Alvarracin et al v. Volume Services, Inc et al

Filing 86

OPINION AND ORDER re: 73 MOTION to Dismiss Plaintiffs' First Amended Complaint With Prejudice Pursuant to Fed. R. Civ. P. 12(b)(6). filed by Saks Fifth Avenue LLC. Saks's motion to dismiss is DENIED. (Docket # 73.) The Clerk is directed to terminate the motion. (Signed by Judge P. Kevin Castel on 5/30/2018) (kgo)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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LUIS ALVARRACIN, CLAUDY
CHOULOUTE, ISRAEL CRESPO, KAREN
MILLOY and JOHN NUSS,
Plaintiffs,
-against-

17-cv-3873 (PKC)
OPINION
AND ORDER

VOLUME SERVICES, INC. a/k/a VOLUME
SERVICES AMERICA a/k/a CENTERPLATE,
SAKS FIFTH AVENUE LLC a/k/a SAKS FIFTH
AVENUE a/k/a SAKS INCORPORATED and
DOES 1-10,
Defendants.
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CASTEL, U.S.D.J.
Plaintiffs are former employees of a restaurant located inside the Saks Fifth
Avenue flagship store in New York City (the “Restaurant”). Plaintiffs allege that their 2013
termination from the Restaurant violated the New York City Human Rights Law’s (“NYCHRL”)
prohibition against discrimination based on age, national origin, race and sex. Subject matter
jurisdiction is premised on diversity of citizenship.
Defendant Saks Fifth Avenue LLC (“Saks”) moves to dismiss all claims against it
pursuant to Rule 12(b)(6), Fed. R. Civ. P. (Docket # 73.) It urges that the First Amended
Complaint (the “Complaint”) does not plausibly allege that plaintiffs were employees of Saks,
and instead alleges only that they were employees of co-defendant Volume Services, Inc.
(“Volume Services”). Volume Services is an independent contractor to Saks, and it assumed
responsibilities for operating the Restaurant in or about 2012. Volume Services has not filed a
motion to dismiss.

In deciding a Rule 12(b)(6) motion, a court’s review is limited to the complaint
and any documents that are attached or integral to its allegations. Because Saks’s motion
disputes the factual circumstances of plaintiffs’ employment, and because the Complaint
contains facts sufficient to nudge plaintiffs’ claims over the line from conceivable to plausible,
Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), Saks’s motion to dismiss is denied.
BACKGROUND.
In summarizing the Complaint, the Court accepts the truth of plaintiffs’ factual
allegations and draws every reasonable inference in their favor. Tanvir v. Tanzin, 889 F.3d 72,
81 (2d Cir. 2018).
Saks operated the Restaurant until 2012, when it entered into a Food Services
Agreement (the “Agreement”) with a subsidiary of Volume Services. 1 (Compl’t ¶ 21.) The
Complaint incorporates the Agreement by reference, and plaintiffs have filed a partial version of
the Agreement. (Compl’t ¶ 21 & Docket # 61.) The Agreement states that Volume Services is
an independent contractor to Saks, and that all employees of the Restaurant are to be considered
employees of Volume Services and not of Saks. (Agrm’t §§ 12.1(c), 19.5.)
After Volume Services took over Restaurant operations, plaintiffs transitioned
from being “nominal employees” of Saks to nominal employees of Volume Services. (Compl’t ¶
13.) The Complaint alleges, however, that the Agreement gave Saks “ongoing authority over the
operations” of the restaurant, and that Saks and Volume Services both acted as plaintiffs’
employers. (Compl’t ¶ 14, 22.) The Agreement includes provisions that allow Saks to set
conduct standards for Restaurant employees and to require Volume Services to reassign
Restaurant employees upon demand from Saks. (Compl’t ¶ 24; Agrm’t §§ 12.1(b), (d).)
The Agreement is between Saks and Fifth Dining, LLC, an entity that the Complaint alleges was formed by
Volume Services for the purpose of doing business with Saks. (Compl’t ¶¶ 19-20.)

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Plaintiffs describe themselves as “long-term employees” of the Restaurant.
(Compl’t ¶¶ 11-12.) They allege that they were terminated in 2013 as part of the “wholesale
elimination of the entire work group.” (Compl’t ¶¶ 12, 31.) They also allege that the 2013
terminations largely affected employees who were over the age of 40 and of Hispanic descent.
(Compl’t ¶¶ 29-30.)
Plaintiffs allege that they were terminated as part of “shared goal” by Saks and
Volume Services “of projecting a more youthful look that was also skewed racially and genderwise.” (Compl’t ¶¶ 32-33.)
RULE 12(b)(6) STANDARD.
To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Iqbal, 556 U.S. at 678 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
Legal conclusions are not entitled to the presumption of truth, and a court assessing the
sufficiency of a complaint disregards them. Iqbal, 556 U.S. at 678. Instead, the Court must
examine only the well-pleaded factual allegations, if any, “and then determine whether they
plausibly give rise to an entitlement to relief.” Id. at 679. The Complaint must include nonconclusory factual allegations that “‘nudge[ ]’” its claims “‘across the line from conceivable to
plausible. ” Id. at 680 (quoting Twombly, 550 U.S. at 570).
“For the purpose of a motion to dismiss under Rule 12(b)(6), the complaint is
deemed to include any written instrument attached to it as an exhibit or any statements or
documents incorporated in it by reference.” Allco Fin. Ltd. v. Klee, 861 F.3d 82, 98 n.13 (2d
Cir. 2017).

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DISCUSSION.
The NYCHRL makes it unlawful for employers to discriminate on the basis of
age, race, color, national origin or gender, among other characteristics. N.Y.C. Admin. Code §
8-107. The NYCHRL does not define the term “employer,” and New York courts have
concluded that four factors guide the determination of whether a defendant qualifies as an
employer: the selection and engagement of the employee; the payment of salary or wages; the
power of dismissal; and the power of control over the employee’s conduct. Griffin v. Sirva, Inc.,
29 N.Y.3d 174, 186 (2017). Of these four factors, the “greatest emphasis [is] placed on the
alleged employer’s power ‘to order and control’ the employee in his or her performance of
work.” Id.
Similarly, to determine whether a defendant is a joint employer under the
NYCHRL, courts apply an “immediate control” test, which considers whether the defendant
“had immediate control over the other company’s employees,” specifically as to “setting the
terms and conditions of the employee’s work.” Brankov v. Hazzard, 142 A.D.3d 445, 445-46
(1st Dep’t 2016) (quotation marks omitted). Relevant factors include common authority over
hiring, firing, discipline, pay, insurance, supervision and employee records. Id. at 446. However
the “right to control the means and manner of the worker’s performance is the most important
factor. If such control is established, other factors are then of marginal importance.” Id.
(quotation marks omitted).
The Complaint and the text of the Agreement contain facts sufficient to plausibly
allege that Saks had a right of control over Restaurant employees. The Agreement contains a
provision that gives Saks the power to set rules of conduct for Restaurant employees:
[Volume Services] agrees that its associates and agents will comply
with and observe all rules concerning conduct of its associates at the
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[Restaurant] that Saks may from time to time impose upon Saks’
associates at the [Restaurant] . . . . [Volume Services] shall not be
deemed to be in material breach of this Subsection 12.1(d) in the
event that, despite [Volume Services’s] commercially reasonable
efforts to insure compliance, one or more of its associates or agents
fails to comply with any such rules and regulations on an isolated
basis, as long as Saks is promptly notified and the failure of
compliance is remedied expeditiously.
(Agrm’t § 12.1(d).) The Agreement separately provides that if Saks notifies Volume Services
“of a reasonable and significant objection to any of [Volume Services’s] associates,” a 30-day
period would commence “to cure the deficiencies noted by Saks. If such deficiencies have not
been cured to the reasonable satisfaction of Saks within such time period, the assignment of such
associate to the [Restaurant] shall be discontinued and a suitable person shall be substituted . . .
as soon as practicable.” (Agrm’t § 12.1(b).) The Agreement also provided that Volume services
would assign a general manager and senior chefs from among its employees, with “each such
assignment being subject to prior consultation from a Saks Representative . . . .” (Agrm’t §
4.3(d).)
In short, the Agreement gives Saks the power to set rules of conduct for
Restaurant employees that are consistent with the rules that Saks sets for its own employees.
Volume Services is required to enforce compliance with Saks’s standards and to notify Saks if a
Restaurant employee fails to meet them. Saks is permitted to make “reasonable and significant”
objections to Volume Services’s employees and to demand their replacement. The power given
to Saks under the Agreement plausibly support plaintiffs’ claim that Saks played a role in
“setting the terms and conditions of the [plaintiffs’] work.” Brankov, 142 A.D.3d at 445-46.
Saks points to other portions of the Agreement, which gives Volume Services
supervisory authority over the Restaurant and defines Restaurant employees solely as employees
of Volume Services and “not deemed employees of Saks for any reasons.” (Agrm’t §§ 4.3(c),
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12.1(c).) Saks also relies on an affidavit submitted by a Volume Services officer, who states that
plaintiffs were employees of Volume Services and that Saks had no role in hiring, disciplining or
terminating the Restaurant employees. (King Aff’t ¶¶ 5-8.) At the Rule 12(b)(6) stage, however,
the Court draws every reasonable inference in favor of the plaintiffs, and affidavits or documents
not integral to the Complaint are not to be considered. See, e.g., Goldman v. Belden, 754 F.2d
1059, 1066 (2d Cir. 1985).
Because the Agreement gives Saks the authority to set and enforce conduct
standards and the authority to demand employee reassignment, the Complaint plausibly alleges
that Saks was a joint employer of the plaintiffs. Saks’s motion to dismiss is therefore denied.
CONCLUSION.
Saks’s motion to dismiss is DENIED. (Docket # 73.) The Clerk is directed to
terminate the motion.
SO ORDERED.

Dated: New York, New York
May 30, 2018

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