Lusk et al v. Serve U Brands, Inc. et al

Filing 47

DECISION AND ORDER finding as moot 8 Motion to Certify Class; finding as moot 9 Motion to Expedite; granting 35 Motion to Dismiss for Failure to State a Claim. Named Plaintiffs shall have 30 days from entry of this Decision and Order to move for leave to file an amended complaint. In the event they fail to file such a motion, the Clerk of the Court is instructed to close the case without further order of the Court.. Signed by Hon. Michael A. Telesca on 2/12/18. (JMC)-CLERK TO FOLLOW UP-

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

SKYLER LUSK, TIA COUNCIL, VIKTORIA
O’BRIEN, and JUSTIN BYROAD, on
behalf of themselves and all other
employees similarly situated,

No. 6:17-cv-06451-MAT
DECISION AND ORDER

Plaintiffs,
-vsSERVE U BRANDS, INC., INSOMNIA
COOKIES, LLC, and SETH BERKOWITZ,
Defendants.

I. INTRODUCTION
Named Plaintiffs Skyler Lusk, Tia Council, Viktoria O’Brien,
and

Justin

Byroad

(collectively

“Named

Plaintiffs”),

former

delivery drivers for Defendant Insomnia Cookies, LLC (“Insomnia
Cookies”), commenced the instant action on July 11, 2017, alleging
violations

of

the

Fair

Labor

Standards

Act

(the

“FLSA”),

29 U.S.C. § 201 et seq., as well as violations of the state laws of
New York, Michigan, and Indiana.

Docket No. 1.

Currently pending

before the Court are Named Plaintiffs’ motion for conditional
certification of the case as a collective action pursuant to the
FLSA (Docket No. 8) and defendants Serve U Brands, Inc. (“Serve
U”),

Insomnia

Cookies,

and

Seth

Berkowitz’s

(“Berkowitz”)

(collectively “Defendants”) motion to dismiss the case pursuant to
Federal Rule of Civil Procedure 12(b)(6) (Docket No. 35).

For the

reasons discussed below, Defendants’ motion to dismiss is granted
and Named Plaintiffs’ motion for conditional certification is
denied.

II.

FACTUAL AND PROCEDURAL BACKGROUND
Named Plaintiffs worked as delivery drivers for Insomnia

Cookies between 2015 and 2017 at stores in Rochester, New York,
Ypsilanti, Michigan, Ann Arbor, Michigan, and West Lafayette,
Indiana. According to the complaint, Serve U is the parent company
of Insomnia Cookies, while Berkowitz is Insomnia Cookies’ chief
executive officer (“CEO”) and founder, as well as the CEO of Serve
U.

Named Plaintiffs allege that Insomnia Cookies, Serve U, and

Berkowitz all meet the definition of “employer” set forth in the
FLSA.
Named Plaintiffs allege the following facts that are relevant
to the instant motions: (1) they were paid a base rate of $5.00 per
hour while employed by Defendants; (2) they were not reimbursed for
miles driven, for vehicle maintenance costs incurred, or for “other
‘tools of the trade’ necessary to complete the job” (Docket No. 1
at

¶

86),

including

cell

phone

usage

and

metered

parking;

(3) Defendants did not inform them of the statutory requirements
related to

the

federal

tip

credit

for tipped

employees;

and

(4) Defendants improperly calculated Named Plaintiffs’ overtime
rate of pay, because they did not include mandatory delivery
charges and other “additional wages” in determining the applicable
regular rate of pay.
Named Plaintiffs commenced this action on July 11, 2017.
Docket No. 1.

On July 21, 2017, Named Plaintiffs moved for

conditional certification of the case as a collective action
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pursuant to the FLSA, as well as for authorization of notice to
potential opt-in plaintiffs.

Docket No. 8.1

On September 15,

2017, Defendants filed a motion seeking dismissal of the complaint.
Docket No. 35.
III. DISCUSSION
A.

Legal Standard for Motions to Dismiss for Failure to
State a Claim

“To survive a motion to dismiss [made pursuant to Federal Rule
of Civil Procedure 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.”

Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (internal quotation marks and citation omitted).

“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.”

Id.

Although a

complaint need not provide “detailed factual allegations,” it
nevertheless must assert “more than labels and conclusions,” and “a
formulaic recitation of the elements of a cause of action” will not
suffice. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007).
The plaintiff must plead facts that “raise a right to relief above
the speculative level on the assumption that all the allegations in

1

Named Plaintiffs’ also concurrently filed a motion for expedited
consideration of their request for conditional certification. While the Court
did not find expedited consideration of the motion necessary, the Court did grant
limited equitable tolling of the applicable statute of limitations in its
Decision and Order dated August 16, 2017. Docket No. 24. Accordingly, Named
Plaintiffs’ motion for expedited consideration (Docket No. 9) is denied as moot.

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the complaint are true.” Id. (citations omitted). In deciding the
motion, the Court must accept as true all factual allegations in
the complaint, and must draw all reasonable inferences in favor of
the nonmovant.

Atwood v. Cohen & Slamowitz LLP, No. 17-702-CV,

2017 WL 6403506, at *1 (2d Cir. Dec. 15, 2017).
C.

The Complaint Fails to State an FLSA Claim

Defendants argue that Named Plaintiffs’ complaint fails to
state a claim pursuant to the FLSA with respect to either their
minimum wage claims or their overtime claims. For the reasons set
forth below, the Court agrees.
With

respect

to

Named

Plaintiffs’

minimum

wage

claims,

pursuant to the FLSA, “minimum wage claims are based on the
plaintiff’s pay for a particular week.”
Inc.,

No.

13-CV-6458

June 24, 2014).

CJS,

2014

WL

Hart v. Crab Addison,

2865899, at

*11 (W.D.N.Y.

“Under what has become known as the Klinghoffer

rule, taking its name from United States v. Klinghoffer Bros.
Realty Corp., 285 F.2d 487, 490 (2d Cir. 1960), no minimum wage
violation occurs so long as the total wage paid to an employee in
any given workweek divided by the total hours worked in the
workweek equals or exceeds the applicable minimum wage.”
(internal quotation omitted).

Id.

As such, in order to state a claim

for a minimum wage violation under the FLSA, a complaint must
allege that, during at least one particular week, “the average of
the Plaintiffs’ . . . wages was less than the federal minimum
wage.”

Id.
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The complaint in this case fails to meet this standard.

In

particular, and as Defendants correctly point out, Named Plaintiffs
have failed to provide sufficient information in their complaint
for a finder of fact to be able to determine their rate of pay in
any given work week.

This is so because Named Plaintiffs have

affirmatively alleged that, in addition to their $5.00 per hour
base rate of pay, they were also paid mandatory delivery charges
and unspecified “additional wages.”

See Docket No. 1 at ¶¶ 95,

100. Service charges that are distributed by an employer to its
employees “may be used in their entirety to satisfy the monetary
requirements of the [FLSA].”

29 C.F.R. § 531.55.

As such, without

knowing the amount of the mandatory delivery charges and the other
additional wages paid to Named Plaintiffs, it is impossible to
conclude from the allegations in the complaint that Defendants
failed to pay them the federally mandated minimum wage in any given
week.
Plaintiffs argue in opposition to Defendants’ motion that it
is immaterial how much they received in mandatory service charges
and additional wages, because they have alleged that Defendants did
not properly inform they were taking a tip credit from their wages.
Plaintiffs are incorrect.

As they themselves point out in their

complaint, “mandatory service charges are not considered tips under
the FLSA.”

Docket No. 1 at ¶ 100.

Plaintiffs also have not

alleged that the “additional wages” paid to them by Defendants were
tips.

Under these circumstances, Defendants’ alleged failure to

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comply with the notice requirements of 29 U.S.C. § 203(m) is
insufficient, standing alone, to render Named Plaintiffs’ FLSA
minimum wage claims plausible.
Turning

to

Named

Plaintiffs’

FLSA

overtime

claims,

the

pleading standards for such claims have been clearly set forth by
the Second Circuit.

In order to state an overtime claim under the

FLSA, “Plaintiffs must allege sufficient factual matter to state a
plausible claim that they worked compensable overtime in a workweek
longer than 40 hours.”

Lundy v. Catholic Health System of Long

Island Inc., 711 F.3d 106, 114 (2d Cir. 2013).

The Second Circuit

has expressly held that an allegation that a plaintiff worked more
than 40 hours in “some or all weeks” without being paid an
appropriate rate of compensation does not meet the plausibility
standard.

Dejesus v. HF Mgmt. Servs., LLC, 726 F.3d 85, 89

(2d Cir. 2013).
In this case, Named Plaintiffs allege that they worked in
excess of 40 hours on “numerous occasions” without being paid at
least one and one-half times their regular rate.
¶ 97.

Docket No. 1 at

This allegation is essentially the same as the allegation

the Second Circuit found insufficient in Dejesus.

See also Smith

v. Mastercraft Decorators, Inc., No. 09-CV-579S, 2011 WL 5191755,
at *3 (W.D.N.Y. Oct. 31, 2011) (allegation that plaintiff routinely
worked in excess of 40 hours per week was insufficient to state an
overtime claim under the FLSA).

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Named

Plaintiffs’

unavailing.

attempt

to

distinguish

Dejesus

is

Named Plaintiffs contend that because their complaint

focuses on the rate they were paid for overtime hours, rather than
claiming that they were not paid at all when they worked overtime,
they do not need to meet the pleading standard set forth in Lundy
and reiterated in Dejesus.

They are incorrect.

While the primary

issue raised by the complaint is indeed how Defendants calculated
Named Plaintiffs’ overtime rate of pay, it is axiomatic that Named
Plaintiffs must plausibly allege that they worked compensable
overtime before the issue of their rate of pay becomes relevant.
As such, the standard set forth in Lundy applies, and Named
Plaintiffs have failed to meet it.

Their FLSA overtime claims

therefore must be dismissed.
D.

The Court Declines to Exercise Supplemental Jurisdiction

Having found that Named Plaintiffs have failed to state a
claim under the FLSA, the Court must consider whether to dismiss
Plaintiffs’ remaining claims, all of which arise under state law.
“The Court has the discretion to dismiss plaintiff’s pendent state
law claim[s] for lack of subject matter jurisdiction when it
dismisses all of the federal question claims in a complaint.”
Birch v. Pioneer Credit Recovery, Inc., No. 06-CV-6497T, 2007 WL
1703914, at *5 (W.D.N.Y. June 8, 2007).

“It is well settled that

where . . . the federal claims are eliminated in the early stages
of litigation, courts should generally decline to exercise pendent
jurisdiction over remaining state law claims.” Klein & Co. Futures
7

v. Bd. of Trade of City of New York, 464 F.3d 255, 262 (2d Cir.
2006). In this case, having determined that all the federal claims
set forth in the complaint are subject to dismissal, the Court
declines to exercise pendent jurisdiction over Named Plaintiffs’
state law claims.
E.

The Court
Arguments

Declines

to

Reach

Defendants’

Remaining

Defendants have also argued that Plaintiffs fail to state a
claim as to Berkowitz and that the consent form used by the opt-in
plaintiffs in this action is defective. Having determined that the
complaint is subject to dismissal, the Court need not and does not
reach these arguments.
F.
As

The Motion for Conditional Certification is Moot
discussed

above,

Named

Plaintiffs

have

moved

for

conditional certification of this matter as an FLSA collective
action.

By definition, however, the Court cannot certify an FLSA

collective action where no plausible FLSA claim has been alleged.
As such, the Court’s determination that Named Plaintiffs have
failed to state an FLSA claim necessarily renders their request for
conditional certification moot.

Accordingly, Named Plaintiffs’

motion for conditional certification is denied.
G.

Named Plaintiffs’ Request For Leave to Amend

In their opposition to Defendants’ motion, Named Plaintiffs
make a cursory request that they be granted leave to replead their
FLSA claims. Named Plaintiffs have failed to comply with the

8

requirements

for

making

a

request

for

leave

to

amend.

In

particular, Named Plaintiffs have failed to comply with Western
District of New York Local Rule 15(a), which requires a party
seeking to amend a pleading to submit an unsigned copy of the
proposed amended pleading to the Court.
However, the Court finds that the interests of justice will be
served by affording Named Plaintiffs an opportunity to file a
properly supported motion for leave to file an amended complaint.
See Nakahata v. New York-Presbyterian Healthcare Sys., Inc., 723
F.3d 192, 198 (2d Cir. 2013) (having concluded that plaintiffs
failed to state a claim under the FLSA, it was error for the court
to order the case terminated without affording an opportunity to
seek leave to amend).

Such a motion must be made within 30 days of

entry of this Decision and Order.

In the event that no such motion

is filed, the Clerk of the Court is instructed to close this case
without further order of the Court.
IV. CONCLUSION
For the reasons set forth above, Defendants’ motion to dismiss
the complaint (Docket No. 35) is granted. Named Plaintiffs’ motion
for conditional certification (Docket No. 8) and accompanying
motion for expedited consideration (Docket No. 9) are denied as
moot.

Named Plaintiffs shall have 30 days from entry of this

Decision and Order to move for leave to file an amended complaint.
In the event they fail to file such a motion, the Clerk of the

9

Court is instructed to close the case without further order of the
Court.
ALL OF THE ABOVE IS SO ORDERED.

S/Michael A. Telesca
HON. MICHAEL A. TELESCA
United States District Judge
Dated:

February 12, 2018
Rochester, New York

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