Vasto et al v. Credico (USA) LLC et al

Filing 161

OPINION & ORDER re: 106 MOTION to Dismiss, filed by Credico (USA) LLC. For the foregoing reasons, plaintiffs' claims against Young are dismissed with prejudice. The Clerk of Court is respectfully directed to close the motion pending at Dkt. 106 and to terminate Young as a defendant in this case. (As further set forth in this Opinion) Jesse Young terminated. (Signed by Judge Paul A. Engelmayer on 8/3/2016) (kl)

(“FAC”) does not plausibly plead that he was plaintiffs’ “employer” for purposes of the FLSA or
the New York and Arizona wage statutes. For the reasons that follow, that motion is granted.
I.

Background
A.

Factual Allegations1

Credico is a Delaware corporation headquartered in Chicago, Illinois. FAC ¶ 22. It
provides face-to-face sales and marketing services to companies in, among others, the
telecommunications, financial services, and energy industries, and to charitable organizations.
Id. ¶ 26. Its clients include Fortune 500 companies, such as Verizon Communications Inc. and
Sprint Nextel Corp. Id. ¶ 27. Young is Credico’s President. Id. ¶ 24.
Credico serves its clients through a nationwide network of more than 100 independent
sales offices (“ISOs”). Id. ¶¶ 1, 28. Each ISO employs workers (“agents”) to engage in face-toface marketing for one or more of Credico’s clients. See id. ¶¶ 1, 28, 30, 42–43. The agents’
primary duty is to gather applications from consumers seeking to enroll in one or more programs
offered by Credico’s client. See id. ¶¶ 1, 42–43.
The FAC alleges that Credico exercises control over the day-to-day operations of all
ISOs in its network. Id. ¶ 1. Most significantly, it alleges, Credico requires each of these ISOs
to implement Credico’s “Management Training Program.” Id. ¶ 11. That program, the FAC
alleges, dictates the manner in which ISOs train agents, the manner in which agents can approach
potential customers, the number of hours that agents must work each week, and the manner in
which agents are to be paid and classified. Id. ¶¶ 8, 11, 31–32.2

1

The facts related herein are drawn from the FAC. Dkt. 6 (“FAC”). The Court assumes all
well-pled facts to be true, drawing all reasonable inferences in plaintiffs’ favor. See Koch v.
Christie’s Int’l PLC, 699 F.3d 141, 145 (2d Cir. 2012).
2

The FAC’s allegations as to Credico and its Management Training Program are made “upon
information and belief.”
2

CroMex is an ISO headquartered in New York City. Id. ¶¶ 23, 33. CroMex operates its
own network of companies which perform marketing services for Credico’s clients in New York,
Michigan, Maryland, Arizona, and Nevada. Id. ¶ 35. The FAC alleges that Credico’s Regional
Sales Director, Tommy Smith, works out of CroMex’s New York City office and has exercised
his authority to terminate CroMex’s agents. See id. ¶¶ 1, 14, 38, 41.3 Corona is CroMex’s
owner and manager. Id. ¶ 25. She supervises the agents who perform marketing services for
Credico’s clients. Id.
At various points in 2015, the four named plaintiffs worked for CroMex in New York
City and Phoenix, Arizona, promoting Credico’s clients’ cell phone and wireless service plans.
Id. ¶¶ 15–18, 58.
The FAC alleges that as a “precondition” of their work with defendants, plaintiffs were
required to participate in a training period for which they were not paid. Id. ¶¶ 2, 46–51. Once
they completed training, the FAC alleges, plaintiffs were required to work 12 hours per day,
Monday through Saturday. Id. ¶ 52. Each day, the FAC alleges, plaintiffs were required to
follow a strict schedule, consisting of: (1) morning team meetings and training sessions; (2)
“[r]ide-out[s]” in the field, where agents signed up new customers for Credico’s clients; and (3)
evening meetings and training sessions. Id. ¶¶ 53–56. The FAC alleges that defendants set
weekly sales targets for plaintiffs and tracked their sales numbers on a weekly basis. Id. ¶ 56.
Given the “extensive control” defendants exercised over them, the FAC alleges, plaintiffs
qualified as employees and were “jointly employed” by each of the defendants. Id. ¶¶ 1, 44–45.
Therefore, the FAC claims, plaintiffs were entitled to minimum wage and overtime
compensation for hours worked in excess of 40 hours per week. See id. ¶¶ 73–74, 77, 86, 97,

3

The FAC alleges that Smith is “controlled by [Credico’s] headquarters.” FAC ¶ 14.
3

106. However, the FAC alleges, plaintiffs were misclassified as independent contractors and
thus paid solely on a commission basis: They were paid $10 for each qualified customer they
signed up for the services of one of Credico’s clients. Id. ¶¶ 2, 8, 57.
As a result of this practice, the FAC alleges, plaintiffs “routinely earn[ed] an hourly rate
that [was] less than the federal minimum wage, New York minimum wage, and Arizona
minimum wage.” Id. ¶ 59. And, it alleges, plaintiffs were never paid overtime compensation,
despite typically working more than 72 hours per week. Id. ¶ 60. On this basis, the FAC brings
claims on behalf of all plaintiffs for overtime and minimum wage violations under the FLSA,
NYLL, AMWA, and AWA. Id. ¶¶ 73–74, 77, 86, 97, 106.
The FAC also brings claims on behalf of Vasto and Yang for retaliation in violation of
the FLSA and NYLL. See id. ¶¶ 75–76, 95–96. It alleges that, during his employment, each of
those plaintiffs told Corona that he wished to “take a different approach to signing up new
customers,” because he had not found defendants’ required sales methods to be effective. See id.
¶¶ 63–64, 70–71. When Corona denied this request, the FAC alleges, each plaintiff told her that
he “did not feel he was properly classified as an independent contractor, because he did not have
the ability to choose his own methods for making sales.” Id. ¶¶ 64, 71. Subsequently, the FAC
claims, each plaintiff was reprimanded for complaining, and terminated by Smith (in Vasto’s
case) or Corona (in Yang’s case) “in retaliation for voicing and acting on his concerns about his
misclassification as an independent contractor.” Id. ¶¶ 66, 72.
B.

Procedural History

On July 27, 2015, plaintiffs filed a complaint in the Northern District of Illinois, bringing
claims, on behalf of themselves and other similarly situated employees, against defendants under
the FLSA, NYLL, AMWA, and AWA. Dkt. 1. On July 30, 2015, plaintiffs filed the FAC. Dkt.
6. On September 28, 2015, Credico answered. Dkt. 26.
4

On November 9, 2015, the case was transferred to this District. Dkt. 46. On December
22, 2015, plaintiffs moved for conditional certification. Dkt. 62.
On January 11, 2016, CroMex and Corona answered. Dkts. 77, 78. On February 4,
2016, Credico filed an amended answer. Dkt. 85.
On March 25, 2016, Young moved to dismiss the FAC against him, Dkt. 106, and filed a
memorandum of law, Dkt. 107 (“Young Br.”), and a declaration by defense counsel, Dkt. 108, in
support. On May 4, 2016, the Court directed plaintiffs to file, within 21 days of the Court’s
resolution of plaintiffs’ motion for conditional certification, either an amended complaint or an
opposition to Young’s motion to dismiss. Dkt. 109.
On May 5, 2016, the Court granted plaintiffs’ motion for conditional certification of a
collective of all persons who conducted face-to-face marketing work for Credico and its
subcontractor companies in the United States, while classified as independent contractors, at any
point during the three years preceding the issuance of a court-appointed notice. Dkt. 113.
On May 26, 2016, plaintiffs filed a memorandum of law in opposition to Young’s motion
to dismiss. Dkt. 119 (“Pl. Br.”). On June 2, 2016, Young replied. Dkt. 120 (“Young Reply
Br.”).
II.

Applicable Legal Standards
To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead “enough

facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Where a complaint pleads facts that are
‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and
plausibility of entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557).
5

In considering a motion to dismiss, a district court must “accept[] all factual claims in the
complaint as true, and draw[] all reasonable inferences in the plaintiff’s favor.” Lotes Co. v. Hon
Hai Precision Indus. Co., 753 F.3d 395, 403 (2d Cir. 2014) (quoting Famous Horse Inc. v. 5th
Ave. Photo Inc., 624 F.3d 106, 108 (2d Cir. 2010) (internal quotation marks omitted)). However,
this tenet is “inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. “Threadbare recitals of
the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.
“[R]ather, the complaint’s [f]actual allegations must be enough to raise a right to relief above the
speculative level, i.e., enough to make the claim plausible.” Arista Records, LLC v. Doe 3, 604
F.3d 110, 120 (2d Cir. 2010) (quoting Twombly, 550 U.S. at 555, 570) (internal quotation marks
omitted) (emphasis in Arista Records). A complaint is properly dismissed where, as a matter of
law, “the allegations in [the] complaint, however true, could not raise a claim of entitlement to
relief.” Twombly, 550 U.S. at 558.
III.

Discussion
Young’s motion to dismiss turns on the question of whether the FAC adequately pleads

that he was plaintiffs’ “employer” as that term is defined by the FLSA, NYLL, AMWA, and
AWA.
A.

Legal Definition of “Employer”

The FLSA defines “employer” as “any person acting directly or indirectly in the interest
of an employer in relation to an employee.” 29 U.S.C. § 203(d). The Supreme Court has
emphasized that this is an expansive definition with “striking breadth.” Nationwide Mut. Ins. Co.
v. Darden, 503 U.S. 318, 326 (1992). Accordingly, “the Court has instructed that the
determination of whether an employer-employee relationship exists for purposes of the FLSA
should be grounded in ‘economic reality rather than technical concepts,’ determined by reference
not to ‘isolated factors, but rather upon the circumstances of the whole activity.’” Barfield v.
6

N.Y.C. Health & Hosps. Corp., 537 F.3d 132, 141 (2d Cir. 2008) (quoting Goldberg v. Whitaker
House Coop., Inc., 366 U.S. 28, 33 (1961), and Rutherford Food Corp. v. McComb, 331 U.S.
722, 730 (1947)). An individual may simultaneously have multiple “employers” for the
purposes of the FLSA, in which case, “all joint employers are responsible, both individually and
jointly, for compliance with all the applicable provisions of the [FLSA].” 29 C.F.R. § 791.2(a).
The Second Circuit has instructed that in applying the “economic reality” test, courts
should consider a variety of factors, based on the “factual challenges posed by particular cases.”
Barfield, 537 F.3d at 142. In the context of evaluating whether an individual official may be
liable as an employer, the Second Circuit has applied a modified version of the “formal control”
test articulated in Carter v. Dutchess Community College, 735 F.2d 8 (2d Cir. 1984). Under
Carter, courts consider: “whether the alleged employer (1) had the power to hire and fire the
employees, (2) supervised and controlled employee work schedules or conditions of
employment, (3) determined the rate and method of payment, and (4) maintained employment
records.” Id. at 12 (quoting Bonnette v. Calif. Health & Welfare Agency, 704 F.2d 1465, 1470
(9th Cir. 1983)).4
In addition, in considering whether an individual official is liable as an employer, courts
are also to consider two other factors. See Irizarry v. Catsimatidis, 722 F.3d 99, 106–12 (2d Cir.
2013) (citing Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 137–40 (2d Cir. 1999)).

4

In evaluating claims of employer status arising in other contexts, the Second Circuit has also
applied a “functional control” test, which considers factors that largely but incompletely overlap
with those considered in the formal control test. See Zheng v. Liberty Apparel Co., 355 F.3d 61,
71–72 (2d Cir. 2003); Barfield v. N.Y.C. Health & Hosp. Corp., 432 F. Supp. 2d 390, 392–93
(S.D.N.Y. 2006), aff’d, 537 F.3d 132 (2d Cir. 2008).
7

The first is the scope of the individual’s “operational control” over “employment-related
factors such as workplace conditions and operations, personnel, or compensation.” Id. at 106,
109; see id. at 106–10.5 In assessing this factor, the Second Circuit has placed emphasis on the
extent to which the individual (1) “exercised financial control over the company,” and (2) gave
instructions to subordinate managers on matters concerning employment practices. See id. at
116 (citing Herman, 172 F.3d at 136–37, 140). The Circuit has held that:
[e]vidence that an individual is an owner or officer of a company, or otherwise
makes corporate decisions that have nothing to do with an employee’s function, is
insufficient to demonstrate “employer” status. Instead, to be an “employer,” an
individual defendant must possess control over a company’s actual “operations”
in a manner that relates to a plaintiff’s employment.
Id. at 109 (emphasis added).
The second factor is the individual’s “potential power,” i.e., the extent to which he has
authority to control employees, even if he does not exercise it. Id. at 110–11. The Circuit has
held that employer status “does not require continuous monitoring of employees, looking over
their shoulders at all times, or any sort of absolute control of one’s employees.” Herman, 172
F.3d at 139. Rather, “[c]ontrol may be restricted, or exercised only occasionally, . . . since such
limitations on control do[] not diminish the significance of its existence.” Id. (alteration in
original) (internal quotation marks and citation omitted). However, the Circuit has emphasized
that “the manifestation of, or, at the least, a clear delineation of an individual’s power over
employees is an important and telling factor in the ‘economic reality’ test.” Irizarry, 722 F.3d at
111. “Ownership, or a stake in a company, is insufficient.” Id. “[A] company owner, president,

5

This consideration may “establish a higher threshold for individual liability than for corporate
‘employer’ status.” Irizarry, 722 F.3d at 109.
8

or stockholder must have at least some degree of involvement in the way the company interacts
with employees to be a FLSA ‘employer.’” Id. at 107.
These factors are not exclusive. As the Second Circuit has emphasized, the “economic
reality” test gauges the “totality of the circumstances,” Barfield, 537 F.3d at 141–42, and “any
relevant evidence may be examined so as to avoid having the test confined to a narrow legalistic
definition.” Herman, 172 F.3d at 139. “[T]he overarching concern is whether the alleged
employer possessed the power to control the workers in question.” Id. (citing Carter, 735 F.2d at
12).6
The standard for employer status under the NYLL appears nearly if not wholly identical
to that of the FLSA. Compare 29 U.S.C. § 203(d) (“‘Employer’ includes any person acting
directly or indirectly in the interest of an employer in relation to an employee.”), with N.Y. Lab.
Law § 190(3) (“‘Employer’ includes any person, corporation, limited liability company, or
association employing any individual in any occupation, industry, trade, business or service.”).
“Neither the New York Court of Appeals nor the Second Circuit has decided whether the tests
for ‘employer’ status are the same under the FLSA and the NYLL. However, district courts in
this Circuit have consistently interpreted the definition of ‘employer’ under the New York Labor
Law coextensively with the definition used by the FLSA.” Inclan v. N.Y. Hosp. Grp., Inc., 95 F.
Supp. 3d 490, 511 (S.D.N.Y. 2015) (internal quotation marks and citations omitted). Both
parties adopt this interpretation in their briefs. See Young Br. 4 n.3; Pl. Br. 4.

6

Circuit courts across the country have applied similar standards. See, e.g., Gray v. Powers, 673
F.3d 352, 355–56 (5th Cir. 2012); Boucher v. Shaw, 572 F.3d 1087, 1091 (9th Cir. 2009); Chao
v. Hotel Oasis, Inc., 493 F.3d 26, 34 (1st Cir. 2007); U.S. Dep’t of Labor v. Cole Enters., Inc., 62
F.3d 775, 778–79 (6th Cir. 1995).
9

As for the Arizona wage statutes, the AMWA “looks to the standards of the FLSA” to
determine whether there is an employer-employee relationship. Martinez v. Ehrenberg Fire
Dist., No. 14 Civ. 00299 (DGC), 2015 WL 3604191, at *2 (D. Ariz. June 8, 2015) (citing Ariz.
Rev. Stat. § 23–362(D) (“[W]hether a person is an independent contractor or an employee shall
be determined according to the standards of the federal Fair Labor Standards Act.”); see also id.
at *2–3 (applying the “economic reality” test to claims brought under the FLSA and AMWA).
And the standard under the AWA is equally broad. See Ariz. Rev. Stat. § 23–350(3) (defining
“employer” as “any individual, partnership, association, joint stock company, trust, [or]
corporation . . . employing any person”). The parties do not address this statute in their briefs.
The Court is aware of no authority holding that its definition of “employer” should be interpreted
materially differently than its federal counterpart.
The Court, therefore, applies the economic reality analysis to plaintiffs’ claims under
each statute.
B.

Analysis

Applying these standards, the FAC does not come close to pleading that Young was
plaintiffs’ employer under the FLSA or the New York and Arizona wage statutes.
As noted, plaintiffs bring claims against Credico; Young, Credico’s President; CroMex,
an ISO within the Credico network; and Corona, CroMex’s owner and manager. The FAC
contains a number of allegations regarding “defendants” as an undifferentiated collective. It
alleges that: “[d]efendants have been operating as joint employers of [p]laintiffs[] and of all
workers promoting [d]efendants’ clients’ cell phones and wireless service plans,” FAC ¶ 1;
“[d]efendants’ workers are supervised closely by their agents[,] . . . instructed in the details of
their job performance, the hours and location worked, and [ ] monitored and reviewed

10

frequently,” id. ¶ 44; “[d]efendants set weekly sales targets for their workers, who can be
terminated for failure to meet these goals,” id.; and “[d]efendants’ workers are paid solely on a
commission basis,” id. ¶ 57.
As to Young specifically, however, the FAC alleges only that he is “an adult resident of
New York . . . [and] the president of Credico.” Id. ¶ 24. This allegation does not approach the
level of specificity required to plead employer status under the relevant statutes. As the Second
Circuit held in Irizarry, an elevated title is “insufficient to establish that an individual is an
‘employer.’” 722 F.3d at 111. Rather, a “company owner, president, or stockholder must have
at least some degree of involvement in the way the company interacts with employees.’” Id. at
107. Here, the FAC does not plead any facts that would permit the Court to infer that Young had
the requisite level of involvement.
As an initial matter, the FAC does not satisfy any of the Carter factors with respect to
Young. It does not allege that Young (1) had the power to hire or fire agents, (2) supervised or
controlled agents’ work schedules or conditions of employment, (3) determined the rate and
method of employment, or (4) maintained employment records. See Carter, 735 F.2d at 12.
“Generally, corporate officers and owners held to be employers under the FLSA have had some
direct contact with the plaintiff employee, such as personally supervising the employee’s work,
including determining the employee’s day-to-day work schedules or tasks, signing the
employee’s paycheck or directly hiring the employees.” Tracy v. NVR, Inc. (“Tracy I”), No. 04
Civ. 6541 (DGL) (MWP), 2009 WL 3153150, at *4 (W.D.N.Y. Sept. 30, 2009) (collecting
cases), report and recommendation adopted as modified, 667 F. Supp. 2d 244 (W.D.N.Y. 2009);
accord Wolman v. Catholic Health Sys. of Long Island, Inc., 853 F. Supp. 2d 290, 299 (E.D.N.Y.
2012), aff’d in part, rev’d in part on other grounds sub nom. Lundy v. Catholic Health Sys. of

11

Long Island Inc., 711 F.3d 106 (2d Cir. 2013). The FAC, however, does not contain a single
allegation to that effect.
Equally significant, the FAC does not plead any facts that would permit the Court to infer
that Young had “operational control” over “employment-related factors such as workplace
conditions and operations, personnel, or compensation.” Irizarry, 722 F.3d at 109; see, e.g.,
Moon v. Kwon, 248 F. Supp. 2d 201, 237 (S.D.N.Y. 2002) (“Kwon hardly was a distant
corporate officer, with no role in setting the terms and conditions of employment for employees
such as Moon. To the contrary, Kwon played an intimate role in the day-to-day operations of the
hotel.”). It does not allege that Young “exercised financial control” over Credico or any of its
ISOs. See Herman, 172 F.3d at 136, 140 (fact that defendant “was the only principal who had
bank credit, [and therefore] exercised financial control over the company” was strong evidence
of his “employer” status); Donovan v. Grim Hotel Co., 747 F.2d 966, 972 (5th Cir. 1984)
(president qualified as employer because he was the “top man” of the hotel companies, “held
their purse-strings[,] and guided their policies”). Nor does it allege that he possessed control
over managerial staff or instructed them on matters concerning employment practices. See
Herman, 172 F.3d at 140 (“Although [defendant’s] hiring involved mainly managerial staff, the
fact that he hired individuals who were in charge of the [plaintiff] guards [was] a strong
indication of control.”). Indeed, the FAC contains no allegations whatsoever as to the scope of
Young’s powers and duties as President.
Accordingly, although the FAC alleges (upon information and belief) that Credico
“exercise[d] control over the day-to-day operations of the companies in its network,”
“determined to classify [agents] as independent contractors,” and “created and implemented its
‘Management Training Program,’” FAC ¶¶ 1, 8, 11, it supplies no basis for inferring that Young

12

played any role in devising or implementing those policies. Similarly, although the FAC alleges
that Corona and Smith fired agents from CroMex, id. ¶¶ 1, 41, 72, in the absence of allegations
as to the relationship between Young and those lower-level managers, there is no basis for
inferring that he had any influence over their actions.
In essence, without pleading any facts that suggest Young enjoyed formal or operational
control over agents’ employment, plaintiffs ask the Court to infer such authority based on his
status as Credico’s President. The Court rejects that bid. Even if there were circumstances in
which an individual’s control over workers could be plausibly inferred solely from his high-level
position within a company, this would not be one of those cases. Courts have been especially
hesitant to infer status-based control where structural considerations—such as a company’s
stratified or decentralized structure, public status, or expansive scale—cast doubt on the premise
that senior corporate officials enjoy authority over employment-related matters.7 That logic is

7

See, e.g., Solis v. Velocity Exp., Inc., No. 09 Civ. 864 (MO), 2010 WL 2990293, at *6 (D. Or.
July 26, 2010) (“In the absence of a direct relationship between the corporate officers’ decisions
and the FLSA violation at issue, courts have found that corporate officers in large publicly traded
corporations did not become FLSA employers simply by virtue of their general authority over
the company as a whole.”); Tracy I, 2009 WL 3153150, at *4 (“Where the relationship between
the putative employer and the plaintiff employee is more attenuated and the size of the
corporation larger, employer liability may not be found.”); compare Tracy v. NVR, Inc. (“Tracy
II”), 667 F. Supp. 2d 244, 246–47 (W.D.N.Y. 2009) (refusing to infer, based solely on their job
titles, that Board Chairman, CEO, and VP of Human Resources of “enormous, multi-billion
dollar corporation scattered across hundreds of miles [ ] had and exercised sufficient control over
[plaintiffs] to satisfy the economic reality test”), with Leal v. Masonry Servs., Inc., No. 12 Civ.
588 (DLI), 2013 WL 550668, at *3 (E.D.N.Y. Feb. 12, 2013) (“[Allegations] that the Moving
Defendants, in their capacity as owners and directors of construction businesses, . . . had the
power to hire and terminate employees, control work schedules and conditions of employment,
and set wages . . . appear plausible because they suggest, when viewed as a whole, a business
enterprise of modest size and scope.”), and Wilk v. VIP Health Care Servs., Inc., No. 10 Civ.
5530 (ILG), 2012 WL 560738, at *9 (E.D.N.Y. Feb. 21, 2012) (noting that there was “no reason
to question the plausibility” of plaintiff’s allegations that company’s owner/manager was
authorized to make employment decisions, because “there [was] no allegation that [the company]
was a massive enterprise with far-flung offices and a large number of employees”).
13

persuasive here, where Credico operates a nationwide network of over 100 ISOs, some of which,
such as CroMex, operate their own networks of sub-ISOs, which in turn directly employ the
agents who perform marketing services for Credico’s clients.
Indeed, the facts pled in the FAC indicate that key employment decisions were made at
multiple levels of management within the Credico network. Compare FAC ¶ 1 (“Credico’s
Regional Sales Director, controlled by its headquarters, has exercised his authority to terminate a
worker from CroMex.”), with id. ¶¶ 71–72 (describing occasion on which Corona, CroMex’s
owner and manager, terminated an agent). Glaringly absent, however, are any factual allegations
linking Young to such decisions.
Under these circumstances, the pleadings do not non-speculatively support an inference
that Young “possessed the power to control the workers in question.” Herman, 172 F.3d at 139.
To hold otherwise “would create de facto liability for high-level corporate officers any time a
corporation violated the FLSA.” Solis, 2010 WL 2990293, at *8 (corporate officers not liable as
“employers” under the FLSA where “control over the terms and conditions of employment was
spread throughout the corporate organization and there [was] no evidence that [the individual
defendants] personally made a decision that [could] be traced to the alleged FLSA violations”).
The Second Circuit has flatly rejected such an outcome. See Irizarry, 722 F.3d at 107, 109, 111.
The cases on which plaintiffs rely are not to the contrary. In those cases, the plaintiffs
did not base their claims against the individual defendants solely on their elevated status within
the employer company. Rather, they alleged that the individual defendants—as distinct from any
named corporate entities—personally participated in or condoned the alleged violations.
For instance, in Winfield v. Babylon Beauty School of Smithtown Inc., 89 F. Supp. 3d 556,
569 (E.D.N.Y. 2015), plaintiffs alleged not only that the individual defendants were the owners,

14

officers, and/or directors of one or more of the beauty school defendants, but also that they “were
ultimately responsible for the decision not to compensate students for working in the [b]eauty
[s]chools’ clinics.” Similarly, in Sikiotis v. Vitesse Worldwide Chaufeeured Services, Inc., 147 F.
Supp. 3d 39, 47 (D. Conn. 2015), plaintiffs alleged that: (1) the individual defendant, who was
the owner and president of the defendant company, “had the authority to set the hours of
employment, hire and fire, maintain employment records, [ ] direct the work and [ ] determine
the rate and method of payment of [plaintiff’s] wages”; and (2) his “exercise of that authority
was the direct cause of [the company’s] failure to pay wages.”8
By contrast, courts faced with factual allegations as sparse as those pled here have
generally rejected claims of individual liability. For instance, in Bravo v. Eastpoint
International, Inc., No. 99 Civ. 9474 (WK), 2001 WL 314622, at *1 (S.D.N.Y. Mar. 30, 2001),
plaintiffs alleged that the “Donna Karan Defendants,” which included Donna Karan in her
personal capacity and a number of corporate entities, “controlled plaintiffs’ wages and hours
through establishing contract prices and dates of production,” and “had a representative present
in the factory at least once a day to monitor quality control.” The only allegation pertaining to
Karan specifically, however, was that she was the “principle [sic] owner and chairperson” of the
other Donna Karan defendants. Id. at *2. The court held that this “conclusory statement [was]
by itself insufficient” to state a claim against Karan under the FLSA. Id. It rejected plaintiffs’

8

See also Olvera v. Bareburger Grp. LLC, 73 F. Supp. 3d 201, 207 (S.D.N.Y. 2014) (“[A]s to
the individual franchisor defendants[,] . . . the FAC alleges that they ‘determined the wages and
compensation of the employees of Defendants, including Plaintiffs, and established the schedules
of the employees, maintained employee records, and had the authority to hire and fire
employees.’” (citation omitted)); cf. Apolinar v. Glob. Deli & Grocery, Inc., No. 12 Civ. 3446
(RJD), 2013 WL 5408122, at *4 (E.D.N.Y. Sept. 25, 2013) (allegations that corporate
defendant’s principal authorized company’s pay policies and controlled terms and conditions of
plaintiffs’ work were sufficient to establish individual employer liability for purposes of
unopposed default judgment motion).
15

effort to “lump [multiple defendants] together as one in the allegations . . . in the amended
complaint.” Id. And it held that, because plaintiffs “allege[d] no fact which would tend to
establish [Karan’s] power to control the plaintiff workers,” they had not adequately pleaded that
she was their employer. Id. 9
So, too, here. As in Bravo, the FAC here does not plead facts that would permit the
Court to plausibly infer that Young exercised—or even possessed—formal or operational control
over plaintiffs’ employment conditions. Strikingly, it pleads no facts as to Young aside from his
executive status. That fact, without more, does not make Young an “employer” under the FLSA,
NYLL, AMWA, or AWA. The FAC’s claims against Young, therefore, must be dismissed.
C.

Leave to Amend

Leave to amend a complaint should be freely given “when justice so requires.” Fed. R.
Civ. P. 15(a)(2). It is “within the sound discretion of the district court to grant or deny leave to
amend.” McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007). “Leave to
amend, though liberally granted, may properly be denied for: ‘undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility

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See also, e.g., Coley v. Vannguard Urban Imp. Ass’n, Inc., No. 12 Civ. 5565 (PKC), 2014 WL
4793825, at *4–6 (E.D.N.Y. Sept. 24, 2014) (dismissing claims against Board Chairman where
plaintiffs “allege[d] no facts other than [defendant’s] status as a board member to support the
conclusory allegation that he was responsible for making decisions concerning employee wages
and payment of employee wages”) (internal quotation marks omitted); Tracy II, 667 F. Supp. 2d
at 246–47 (plaintiffs failed to state a claim against CEO, Board Chairman, and VP of Human
Resources where they “offere[d] no supporting details to substantiate their belief [that defendants
had authority over their employment conditions] other than [defendant’s] job titles”), adopting as
modified Tracy I, 2009 WL 3153150, at *5–6.
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of amendment, etc.’” Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir. 2008) (quoting
Foman v. Davis, 371 U.S. 178, 182 (1962)).
Here, plaintiffs have not requested leave to file a Second Amended Complaint. To the
contrary, they declined the Court’s invitation, in its Order of April 4, 2016, to amend the FAC in
response to Young’s motion to dismiss. See Dkt. 109. In that Order, the Court advised plaintiffs
that, pursuant to the Court’s Individual Rule 3(B), “[n]o further opportunities to amend will
ordinarily be granted.” Id.
Accordingly, plaintiffs’ claims against Young are dismissed with prejudice. See Ritchie
Capital Mgmt., L.L.C. v. Gen. Elec. Capital Corp., 821 F.3d 349, 351–52 (2d Cir. 2016) (no
abuse of discretion to dismiss complaint with prejudice where plaintiff had not requested leave to
amend and Individual Rule stated that no further opportunity to amend would ordinarily be
granted); Williams v. Citigroup Inc., 659 F.3d 208, 212 (2d Cir. 2011) (“[T]he contention that the
District Court abused its discretion in not permitting an amendment that was never requested [i]s
frivolous.” (internal quotation marks and citation omitted)).
CONCLUSION
For the foregoing reasons, plaintiffs’ claims against Young are dismissed with prejudice.
The Clerk of Court is respectfully directed to close the motion pending at Dkt. 106 and to
terminate Young as a defendant in this case.

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