Lankford v. CWL Investments LLC
OPINION and ORDER Denying Plaintiff's 21 MOTION for Conditional Certification, Granting Plaintiff's 28 MOTION for Leave to Amend, and Denying Plaintiff's 38 MOTION to Compel Discovery Signed by District Judge Gerald E. Rosen. (JOwe)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
JOHN LANKFORD, personally and on
behalf of all similarly situated persons,
Hon. Gerald E. Rosen
CWL INVESTMENTS, LLC, d/b/a
OPINION AND ORDER DENYING PLAINTIFF’S MOTION FOR
CONDITIONAL CERTIFICATION, GRANTING PLAINTIFF’S MOTION
FOR LEAVE TO AMEND, AND DENYING PLAINTIFF’S MOTION TO
In this Fair Labor Standards Act (FLSA) matter, Plaintiff John Lankford
claims that his former employer, Defendant CWL Investments d/b/a Jimmy John’s,
improperly classified him as an exempt employee and is therefore eligible to
recover overtime pay under the FLSA.
Presently before the Court are three
motions. First, Plaintiff requests that this Court conditionally certify a collective
action under § 216(b) of the FLSA. Second, Plaintiff seeks leave to amend his
Complaint in order to add two limited liability companies as additional defendants.
Third, Plaintiff seeks to compel certain discovery. Defendant opposes all three.
Having reviewed and considered Plaintiff’s Motions and supporting briefs,
Defendant’s responses thereto, and the entire record of this matter, the Court has
determined that the relevant allegations, facts, and legal arguments are adequately
presented in these written submissions, and that oral argument would not aid the
decisional process. Therefore, the Court will decide this matter “on the briefs.”
See Eastern District of Michigan Local Rule 7.1(f)(2). The Court’s Opinion and
Order is set forth below.
II. PLAINTIFF’S MOTION FOR CONDITIONAL CERTIFICATION
Plaintiff formerly worked as an assistant manager at two of the twenty-six
Jimmy John’s franchises owned and operated by Defendant 1 -- one on Baldwin
Road in Auburn Hills, Michigan and one on Sashabaw Road in Clarkston,
Michigan. (Plf’s Compl., Dkt. # 1, at ¶¶ 15-17, 26; Ex. A to Def’s Resp., Dkt. #
24-2, at ¶ 4). He worked at the Baldwin Road store from 2011 to 2012. (Plf’s
Compl., Dkt. # 1, at ¶ 17). Defendant then transferred him to the Sashabaw Road
store, where he worked until Defendant terminated his employment on August 13,
2014. (Id. at ¶¶ 17, 42).
As set forth in more detail with respect to Plaintiff’s Motion for Leave to File
First Amended Complaint below, the corporate structure at play is quite nuanced as
it involves a variety of LLCs to own, operate, and manage the Jimmy John’s
franchises that are at issue in this litigation.
The gist of Plaintiff’s Complaint is straight-forward. Defendant classified
him as an exempt employee under the FLSA, and as a consequence, he was not
entitled to overtime compensation. Plaintiff asserts that he should have been
classified as a non-exempt employee and is due over $20,000 in back wages, which
represents more than eleven hundred hours of unpaid overtime. (Id. at ¶¶ 28-38).2
For example, Plaintiff alleges that he spent “at least 80-85%” of his time engaged
in non-exempt duties on the food production line: “taking customer orders,
preparing sandwiches and other food orders, and serving as cashier.” (Id. at ¶¶ 1819). Plaintiff additionally asserts that although he was an assistant manager, this
position was only a title as he had “no authority to hire or fire employees,” “did not
set the schedules for other employees,” and “had no authority to impose
disciplinary measures on other employees.” (Id. at ¶¶ 20-22).
Plaintiff seeks to represent other assistant managers in this purported
collective action. (Id. at ¶¶ 43-58). He avers that he “has actual knowledge” that
Defendant failed to pay other assistant managers overtime because he “worked at
more than one location . . . as an assistant manager and was classified as an exempt
employee at all locations” and because he “worked with other assistant managers.”
(Id. at ¶¶ 43-45). Moreover, it is “a matter of policy for all locations operated by
In addition to seeking compensation for this misclassification, Plaintiff also
alleges that Defendant terminated his employment after complaining about this
misclassification in violation of the FLSA’s anti-retaliation provision. (Id. at ¶¶
[Defendant that assistant managers] are improperly classified as exempt
employees.” (Id. at ¶¶ 48, 53).
In support of his Motion, Plaintiff primarily attaches two documents that fill
in some of these allegations: his own affidavit and Defendant’s Employee Policy
First, Plaintiff’s affidavit frames his day-to-day tasks around
During the time that I was an assistant manager my principal
work was at the meat slicing station. I spent nearly all of my
work time at the meat slicing station, filling in for another
employee at one of the other [sandwich] production stations, or
sharing in cleaning duties. This was the case at both restaurants
where I worked, and was based on uniform company policies
applicable to all restaurant locations.
The tasks for employees, including assistant managers, were
spelled out in detail in established CWL policies. For instance,
there were specific cleaning tasks, listed in order or (sic)
priority, on sheets provided by CWL for cleaning at lunch time,
cleaning at dinner time, and “specialized” cleaning to be
performed on specified days of the week.
Neither I nor any other assistant manager had the authority to
hire, promote, or fire other employees. These decisions were
made at the corporate, not the restaurant, level.
As an assistant manager I was occasionally directed to conduct
interviews of applicants for employment. By established CWL
policy I was required to ask specified questions -- and only
those specified questions -- of an applicant. I then wrote down
He also attaches various screenshots from Defendant’s website that depict
Defendant’s investment locations, including those in southeast Michigan. (Exs. 1
& 2 to Plf’s Br., Dkt. ## 21-3, 21-4).
the applicant’s responses on the general sheet and passed the
sheet to the [store’s General Manager].
Assistant managers had no authority to determine or impose
discipline upon other employees or to reward employees for
exceptional work. We were permitted only to fill out a form
listing an employee’s violation of established company rules or
policies and pass the form along to the [store’s General
Manager], who would forward the form to the Human
Resources department at the company offices for determination
Neither I nor any other assistant manager was responsible for
establishing work schedules for other employees. Even when
an employee could not report due to illness or other emergency,
the assistant manager could merely provide that employee with
a list of other employees who were available and eligible to
work those hours. We could only provide the names of
employees who, if they worked an additional shift, would not
exceed a set number of hours in a week.
(Ex. 3 to Plf’s Br., Dkt. # 21-5, at ¶¶ 13-18).
Second, Plaintiff directs this Court to the following policies within
Defendant’s Employee Policy Guidebook: (1) Area managers -- not assistant
managers, managers, or general managers -- may reward employees for
“outstanding performance;” (2) All employees must “find [their] own replacement
if [they] are not going to be at work;” (3) General managers are “solely responsible
for the supervision, contents and operation of the cash register;” and (4) the
“Manager work week is a minimum of fifty hours and five shifts,” with a
“minimum of 10 hours per day.” (Ex. 4 to Plf’s Br., Dkt. # 21-6, at 16, 19-21).
Plaintiff therefore requests that this Court authorize that notices of this
lawsuit be sent to “all current and former persons employed as assistant managers
by CWL Investments, LLC throughout Michigan who worked for at least one week
in excess of forty hours but were paid only for forty hours from October 23, 2010
to the present.” (Ex. 1 to Plf’s Mtn., Dkt. # 21-1, at 2). Defendant vigorously
objects, attaching declarations by eight current or former assistant managers at
various locations denying in some detail that they are not similarly situated to
Plaintiff with respect to the work that they perform. (Exs. C-J to Def’s Resp.,
Dkts. ## 24-4 to 24-11). These assistant managers emphasize the supervisory and
discretionary nature of their positions, including by: interviewing applicants for
positions; training new employees; directing employees to do certain tasks;
disciplining employees; managing labor costs by sending employees home; and
reviewing employee’s performance.
Notably, one of these assistant
managers worked at both locations where Plaintiff worked and absolutely disputes
Plaintiff’s view of an assistant manager’s job duties. (Ex. F to Def’s Resp., Dkt. #
Defendant also attaches other materials, including: (1) declarations of employees
whom Plaintiff formerly supervised and who dispute Plaintiff’s position as to his
job responsibilities; (2) documentation that it asserts shows that Plaintiff
disciplined employees, managed employee’s timesheets, and interviewed
applicants; and (3) Plaintiff’s job description. (Exs. K-N to Def’s Resp., Dkt. ##
24-12 to 12-15, 24-18 to 24-20).
Section 216(b) of the FLSA permits individuals to sue on “their own behalf
and for ‘similarly situated’ persons.” Comer v. Wal-Mart Stores, Inc., 454 F.3d
544, 546 (6th Cir. 2006). In order to proceed as a “collective action,” the plaintiffs
must be actually similarly situated and all plaintiffs must affirmatively opt into the
litigation. Id. (citing 29 U.S.C. § 216(b) and Hoffman-La Roche, Inc. v. Sperling,
493 U.S. 165, 167-68 (1989)). This is in contrast to “the opt-out approach utilized
in class actions under Fed. R. Civ. P. 23.” Id.
Though the Sixth Circuit has not expressly decided the procedure under
which a district court should utilize to determine whether to certify a collective
action under Section 216(b), the near universal approach within this Circuit -- and
across the country -- is to employ a “two-phase inquiry.” Id. During the first
stage, which takes place at the beginning of discovery, a court will typically
“conditionally certify” a representative class upon a “modest factual showing” that
a class of similarly situated individuals exists. Id. at 547 (citation omitted). Other
courts have described this showing as “a fairly lenient standard.” See White v.
Baptist Mem. Health Care Corp., 699 F.3d 869, 877 (6th Cir. 2012). Putative class
members are then notified of the action and are given the opportunity to “opt-in.”
Comer, 454 F.3d at 546. Following the close of discovery, a court will turn to the
second stage and determine whether the class members are, in fact, similarly
situated by way of a decertification motion. Id.
Lead plaintiffs “bear the burden of showing that the opt-in plaintiffs are
similarly situated to the lead plaintiffs.” O’Brien v. Ed Donnelly Enters., Inc., 575
F.3d 567, 584 (6th Cir. 2009). Neither the FLSA nor the Sixth Circuit defines the
term “similarly situated.” The Sixth Circuit has, however, endorsed certification
decisions made upon a variety of factors, including “the ‘factual and employment
settings of the individual[ ] plaintiffs, the different defenses to which the plaintiffs
may be subject on an individual basis, [and] the degree of fairness and procedural
impact of certifying the action as a collective action.’” Id. (citations omitted). It
has also held that “it is clear that plaintiffs are similarly situated when they suffer
from a single, FLSA-violating policy, and when proof of that policy or of conduct
in conformity with that policy proves a violation as to all the plaintiffs.” Id. at 585.
But such a “unified policy” is not required to make an adequate similarly situated
finding. Id. at 584. That is, a collective action may be appropriate when claims
are “unified by common theories of . . . statutory violations, even if the proofs of
these theories are inevitably individualized and distinct.” Id. at 585.
This instant Motion arrives before this Court in a slightly different
procedural posture than most motions for conditional certification. Here, Plaintiff
filed his Motion not at the beginning of discovery, but instead a little more than
one and a half months before the close of discovery. When a plaintiff has been
afforded the opportunity to conduct discovery, courts typically apply a
“heightened” or “more restrictive” -- but not stringent -- standard. See, e.g.,
Wheeler v. City of Detroit, 2012 WL 1119300, at *3 (E.D. Mich. Apr. 3, 2012)
(Borman, J.); Neff v. U.S. Xpress, Inc., 2013 WL 4479078, at *3 (S.D. Ohio Aug.
Plaintiff argues that this Court should not apply such a standard, noting that
Defendant “has refused to provide information regarding other assistant managers
in response to [Plaintiff]’s discovery requests, or any other ‘significant’
information.” (Plf’s Reply, Dkt. # 25, at 3-4). He also argues that he had problems
-- due to Defendant’s calendar -- scheduling the deposition of Defendant’s 30(b)(6)
representative, and that Defendant has been tardy in producing documents and
identifying individuals with knowledge of Plaintiff’s claims. (Id. at 4-6). Because
Defendant “has failed or refused to provide any ‘significant’ discovery bearing on
the classification, actual job duties or compensation of other assistant managers,”
Plaintiff posits that this Court should apply the looser standard. (Id.) (emphasis
This position is not well-taken.
Defendant responded to Plaintiff’s
document requests and interrogatories on this issue in January 2014. (Exs. 1 & 2
to Plf’s Reply, Dkt. ## 25-2, 25-3). Under this Court’s Scheduling Order, Plaintiff
was required to file a motion to compel discovery “within 14 days of receipt or
notice of such disputed discovery.” (Dec. 5, 2013 Scheduling Order, Dkt. # 9, at
¶7A.). Plaintiff’s failure to timely challenge Defendant’s answers and responses
has waived any right he had to object to the same. And though he was not able to
depose Defendant’s 30(b)(6) representative until recently, this Court need not
require “significant” discovery to view Plaintiff’s Motion with the heightened
standard. It is clear that Plaintiff has conducted some discovery with respect to the
certification issue, albeit one that has apparently not been very fruitful for him.
Neff, 2013 WL 4479078, at *3 (“[W]hen some, but not all, discovery has been
undertaken relating to the issue of class certification, a heightened, but not
stringent, standard must be applied.”).
Accordingly, the Court will analyze
Plaintiff’s Motion under the “heightened” or “more restrictive” standard. 5
Plaintiff rests his Motion upon his identification of “a single policy . . .
which has caused [Defendant] to violate the FLSA by failing to pay overtime
compensation to Plaintiff and all Class Members:” Defendant’s classification of all
assistant managers as exempt employees. (Plf’s Br., Dkt. # 21-2, at 13). While
cognizant of the fact that courts typically grant such motions, Plaintiff’s
identification of this policy alone does not set forth a sufficient factual nexus
Even were the loose standard to apply, this Court’s conclusion regarding
conditional certification would be the same.
between this policy and other similarly situated employees. Courts within this
Circuit and across the country require more than just identifying classification
decisions in order to conditionally certify a collective action:
As a matter of both sound public policy and basic common sense, the
mere classification of a group of employees -- even a large or
nationwide group -- as exempt under the FLSA is not by itself
sufficient to constitute the necessary evidence of a common policy,
plan, or practice that renders all putative class members as “similarly
situated” for § 216(b) purposes. If it were, in every instance where an
employer is accused of misclassifying a large group of employees, the
district court would then somehow be required to order collective
action notification, irrespective of the quality or quantity of evidence
that had been produced in the form of declarations and supporting
exhibits. Such a rule would run counter to the long established law
governing § 216(b) actions, which states that whether an employee
has been properly exempted under the FLSA necessitates a fact
Colson v. Avnet, Inc., 687 F. Supp. 2d 914, 927 (D. Ariz. 2010) (emphasis added);
Bearden v. AAA Auto Club S., Inc., 2013 WL 1181474, *7 (W.D. Tenn. Mar. 18,
2013) (“It is not enough for the named plaintiffs to assert that [an employer]
‘applied a similar classification to all of them.’ Instead, there must be a specific
factual showing, albeit ‘modest,’ that the theoretical claims of the potential class
members share with the named plaintiffs a common theory that the . . .
classification was improperly applied to them.”) (citation omitted). In particular,
this Court finds recent decisions by Judges Lawson, Edmonds, and Roberts of this
District to be persuasive. See Arrington v. Michigan Bell Tel. Co., 2011 WL
3319691 (E.D. Mich. Aug. 1, 2011) (Lawson, J.); Shipes v. Amurcon Corp., 2012
WL 995362 (E.D. Mich. Mar. 23, 2012) (Roberts, J.); Swinney v. Amcomm
Telecomm., Inc., 2013 WL 28063 (E.D. Mich. Jan. 2, 2013) (Edmunds, J.).
In Arrington, the plaintiffs similarly argued that their employer improperly
classified them as exempt employees and sought conditional certification under
Section 216(b). 2011 WL 3319691, at *1-2. In support, they claimed that they
were “similarly situated to other First Level Managers because they are all subject
to the defendant’s FLSA-violating policy of improperly classifying the First Level
Managers as exempt from overtime wages under the FLSA.” Id. at *5. But they
supported this claim “with declarations and depositions of the plaintiffs in which
the plaintiffs assert only their ‘beliefs’ that other First Level Managers also are
subject to that practice.” Id. And as here, the defendant attached a variety of
affidavits from other First Level Managers “denying that their positions should be
exempted under the FLSA and asserting that they are not similarly situated to the
plaintiffs with respect to the work they perform.” (Id. at *5). Judge Lawson found
that such “beliefs” were not sufficient to warrant conditional certification: “The
plaintiffs’ claim of a common violation by the defendant would be sufficient to
meet that showing, but the plaintiffs have provided no evidence of common
treatment beyond the two experiences of Arrington and Nagy and their beliefs that
other First Level Managers are not being compensated for overtime work.
Although they include their beliefs . . . in signed declarations, the plaintiffs have
pointed to no evidence at all that could support their argument that other First
Level Managers are similarly situated.” Id. at *6.
Shipes, as pertinent here, also involved an allegation of misclassification.
2012 WL 995362, at *9. Judge Roberts similarly held that “it is not enough, even
at the notice stage, to allege lead and opt-in plaintiffs are similarly situated simply
because of the defendant’s common scheme to misclassify them as exempt.” Id.
(citation omitted). Rather, “[a] collective action is only appropriate where the
plaintiffs make a modest factual showing that the nature of the work performed by
all class members is at least similar to their own.” Id. at *10. (citation omitted).
In finding that plaintiff’s support -- by pointing to her classification status and an
affidavit attesting that she “kn[e]w of other individuals who regularly worked
overtime hours” -- did not warrant conditional certification, Judge Roberts noted
that the plaintiff “provide[d] no evidence that other salaried employees performed
similar job duties as she. . . . While her affidavit suggests she may have been
subjected to FLSA-violating practices, standing alone, this declaration does not
establish a right to proceed collectively.” Id.
Finally, Judge Edmonds in Swinney addressed a claim that a cable company
misclassified its service technicians as “independent contractors” instead of
employees. 2013 WL 28063, at *1, 3. Drawing on Arrington and Shipes, Judge
Edmonds declined to conditionally certify a collective action due to the conclusory
nature of the plaintiff’s “support” for the identification of similarly situated
Just as in Arrington, Plaintiff has alleged that Defendant violated the
FLSA by failing to pay him overtime. He also alleged a class size of
at least fifty. And he finally has alleged that Defendant subjected all
of the independent contractors to the same. But, also just as in
Arrington, Plaintiff has only provided conclusory allegations in
support of his affidavit. The Court also points out that Plaintiff has
offered only his declaration in support of conditional certification.
While, as the court noted in Arrington, numbers are not dispostive,
they are a factor. But his declaration, as it stands, with no other
evidence, is insufficient.
Id. at *8 (citation to Shipes omitted).
As with the plaintiffs in Arrington, Shipes, and Swinney, Plaintiff has not
sufficiently put forth facts to warrant conditional certification. He has no evidence
that other assistant managers performed their work as assistant managers in a
Outside of pointing to Defendant’s classification policy, all
Plaintiff has put forth is that he “has worked with other assistant managers” and
that “[o]ther employees similarly situated to [him] work or have worked for
[Defendant], but are or were not paid overtime.” (Plf’s Compl., Dkt. # 1, at ¶¶ 4546). This falls short of his burden to show that there are opt-in plaintiffs that are
similarly situated to him. See also O’Neal v. Emery Fed. Credit Union, 2013 WL
4013167, at *8 (S.D. Ohio Aug. 6, 2013) (“[T]o warrant a finding that similarly
situated employees exist, a plaintiff’s declaration must at least allege facts
sufficient to support an inference that she has actual knowledge about other
employees[’] job duties, pay structures, hours worked, and whether they were paid
for overtime hours.”) (emphasis in original); Harriel v. Wal-Mart Stores, Inc.,
2012 WL 2878078, at *5 (D.N.J. July 13, 2012) (“The fact that Plaintiff alone
claims he spent most of his time performing non-managerial tasks, combined with
the evidence showing that [his] position is subject to nationwide standards under
Defendant’s corporate policies, does not require the Court to infer that a significant
number of other [alleged similarly situated plaintiffs] would have also deviated
from the written job description to spend most of their time performing nonmanagerial tasks.”).
Plaintiff makes no attempt to distinguish this line of cases, which Defendant
featured prominently -- amongst others -- in its Response. Instead, Plaintiff’s
Reply focuses upon Defendant’s argument that “no other class members have yet
to indicate a desire to opt in” and its use of the various affidavits by current
employees. (Plf’s Reply, Dkt. # 25, at 6-10). But this Court has neither required
such a showing of interest to opt-in nor relied upon the other affidavits to evaluate
whether Plaintiff has shown that similarly situated individuals exist.
Accordingly, this Court denies Plaintiff’s Motion without prejudice.
III. PLAINTIFF’S MOTION FOR LEAVE TO AMEND
Pertinent Facts and Procedural History
Plaintiff commenced this litigation on October 23, 2013, naming only CWL
Investments as a Defendant. (Plf’s Compl., Dkt. # 1). In its Answer, Defendant
denied that it “owns and operates” Jimmy John’s franchises and that it was
Plaintiff’s employer. (Def’s Ans., Dkt. # 5, at ¶¶ 2, 7, 12, 16). Moreover, one of
its affirmative defenses expressly pled that “CWL did not employ Plaintiff.”
(Def’s Aff. Def., Dkt. # 5, at ¶ 2). Nevertheless, Defendant appeared and the
parties commenced discovery.
During discovery, one of Plaintiff’s Interrogatories asked for information
concerning Plaintiff’s employment status with Defendant: “Do you contend that
Plaintiff was not employed by Defendant, as alleged in paragraph 2 of the
Affirmative Defenses you filed in this action?” (Ex. 2 to Plf’s Resp., Dkt. # 32-3,
at 5-6). Defendant answered on January 31, 2014 as follows:
Defendant states that Plaintiff was employed by CWL-Great Lakes,
LLC when he worked at the Auburn Hills store and by CWLIndependence, LLC when he worked at the Clarkston store. These are
separate and distinct legal entities. Each of these entities have
separate employees, separate payroll, and separate employer
identification numbers for tax and other purposes.
Defendant additionally referenced CWL-Independence, LLC and CWL-
Great Lakes, LLC in other interrogatory answers. (Id. at 3, 4).
On March 11, 2014, Plaintiff filed the above discussed Motion for
Conditional Certification. (Plf’s Mtn., Dkt. # 21). In a footnote in his Brief,
Plaintiff raised -- for the first time to this Court -- the issue of whether Plaintiff has
properly identified Defendant as his employer: “[D]iscovery as has been obtained
indicates that CWL may operate the restaurants through creation of individual
LLCs, with CWL as either the sole or the majority member, and with an officer of
CWL as the managing member.” (Plf’s Br., Dkt. # 21-2, at 4, n.1). Defendant did
not directly address this issue and instead just noted in its Response that “CWL
currently assists in the operation of 26 Jimmy John’s . . . under various
administrative service agreements between CWL and the companies that own the
individual stores. . . . [I]t does not employ store employees.” (Def’s Resp., Dkt. #
24, at 11).
While that Motion remained pending, on May 1, 2014, Plaintiff finally
deposed Clifford Lunney. 6
Lunney is Defendant’s “President and managing
member.” (Ex. A to Def’s Resp., Dkt. # 24-2, at ¶ 2). During his deposition,
Lunney clarified the various corporate structures used to operate the Jimmy John’s
franchises at issue in this litigation:
• Defendant, an LLC, is composed of three members -- two other
LLCs (4LI LLC and Sandpoint Investments LLC) and an
individual (Andy Elmhurst). (Ex. 1 to Def’s Resp., Dkt. # 32-2, at
Plaintiff attributes a lengthy delay in scheduling due to Defendant’s calendar.
(Plf’s Reply, Dkt. # 25, at 5).
5). The majority member, 4LI LLC, has two members -- a trust
under Lunney’s name and a trust under his wife’s name. (Id. at 56).
• Defendant manages Jimmy John’s franchises pursuant to a separate
management agreement with each of the franchises that are at issue
in this litigation. (Id. at 6, 8-9, 13). A separate LLC owns each
franchise that Defendant operates. (Id. at 8-9). Those LLCs
employ each of their respective employees. (Id. at 24, 27, 38-39).
For Plaintiff, these separate LLCs were CWL-Great Lakes, LLC.
and CWL-Independence, LLC. Defendant (and now Michigan JJ)
handles taxes and payroll for each franchise. (Id. at 27).
• Prior to late 2013 or early 2014, Defendant wholly owned each of
these separate LLCs. (Id. at 11-12; Ex. 1 to Plf’s Mtn., Dkt. # 28,
at ¶ 3). At that time, Defendant transferred its ownership interests
in these separate LLCs to a newly-formed LLC, Michigan JJ, LLC.
(Id. at 10-11; Ex. 1 to Plf’s Mtn., Dkt. # 28, at ¶ 3). Michigan JJ,
LLC was formed on November 20, 2013 -- two months after
Plaintiff’s August 13, 2013 termination. (Ex. 4 to Def’s Resp.,
Dkt. # 32-5).
• Michigan JJ, LLC is composed of the same members as
Defendant: 4LI LLC, Sandpoint Investments LLC and Andy
Elmhurst. Each member has the same ownership percentage as
they did in Defendant. (Ex. 1 to Def’s Resp., Dkt. # 32-2, at 10).
• Defendant -- through Lunney -- continues to manage each of the
respective franchises. (Id. at 16-17).
During Lunney’s deposition, Plaintiff’s counsel noted that he was going to
move to amend Plaintiff’s Complaint to add Michigan JJ as a Defendant. (Id. at
12). He sent Defendant’s counsel a copy of the proposed Amended Complaint on
May 23, 2014 -- a week before this Court’s May 30, 2014 discovery cut-off date.
(Plf’s Mtn., Dkt. # 28, at 5). Defendant’s counsel did not substantively respond,
and the discovery cut-off date came and went. (Id. at 5-6). Two weeks later, on
June 13, 2014, Plaintiff finally moved for leave to amend in order to add 4LI, LLC
and Michigan JJ, LLC as defendants. (Plf’s Mtn., Dkt. # 28).
Defendant objects to Plaintiff’s Proposed First Amended Complaint on two
fronts. First, Defendant argues that it is futile because it does not allege sufficient
facts showing that 4LI, LLC and Michigan JJ, LLC were Plaintiff’s “employers”
under the “economic-realities” test. (Def’s Resp., Dkt. # 32, at 13-18). Second,
Defendant contends that the Proposed First Amended Complaint is prejudicial
because Plaintiff filed this Motion after discovery cut-off. (Id. at 18-20). As set
forth below, these objections are without merit.
Under Rule 15, a party may amend a pleading before trial as a matter of
course (Fed. R. Civ. P. 15(a)(1)), with the opposing party’s written consent (Fed.
R. Civ. P. 15(a)(2)), or by leave of the Court. (Id.). Rule 15(a)(2) makes clear that
a “court should freely give leave when justice so requires.” Id. “The decision as to
when ‘justice requires’ an amendment is within the discretion of the trial judge.”
Head v. Jellico Hous. Auth., 870 F.2d 1117, 1123 (6th Cir. 1989) (citation and
“Although Federal Rule of Civil Procedure 15(a)(2) provides that a court
should freely give leave to amend a complaint when justice so requires, the right to
amend is not absolute or automatic.” Tucker v. Middleburg-Legacy Place, 539
F.3d 545, 551 (6th Cir. 2008) (internal quotation and modification omitted). “In
deciding whether to allow an amendment, the court should consider the delay in
filing, the lack of notice to the opposing party, bad faith by the moving party,
repeated failure to cure deficiencies by previous amendments, undue prejudice to
the opposing party, and futility of amendment.” Perkins v. Am. Elec. Power Fuel
Supply, Inc., 246 F.3d 593, 605 (6th Cir. 2001). An amendment is deemed futile if
the resulting amended complaint “could not withstand a Rule 12(b)(6) motion to
dismiss.” Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir.
Taking Defendant’s arguments in reverse order, the Court finds that
amendment will not prejudice the new Defendants in a manner that would support
denying Plaintiff’s Motion for Leave to File First Amended Complaint. Plaintiff
has offered (although barely) an explanation for the delay as he identified
scheduling issues with respect to Lunney’s deposition and requested Defendant’s
consent to amend the Complaint prior to discovery cut-off. Duggins v. Steak N
Shake, Inc., 195 F.3d 828, 834 (6th Cir. 1999). The dispositive motion deadline
has not arrived and Defendant has not moved for summary judgment. More
importantly, the addition of the new Defendants is really just an addition of paper:
according to Lunney’s deposition testimony, the various corporate machinations all
point back to him and Plaintiff has already deposed Lunney. In sum, permitting
Plaintiff to add Michigan JJ and 4LI will just require a short period of written
discovery as set forth below, which will not be prejudicial.
The Court also finds that Plaintiff’s Motion is not futile. It is apparent to
this Court that Michigan JJ could be deemed Defendant’s successor, and therefore
liable for Defendant’s conduct. 7
“[T]he appropriateness of successor liability
depends on whether the imposition of such liability would be equitable.” Cobb v.
Contract Transp., Inc., 452 F.3d 543, 554 (6th Cir. 2006). Courts use a variety of
factors to consider successor liability, including:
(1) whether the successor company has notice of the charge; (2) the
ability of the predecessor to provide relief; (3) whether the new
employer uses the same plant; (4) whether there has been substantial
continuity of business operations; (5) whether the new employer uses
the same or substantially same workforce; (6) whether the new
employer uses the same or substantially same supervisory personnel;
(7) whether the same jobs exist under substantially the same working
conditions; (8) whether [the defendant] uses the same machinery,
equipment and methods of production; and (9) whether [the
defendant] produces the same product.
Though the Sixth Circuit has not examined successor liability under the FLSA,
others “have directly addressed the issue [and] unanimously . . . hold that successor
liability can be appropriate in FLSA cases.” Thompson v. Bruister & Associates,
Inc., 2013 WL 1099796, at *6 (M.D. Tenn. Mar. 15, 2013) (collecting cases). The
Sixth Circuit has also “recognized successor liability in the employment context.”
Id. at *4-6 (citing EEOC v. MacMillan Bloedel Containers, 503 F.2d 1086, 109091 (1974)).
Id. These are “not in themselves the test for successor liability,” but rather “are
simply factors courts have considered when applying the three prong balancing
approach, considering the defendant’s interests, the plaintiff’s interests, and federal
Here, Plaintiff’s Proposed First Amended Complaint makes clear that
Defendant has since “conveyed all of its interest in the Jimmy John’s franchises to
Michigan JJ . . . with the same members, [and] with the same ownership
percentages, as [Defendant.]” (Ex. 1 to Plf’s Mtn., Dkt. # 28, at ¶ 3) (emphasis
added). In short and as stated previously, the change was one in paper only.
Defendant argues that Plaintiff has not addressed the nine-factor test set forth
above, but the Sixth Circuit made it clear in Cobb that Plaintiff need not do so:
“[A]ll nine factors will not be applicable to each case. Whether a particular factor
is relevant depends on the legal obligation at issue in the case. The ultimate
inquiry always remains whether the imposition of the particular legal obligation at
issue would be equitable and in keeping with federal policy.” 452 F.3d at 554.
Plaintiff has pled enough facts to plausibly infer that Michigan JJ is Defendant’s
successor. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
With regards to 4LI, Plaintiff argues that it is either a joint-employer or
constitutes part of a “single integrated enterprise.” As this Court finds that it is
plausible that 4LI is a part of a single integrated enterprise, there is no need to
separately examine whether it also constitutes a “joint employer” at this time.
Under the single integrated enterprise (or “single employer”) doctrine, the Sixth
Circuit has stated that:
two companies may be considered so interrelated that they constitute a
single employer subject to liability. . . . In determining whether to
treat two entities as a single employer, courts examine the following
four factors: (1) interrelation of operations, i.e., common offices,
common record keeping, shared bank accounts and equipment; (2)
common management, common directors and boards; (3) centralized
control of labor relations and personnel; and (4) common ownership
and financial control. None of these factors is conclusive, and all four
need not be met in every case. Nevertheless, control over labor
relations is a central concern.
Swallows v. Barnes & Noble Book Stores, Inc., 128 F.3d 990, 993-94 (6th Cir.
1997) (citing internal citations omitted).
This Court is satisfied that Plaintiff’s allegations plausibly allege that 4LI
and Defendant -- as well as the other various corporate machinations -- are just part
one single integrated enterprise.
4LI is Defendant’s majority member and
Michigan JJ’s majority member. More importantly, 4LI apparently begins and
ends with Lunney -- the individual who manages (through Defendant) each of the
These facts are enough for Plaintiff’s Proposed First
Amended Complaint to not be futile with respect to 4LI. Iqbal, 556 U.S. at 678;
Bracken v. DASCO Home Med. Equip., Inc., 954 F. Supp. 2d 686, 698-99 (S.D.
Ohio 2013) (it is enough to plead that two entities “have the same business address
and the same statutory agent” to plausibly allege that they “were a single integrated
employer that are separated only nominally”).
In sum, whether Michigan JJ and 4LI may be liable for Defendant’s alleged
FLSA violations is a question to be fleshed out during a period of limited
Because discovery has already closed in this matter and given
Plaintiff’s acknowledgment that he is done deposing Lunney, the Court will
therefore permit written discovery only with respect to Plaintiff’s claims against
4LI, LLC and Michigan JJ, LLC for a period not to extend thirty days after they
appear in this matter.8
IV. PLAINTIFF’S MOTION TO COMPEL
Finally, Plaintiff seeks to compel Defendant to produce certain documents in
response to his Second Requests for Production of Documents. (Plf’s Mtn., Dkt. #
38). Plaintiff served such discovery on May 23, 2014. (Ex. 1 to Plf’s Mtn., Dkt. #
38-1). Defendant responded on June 18, 2014. (Ex. 2 to Plf’s Mtn., Dkt. # 38-2).
Under this Court’s Scheduling Order, “[a]ll motions to compel disputed discovery .
. . must be filed within 14 days of receipt or notice of such disputed discovery. . . .
The Court will not entertain such motions beyond this time absent some
In a footnote in his Reply, Plaintiff for the first time requests that this Court add
Lunney as a Defendant. (Plf’s Reply, Dkt. # 34, at 4 n. 3). It is well established
that parties may not raise new positions in a reply brief. Scottsdale Ins. Co. v.
Flowers, 513 F.3d 546, 553 (6th Cir. 2008). If Plaintiff wished to add Lunney, he
should have done so pursuant to Federal Rule of Civil Procedure 15(a)(2).
extraordinary showing of good cause.” (Dec. 5, 2013 Scheduling Order, Dkt. # 9,
at ¶7A.). Fourteen days after June 18, 2014 was July 2, 2014. His July 24, 2014
Motion is therefore untimely and he has not made an extraordinary showing of
good cause. His Motion is therefore denied. 9
For these reasons,
IT IS HEREBY ORDERED that Plaintiff’s Motion for Conditional
Certification (Dkt. # 21) is DENIED WITHOUT PREJUDICE.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Leave to File First
Amended Complaint (Dkt. # 28) is GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s Motion to Compel Discovery
(Dkt. # 38) is DENIED.
IT IS FURTHER ORDERED that Plaintiff may file his First Amended
Complaint within seven days after entry of this order.
IT IS FURTHER ORDERED that the parties may engage in written
discovery only with respect to Plaintiff’s claims against 4LI, LLC and Michigan JJ,
LLC for a period not to extend thirty days after they appear in this matter. With
The Court recognizes that some of the discovery pertinent to Plaintiff’s Motion
relates to Defendant’s various corporate organizations. Because this Court is
narrowly extending the discovery period due to the addition of other Defendants,
Plaintiff may serve discovery consistent with this Opinion, including this Court’s
denial of conditional certification.
the exception of the presently scheduled settlement conference with Magistrate
Judge Mona K. Majzoub on August 14, 2014, the Court will issue an Amended
Scheduling Order adjusting all upcoming dates. This includes the September 15,
2014 dispositive motion cutoff. The Court will not extend any more dates.
IT IS SO ORDERED.
Dated: August 13, 2014
s/Gerald E. Rosen
Chief, Judge, United States District Court
I hereby certify that a copy of the foregoing document was served upon the parties
and/or counsel of record on August 13, 2014, by electronic and/or ordinary mail.
Case Manager, (313) 234-5135
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