Flemming v. The MENTOR Network

Filing 63

ORDER: Defendants' Motion 43 to Dismiss is DENIED. Signed by Judge Janet Bond Arterton on 12/20/2012. (Bonneau, J)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
Suzanne Flemming,
Plaintiff,
Civil No. 3:11cv689 (JBA)
v.
REM Connecticut Community Services Inc., National
Mentor Services LLC, and National Mentor
December 20, 2012
Holdings, Inc.
Defendants.
RULING ON DEFENDANTS’ MOTION TO DISMISS
Defendants National Mentor Services, LLC (“Services”), and National Mentor
Holdings, Inc. (“Holdings”), move [Doc. #43] pursuant to Federal Rule of Civil Procedure
12(b)(6) to dismiss all counts against Defendants Services and Holdings in Plaintiff
Suzanne Flemming’s Amended Complaint [Doc. # 36], on the grounds that Plaintiff has
failed to allege sufficient facts to establish that Defendants were her joint employers
within the meaning of the Fair Labor Standards Act (“FLSA”) and the Connecticut
Minimum Wage Act (“CMWA”). For the following reasons, Defendants’ Motion to
Dismiss is denied.

I.

Discussion1
Both the FLSA and the CMWA control certain terms of the relationship between

“employers”2 and “employees.”3 29 U.S.C. § 207; Conn. Gen. Stat. § 31-72. Where a
plaintiff claims multiple simultaneous employers, or “joint employers” under the FLSA,
“the overarching concern is whether the alleged employer possessed the power to control
the workers in question . . . with an eye to the economic reality presented by the facts of
each case.” Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999) (internal
citations and quotation marks omitted). In applying the economic reality test, a court
must first evaluate whether the alleged joint employer exercised formal control over a
plaintiff’s employment. The Second Circuit has recognized a four–factor joint–employer
test to establish formal control, which asks whether an employer:
(1) had the power to hire and fire the employees, (2) supervised and
controlled employee work schedules or conditions of employment, (3)
determined the rate and method of payment, and (4) maintained employment
records.
1

“To survive a motion to dismiss, 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 Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Although detailed allegations are not required, a claim will be found facially
plausible only if “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. Conclusory allegations are not sufficient. Id. at 678–79; see also Fed. R. Civ. P.
12(b)(6).
2
FLSA defines “employer” as “any person acting directly or indirectly in the
interest of an employer in relation to an employee . . . .” 29 U.S.C. § 203(d). The CMWA
defines “employer” to mean “any individual, partnership, association, joint stock
company, trust, corporation, the administrator or executor of the estate of a deceased
person, the conservator of the estate of an incompetent, or the receiver, trustee, successor
or assignee of any of the same, employing any person, including the state and any
political subdivision thereof.” Conn. Gen. Stat. § 31-71a(1).
3
FLSA provides that “the term ‘employee’ means any individual employed by an
employer.” 29 U.S.C. § 203(e)(1). The CMWA defines “employee” to include “any
person suffered or permitted to work by an employer.” Conn. Gen. Stat. § 31-71a(2).
2

Carter v. Dutchess Community College, 735 F.2d 8, 12 (2d Cir. 1984).
However, “Carter did not hold . . . that those [four] factors are necessary to
establish an employment relationship. See Zheng v. Liberty Apparel Co., 355 F.3d 61, 71
(2d Cir. 2003) (emphasis in original). A court may also consider the following factors to
determine whether a defendant had functional control over a plaintiff’s employment:
(1) whether [the putative employers’] premises and equipment were used
for the plaintiffs’ work; (2) whether [the direct employer] had a business
that could or did shift as a unit from one putative joint employer to
another; (3) the extent to which plaintiffs performed a discrete line–job
that was integral to [the putative employers’] process of production; (4)
whether responsibility under the contracts [between the direct and
putative employers] could pass from one [entity] to another without
material changes; (5) the degree to which the [putative employers] or their
agents supervised plaintiffs’ work; and (6) whether plaintiffs worked
exclusively or predominately for the [putative employers].
Id. at 72. The Second Circuit has not announced a definitive set of factors to establish
functional control, recognizing that there will be “different sets of relevant factors based
on the factual challenges posed by particular cases.” Barfield v. New York City Health and
Hospitals, 537 F.3d 132, 142–43 (2d Cir. 2008) (holding that previous precedent “state[s]
no rigid rule for the identification of an FLSA employer . . . [but] provide[s] a
nonexclusive and overlapping set of factors to ensure that the economic realities test
mandated by the Supreme Court is sufficiently comprehensive and flexible to give proper
effect to the broad language of the FLSA”).
Under Connecticut law, although the CMWA “provides wage and overtime
guarantees similar to the FLSA,” Scott v. Aetna Servs. Inc., 210 F.R.D. 261, 263 n.2 (D.
Conn. 2002), the Connecticut Supreme Court has declined to adopt the “economic
reality” test for purposes of evaluating joint–employer status under the CMWA. See
3

Butler v. Hartford Technical Inst., 243 Conn. 454, 462 n.8 (1997). Instead, Connecticut
courts consider factors such as whether the alleged employer set the hours of
employment, paid wages, exercised control over day–to–day responsibilities, or ran other
daily operations. See id. at 464–65; see also Petronella ex rel. Maiorano v. Venture
Partners, Ltd., 60 Conn. App. 205, 211–12 (2000).
Plaintiff alleges the following facts to support her claim that Defendants Holdings
and Services are her joint employers:


Defendant Services and Holdings either directly or through common
management policies of Defendants, directed the work of Plaintiff and all other
similarly situated individuals (Amend. Compl. ¶¶ 7–8), by operating the entities
within The Mentor Network, including Defendant REM, using “a well–defined set
of policies procedures and quality standards that create a level of support and
consistency unavailable elsewhere.” (Id. ¶ 9.) Using an executive management
team to develop and oversee these policies, which include identical job
descriptions for all entities operating under their trademark “The Mentor
Network,” Defendants collectively directed the work of Plaintiff and other
similarly situated individuals. (Id. ¶¶ 9, 12.)

Defendants also maintained the

employment records of Plaintiff and all other similarly situated individuals. (Id.
¶¶ 7–8, 15.)


Defendants Services and Holdings also determined the rate and method of
payment of wages to Plaintiff and all other similarly situated individuals (id.
¶¶ 7–8), and classified all Program Supervisors as exempt from overtime
compensation (id. ¶ 16).

Plaintiff’s paycheck was drawn from the Mentor

Network, which is a trademark owned by Defendants Holdings and Services. (Id.)
4

Defendants Services and Holdings managed the employee benefits that were given
to Plaintiff and other similarly situated individuals, which were consistent among
all Program Supervisors. (Id. ¶ 14.)


Defendants Services and Holdings had the authority to hire and fire Plaintiff and
all other similarly situated individuals for, inter alia, violating the uniform rules
and policies created and distributed by Defendants. (Id. ¶¶ 7–8, 13.)



Defendants Services and Holdings employed a senior management team to
develop and oversee these policies and procedures for each entity operating under
the trademark of “The Mentor Network,” and employed regional management
employees who supervised the work of Plaintiff and similarly situated individuals.
(Id. ¶ 13.) Specifically, Defendants Services and Holdings employed Patti Maguire
as Vice President who oversaw operations in the Northeast, including the
operations of Defendant REM, Plaintiff’s direct employer. (Id.)



Connecticut’s Worker’s Compensation Commission listed Defendant Holdings as
Plaintiff’s employer on a claim form. (Id. ¶ 18; Ex 1 to id.)
Defendants make two arguments as to why Plaintiff has failed to allege a joint–

employer relationship. First, Defendant claims that Plaintiff’s allegations are conclusory,
because they merely restate the joint–employer factors established by the Second Circuit,
and thus are insufficient to meet Plaintiff’s burden on a motion to dismiss. See Ashcroft v.
Iqbal, 556 U.S. 662, 678–79 (2009). The Court disagrees: Plaintiff’s allegations are not
mere “legal conclusions couched as fact[].” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). They do not simply state that Defendants are Plaintiff’s joint employers or offer
only a rote recital of recognized factors because these factors are also facts. For example
Plaintiff specifically alleges that Defendants have authority to discipline or fire her, set her
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rate and method of payment, and maintain her employment records.

These are

statements of fact, which the Court must accept as true when ruling on a motion to
dismiss. See Iqbal, 556 U.S. at 678.
Second, Defendants claim that several of Plaintiff’s allegations are insufficient, on
their own, to establish a joint–employment relationship. Defendants cite Zheng for the
proposition that the policies enforced across the Mentor Network do not establish an
employer–employee relationship between Plaintiff and Defendants Holdings and
Services.

In Zheng, the Second Circuit explained that extensive supervision of the

plaintiff by the defendant demonstrates an employer–employee relationship where the
defendant effectively controls the terms and conditions of the plaintiff’s employment, see
Zheng, 355 F. 3d at 74–75, as distinguished from a subcontracting relationship in which
“supervision with respect to contractual warranties of quality and time of delivery has no
bearing on the joint employment inquiry, as such supervision is perfectly consistent with
a typical, legitimate subcontracting arrangement.”

Id. at 75.

Other courts have

interpreted this reasoning to mean that where the evidence of supervision over quality
control was intended to protect customers, it alone was insufficient to create more than a
normal parent–subsidiary relationship. See Moreau v. Air France, 356 F. 3d 942, 951 (9th
Cir. 2004) (finding that supervision by airline over ground handling employees was done
to ensure compliance with passenger safety regulations and thus did not show effective
control of joint–employer relationship); Jacobson v. Comcast Corp., 740 F. Supp. 2d 683,
691–92 (D. Md. 2010) (“It is also significant that the control Comcast does exercise is in
part designed to protect Comcast customers. . . . Comcast’s quality control procedures
ultimately stem from the nature of their business and the need to provide reliable service
to their customers, not the nature of the relationship between the technicians and
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Comcast. While Comcasts’s supervision and control may appear substantial in degree, it
is qualitatively different from the control exercised by employers over employees.”); see
also Lepkowski v. Telatron Marketing Group, Inc., 766 F. Supp. 2d 572, 579 (W.D. Pa.
2011) (“Courts have widely held that detailed instructions and a strict quality control
mechanism will not, on their own, indicate an employment relationship.” (internal
quotation marks omitted)).
Defendants also reference Plaintiff’s allegations about Defendants Holdings and
Services administering Plaintiff’s employee benefits as insufficient to show they were her
joint employers. First, Defendants correctly point out that administration of employee
benefits is not a factor under the CMWA. Furthermore, Connecticut employs a different
test for determining “employer” status under the workers’ compensation statute, see
Hanson v. Transportation General, Inc., 45 Conn. App. 441 (Conn. App. Ct. 1997)
(announcing “employer” test in a workers’ compensation case), and thus Ex. 1 to the
Amended Complaint does not bear significantly on the plausibility of Plaintiff’s state law
claims. Defendant cites to several out–of–circuit district court cases to support the
proposition that the administration of employee benefits, management of payroll services
and payment of payroll taxes and workers’ compensation insurance are alone insufficient
to establish that a defendant is an employer under the FLSA. See Maddock v. KB Homes,
Inc., 631 F. Supp. 2d 1226, 1234 (C. D. Cal. 2007) (holding that maintenance of employee
records via shared payroll services and a joint database alone is insufficient as a matter of
law to meet the economic reality test); Beck v. Boce Group, L.C., 391 F. Supp. 2d 1183,
1191 (S.D. Fla. 2005) (holding that preparation of payroll checks, and payment of payroll
taxes and workers’ compensation insurance is probative, but not dispositive, of joint
employment).
7

Defendants’ arguments slice and dice Plaintiff’s allegations separately, instead of
evaluating the totality of the circumstances, as the Second Circuit has instructed courts to
do in joint employer cases. See, e.g., Zheng, 355 F.3d at 71 (“[E]conomic reality is
determined based on all the circumstances and any relevant evidence may be examined
so as to avoid having the test confined to a narrow legalistic definition.” (internal
quotation marks and citations omitted) (emphasis in original)); Herman, 172 F.3d at 139
(“No one of the four [Carter] factors standing alone is dispositive.”). Thus, Defendants’
arguments that any particular allegation contained in Plaintiff’s Amended Complaint is
insufficient, on its own, to establish a joint–employer relationship, does not necessitate
the conclusion that Plaintiff has failed to meet her pleading burden. Rather, the Court
must look to each of the factors set out by the Second Circuit, in addition to any other
relevant factual allegations, to determine whether Defendants Holdings and Services
exercised the requisite degree of control over Plaintiff such that they were her employers
within the meaning of the FLSA.
At oral argument, Defendants also argued that because Plaintiff did not allege that
Defendants Holdings and Services exercised daily on–the–ground–type supervision or
direction over Plaintiff’s work, her joint–employment claim must necessarily fail.
Without alleging this high degree of control, Defendants argue, Plaintiff has done nothing
more than plead that a typical parent–subsidiary relationship existed between Defendants
Holdings and Services and Defendant REM, which would be insufficient to establish that
Defendants Holdings and Services were her joint employers. See In re Enterprise Rent–A–
Car Wage & Hour Employment Practices Litigation, 735 F. Supp. 2d 277, 338 (W.D. Pa.
2010) (“The doctrine of limited liability creates a strong presumption that a parent
corporation is not the employer of its subsidiary’s employees, and only evidence of
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control suggesting a significant departure from the ordinary relationship between a
parent and its subsidiary is sufficient to establish a joint employer relationship.” (internal
quotation marks and citations omitted)). However, the Second Circuit has recognized
that joint employer status:
does not require continuous monitoring of employees, looking over their
shoulders at all times, or any sort of absolute control of one’s employees.
Control may be restricted or exercised only occasionally, without removing
the employment relationship from the protections of the FLSA, since such
limitations on control do not diminish the significance of its existence.
Herman, 172 F.3d at 139. Thus, Plaintiff need not allege daily supervision in order to
plausibly state a claim of a joint–employment relationship. Here, Plaintiff claims that
Defendants Holdings and Services drafted her job description, thereby controlling her
primary responsibilities, oversaw her performance via a regional management team, and
had the authority to impose discipline via uniform procedures and policies that they had
drafted. Whether Plaintiff can develop a factual record to show that Defendants Holdings
and Services exercised a sufficiently high degree of control over her daily working
conditions via these means will be examined on a motion for summary judgment. For
the purposes of this motion to dismiss, however, the factual allegations do not show the
implausibility of a claim that Defendants exercised the requisite control to be joint
employers.
In applying the Carter factors, the Court concludes that Plaintiff has alleged
sufficient facts to establish a plausible claim that Defendants were her joint employers
within the meaning of the FLSA. Plaintiff has alleged that Defendants had the power to
hire, discipline, and fire her pursuant to the policies and procedures they issued (see
Amend. Compl. ¶¶ 7–8, 13); that Defendants controlled the conditions of her
employment by supervising her work via a regional manager, by imposing a uniform job
9

description on her position and by binding Plaintiff to a set of uniform policies and
procedures (see id.); that Defendants set her rate and method of payment (see id. ¶¶ 7–8);
and that Defendants maintained her employment records (see id. ¶¶ 7–8, 15). Based on
these allegations, the Court does not find as a matter of law that it is implausible that
Defendants Holdings and Services exercised a sufficient degree of control over Plaintiff’s
employment to qualify as her joint employers under the FLSA.
Furthermore, Plaintiff has alleged additional facts that would indicate that
Defendants exercised a high degree of control over her employment.

Defendants

administered her employee benefits, (see id. ¶ 14), were responsible for her workers’
compensation benefits (see id. ¶ 18; Ex 1 to id.), and Defendant Holdings was identified as
her employer on a claim form from the Connecticut Workers’ Compensation
Commission (see id. ¶ 18; Ex. 1 to id.). Courts in this Circuit have found that plaintiffs
met their pleading burden on a motion to dismiss based on similar factual allegations.
See, e.g., Hart v. Rick’s Cabaret Int’l Inc., No. 09 Civ. 3043 (JGK), 2010 WL 5297221, at *3
(S.D.N.Y. Dec. 20, 2010) (holding that where a parent company supervised subsidiary
employees via regional managers, where regional managers were responsible for
enforcing global policies and procedures and for hiring and firing subsidiary employees,
and where the parent company classified the subsidiary employees as exempt under the
FLSA, there was sufficient evidence to suggest a joint–employer relationship under the
Carter factors); Beltre v. Lititz Healthcare Staffing Solutions LLC, 757 F. Supp. 2d 373, 378
(S.D.N.Y. 2010) (holding that plaintiff’s allegations that defendant paid her wages, held
itself out as her employer in a contract, and was responsible for taxes and workers’
compensation was sufficient to allege joint employment on a motion to dismiss).

10

Plaintiff also alleges that Defendants caused the alleged FLSA violation by
improperly designating all Program Managers as exempt from overtime compensation.
(See id. ¶ 16.) Courts in this circuit have recognized facilitation of the alleged violation as
a significant factor in the joint–employer analysis. For example, in Lanzetta v. Florio’s
Enterprises, Inc., 763 F. Supp. 2d 615 (S.D.N.Y. 2011), the district court noted that
“facilitating the violations at issue [] has also been considered significant in the economic
reality inquiry.” Id. at 627. The Connecticut Supreme Court has also found that the fact
that a defendant “caused” the alleged CWMA violation is an important factor in
determining whether that defendant employed the plaintiff within the meaning of the
CWMA. See Butler, 243 Conn. at 462 (“We, therefore, agree with the plaintiff that when
placed in its statutory context, the term employer as used in § 31-72 encompasses an
individual who possesses the ultimate authority and control within a corporate employer

11

to set the hours of employment and pay wages and therefore is the specific or exclusive
cause of improperly failing to do so.”).

As previously noted, Plaintiff alleges that

Defendants were the specific cause of the alleged CMWA violation because they
improperly designated all Program Managers as exempt from employment
compensation. (See Amend. Compl. ¶ 16.) This, in addition to her allegation that
Defendants Holdings and Services determined her rate and method of payment (see id. ¶¶
7–8), is sufficient to establish that Defendants Holdings and Services were her employers
within the meaning of the CWMA.
II.

Conclusion
For the reasons discussed above, Defendants’ Motion to Dismiss [Doc. # 43] is

DENIED.

IT IS SO ORDERED.
/s/
Janet Bond Arterton, U.S.D.J.

Dated at New Haven, Connecticut this 20th day of December, 2012.

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