Karlin v. MCS Mortgage Bankers, Inc. et al

Filing 40

MEMORANDUM OF DECISION & ORDER: Presently before the Court is plaintiff Peter Karlin's (the "Plaintiff") October 3, 2018 34 motion, pursuant to Federal Rule of Civil Procedure ('FED. R. CIV. P." or "Rule") 15(a)(2 ) and/or 15(d) to amend to add additional claims of retaliation pursuant to the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). For the reasons set forth below, the Court denies the Plaintiff's motion. SEE ATTACHED DECISION for details. So Ordered by Judge Arthur D. Spatt on 4/12/2019. (Coleman, Laurie)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------------------------X
PETER KARLIN, individually and on behalf of
himself and all others similarly-situated,
Plaintiff,
-against-

FILED 
CLERK 

11:18 am, Apr 12, 2019

U.S. DISTRICT COURT 
EASTERN DISTRICT OF NEW YORK 
LONG ISLAND OFFICE 

MEMORANDUM OF
DECISION & ORDER
2:17-cv-06011 (ADS)(SIL)

MCS MORTGAGE BANKERS, INC.,
DAVID KOTKIN, in his professional and
individual capacities, STEPHEN PETUCK,
in his professional and individual capacities,
and FRANK WALTER, in his professional
and individual capacities,
Defendants.
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APPEARANCES:
Stevenson Marino LLP
Counsel for the Plaintiff
75 Maiden Lane Suite 402
New York, NY 10038
By:
Justin Robert Marino, Esq.,
John Russell Stevenson, Esq., Of Counsel.
Kerr LLP
Counsel for the Defendants
44 Wall Street 12th Floor
New York, NY 10005
By:
William B. Kerr, Esq., Of Counsel.
Nixon Peabody LLP
Counsel for the Defendants
50 Jericho Quadrangle Suite 300
Jericho, NY 11753
By:
David Adam Tauster, Esq., Of Counsel.

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SPATT, District Judge:
Presently before the Court is plaintiff Peter Karlin’s (the “Plaintiff”) October 3, 2018
motion, pursuant to Federal Rule of Civil Procedure (“FED. R. CIV. P.” or “Rule”) 15(a)(2) and/or
15(d) to amend to add additional claims of retaliation pursuant to the Fair Labor Standards Act
(“FLSA”) and New York Labor Law (“NYLL”). For the reasons set forth below, the Court denies
the Plaintiff’s motion.
I. BACKGROUND
On October 14, 2017, the Plaintiff filed the Complaint asserting, on behalf of himself and
all others similarly situated, that the Defendants (1) violated the FLSA and NYLL by failing to
pay overtime; and (2) violated the NYLL by failing to provide accurate wage statements and notice
and acknowledgment of pay forms, and by failing to remit additional consideration and severance
as a result of a severance agreement between the Defendants and a third-party.
Following the Defendants’ Answer on February 26, 2018, the Plaintiff filed the First
Amended Complaint on April 9, 2018, adding a sixth cause of action pursuant to NYLL § 215 for
retaliation.
On May 14, 2018, the Defendants answered the First Amended Complaint. In the Answer,
MCS asserted counterclaims against the Plaintiff for breach of his employment contract and for
attorney’s fees and costs for breach of said contract, claiming that the Plaintiff improperly solicited
and diverted, inter alia, confidential information and customers to a competitor of MCS.
On June 4, 2018, the Plaintiff filed a motion to amend seeking to add additional retaliation
claims based on the Defendants’ inclusion of the of the counterclaims in their Answer.
On October 3, 2018, the Court denied the motion without prejudice for failure to attach a
proposed amended complaint
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On October 4, 2018, the Plaintiff filed the instant motion with a Proposed Second Amended
Complaint (“PSAC”). In the PSAC, the Plaintiff claims that retaliatory animus motivated the
Defendants’ filing of counterclaims.
First, the PSAC alleges that during a call on or about August 12, 2016, Kotkin said to a
colleague of the Plaintiff, “I will pay everyone, except – non-negotiable – I’m not paying Peter
Karlin. . . . He can sue me and then what I’ll do is that I’ve already spoke to Deborah McKenzie
(i.e., a governmental regulator) . . . . And Peter Karlin will never work in this industry. Or, he can
take the high road and say, you know, he knows what he did and I don’t care what he does with
the records.”
Second, the PSAC alleges that on or about August 17, 2016, Kotkin said the following to
a colleague of the Plaintiff:
Colleague: Q. “Are you trying to say if I walk away from the money that is owed to me
that this [i.e., governmental investigation] is going to disappear, this is going to go away?”
Kotkin: A. “Yes, it takes a different, a different approach. That’s what I’m saying.”
Colleague: “Q. Tell me how?”
Kotkin: A. “Because then I may not have to disclose you. That’s how.”
According to the Plaintiff, the Defendants have never sought to enforce similar alleged
breach of non-solicitation provisions in any contracts with any other employee who did not first
assert claims for the recovery of wages pursuant to the FLSA and NYLL.
II. DISCUSSION
A. THE LEGAL STANDARD
Where, like here, a party already amended its pleading as a matter of course, Rule 15(a)(2)
specifies that “party may amend its pleading only with the opposing party's written consent or the
court's leave. The court should freely give leave when justice so requires.” Courts have construed
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the rule liberally and have said that “the purpose of Rule 15 is to allow a party to correct an error
that might otherwise prevent the court from hearing the merits of the claim.” Safety–Kleen Sys.,
Inc. v. Silogram Lubricants Corp., No. 12-cv-4849, 2013 WL 6795963, at *2 (E.D.N.Y. Dec. 23,
2013) (quoting Chapman v. YMCA of Greater Buffalo, 161 F.R.D. 21, 24 (W.D.N.Y. 1995)); see
also Williams v. Citigroup Inc., 659 F.3d 208, 212–13 (2d Cir. 2011) (finding a “strong preference
for resolving disputes on the merits”).
A court should deny leave to amend only “in instances of futility, undue delay, bad faith
or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, or
undue prejudice to the nonmoving party.” Burch v. Pioneer Credit Recovery, Inc., 551 F.3d 122,
126 (2d Cir. 2008) (per curiam).
“The party opposing the motion for leave to amend has the burden of establishing that an
amendment would be prejudicial.” Fariello v. Campbell, 860 F.Supp. 54, 70 (E.D.N.Y. 1994)
(Spatt, J.); see also European Cmty. v. RJR Nabisco, Inc., 150 F.Supp.2d 456, 502–03 (E.D.N.Y.
2001); Saxholm AS v. Dynal, Inc., 938 F.Supp. 120, 123 (E.D.N.Y. 1996). The opposing party
likewise bears the burden of establishing that an amendment would be futile. See Blaskiewicz v.
County of Suffolk, 29 F.Supp.2d 134, 137–38 (E.D.N.Y. 1998) (citing Harrison v. NBD Inc., 990
F.Supp. 179, 185 (E.D.N.Y. 1998) (Spatt, J.)).
Proposed amendments are futile when they “would fail to cure prior deficiencies or to state
a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure.” IBEW Local Union No. 58
Pension Trust Fund & Annuity Fund v. Royal Bank of Scotland Grp., PLC, 783 F.3d 383, 389 (2d
Cir. 2015) (quoting Panther Partners Inc. v. Ikanos Commc'ns, Inc., 681 F.3d 114, 119 (2d Cir.
2012)).

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Under the Bell Atlantic v. Twombly standard, a complaint should be dismissed only if it
does not contain enough allegations of fact to state a claim for relief that is “plausible on its face.”
550 U.S. 544, 570, 127 S.Ct. 1955, 1973, 167 L.Ed.2d 929 (2007). The Second Circuit has
explained that, after Twombly, the Court's inquiry under Rule 12(b)(6) is guided by two principles:
First, although a court must accept as true all of the allegations contained in a
complaint, that tenet is inapplicable to legal conclusions, and threadbare recitals of
the elements of a cause of action, supported by mere conclusory statements, do not
suffice. Second, only a complaint that states a plausible claim for relief survives a
motion to dismiss and determining whether a complaint states a plausible claim for
relief will be a context-specific task that requires the reviewing court to draw on its
judicial experience and common sense.
Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129
S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotation marks and alterations omitted)).
B. APPLICATION TO THE FACTS.
Under FLSA § 215(a)(3) and NYLL § 215(1)(a), it is unlawful to discriminate against an
employee because that employee “has filed any complaint or instituted or caused to be instituted
any proceeding under [the FLSA].” 29 U.S.C. § 215(a)(3). To make a prima facie retaliation claim,
the Plaintiff must show: “(1) participation in protected activity known to the defendant, like the
filing of a FLSA lawsuit; (2) an employment action disadvantaging the plaintiff; and (3) a causal
connection between the protected activity and the adverse employment action.” Flores v. Mamma
Lombardis of Holbrook, Inc., 942 F.Supp.2d 274, 278 (E.D.N.Y.2013) (quoting Mullins v. City of
New York, 626 F.3d 47, 53 (2d Cir.2010)); see also Belizaire v. RAV Investigative & Sec. Servs.
Ltd., 61 F.Supp.3d 336, 354 (S.D.N.Y. Nov. 21, 2014) (“In order to establish a prima facie case of
retaliation under the FLSA, a plaintiff must show ‘(1) participation in a protected activity known
to the defendant; (2) an employment action disadvantaging the plaintiff; and (3) a causal

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connection between the protected activity and the adverse employment action.’”) (quoting Torres
v. Gristede's Operating Corp., 628 F.Supp.2d 447, 472 (S.D.N.Y.2008)).
The Court finds that the proposed amendments are futile because they lack facts necessary
to allege that the Plaintiff suffered an adverse employment action. In D'Amato v. Five Star
Reporting, Inc., 80 F. Supp. 3d 395 (E.D.N.Y. 2015) (Spatt, J.), the Court addressed an identical
set of facts, stating:
An adverse employment action must affect the terms, privileges, duration, or
conditions of the plaintiff's employment. In particular, a plaintiff must show that
the counterclaims had some impact on the plaintiff's employment or prospective
employment.
For example, in Ginsberg v. Valhalla Anesthesia Associates, P.C., 971 F.Supp. 144,
148 (S.D.N.Y.1997), the court dismissed a plaintiff's retaliation claims because the
“defendant's counterclaims relate to a simple breach of contract that does not reflect
negatively on plaintiff's ethical or professional reputation.” The court distinguished
its case from Yankelevitz v. Cornell University, No. 95 Civ. 4593(PKL), 1996 WL
447749 at *5 (S.D.N.Y. Aug. 7, 1996). In Yankelevitz, the court denied the
defendants' motion to strike the plaintiffs' retaliation claim because the
counterclaims filed by the defendants alleged that the plaintiff improperly
performed an audit, which “shed a negative light on plaintiff's professionalism and
ethics in a profession that holds such qualities in high regard.”
Here, as in Ginsberg v. Valhalla Anesthesia Associates, P.C., the Defendants'
counterclaims related to “a simple breach of contract.” 971 F.Supp. at 148. The
Plaintiff does not allege any facts that could plausibly suggest that her reputation
or job prospects have been affected by the Defendants' counterclaims.
Accordingly, the Court denies the Plaintiff's motion with respect to her retaliation
claims under the FLSA and NYLL, grants the Defendants' cross-motion with
respect to those claims, and dismisses the Plaintiff's retaliation claims.
Id. at 420. The counterclaims in this case similarly only assert a “simple breach of contract” and
the Plaintiff alleges no articulable harm to his employment or prospective employment. As a result,
the PSAC is deficient as a matter of law.
According to the Plaintiff, the Supreme Court’s opinion in Burlington Northern & Santa
Fe Railroad Company v. White, 548 U.S. 53, 126 S.Ct. 2405, 165 L.Ed.2d 345 (2006), which
dictates that a plaintiff need not be currently employed in order to allege retaliation, saves his
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claim. The Court recognizes “[i]n the wake of Burlington Northern, there is now a ‘substantial
question’ as to the validity of precedent holding that a post-termination lawsuit or counterclaim
may not be an adverse employment” action. Mohamed v. Sanofi-Aventis Pharm., No. 06-cv-1504,
2009 WL 4975260, at *23 (S.D.N.Y. Dec. 22, 2009). However, the Court concurs with the postBurlington Northern cases which found that the Supreme Court’s opinion did not erase the
requirement that the adverse action have some form of impact on the plaintiff’s working
conditions. See Marchuk v. Faruqi & Faruqi, LLP, 100 F. Supp. 3d 302, 311 (S.D.N.Y. 2015)
(granting judgment as a matter of law where the defendants “lacked control over any aspect of [the
plaintiff’s] working conditions” and the plaintiff did “not identify any aspect of her working
conditions that changed after the counterclaim was filed”). A breach of contract counterclaim filed
nearly two years after the Defendants employed the Plaintiff is not likely to deter a reasonable
worker from bringing an FLSA claim absent further factual allegations omitted from the PSAC.
Assuming the PSAC included such facts, the Plaintiff’s retaliation claim would still fail
because the Defendants’ counterclaims do not appear to be baseless. See Pawlowski v. Kitchen
Expressions Inc., No. 17-cv-2943, 2017 WL 10259773, at *5 (E.D.N.Y. Dec. 15, 2017) (“Because
plaintiff’s retaliation claims can survive only if defendants' counterclaim is baseless and because
defendants' counterclaim is not baseless, plaintiff’s retaliation claims must be dismissed.”);
Schanfield v. Sojitz Corp. of Am., 663 F. Supp. 2d 305, 342 (S.D.N.Y. 2009) (“I can see nothing
in Title VII or any other anti-discrimination statute that should prevent an employer from bringing
a legitimate claim against a current or former employee simply because that employee has
complained about what the employee believes to be discriminatory behavior.”). The counterclaims
allege facts that, if true, would state a claim for breach of the Plaintiff’s employment agreement.
Neither the PSAC nor the Plaintiff’s motion papers contain any explanation of why the
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counterclaims lack a foundation in law or fact other than the conclusory assertion that they are
“frivolous.” In the Court’s view, these assertions are plainly insufficient to allege that the
counterclaims are baseless.
Therefore, the proposed amendments fail to state a claim for retaliation.
III. CONCLUSION
For the foregoing reasons, the Court denies the Plaintiff’s motion to amend.

It is SO ORDERED:
Dated: Central Islip, New York
April 12, 2018
___/s/ Arthur D. Spatt_______
ARTHUR D. SPATT
United States District Judge

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