Fountain v. Big River Lumber Company LLC et al

Filing 37

ORDER granting in part and denying in part 29 Motion to Dismiss. The Court dismisses the recordkeeping claim under the FLSA and the claim for fraud. All other claims remain pending. Signed by District Judge Keith Starrett on 9/29/17 (aa)

Case 5:16-cv-00079-KS-MTP Document 37 Filed 09/29/17 Page 1 of 7

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
EASTERN DIVISION
KELVIN FOUNTAIN

PLAINTIFF

v.

CIVIL ACTION NO. 5:16-CV-79-KS-MTP

BIG RIVER LUMBER COMPANY
LLC, et al.

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This matter is before the Court on Defendants Motion to Dismiss for Failure to State a
Claim for Relief [29]. For the reasons below, the Court grants in part the motion.
I. BACKGROUND
Plaintiff is a former employee of Big River Lumber Company, LLC (“Big River”). He
alleges that he “routinely worked more than forty (40) hours per week and defendants did not
compensate [him] for the hours worked in excess for forty (40) hours per week.” (Compl. ¶ 19).
He further alleges that “Defendants failed to maintain accurate records of Fountain’s time and
engaged in a scheme to avoid compensating Fountain’s overtime earned.” (Id. ¶ 21). He further
alleges that “Defendants represented to Plaintiff that he was a daily employee as opposed to an
hourly employee and was not entitled to overtime pay,” that Defendants knew these statements to
be false, and that they intended to induce Plaintiff not to make a claim for benefits. (Id. ¶ 33).
Plaintiff has alleged race discrimination under Title VII and 42 U.S.C. § 1981, overtime and
recordkeeping violations under the FLSA, fraud, negligent and/or intentional infliction of mental
distress, and common law harrassments. He filed suit against Big River and two of its managers,
Andrew McGruder Hazlip and Edward Alex Kirkland. Defendants now move to dismiss the claims

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related to inadequate recordkeeping, the claims against Hazlip and Kirkland in their individual
capacities, and the claim for fraud.
II. STANDARD OF REVIEW
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), “a
complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face.” Great Lakes Dredge & Dock Co. LLC v. La. State, 624 F.3d 201, 210 (5th
Cir. 2010) (punctuation omitted). “To be plausible, the complaint’s factual allegations must be
enough to raise a right to relief above the speculative level.” Id. (punctuation omitted). The Court
must “accept all well-pleaded facts as true and construe the complaint in the light most favorable
to the plaintiff.” Id. But the Court will not accept as true “conclusory allegations, unwarranted
factual inferences, or legal conclusions.” Id. Likewise, “a formulaic recitation of the elements of
a cause of action will not do.” PSKS, Inc. v. Leegin Creative Leather Prods., Inc., 615 F.3d 412,
417 (5th Cir. 2010) (punctuation omitted). “While legal conclusions can provide the framework
of a complaint, they must be supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662,
679 (2009).
III. ANALYSIS
A.

Damages under the FLSA
In his Complaint [1], Plaintiff requested “non-pecuniary losses” including compensation

for “emotional pain, suffering, inconvenience, loss of enjoyment of life, humiliation and other nonpecuniary losses.” (Compl. Prayer for Relief, ¶ 6). Defendants argue that this claim must be
dismissed because the FLSA does not allow for such relief for an overtime violation. 29 U.S.C. §
216(b) (2012) (permitting an employee to recovery “unpaid overtime compensation . . . and an
additional equal amount as liquidated damages” for overtime compensation violations). In his

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Response, Plaintiff argues that he seeks only permitted damages under the FSLA and that the nonpecuniary damages claimed were related to other causes of action he asserted, such as Title VII,
42 U.S.C. § 1981, fraud, and infliction of emotional distress. In their Rebuttal, Defendants made
no response to this argument.1 As Defendants have failed to respond to Plaintiff’s arguments, the
Court finds that such portion of the motion should be denied.
B.

FLSA Record Maintenance
Section 211(c) of the FLSA requires that an employer keep accurate time records for its

employees. 29 U.S.C § 211(c) (2012). Section 211(a) provides that the Administrator of the Wage
and Hour Division of the U.S. Department of Labor may bring claims for equitable relief to restrain
any FLSA violations that are discovered. Id. § 211(a); see id. § 204(a) (defining “Administrator”).
However, § 216(b), which grants employees a private right of action to redress FLSA violations,
does not extend that right to violations of § 211(c)’s recordkeeping requirements. Plaintiff does
not appear to dispute this. Therefore, to the extent that Defendants’ Motion requests that the Court
dismiss any claim under FLSA’s recordkeeping requirement, it is granted.
However, Defendants’ motion goes further and argues that “each reference made [to
Defendants’ alleged defective employee recordkeeping] in Plaintiff’s Complaint should be
dismissed with prejudice.” (Mem. Supp. Rule 12(b)(6) Mot. Partial Dismissal [30], 6) (emphasis
added). The Court construes this to be a motion to strike under Rule 12(f) of the Federal Rules of

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Instead, they assert for the first time that Plaintiff has failed to state a claim for uncompensated overtime. Defendants
urge the Court to dismiss Plaintiff’s claim for his failure to submit “supporting witness affidavits or documentation”
for his FLSA overtime claim. (Rebuttal Mem. Supp. Defs.’ Mot. Dismiss [36], 2). The Court need not address
arguments raised for the first time in a rebuttal and unrelated to those raised in Defendants’ Motion and supporting
memorandum brief. Clinton v. Johnson, No. 5:12-cv-84-DCB-RHW, 2013 WL 870361, at *5 n.3 (S.D. Miss. Mar. 7,
2013). Furthermore, Defendants cite no authority to support their argument that Plaintiff’s allegations are insufficient
as a matter of law, and several district courts in this circuit have found similar allegations sufficient. Daniels v. City
of Jackson, Miss., No. 3:14-cv-279-DPJ-FKB, 2014 WL 4546020, at *2 (S.D. Miss. Sept. 11, 2014); Haymon v. City
of Jackson, Miss., No. 3:12-cv-325-DPJ-FKB, 2012 WL 6626645, at *2 (S.D. Miss. Dec. 19, 2012); Hoffman v.
Cemex, Inc., No. H-09-3144, 2009 WL 4825224, at *3 (S.D. Tex. Dec. 8, 2009).

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Civil Procedure. Under such rule, the Court may strike “any redundant, immaterial, impertinent,
or scandalous matter.”
The Court declines to do so, finding that the allegations that Defendants violated the
recordkeeping requirement under § 211(c) material. When a plaintiff makes such allegations, “[i]t
alters the Plaintiff[’s] burden and should alter the pleading requirements [because] the United
States Supreme Court [has] held that when an employer’s wage and hour records are unreliable,
an employee claiming FLSA violations meets the required burden of proof by showing ‘there is a
basis for a reasonable inference as to the extent of the damages.’” Daniels v. City of Jackson, Miss.,
No. 3:14-cv-279-DPJ-FKB, 2014 WL 4546020, at *3 n.2 (S.D. Miss. Sept. 11, 2014) (quoting
Anderson v. Mount Clemens Pottery Co., 328 U.S. 680, 688 (1946), superseded by statute on other
grounds, Portal-to-Portal Act of 1947, Pub. L. No. 80-49); Kirk v. Invesco, Ltd., No. H-15-833,
2016 WL 4394336, at *3-4 (S.D. Tex. Aug. 18, 2016) (setting out the burdens of proof under the
Anderson framework). Thus, to the extent that Defendants request that the Court strike all
allegations that Defendants violated the FLSA in failing to keep accurate records, it is denied.
C.

Individual Liability of Hazlip and Kirkland
Defendants argue that they are shielded from liability by Miss. Code Ann. § 79-29-311(1)

and are therefore not proper parties to this lawsuit. The statute provides: “No member, manager,
or officer of a limited liability company shall be obligated personally for any such debt, obligation
or liability of the limited liability company solely by reason of being a member, or acting as an
officer of the limited liability company.” Miss. Code Ann. § 79-29-311(1).2 Defendants argue that

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The statute provides a few exceptions, including that a member may agree to be personally liable for the debts of the
LLC. Miss. Code Ann. § 79-29-311(3). Plaintiff argues that this exception means that being a member or employee
of an LLC “does not automatically relieve the individual defendants of liability.” (Pl.’s Resp. & Memo. Opposing
Defs.’ 12(b)(6) Mot. Dismiss [35], 5). As there are no allegations that Hazlip or Kirkland have made any such
agreement, this argument is without merit.

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Plaintiff is attempting to pierce the corporate veil and that Plaintiff has not alleged sufficient facts
to support such piercing.
To pierce the corporate veil, a plaintiff must show: “(1) some frustration of contractual
expectations, (2) flagrant disregard of LLC formalities by the LLC members, and (3) fraud or
misfeasance by the LLC member.” Restaurant of Hattiesburg, LLC v. Hotel & Restaurant Supply,
Inc., 84 So. 3d 32, 39 (Miss. Ct. App. 2012) (citing Gray v. Edgewater Landing, Inc., 541 So. 2d
1044, 1047 (Miss. 1989)). There are no allegations that Big River and its members have
disregarded LLC formalities.3 Therefore, there is no basis for piercing the corporate veil, and the
individual defendants will not be held responsible for Big River’s alleged liabilities.
This does not necessarily mean that the individual defendants are due to be dismissed. The
above statute shields individuals from being held liable for the debts of the LLC “solely by reason
of being a member” of said LLC. This statute does not shield members from personal liability for
their own actions. See Grand Legacy, LLP v. Gant, 66 So. 3d 137, 147 (Miss. 2011) (noting that
an LLC member could be personally liable for fraud if the member personally participated in
making fraudulent representations to a third party). As Defendants have not shown that they cannot
be held personally liable for their own actions under each of the theories Plaintiff has asserted, the
motion to dismiss Hazlip and Kirkland is denied.
D.

Preemption
Finally, Defendants argue that Plaintiff’s claim for fraud is preempted by the FLSA. The

Fifth Circuit has not yet issued a published opinion regarding the extent to which the FLSA
preempts state law claims, but several district courts within this circuit have ruled on this issue.

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While Plaintiff argues that he has alleged fraud and that this should be enough to pierce the corporate veil, “[a]
successful veil-piercing claim must show each of the three Gray prongs.” Restaurant of Hattiesburg, LLC, 84 So. 3d
at 39 (citing Gray, 541 So. 2d 1047).

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“Consistently, these courts [within the Fifth Circuit] have held that where the claim at issue is pled
as an alternative cause of action for conduct that is addressed by the FLSA and for which the Act
provides a remedy, the common law claim is preempted. On the other hand, where the state law
affords a remedy for conduct not otherwise addressed by the FLSA, there is no preemption.”
Newsom v. Carolina Logistics Servs., Inc., No. 2:11-cv-172-DCB-JMV, 2012 WL 3886127, at *3
(N.D. Miss. Sept. 6, 2012) (collecting cases) (claim for quantum meruit preempted because the
right to such wages arises under FLSA) (internal citations omitted); Guerrero v. JPMorgan Chase
& Co., No. 6:09-cv-388, 2010 WL 245144, at *4 (E.D. Tex. Feb. 5, 2010) (claims for quantum
meruit, breach of contract, and unjust enrichment preempted because they “were duplicative of the
FLSA claim,” not “wholly aside from or independent of the FLSA,” and the FLSA “provides the
exclusive remedy for violation of its mandates”); Karna v. BP Corp. N. Am., 11 F. Supp. 3d 809,
816 (S.D. Tex. 2014) (no preemption when plaintiff’s quantum meruit claim did not require
establishing that employer violated the FLSA, as he was considered “exempt” and not subject to
the statute’s protection); Washington v. Freds Stores of Tenn., Inc., 427 F. Supp. 2d 725, 729 (S.D.
Miss. 2006) (state law negligence and conversion claims not preempted because they did not
“directly overlap with the claim under FLSA”). A claim for fraud based on an employer’s false
statements regarding whether the plaintiff is entitled to overtime compensation is preempted by
the FLSA. Brand Energy Solutions, LLC v. Gilley, No. 2:16-1025, 2017 WL 710951, at *3 (W.D.
La. Feb. 22, 2017) (fraudulent statements related to whether employee was salaried and thus not
entitled to overtime pay).
Plaintiff’s claim for fraud is based on Defendants’ representation that “he was a daily
employee as opposed to an hourly employee and was not entitled to overtime pay.” (Compl. ¶ 33).
Plaintiff further alleges that Defendants had the intent to defraud Plaintiff “with respect to the

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overtime benefits that he was entitled to and with the intent to induce plaintiff to not make any
claim for such benefits.” (Id.) To establish his claim, Plaintiff will have to show that the statements
made to him were false, meaning he must prove that he was, in fact, entitled to overtime
compensation. Furthermore, Plaintiff is entitled to such compensation only if he can prove his
FLSA claim. Since Plaintiff’s claim is not independent from his claim under the FLSA, it is
preempted and must be dismissed. To the extent that Defendants request that the Court dismiss
Plaintiff’s claim for fraud based on preemption, it is granted.
IV. CONCLUSION
IT IS THEREFORE ORDERED AND ADJUDGED that that Motion to Dismiss for
Failure to State a Claim for Relief [29] is granted in part and denied in part. To the extent that the
Motion requests that the Court dismiss any claims under the recordkeeping provision of the FLSA
and the claim for fraud, it is granted. To the extent that the Motion requests that the court dismiss
Defendants Hazlip and Kirkland, it is denied.
SO ORDERED AND ADJUDGED, on this, the 29th day of September, 2017.

/s/ Keith Starrett__________________
KEITH STARRETT
UNITED STATES DISTRICT JUDGE

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