Michelsen v. S-L Distribution Company, LLC
MEMORANDUM (Order to follow as separate docket entry) (eo)
Case 1:19-cv-02143-JEJ Document 34 Filed 01/06/21 Page 1 of 12
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
S-L DISTRIBUTION COMPANY,
Hon. John E. Jones III
January 6, 2021
Presently pending before the Court is Defendant S-L Distribution Company,
LLC’s, (“S-L”), Motion to Dismiss Plaintiff’s Amended Complaint. (Doc. 27).1
Plaintiff Monika Hanna, on behalf of herself and all others similarly situated,
alleges violations of the Illinois Wage Payment and Collection Act, (“IWPCA”),
820 ILCS 115/1, et seq. Defendant S-L is a wholesale distributor of snack food
products associated with Snyder’s-Lance, Inc. (Doc. 21 at ¶ 7). Plaintiff’s claim
concerns business arrangements between members of the proposed class and
Defendant by which putative class members formed LLCs to distribute
The underlying facts of the instant motion closely mirror that in a related case we have
previously considered, Marazano v. S-L Distribution Company, 19-cv-1997. Many of the factual
allegations asserted in Hanna were previously stated in Marazano by the same set of attorneys
for both parties. As such, we rely upon our prior recitation of facts in Marazano to render our
decision in the instant Motion.
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Defendant’s snack products. (Doc. 21 at ¶¶ 9-11). Plaintiff alleges that Defendant,
in the course of these arrangements, violated the IWPCA by improperly
withholding and diverting funds from class members’ earnings for work-related
expenses. (Id. at ¶¶ 29-31).
We take the following from Plaintiff’s Amended Complaint and assume its
veracity, as is required at this stage of the proceedings.
Defendant S-L requires individuals to form corporations, called “IBOs,” to
distribute its snack products. (Doc. 21 at ¶ 10). Plaintiff complied with S-L’s
incorporation requirement by forming an IBO headquartered at her home in
Illinois. (Doc. 21 at ¶ 11). Plaintiff avers that these IBOs typically work
exclusively for S-L, using vehicles to transport Defendant’s products from
warehouses to customers. (Id. at ¶¶ 18-19). Generally, Defendant then remits
payment to Plaintiff after making certain withholdings on weekly “settlement
sheets.” (Id. at ¶ 21). These weekly withholdings include route loan repayments,
truck loan repayments, truck rental payments, and charges for electronic
equipment. (Id.). Defendant similarly diverts earnings from the IBOs for additional
expenses that Plaintiff characterizes as work expenses, including for gas, vehicle
maintenance/repairs, and insurance. (Id. at ¶ 22). Plaintiff estimates the total of
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such pay withholdings and diversions from her IBO amount to more than $75,000.
(Id. at ¶ 23).
Plaintiff now alleges that these withholdings and diversions violated Illinois
wage and hour laws, (Count I), because she, and similarly situated Plaintiffs,
created and operated IBOs in the state of Illinois, and were Defendant’s
employees. (Id. at ¶ 11; 27-28).
In the instant motion, S-L seeks to dismiss Plaintiffs’ claim Illinois state law
for failure to state a claim for which relief can be granted under Federal Rule of
Civil Procedure 12(b)(6). (Doc. 27). S-L filed its supporting brief on May 19,
2020. (Doc. 28). Plaintiff filed her brief in opposition on June 1, 2020. (Doc. 30).
Defendant filed a reply brief on July 1, 2020. (Doc. 31). The matter is now ripe for
review. For the reasons that follow, the motion shall be granted without prejudice.
STANDARD OF REVIEW
In considering a motion to dismiss pursuant to Rule 12(b)(6), courts “accept
all factual allegations as true, construe the complaint in the light most favorable to
the plaintiff, and determine whether, under any reasonable reading of the
complaint, the plaintiff may be entitled to relief.” Phillips v. Cty. of Allegheny, 515
F.3d 224, 231 (3d Cir. 2008) (quoting Pinker v. Roche Holdings, Ltd., 292 F.3d
361, 374 n.7 (3d Cir. 2002)). In resolving a motion to dismiss pursuant to Rule
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12(b)(6), a court generally should consider only the allegations in the complaint, as
well as “documents that are attached to or submitted with the complaint, . . . and
any matters incorporated by reference or integral to the claim, items subject to
judicial notice, matters of public record, orders, [and] items appearing in the record
of the case.” Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006).
A Rule 12(b)(6) motion tests the sufficiency of the complaint against the
pleading requirement of Rule 8(a). Rule 8(a)(2) requires that a complaint contain a
short and plain statement of the claim showing that the pleader is entitled to relief,
“in order to give the defendant fair notice of what the claim is and the grounds
upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). While a complaint attacked by
Rule 12(b)(6) motion to dismiss need not contain detailed factual allegations, it
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). To
survive a motion to dismiss, a civil plaintiff must allege facts that “raise a right to
relief above the speculative level….” Victaulic Co. v. Tieman, 499 F.3d 227, 235
(3d Cir. 2007) (quoting Twombly, 550 U.S. at 555). Accordingly, to satisfy the
plausibility standard, the complaint must indicate that defendant’s liability is more
than “a sheer possibility.” Iqbal, 556 U.S. at 678. “Where a complaint pleads facts
that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line
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between possibility and plausibility of entitlement to relief.’” Id. (quoting
Twombly, 550 U.S. at 557).
Under the two-pronged approach articulated in Twombly and later
formalized in Iqbal, a district court must first identify all factual allegations that
constitute nothing more than “legal conclusions” or “naked assertions.” Twombly,
550 U.S. at 555, 557. Such allegations are “not entitled to the assumption of truth”
and must be disregarded for purposes of resolving a 12(b)(6) motion to dismiss.
Iqbal, 556 U.S. at 679. Next, the district court must identify “the ‘nub’ of the …
complaint – the well-pleaded, nonconclusory factual allegation[s].” Id. Taking
these allegations as true, the district judge must then determine whether the
complaint states a plausible claim for relief. See id.
However, “a complaint may not be dismissed merely because it appears
unlikely that the plaintiff can prove those facts or will ultimately prevail on the
merits.” Phillips, 515 F.3d at 231 (citing Twombly, 550 U.S. at 556-57). Rule 8
“does not impose a probability requirement at the pleading stage, but instead
simply calls for enough facts to raise a reasonable expectation that discovery will
reveal evidence of the necessary element.” Id. at 234.
As Defendant correctly notes, before Plaintiff Hanna filed the instant
lawsuit, she opted-in to a FLSA collective action lawsuit in the Western District of
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North Carolina which also involved S-L: Mode, et al. v. S-L Distribution Co., LLC,
et al., Case No. 18-cv-00150. (Doc. 28 at 2).2 Defendant argues that Plaintiff
should have asserted her Illinois state law claim in Mode because it arises from the
same set of facts against the same party. (Id. at 3). Thus, Defendant maintains,
Plaintiff has impermissibly split her claims and we should dismiss the instant
action. For the reasons that follow, we agree with Defendant and will dismiss
Plaintiff’s claim without prejudice to Plaintiff to refile the lawsuit, if appropriate,
at a later date.
The split claims doctrine dictates that “[p]laintiffs generally must bring all
claims arising out of a common set of facts in a single lawsuit.” Elgin v. Dep't of
Treasury, 567 U.S. 1, 34 (2012) (Alito, J., dissenting) (quoting Colorado River
Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)). As such,
“federal district courts have discretion to enforce that requirement as necessary ‘to
avoid duplicative litigation.’” Id.
Two Third Circuit cases have elucidated this principle. The first, Walton v.
Eaton Corp., stated that a plaintiff could not “maintain two separate actions
involving the same subject matter at the same time in the same court and against
We take judicial notice of the docket and public filings in Mode, as we are permitted to
do. See Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006) (“In evaluating a
motion to dismiss, we may consider documents that are attached to or submitted with the
complaint [and] matters incorporated by reference or integral to the claim, items subject to
judicial notice, matters of public record, orders, [and] items appearing in the record of the case”).
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the same defendant.” 563 F.2d 66 (3. Cir. 1977). In so finding, the Court noted
that, while the plainitff’s second complaint sought additional relief under a new
statute, there were not sufficient differences between the two complaints to survive
dismissal. Id. at 69-70.
The second case, McKenna v. City of Philadelphia, further explained that
Walton “was intended to fill the gap when duplicative claims are brought in the
course of ongoing litigation and applies ‘when a second action is filed before the
first is concluded [and] issue and claim preclusion do not apply.’” Yost v. Anthem
Life Ins. Co., No. 3:18-CV-1522, 2019 WL 3451507, at *3 (M.D. Pa. July 30,
2019) (citing McKenna, 304 F.App’x 89, 94 (3d Cir. 2008) (not precedential).
In such cases, as our esteemed colleague Judge Mariani notes,
“[b]oth Walton and McKenna identified available procedures for handling a second
action which is substantially identical to a pending case: either stay the second
case, consolidate it with the first case, or dismiss the second case without
prejudice.” Yost, No. 3:18-CV-1522, 2019 WL 3451507, at *3 (citing McKenna,
304 F. App'x at 89; Walton, 563 F.2d at 70-71).
Here, similarities abound. Both Mode and the instant case involve our
plaintiff, Monika Hanna. (Doc. 28 at 2; Doc. 30 at 7). Both cases are brought
against S-L. (Id.). Both cases arise from the business relationship between Hanna
and S-L by which Hanna distributed snack products for S-L in Illinois. (Id.).
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Indeed, as Defendant thoroughly notes, both the Mode complaint and Plaintiff’s
Amended Complaint in the instant case contain markedly similar language and
allegations. See Doc. 28 at 5-6. This makes sense, as Plaintiff Hanna is represented
by the same counsel both here and in Mode. (Compare Hanna v. S-L Dist. Co.,
LLC, 19-cv-2143, with Mode v. S-L Dist. Co, LLC, 18-cv-00150). Most
importantly, though, both Mode and the case presently before us would require a
determination of whether Plaintiff was incorrectly classified as an independent
contractor—the IWPCA’s relevant protections apply only to employees, as do
those of the FLSA. See 820 Ill. Comp. Stat. Ann. 115/1 (“This Act applies to all
employers and employees in this State”); Fair Labor Standards Act of 1938, §1 et
seq., 29 U.S.C.A. § 201 et seq.
Consequently, we would be required to examine the same evidence as the
court in Mode to determine whether Plaintiff is an employee.3 True, Plaintiff
correctly notes that we would be compelled to make such a determination under
the “ABC Test,” while the court in Mode would use the FLSA’s “economic
realities test” in its conclusion. (Doc. 30 at 24-25). But this is not enough to
Plaintiff disagrees, arguing that this case concerns “improper wage deductions and
business expenses” while Mode seeks unpaid overtime and minimum wages. (Doc. 30 at 23-24).
But, as Plaintiff herself notes, we must “focus [on] the facts” underlying these claims. (Doc. 30
at 23) (citing Davis v. Wells Fargo, 824 F.3d 333, 342 (3d Cir. 2016)). Those facts show that
both cases are predicated on the same business arrangement to distribute snack products. And
both cases begin with evidence concerning Plaintiff’s employment status. While the legal
conclusions of these cases may differ, the same evidence and factual basis exists for both cases.
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constitute the substantial difference required by Walton. 563 F.2d at 69-70. While
these tests are different, both will require us to examine the same evidence, namely
“Hanna’s daily interactions with S-L, her ability to set her own schedule, the
manner in which she chose to distribute S-L products, her ability to affect profit
and loss, and the extent to which she managed her own business.” (Doc. 31 at 10).
These similarities constitute a “common set of facts” that would require “all claims
[to be included] in a single lawsuit” to avoid duplicative litigation. Elgin, 567 U.S.
at 34. See Yost, No. 3:18-CV-1522, 2019 WL 3451507, at *4 (internal citations
omitted) (noting that deciding whether two suits are based on the same “cause of
action” requires looking to the “essential similarity of the underlying events giving
rise to the various legal claims” and collecting cases indicating that we must look
to the relevant factual allegations in comparing lawsuits, not to the resulting legal
In addition, we must “carefully insure[ ] that the plaintiff does not use the
tactic of filing two substantially identical complaints to expand the procedural
rights he would have otherwise enjoyed.” Walton, 563 F.2d at 71. Here, there is no
question that Plaintiff’s counsel was aware of Mode and knew that they could have
sought amendment to include Plaintiff’s state law claims when she opted-in to the
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collective action suit.4 But the Mode court had previously dismissed similar North
Carolina state law claims, perhaps leading counsel to believe that the same fate
would befall Plaintiff’s Illinois claims. Mode v. S-L Distribution Co., LLC, No.
3:18-CV-00150-RJC-DSC, 2019 WL 1057045, at *2 (W.D.N.C. Mar. 6, 2019).
We will never know Plaintiff’s true motivations, but Defendant helpfully
points us to several wage-and-hour cases in which Plaintiff’s counsel had
previously sought to amend collective action cases to include state law claims.
(Doc. 31 at 19-20). (See. E.g., Doc. 31-3 (docket sheet of Allison v. Amazon.com,
14-cv-00168-DJH (W.D. Wash./W.D. Ky.), showing amended complaint adding
state law wage-and-hour claims from Washington, Pennsylvania, Kentucky, and
Arizona, with Attorneys Winebrake and Santillo as counsel of record); Doc. 31-5
(amended complaint of Carr v. Flowers Foods, Inc., No. 2:15-cv-06391-LS (E.D.
Pa. May 19, 2016), adding New York state law wage claim, with Attorneys Mark
Gottesfeld, R. Andrew Santillo, and Peter Winebrake as counsel of record).5
Plaintiff’s argument that she had no “substantive control” over the scope of the Mode
litigation is unavailing. Plaintiff’s written consent to opt-in to Mode made her a party to the
action. Reinig v. RBS Citizens, N.A., 912 F.3d 115, 123 n.1 (3d Cir. 2018). She thus had the
ability to assert new claims and secure counsel to represent her in Mode. Indeed, she did so,
retaining the same lawyers that had initially instigated the Mode litigation. Those lawyers were
able to communicate with Plaintiff, identify any other claims she may have, and, if appropriate,
assert those claims for her by seeking leave to amend Mode.
Plaintiff argues that amending the Mode complaint to include each opt-in Plaintiff’s
relevant state law claims would constitute a “wild litigation plan” that the Mode court “would
never have endorsed” and which they “would be embarrassed to propose.” (Doc. 30 at 20). But
Plaintiff’s counsel was clearly not too “embarrassed” to amend previous complaints under
similar circumstances. See Allison v. Amazon.com, 14-cv-00168-DJH (W.D. Wash./W.D. Ky.);
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Counsel was clearly aware of this available procedure and yet, for some reason,
chose not to utilize it in Mode.6 We find these circumstances suspect, and are
Carr v. Flowers Foods, Inc., No. 2:15-cv-06391-LS (E.D. Pa. May 19, 2016). Indeed, there are
many instances in which courts have allowed plaintiffs to amend complaints in FLSA collective
actions to include state law claims. See Higgins v. Bayada Home Health Care, Inc., No. CV
3:16-2382, 2019 WL 6467857, at *1 (M.D. Pa. Dec. 2, 2019). See also Scott v. Chipotle Mexican
Grill, Inc., 300 F.R.D. 193, 199 (S.D.N.Y. 2014) (“FLSA’s broad remedial nature and its
collective action provision suggest that the act contemplates this very situation, and given the
choice between litigating each claim separately or in the aggregate, it favors the latter.”). Such a
routine practice is not, in our view, “embarrassing” or unworkable.
Plaintiff advances several arguments as to why she did not seek to add her Illinois state
law claim to Mode, none of which are convincing. First, Plaintiff argues that her Mode opt-in
consent form limited her Mode claims to those relating to the FLSA. (Doc. 30 at 8). But we see
nothing in Mode’s opt-in notice which a “reasonable person” could read as limiting Plaintiff to
her FLSA claims. (Id. at 16). Instead, it informed her of the current scope the Mode litigation and
offered her the opportunity to participate. (See Doc. 30 at 9 (reprinting the Mode consent
notice)). As the Third Circuit has noted, “every plaintiff who opts in to a collective action has
party status,” which would not only allow, but require, Plaintiff to assert all claims arising from
the transaction or occurrence at issue to avoid issues of claim splitting or res judicata. Reinig v.
RBS Citizens, N.A., 912 F.3d 115, 123 n.1 (3d Cir. 2018). Next, Plaintiff argues that, because of
the relevant choice-of-forum provision in her agreement with S-L, she was required to file her
state law claims in a Pennsylvania state or federal court. (Doc. 30 at 15). However, Plaintiff’s
own counsel chose to file Mode, a case governed by an identical provision, in the Western
District of North Carolina. We thus struggle to understand how counsel could reasonably argue
they were restricted from amending their own complaint to include new claims. Plaintiff also
maintains that the inclusion of the provision meant that S-L had consented to her claim splitting.
(Id. at 14-15). Again, we disagree. Nothing in the choice-of-forum provision states that S-L was
aware of Plaintiff’s intention to reserve her Illinois state claim for a later date, and indeed
Plaintiff does not allege that she informed Defendant of such an intention. See Bradley v.
Pittsburgh Bd. of Educ., 913 F.2d 1064, 1072 (3d Cir. 1990) (holding that claim splitting is
permissible when “the defendant consents, in express words or otherwise”). Finally, Plaintiff
argues that she filed her state law claim here because the Mode court lacked both personal and
subject matter jurisdiction. But this is absurd. Plaintiff consented to personal jurisdiction in
North Carolina when she opted-in to Mode. See In re Asbestos Prod. Liab. Litig. (No. VI), 921
F.3d 98, 105 (3d Cir. 2019) (“[A] party is deemed to have consented to personal jurisdiction if
the party actually litigates the underlying merits or demonstrates a willingness to engage in
extensive litigation in the forum.).” And, as previously discussed, her IWPCA claim shares a
common set facts with her FLSA collective action. Thus, the Mode court would have
supplemental jurisdiction over Plaintiff’s state law claim, as Plaintiff’s attorneys well know. See
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persuaded to dismiss Plaintiff’s case without prejudice to avoid forum shopping
and the circumvention of relevant procedure.
We must carefully guard the efficient use of judicial resources. We must also
ensure that parties do not attempt to “game the system” by filing duplicative
lawsuits. Here, we see both of these issues at play. We cannot properly and
efficiently consider Plaintiff’s Illinois claim while the Mode court looks to the
same underlying facts to decide a substantially similar case. Both Supreme Court
and Third Circuit precedent caution us against doing so. Moreover, the instant case
appears to be an impermissibly strategic attempt to remove Plaintiff’s state law
claim from the consideration of the Mode court. In the interest of judicial
efficiency and fairness, we will thus dismiss the instant case without prejudice.
Should Mode no longer present issues of claim splitting, nor give rise to claim or
issue preclusion, Plaintiff is welcome to refile her Illinois state law claim. Until
then, we shall properly defer to the ongoing proceedings in Mode.
Allison v. Amazon.com, 14-cv-00168-DJH (W.D. Wash./W.D. Ky.); Carr v. Flowers Foods, Inc.,
No. 2:15-cv-06391-LS (E.D. Pa. May 19, 2016).
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