Vazquez v. Joseph Cory Holdings, LLC
Filing
54
ORDER overruling 48 Plaintiff's Partial Objection to Report and Recommendation; overruling as moot 49 Defendant's Objections to Report and Recommendation; adopting in part 42 Report and Recommendation; granting in part 31 Defenda nt's Motion to Dismiss First Amended Complaint; denying without prejudice 32 Plaintiff's Motion to Certify Class. Plaintiff has fourteen (14) days from the date of this Order to file a Second Amended Complaint. Plaintiff has fourteen (14) days from the filing of his Second Amended Complaint to renew his motion to certify a class. Signed by Judge Paul G. Byron on 3/2/2017. (SEN)
They UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
OBED VAZQUEZ, on behalf of himself
and all others similarly situated,
Plaintiff,
v.
Case No: 6:16-cv-1307-Orl-40TBS
JOSEPH CORY HOLDINGS, LLC,
Defendant.
ORDER
This cause comes before the Court on the following:
1. Defendant’s Motion to Dismiss First Amended Complaint and Memorandum
of Law in Support (Doc. 31), filed October 17, 2016;
2. Magistrate Judge Thomas B. Smith’s Report and Recommendation
(Doc. 42), filed November 10, 2016;
3. Plaintiff’s Partial Objection to the Report and Recommendation on
Defendant’s Motion to Dismiss (Docs. 48), filed November 23, 2016;
4. Defendant’s Objections to Magistrate Judge’s Report and Recommendation
(Doc. 49), filed November 23, 2016; and
5. Plaintiff’s Motion for Rule 23 Class Certification (Doc. 32), filed October 20,
2016.
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I.
BACKGROUND 1
Defendant, Joseph Cory Holdings, LLC (“Cory”), operates a trucking business
which provides delivery services to Best Buy stores throughout Osceola County, Florida.
During the relevant time period, Cory employed Plaintiff, Obed Vazquez (“Vazquez”), as
a driver. Vazquez claims that Cory has a policy of willfully misclassifying its drivers—
including Vazquez—as independent contractors, when these drivers are in fact
employees. As a result of this misclassification, Vazquez contends that Cory has injured
its drivers by failing to properly withhold employment taxes, failing to pay mandatory
employment taxes on the drivers’ behalf, inhibiting drivers’ rights to seek worker’s
compensation and unemployment benefits, and reducing drivers’ contributions to Social
Security and Medicare.
On July 21, 2016, Vazquez initiated this lawsuit against Cory, asserting claims
under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201–219, the Florida
Deceptive and Unfair Trade Practices Act (“FDUTPA”), Fla. Stat. §§ 501.201–.213, the
Florida common law with respect to payment of wages, and § 7434 of the Internal
Revenue Code (the “IRS claim”). Vazquez additionally brings his FLSA claim as a
putative collective action and his FDUTPA and IRS claims as putative class actions, in
which he seeks to vindicate the rights of other drivers who were also subjected to Cory’s
allegedly unlawful misclassification policy.
1
This account of the facts is taken from Plaintiff’s First Amended Complaint (Doc. 28),
the factual allegations of which the Court must accept as true when considering
Defendant’s motions to dismiss. See Linder v. Portocarrero, 963 F.2d 332, 334 (11th
Cir. 1992).
2
On October 17, 2016, Cory filed a motion to dismiss Vazquez’s FDUTPA and IRS
claims. Upon reviewing Cory’s motion, Magistrate Judge Thomas B. Smith recommends
that the motion be granted in part and denied in part, and that the IRS claim be dismissed
due to Vazquez’s lack of standing. Additionally, on October 20, 2016, Vazquez moved to
certify his FDUTPA and IRS claims as class actions.
II.
STANDARDS OF REVIEW
A motion to dismiss made pursuant to Federal Rule of Civil Procedure 12(b)(6)
tests the legal sufficiency of a plaintiff’s complaint. In order to survive a Rule 12(b)(6)
motion, the complaint must “state a claim to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face when the
plaintiff alleges enough facts to “allow[] the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). The mere recitation of the elements of a claim is not enough, and the district court
need not give any credence to legal conclusions that are not supported by sufficient
factual material. Id. District courts must accept all well-pleaded allegations within the
complaint and any documents attached thereto as true and must read the complaint in
the light most favorable to the plaintiff. Hunnings v. Texaco, Inc., 29 F.3d 1480, 1484
(11th Cir. 1994) (per curiam).
When a magistrate judge has been designated to decide a matter that is dispositive
in nature, as is the case here, the magistrate judge must issue a report to the district judge
specifying the magistrate judge’s proposed findings of fact and the recommended
disposition. Fed. R. Civ. P. 72(b)(1). Any party who disagrees with the magistrate judge’s
decision has fourteen days from the date of the decision to seek the district judge’s review
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by filing objections to those specific portions of the decision with which the party
disagrees. Fed. R. Civ. P. 72(b)(2). The district judge must then make a de novo
determination of each issue to which objection is made. Fed. R. Civ. P. 72(b)(3). De
novo review “require[s] independent consideration of factual issues based on the record.”
Jeffrey S. v. State Bd. of Educ., 896 F.2d 507, 512 (11th Cir. 1990) (per curiam). The
district judge may then accept, reject, or modify the magistrate judge’s recommendation,
receive additional evidence or briefing from the parties, or return the matter to the
magistrate judge for further review. Fed. R. Civ. P. 72(b)(3)
Lastly, federal courts are courts of limited jurisdiction, meaning that they are
conscribed to hearing only those types of cases and controversies specifically
enumerated by Article III of the United States Constitution or otherwise granted to them
by the United States Congress. Smith v. GTE Corp., 236 F.3d 1292, 1299 (11th Cir.
2001). As such, a federal court is obligated to ensure that it has subject matter jurisdiction
at all times during the proceedings, and the court may examine its jurisdiction with or
without a party’s urging. Id.
III.
DISCUSSION
A.
The FDUTPA Claim
Cory moves to dismiss Vazquez’s FDUTPA claim for two reasons: (1) Vazquez
lacks standing to bring the claim because he is not a consumer within the meaning of the
statute, and (2) Vazquez fails to state a plausible claim for relief. While the Magistrate
Judge found neither of these two arguments persuasive and recommended that the
FDUTPA claim be allowed to proceed, the undersigned finds that jurisdictional reasons
counsel in favor of dismissal.
4
When a district court has original jurisdiction over a case, the court may exercise
supplemental jurisdiction “over all other claims that are so related to claims in the action
within such original jurisdiction that they form part of the same case or controversy.”
28 U.S.C. § 1367(a). Notwithstanding, the court may decline to exercise supplemental
jurisdiction over a claim if any of the following circumstances are present:
(1)
[T]he claim raises a novel or complex issue of State law,
(2)
[T]he claim substantially predominates over the claim or
claims over which the district court has original
jurisdiction,
(3)
[T]he district court has dismissed all claims over which it
has original jurisdiction, or
(4)
[I]n exceptional circumstances, there are
compelling reasons for declining jurisdiction.
other
Id. § 1367(c)(1)–(4); see also Palmer v. Hosp. Auth. of Randolph Cty., 22 F.3d 1559, 1569
(11th Cir. 1994) (observing that courts are required to exercise supplemental jurisdiction
over pendent claims unless any of these four circumstances exist, in which case the court
has discretion to decline the exercise of supplemental jurisdiction). If the district court
determines that one of the enumerated reasons for declining supplemental jurisdiction is
present, the court should additionally consider equitable factors such as judicial economy,
convenience, and fairness to the parties in deciding whether to employ its discretion to
decline supplemental jurisdiction. Palmer, 22 F.3d at 1569.
Here, the Court finds that it should not exercise supplemental jurisdiction over
Vazquez’s FDUTPA claim because the claim would substantially predominate over the
FLSA claim which invokes the Court’s original jurisdiction. See 28 U.S.C. § 1367(c)(2).
“A federal court will find substantial predominance when it appears that a state claim
constitutes the real body of a case, to which the federal claim is only an appendage.”
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Parker v. Scrap Metal Processors, Inc., 468 F.3d 733, 744 (11th Cir. 2006) (quoting
McNerny v. Neb. Pub. Power Dist., 309 F. Supp. 2d 1109, 1117–18 (D. Neb. 2004)).
Important factors for a court to compare in this regard include the elements required to
prove each claim, the number of plaintiffs who pursue each claim, and the burden the
court must shoulder in managing each claim. See Bishop v. VIP Transp. Grp., LLC, No.
6:15-cv-2118-Orl-22KRS, 2016 WL 4435700, at *3–4 (M.D. Fla. Aug. 2, 2016), report and
recommendation adopted, 2016 WL 4382694 (M.D. Fla. Aug. 17, 2016).
To begin, Vazquez’s FDUTPA and FLSA claims require different elements of proof.
In order to prevail on his FDUTPA claim, Vazquez will need to prove that (1) Cory
committed a deceptive act or engaged in an unfair practice (2) which caused (3) actual
damages. Carriuolo v. Gen. Motors Co., 823 F.3d 977, 984 (11th Cir. 2016). Importantly,
the proof required to establish that Cory’s conduct was deceptive or unfair will be
particularly fact-intensive, requiring Vazquez to convince the jury that Cory’s policy of
misclassifying employees as independent contractors would either deceive an objectively
reasonable person or offend public policy in a way that is immoral, unethical, oppressive,
unscrupulous, or substantially injurious. See PNR, Inc. v. Beacon Prop. Mgmt., Inc., 842
So. 2d 773, 777 (Fla. 2003). In contrast, to prevail on his FLSA claim, Vazquez need only
establish that he was employed by Cory and Cory failed to pay him wages to which he is
legally entitled, a relatively straightforward task. See Allen v. Bd. of Pub. Educ. for Bibb
Cty., 495 F.3d 1306, 1314 (11th Cir. 2007). This incongruity informs the Court that the
FDUTPA claim substantially predominates over the FLSA claim.
Moreover, Vazquez brings his FLSA claim as a collective action pursuant to
29 U.S.C. § 216(b) and his FDUTPA claim as a class action pursuant to Federal Rule of
6
Civil Procedure 23. The procedures governing each type of aggregate litigation could not
be more different. The FLSA collective action requires plaintiffs to affirmatively opt into
the lawsuit so they can pursue their own rights, following which the court determines
whether the lawsuit should proceed on an aggregate basis or be decertified; alternatively,
the Rule 23 class action allows the named plaintiff to pursue the rights of absent class
members, and class members must affirmatively exclude themselves from the lawsuit if
they do not wish to be bound by the result. See Daniel C. Lopez, Note, Collective
Confusion: FLSA Collective Actions, Rule 23 Class Actions, and the Rules Enabling Act,
61 Hastings L.J. 275, 277–78, 289 (2009); cf. LaChapelle v. Owens-Illinois, Inc., 513 F.2d
286, 289 (5th Cir. 1975) (observing that the FLSA collective action and Rule 23 class
action mechanisms “are mutually exclusive and irreconcilable”). Although hybrid
collective action/class action lawsuits are certainly permissible, it is well-settled that such
lawsuits should only be allowed to proceed “where . . . the essential facts and issues
regarding each set of claims are likely to be the same and [the] proceedings are not likely
to be rendered unduly burdensome by inclusion of both sets of claims.” Bennett v. Hayes
Robertson Grp., Inc., 880 F. Supp. 2d 1270, 1277 (S.D. Fla. 2012) (citation omitted). As
explained above, Vazquez’s FLSA and FDUTPA claims require proof of significantly
different elements. Additionally, the dichotomy between managing the opt-in plaintiffs for
Vazquez’s FLSA collective action on the one hand and facilitating notice to the opt-out
plaintiffs in Vazquez’s FDUTPA class action on the other hand would render these
proceedings burdensome and inefficient.
The burden of allowing Vazquez’s claims to proceed in hybrid fashion would be
further compounded by the fact that Vazquez’s FLSA claim is subject to a two- or three-
7
year statute of limitations, see 29 U.S.C. § 255(a), while his FDUPTA claim is subject to
a four-year statute of limitations, see Tiger v. Dynamic Sports Nutrition, LLC, No. 6:15cv-1701-Orl-41TBS, 2016 WL 1408098, at *2 (M.D. Fla. Apr. 11, 2016). As a result,
Vazquez’s FDUTPA class action would be larger than his FLSA collective action, again
demonstrating that the state law FDUTPA claim substantially predominates over the
FLSA claim. See, e.g., De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 311–12 (3d Cir.
2003) (finding that the district court abused its discretion by exercising supplemental
jurisdiction over pendent state law class action where the plaintiffs pursuing the class
action far outnumbered the plaintiffs pursuing the FLSA collective action which invoked
the federal court’s original jurisdiction); Santiago v. Wm. G. Roe & Sons, Inc., No. 8:07CV-1786-T-27MAP, 2008 WL 2944921, at *2 (M.D. Fla. July 29, 2008) (declining to
exercise supplemental jurisdiction in similar circumstances).
Having found that Vazquez’s FDUTPA claim substantially predominates over his
FLSA claim and that the Court consequently has discretion to decline supplemental
jurisdiction, the Court further finds that equitable considerations do not counsel in favor
of the exercise of jurisdiction. It is still early in the proceedings and neither Vazquez nor
the putative class members will be prejudiced should the Court dismiss the FDUTPA
claim, as 28 U.S.C. § 1367(d) tolls the statute of limitations so the claim can be brought
in state court. Moreover, Florida’s state courts are well-equipped to adjudicate state law
FDUTPA class actions such as what Vazquez has asserted in this Court. Accordingly,
the Court will decline to exercise supplemental jurisdiction and will dismiss Vazquez’s
FDUTPA claim.
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B.
The IRS Claim
Next, Cory moves to dismiss Vazquez’s IRS claim for two reasons: (1) Vazquez
fails to state a claim under 26 U.S.C. § 7434, and (2) Vazquez lacks standing to bring the
claim. In his report, Magistrate Judge Smith found that the factual allegations contained
within the Amended Complaint fail to sufficiently allege Vazquez’s standing to bring the
IRS claim, and the undersigned agrees.
The Internal Revenue Code provides the following cause of action with respect to
certain documents fraudulently filed with the IRS:
If any person willfully files a fraudulent information return with
respect to payments purported to be made to any other
person, such other person may bring a civil action for
damages against the person so filing such a return.
26 U.S.C. § 7434(a) (emphasis added). As observed by the Magistrate Judge, and as
emphasized above, “the cause of action . . . belongs to the aggrieved subject of the
allegedly false information return.”
(Doc. 42, p. 10 n.4).
However, the Amended
Complaint avers that it was not Vazquez who was the subject of the information returns
Cory allegedly filed with the IRS, but a limited liability company Cory required Vazquez to
organize to receive his pay. (Doc. 28, ¶¶ 115–116). And while Vazquez might be the
sole member of this limited liability company—and therefore might have standing as a
result—the Amended Complaint’s allegations are not sufficient to establish this fact.
Accordingly, the Court finds that the IRS claim must be dismissed.
Acknowledging that the Amended Complaint’s content might not be enough to
demonstrate his standing to bring the IRS claim, Vazquez requests leave to file a Second
Amended Complaint so that he can either add the limited liability company as a plaintiff
to pursue the claim or state additional allegations showing that he has the legal authority
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to pursue the IRS claim as the company’s sole member. Since the pleading deadline had
not yet passed when Vazquez made his request, the Court will grant leave to amend.
C.
The Motion to Certify Class Action
As a final matter, Vazquez has filed a motion to certify his FDUTPA and IRS claims
as class actions pursuant to Rule 23. In light of the Court’s decision to dismiss both
claims, the Court will also deny the motion to certify at this juncture. Vazquez will be
permitted to renew his motion to certify following the filing of his Second Amended
Complaint. See M.D. Fla. R. 4.04(c) (authorizing the Court to postpone the certification
of a class pending the resolution of other preliminary procedures or as the Court finds
appropriate given the circumstances of the case).
IV.
CONCLUSION
For the aforementioned reasons, it is ORDERED AND ADJUDGED as follows:
1. Plaintiff’s Partial Objection to the Report and Recommendation on
Defendant’s Motion to Dismiss (Doc. 48) is OVERRULED.
2. Defendant’s Objections to Magistrate Judge’s Report and Recommendation
(Doc. 49) are OVERRULED AS MOOT.
3. The Magistrate Judge’s November 10, 2016 Report and Recommendation
(Doc. 42) is ADOPTED IN PART and incorporated into this Order to the
extent the Magistrate Judge recommends dismissing Count IV for lack of
standing.
4. Defendant’s Motion to Dismiss First Amended Complaint (Doc. 31) is
GRANTED IN PART. Count IV of Plaintiff’s First Amended Complaint is
DISMISSED WITHOUT PREJUDICE due to Plaintiff’s lack of standing.
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5. The Court declines to exercise supplemental jurisdiction over Count II of
Plaintiff’s First Amended Complaint.
Count II is therefore DISMISSED
WITHOUT PREJUDICE with leave for Plaintiff to file his claim in state court
as permitted by 28 U.S.C. § 1367(d).
6. Plaintiff’s Motion for Rule 23 Class Certification (Doc. 32) is DENIED
WITHOUT PREJUDICE.
7. Plaintiff has fourteen (14) days from the date of this Order to file a Second
Amended Complaint which fixes the deficiencies resulting in the dismissal
of Count IV. Plaintiff has fourteen (14) days from the filing of his Second
Amended Complaint to renew his motion to certify a class action.
DONE AND ORDERED in Orlando, Florida on March 2, 2017.
Copies furnished to:
The Honorable Magistrate Judge
Counsel of Record
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