Park v. FDM Group Inc. et al
Filing
65
MEMORANDUM OPINION AND ORDER: re: 56 MOTION for Reconsideration re; 55 Clerk's Judgment, 54 Memorandum & Opinion, filed by Grace Park. For the foregoing reasons, Plaintiff's Motion for Reconsideration and Relief under Federal Rule s of Civil Procedure 59 and 60 is granted insofar as the Court permits Plaintiff to move to amend her complaint, and Plaintiff's motion for leave to amend her pleading is granted with respect to Plaintiff's overtime claim, but denied with r espect to Plaintiff's minimum wage claims. The dismissal with prejudice of Plaintiff's other claims stands, but the judgment will be vacated to permit continuation of the litigation with respect to the overtime pay claims. This Memorandum Order resolves Docket Entry No. 56. The Clerk of the Court is directed to vacate the judgment and reopen the case.SO ORDERED. (Signed by Judge Laura Taylor Swain on 8/28/2018) (ama)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------x
GRACE PARK, individually and on behalf of
all others similarly situated,
Plaintiff,
-v-
No. 16-CV-1520-LTS
FDM GROUP, INC.,
Defendant.
-------------------------------------------------------x
MEMORANDUM OPINION AND ORDER
On March 9, 2017, this Court issued a Memorandum Order and Opinion (the
“March Order”), 2017 WL 946298 (S.D.N.Y. Mar. 9, 2017), granting the motion of defendants
FDM Group (Holdings) PLC and FDM Group, Inc. (collectively, “FDM” or “Defendants”) to
dismiss the First Amended Complaint (“FAC”) of Grace Park (“Plaintiff”), which asserted
claims for minimum wage and overtime violations under the Fair Labor Standards Act (“FLSA”)
and claims for minimum wage, overtime, gap time and record-keeping violations under the New
York Labor Law (“NYLL”). Plaintiff now moves for reconsideration of and relief from the
March Order, pursuant to Federal Rules of Civil Procedure 59(e) and 60(b), and S.D.N.Y. Local
Civil Rule 6.3 and, alternatively, for leave to amend her complaint. (Docket Entry No. 56.) The
Court has considered the submissions of the parties carefully and, for the following reasons,
Plaintiff’s motion for relief from the judgment is granted to the extent that Plaintiff’s motion for
leave to amend is granted in part.
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DISCUSSION
The factual allegations underlying this case are set forth in the March Order,
familiarity with which is presumed. See March Order, 2017 WL 946298, at *1-*2.
Motion for Reconsideration
Federal Rule of Civil Procedure 59(e)1 allows parties to submit a motion to “alter
or amend a judgment” no later than “28 days after the entry of the judgment.” Rule 59(e)
motions are granted to “correct clear error, prevent manifest injustice or review the court’s
decision in light of the availability of new evidence.” Parrish v. Sollecito, 253 F. Supp. 2d 713,
715 (S.D.N.Y. 2003) (citing Virgin Atl. Airways, Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245,
1255 (2d Cir. 1992)). Similarly, Rules 60(b)(1), (2), and (6) allow a court to relieve a party
“from a final judgment, order, or proceeding” because of “mistake, inadvertence, surprise, or
excusable neglect,” “newly discovered evidence that, with reasonable diligence, could not have
been discovered in time to move for a new trial,” and “any other reason that justifies relief,”
respectively. Fed. R. Civ. P. 60(b)(1), (2), (6); see Kotlicky v. U.S. Fid. & Guar. Co., 817 F.2d
6, 9 (2d Cir. 1987).
Both Rule 59(e) and Rule 60(b) permit the Court to reconsider a prior judgment,
but impose a high burden. Reconsideration under Rule 59(e) is “an extraordinary remedy to be
employed sparingly in the interests of finality and conservation of scarce judicial resources.” In
re Health Mgmt. Sys., Inc. Sec. Litig., 113 F. Supp. 2d 613, 614 (S.D.N.Y. 2000) (citation
omitted) (denying Rule 59(e) motion for reconsideration for failure to point to any additional
1
Plaintiff also seeks relief under S.D.N.Y. Local Civil Rule 6.3. Plaintiff’s Local Rule 6.3
motion, filed on April 6, 2017, was untimely, as a motion for reconsideration filed under
that Rule must be filed “within fourteen (14) days after the entry of the judgment.”
S.D.N.Y. Local Civil Rule 6.3.
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facts that would alter the court’s opinion). A motion for reconsideration, moreover, is not
intended to be a vehicle for parties to relitigate cases or advance new theories that they failed to
raise in their underlying motion practice. Melnitzky v. Rose, 305 F. Supp. 2d 349, 352
(S.D.N.Y. 2004) (rejecting a Rule 59(e) motion for reconsideration because Plaintiff failed to
point to “any controlling law or a factual matter before the Court on the underlying motion that
the Court overlooked”). Similarly, a Rule 60(b) motion is “generally not favored and is properly
granted only upon a showing of exceptional circumstances.” Marrero Pichardo v. Ashcroft, 374
F.3d 46, 55 (2d Cir. 2004) (quoting United States v. International Bhd. of Teamsters, 247 F.3d
370, 391 (2d Cir. 2001)). The decision as to whether to grant a party’s Rule 60(b) motion for
reconsideration sits “within the court’s broad discretion.” Badian v. Brandaid Communications
Corp., No. 03 CV 2424 (DC), 2005 WL 1083807, at *2 (S.D.N.Y. 2005) (internal citation
omitted).
Here, with respect to Rule 59(e), Plaintiff has pointed to no overlooked or new
evidence or factual allegations previously unavailable to Plaintiff, and simply reiterates her
previous arguments that she plausibly plead minimum wage and overtime compensation claims
under the FLSA.2 Nor does Plaintiff cite any overlooked binding precedent as a basis for
reconsideration.3 Likewise, Plaintiff has failed to satisfy the Rule 60(b) standard; she does not
2
3
Plaintiff now alleges in her proposed Second Amended Complaint that her training
stream has a maximum cost of $18,000 while she ultimately paid a Termination Fee of
$20,000, and that this difference serves to bolster the conclusion that the fee is an illegal
kickback. This alleged 10% difference between the costs associated with Plaintiff’s
training stream and the Termination Fee fails to support plausibly the proposition that the
Fee was an illegal kickback rather than a valid “approximat[ion of] the damages FDM
suffered by reason of breach of the Employment Agreement prior to the completion of
the two-year contracted period.” 2017 WL 946298, at *4.
In her motion for reconsideration, Plaintiff reiterates her arguments against applying the
Glatt test to these circumstances. (Docket Entry No. 57, at 8-11.) See Glatt v. Fox
Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2016). The Court finds that Plaintiff has
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argue surprise or excusable neglect and fails to demonstrate that the Court mistakenly or
inadvertently misinterpreted the FAC in concluding that Plaintiff failed to state a claim under
FLSA. Plaintiff also failed to highlight any newly discovered evidence or facts in her motion.
In the alternative, Plaintiff contends that the Court erred when it dismissed the
FAC with prejudice and consequently denied leave to amend, and now moves to vacate the
judgment and file a second amended complaint.
“Once judgment is entered the filing of an amended complaint is not permissible
until judgment is set aside or vacated pursuant to Federal Rule of Civil Procedure 59(e) or
60(b).” National Petrochemical Co. of Iran v. M/T Stolt Sheaf, 930 F.2d 240, 244 (2d Cir.
1991). When considering a post-judgment motion for leave to amend, the Second Circuit has
stated that the motion “must be evaluated with due regard to both the value of finality and the
policies embodied in Rule 15.” Williams v. Citigroup Inc., 659 F.3d 208, 213 (2d Cir. 2011).
The Court may “take into account the nature of the proposed amendment in deciding whether to
vacate the previously entered judgment.” Id. (quoting Ruotolo v. City of New York, 514 F.3d
184, 191 (2d Cir. 2008)). “In the absence of any apparent or declared reason—such as 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
failed to present any basis to reconsider its use of this legal standard at the motion to
dismiss stage, and notes that courts in this circuit have applied the Glatt test specifically
in the trainee context. Plaintiff presents no controlling case law requiring that the Court
apply another test in the context of trainees. See Warman v. Am. Nat’l Standards Inst.,
No. 15 CV 5486, 2016 WL 3647604, at *4 (S.D.N.Y. Jun. 27, 2016). Furthermore,
Plaintiff’s argument that the Court erred in applying Glatt at the pleading stage (Docket
Entry No. 57, at 11) is unfounded, as this argument confuses the substantive test with the
procedural standard applied. The Court employed the Glatt factors to determine whether
the facts in the FAC plausibly plead a FLSA minimum wage claim, and therefore
faithfully applied the pleading standard articulated in Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007).
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allowance of the amendment, futility of amendment, etc. — the leave sought should, as the rules
require, be ‘freely given.’” Foman v. Davis, 371 U.S. 178, 182 (1962).
The Court finds no undue delay, prejudice, or repeated failure to cure the
complaint’s deficiencies here. Plaintiff amended her complaint before any dispositive motions
were filed and the Court entered judgment on the same day that the Defendant’s motion to
dismiss was granted, precluding any opportunity to act prior to judgment. The fact that Plaintiff
amended her complaint only once before the judgment was entered, and that this amended
complaint was filed before its deficiencies were identified by Defendant and the Court, tends to
weigh in favor of “freely” giving leave to amend here. The Second Circuit has observed that,
often, “[w]ithout the benefit of a ruling, many a plaintiff will not see the necessity of amendment
or be in a position to weigh the practicality and possible means of curing specific deficiencies.”
Loreley Financing (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC, 797 F.3d 160, 190 (2d Cir.
2015). Moreover, granting leave to amend here would not improperly force the parties to
“expend significant additional resources to conduct discovery and prepare for trial” or
“significantly delay the resolution of the dispute,” as there has only been a single motion and no
discovery has been conducted in this case. Block v. First Blood Assocs., 988 F.2d 344, 350 (2d
Cir. 1993). Accordingly, the Court finds that Plaintiff is not barred from seeking leave to amend.
In light of the “liberal spirit of Rule 15,” the Court will consider Plaintiff's request
to amend her pleadings, carefully balancing the value of finality and our court system’s “strong
preference for resolving disputes on the merits.” Loreley Financing (Jersey) No. 3 Ltd, 797 F.3d
at 190-91 (quoting Williams, 659 F.3d at 212-13). While the Second Circuit has found that a
district court may forgo consideration of a motion for leave to amend when the party fails to
proffer adequate grounds to set aside or vacate the judgment pursuant to Rule 59(e) or 60(b), the
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plaintiffs in the cases upon which Defendants rely failed to make any showing to the district
courts that the underlying complaints’ deficiencies could be cured and therefore proffered no
justification for setting aside the judgments. See e.g. Gallop v. Cheney, 642 F.3d 364, 369 (2d
Cir. 2011) (finding that “in the absence of any indication that Gallop could . . . provide additional
allegations that might lead to a different result, the District Court did not err in dismissing her
claim with prejudice); see also Janese v. Fay, 692 F.3d 221, 229 (2d Cir. 2012) (finding that the
district court properly denied Plaintiffs’ motion to amend when they failed to make any showing
that would justify vacating the judgment to allow the reassertion of untimely claims). Here,
Plaintiff has attached a Proposed Second Amended Complaint (“PSAC”) to her Memorandum of
Law in Support of her Motion for Reconsideration, which the Court will consider to assess
whether her proposed amendments would be futile. Plaintiff’s motion to modify the judgment is
therefore granted to the extent necessary to permit consideration of her instant motion for leave
to amend the FAC.
Motion for Leave to Amend
“The party opposing a motion to amend bears the burden of establishing that an
amendment would be futile . . . . A proposed amendment to a pleading would be futile if it could
not withstand a motion to dismiss pursuant to Rule 12(b)(6)” of the Federal Rules of Civil
Procedure. Ballard v. Parkstone Energy, LLC, 06 CV 13099, 2008 WL 4298572, at *3
(S.D.N.Y. Sept. 19, 2008) (internal quotation marks and citations omitted). “To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a
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claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
The Court previously concluded that the allegations of the FAC were insufficient
to state a claim under Rule 12(b)(6) and the standard set forth in Twombly and Iqbal. In the
PSAC, Plaintiff has added new alleged facts to support her minimum wage and overtime claims
under the FLSA.
Minimum Wage Compensation During Training Period
With respect to Plaintiff’s claim that she was not paid the minimum wage during
her training period, the Court adopted the “primary beneficiary test” set forth by the Second
Circuit in Glatt v. Fox Searchlight Pictures, Inc., to determine whether Park was an employee or
trainee during that time. 811 F.3d 528, 536-38 (2d Cir. 2016). Applying several of the “nonexhaustive” factors identified in the Glatt opinion,4 the Court found that “Plaintiff ha[d] not
pleaded facts that would support a reasonable inference that she was an FDM employee during
the training period.” March Order, 2017 WL 946298, at *3. Given that the Training Agreement
negated any expectation of compensation on the Plaintiff’s part, and Plaintiff’s allegations
4
The Glatt Court enumerated the following non-exhaustive factors as relevant to the
evaluation of unpaid internships: (1) the extent to which the intern and the employer
clearly understand that there is no expectation of compensation; (2) the extent to which
the internship provides training that would be similar to that which would be given in an
educational environment, including the clinical and other hands-on training provided by
educational institutions; (3) the extent to which the internship is tied to the intern’s formal
education program by integrated coursework or the receipt of academic credit; (4) the
extent to which the internship accommodates the intern’s academic commitments by
corresponding to the academic calendar; (5) the extent to which the internship’s duration
is limited to the period in which the internship provides the intern with beneficial
learning; (6) the extent to which the intern’s work complements, rather than displaces, the
work of paid employees while providing significant educational benefits to the intern;
and (7) the extent to which the intern and the employer understands that the internship is
conducted without entitlement to a paid job at the conclusion of the internship. 811 F.3d
at 536-37.
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concerning the nature of the training activities and the benefits they offered to her demonstrated
that those benefits outweighed the employment-related aspects of the alleged facts, the complaint
did not substantiate the Plaintiff’s conclusory assertions that she was an employee during the
training period with facts depicting an “economic reality” of an employment relationship during
the training period. Id.
The PSAC alleges new facts related to the interview process for the training
program, FDM’s Code of Conduct for Trainees, Plaintiff’s weekly training schedule, and other
aspects of her training. (See PSAC ¶¶ 21-62.) In particular, Plaintiff contends that the required
background check and interview rounds preceding placement in the training program, the 40hour weekly training schedule, FDM’s “rules and regulations” pertaining to trainee conduct, and
FDM’s ability to hire and fire trainees plausibly show that Plaintiff was an employee during this
period. Id. The Court finds that these proposed allegations are insufficient to state plausibly a
claim that Plaintiff was entitled to be paid during her training period. The PSAC does not plead
facts tending to show that the training sessions here differed substantially from those offered in
vocational schools or other educational environments, or that Plaintiff displaced the work of any
paid FDM employees; her sole responsibility was to build skills, not to create work product. See
March Order, 2017 WL 946298, at *3; (PSAC ¶¶ 47-50). Moreover, the allegations contradict
the explicit stipulation in the Training Agreement that “nothing in this Agreement shall give rise
to a relationship of employee and employer between you and FDM,” negating any reasonable
expectation that Plaintiff would be compensated before she signed an employer agreement with
an FDM client upon completion of the training. (Ascher Decl. Ex. A, Docket Entry No. 29-1.)
Accordingly, the PSAC’s factual elements, taken as true and considered in light of the
substantive standard framed by the Glatt factors, do not plausibly allege that FDM was the
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primary beneficiary of the training program and that Plaintiff was an employee under FLSA
during the training period.
Minimum Wage Compensation as an FDM Consultant
In the March Order, the Court found that the FAC and integral documents, read in
the light most favorable to Plaintiff, did not state plausibly a claim that the Termination Fee
imposed by the Employment Agreement was “a deduction [from Plaintiff’s paychecks] for tools
used or costs incurred in the course of Plaintiff's performance of her job as a consultant.” 2017
WL 946298, at *4. Rather the pleading, including the agreement, showed a liquidated damages
arrangement and did not support plausibly an inference that the fee constituted an illegal
kickback under 29 C.F.R. § 531.35. In dismissing Plaintiff’s claim concerning the repayment
provision in Plaintiff’s Employment Agreement, the Court relied primarily on Gordon v. City of
Oakland, 627 F.3d 1092 (9th Cir. 2010), a case involving a training cost repayment provision
enforceable upon the employee’s termination of employment. 2017 WL 946298, at *4.
In conjunction with argumention in her reconsideration motion that the Court
should have viewed Ketner v. Branch Banking and Trust Co., 143 F. Supp. 3d 370 (M.D.N.C.
2015) as authority more persuasive than Gordon, Plaintiff makes further factual proffers and
arguments that are arguably consistent with Ketner’s analytical approach. The Court is not
persuaded that reconsideration of its March Order conclusions concerning the proper standard for
analysis of the Termination Fee is warranted. Plaintiff’s request to amend further her complaint
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in connection with the claim that the Termination Fee constituted an illegal kickback is therefore
denied as futile.
Overtime Compensation as an FDM Consultant
Finally, with respect to the overtime claims pertaining to Plaintiff’s employment
as a consultant, the Court adopted the test established by Lundy v. Catholic Health Sys. of Long
Island Inc., which requires Plaintiff to “sufficiently allege 40 hours of work in a given workweek
as well as some uncompensated time in excess of the 40 hours” in order to state a proper FLSA
claim. 711 F.3d 106, 114 (2d Cir. 2013). In the March Order, the Court found that Plaintiff’s
“conclusory” allegations that she “regularly worked over 40 hours [in any given week,] arrives at
work by 8:30am and gets out around 6:45-7:15pm, . . . quite frequently had to work on weekends
and . . . was not able to even have a one hour lunch break” “merely invite[d] speculation” and
therefore were “insufficient to permit the Court to make a calculation demonstrating that Plaintiff
worked more than forty hours in any week of her FDM employment.” 2017 WL 946298, at *4
(citing FAC ¶¶ 44-45) (internal quotation marks omitted).
The additional allegations proffered in the PSAC, however, are sufficient to show
that Plaintiff worked some unpaid overtime during her employment as a consultant. Plaintiff
alleges that her regular hours, set forth by a “Mountie Schedule,” established a minimum of “8
hours per day and 5 days per week” of work. (PSAC ¶¶ 89-91.) Plaintiff also alleges that, from
December 2014 to October 2015, she worked from “8:30 a.m. until 6:45-7:15 p.m. Monday
through Thursday and from 8:30 a.m. until 5 p.m. on Fridays [most weeks] . . . except for the
rare occasions when she could take a lunch break . . .” (Id. at ¶ 104.) Moreover, she alleges that
she “occasionally” worked from home during the workweek and “quite frequently” worked from
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home on the weekends. (Id. at ¶ 101.) Finally, she alleges that “she was not eligible for
overtime pay . . . unless her placement manager approved overtime pay.” (Id. at ¶ 105.)
Accepting as true the allegations that Plaintiff worked during the hours alleged in
the FAC most weeks from December 2014 to October 2015, and was not eligible for overtime
compensation, Plaintiff has “provide[d] sufficient detail about the length and frequency of [her]
unpaid work to support a reasonable inference that [she] worked more than forty hours in a given
week.” Nakahata v. N.Y. Presbyterian Healthcare Sys., Inc., 723 F.3d 192, 201 (2d Cir. 2013).
The PSAC alleges that Plaintiff worked at least 9 hours and 15 minutes daily from Monday
through Thursday, and 7 hours and 30 minutes on Fridays, or a total of 44.5 hours, in any given
week during this time period, even assuming that Plaintiff took an hour-long lunch break and did
not work from home during a given week. Therefore, the Court finds that the PSAC cures the
pleading defects previously identified by the Court with respect to the overtime wage claim
under FLSA, and that granting leave to amend to reassert this claim would not be futile.
CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for Reconsideration and Relief
under Federal Rules of Civil Procedure 59 and 60 is granted insofar as the Court permits Plaintiff
to move to amend her complaint, and Plaintiff’s motion for leave to amend her pleading is
granted with respect to Plaintiff’s overtime claim, but denied with respect to Plaintiff’s minimum
wage claims. The dismissal with prejudice of Plaintiff’s other claims stands, but the judgment
will be vacated to permit continuation of the litigation with respect to the overtime pay claims.
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This Memorandum Order resolves Docket Entry No. 56. The Clerk of the Court
is directed to vacate the judgment and reopen the case.
SO ORDERED.
Dated: New York, New York
August 28, 2018
/s/ Laura Taylor Swain
LAURA TAYLOR SWAIN
United States District Judge
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