Gough v. Bankers Life

Filing 53

MEMORANDUM OPINION. Signed by Judge Peter J. Messitte on 2/12/2019. (cm 02/13/2019 - jf3s, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

LINDA GOUGH,
Plaintiff,
v.
BANKERS LIFE AND CASUALTY
COMPANY,
Defendant.

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Civil No.

PJM 17-2341

MEMORANDUM OPINION
On September 21, 2018, the Court dismissed the initial Complaint filed by Plaintiff Linda
Gough, pro se,1 against her former employer, Defendant Bankers Life and Casualty Company
(“Bankers Life”). After reviewing the report of an independent counsel appointed by the Court to
review her case, the Court granted Gough leave to file an Amended Complaint within thirty days,
in which she could allege that Bankers Life had violated the Fair Labor Standards Act (“FLSA”),
29 U.S.C. § 201 et seq., by improperly classifying her as an independent contractor when in fact
she allegedly performed the responsibilities of an employee—who would therefore be entitled to
such benefits as minimum wage and unemployment insurance. Gough filed an Amended
Complaint, ECF No. 39, on October 22, 2018, within the time limit specified by the Court, but still
proceeding pro se. On October 26, 2018, Bankers Life filed a Motion to Dismiss. ECF No. 40.
For the following reasons, Bankers Life’s Motion to Dismiss is GRANTED.

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Gough is proceeding pro se despite the Court’s strong recommendation that she retain counsel to assist her in filing
an Amended Complaint. See ECF No. 37 at 7 (“The Court strongly encourages Gough to retain counsel who may be
willing to represent her on a contingency fee . . . .”). The Court would note, however, that it appointed two pro bono
counsels for Gough earlier in the case and enlisted a third attorney to draft a report for Gough outlining possible
colorable claims she might have against Bankers Life. But both of Gough’s previously appointed pro bono counsels
withdrew from the case, and the Court declined to appoint a new attorney for her, given the indication that Gough's
prior counsels sought release of their obligations to represent her due to her unwillingness to cooperate with them.

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I.
The Court’s Memorandum Opinion of September 21, 2018, ECF No. 37, thoroughly recites
the factual background and procedural history of the case. This Opinion will discuss the relevant
facts alleged in Gough’s Amended Complaint as well as the procedural developments that have
occurred since she filed it on October 22, 2018.
According to her Complaint and Amended Complaint, Gough worked for Bankers Life as
a “1099 Insurance Agent” from February 2016 through July 2016. ECF No. 39 at 1–2. She spent
two days per week “making phone calls to pursue sales leads” and three days per week “meeting
with clients, preparing materials, and doing on-line course work.”

Id. at 1.

Prior to her

employment, Bankers Life sponsored Gough’s participation in an online class to prepare her for
the examination required for insurance agents, but required her to pay for the class, for the exam,
and for insurance licenses required by both Maryland and the District of Columbia. Id. at 9. Gough
also claims that Bankers Life encouraged its agents to buy sales leads in order to increase their
likelihood of successfully selling insurance policies, but says she lacked sufficient funds to
purchase any. See id. 9–10. As an additional job responsibility, Gough was required to mail
information about Bankers Life’s insurance products to “cold leads,” although Bankers Life did
not provide a mail room or postage for this purpose. See id. at 10.
Gough states that after she failed to meet her monthly sales quota, she met with her
manager, Omar Torres, to discuss her career options. Id. at 2. Torres refused Gough’s request for
minimum wage protection. Shortly after that meeting, in July 2016, Gough left her position at
Bankers Life. Id. Gough estimates that “46%” of the workers at Bankers Life left the company
during her tenure. Id.

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In January 2017, after briefly working for State Farm and interviewing for a job at Geico,
Gough applied unsuccessfully for unemployment benefits. Id. She was purportedly unable to
obtain such benefits because she had been compensated solely by commission during her time at
Bankers Life. Id. at 2–3.
The Court dismissed Gough’s Complaint without prejudice on September 21, 2018, giving
her leave to file an Amended Complaint, which, as indicated, she did. In response to the Amended
Complaint, ECF No. 39, Bankers Life filed its Motion to Dismiss, ECF No. 40, which Gough
responded to, ECF No. 44, later supplementing it with additional documents, ECF No. 45. Bankers
Life filed its Reply on November 30, 2018. ECF No. 46. After the Court granted her leave on
January 30, 2019, Gough filed a Surreply. ECF No. 49-1.2
II.
Federal Rule of Civil Procedure 8(a) prescribes “liberal pleading standards” that require a
plaintiff to submit only a “short and plain statement of the claim showing that [she] is entitled to
relief.” Erickson v. Pardus, 551 U.S. 89, 93-94 (2007) (citing Fed. R. Civ. P. 8(a)(2)). The
plaintiff’s statement must contain facts sufficient to “state a claim to relief that is plausible on its
face” in order to survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Bell
Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007). The plausibility standard requires that the
plaintiff plead facts sufficient to show by “more than a sheer possibility that a defendant has acted
unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although a court will accept the
plaintiff’s factual allegations as true, “[t]hreadbare recitals of the elements of a cause of action,

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On November 5, 2018, Gough filed a Motion to Reconsider Reimbursement of Expenses, ECF No. 42, to which
Bankers Life filed a Response in Opposition. ECF No. 43. Gough has yet to file a Reply. The Court has already
explained to Gough that pro se litigants are not entitled to attorney’s fees, even where attorney’s fees are authorized
by a fee-shifting statute. ECF No. 33 (citing Rhoads v. F.D.I.C., 286 F. Supp. 2d 532, 541 (D. Md. 2003)). Therefore,
the Court will DENY her Motion to Reconsider.

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supported by mere conclusory statements, do not suffice.” Id. Legal conclusions couched as
factual allegations or “unwarranted inferences, unreasonable conclusions, or arguments” do not
satisfy the plausibility pleading standard. E. Shore Markets, Inc. v. J.D. Associates Ltd. P’ship,
213 F.3d 175, 180 (4th Cir. 2000). The complaint must contain factual allegations sufficient to
apprise a defendant of “what the . . . claim is and the grounds upon which it rests.” Twombly, 550
U.S. at 555 (internal quotations and citations omitted).
Federal courts have an “obligation to liberally construe a pro se [c]omplaint” and may
consider additional facts and information supporting the complaint that is provided in an
opposition to a motion to dismiss. See Rush v. Am. Home Mortg., Inc., 2009 U.S. Dist LEXIS
112530, at *11-12 (D. Md. Dec. 3, 2009). However, this requirement “does not transform the
court into an advocate,” United States v. Wilson, 699 F.3d 789, 797 (4th Cir. 2012) (internal
quotations and citations omitted), and “[w]hile pro se complaints may ‘represent the work of an
untutored hand requiring special judicial solicitude,’ a district court is not required to recognize
‘obscure or extravagant claims defying the most concerted efforts to unravel them.’” Weller v.
Dep’t of Soc. Servs., 901 F.2d 387, 391 (4th Cir. 1990) (quoting Beaudett v. City of Hampton, 775
F.2d 1274, 1277 (4th Cir. 1985), cert. denied, 475 U.S. 1088 (1986)). Although the facts alleged
in a pro se plaintiff’s complaint must ordinarily be taken as true, mere conclusory statements “are
not entitled to the assumption of truth.” Aziz v. Alcolac, Inc., 658 F.3d 388, 391 (4th Cir. 2011)
(quoting Iqbal, 556 U.S. at 679)) (internal quotation marks omitted).
III.
As a preliminary matter, the Court addresses Bankers Life’s argument that Gough is
precluded from introducing new facts in her Opposition to Bankers Life’s Motion to Dismiss and
relying on any attachments thereto that were not pled in her Amended Complaint. Normally, when

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reviewing a motion to dismiss, courts only consider “allegations in the complaint, matters of public
record, and documents attached to the motion to dismiss that are integral to the complaint and
authentic.” See, e.g., Verdiner v. Washington Metropolitan Area Transit Authority, No. DKC 152612, 2016 WL 2736185, at *1 n.3 (D. Md. May 11, 2016) (citing Philips v. Pitt Cnty. Mem’l
Hosp., 572 F.3d 176, 180 (4th Cir. 2009)). In effect, allowing a plaintiff to introduce new
allegations through an opposition to a motion to dismiss would permit circumvention of the proper
method for pleading new facts and claims: amending the complaint. See, e.g., S. Walk at
Broadlands Homeowner’s Ass’n, Inc. v. OpenBand at Broadlands, LLC, 713 F.3d 175, 184 (4th
Cir. 2013) (“It is well established that parties cannot amend their complaints through briefing or
oral advocacy.”) (citations omitted); see also Palmer v. Urgo Hotels, L.P., No. 8:18-cv-0085-PX,
2018 WL 5026372, at *2 (D. Md. Oct. 17, 2018) (stating that a complaint “may not be amended
by the briefs in opposition to the motion to dismiss”) (quoting Mylan Labs, Inc. v. Akzo, N.V., 770
F. Supp. 1053, 1068 (D. Md. 1991) (citation and internal quotation marks omitted), aff’d 2 F.3d
56 (4th Cir. 1993)).
However, in certain circumstances, courts may consider new facts and claims introduced
by a pro se plaintiff in filings apart from her complaint. Thus, in Smith v. Blackledge, the Fourth
Circuit held that the district court should have considered facts first alleged by a pro se prisoner
plaintiff in a filing in response to the defendants’ motion to dismiss. 451 F.2d 1201, 1202–03 (4th
Cir. 1971). After the defendants filed a motion to dismiss, the pro se plaintiff filed a thirty-sixpage document denominated as an intent to “Further Particularize” the initial allegations in his
complaint. See id. at 1202. The district court construed plaintiff’s filing as a response to the
defendants’ motion and ignored the new allegations it raised. See id. The Fourth Circuit ruled
that the district court should have considered the pro se plaintiff’s filing as an amendment to the

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complaint, and because at the time the plaintiff filed the document he could have amended his
complaint as a matter of course without leave of the court, the district court should have considered
the new allegations therein. See id. at 1202–03. By “dismissing the complaint after the filing of
the plaintiff's more particularized pleading,” the district court, according to the Fourth Circuit,
“was making a judgment on the merits of the entire case, thereby terminating plaintiff's right to be
heard at trial on his additional claims.” Id. at 1203. The ruling in Smith v. Blackledge suggests
that a pro se plaintiff should not be deprived of the opportunity for the district court to hear all of
her allegations merely because the pro se plaintiff does not follow the prevailing procedure for
introducing them.
Although Gough titled her response to Bankers Life’s Motion to Dismiss an “Opposition,”
the new facts it contains suggest that her filing, like that of the pro se plaintiff in Blackledge, is
tantamount to an amendment of a complaint. A complaint is considered a “pleading” under the
Federal Rules of Civil Procedure, Fed. R. Civ. P. 7(a)(1), and a party may amend a pleading once
as a matter of course, if the pleading is one to which a responsive pleading is required, either
twenty-one days after service of a responsive pleading or twenty-one days after service of a motion
under Rule 12(b), (e), or (f), whichever is earlier. Fed. R. Civ. P. 15(a)(1)(B). Accordingly,
Gough’s Opposition can be considered an amendment of a pleading as a matter of course because
she served and filed it on November 15, 2018, twenty days after Bankers Life filed its Motion to
Dismiss pursuant to Rule 12(b)(6) on October 26, 2018.
Therefore, the Court will consider facts that Gough alleges for the first time in her
Opposition, ECF Nos. 44, 45, and in any exhibits attached thereto, as it reviews Bankers Life’s
Motion to Dismiss.

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IV.
The case turns on whether Bankers Life properly classified Gough as an independent
contractor, or whether, based the economic realities of her employment, she should have been
classified as an employee under the FLSA.
The FLSA defines “employer” as “any person acting directly or indirectly in the interest of
an employer in relation to an employee,” and defines “employ” as “to suffer or permit work.” 29
U.S.C. § 203(d), (g). “Employee” is defined, except for specific definitions of public sector and
agricultural workers not applicable to Gough’s case, as “any individual employed by an employer.”
Id. at § 203(e)(1). To determine whether a worker is an employee covered by the FLSA, courts
apply the “economic realities” test to evaluate the relationship between the worker and the putative
employer. See Schultz v. Capital Intern. Sec., Inc., 466 F.3d 298, 304 (4th Cir. 2006) (citations
omitted). This test balances several factors: “‘(1) the degree of control which the putative
employer has over the manner in which the work is performed; (2) the opportunities for profit or
loss dependent upon the managerial skill of the worker; (3) the putative employee’s investment in
equipment or material; (4) the degree of skill required for the work; (5) the permanence of the
working relationship; and (6) whether the service rendered is an integral part of the putative
employer’s business.’” See Salinas v. Commercial Interiors, Inc., 848 F.3d 125, 150 (4th Cir.
2017) (quoting Schultz, 466 F.3d at 304–05).
The focal point of the economic realities test is whether the worker is “economically
dependent” on the putative employer or is, as a matter of economic reality, in business for herself.
See Schultz, 466 F.3d at 304. If the worker’s “profit or loss depends upon [her] own creativity,
ingenuity, and skill,” she is properly classified as an independent contractor outside the scope of

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the FLSA. See Salinas, 848 F.3d at 150 (citing Walling v. Portland Terminal Co., 330 U.S. 148,
152 (1947)).
Here, the only factor under the economic realities test that clearly weighs in favor of
classifying Gough as an employee is the sixth factor: her selling of insurance policies. In that
sense, Gough clearly rendered a service that was an integral part of Bankers Life’s business.
The fourth factor is indeterminate. Case law interpreting the economic realities test
suggests that workers whose jobs require a specialized degree of skill might be appropriately
classified as independent contractors. See, e.g., Schultz, 466 F.3d at 308 (noting that guards
responsible for conducting personal security could be “expected to offer more specialized services
than the average private security guard” and this “could weigh in favor” of classifying the guards
as independent contractors). Gough does not allege in either her Amended Complaint or her
Opposition that selling insurance requires specialized knowledge, but the fact that Bankers Life
required her to pass an insurance sales licensing examination for both Maryland and the District
of Columbia might imply that a greater degree of skill is required to sell insurance than would be
demanded of the average salesperson. This distinction might support classifying insurance agents
as independent contractors.
Regardless of the foregoing, all the remaining factors weigh heavily in favor of classifying
Gough as an independent contractor. Bankers Life appears to have maintained a minimal degree
of control over Gough and its other agents, since Gough herself alleges that she frequently worked
from home and often met with potential clients outside Bankers Life’s offices. ECF No. 39 at 1–
2. Ultimately, Gough’s opportunities for profit or loss depended entirely on Gough’s own efforts,
since Bankers Life paid her entirely by commission and did not provide her with sales leads,
requiring her to either purchase leads herself or cold-mail potential clients. See id. at 2, 9–10.

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In sum, from all that appears in the Amended Complaint, Bankers Life invested minimally
in its workers, requiring that Gough, in particular, pay all costs required to obtain her insurance
licenses—from prep course tuition to license exam fees to the price of the licenses themselves. Id.
at 9. Once she was licensed, Gough had to pay for sales leads out of her own pocket as well as the
cost of postage to potential clients. See id. at 9–10. All this is to say that the relationship between
Bankers Life and its workers appears to have been highly impermanent, with Gough estimating
that “46%” of the agents who worked at Bankers Life when she started in February 2016 had left
the company by the time Gough herself left in July 2016, some four months later. Id. at 2, 10.
While Gough may well have endured difficult personal circumstances while seeking
employment, medical care, and a residence, based on the factors of the economic realities test, the
only fair reading of the Amended Complaint is that Bankers Life properly classified her as an
independent contractor, not as an employee. As a result, she has no plausible claim for lost wages
or unemployment benefits.3

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Insofar as a Fair Labor Standards Act (“FLSA”) claim might be inferred from the Amended Complaint, the FLSA
exempts certain workers from minimum wage and unemployment benefits protections. 29 U.S.C. § 213. Bankers
Life argues in its Motion to Dismiss that FLSA protections do not apply to Gough under the “outside sales” exemption.
29 U.S.C. § 213(a)(1); 29 C.F.R. § 541.500. Employers bear the burden of demonstrating the applicability of an FLSA
exemption by clear and convincing evidence. See Shockley v. City of Newport News, 997 F.2d 18, 21 (4th Cir. 1993);
see also Speert v. Proficio Mortg. Ventures, LLC, No. JKB-10-718, 2011 WL 2417133, at *5–6 (D. Md. June 11,
2011) (holding that employer bore the burden of proof to demonstrate that the “outside sales” exemption applied to
plaintiffs). However, individuals seeking compensation pursuant to the FLSA “bear the initial burden of proving that
an employer-employee relationship exists and that the activities in question constitute employment for purposes of the
Act.” Purdham v. Fairfax Cnty. Sch. Bd., 637 F.3d 421, 427 (4th Cir. 2011). Because the Court is holding that
Bankers Life properly classified Gough as an independent contractor—and because Gough did not raise the issue of
FLSA exemptions in either her Amended Complaint or her Opposition to Bankers Life’s Motion to Dismiss—the
Court finds it unnecessary to determine whether the “outside sales” FLSA exemption applies to her.

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V.
For the foregoing reasons, Bankers Life’s Motion to Dismiss Plaintiff’s Amended
Complaint (ECF No. 40) is GRANTED WITH PREJUDICE, and Gough’s Motion to
Reconsider Reimbursement of Expenses (ECF No. 42) is DENIED.
A separate Order will ISSUE.

/s/
PETER J. MESSITTE
UNITED STATES DISTRICT JUDGE
February 12, 2019

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