pace, and ordered Mr. Lora to fire her. (Id. ¶¶ 31-32). When Mr. Lora told Mr. Richards that he could not fire her because of her age, Mr. Richards told Mr. Lora that he would “regret it” if he did not fire her. (Id. ¶ 34).

         Around the same time, Mr. Lora began processing payroll for the Owings Mills Store and noticed several issues. First, he discovered that some employees were being paid less than minimum wage. (Id. ¶ 35). Mr. Lora informed Trupti Prakash Shah that the wages were illegally low; she told him that she would correct the wages in Annapurna's payroll system but never made the correction. (Id. ¶¶ 36-40, 49). Second, Ms. Shah reprimanded Mr. Lora for properly paying employees increased amounts for overtime work. (Id. ¶¶ 45-46). Third, Mr. Lora discovered that one employee at the Owings Mills Store was an undocumented worker who was being paid outside of Annapurna's normal payroll. (Id. ¶¶ 41-43). When Mr. Lora raised concerns about this practice with Ms. Shah and Mr. Richards, Mr. Richards told him to “do the best you can, ” and Ms. Shah continued to pay the undocumented worker. (Id. ¶ 44).

         At the beginning of June, the Shahs eliminated Mr. Lora's payroll responsibilities, began processing payroll exclusively on their own, and resumed underpaying Annapurna's employees. (Id. ¶¶ 48-49). Because Mr. Lora had informed them of Annapurna's wage violations, employees in the Owings Mills Store confronted the Shahs after receiving their reduced paychecks on June 10. (Id. ¶ 50). On June 16, Mr. Lora complained once again about the undocumented worker, this time to PV Shah. (Id. ¶ 51). On June 17, the day after making this complaint, Mr. Shah and Mr. Richards told Mr. Lora he was being fired because of the poor performance of the Owings Mills Store. (Id. ¶¶ 52-53). When Ms. Miller called two days later to ask for her shift schedule for the week, Ms. Shah told Ms. Miller that “Corporate” had told her not to put Mr. Lora “or his girlfriend” on the schedule, effectively terminating Ms. Miller's employment at the Owings Mills Store. (Id. ¶¶ 55-56). Both Plaintiffs were underpaid in their final paychecks. (Id. ¶¶ 57-59). After firing Plaintiffs, the Shahs and Mr. Richards told third parties, including Mr. Beall, a food safety inspector, and the other employees at the Owings Mills Store, that Mr. Lora was a “bad manager, ” that he “did not care about the store, ” and that he had been stealing from the restaurant. (Id. ¶ 61).

         B. Procedural History

         Plaintiffs each filed charges of discrimination with the United States Equal Employment Opportunity Commission in September 2016. (ECF No. 21-2 ¶¶ 5-8). On December 15, Plaintiffs filed the instant suit. (ECF No. 1). In their original complaint, they alleged that: Defendants fired each of them in retaliation for Mr. Lora raising wage issues, in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq. (Counts I and II); Defendants fired each of them in retaliation for Mr. Lora refusing to fire Ms. Gray because of her age, in violation of the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. § 621, et seq. (Counts III and IV); Defendants defamed Mr. Lora after he was fired (Count V); Defendants fired Mr. Lora because he complained about their unfair wage practices, in violation of public policy and thus constituting an abusive discharge (Count VI); and the Owings Mills Defendants intentionally underpaid each of them on their last paychecks constituting both a failure to pay wages and untimely payment of wages under the Maryland Wage Payment and Collection Law, Md. Code Ann., Labor & Empl. § 3-501 et seq., (Counts VII, VIII, IX, and X). (ECF No. 1 ¶¶ 61-121).

         Ledo filed a motion to dismiss all of the claims against it on January 12, 2017. (ECF No. 5). That same day, the Owings Mills Defendants filed a partial motion to dismiss as to the Shahs for Counts III and IV, and as to all three Owings Mills Defendants for Counts V and VI. (ECF No. 7). On February 9, Plaintiffs filed responses in opposition to each motion and a motion to amend their complaint. (ECF Nos. 19-21). The Owings Mills Defendants consented to Plaintiffs' motion to amend, but Ledo did not. (ECF No. 21). On March 2, Ledo responded in opposition the Plaintiffs' motion to amend and also filed a reply to its motion to dismiss. (ECF Nos. 25; 26).

         II. Plaintiffs' Motion to Amend A. Standard of Review

         A party may amend its pleading once as a matter of course within twenty-one days after serving it or within twenty-one days after service of a motion under Fed.R.Civ.P. 12(b), whichever is earlier. Fed.R.Civ.P. 15(a)(1). When the right to amend as a matter of course expires, “a party may amend its pleading only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2). Whether to grant leave to amend is a matter left to the discretion of the district court, see Simmons v. United Mortg. & Loan Inv., LLC, 634 F.3d 754, 769 (4th Cir. 2011), though courts should “freely give leave when justice so requires, ” Fed.R.Civ.P. 15(a)(2). Denial of leave to amend is appropriate “only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or the amendment would be futile.” Edwards v. City of Goldsboro, 178 F.3d 231, 242 (4th Cir. 1999) (emphasis in original) (quoting Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th Cir. 1986)).

         B. Analysis

         The Owings Mills Defendants have consented to Plaintiffs' motion to amend. (ECF No. 21, at 1). Ledo filed an opposition to the motion, arguing that Plaintiffs' proposed amendments would be both futile and prejudicial. (ECF No. 24, at 3).

         Leave to amend may be denied as futile “if the proposed amended complaint fails to satisfy the requirements of the federal rules, ” including federal pleading standards. Katyle v. Penn Nat'l Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011) (quoting Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008)); Oroweat Foods Co., 785 F.2d at 510 (“Leave to amend, however, should only be denied on the ground of futility when the proposed amendment is clearly insufficient or frivolous on its face.” (citations omitted)). Denial of leave to amend on futility grounds is appropriate if the court, taking as true the allegations of the proposed amended pleading, would be compelled to dismiss the action. See Kellogg Brown & Root, 525 F.3d at 376 (affirming the district court's denial of leave to amend because the “proposed amended complaint does not properly state a claim under Rule 12(b)(6)”). As explained below, the factual allegations in the proposed amended pleading are sufficient to survive a motion to dismiss on several counts. Accordingly, Plaintiffs' amendment would not be futile.

         “Whether an amendment would be prejudicial is a factual determination. Courts look at the nature of the proposed amendment, the purpose of the amendment, and the time when the amendment was filed.” Equal Rights Ctr. v. Archstone Smith Tr., 603 F.Supp.2d 814, 818 (D.Md. 2009) (citing Laber v. Harvey, 438 F.3d 404, 427 (4th Cir. 2006) (en banc); Oroweat Foods Co., 785 F.2d at 509). The United States Court of Appeals for the Fourth Circuit has explained that:

A common example of a prejudicial amendment is one that “raises a new legal theory that would require the gathering and analysis of facts not already considered by the [opposing party, and] is offered shortly before or during trial.” Foman v. Davis, 371 U.S. 178, 182 (1962). An amendment is not prejudicial, by contrast, if it merely adds an additional theory of recovery to the facts already pled and is offered before any discovery has occurred.

Laber, 438 F.3d at 427 (alteration in original).

         Ledo contends that “permitting the amendment would unduly prejudice Ledo Pizza System by causing it to defend a complaint that would become a moving target through substantial changes to the causes of action and allegations asserted.” (ECF No. 24, at 3). To be sure, Plaintiffs' modifications are designed to cure defects identified in the motions to dismiss and therefore have created somewhat of a moving target, but such changes are common to amended complaints. See Hess v. Gray, 85 F.R.D. 15, 20 (N.D.Ill. 1979) (“Generally, almost every amendment to a complaint results in some prejudice to the defendant, either in the form of additional counts or new discovery resulting in delay. The test in each case is whether undue prejudice will result.”). Here, Plaintiffs provided their amended complaint with their response in opposition to Defendants' motions to dismiss, allowing Ledo to address these new allegations in its reply. Indeed, Ledo has done so. Moreover, this case is in its early stages. Ledo has not yet filed its answer, nor has any discovery been scheduled. Accordingly, Ledo cannot show that amendment would cause undue prejudice, and Plaintiffs' motion to amend will be granted.[2]

         “If some of the defects raised in the original motion remain in the new pleading, the court simply may consider the motion [to dismiss] as being addressed to the amended pleading.” 6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1476 (2d ed. 1990), cited in Ford v. Chiaramonte, No. DKC-10-0137, 2010 WL 2696699, at *3 n.2 (D.Md. July 6, 2010); see also Dolgaleva v. Va. Beach City Public. Sch., 364 F.App'x 820, 825 (4th Cir. 2010) (accepting an appeal based on a motion to dismiss that preceded an amended complaint where the district court accepted the amended complaint determined that the Defendant would not need to file a new motion to dismiss). As discussed below, Plaintiffs' amended complaint does not cure all of the defects ...

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