Komatsu v. NTT Data, Inc. et al

Filing 53

OPINION & ORDER: For the foregoing reasons, Plaintiff's motion for leave to amend the complaint is DENIED. Plaintiff's First Amended Complaint is DISMISSED. The Clerk of Court is respectfully directed to mail a copy of this Order and Opinion to the pro se Plaintiff and to close the case. (Signed by Judge Lorna G. Schofield on 5/17/2016) (tro)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------------X
:
TOWAKI KOMATSU,
:
Plaintiff,
:
:
-against:
:
NTT DATA, INC., et al.,
:
Defendants. :
:
------------------------------------------------------------ X

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 05/17/2016
15 Civ. 7007 (LGS)
OPINION & ORDER

LORNA G. SCHOFIELD, District Judge:
Pro se Plaintiff Towaki Komatsu brings this action against Defendants NTT Data, Inc.
(“NTT Data”) and Credit Suisse AG (“Credit Suisse”), pursuant to the Fair Labor Standards Act
(“FLSA”), 29 U.S.C § 201 et seq., and New York Labor Law § 215. Plaintiff moves for leave to
amend the First Amended Complaint (“FAC”). Having reviewed the parties’ memoranda of law
and other submissions in connection with the motion, Plaintiff’s motion to amend is denied.
Furthermore, because Plaintiff’s claims must be arbitrated rather than litigated in this forum, the
FAC is dismissed pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
I.

BACKGROUND
A.

The Agreement

On January 13, 2012, Plaintiff executed a consultancy agreement (the “Agreement”)
between Ikam Adeu Corporation (“Ikam”) and M.I.S.I. Co., Ltd. (“M.I.S.I.”), in his capacity as
president of Ikam. Plaintiff owns and operates Ikam. According to the affidavit of Francis J.
Convery, an executive at NTT Data who also had served as an executive of M.I.S.I., M.I.S.I.
merged with and into NTT Data on or about March 31, 2012.
The Agreement provides that Ikam as a consultant of M.I.S.I. would provide services to

certain of M.I.S.I.’s clients as provided in Exhibit A. Exhibit A states that Ikam’s employee,
Plaintiff, would provide “production support” services to M.I.S.I.’s client, Credit Suisse, from on
or around January 18, 2012, to January 18, 2013. Pursuant to the Agreement, Plaintiff was the
only employee of Ikam to be assigned to provide services to Credit Suisse. Credit Suisse is not a
party to the Agreement.
The Agreement explicitly states that, under its terms, Ikam is an independent contractor
rather than an employee of M.I.S.I. The Agreement establishes five conditions under which it
may be terminated: (1) by M.I.S.I., for any reason or for no reason, upon two weeks prior notice
to Ikam -- although the Agreement explicitly provides that the services provided to M.I.S.I.’s
client may terminate upon shorter notice or without notice if the client so requires; (2) by Ikam,
for any reason or for no reason, upon two weeks prior notice to M.I.S.I.; (3) by the filing of a
petition in bankruptcy by or against Ikam as debtor; (4) by any breach by Ikam of any of the
Agreement’s representations or warranties; or (5) by any failure of Ikam to fully and faithfully
perform any of its obligations under the Agreement. According to the Convery affidavit, NTT
Data exercised its right to terminate the agreement in April 2012.
The Agreement requires that any “controversy, dispute and/or claim” between Ikam and
M.I.S.I. -- or any of their respective officers, directors, shareholders or employees -- “which may
ever arise between them in relation to this Agreement” be settled solely by binding arbitration to
be held in New York City.
B.

The State Court Action

Plaintiff previously pursued relief against NTT Data in New York state court, according
to the affirmation of M. Todd Parker. On November 21, 2012, Plaintiff filed a complaint for
failure to pay wages and for breach of contract against NTT Data relating to NTT Data’s

2

termination of the Agreement and alleged failure to pay Plaintiff. In its order dated April 11,
2014, the Civil Court of the City of New York1 granted NTT Data’s motion to stay the
proceeding and compel arbitration pursuant to the arbitration clause of the Agreement.
C.

The Federal Court Action

Plaintiff filed this action on September 4, 2015, and named both NTT Data and Credit
Suisse as Defendants. The FAC, the operative complaint, alleges that both Defendants violated
the FLSA and New York Labor Law by failing to pay Plaintiff overtime wages and by retaliating
against him. The FAC further alleges claims against NTT Data of breach of the Agreement,
negligence and fraudulent misrepresentation. These claims are substantially identical to the
claims raised in Plaintiff's state court action in that they allege that NTT Data failed to pay
Plaintiff overtime wages and misclassified him as an independent contractor rather than an
employee. The FAC also alleges claims against Credit Suisse of fraudulent misrepresentation,
negligence and unjust enrichment. Credit Suisse was not a Defendant in the state court action.
On September 18, 2015, Plaintiff sought a preliminary injunction and temporary
restraining order against NTT Data, in substance seeking payment of monies allegedly owed to
Plaintiff. At the hearing on the order to show cause for a preliminary injunction and temporary
restraining order on September 28, 2015, the Court dismissed Plaintiff’s claims against NTT
Data for lack of subject matter jurisdiction, as Plaintiff’s claims alleged an injury from a prior
state court ruling -- the New York state court’s order compelling arbitration -- and effectively
asked the Court to reverse the decision of the New York state court to compel arbitration.
Plaintiff filed his motion for leave to amend the FAC on October 19, 2015, and both
Plaintiff and Defendants extensively briefed the issue of whether Plaintiff’s proposed Second

The Civil Court of the City of New York is part of the New York State Unified Court System
and accordingly is referred to in this opinion as the “state court.” See http://www.nycourts.gov/.
1

3

Amended Complaint (“SAC”) would be futile.
Plaintiff’s proposed SAC alleges the following causes of action:
1.

Against Credit Suisse for violation of the FLSA for failure to pay regular wages and
overtime wages;

2.

Against Credit Suisse for violation of the New York Labor Law for failure to pay
wages;

3.

Against both Defendants for violation of the New York Labor Law for retaliation;

4.

Against Credit Suisse for fraudulent misrepresentation;

5.

Against Credit Suisse for negligence;

6.

Against Credit Suisse for unjust enrichment;

7.

Against NTT Data for retaliation in violation of the Sarbanes-Oxley Act (the “SOX
Claim”);

8.

Against NTT Data for fraudulent misrepresentation.

In sum, as to NTT Data, Plaintiff has dropped some claims and reasserted some claims that were
dismissed in the FAC, and seeks to add the new SOX Claim. Plaintiff seeks to reassert all of its
claims against Credit Suisse, including his FLSA and New York Labor Law claims.
Plaintiff filed a complaint on October 29, 2015, with the Occupational Safety and Health
Administration (“OSHA”) against both Defendants regarding his termination. OSHA dismissed
the complaint as untimely on February 11, 2016.
II.

STANDARD
A motion for leave to amend a complaint is entrusted to the discretion of the district

court. In re Arab Bank, PLC Alien Tort Statute Litigation, 808 F.3d 144, 159 (2d Cir. 2015)
(“As for leave to amend the complaints, ‘we review [the district court’s refusal to allow such
amendment] only for abuse of discretion which ordinarily we will not identify absent an error of
law, a clearly erroneous assessment of the facts, or a decision outside the available range of
4

permitted choices.’” (quoting Knife Rights, Inc. v. Vance, 802 F.3d 377, 389 (2d Cir.2015))).
“While ‘[l]eave to amend should be freely granted, . . . the district court has the discretion to
deny leave if there [was] a good reason for it, such as futility, bad faith, undue delay, or undue
prejudice to the opposing party.’” Id. (quoting Jin v. Metro Life Ins. Co., 310 F.3d 84, 101 (2d
Cir. 2002)). Futility is assessed under the same standard as a motion to dismiss: “determining
whether the proposed complaint contains ‘enough facts to state a claim to relief that is plausible
on its face.’” Indiana Pub. Retirement Sys. v. SAIC, Inc., No. 14-4140-cv, 2016 WL 1211858, at
*5 (2d Cir. March 29, 2016) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
District Courts have the inherent authority to dismiss meritless claims sua sponte.
Fitzgerald v. First East Seventh St. Tenants Corp., 221 F.3d 362, 364 (2d Cir. 2000) (per curiam)
(affirming the district court’s conclusion that it had the power to dismiss a frivolous action sua
sponte); Wachtler v. Cty. of Herkimer, 35 F.3d 77, 82 (2d Cir. 1994) (“The district court has the
power to dismiss a complaint sua sponte for failure to state a claim.”) (quoting Leonhard v.
United States, 633 F.2d 599, 609 n.11 (2d Cir. 1980)); Charles A. Wright & Arthur R. Miller, 5B
Fed. Prac. & Proc. Civ. § 1357 (3d ed.) (“Even if a party does not make a formal motion under
Rule 12(b)(6), the district judge on his or her own initiative may note the inadequacy of the
complaint and dismiss it for failure to state a claim as long as the procedure employed is fair to
the parties.”).
Where, as here, a party appears pro se, a court must construe “the submissions of a pro se
litigant . . . liberally” and interpret them “to raise the strongest arguments that they suggest.”
Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir. 2006) (per curiam) (internal
quotation marks omitted); see Smith v. Fischer, 803 F.3d 124, 127 (2d Cir. 2015) (confirming
Triestman’s approach to pro se litigants). However, “failure of subject matter jurisdiction is not

5

waivable and may be raised at any time by a party or by the court sua sponte.” Lyndonville Sav.
Bank & Trust Co. v. Lussier, 211 F.3d 697, 700 (2d Cir. 2000); see also Faucette v. Colvin, No.
15 Civ. 8495, 2016 WL 866350, at *2 (S.D.N.Y. Mar. 3, 2016) (same).
III.

DISCUSSION
A.

Claims Against NTT Data

Because the proposed SAC would assert claims against NTT Data that could not survive
a motion to dismiss, leave to amend as to NTT Data is futile and is denied. The proposed
complaint alleges three claims against NTT Data -- retaliation in violation of New York Labor
Law, fraudulent misrepresentation and the SOX Claim.
The first two of these could not survive a motion to dismiss because the Court previously
dismissed them from this action on September 28, 2015. Plaintiff’s FAC and proposed SAC
both allege that NTT Data fraudulently misrepresented the terms of the Agreement to Plaintiff;
and both allege the New York Labor Law retaliation claim. These claims were dismissed from
the FAC for lack of subject matter jurisdiction under the Rooker-Feldman doctrine, which
“directs federal courts to abstain from considering claims when four requirements are met:
(1) the plaintiff lost in state court, (2) the plaintiff complains of injuries caused by the state court
judgment, (3) the plaintiff invites district court review of that judgment, and (4) the state court
judgment was entered before the plaintiff’s federal suit commenced.” McKithen v. Brown, 626
F.3d 143, 154 (2d Cir. 2010); see also Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S.
280 (2005) (explaining the Rooker-Feldman doctrine). The Rooker-Feldman doctrine is
intended to foreclose a narrow and specific kind of case: “cases brought by state-court losers
complaining of injuries caused by state-court judgments rendered before the district court
proceedings commenced and inviting district court review and rejection of those judgments.”

6

Exxon Mobil, 544 U.S. at 284; see also Green v. Mattingly, 585 F.3d 97, 101 (2d Cir. 2009)
(same). Because the state court rejected Plaintiff ’s objection to arbitration, and Plaintiff seeks
relief in federal court as an alternative to that arbitration, Plaintiff’s claims meet all four criteria
of Rooker-Feldman: he lost in state court as he was compelled to arbitrate under the terms of the
Agreement; he seeks relief here to avoid that arbitration; the state court judgment was entered
before the commencement of the present federal court action; and Plaintiff’s claims here
necessarily invite the district court to reject the judgment of the state court. See Yonkers Elec.
Contracting Corp. v. Local Union No. 3, Int’l Bhd. Elec. Workers’ AFL-CIO, 220 F. Supp. 2d
254, 259 (S.D.N.Y. 2002) (“A federal court does not have subject matter jurisdiction over a
petition to compel arbitration after a state court has already ruled on the merits of that petition.”);
Wanderlust Pictures, Inc. v. Empire Entm’t Grp., No. 01 Civ. 4465, 2001 WL 826095, at *4
(S.D.N.Y. July 19, 2001) (“[S]everal courts have applied the Rooker-Feldman doctrine in cases
where a state court has ruled on a party’s right to arbitrate prior to the petitioner’s filing of the
federal suit.”). The state law claims against NTT Data were properly dismissed from the FAC
and, if reasserted, could not survive a motion to dismiss, rendering leave to amend futile.
Plaintiff also seeks to amend his complaint to add the SOX Claim against NTT Data.
Although this claim is new -- albeit alleging essentially the same facts as Plaintiff’s previously
dismissed retaliation claim under New York Labor Law and the FLSA -- it is dismissed because
this Court lacks jurisdiction to hear Plaintiff’s claim. An employee seeking relief under the
Sarbanes-Oxley Act must first file a complaint with OSHA, the agency with delegated authority
to receive such complaints. 29 C.F.R. § 1980.103(c) (2015); see 18 U.S.C. § 1514A(b)(1)(A)
(2010). Plaintiff filed his OSHA complaint after filing for leave to add the SOX claim in this
action. OSHA dismissed Plaintiff’s complaint as untimely. Plaintiff was permitted to object to

7

this determination and request a hearing with an Administrative Law Judge within thirty days of
OSHA’s determination, see 29 C.F.R. §§ 1980.105(c), 1980.107, which was dated February 11,
2016. If Plaintiff failed to object, OSHA’s dismissal is final. See id. at § 1980.105(c). If
Plaintiff did object and the administrative law judge affirmed OSHA’s findings, Plaintiff’s sole
recourse in the federal courts is an appeal to the United States Court of Appeals. See id. at §
1980.112; see generally Procedures for the Handling of Retaliation Complaints Under Section
806 of the Sarbanes-Oxley Act of 2002, as amended, 80 Fed. Reg. 11865, 11866 (Mar. 5, 2015).
Plaintiff cannot seek relief in this Court, as OSHA acted within 180 days of Plaintiff’s filing of
the complaint. Only if OSHA had “not issued a final decision within 180 days of the filing of the
complaint,” could the employee bring “an action at law or equity for de novo review in the
appropriate district court of the United States.” 29 C.F.R. § 1980.114 (2015).
Even if the Court had subject matter jurisdiction to review OSHA’s determination, it is
evident from the face of the proposed SAC that the SOX Claim is untimely. The SarbanesOxley Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010, obligates a complainant to file his complaint within 180 days of discovering the violation.
18 U.S.C. § 1514A(b)(2)(D) (2010). The proposed claim alleges impermissible retaliation on
April 27, 2012, in a complaint filed in October 2015. Plaintiff did not file until more than 1,200
days had elapsed. The proposed SAC is therefore untimely and would not survive a motion to
dismiss. Leave to amend would be futile.
Plaintiff’s request dated April 6, 2016, to further amend his pleading to add a claim for
violation of the civil provisions of the Racketeer Influenced & Corrupt Organizations Act, 18
U.S.C. §§ 1961-1968 (“civil RICO”"), is also denied as futile. The proposed SAC does not
allege, nor has Plaintiff otherwise suggested specific facts that, construed in the most generous

8

light, would give rise to an inference of a criminal predicate act necessary to bring a civil RICO
claim. See 18 U.S.C. § 1962 (establishing conduct constituting RICO predicate); 18 U.S.C. §
1964 (providing for civil remedies to RICO offenses). Plaintiff makes only conclusory
statements that he “can substantiate allegations that Ed Epstein and Sharin Newman of NTT
Data, Inc. committed multiple acts of wire fraud at [his] expense.” Although Plaintiff raised the
possibility of amending the FAC to add a civil RICO claim at the September 28, 2016, hearing,
his decision not to do so in the proposed SAC does not entitle him to successive bites at the apple
by rationing his proposed amendments over multiple iterations of the complaint.
B.

Claims Against Credit Suisse

Plaintiff alleges several claims against Credit Suisse. Credit Suisse was not a signatory to
the Agreement, and its arbitration clause does not cover disputes with Credit Suisse. However,
Plaintiff’s services were provided to Credit Suisse pursuant to the Agreement, and Plaintiff
cannot avoid the arbitration provision by pressing his claims against Credit Suisse rather than
NTT Data, the counterparty to the Agreement. “[A] signatory [is estopped] from avoiding
arbitration with a nonsignatory when the issues the nonsignatory is seeking to resolve in
arbitration are intertwined with the agreement that the estopped party has signed.” Smith/Enron
Cogeneration Ltd. P’ship v. Smith Cogeneration Int’l, 198 F.3d 88, 98 (2d Cir. 1999) (emphasis
omitted).
Plaintiff’s claims against Credit Suisse are intertwined with the Agreement as it gave rise
to any relationship between Plaintiff and Credit Suisse. The allegations of non-payment and
retaliatory firing arise primarily from any rights Plaintiff may or may not have under the
Agreement. See Holick v. Celluar Sales of N.Y., LLC, 802 F.3d 391, 395 (2d Cir. 2015) (“If the
allegations underlying the claims touch matters covered by the parties’ . . . agreements, then

9

those claims must be arbitrated.” (quoting Smith/Enron, 198 F.3d at 99)). It would be anomalous
and could lead to inconsistent results to require claims against NTT Data to be arbitrated and the
related, if not identical, claims against Credit Suisse to be litigated. Plaintiff is therefore
estopped from litigating here claims that should be arbitrated. Allowing Plaintiff leave to amend
his complaint to add the proposed claims against Credit Suisse would be futile and is denied.
This estoppel precluding the litigation of claims against Credit Suisse in the proposed
SAC applies equally to the existing claims against Credit Suisse in the operative FAC. Both
complaints are predicated on identical alleged facts and bear the same relationship to the
Agreement. Plaintiff’s claims against Credit Suisse are dismissed sua sponte, leaving no further
claims for the Court to adjudicate.
IV.

CONCLUSION
For the foregoing reasons, Plaintiff’s motion for leave to amend the complaint is

DENIED. Plaintiff’s First Amended Complaint is DISMISSED. The Clerk of Court is
respectfully directed to mail a copy of this Order and Opinion to the pro se Plaintiff and to close
the case.
Dated: May 17, 2016
New York, New York

10