Arya et al v. Taxak et al
Filing
32
MEMORANDUM OPINION & ORDER Signed by Senior Judge Thomas B. Russell on 11/17/2017 denying 15 Motion to Dismiss for Failure to State a Claim; denying 16 Motion to Dismiss for Failure to State a Claim cc: Counsel(KJA)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
CIVIL ACTION NO. 3:17-CV-032-TBR
MEENU ARYA, ET AL.
PLAINTIFF
v.
AJAY TAXAK, ET AL.
DEFENDANTS
MEMORANDUM OPINION AND ORDER
This matter is before the Court on two pending motions.1 First, Defendants AU Infotech,
LLC, AU Wholesale, LLC, and Ajayupu, LLC (“the Ajay Defendants”) filed a Motion to
Dismiss for Failure to State a Claim pursuant to Federal Rule of Civil Procedure 12(b)(6), [R.
15.], which incorporated the arguments from Ajay Taxak’s Motion to Dismiss, [R. 11]. Second,
Defendants Sanjay Taxak, Dakshin South Indian Restaurant, Fateh Imports, Inc., Indra
International, Subzi Mandi, Midwest Logistics, LLC, Samayra, Inc., Sanprit Resources, Inc.,
Swades, LLC, Taxak University, Taxak's Gasoline, LLC, Yoway, LLC, and Zayka Foods, LLC
(“the Sanjay Defendants”) filed a Partial Motion to Dismiss for Failure to State a Claim pursuant
to Rule 12(b)(6). [R. 16.] Fully briefed, this matter is now ripe for adjudication. For the reasons
stated herein, the Ajay LLC Defendants’ Motion to Dismiss for Failure to State a Claim, [R. 15.],
is DENIED, and the Sanjay Defendants’ Partial Motion to Dismiss for Failure to State a Claim,
[R. 16.], is DENIED.
BACKGROUND
This case involves the story of three Indian immigrants and their journey to start a new
life in America. The Plaintiffs allege that what looked like an encouraging opportunity at first,
1
As previous arguments were incorporated into the most recent motions to dismiss, the Court has considered all
arguments from the previous motions in its ruling.
1
revealed itself to be a trap involving unpaid labor and broken promises. The defendants deny
these allegations.
A. Plaintiff Hooda Moves to the United States
The factual allegations as set out in the Amended Complaint, [R. 12 (Amended
Complaint)], and taken as true are as follows. See Total Benefits Planning Agency, Inc. v.
Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citing Great Lakes Steel v.
Deggendorf, 716 F.2d 1101, 1105 (6th Cir. 1983)). In December of 2009, Sanjay Hooda
(“Hooda”) fled to the United States due to a rising tide of violence surrounding political conflict
in his home of Haryana, India. [R. 12 at 6.] He briefly settled in Philadelphia, Pennsylvania,
where he was put into contact with Ajay Taxak (“Ajay”), another former citizen of Haryana. [Id.]
Plaintiffs state that in November of 2010, Ajay told Hooda over the phone that he could
accommodate Hooda with a good job, room and board, and legal assistance with his immigration
status if Hooda moved to Louisville, Kentucky, where Ajay resided. [Id.] Plaintiffs allege that
shortly after that phone conversation, Ajay promised that if Hooda loaned him $1,500, Ajay
could arrange the job, housing, and legal assistance discussed earlier, and he would repay Hooda
once he arrived in Louisville. [Id.] Thereafter, Hooda wired the money to Ajay, and, in January
2011, Hooda moved to Louisville. [Id.]
After arriving in Louisville, Hooda met Ajay’s brother, Sanjay Taxak, and accepted a job
at one of the Taxak family’ businesses, the Subzi Mandi grocery store. [Id. at 7.] Plaintiffs assert
that the job was to pay a rate of approximately $1,600 per month, along with room and board and
legal immigration assistance. [Id.] Plaintiffs claim that after he accepted the job, Ajay collected
Hooda’s identification-related documentation and the rest of his money, $1,400, explaining that
he would keep them safe. [Id.]
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B. Hooda’s Housing
Plaintiffs describe Hooda’s initial housing as an unfurnished back-room of the restaurant,
which he shared with eleven other workers. [Id. at 8.] Around 2013, Plaintiffs allege that the
Taxak brothers moved Hooda and the other workers to a small house across the street from the
grocery where he shared a room with an abusive roommate. [Id.] Furthermore, they state that
eight to eleven people lived in the house at various times. [Id.]
C. Hooda’s Work Schedule and Conditions
Plaintiffs state that from January 2011 until about June 2011 Hooda worked
approximately 98 hours per week; from July 2011 to October 2013 he worked approximately 85
hours per week; and from November 2013 until June 2014 he worked approximately 80 hours
per week. [Id. at 10.] Plaintiffs allege that all three of these periods involved long hours with
only one fifteen minute break per day. [Id. at 9-11.] Furthermore, Hooda was supposed to have
Mondays off, but he was often forced to work at one of the other Taxak family ventures,
including the family farm. [Id.] Plaintiffs state that Hooda suffers from back pain, but he was
consistently denied further breaks by the Taxak brothers. [Id. at 11.] Also, Plaintiffs maintain
that the Taxaks kept the store at unbearably cold temperatures, and Sanjay threatened to punish
and beat Hooda if he used the heater. [Id.] Allegedly, this caused Hooda to become ill, which the
Taxak brothers refused to accept as an excuse for him not to work. [Id.] Plaintiffs assert that
Sanjay intimidated and threatened Hooda frequently, and Hooda witnessed him follow through
on these threats with co-workers. [Id. at 14.] Plaintiffs allege that Sanjay prevented Hooda from
taking another job in 2013 at a gas station by threatening the owner. [Id. at 12-13.]
D. Hooda’s Compensation
3
Overall, Plaintiffs assert that the wages paid to Hooda were significantly below the
amount required by federal and Kentucky minimum wage laws. [Id. at 12.] Plaintiffs claim that
Hooda was not paid until June of 2011. [Id. at 11.] Allegedly he was paid $1,600 per month for
June and July of 2011, but he did not receive payment for the month of August. [Id.] From
August onward, Plaintiffs state that Hooda’s wages steadily increased to where he was paid
$2,500 per month from March 2014 through June 2014. [Id. at 11-12.] Plaintiffs allege that the
Defendants never provided Hooda with back pay for missing wages, never gave Hooda pay
records, failed to post notices describing state and federal wage laws in the grocery or the
restaurant, and refused to pay Hooda back the $2,900 initially taken from him. [Id. at 12.]
Furthermore, Plaintiffs maintain that, despite Hooda’s inquiries, Sanjay only took Hooda to see a
lawyer once and to one or more court dates, but the lawyer eventually stopped representing
Hooda due to Sanjay not paying him or bringing Hooda to their meetings. [Id. at 13.] Allegedly,
Ajay told Hooda he would be arrested for his immigration status if he tried to report the
defendants to law enforcement authorities. [Id. at 12.]
E. Plaintiffs Meenu and Narender Arya Move to the United States
What started as a temporary visit to the United States for Meenu and Narender Arya in
April of 2013, allegedly ended as a permanent re-location to Louisville when Sanjay offered the
couple employment at his restaurant, Dakshin. [Id. at 14]. Plaintiffs state that Sanjay promised
them a wage of $600 per week, lodging, food, and immigration legal assistance. [Id. at 14-15.]
The Aryas accepted his offer. [Id.]
F. The Aryas Housing
Plaintiffs state that the Aryas moved into the same small, unfurnished house as Hooda.
[Id.] Plaintiffs allege that it was an unsafe and hostile environment, especially once Meenu
4
became pregnant in February of 2014. [Id. at 15.] It was around this same time that the Plaintiffs
recall Sanjay collected their passports so the attorney he was to hire for them could process their
immigration paperwork. [Id.] Plaintiffs claim that Sanjay never hired legal assistance to represent
the Aryas as he promised. [Id at 19.]
Eventually, around March or April of 2014, the Plaintiffs allege that the unhealthy living
conditions in the house caused the Aryas to feel like they could no longer live there. [Id. at 19.]
When they confronted Sanjay about it, he allegedly refused to help them re-locate and threatened
to physically harm Narender if he complained again. [Id.]
G. The Aryas’ Work Schedule and Conditions
Similar to Hooda, the Plaintiffs describe the Aryas’ weekly schedule as a six day work
week consisting of long hours and few breaks. [Id. at 16.] The Plaintiffs state that the typical
work day consisted of a first shift from 10:00 A.M. to 2:30 P.M., followed by a second shift that
would last from 4:45 P.M. to between 10:00 and 11:00 P.M., but sometimes 12:30 or 1:00 A.M.
if they had to cook for the other workers. [Id.] Plaintiffs allege that they were not permitted to
take time off work, even in circumstances where they needed to see a doctor due to illness. [Id. at
17.] They claim that Sanjay told them to keep working or they would never get immigration
assistance. [Id.] Plaintiffs also allege that Sanjay regularly observed the workers at the restaurant,
and he was verbally abusive toward the Aryas on these occasions. [Id.]
H. The Aryas’ Compensation
The Plaintiffs allege that the wages the Aryas received fall significantly below what is
required under federal and Kentucky minimum wage laws. [Id. at 20.] Furthermore, they claim
that the Aryas did not receive compensation for their first month of work in December 2013. [Id.
at 17.] When they asked for payment, the Plaintiffs allege that Sanjay lied to the Aryas, saying
5
that this was a “trial period,” and their wages were going toward housing, food, taxes, and
immigration lawyers (which were never hired). [Id. at 18.] Allegedly, from January 2013 to April
2014, Sanjay paid Meenu approximately $1,200 per month, which would be less than the law
requires, as well as what was promised. [Id.] Plaintiffs state that Narender received twenty to
fifty dollars in tips each day, but these were unfairly distributed among employees. [Id. at 18-19.]
Allegedly, the Aryas confronted Sanjay several times about his failure to pay what he
promised and the uneven distribution of tips. [Id. at 19.] They recall that Sanjay replied with the
familiar excuse that he was using that money to pay taxes and immigration attorneys. [Id.]
Plaintiffs claim that by May and June of 2014, Sanjay stopped paying them entirely. [Id.]
I. Plaintiffs Leave Louisville
On June 26, 2014, Plaintiffs state that Narender once again confronted Sanjay about the
payment of wages, legal assistance, and the abusive behavior of Hooda’s roommate. [Id. at 20.]
Allegedly, Sanjay swore at Narender and accused him of asking too many questions. [Id.] When
Narender told Sanjay not to swear at him, Plaintiffs allege that Sanjay dragged Narender by the
collar through the restaurant and hit him in the neck. [Id.] The Plaintiffs recall that the next day
they tried, unsuccessfully, to contact Sanjay for the return of their passports. [Id.] They claim
that when the Aryas arrived at the restaurant they were met by Sanjay’s nephew, Singh, who
physically beat Narender while scolding him for talking to Sanjay disrespectfully and asking so
many questions. [Id.] Plaintiffs further allege that when the visibly pregnant Meenu yelled at him
to stop, Singh shoved her to the floor and tried to kick her in the abdomen but was blocked by
Narender. [Id. at 21.] Plaintiffs state that Hooda was working that morning and tried to intervene,
but backed off when Singh threatened to beat him up too. [Id. at 21.]
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Plaintiffs allege that Sanjay acknowledged the fact that he had his nephew attack them.
[Id.] They state that Sanjay then returned the Aryas’ passports and threatened that he would
break their hands and legs if he saw them again. [Id.] Plaintiffs claim that Sanjay also showed
Hooda his gun and threatened to shoot him. [Id.] Plaintiffs recall that Hooda then called a friend
who took the Aryas to the hospital so they could have their injuries treated, which is where they
filed a police report. [Id.] Allegedly, the Aryas then left for Chicago, but Hooda remained in
Louisville in order to retrieve his passport, immigration documentation, and money from Sanjay.
[Id. at 22.] Plaintiffs allege that Sanjay told Hooda he did not have his documentation and he
would break Hooda’s legs if he ever saw him again. [Id.] Allegedly, Hooda then left Louisville
and joined the Aryas in Chicago. [Id.]
On April 10, 2017, Plaintiffs filed the Amended Complaint, which contains fourteen
causes of action involving minimum wage and overtime compensation violations, a human
trafficking violation, promissory estoppel, quantum meruit, unjust enrichment, fraud, intentional
interference with a prospective contractual relation, and conversion. [R. 12.] The following
month, the Ajay LLC Defendants and the Sanjay Defendants filed a Motion to Dismiss, [R. 15],
and a Partial Motion to Dismiss, [R. 16], respectfully.
STANDARD
A complaint must contain “a short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). In order to survive a motion to dismiss under
Rule 12(b)(6), a party must “plead enough ‘factual matter’ to raise a ‘plausible’ inference of
wrongdoing.” 16630 Southfield Ltd. P'ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 504 (6th Cir.
2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A claim becomes plausible “when
the plaintiff pleads factual content that allows the court to draw the reasonable inference that the
7
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 556 (2007)). When considering a Rule 12(b)(6) motion to dismiss, the
Court must presume all of the factual allegations in the complaint are true and draw all
reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc.,
552 F.3d at 434 (citing Great Lakes Steel, 716 F.2d at 1105). “The court need not, however,
accept unwarranted factual inferences.” Id. (citing Morgan v. Church’s Fried Chicken, 829 F.2d
10, 12 (6th Cir. 1987)). Should the well-pleaded facts support no “more than the mere possibility
of misconduct,” then dismissal is warranted. Iqbal, 556 U.S at 679. The Court may grant a
motion to dismiss “only if, after drawing all reasonable inferences from the allegations in the
complaint in favor of the plaintiff, the complaint still fails to allege a plausible theory of relief.”
Garceau v. City of Flint, 572 F. App’x. 369, 371 (6th Cir. 2014) (citing Iqbal, 556 U.S. at 677–
79).
DISCUSSION
In their Amended Complaint, Plaintiffs assert fourteen causes of action. [R. 12]. The
Court will address each in turn, weighing them against the standard articulated above. However,
first, the Court will address the introductory arguments surrounding the claims against different
entities that involve the defendants.
I.
Legal Entity Issues
A. “Subzi Mandi” and “Dakshin South Indian Restaurant”
Both defendants argue that neither Subzi Mandi nor Dakshin South Indian Restaurant are
legal entities, therefore, they cannot be sued. [See R. 11-1 at 1-2 (Ajay Motion to Dismiss); R.
16-1 at 3 (Sanjay Motion for Partial Dismissal).] However, neither defendant provides
8
documentation to support this accusation.2 The Court acknowledges the array of case law
supplied by the Sanjay Defendants. [R. 16-1 at 3]. However, this precedent cannot be applied
without evidence that these businesses are not registered as legal entities. Otherwise, at this stage
in the litigation, the Court must presume that the factual allegations in the complaint are true, i.e.,
that both businesses are legal entities that employed the Plaintiffs. See Total Benefits Planning
Agency, Inc., 552 F.3d at 434.
B. Entity Defendants
The Sanjay Defendants also assert that the Plaintiffs’ claims against the entities owned by
Sanjay (“Entity Defendants”) should be dismissed as improperly pled due to the Plaintiffs’ “mere
speculation” that they are entitled to recover from one of the defendants. [R. 21 at 2 (Sanjay’s
Reply).] However, in their Amended Complaint, the Plaintiffs stated the connection of the Entity
Defendants to Sanjay, as well as how the Entity Defendants were involved in the first, second,
third, fourth, eighth, ninth, tenth, and eleventh causes of action. [See R. 12 at 5, 22-28, 30-33.]
The Court holds that these statements raise a “‘plausible’ inference of wrongdoing.” Iqbal, 556
U.S. at 678. Therefore, the Plaintiffs have satisfied their pleading burden at this stage of the
litigation.
II.
First Cause of Action: FLSA Violations (Hooda3 Against All Defendants)4
The policy underlying the Fair Labor and Standards Act (FLSA) is that Congress wished
to remedy “labor conditions detrimental to the maintenance of the minimum standard of living
necessary for health, efficiency, and general well-being of workers.” 29 U.S.C. § 202(a).
2
Ajay cited to a “Kentucky Secretary of State report,” [R. 11-1 at 2], but did not attach it to his memorandum nor
did he give the Court an alternative avenue by which to locate the document.
3
Presuming “all of the factual allegations in the complaint are true,” the Court will refer to this defendant as Sanjay
Hooda (“Hooda”). Total Benefits Planning Agency, Inc., 552 F.3d at 434.
4
It should be noted that the Plaintiffs clarified that Hooda’s claim under the FLSA is in relation to his work at the
grocery and the Aryas’ claim under the FLSA is in relation to their work at the Dakshin restaurant. [See R. 20 at 6.]
9
Pertinent to this case, the FLSA requires “employers to pay employees engaged in commerce a
wage consistent with the minimum wage established by the Act, [29 U.S.C.] § 206(a), and
‘provides that employers may not require employees to work more than forty hours per
workweek unless those employees receive overtime compensation at a rate of not less than oneand-one half times their regular pay.’” Ellington v. City of East Cleveland, 689 F.3d 549, 552
(6th Cir. 2012) (quoting Baden–Winterwood v. Life Time Fitness, Inc., 566 F.3d 618, 626 (6th
Cir. 2009)).
In the first cause of action, the Plaintiffs assert that all of the defendants willfully violated
the FLSA by failing to pay Hooda the applicable minimum wage for every compensable hour of
labor performed, including overtime wages, and failing to post a notice explaining the FLSA in a
conspicuous place where employees could see it. [See R. 12 at 23 (citing 29 U.S.C. §§ 206(a)
and 207(a) and 29 C.F.R. § 516.4).]
A. Ajay as “Employer”
The Ajay Defendants argue that the first count, as well as others, must fail because Ajay
was not an “employer” of Hooda, as required under the FLSA, 29 U.S.C. § 203. [R. 11-1 at 3.]
The FLSA defines “employer” as “any person acting directly or indirectly in the interest of an
employer in relation to an employee and includes a public agency, but does not include any labor
organization (other than when acting as an employer) or anyone acting in the capacity of officer
or agent of such labor organization.” 29 U.S.C.A. § 203. To determine whether someone is an
“employer” under the FLSA, the Sixth Circuit uses the “economic reality test” in a case-by-case
approach. See Ellington, 689 F.3d at 555. As quoted by the Plaintiffs, the Sixth Circuit stated that
the Court may consider relevant factors involving the “circumstances of the whole business
activity,” including:
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whether the plaintiff is an integral part of the operations of the putative employer;
the extent of the plaintiff's economic dependence on the defendant; the
defendant's ‘substantial control of the terms and conditions of the work’ of the
plaintiff; the defendant's authority to hire or fire the plaintiff; and whether the
defendant maintains the plaintiff's employment records and establishes the rate
and method of payment.
Id. (citations omitted). In the Amended Complaint, the Plaintiffs allege that Ajay offered
Hooda a job, [See R.12 at 6-7], that Ajay and Sanjay controlled the terms and conditions
of Hooda’s work at the store, [Id. at 10-11], and that Ajay and Sanjay each had authority
over Hooda’s compensation, [Id. at 11-12]. Without further evidence from the
Defendants, the Court must presume the factual allegation in the Amended Complaint,
that Ajay was Hooda’s employer, is true.
B. Statute of Limitations
The Sanjay Defendants argue that the Plaintiffs’ claims for unpaid wages and overtime
pay based on events preceding January 18, 2014 must be at least partially time barred under the
three-year statute of limitations of the FLSA. [R. 16-1 at 4.] They reason that due to the fact that
the Plaintiffs filed their Complaint on January 18, 2017, any conduct pre-dating January 18, 2014
is time-barred. [Id.] The timeline alleged by the Plaintiffs in their Amended Complaint involves
conduct that falls both before and after the Sanjay Defendants’ deadline. [See R. 12.]
Both the Sanjay Defendants and the Plaintiffs cite to the Sixth Circuit’s holding in
Michalak v. LVNV Funding on this subject. In Michalak, the defendant filed a motion to dismiss
a class action complaint accusing them of issuing improper dunning letters under the Fair Debt
Collection Practices Act (“FDCPA”). 604 F. App’x 492, 493 (6th Cir. 2015). There, the Sixth
Circuit stated that although a Rule 12(b)(6) motion is generally an “‘inappropriate vehicle’ for
dismissing a claim based upon a statute of limitations . . . Dismissal can be appropriate, though,
if the ‘allegations in the complaint affirmatively show that the claim is time-barred.’” Id. (first
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citing Lutz v. Chesapeake Appalachia, L.L.C., 717 F.3d 459, 464 (6th Cir. 2013); then quoting
Cataldo v. U.S. Steel Corp., 676 F.3d 542, 547 (6th Cir. 2012)). The Sixth Circuit held that
although some of the dunning letters fell outside the statute of limitations, the court could infer
that the plaintiff received at least one dunning letter within the correct time period. Id. at 494.
The court stated that the defendant did not establish its affirmative defense as to all of the
letters.5 Id. Therefore, the Sixth Circuit reversed the lower court’s decision to grant the motion to
dismiss. Id.
Here, the Plaintiffs state in the Amended Complaint that Hooda worked for low to nonexistent wages from January 2011 to June 2014, [R. 12 at 10-12], and the Aryas did the same
from December 2013 to June 2014, [Id. at 17-19]. Clearly, portions of both of these time periods
fall outside the statute of limitations put forth by the defendants. However, as in Michalak, this
statute would only bar recovery for a portion of the dates specified under the claim, not the entire
claim itself. See 604 F. App’x at 494. In other words, the Plaintiffs did not affirmatively plead
themselves out of court because the claim is not fully barred by the statute of limitations. The
Court will save arguments and presentation of evidence over appropriate damages regarding the
applicable dates for another day. For now, the claim survives dismissal.
III.
Second Cause of Action: FLSA Violations (The Aryas Against Sanjay Taxak, the
Dakshin, the Corporation Defendants, and the Sanjay Taxak LLC Defendants)
In the second cause of action, the Plaintiffs assert that the specified defendants willfully
violated the FLSA by failing to pay the Aryas the applicable minimum wage for every
compensable hour of labor performed, including overtime wages, and failing to post a notice
5
It should be noted that, under the FDCPA, “each dunning letter may constitute a separate violation of the FDCPA.”
Michalak, 604 F. App'x at 493.
12
explaining the FLSA in a conspicuous place where employees could see it. [See R. 12 at 23
(citing 29 U.S.C. §§ 206(a) and 207(a) and 29 C.F.R. § 516.4).]
The same analysis concerning the statute of limitations described previously in relation
to Hooda applies to the Aryas. Therefore, the Aryas claim under the second cause of action
survives dismissal.
IV.
Third Cause of Action: Kentucky Minimum Wage and Overtime Compensation
Violations (Hooda Against All Defendants)
Similar to the FLSA, the Kentucky Wage and Hours Act (“KWHA”) ensures that
employers pay their workers the wages and overtime pay they deserve. The Plaintiffs allege
violations of several different sections of the KWHA, including failure to pay all wages due to
Hooda, failure to pay overtime, illegal deduction of wages, failure to furnish Hooda with a
statement of wage deductions, failure to pay minimum wages, failure to give a rest period of at
least ten minutes during each four hours worked, and failure to post an explanation of employee
rights. [See R. 12 at 25-28 (citing K.R.S. §§ 337.020, 337.055, 337.050, 337.060, 337.060,
337.070, 337.275, 337.365, and 337.325).] KWHA claims are governed by a five-year statute of
limitations. K.R.S. § 413.120(2).
A. Statute of Limitations
Similar to the claim under the FLSA, the defendants argue that Hooda cannot recover
damages for any alleged unpaid wages for the period of June 2011 through January 17, 2012 due
to the five-year statute of limitations. [See R. 16-1 at 6.] As with the FLSA statute of limitations
argument, the Court finds that, at least at this stage in the proceedings when the Court must
accept the factual allegations of the complaint as true, the Plaintiffs’ claim is not completely
barred by the statute of limitations under the KWHA. Therefore, the claim survives dismissal.
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B. K.R.S. § 337.325
Section 337.325 of the Kentucky Revised Statutes requires employers to post “summaries
of wage and hour laws and regulations issued under K.R.S. 337.295” in a conspicuous and
accessible place where employees can see it. K.R.S. § 337.325. The Sanjay Defendants
originally argued that the claim concerning rest breaks under K.R.S. § 337.65, as well as the
claim concerning failure to post a notice under K.R.S. § 337.325, fell “outside of the express
listing of those sections for which employees may recover under the Wage and Hour Act.” [R.
16-1 at 5-6.] The Plaintiffs responded by arguing that they did “have standing to pursue recovery
of damages from Defendants’ violation of the rest period and notice requirements in K.R.S. §§
337.365 and 337.325.” [R. 20 at 9.] In their Reply, the Sanjay Defendants concede that “actions
may be brought based on Plaintiffs’ rights to not miss rest or meal breaks” based on England v.
Advance Stores Co., which served as the cornerstone of the Plaintiffs’ argument in their
Response. [R. 21 at 3 (citing England v. Advance Stores Co., 263 F.R.D. 423, 441 (W.D. Ky.
2009)).] Notably, the Sanjay Defendants did not specifically respond to the Plaintiffs’ argument
regarding the notice requirements. At this stage in the proceedings, the Court must draw all
reasonable inferences in favor of the Plaintiffs. With no further argument from the defense, the
Court will allow the claim to survive dismissal.
C. K.R.S. § 337.060
Section 337.060 of the Kentucky Revised Statutes provides that “[n]o employer shall
withhold from any employee any part of the wage agreed upon.” K.R.S. § 337.060. The Sanjay
Defendants argue that this statute does not apply to Hooda because it governs employees who
receive gratuities, and Hooda never received gratuities as an employee of the grocery store. [R.
16-1 at 6.] The Plaintiffs disagree, stating that the statute is not limited to governing gratuities.
14
[R. 20 at 9.] Judging from the plain language of the statute, the Court agrees with the Plaintiffs.
Furthermore, the Western District of Kentucky has previously allowed claims under K.R.S. §
337.060 in cases involving professions that did not receive gratuities. See, .e.g., Keys v.
Monument Chemical Kentucky, LLC, No. 3:15-CV-645-DJH, 2017 WL 2196751, at *6 (W.D.
Ky. 2017) (involving wages for four unused sick days by a plaintiff that worked as a production
shift supervisor at a chemical plant); Coleman v. FedEx Ground Package System, Inc., No. 3:05CV-522-H, 2012 WL 2407538, at *2-3 (W.D. Ky. 2012) (involving claims concerning wage
deduction from plaintiffs that worked at FedEx Ground). Therefore, the Court denies the Sanjay
Defendants’ argument for dismissal of this claim.
D. Ajay as “Employer”
Similar to the FLSA claims, the Ajay Defendants argue that this claim must fail because
Ajay was not an “employer” of Hooda as defined under K.R.S. § 337.010(1)(d). [R. 11-1 at 3.]
That section defines an “employer” as “any person, either individual, corporation, partnership,
agency, or firm who employs an employee and includes any person, either individual,
corporation, partnership, agency, or firm acting directly or indirectly in the interest of an
employer in relation to an employee.” K.R.S. § 337.010(1)(d). As previously discussed, the
Plaintiffs alleged in their Amended Complaint that Ajay offered Hooda a job, [See R.12 at 6-7],
that Ajay and Sanjay controlled the terms and conditions of Hooda’s work at the store, [Id. at 1011], and that Ajay and Sanjay each had authority over Hooda’s compensation, [Id. at 11-12].
Because the language of “acting directly or indirectly in the interest of an employer in relation to
an employee” in this Kentucky statute is identical to that of the FLSA, the Court will make the
same determination. At this stage in the proceedings, the Court must accept the factual
allegations in the complaint as true, including the allegation that Ajay was Hooda’s employer.
15
V.
Fourth Cause of Action: Kentucky Minimum Wage and Overtime
Compensation Violations (The Aryas Against Sanjay Taxak, the Dakshin, the
Corporation Defendants, and the Sanjay Taxak LLC Defendants)
The Court holds that the Aryas claim under the KWHA in the fourth cause of action
survives dismissal for the same reasons articulated above.
VI.
Fifth Cause of Action: Kentucky Human Trafficking Violation (All Plaintiffs
Against Sanjay Taxak and Ajay Taxak)
Human trafficking is defined under K.R.S. § 529.010(5)(a) as “criminal activity whereby
one (1) or more persons are subjected to engaging in: (a) forced labor services.” K.R.S. §
529.010(5)(2). Besides alleging that Sanjay and Ajay were engaged in human trafficking,
Plaintiffs also argue that they are entitled to punitive damages under K.R.S. § 337.385(3), which
states:
If the court finds that the employer has subjected the employee to forced labor or
services as defined in KRS 529.010, the court shall award the employee punitive
damages not less than three (3) times the full amount of the wages and overtime
compensation due, less any amount actually paid to such employee by the
employer, and for costs and such reasonable attorney's fees as may be allowed by
the court, including interest thereon.
K.R.S. § 337.385(3).
A. Ajay as “Employer”
In moving to dismiss the claim, the Ajay Defendants revive their argument from
the first cause of action that the allegation of human trafficking must fail because Ajay
was not an employer of Hooda.6 [R. 11-1 at 3.] Even if human trafficking laws require
the same type of employment relationship as required by federal and state minimum
6
Contrary to Ajay’s characterization, [See R. 11-1 at 3], the Plaintiffs imply in their Response that Counts 1, 3, 5, 8,
and 10 concern the employer-employee relationship between the Ajay Defendants and Hooda, not the Ajay
Defendants and the Aryas, [See R. 19 at 3].
16
wage laws,7 the Court stands beside its analysis from the first cause of action and, at least
at this stage of the proceedings, presumes the factual allegation in the complaint to be
true that Ajay was Hooda’s employer.
B. Statute of Limitations
The Sanjay Defendants argue that Hooda’s claim of human trafficking must be
dismissed because it is based on Ajay allegedly taking his identification-related
documentation in 2011, which is beyond the five-year statute of limitations. [See R. 16-1
at 7.] The Plaintiffs argue that the claim should still survive due to the alleged false
representations, forced labor, and threats of physical violence additionally stated to
support this cause of action in the Amended Complaint. [See R. 20 at 10; see also R. 12
at 28-29.] Notably, these allegations in the Amended Complaint were not accompanied
by dates that could cause them to be barred by the statute of limitations. The Court agrees
with the Plaintiffs. Even if the confiscation of the documents is barred, the Plaintiffs still
sufficiently plead a violation of the statute by alleging these other details.
VII.
Sixth Cause of action: Promissory Estoppel (Hooda Against Sanjay
Taxak and Ajay Taxak)
Under the sixth cause of action, the Plaintiffs allege that the Taxak brothers
promised but ultimately “failed to pay Hooda the full amount that was promised, failed to
provide safe and habitable housing, and failed to procure the promised legal services.”
[R. 12 at 29.] Both sets of defendants argue that this claim is untimely and should be
barred by the five-year statute of limitations.
7
The Court acknowledges the Plaintiffs’ argument that the Ajay Defendants failed to cite case law supporting the
notion that Kentucky human trafficking laws entail the same type of employment relationship required by federal
and state minimum wage laws. [See R. 19 at 3.] However, it is not necessary for the Court to address this issue at
this time because, even if it does require such a relationship, the Court has already stated that, in accordance with
Rule 12(b)(6), it must accept that Ajay was Hooda’s employer at this time.
17
The Sanjay Defendants argue that the brothers’ promises to Hooda, on which he
relied in taking the job, occurred in 2011. [R. 16-1 at 7-8.] Therefore, they claim the
promissory estoppel claim is barred under the five-year statute of limitations. [Id.] The
Plaintiffs respond that a promissory estoppel claim does not begin to accrue until there is
a breach of the promise. [R. 20 at 11 (citing Ronald Eades, KENTUCKY LAW OF DAMAGES
§ 12:14 (March 2017)).] The Court agrees with the Plaintiffs. The Sixth Circuit has
stated: “Usually an action accrues at the time of infliction of a wrong or breach of a
contract.” Willits v. Peabody Coal Co., 188 F.3d 510, at *12 (6th Cir. 1999) (quoting
Hoskins' Adm'r v. Kentucky Ridge Coal Co., 305 S.W.2d 308, 311 (Ky. 1957)). At this
point in the litigation, the Court must presume the Plaintiffs’ claim that the alleged breach
of promise to Hooda occurred in 2014 to be true. Thus, the claim is not barred by the
statute of limitations at this time. [See R. 12 at 22.]
The Ajay Defendants also argue that the claim should be barred by the five-year
statute of limitations but under different reasoning. [R. 11-1 at 4-5.] Unlike the Sanjay
Defendants, the Ajay Defendants acknowledge that an action for promissory estoppel
accrues at the time of the breach of the promise. [R. 11-1 at 4.] However, the Ajay
Defendants argue that the breach of promise occurred in January 2011 when the
defendants allegedly did not pay the promised $1600 monthly wages, not in 2014. [Id.
(citing R. 1 at 23, ¶ 179).] However, the portion of the Complaint cited by the Ajay
Defendants does not mention the breach of a promise, it merely states:
Also as set forth above, the Taxak brothers made a clear and unambiguous
promise to Plaintiff Hooda that he would be paid at least $1,600 per month, with a
raise to $1,800 per month in August 2011 and would also receive housing, food
and legal assistance with his immigration status in exchange for his labor at the
Subzi Mandi grocery store.
18
[R. 1 at 23.] The Amended Complaint alleges that “eventually” Ajay refused to pay
Hooda the money owed, [R.12 at 12], and, in June 2014, Sanjay refused to return
Hooda’s passport, immigration documentation, and money owed, [Id. at 22]. At this stage
in the litigation, the Court must presume all of the factual allegations in the complaint are
true. Therefore, the claim survives dismissal.
VIII. Eighth and Tenth Causes of Action8: Quantum Meruit and Unjust
Enrichment (Hooda Against All Defendants)
A. Statute of Limitations
The Sanjay Defendants argue that the Plaintiffs’ claims for both quantum meruit
and unjust enrichment should be barred by a five-year statute of limitations. [See R. 16-1
at 8.] Once again, this is based on the reasoning that Hooda should not be able to recover
damages for any work performed from 2011 through January 17, 2012. [Id.] Neither
party makes arguments as to what specific occurrence would cause the statute of
limitations to start accruing for either action. Therefore, as previously stated, the Court
finds that these earlier dates do not completely bar the claim, and the Court will save
argument over the amount of damages concerning the dates that allegedly fall outside the
statute of limitations for another day.9
B. Ajay as “Employer”
The Court stands by its previous explanation for accepting the factual allegation
in the complaint that Ajay was Hooda’s employer.10
IX.
Twelfth Cause of Action: Fraud (Hooda Against Ajay Taxak)
8
None of the defendants challenge the seventh cause of action.
As explained by the Plaintiffs, the Aryas did not accept employment at the restaurant until November 2013. [R. 12
at 31.] Therefore, their claims fall after the 2011 to January 2012 window of time the Sanjay Defendants reference in
their argument, and counts nine and eleven are not barred by the statute of limitations.
10
See previous discussion from the first and fifth causes of action for further detail.
9
19
The Plaintiffs plead a claim for fraud based on representations made by Ajay that
caused Hooda to relinquish a total of $2,900, his passport, and immigration documents to
Ajay. [R. 12 at 33-34.] Ajay misread the claim and argued in his original Motion to
Dismiss that the claim for fraud is solely based on Ajay’s initial phone conversation with
Hooda in November 2010. [R. 11-1 at 5.] Ajay did not correct this misconception in his
subsequent Motion to Dismiss after the Plaintiffs filed their Amended Complaint. [See
generally R. 15.] At this stage in the litigation, the Court must accept the allegations by
the Plaintiffs in the Amended Complaint to be true, and, therefore, Ajay’s arguments
concerning failure to state a claim and the statute of limitations for this cause of action
are denied.
X.
Thirteenth Cause of Action: Intentional Interference with Prospective
Contractual Relation (Hooda Against Sanjay Taxak)
The Plaintiffs assert a claim of intentional interference with prospective
contractual relation based on the allegation that after Hooda accepted a job with another
employer, Sanjay “intentionally called the prospective new employer for the purpose of
convincing the employer not to hire Hooda and to prevent Hooda from leaving his work
at the Subzi Mandi grocery store and the farm.” [R. 12 at 35.] More specifically, the
Plaintiffs allege that Sanjay “threatened the [prospective employer] to prevent Hooda
from obtaining other employment.” [R. 12 at 13.] The Sanjay Defendants argue that the
underlying tort of this claim is defamation, and, therefore, it is barred by the one-year
statute of limitations. [See R. 16-1 at 9; R. 21 at 4 (citing Ceres Protein, LLC v.
Thompson Mechanical & Design, No. 3:14-CV-00491-TBR-LLK, 2016 WL 6090966, at
*6 n.5 (W.D. Ky. 2016).] The Plaintiffs respond that Hooda has not alleged defamation
20
and, therefore, the one-year statute of limitations does not apply. [R. 20 at 13.] The Court
agrees with the Plaintiffs. The Amended Complaint does not allege defamation.11
Therefore, the one-year statute of limitations does not apply, and the Court denies the
Sanjay Defendants’ argument for dismissal.
XI.
Fourteenth Cause of Action: Conversion (Hooda Against Sanjay and
Ajay Taxak)
In the final cause of action, the Plaintiffs allege that Sanjay and Ajay committed
conversion when they wrongfully withheld Hooda’s passport, bond papers, and immigration
documentation. [See R. 12 at 35.] The Sanjay Defendants argue that the two-year statute of
limitations12 started accruing when Ajay allegedly took Hooda’s passport in 2011, and, therefore,
Hooda’s claim for conversion is barred. [See R. 16-1 at 10.] The Sixth Circuit has stated that in a
conversion claim in Kentucky, “[a] cause of action will not accrue under the discovery rule until
the plaintiff discovers or in the exercise of reasonable diligence should have discovered not only
that he has been injured but also that his injury may have been caused by the defendant's
conduct.” Madison Capital Co., LLC v. S & S Salvage, LLC, 507 F. App'x 528, 535 (6th Cir.
2012) (quoting Louisville Trust Co. v. Johns—Manville Prods. Corp., 580 S.W.2d 497, 501 (Ky.
1979)). Here, the Sanjay Defendants fail to argue when Hooda should have discovered that the
alleged conversion occurred. Therefore, the defendants have failed to convince the Court that
“the complaint still fails to allege a plausible theory of relief.” Garceau, 572 F. App’x at 371.
The Court is also unconvinced by the Plaintiffs’ argument that the conversion is a “continuing
11
This is dissimilar to the plaintiff in Ceres Protein, who alleged that the defendants contacted a potential client and
accused the plaintiff of patent infringement. See Ceres Protein, 2016 WL 6090966, at *2.
12
Ajay mistakenly cites the statute of limitations for stolen property. [R. 11-1 at 7.] In Kentucky, a claim of
conversion has a two-year statute of limitations. See Madison Capital Co., LLC v. S & S Salvage, LLC, 507 F.
App’x 528, 533 (6th Cir. 2012) (“The relevant Kentucky statute thus provides in plain language that claims of
conversion must now be initiated within two years of the accrual of the cause of action.”).
21
violation,”13 however, presuming all of the factual allegations in the complaint are true and
drawing all reasonable inferences in favor of the non-moving party, the Court will allow the
claim to survive dismissal.14
CONCLUSION
In the end, this is a Rule 12(b)(6) motion. The Court must presume all of the factual
allegations in the complaint are true and draw all reasonable inferences in favor of the nonmoving party. Essentially applying that standard at this stage of the proceedings, the Court has
denied the defendants motions. Discovery in the matter will shed more light as to the accuracy of
the allegations.
For the foregoing reasons, IT IS HEREBY ORDERED: The Ajay LLC Defendants’
Motion to Dismiss for Failure to State a Claim, [R. 15.], is DENIED. The Sanjay Defendants’
Partial Motion to Dismiss for Failure to State a Claim, [R. 16.], is DENIED.
IT IS SO ORDERED.
cc: Counsel of Record
November 17, 2017
13
The continuing violation doctrine is a narrow exception to the statute of limitations rule, and courts are hesitant to
apply it outside the Title VII context. Phat's Bar & Grill, Inc. v. Louisville-Jefferson Cty. Metro Gov't, No. 3:10-CV00491-H, 2013 WL 124063, at *3 (W.D. Ky. 2013) (citing Sharpe v. Cureton, 319 F.3d 259, 288 (6th Cir. 2003)).
Furthermore, “the acts constituting the continuing violation cannot be discrete acts or merely ‘continual ill effects
from an original violation.’” Id. at *4 (quoting Eidson v. Tennessee Dept. of Children’s Services, 510 F.3d 631, 635
(6th Cir. 2007). Here, Hooda appears to be experiencing “continual ill effects” from the original violation of the
Taxaks taking his immigration documentation. Therefore, even if the Court were to ignore precedent, the continuing
violation doctrine still might not apply to this situation.
14
The Court acknowledges the Plaintiffs’ timely reply in filing the First Amended Complaint. However, the Court
finds it unnecessary to analyze whether Ajay’s subsequent motion should be denied for being untimely because the
Court is denying the motion as it pertains to all of the Ajay Defendants.
22
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