Iraheta v. Lam Yuen, LLC et al

Filing 12

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 11/29/12. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
KARLA PATRICIA IRAHETA
:
v.

:

Civil Action No. DKC 12-1426

:
LAM YUEN, LLC ET AL
:

MEMORANDUM OPINION
Presently pending and ready for review in this wage and
hour law case is the motion to dismiss or, in the alternative,
for summary judgment filed by Defendants Lam Yuen, LLC, Stan
Lam, and Denis Lam.

(ECF No. 7).

The issues have been briefed,

and the court now rules, no hearing being deemed necessary.
Local Rule 105.6.

For the following reasons, the motion – which

will be construed as a motion to dismiss under Fed.R.Civ.P.
12(b)(6) and 12(b)(7) – will be denied.
I.

Background
The following facts are alleged by Plaintiff Karla Patricia

Iraheta in her complaint.

During the period from March 28, 2003

through April 3, 2012, Plaintiff worked for Defendants as a
“bakery prep and cook/utility person” at a bakery located at
12205

Nebel

Street,

Factory Bakery”).

Rockville,

Maryland

(ECF No. 1 ¶ 1).

(“the

Nebel

Street

The Nebel Street Factory

Bakery did not sell products to the general public but instead

functioned as the “factory/supplier” for a second bakery located
at 1701 Rockville Pike #B, Rockville, Maryland (“the Rockville
Pike Retail Bakery”).

(Id.).

According to the complaint, Defendant Lam Yuen, LLC is a
limited liability company organized under Maryland law that owns
the Nebel Street Factory Bakery and operates it under the trade
name of “Maria’s Bakery Lite.”

Defendants Denis Lam and Stan

Lam are both allegedly members, directors, officers, and owners
of Defendant Lam Yuen, LLC.

Collectively, Defendants also own

the Rockville Pike Retail Bakery and operate it under the name
of “Maria’s Café and Bakery.”
Plaintiff

alleges

that

throughout

her

employment

by

Defendants, she regularly worked 72 hours per week, consisting
of

12-hour

include

shifts,

designated

six
meal

days

per

breaks.

week.

Defendants

Iraheta in cash on a biweekly basis.
Iraheta any paystubs or W-2’s.
paid

any

purportedly

payroll

taxes

followed

Hispanic employees.”

on

these

Her

shifts

did

purportedly

not
paid

Defendants never issued

Defendants also never filed or
Iraheta’s

same

behalf.

practices

for

Defendants
their

“other

(Id. ¶ 17).

From January 1, 2005 until her termination on April 3,
2012, Defendants paid Iraheta at a biweekly rate of $750.00
(i.e., $375.00 per week).

Based on this rate of pay, Plaintiff

alleges that Defendants willfully and intentionally failed to
2

pay her the minimum and overtime wages she was due under federal
and state law.

Specifically with respect to the period from May

9, 2009 to April 3, 2012, Plaintiff asserts that she was paid a
total of $56,625.00 for 6,040 hours of regular work and 4,832
hours

of

statutory

overtime
minimum

work.
wage

Iraheta

rate

in

contends

effect

for

that,
this

under
time

the

period

($7.25) and the corresponding overtime rate ($10.88), Defendants
should have paid her $96,362.16 – a difference of $39,737.16.
Defendants also purportedly failed to pay Iraheta any amount for
her last three days of work at the Nebel Street Factory Bakery,
even though she earned $216.00 for working 36 hours.
On May 5, 2012, Iraheta filed this action, alleging that
Defendants’ actions violated the Fair Labor Standards Act, 29
U.S.C. §§ 201, et seq. (“FLSA”); the Maryland Wage and Hour Law,
MD Code Ann., Labor & Empl. §§ 3-401 et seq. (“MWHL”); and the
Maryland Wage Payment and Collection Law, id. §§ 33-501 et seq.
(“MWPCL”).

(ECF No. 1).

On July 27, 2012, Defendants moved to

dismiss or, alternatively, for summary judgment.
Plaintiff

timely

opposed

this

Defendants did not file a reply.

3

motion

(ECF

(ECF No. 7).
No.

11),

but

II.

Motion to Dismiss
Defendants seek dismissal of Iraheta’s complaint pursuant

to both Fed.R.Civ.P. 12(b)(6) and 12(b)(7).1
A.

Rule 12(b)(6) Motion

1.

Standard of Review

The purpose of a motion to dismiss under Rule 12(b)(6) is
to test the sufficiency of the complaint.
Charlottesville,

464

F.3d

480,

483

(4th

Presley v. City of
Cir.

2006).

A

plaintiff’s complaint need only satisfy the standard of Rule
8(a), which requires a “short and plain statement of the claim
showing that the pleader is entitled to relief.”
8(a)(2).

Fed.R.Civ.P.

“Rule 8(a)(2) still requires a ‘showing,’ rather than

a blanket assertion, of entitlement to relief.”
v. Twombly, 550 U.S. 544, 555 n. 3 (2007).

Bell Atl. Corp.

That showing must

consist of more than “a formulaic recitation of the elements of
a cause of action” or “naked assertion[s] devoid of further
factual enhancement.”

Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (internal citations omitted).
At this stage, all well-pleaded allegations in a complaint
must be considered as true, Albright v. Oliver, 510 U.S. 266,
268 (1994), and all factual allegations must be construed in the
light

most

favorable

to

the

1

plaintiff,

see

Harrison

v.

Defendants alternatively move for summary judgment
pursuant to Fed.R.Civ.P. 56. As set forth in more detail below,
however, summary judgment is not appropriate at this stage.
4

Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir.
1999) (citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134
(4th Cir. 1993)).

In evaluating the complaint, unsupported legal

allegations

not

need

be

accepted.

Revene

Comm’rs, 882 F.2d 870, 873 (4th Cir. 1989).

v.

Charles

Cnty.

Legal conclusions

couched as factual allegations are insufficient, Iqbal, 556 U.S.
at 678, as are conclusory factual allegations devoid of any
reference to actual events, United Black Firefighters v. Hirst,
604

F.2d

844,

847

(4th

Cir.

1979);

see

also

Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009).

Francis

v.

“[W]here the

well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has alleged,
but it has not ‘show[n] . . . that the pleader is entitled to
relief.’”
8(a)(2)).

Iqbal,

556

U.S.

at

679

(quoting

Fed.R.Civ.P.

Thus, “[d]etermining whether a complaint states a

plausible claim for relief will . . . be a context-specific task
that

requires

the

reviewing

experience and common sense.”
2.

court

to

draw

on

its

judicial

Id.

Analysis

Defendants advance two arguments in support of dismissing
Plaintiff’s complaint pursuant to Rule 12(b)(6).

First, they

argue that Plaintiff cannot state a claim for relief against
Defendant Lam Yuen, LLC because that entity never conducted any
operations at the Nebel Street Factory Bakery and consequently
5

never employed Plaintiff.

(ECF No. 7, at 4-5).

Second, they

contend that individual Defendants Stan Lam and Denis Lam should
be

dismissed

personally

from

this

liable

corporation law.

action

under

(Id.).

because

general

they

cannot

principles

of

be

held

Maryland

Plaintiff responds that Lam Yuen, LLC,

is a proper defendant to this action and that the individual
Defendants can be held personally liable under the FLSA, the
MWHL, and the MWPCL.

As set forth below, both of Defendants’

arguments are meritless.
a.
In

Claims Against Defendant Lam Yuen, LLC
seeking

dismissal

of

Plaintiff’s

claims

against

Lam

Yuen, LLC, Defendant principally rely on a set of documents that
purport

to

be

records

from

Assessments

and

Taxation.

the

(See

Maryland

ECF

Nos.

Department
7-1,

7-2,

of

7-3).

According to Defendants, these exhibits establish that Lam Yuen,
LLC was not formed until 2011, approximately nine years after
Iraheta

allegedly

began

working

at

the

Nebel

Street

Factory

Bakery – a fact that, in Defendants’ view, precludes Lam Yuen,
LLC, from being liable for any of the violations alleged in
Plaintiff’s complaint.

(ECF No. 7, at 3-4).

Defendants further

contend that their exhibits establish that the proper defendant
to

Iraheta’s

claims

is

Victory

International

Incorporated

(“Victory”), the entity that purportedly conducts all operations
at the Nebel Street Factory Bakery.
6

(Id.).

Defendants’

reliance

on

these

documents

is

misplaced

because, in ruling on a Rule 12(b)(6) motion, a district court
is generally “forbidden” from considering “evidence outside the
pleadings.”

Bosinger v. U.S. Airways, 510 F.3d 442, 450 (4th

Cir. 2007).

Documents attached to a motion to dismiss may be

considered only if their authenticity is undisputed and they are
“integral

to

and

explicitly

relied

on

in

the

complaint.”

Robinson v. Am. Honda Motor Co., Inc., 551 F.3d 218, 222-23 (4th
Cir. 2009); see also Moreno v. EDCare Mgt., Inc., 243 F.R.D.
258, 260 (W.D. Tex. 2007) (in denying a Rule 12(b)(6) motion to
dismiss

an

FLSA

action,

declining

to

consider

a

defendant’s

documentary evidence purporting to show its non-employer status
where the exhibits were not relied on in the complaint).
Here, Iraheta’s complaint does not refer to any documents
regarding Lam Yuen LLC’s corporate standing within the state of
Maryland, nor does it make any reference to business licenses
held by Victory.
to

Defendants’

(See generally ECF No. 1).
motion

will

be

disregarded,

Thus, the exhibits
leaving

allegations in the complaint to be considered.

only

the

Among other

things, Plaintiff alleges that Lam Yuen, LLC – alongside of the
individual
accordance

Defendants
with

–

employed

failed

minimum

applicable

her;

wage

to

pay

and

her

in

overtime

requirements; and failed to pay her at all for her final days of
work.

Defendants do not challenge the sufficiency of Iraheta’s
7

allegations with respect to Defendant Lam Yuen, LLC, but instead
seek dismissal based solely on evidentiary arguments (i.e., that
the

evidence

will

ultimately

employed by Lam Yuen, LLC).

show

that

Plaintiff

was

never

Accordingly, there is no basis for

dismissing Lam Yuen, LLC pursuant to Rule 12(b)(6).2
b.

Claims Against Defendants Denis Lam and Stan Lam

Defendants also mistakenly argue that Plaintiffs’ claims
against

Denis

Lam

and

Stan

Lam

must

be

dismissed

because

individuals cannot be held personally liable for violations of
the FLSA, the MWPCL, or the MWHL.
Among other things, the FLSA generally requires employers
(1) to pay their employees in accordance with applicable minimum
wage

rates,

see

29

U.S.C.

§

206,

and

(2) to

provide

their

employees with overtime compensation for all hours worked in
excess

of

a

forty-hour

workweek,

see

id.

§

207.

The

FLSA

defines “employer” to include “any person acting directly or
indirectly in the interest of an employer in relation to an
employee.”

29 U.S.C. § 203(d).

To decide whether an individual

is an “employer” under this definition, “the economic realities

2

Although Defendants urge that their motion can be
converted into one for summary judgment in order to consider
matters outside of the pleadings relevant to Lam Yuen, LLC and
Victory (ECF No. 7, at 3), the court is not inclined to do so at
this stage given the undeveloped state of the record. Moreover,
even if they were considered, Defendants’ exhibits would not
conclusively establish that Lam Yuen, LLC cannot be held liable
for the violations alleged in Iraheta’s complaint.
8

of

the

relationship

between

employer” must be examined.

the

employee

and

the

putative

Caseres v. S&R Mgt. Co., LLC, No.

12–cv–01358–AW, 2012 WL 5250561, at *3 (D.Md. Oct. 24, 2012).
The

economic

realities

test

looks

to

a

number

of

factors,

including whether the putative employer is someone who “(1) has
the authority to hire and fire employees; (2) supervises and
controls work schedules or employment conditions; (3) determines
the rate and method of payment; and (4) maintains employment
records.”

Khalil v. Subway at Arundel Mills Office Park, Inc.,

No. CCB–09–158, 2011 WL 231793, at *2 (D.Md. Jan. 24, 2011).
single

factor

is

dispositive;

rather,

circumstances must be considered.

the

totality

of

No
the

See, e.g., Speert v. Proficio

Mortg. Ventures, LLC, No. JKB–10–713, 2011 WL 2417133, at *3
(D.Md. June 11, 2011).

Accordingly, an individual defendant’s

status as a high-level corporate shareholder or officer does not
necessarily impart “employer” liability to that individual; the
analysis turns on the economic realities of the individual’s
relationship with the putative employee.
States

Prot.,

LLC,

No.

RDB–09–3232,

2010

Pearson v. Prof’l 50
WL

4225533,

at

*4

(D.Md. Oct. 26, 2010).
Given that MWHL is “the State parallel” to the FLSA, Friolo
v. Frankel, 373 Md. 501, 513 (2003), it is appropriate to assess
an

individual’s

liability

as

an

“employer”

for

overtime

and

minimum wage violations of the MWHL under the same economic
9

realities test used in the FLSA context, see Caseres, 2012 WL
5250561 at *4; Khalil, 2011 WL 231793, at *2.
The MWPCL, in turn, permits employees to recover treble
damages when their employers do not pay them on a regular basis
or promptly upon termination.

Butler v. DirectSat USA, LLC, 800

F.Supp.2d 662, 667 (D.Md. 2011).

The MWPCL defines “employer”

to include “any person who employs an individual in the State or
a successor of the person.”
501(b).

Md. Code Ann., Labor & Emp., § 3-

This definition is more restrictive than either the

FLSA or the MWHL as it does not expand employer liability to
those acting on behalf of the employer.

Watkins v. Brown, 173

F.Supp.2d 409, 416 (D.Md. 2011) (rejecting an interpretation of
“employer” that would encompass supervisors, officers, or other
agents acting on behalf of a corporate employer).

Thus, for

purposes of the MWPCL, the term “employer” must be interpreted
in

accordance

term . . . ,

with

the

which

“‘commonly

contemplates
the

understood
some

sort

of

wages

payment

meaning
of
in

of

the

contractual

relationship

involving

exchange

for

services.’”

Casares, 2012 WL 5250561, at *4 (quoting Watkins,

173 F.Supp.2d at 416).
In her complaint, Iraheta alleges that both Stan Lam and
Denis Lam are members, directors, officers and owners of Lam
Yuen, LLC.
not

make

(ECF No. 1 ¶¶ 3-4).
any

specific

Other than that, Plaintiff does

allegations
10

with

respect

to

actions

undertaken

by

capacities.

Stan
As

Lam

set

or

forth

Denis
above,

Lam
an

in

their

individual’s

individual
status

as

corporate officer is not, without more, sufficient to establish
liability as an employer under the FLSA, the MWHL, or the MWPCL.
Pearson, 2010 WL 4225533, at *4; Watkins, 173 F.Supp.2d at 416.
Iraheta

does,

however,

allege

that

collectively took the following actions:

all

Defendants

employed her as a

“bakery prep and cook/utility person”; paid her in cash at a
rate

of

$375.00

per

week

from

January

1,

2005,

until

her

termination in 2012, even though she regularly worked 72 hours
per

week

at

the

Nebel

Street

Factory

Bakery;

willfully

and

intentionally failed to properly compensate her for the minimum
and overtime wages to which she was entitled; failed to pay her
at all for the last three days of work at the Nebel Street
Factory Bakery; and failed to issue Iraheta any paystubs or
other documentation stating her gross earnings and deductions
for each pay period.3
Viewing
Plaintiff,
equally

to

the

it

complaint

will

Denis

be
Lam

in

presumed
and

the
that

Stan

3

light
these

Lam

in

most

favorable

allegations
their

to

apply

individual

The affidavit that Plaintiff includes in her opposition to
buttress her allegations of individual liability against Denis
Lam and Stan Lam (ECF No. 11-2) will not be considered because,
as observed above, district courts generally are forbidden from
considering evidence extrinsic to the pleadings in ruling on a
Rule 12(b)(6) motion to dismiss.
Bosiger, 510 F.3d at 450.
11

capacities.

See

Prof’l

50

States

Protection,

LLC,

2010

WL

4225533, at *4 (in ruling on a Rule 12(b)(6) motion seeking
dismissal
presume

of
that

an

individual

all

FLSA

allegations

defendant,
made

against

“this

Court

the

will

Defendants

[collectively] also apply equally to [the individual Defendant]
in his individual capacity”); Caseres, 2012 WL 5250561, at *4-5
(same).

Construed as such, these allegations state a plausible

claim for relief that Denis Lam and Stan Lam are individually
liable as “employers” for violating the overtime and minimum
wage

provisions

of

the

FLSA

and

the

MWHL,

as

well

as

the

provisions of the MWPCL requiring prompt payment of wages upon
termination.

Thus, Defendants’ motion will be denied to the

extent it seeks dismissal of the individual defendants.
B.

Rule 12(b)(7) Motion

1.

Standard of Review

Assessing a Rule 12(b)(7) motion to dismiss for failure to
join a party under Fed.R.Civ.P. 19 requires a two-step inquiry.
Owens–Illinois, Inc. v. Meade, 186 F.3d 435, 440 (4th Cir. 1999).
First, it must be determined “‘whether [the absent] party is
necessary to a proceeding because of its relationship to the
matter under consideration pursuant to Rule 19(a).”

Id.

In

other words, it must be determined (1) if complete relief cannot
be afforded in the person’s absence; or (2) whether the person
“claims an interest relating to the subject of the action” and
12

his

absence

may

either

(i)

“impede

the

person’s

ability

to

protect that interest” or (ii) subject current parties to a
“substantial

risk”

of

Fed.R.Civ.P. 19(a).

incurring

inconsistent

obligations.

The movant bears the burden of showing that

the absent person is necessary for a just adjudication.

5A

Federal Practice & Procedure § 1359.
“If

a

action,”

party

so

is

long

jurisdiction.

necessary,

it

will

joinder

does

not

as

be

ordered

destroy

Owens-Illinois, 186 F.3d at 440.

into

the

the

court’s

When joinder is

infeasible, it must be determined “whether the proceeding can
continue

in

[the

party’s]

absence,

or

whether

it

is

indispensable pursuant to Rule 19(b) and the action must be
dismissed.”

Id.

“Courts are loath to dismiss cases based on

nonjoinder of a party, so dismissal will be ordered only when
the

resulting

defect

cannot

be

inefficiency will certainly result.”
2.

remedied

and

prejudice

or

Id. at 441.

Analysis

Defendants argue that dismissal of Plaintiff’s complaint is
warranted

based

defendant.
that

“[t]o

on

Iraheta’s

(ECF No. 7, at 9).
the

extent

that

failure

to

join

Victory

as

a

Specifically, Defendants contend
Iraheta

was

employed—or

had

a

contract—with any entity . . . it would have been with Victory”
rather than Defendant Lam Yuen, LLC, and therefore it “logically
follows” that Victory is an indispensable party whose joinder is
13

required.

(Id.).

inappropriate

Plaintiff responds that dismissal would be

because

although

“Victory

may

be

an

additional

employer” of Iraheta’s and thus a proper defendant, Victory is
not a necessary (let alone indispensable) party because it “is
not the one and only possible employer of Plaintiff.”
11, at 12).
It

(ECF No.

Plaintiff has the better argument.

is

well-established

that

an

FLSA

employee

may

be

employed by more than one employer at the same time, see Schultz
v. Capital Int’l Sec. Inc., 466 F.3d 298, 305 (4th Cir. 2006), in
which case all employers are jointly and severally liable for
FLSA violations, Jacobsen v. Comcast Corp., 740 F.Supp.2d 683,
688 (D.Md. 2010).
tortfeasors.
(1990).
party

Rule 19 does not require the joinder of joint

Temple

v.

Synthes

Corp.,

Ltd.,

498

U.S.

5,

7

Rather, a joint tortfeasor is “merely a permissive
to

an

Fed.R.Civ.P.

action
19

against

advisory

another

committee’s

with
note.

like

liability.”

Consistent

with

these principles, courts generally hold that where a plaintiff
states an FLSA claim against a defendant who is alleged to be
his employer, an unnamed co-employer is not a necessary party
who should be joined under Rule 19(a).

See, e.g., DeWitt v.

Daley, 336 B.R. 552, 556 (S.D.Fla. 2006); Moreno, 243 F.R.D. at
259-60; Yates v. Applied Performance Techs., Inc., 209 F.R.D.
143, 149 (S.D.Ohio 2002).

14

Here, as set forth above, Iraheta’s complaint states claims
for relief under the FLSA against Defendants Yuen Lam, LLC, Stan
Lam, and Denis Lam.

Assuming the truth of her allegations that

all three of the current Defendants are “employers” under the
FLSA (and therefore are jointly and severally liable for the
alleged
afforded

violations
from

of

the

the

current

statute),

complete

Defendants

relief

without

can

joining

be
any

additional co-employers, including but not limited to Victory.
In addition, Defendants fail to show they would be subject to
multiple or inconsistent obligations absent Victory’s joinder.
Therefore, Victory is not a necessary party under Rule 19(a) and
its

joinder

is

not

required

for

this

action

to

proceed.

Accordingly, Defendants’ motion will be denied to the extent it
seeks relief under Rule 12(b)(7).4
III. Conclusion
For the foregoing reasons, the motion to dismiss or, in the
alternative, for summary judgment filed by Defendants Lam Yuen,
LLC, Stan Lam, and Denis Lam will be denied.

A separate order

will follow.
/s/
DEBORAH K. CHASANOW
United States District Judge

4

Plaintiff is free to seek leave to amend her complaint
pursuant to Fed.R.Civ.P. 15 in order permissively to join
Victory as an additional defendant.
15