Gregory v. Stewart's Shops Corp.
DECISION AND ORDER granting deft's 104 Motion for Summary Judgment, and the breach of contract claims are dismissed. Signed by Senior Judge Thomas J. McAvoy on 9/28/17. (sfp, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
HOLLY GREGORY, MATTHEW POTTER,
and ASTRID HALTEN, individually and on
behalf of all others similarly situated,
STEWART’S SHOPS CORPORATION,
THOMAS J. McAVOY,
Senior United States District Judge
DECISION & ORDER
Presently before the Court is defendant’s motion for summary judgment seeking to
dismiss plaintiffs’ breach of contract claims. Dkt. No. 104. The Court has determined to
decide the motion without oral argument, and in doing so has considered all of the parties’
submissions. For the reasons that follow, the motion is granted.
STANDARD OF REVIEW
On a motion for summary judgment the Court must construe the properly disputed
facts in the light most favorable to the non-moving party, see Scott v. Harris, 127 S. Ct.
1769, 1776 (2007), and may grant summary judgment only where “there is no genuine
issue as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a); see O'Hara v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 642 F.3d
110, 116 (2d Cir. 2011).
A. Procedural Background
1. Initial Complaint
Plaintiffs filed their initial Complaint alleging that defendant “willfully violated New
York State Law related to mandatory meal breaks.” Dkt. 1, ¶ 4. Plaintiffs alleged that
“defendant has received a special permit from the Department of Labor to allow for paid 20
minute meal breaks under certain circumstances” and that “defendant does not provide the
20 minute breaks let alone the State required breaks of 30 or 45 minutes.” Id. Plaintiffs
further alleged that their claims “are typical of the claims for the New York Class members
because . . . [they] were routinely permitted and asked to work during their breaks and were
therefore deprived of wages.” Id., ¶ 35.
2. First Amended Complaint
Thereafter, plaintiffs filed a First Amended Complaint (“FAC”) alleging in connection
with their meal break claim that:
[Defendant] willfully violated New York State Law related to payment of
employee benefits. Upon information and belief, defendant has received a
special permit from the Department of Labor to allow for paid 20 minute meal
breaks under certain circumstances (rather than the unpaid breaks required by
law). However, defendant does not provide the 20 minutes breaks that it has
promised its employees.”
Dkt. 25, ¶ 5.
Plaintiffs also alleged that “[p]ursuant to New York Labor Law Section 190, wages
include the value of all employee benefits promised by an employer. As set forth above,
defendant agreed to provide its employees with a paid 20 minute break as an employee
benefit. However, plaintiffs and members of the New York Class were deprived of this
valuable employee benefit . . . . Pursuant to Labor Law Section 198 defendant should be
required to pay plaintiff [sic] and the members of the New York Class the value of the
employee benefit that was wrongfully and intentionally withheld by defendant.” Id., ¶¶ 84-87.
Plaintiffs further alleged that their claims “are typical of the claims for the New York Class
members because . . . [they] were routinely permitted and asked to work during their breaks
and were therefore deprived of wages and employee benefits.” Id., ¶ 48.
3. The Court’s Decision on Defendant’s Motion to Dismiss the FAC
Defendant moved to dismiss the meal break claims because, under New York Labor
Law (“NYLL”) §162, only the New York State Department of Labor can bring actions against
employers for statutory meal break violations and seek the corresponding civil penalties. As
such, defendant argued there is no private cause of action for plaintiffs to allege meal break
violations under the NYLL. See generally, Cyr v. Berry Plastics Corp., 2011 U.S. Dist.
LEXIS 145468 (N.D.N.Y, Dec. 19, 2011). Plaintiffs agreed that, pursuant to NYLL §162,
“defendant is required to provide an unpaid thirty minute meal break, and, that breach of
such promise is the sole and exclusive jurisdiction of the New York State Labor
Department.” Dkt. # 41, p. 10 (quoting Pl. MOL in Opp., pp. 18-19). However, plaintiffs
also argued that they were “not seeking to enforce their right to an unpaid meal break.
Rather, plaintiffs [were] seeking to enforce the promise defendant made to them to provide
a paid 20 minute paid break.” Id. The Court interpreted the argument as raising breach of
contract claims, but found that plaintiffs failed to plead sufficient factual allegations to
plausibly establish such claims because there were no factual allegations supporting the
proposition that Defendant entered into an agreement with any of the plaintiffs to provide
paid 20-minute meal breaks. Id. The Court also found that the FAC lacked factual
allegations indicating that plaintiffs incurred damages because of the purported breaches of
contract. Id. p. 12. Accordingly, the claims were dismissed with leave to replead. Id.
4. Plaintiffs’ Second Amended Complaint
Plaintiffs subsequently filed a Second Amended Complaint (“SAC”) in which they
allege, inter alia, that:
[D]efendant agreed to provide its employees with an uninterrupted paid 20 minute
break each day the employee worked a shift of more than 6 hours. Defendant made
several verbal promises to plaintiffs regarding this paid break, and, this agreement is
memorialized in the Employee Handbook distributed to employees: “NYS has
granted Stewart’s a permit for shorter 20 minute meal periods for partners working
over 6 hours. This allows you to be paid during your break as well as the flexibility to
break up the day, while keeping good customer service.”
Dkt. 46, ¶¶ 104-105.
Plaintiffs further allege that “[t]he Agreement to provide employees with a paid twenty
minute break is also contained in several Permits obtained by defendant from the
Department of Labor. Plaintiffs are intended and/or third party beneficiaries of these
commitments to provide paid breaks.” Id., ¶ 106. Plaintiffs contend that they “have been
damaged since they have been deprived an employee benefit that was promised by
defendant. Such damage is measured by the value of the paid time off (PTO) that
defendant has promised, yet, failed to deliver.” Id., ¶ 110. Plaintiffs’ assert that they “and
members of the New York Class therefore seek payment in an amount equal to their agreed
rate of pay for each shift they worked of at least 6 hours and for which an uninterrupted
break of 20 minutes was not given,” as well as punitive damages. Id., ¶ 111.
B. Factual Background
1. Defendant’s Personnel Manual
Stewart’s has distributed to its employees a Personnel Manual that summarizes
some of the Company’s policies and practices, including its policy on meal breaks. Def.
Stat. Mat. Facts, ¶ 17. 1 The Personnel Manual contains language explicitly stating that
“[t]his booklet is not representative of an implied employment contract.” Id. ¶ 18.
2. The Permits Issued by the NYS DOL
As permitted by NYLL §162(5),2 the New York State Department of Labor (“NYS
DOL”) has issued to defendant a series of permits (the “Permits) allowing Stewart’s to
provide its employees with shorter meal periods than would otherwise be required under the
NYLL. Id. ¶ 19. The Permits state that defendant “has received permission to set a meal
period of not less than 20 minutes for the employees at the [respective Stewart’s Shops].
The company must pay all employees their agreed rate during this shorter meal period.
You must post this permit conspicuously in your establishment. The Commissioner may
revoke this permission at any time.” Dkt. # 47.
3. Other Relevant Factual Background
Stewart’s 30(b)(6) representative, Director of Personnel Anthony Carnevale, stated
during his deposition:
Q. Is it Stewart's policy that you get a 20-minute uninterrupted break every day?
The Court cites to the Defendants Statement of Material Facts where the plaintiffs have admitted
the asserted fact.
NYLL § 162 is the sole source of an employer’s meal break obligations under New York state law.
Subsections (1) through (4) of that statute govern the usual timing, frequency, and duration of meal breaks.
Section 162(5) carves out an alternative means of compliance, providing that the Department of Labor “may
permit a shorter time for meal periods” by issuing special permits.
A. Yes. Every day you work.
Q. Every day you work more than six hours, in fact. Right?
Docket 63-7 (Deposition Transcript of Anthony Carnevale), pp. 163-164.
During their depositions, each of the named plaintiffs admitted that no deductions
were made from their pay for breaks. Def. Stat. Mat. Facts, ¶ 21. Instead, plaintiffs seek
payment for an additional twenty minutes of time (or some portion thereof) that they did not
actually work as a remedy for the purported breaches of contract. See Dkt. 106-1, p. 12
(“[T]o be made whole … [Plaintiffs] need to be paid … for all time worked plus twenty
minutes of pay for time [they] w[ere] not actually working.”); SAC ¶ 110 (Plaintiffs “have
been damaged since they have been deprived an employee benefit that was promised by
defendant. Such damage is measured by the value of the paid time off (PTO) that
defendant has promised, yet, failed to deliver.”).
In order to establish a breach of contract claim, plaintiffs must establish “(1) the
existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3)
breach of contract by the defendant, and (4) damages.” Landmark Ventures, Inc. v. Wave
Sys. Corp., 513 F. App'x 109, 111 (2d Cir. 2013)). Defendants argue that plaintiffs’ breach
of contract claims fail because (1) an enforceable contract does not exist; ( 2) plaintiffs’
breach of contract claims constitute impermissible “end runs” around NYLL § 162, a statute
that plaintiffs concede does not provide a private right of action; and (3) plaintiffs have
suffered no recoverable damages.
Existence of an Agreement
The fact that Stewart’s policy to pay employees for 20-minute meal breaks appears
in the Personnel Manual does not create a binding contract to pay employees for breaks not
taken. As this Court wrote in Verrocchio v. Fed. Express Corp., 2011 U.S. Dist. LEXIS
20967 (N.D.N.Y. Mar. 3, 2011),
"New York . . . recognize[s] an action for breach of contract when plaintiff can
show that the employer made its employee aware of an express written policy
limiting the right of discharge and the employee detrimentally relied on that
policy in accepting employment." Lobosco v. New York Telephone
Company/NYNEX, 96 N.Y.2d 312, 316, 751 N.E.2d 462, 727 N.Y.S.2d 383
(2001). An explicit disclaimer on a contractual relationship will defeat any
claim of a contractual relationship. Id.
Verrocchio, 2011 U.S. Dist. LEXIS 20967, at *10.
The explicit disclaimer in the Personnel Manual defeats any claim of a contractual
relationship formed by representations in that manual. See Doe v. French, 458 Fed. App’x.
21, 23 (2d Cir. 2012) (noting “[b]ecause the handbook contained an explicit disclaimer that it
did not constitute an employment contract, [plaintiff] cannot maintain an explicit breach of
contract action.”) (citations omitted). “[C]ontrary to [plaintiffs’] argument, the [Personnel
Manual] did not merely retain [the employer’s] right to discharge [employees] at-will, but
expressly precluded reliance upon the [Personnel Manual] as the f oundation of any right or
contract . . . Accordingly, no contractual relationship, express or implied, was formed.” Wait
v. Beck’s North America, Inc., 241 F. Supp. 2d 172, 185 (N.D.N.Y. 2003)(emphasis in
It is also well-settled that “a failure by an employer to follow its internal policies
cannot form the basis of a breach of contract claim, unless … mutual assent to enter into an
implied-in-fact contract is shown.” Kunda v. Caremark PhC, L.L.C., 119 F. Supp. 3d 56, 61
(E.D.N.Y. 2015). Mutual assent cannot be shown where, as here, the Personnel Manual
containing that policy also contains an express disclaimer of any contractual relationship.
See id. at 62-64 (collecting cases).
The Permits issued by the NYS DOL, clearly within the scope of its regulatory
powers, see NYLL § 162(5), do not constitute a contract between defendant and the NYS
DOL. The Permits merely indicate that defendant “received permission to set a meal period
of not less than 20 minutes” for its employees provided defendant paid employees during
these breaks, but the NYS DOL reserved the right to revoke this permission at any time.
This granting of permission, revokable by the NYS DOL, is not a contract and does not
create any contractual rights between the NYS DOL and defendant. See People ex. rel.
Lodes v. Dept. of Health, 189 N.Y. 187, 191 (1907) (“A license is not a contract or property,
but merely a temporary permit issued in the exercise of the police powers to do that which
otherwise would be prohibited.”); Pyramid Co. of Onondoga v. N.Y. State Dept. of Labor ,
223 A.D.2d 285, 287-88 (N.Y. App. Div. 3d Dept. 1996) (“The permits issued by DOT . . . do
not create any contractual rights between the State and the petitioner.”). Because the
Permits do not create a contract, no third-party contractual rights flow to plaintiffs from the
Permits. See Allen v. Telergy Network Svcs., Inc., 52 A.D.3d 1094, 1097 (N.Y. App. Div. 3d
Dept. 2008) (dismissing plaintiff’s cause of action premised on plaintiff’s status as a
third-party beneficiary of a highway work permit because, “[i]nsofar as this Court has held
that a highway work permit does not constitute a contract, plaintiff may not claim to be a
third-party beneficiary thereunder”); Banach v. Dedalus Found., Inc., 2010 N.Y. Misc. LEXIS
2614, at *10-*11 (Sup. Ct. New York Co. June 8, 2010) (“Where, as here, there is no
enforceable contract, there can be no basis to assert a claim as a third-party beneficiary.”);
see also Matter o/Liquidation of Union Indemnity Insurance Company of New York, 200
A.D.2d 99, 108, 611 N.Y.S.2d 506 (N.Y. App. Div. 1st Dept. 1994) ("the essential foundation
of any right of action a third-party beneficiary may have is a valid and binding contract"), affd
89 N.Y.2d 94, 674 N.E.2d 313, 651 N.Y.S.2d 383 (1996).
There is also no merit to plaintiffs’ argument that the representations in the
Personnel Manual and the Permits amount to a verbal agreement that defendant would pay
employees for 20-minute meal breaks that were not taken. As indicated above, these
documents do not amount to contracts, and violations of company policies, even if set forth
in the Personnel Manual, do not form the basis of a breach of contract claim because
mutual assent has not been demonstrated. Further, plaintiffs fail to present evidence
supporting their claims that specific verbal agreements existed, or that Stewart’s made any
oral representations relating to paying for meal breaks that were not taken. Plaintiffs have
not identified who specifically made such an offer on behalf of Stewart’s, or when such an
offer was made; nor have they provided any details regarding how or when such an offer
was allegedly accepted by each employee. Plaintiffs have also failed to demonstrate a
meeting of the minds, and have therefore failed to establish the existence of any
enforceable verbal agreement. Instead, plaintiffs rely on conclusory assertions in support of
their breach of contract claims, but conclusory assertions alone will not suffice to survive
summary judgment. See Silman v. Utica College, 2016 U.S. Dist. LEXIS 106828 at *28
(N.D.N.Y. Aug. 12, 2016).
For these reasons, the Court finds that an enforceable contract to pay plaintiffs for
20-minute meal breaks they failed to take does not exist. Accordingly, defendant’s motion
must be granted. The Court, therefore, need not reach defendant’s arguments that the
breach of contract claims are impermissible “end runs” around NYLL § 162, or that plaintiffs
have suffered no recoverable damages from the alleged breaches of contract.
For the reasons discussed above, defendant’s motion for summary judgment [dkt. #
104] is GRANTED, and the breach of contract claims in this action are DISMISSED.
IT IS SO ORDERED.
Dated:September 28, 2017
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