Whyte v. PP&G Inc. et al
Filing
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MEMORANDUM. Signed by Judge William M Nickerson on 4/2/14. (mps, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
RAQIYA WHYTE
v.
PP&G, INC., et al.
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Civil Action No. WMN-13-2806
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MEMORANDUM
I.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Raqiya Whyte (“Whyte”) worked as an exotic dancer
at Norma Jean’s Nite Club from approximately September 2010
through September 9, 2013.
Norma Jean’s Nite Club is owned and
operated by Defendant PP&G, Inc. (“PP&G”), which in turn is
owned by Defendant Lisa Ireland (“Ireland”).
Plaintiff alleges
that Defendants improperly classified her as an independent
contractor, rather than an employee, and thus failed to pay her
a minimum hourly wage under the Fair Labor Standards Act, 29
U.S.C. §§ 201 et seq. (“FLSA”).
Additionally, Plaintiff
contends that she was wrongfully discharged from her employment
at Norma Jean’s when Defendants became aware of her involvement
as a witness in a similar case against PP&G previously filed in
this Court.
See Unique Butler v. PP&G, Inc., Civ. No. WMN-13-
430 (filed Feb. 8, 2013).
Plaintiff filed a Complaint against Defendants, on behalf
of herself and all others similarly situated, alleging the
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following four counts: (I) Violation of Federal Fair Labor
Standards Act – Minimum Wage; (II) Violation of Maryland Wage
Payment and Wage Collection Law; (III) Wrongful Discharge; and
(IV) Retaliation-Wrongful Discharge FLSA.
Plaintiff has since
voluntarily dismissed her collective action claims and Counts II
and III.
See ECF Nos. 17, 24, 34.
Defendant PP&G filed a
counterclaim, alleging that it had entered into a “contractual
relationship” with Plaintiff under which she “agreed to provide
entertainment services . . . solely as [an] independent
contractor[],” agreed in consideration to permit Plaintiff to
dance at Norma Jean’s and accept gratuities from customers, and
“reasonably relied on in good faith, and to their own detriment,
the representations and the promises of . . . [Plaintiff’s], to
provide entertainment services as [an] independent
contractor[].”
ECF No. 35 ¶¶ 33-36.
Based on those
allegations, PP&G asserts claims for breach of contract and
unjust enrichment.
All three parties have filed a Motion to Dismiss.
Defendant PP&G’s Motion to Dismiss, ECF No. 26, which sought
dismissal of Count III of the Complaint, is now moot, as
Plaintiff has since voluntarily dismissed Count III.
Defendant
Ireland filed a Motion to Dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6), or in the alternative, a Motion for
Summary Judgment under Rule 56, ECF No. 41, arguing that she is
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not an employer within the meaning of the FLSA.1
Last, Plaintiff
filed a Motion to Dismiss Defendant PP&G’s Counterclaim pursuant
to Federal Rule of Civil Procedure 12(b)(1), ECF No. 41, arguing
that this Court lacks subject matter jurisdiction over PP&G’s
counterclaims.2
For the reasons stated herein, the Court
determines that no hearing is necessary, Local Rule 105.6, and
both Ireland’s and Plaintiff’s Motions to Dismiss will be
denied.
I.
LEGAL STANDARD
Generally, in considering the sufficiency of a complaint to
survive a 12(b)(6) motion to dismiss, the Court considers first
whether the complaint contains “factual allegations in addition
to legal conclusions.”
Robertson v. Sea Pines Real Estate Cos.,
679 F.3d 278, 288 (4th Cir. 2012).
Specifically, a complaint
must contain “more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action,” without
“further factual enhancement,” is not enough.
Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 555, 557 (2007).
Secondly, the
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
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Ireland also asserted that Count III must be dismissed as
preempted by the FLSA. That portion of her Motion is now moot.
2
Plaintiff also filed a Motion for Leave to File her motion to
dismiss. ECF No. 40. The motion for leave will be granted.
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Twombly, 550 U.S. at 570).
In order to state a plausible claim
for relief, the factual allegations must “be enough to raise a
right to relief above the speculative level . . . on the
assumption that all the allegations in the complaint are true.”
Robertson, 679 F.3d at 288 (quoting Twombly, 550 U.S. at 555).
Although a Court is limited to the allegations in a
Complaint in ruling on a motion to dismiss, if matters outside
the pleadings are presented to and not excluded by the Court, it
may treat the motion to dismiss as a motion for summary judgment
under Federal Rule of Civil Procedure 56.
12(d).
See Fed. R. Civ. P.
The purpose of summary judgment is to dismiss claims and
defenses that lack evidentiary support.
Catrett, 477 U.S. 317, 323-24 (1986).
Celotex Corp. v.
Accordingly, the Court
will grant a motion for summary judgment if “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”
Fed. R. Civ. P. 56.
In ruling on
a motion for summary judgment, all facts and inferences will be
drawn in the light most favorable to the non-moving party.
Evans v. Techs. Applications & Serv. Co., 80 F.3d 954, 958 (4th
Cir. 1996).
In ruling on a motion to dismiss a counterclaim for lack of
subject matter jurisdiction pursuant to Federal Rule of Civil
Procedure 12(b)(1), the burden rests on the defendant/counterplaintiff to establish jurisdiction by a preponderance of the
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evidence.
Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982).
Where the factual basis for subject matter jurisdiction is
challenged, “the district court should apply the standard
applicable to a motion for summary judgment, under which the
nonmoving party must set forth specific facts beyond the
pleadings to show that a genuine dispute of material fact
exists.”
Richmond, Fredericksburg & Potomac R.R. Co. v. United
States, 945 F.2d 765, 768 (4th Cir. 1991) (citing Trentacosta v.
Frontier Pacific Aircraft Indus., 813 F.2d 1553, 1558 (9th Cir.
1987)).
II.
ANALYSIS
A. Ireland’s Motion to Dismiss
Defendant Ireland seeks dismissal of the claims against her
in their entirety, or, in the alternative, summary judgment in
her favor.
Presently pending against Ireland are Counts I and
IV of the First Amended Complaint, which each assert violations
of the FLSA.
Ireland asserts that, because she does not control
day to day operations at Norma Jean’s and does not play a role
in hiring or firing employees,3 she is not an “employer” as that
3
Although the Court recognizes that Defendants argue that
Plaintiff was an independent contractor and not an employee, the
Court will, for purposes of clarity and simplicity, refer to the
Plaintiff as an employee in its analysis of Ireland’s claims.
In so doing, it expresses no opinion as to the ultimate
disposition of Defendants’ argument on that point.
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term is defined in the FLSA, and thus cannot be held liable
thereunder.
The FLSA defines an employer, in relevant part, 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 definition of “employer” is “very broadly cast,” and, as a
result, courts have “found an employment relationship for
purposes of the Act far more readily than would be dictated by
common law doctrines.”
Shultz v. Falk, 439 F.2d 340, 344 (4th
Cir. 1971) (citations omitted).
The “determination of whether an employer-employee
relationship exists does not depend on ‘isolated factors but
rather upon the circumstances of the whole activity.’”
Gionfriddo v. Jason Zink, LLC, 769 F. Supp. 2d 880, 890 (D. Md.
2011) (quoting Rutherford Food Corp. v. McComb, 331 U.S. 772,
730 (1947)).
To determine whether an individual or entity is an
employer, courts generally look to the economic reality of the
relationship between the parties, including whether the
individual has the authority to hire and fire employees,
supervises and controls work schedules or employment conditions,
determines the rate and method of payment, and maintains
employment records.
Caseres v. S & R Mgmt. Co., Civ. No. 12-cv-
01358-AW, 2012 WL 5250561, at *3 (D. Md. Oct. 24, 2012) (quoting
Khalil v. Subway at Arundel Mills Office Park, Inc., Civ. No.
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CCB-09-158, 2011 WL 231793, at *2 (D. Md. Jan. 24, 2011)).
Courts have also looked to “the person’s job description, his or
her financial interest in the enterprise, and whether or not the
individual exercises control over the employment relationship.”
Gionfriddo, 769 F. Supp. 2d at 890.
A corporate officer may be
personally liable where he or she “exercises a high level of
control for the FLSA violations of a corporation.” See Pearson
v. Professional 50 States Protection, LLC, Civ. No. RDB-09-3232,
2010 WL 4225533, at *4 (D. Md. Oct. 26, 2010) and cases cited
therein.
The Court determines that Plaintiff’s allegations, as set
forth in her Amended Complaint, are sufficient to withstand
Ireland’s Motion to Dismiss.
Plaintiff states that Ireland is
the President of PP&G, Inc., and that her duties include
“developing the organization’s vision and implementing the
policies and procedures that allow that vision to be
accomplished.”
Am. Compl. ¶ 5.
Plaintiff also alleges that
Ireland “sets policies, and sets the direction of the company[,
including] . . . determining or calculating and approving fees
imposed upon Plaintiff as an exotic dancer.”
Id.
Moreover,
Plaintiff argues that she was informed by Walter Robinson, the
manager of Norma Jean’s, that Ireland instructed him to fire her
and ban her from the premises, thus suggesting that Ireland
exercised authority over the hiring and firing of the exotic
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dancers.
Id. at ¶ 44, 47.
The Court determines that, taken as
a whole, the allegations in the Amended Complaint, when assumed
to be true, sufficiently assert that Ireland exercised control
over Norma Jean’s and its employees to be considered an employer
under the FLSA.
Although Ireland requests that the Court consider evidence
outside the pleadings to convert the motion into one for summary
judgment, the Court declines to do so.
Although the parties
have attached the depositions of Ireland and Walter Robinson
from prior litigation, as well as an affidavit executed by
Ireland, the Court finds that the factual record is
insufficiently developed for the Court to determine whether
Ireland is entitled to judgment as a matter of law.
See
generally Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)
(noting that as a general rule, summary judgment is appropriate
only after “adequate time for discovery”).
The parties did not
produce evidence to prove or disprove many facts specific to
Plaintiff’s claim, i.e., that Ireland told Robinson that
Plaintiff was fired and banned from the club.
Additionally,
because Ireland’s status as an employer was not implicated in
the Butler action, the Court does not believe that the Butler
depositions explore sufficiently Ireland’s relationship with
PP&G to determine whether, as a matter of law, she is an
employer under the FLSA.
Accordingly, because discovery in this
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action has not commenced, and the Court believes that it is
reasonably likely that facts adduced during discovery will be
helpful in determining whether Ireland is entitled to judgment
as a matter of law, the Court declines to consider Ireland’s
motion as one for summary judgment at this time.
B. Whyte’s Motion to Dismiss
Plaintiff filed a Motion to Dismiss Defendant PP&G’s
counterclaims for breach of contract and unjust enrichment under
Federal Rule of Civil Procedure 12(b)(1), contending that this
Court does not have jurisdiction over PP&G’s counterclaims.
Specifically, Plaintiff argues that PP&G’s counterclaim is not
compulsory and is not “so related to claims in the action within
[the court’s] original jurisdiction that they form part of the
same case or controversy under Article III of the United States
Constitution.”
28 U.S.C. § 1367(a).
Plaintiff asserts that the
only link between the FLSA claims and PP&G’s counterclaims is
the parties’ employment relationship, which Plaintiff contends
is insufficient to establish jurisdiction.4
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Plaintiff also contends that PP&G is “judge shopping” by
“failing to inform this court” of a recently-filed collective
action regarding similar assertions in an action brought by a
different attorney. ECF No. 47 at 3-4. To the extent that
Defendant has an obligation to notify the Court of the
relatedness of an action, that notification is required in the
later-filed case. See Local Rule 103.1(b).
With respect to Plaintiff’s contention that PP&G’s counterclaims
are intended to “chill” participation in a “very possible”
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“In cases such as this one, where neither diversity nor
federal question jurisdiction exists over defendant’s
counterclaims, the counterclaims’ status as ‘compulsory’ or
‘permissive’ determines whether the court has jurisdiction over
them.”
Williams v. Long, 558 F. Supp. 2d 601, 602-03 (D. Md.
2008) (citing Painter v. Harvey, 863 F.2d 329, 331 (4th Cir.
1988)).
Pursuant to Federal Rule of Civil Procedure 13(a), a
compulsory counterclaim is one that, in relevant part, “arises
out of the transaction or occurrence that is the subject matter
of the opposing party’s claim,” while a permissive counterclaim
does not.
“Accordingly, a compulsory counterclaim is ‘within
the ancillary jurisdiction of the court to entertain and no
independent basis of federal jurisdiction is required.’
By
contrast, a permissive counterclaim that lacks its own
independent jurisdictional basis is not within the jurisdiction
of the court.”
Williams, 558 F. Supp. 2d at 603 (quoting
Painter, 863 F.2d at 331).
If the Court determines that a
counterclaim without an independent jurisdictional basis is
collective action and will undermine “the goals of collective
actions by increasing complexity, creating management
difficulties, fragmenting the case into several individual
disputes and discouraging participation,” ECF No. 41-1 at 12,
the Court notes at the outset that Plaintiff has dismissed her
collective action claims. Thus, the latter contentions are
irrelevant. Moreover, notwithstanding Plaintiff’s contention
that PP&G’s counterclaims will “chill” participation in a
collective action, the Court does not find dismissal of PP&G’s
counterclaims to be warranted.
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permissive, “it is also concluding that the claim and
counterclaim did not ‘derive from a common nucleus of operative
fact’ (and thus that the court lacks supplemental jurisdiction
over the counterclaim).”
Id. at 603 n.1.
In determining whether a counterclaim is compulsory, courts
consider the following four inquiries:
(1) Are the issues of fact and law raised in the claim
and counterclaim largely the same? (2) Would res
judicata bar a subsequent suit on the party’s
counterclaim, absent the compulsory counterclaim rule?
(3) Will substantially the same evidence support or
refute the claim as well as the counterclaim? and (4)
Is there any logical relationship between the claim
and counterclaim?
Painter, 863 F.2d at 331 (citing Sue & Sam Mfg. Co. v. B-LS Constr. Co., 538 F.2d 1048, 1051-53 (4th Cir. 1976)).
“A
court need not answer all these questions in the
affirmative for the counterclaim to be compulsory.”
Id.
PP&G contends that this Court may exercise supplemental
jurisdiction over its counterclaims because they arise from the
“common nucleus of operative facts” of Plaintiff’s FLSA claims.
Specifically, PP&G argues that the employment relationship
between the parties is “but one of the operative facts” which
creates a nexus between the parties’ claims, noting that it
seeks a set off against any wages and/or “other accouterments of
employment” to which Plaintiff may be entitled of “those service
charges or performance fees which were received by Ms. Whyte but
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were not remitted to PP&G.”
ECF No. 42-1 at 6.
Accordingly,
PP&G argues, both the FLSA claims and counterclaims will “focus
on the issues concerning the number of hours Ms. Whyte allegedly
performed at the Club, whether or not Ms. Whyte was paid for her
work by PP&G, and issues related to PP&G’s compensation
practices.”
ECF No. 42-1 at 7.
The Court agrees that the issues of fact and law raised by
the Plaintiff’s claims and PP&G’s counterclaims are largely the
same.
Plaintiff asserts that PP&G failed to pay her minimum
wage and/or overtime compensation, while PP&G seeks a set off in
the amount of performance fees earned by Plaintiff during the
course of her employment.
Although “[f]ederal courts have been
reluctant to exercise supplemental jurisdiction over state law
claims and counterclaims in the context of an FLSA suit where
the only connection is the employee-employer relationship,”
Williams, 558 F. Supp. 2d at 604, that is simply not the case
here.
PP&G’s counterclaim is not related to Plaintiff’s claims
on the basis of the employer-employee relationship alone;
rather, PP&G’s ability to recover on its claim appears to the
Court to be partially dependent on Plaintiff prevailing on her
claim that she is entitled to wages.
Specifically, absent a
finding that Plaintiff is an employee entitled to wages, PP&G’s
assertion that Plaintiff was unjustly enriched by the award of
minimum wages in addition to performance fees appears moot.
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With respect to PP&G’s claim for breach of contract, it appears
to concern the agreement allegedly signed by Plaintiff which
PP&G maintains established her status as an independent
contractor.
Accordingly, the issues of fact and law raised by
PP&G’s counterclaims are largely the same as those raised in
Plaintiff’s FLSA claims.
With regard to the second inquiry – whether res judicata
would bar the counterclaims if not asserted in the present
action – the Court does not find a res judicata bar conclusive
as to whether the counterclaim is permissive or compulsory.
In
Maryland, the doctrine of res judicata “bars the relitigation of
a claim if (1) the parties in the present litigation are the
same or in privity with the parties to the earlier litigation;
(2) the claim presented in the subsequent action is ‘identical
to that determined or that which could have been raised and
determined in the prior litigation’; and (3) there was a final
judgment on the merits in the prior litigation.”
Williams, 558
F. Supp. 2d at 605 (quoting R & D 2001 LLC v. Rice, 938 A.2d
839, 848 (Md. 2008)).
Assuming that res judicata would not bar
a subsequent state court action, however, the Court cannot
accept Plaintiff’s argument for dismissal of PP&G’s claims
simply on res judicata grounds.
See Painter, 863 F.2d at 333
(noting the difficulty of “using a res judicata test to
distinguish between permissive and compulsory counterclaims” and
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stating that, assuming the counterclaim “might still be brought
in state court, the res judicata test cannot be the controlling
one”).
As to the final two inquiries, the Court finds that each
support a finding that this Court may exercise jurisdiction over
PP&G’s counterclaims.
Although the evidence in support of
damages for PP&G’s counterclaims might be somewhat different
than that set forth in support of damages for Plaintiff’s
claims, evidence of the agreement signed and the behavior of the
parties is relevant regarding the liability aspects of each
parties’ claims.
The Court sees no reason to duplicate
consideration of that evidence.
Similarly, the Court finds that
a logical relationship exists between the claims and
counterclaims.
As noted supra, PP&G’s counterclaims do not rely
simply on the employer-employee relationship to “single-handedly
create[] a common nucleus of operative fact. . . .”
Williams,
558 F. Supp. 2d at 606 (quoting Wilhelm v. TLC Lawn Care, Inc.,
Civ. No. 07-2465-KHV, 2008 WL 640733, at *3 (D. Ks. Mar. 6,
2008)).
To the contrary, PP&G’s counterclaims are intertwined
with the issues set forth in Plaintiff’s FLSA claims.
Accordingly, the Court concludes that PP&G’s counterclaims are
compulsory and thus, the Court has jurisdiction over them.
will therefore deny Plaintiff’s motion to dismiss.
III. CONCLUSION
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It
For the foregoing reasons, Ireland’s Motion to Dismiss or
in the alternative for Summary Judgment will be denied, and
Plaintiff’s Motion to Dismiss will be denied.
A separate order
will issue.
______________/s/__________________
William M. Nickerson
Senior United States District Judge
DATED:
April 2, 2014
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