Kology v. My Space NYC Corp. et al

Filing 27

ORDER denying 16 Motion to Dismiss. Ordered by Judge I. Leo Glasser on 4/11/2016. (Shamah, Adam)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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KOLOGY
Plaintiff,
- against -

MEMORANDUM AND ORDER
15-CV-3061 (ILG) (RML)

MY SPACE NYC CORP., ET AL.,
Defendants.
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GLASSER, Senior United States District Judge:
Dena Kology brought suit under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§§ 2000e et seq. (“Title VII”), New York State Human Rights Law, N.Y. Exec. Law § 296
(NYSHRL), and New York City Human Rights Law, N.Y.C. Code § 8-107 (NYCHRL), against
My Space NYC Corp. (“My Space”) and its president, Guy Hochman (collectively,
“Defendants”). Arguing that My Space was not Kology’s employer and therefore cannot be held
liable under the employment discrimination statutes, Defendants moved to dismiss the complaint
for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). But the
existence of an employee-employer relationship is not a jurisdictional matter; it is a substantive
element of Kology’s claims. Defendants’ motion therefore should be construed as a Rule
12(b)(6) motion to dismiss for failure to state a claim. Because both parties have filed affidavits
demonstrating that My Space was Kology’s employer, however, the Court converts Defendants’
motion to dismiss to a motion for summary judgment. The motion is DENIED.
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BACKGROUND

From May 2009 to August 2014, Kology was an agent and manager at My Space, a real
estate brokerage. See Kology Decl., Dkt 20-1, ¶¶ 3–4; Am. Compl., Dkt 13, ¶ 75. Hochman, My
Space’s president, hired her and assigned her general duties—e.g., opening and closing the
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office, meeting tenants and landlords, attending staff meetings, training and evaluating agents,
and compiling reports—and at times more specific duties; he controlled “every aspect of how”
she completed her work. Am. Compl., ¶ 49; see Kology Decl., ¶¶ 4, 6, 7, 9, 18, 19, 21. Hochman
also controlled Kology’s schedule, requiring his approval for time-off. Kology Decl., ¶¶ 6–7.
In 2010, after Hochman tasked Kology with managing a new branch office (id., ¶ 10),
Kology signed a contract detailing her salary, commission, holidays, vacation, and sick leave.
Id., ¶ 11. Kology later signed a non-compete agreement. Id., ¶ 20.
In 2011, Kology formed Atlantis 94 Corp. (“Atlantis”), a corporation of which she was
the sole shareholder and employee. Kology Decl., ¶¶ 13–14; Am. Compl., ¶¶ 40–46. My Space
thereafter paid Atlantis for Kology’s services. Kology Decl., ¶ 17; Hochman Reply Decl., Dkt.
22, ¶ 5; Am. Compl., ¶¶ 18, 43. This was Atlantis’s only purpose. Kology Decl., ¶ 17; Am
Compl., ¶¶ 41–46. Although Defendants maintain that Atlantis was a “vendor” of My Space
(Hochman Decl., Dkt. 17, ¶ 4), the parties appear to agree that this arrangement did not affect
Kology’s duties or Hochman’s control over her at work. See Kology Decl., ¶¶ 20–21. Hochman
later named Kology Senior Vice President of My Space, and ordered her to list that title in emails
and on her business card. Id., ¶ 20.
Kology alleges violations of Title VII and state law occurring between July 2013 and
August 15, 2014. See Am. Compl., ¶¶ 54, 75. On that day, Hochman fired her. Id., ¶ 75.
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LEGAL STANDARD

Although Defendants bring their motion to dismiss under Rule 12(b)(1), a defendant’s
“status as Plaintiff’s employer is a nonjurisdictional element of her substantive cause of action,
and therefore, a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction is not the
appropriate procedural vehicle for presenting this defense.” Kaiser v. Trofholz Techs., Inc., 935
F. Supp. 2d 1286, 1292 (M.D. Ala. 2013); see also Xie v. Univ. of Utah, 243 F. App’x 367, 371
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(10th Cir. 2007) (“employee status is an element of [a] Title VII claims rather than a matter of
subject matter jurisdiction”); Price v. Waste Mgmt., Inc., 2014 WL 1764722, at *5 (D. Md. Apr.
30, 2014) (same); cf. Arbaugh v. Y & H Corporation, 546 U.S. 500, 503 (2006) (Title VII’s
employee-numerosity requirement does not confine “federal-court subject-matter jurisdiction”
and instead “relates to the substantive adequacy of [a] Title VII claim”). Defendants’ motion
should be construed as a Rule 12(b)(6) motion to dismiss for failure to state a claim.
The affidavits filed by the parties cannot be considered on a Rule 12(b)(6) motion,
however, so the Court will convert the motion to one for summary judgment. See Fed. R. Civ. P.
12(d); Chambers v. Time Warner, Inc., 282 F.3d 147, 154 (2d Cir. 2002). And because both
parties have had “a reasonable opportunity to present” all pertinent material, the Court will
decide the summary judgment motion on the present submissions. Fed. R. Civ. P. 12(d); see In re
G. & A. Books, Inc., 770 F.2d 288, 295 (2d Cir. 1985) (“The essential inquiry is whether the
[parties] should reasonably have recognized the possibility that the motion might be converted
into one for summary judgment or was taken by surprise and deprived of a reasonable
opportunity to meet facts outside the pleadings.”); Washington v. Securitas Sec. Servs. USA, Inc.,
2014 WL 2882854, at *1 (W.D.N.Y. June 25, 2014).1

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By filing affidavits and counter-affidavits in connection with the purported Rule 12(b)(1) motion, both
parties evidenced an understanding that the Court would rely on this evidence to decide Kology’s
employment status. See In re G. & A. Books, Inc., 770 F.2d at 295 (“A party cannot complain of lack of a
reasonable opportunity to present all material relevant to a motion for summary judgment when both
parties have filed exhibits, affidavits, counter-affidavits, depositions, etc. in support of and in opposition
to a motion to dismiss.”); see generally Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (on
a 12(b)(1) motion, the plaintiff must establish jurisdiction by a preponderance of the evidence, and the
court may consider “evidence outside the pleadings”). Defendants nevertheless complain that Kology has
not produced a copy of her tax returns, which may show that she “declared herself as a non-employee of
My Space.” Def. Reply Mem. of Law, Dkt. 21, at 7 n.2. However, as elaborated below, even if Kology
declared herself a non-employee of My Space for tax purposes, that would not change the conclusion that
My Space was her employer for purposes of Title VII. See Eisenberg v. Advance Relocation & Storage,
Inc., 237 F.3d 111, 112 (2d Cir. 2000) (“in determining whether a worker is an employee within the
meaning of Title VII and the NYHRL, courts ordinarily should place particular weight on the extent to
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Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). The court must “construe the facts in the light most favorable to the nonmoving party” and
“resolve all ambiguities and draw all reasonable inferences against the movant.” Brod v. Omya,
Inc., 653 F.3d 156, 164 (2d Cir. 2011) (quotation omitted).
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DISCUSSION

Defendants argue that My Space was not Kology’s employer simply because My Space
paid Kology’s corporation, Atlantis, rather than Kology. This argument borders on frivolous. The
“corporate form under which a plaintiff does business is not dispositive in the determination of
whether an individual is an employee.” Frankel v. Bally, Inc., 987 F.2d 86, 91 (2d Cir. 1993)
(holding that there is no “per se rule that under the [Age Discrimination in Employment Act] an
individual who does business as a corporate entity cannot be recognized as an employee of the
company for whom he performs services”); see Rivera v. Puerto Rican Home Attendants Servs.,
Inc., 922 F. Supp. 943, 949 (S.D.N.Y. 1996) (Title VII). Yet evidence of corporate form is the
only evidence cited by Defendants to support their contention that My Space was not Kology’s
employer. See Hochman Decl., ¶¶ 3–6; Hochman Reply Decl., ¶¶ 5–6 (stating that My Space
paid Atlantis, not Kology, for services provided to My Space). The remaining evidence—facts
asserted in Kology’s affidavit that are not disputed in Hochman’s affidavit or reply affidavit—
clearly demonstrates that My Space was Kology’s employer for the duration of their relationship.
Under Title VII, courts construe “the term ‘employer’ functionally, to encompass persons
who are not employers in conventional terms, but who nevertheless control some aspect of an
employee’s compensation or terms, conditions, or privileges of employment.” Laurin v. Pokoik,

which the hiring party controls the manner and means by which the worker completes her assigned tasks,
rather than on how she is treated for tax purposes”).
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2004 WL 513999, at *8 (S.D.N.Y. Mar. 15, 2004) (quotation omitted); see also Rohn Padmore,
Inc. v. LC Play Inc., 679 F. Supp. 2d 454, 466 (S.D.N.Y. 2010) (quoting Eisenberg, 237 F.3d at
114) (in determining whether there is an employer-employee relationship, the most important
factor is “the extent to which the hiring party controls the ‘manner and means’ by which the
worker completes his or her assigned tasks”). “‘[T]he absence of a direct employment
relationship does not bar a Title VII claim, and [] liability extends beyond conventional, singleemployer situations.’” Dortz v. City of New York, 904 F. Supp. 127, 144–45 (S.D.N.Y. 1995)
(quoting Alie v. NYNEX Corp., 158 F.R.D. 239, 245 (E.D.N.Y.1994)); see also Lima v. Addeco,
634 F. Supp. 2d 394, 399 (S.D.N.Y. 2009) aff’d, 375 F. App’x 54 (2d Cir. 2010). For example,
“‘an employee, formally employed by one entity, who has been assigned to work in
circumstances that justify the conclusion that the employee is at the same time constructively
employed by another entity, may impose liability . . . on the constructive employer, on the theory
that this other entity is the employee’s joint employer.’” Tate v. Rocketball, Ltd., 45 F. Supp. 3d
268, 273 (E.D.N.Y. 2014) (quoting Arculeo v. On–Site Sales & Mktg., LLC, 425 F.3d 193, 198
(2d Cir. 2005)) (ellipses in original); see also N.L.R.B. v. Solid Waste Servs., Inc., 38 F.3d 93, 94
(2d Cir. 1994) (“A joint employer relationship may be found to exist where there is sufficient
evidence that the [joint employer] had immediate control over the other company’s
employees.”); Adams v. Debevoise & Plimpton, 2004 WL 1737826 (S.D.N.Y. Aug. 3, 2004)
(citations omitted) (alterations omitted) (“Control of the ‘conditions of employment’ can
indicate one’s position as a ‘joint employer.’”).
These principles compel the conclusion that My Space was Kology’s employer (or,
technically, joint employer) and therefore subject to liability under Title VII, the NYSHRL, and
the NYCHRL. No one disputes that My Space was Kology’s employer when it hired her—

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Hochman, among other things, set her schedule and responsibilities, and controlled “how” she
carried them out—and that Atlantis’s formation two years later did not alter the functional
features of this relationship. The formation of Atlantis—an entity whose sole purpose was to
receive Kology’s compensation—was a change in form, not substance; it does not immunize My
Space from liability under the employment discrimination laws. See, e.g., Frankel, 987 F.2d at
88; cf. Adams, 2004 WL 1737826, at *2 (holding that although “plaintiff received his
compensation through [a temp] agency, rather than through [the defendant,] [the defendant’s]
continued, long-term relationship with [the plaintiff], and its control of the conditions of his
employment there, establishes it as a joint employer”); see generally Shipkevich v. Staten Island
Univ. Hosp., 2009 WL 1706590, at *3 (E.D.N.Y. June 16, 2009) (“The analysis used to
determine whether an entity is an individual’s employer pursuant to the [NYSHRL] and
NYCHRL is substantially the same as that used under Title VII.”).
Defendants’ motion is DENIED.
SO ORDERED.
Dated:

Brooklyn, New York
April 11, 2016

/s/
I. Leo Glasser
Senior United States District Judge

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