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Peterson v. M.J.J., Inc.

United States District Court, D. Maryland

September 13, 2017

NICHOLAS PETERSON[1] et al., Plaintiffs
M.J.J., INC., et al., Defendants



         I. Background

         This Fair Labor Standards Act (“FLSA”) case, which includes supplemental claims under Maryland's Wage and Hour Law (“MWHL”) and the Maryland Wage Payment and Collection Law (“MWPCL”), was filed by two Plaintiffs against M.J.J., Inc., trading as The Suburban House (“M.J.J.”), and against Mark Horowitz, an officer and owner of M.J.J., on November 3, 2016. (Compl., ECF No. 1.) On February 6, 2017, when Defendants had not timely filed answers, the Court ordered Plaintiffs to file and serve a motion for Clerk's entry of default or to provide a report why such a motion would be inappropriate. (ECF No. 9.) The same day, Plaintiffs filed their motion for Clerk's entry of default (ECF No. 10), and Defendants filed their motion for extension of time to answer (ECF No. 11). The Court granted the extension (ECF No. 14), thereby rendering Plaintiffs' motion for entry of default (ECF No. 10) moot.

         On February 16, 2017, Defendants filed a motion to dismiss or, in the alternative, for summary judgment. (ECF No. 18.) Within the time permitted by Federal Rule of Civil Procedure 15(a)(1)(B), Plaintiffs filed an amended complaint, adding a third Plaintiff, as a matter of course (ECF No. 19), thereby rendering Defendants' motion (ECF No. 18) moot. Although the motion was then moot, Plaintiffs filed their opposition to it (ECF No. 21). Defendants did not reply substantively, noting the mootness of their original motion. (ECF No. 26.) Counsel for Defendants then filed another motion to dismiss or, in the alternative, for summary judgment. (ECF No. 30.) Plaintiffs responded with a motion for leave to file a second amended complaint (ECF No. 31) and their opposition to Defendants' motion (ECF No. 34). Plaintiffs also filed a motion for conditional certification of their FLSA class. (ECF No. 35.) The motion for leave to file a second amended complaint has been fully briefed (ECF Nos. 36, 43).

         Defendants sought and received an extension of time within which to reply on their dispositive motion as well as to respond to Plaintiffs' motion for class certification. (ECF Nos. 37, 38, 41, 42.) Roughly two weeks later, defense counsel sought a seven-day stay of all deadlines; counsel indicated Defendants had not paid for legal services and would not be able to pay in the future. (ECF No. 44.) Further, defense counsel stated she had provided Defendants with her notice of intent to withdraw, as required by the Court's Local Rule 101.2 (D. Md. 2016), and that Defendants were aware that the corporate Defendant, M.J.J., could not appear pro se. (Defs.' Mot. Stay 1.) She also stated, “Defendants are in the process of trying to determine what steps to take moving forward, regarding how and whether to finance the defense of this matter, ” and she requested the seven-day stay to enable Defendants to make new arrangements. (Id. 1-2.) The Court granted the stay (ECF No. 47) and granted defense counsel's motion to withdraw (ECF Nos. 48, 49).

         After the Court had followed its usual practice and mailed notice to M.J.J. and Horowitz of their counsel's withdrawal (ECF No. 50), the Court lifted the stay (ECF No. 51). The correspondence (ECF No. 50) was returned as undeliverable to Horowitz (ECF No. 52); the mail sent to the corporate Defendant, M.J.J., was not returned to the Court, and the Court presumes it was delivered to M.J.J. Thereafter, Plaintiffs moved the Court to order M.J.J. to show cause why a default should not be entered against it, pursuant to Local Rule 101.2.b. (ECF No. 53.) The motion was granted on July 19, 2017, and the Court required M.J.J.'s response within twenty-one days of the date of the order. (ECF No. 54.) Upon finding that the Clerk's office had not mailed the show-cause order to Defendants, the Court directed the Clerk to mail it on August 7. More than twenty-one days have passed since the time of mailing, and M.J.J. has not responded.

         Although it would be a simple matter to declare M.J.J. in default for not having secured representation by counsel, doing so requires the Court to overlook both Defendants' pending dispositive motion, which asserts substantial arguments as to the viability of Plaintiffs' case, and Defendants' vigorous opposition to Plaintiffs' motion for leave to file a second amended complaint. Instead, the fairer course is not to regard those briefing papers as null and void but to give full consideration to them. Beyond that, the question of liability of the individual Defendant, Horowitz, must be determined, and the legal arguments pertaining to him apply equally to the corporate Defendant, M.J.J.; declaring M.J.J. in default would only complicate the decision-making in this case. If, after these motions are decided, the case remains pending, then it is possible the Court might consider it appropriate to revisit Plaintiffs' request for default against M.J.J. Consequently, the Court shall first address Defendants' pending dispositive motion, construed initially as a motion to dismiss.

         II. Standard for Dismissal under Rule 12(b)(1)

         The burden of proving subject-matter jurisdiction is on the plaintiff. A challenge to jurisdiction may be either facial, i.e., the complaint fails to allege facts upon which subject- matter jurisdiction can be based, or factual, i.e., jurisdictional allegations of the complaint are not true. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). See also Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (same); Richmond, Fredericksburg & Potomac Ry. Co., 945 F.2d 765, 768 (4th Cir. 1991) (same). In the case of a factual challenge, it is permissible for a district court to “consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Richmond, Fredericksburg, 945 F.2d at 768 (citing Adams, 697 F.2d at 1219).

         III. Standard of Dismissal for Failure to State a Claim

         A complaint must contain “sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. An inference of a mere possibility of misconduct is not sufficient to support a plausible claim. Id. at 679. As the Twombly opinion stated, “Factual allegations must be enough to raise a right to relief above the speculative level.” 550 U.S. at 555. “A pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.' . . . Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555, 557). Although when considering a motion to dismiss a court must accept as true all factual allegations in the complaint, this principle does not apply to legal conclusions couched as factual allegations. Twombly, 550 U.S. at 555.

         IV. Analysis of Motion to Dismiss

         A. Motion to Dismiss for Lack of Subject-Matter Jurisdiction

         The Court does not find a clear argument for dismissal under Rule 12(b)(1). Instead, Defendants' argument that Plaintiffs Peterson and Danson are not covered by the FLSA because they were, at the time in issue, prisoners on work release is properly cast as a Rule 12(b)(6) argument. Plaintiffs Peterson and Danson have sufficiently alleged Article III standing, which requires a showing that “[t]he plaintiff . . . ha[s] suffered or [is] imminently threatened with a concrete and particularized 'injury in fact' that is fairly traceable to the challenged action of the defendant and likely to be redressed by a favorable judicial decision.” Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377, 1386 (2014) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, ...

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