Villafane et al v. B Open Enterprises, Inc. et al

Filing 79

OPINION AND ORDER re 50 Motion to Dismiss; and re 62 Motion to Stay. The Court DENIES defendants' motion for judgment on the pleadings and GRANTS defendants' motions to stay proceedings in this case, pending the outcome of B Open's bankruptcy proceedings. Signed by Judge Francisco A. Besosa on 03/26/2013. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
ALEXANDRA VILLAFAÑE-COLON,
Plaintiff,
Civil No. 11-2099 (FAB)

v.
B OPEN
al.,

ENTERPRISES,

INC.,

et

Defendants.

OPINION AND ORDER1
BESOSA, District Judge.
Before the Court is the motion to dismiss or for judgment on
the pleadings pursuant to Federal Rule of Civil Procedure 12(c) and
the motion to stay proceedings filed by defendants Talk 2 ME, Inc.,
Talk Time PR, Inc., Stargazer, Inc., and Maraliz Rivera-Ortiz
(collectively “defendants”).
considered

the

arguments

in

(Docket Nos. 50 & 62.)
the

motion

for

judgment

Having
on

the

pleadings and motion to stay and plaintiff Alexandra VillafañeColon’s (“plaintiff Villafañe”) opposition, (Docket Nos. 50, 53,
62, 63 & 67), and defendants’ response and surreply regarding the
motion to stay (Docket Nos. 66 & 70), the Court DENIES defendants’
motion for judgment on the pleadings and GRANTS defendants’ motion
to stay for the reasons discussed below.

1

Katherine Hedges, a second-year student at the University of
New Hampshire School of Law, assisted in the preparation of this
Opinion and Order.

Civil No. 11-2099 (FAB)
I.

2

BACKGROUND
A.

Procedural History
On

November

10,

2011,

plaintiff

Villafañe

filed

a

complaint seeking damages from defendant B Open Enterprises, Inc.
(“defendant B Open”), defendant Talk 2 ME, Inc., defendant Talk
Time PR, Inc., defendant Stargazer, Inc., an unidentified insurance
company, and other unknown defendants, including many individual
defendants.

(Docket

No.

1.)

Plaintiff

Villafañe

alleged

violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§§ 2000e et seq. (“Title VII”), failure to provide reasonable
accommodation under the Americans with Disability Act, 42 U.S.C.
§§ 12101 et seq. (“ADA”), and violations of the Constitution of the
Commonwealth of Puerto Rico and the Puerto Rico Civil Code.

Id.

Defendants B Open, Stargazer, Inc., Talk 2 ME, Inc., Talk Time PR,
Inc., Conjugal Partnership Guzman-Rivera, and Marliz Rivera Ortiz
(“defendant Rivera”) filed a motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6) on May 29, 2012.

(Docket No. 19.)

The remaining defendants filed a motion to dismiss pursuant to
Federal Rules of Civil Procedure 4(m), 12(b)(5), and 12(b)(6) on
May 29, 2012.

(Docket No. 30.)

On June 11, 2012, the Court

dismissed the claims against the defendants in their individual
capacity because neither Title VII nor the ADA provide for a cause
of action other than against an employer.

(Docket No. 26.)

Civil No. 11-2099 (FAB)

3

On June 19, 2012, plaintiff Villafañe filed an amended
complaint, identical to the original complaint, substituting the
fictitious

insurance

Insurance Company.

company

name

(Docket No. 35.)

with

defendant

Universal

On July 3, 2012, defendant B

Open filed for protection pursuant to Chapter 7 of the Bankruptcy
Code.

In re B Open Enterprises, Inc., No. 12-05284 (Bankr. D.P.R.

filed July 3, 2012).

On that same day, defendants B Open, Conjugal

Partnership Guzman-Rivera, Rivera, Stargazer, Inc., Talk 2 ME,
Inc., and Talk Time PR, Inc. filed a motion to stay the proceedings
in this case.

(Docket No. 42.)

The motion to stay was granted,

and, on July 5, 2012, the court dismissed this case without
prejudice, pending the outcome of the bankruptcy proceedings.
(Docket No. 43.)
On

July

19,

2012,

plaintiff

Villafañe

moved

for

reconsideration of the decision to stay these proceedings. (Docket
No. 46.)
limiting

The Court granted the motion and reopened the case,
the

stay

to

defendant

B

Open.

(Docket

No.

47.)

Defendants Rivera-Ortiz, Stargazer, Inc., Talk 2 ME, Inc., and Talk
Time PR, Inc. then filed a new motion to dismiss or, in the
alternative, a motion for judgment on the pleadings on August 20,
2012 and a new motion to stay on September 14, 2012.
No. 50 & 62.)

(Docket

Plaintiff Villafañe filed an opposition to the

motion for judgment on the pleadings on August 22, 2012 and
requested

leave

to

amend

the

complaint,

which

she

attached.

Civil No. 11-2099 (FAB)
(Docket

Nos.

53

&

4

53-1.)

Plaintiff

Villafañe

also

filed

a

memorandum on September 14, 2012, arguing that the case should not
be stayed.

(Docket No. 63.)

Defendants responded to plaintiff

Villafañe’s memorandum on October 1, 2012.

(Docket No. 66.)

Plaintiff filed another memorandum opposing the motion to stay on
October 1, 2012.

(Docket No. 67.)

Defendants filed a surreply to

this opposition on October 5, 2012.
B.

(Docket No. 70.)

Factual Background
Plaintiff Villafañe’s first amended complaint alleges the

following relevant facts.

Plaintiff Villafañe began working for

defendant B Open as an Accounting Clerk on March 27, 2008. (Docket
No. 35 at p. 9.)

She also contends that defendants Talk 2 ME,

Inc., Stargazer, Inc., Rival Enterprises, Inc., and Talk Time PR,
Inc. were also her “former single and/or joint employers along with
the other party defendants.”

Id. at p. 8.

Soon after she began

working, plaintiff Villafañe noticed accounting deficiencies, which
she reported.

Id.

As a result of the ensuing investigation,

defendant B Open fired the General Manager and hired defendant
Rivera in his place.

Id. at p. 10.

Plaintiff Villafañe worked

with defendant Rivera to correct the accounting deficiencies and
investigate other accounting matters at defendant B Open.

Id.

When

she

plaintiff

Villafañe

noticed

other

irregularities,

recommended that defendant B Open conduct an external financial
audit, over defendant Rivera’s objection.

Id.

Civil No. 11-2099 (FAB)
Plaintiff

5

Villafañe

alleges

that

defendant

Rivera

sexually harassed her and made offensive comments to her, which she
made clear were unwelcome.

Id. at pp. 10-15.

While plaintiff

Villafañe was still employed there, defendant B Open’s president
hired a new Accounting Manager and required plaintiff Villafañe to
train him.

Id. at p. 11.

As a result of the “previous sexual

hostile working environment that [plaintiff] Villafañe had been
suffering coupled with the uncertainty of her job,” plaintiff
Villafañe

allegedly

suffered

treatment from a psychiatrist.
Plaintiff

Villafañe

emotional

distress

and

received

Id.
alleges

that

defendant

Rivera

continued to harass her sexually; as a result she took more time
off from work, seeking treatment for emotional distress.
13-17.

Plaintiff

Villafañe

contends

that

she

Id. at

reported

the

harassment to her superiors and asked for reasonable accommodations
in compliance with the ADA because of her emotional distress.
at 16-17.

Id.

She alleges that the request for accommodations was not

answered, and that her employer failed to conduct a sufficient
investigation into her hostile working environment claim.

Id.

Plaintiff Villafañe contends that she was stripped of her duties
and

eventually

dismissed

in

retaliation

for

having

filed

administrative grievances with the Puerto Rico’s Department of
Labor’s Anti-Discrimination Unit (“ADU”) and the Equal Employment
Opportunity Commission (“EEOC”) and because of the time she took

Civil No. 11-2099 (FAB)

6

off while under the Puerto Rico State Insurance Fund’s care.

Id.

at pp. 17-18.
Plaintiff Villafañe filed a second amended complaint which
added the following additional relevant facts. (See Docket No. 531.)

She describes defendants Talk 2 ME, Inc., Stargazer, Inc.,

Rival Enterprises, Inc., and Talk Time PR., Inc. similarly to the
description that she previously had alleged against defendant B
Open, in order to allege more clearly that all these defendants
were her “former single and/or joint employers.”

Id. at pp. 5-11.

Plaintiff Villafañe alleges that the president of defendant B Open
is also the president of defendant Talk 2 ME, Inc., defendant
Stargazer, Inc., defendant Rival Enterprises, Inc., and defendant
Talk Time PR, Inc.

Id. at p. 12.

Plaintiff Villafañe also alleges

that the General Manager of defendant B Open, defendant Rivera, is
also the General Manager for all of the defendant corporations.
Id.

Plaintiff

Villafañe

states

that

she

also

investigated

accounting discrepancies at defendant Talk 2 ME, Inc., defendant
Stargazer, Inc., defendant Rival Enterprises, Inc., and defendant
Talk Time PR, Inc. when she was investigating discrepancies at
defendant B Open.

Id. at p. 13.

Plaintiff Villafañe also

“prepared income tax returns and other tax documents for Talk 2 ME
and Talk Time PR, Inc.”

Id.

Civil No. 11-2099 (FAB)
II.

7

LEGAL STANDARD
“A motion for judgment on the pleadings is treated much like

a

Rule

12(b)(6)

motion

to

dismiss.”

Perez–Acevedo

v.

Rivero–Cubano, 520 F.3d 26, 29 (1st Cir. 2008) (citing Curran v.
Cousins, 503 F.3d 36, 43-44 (1st Cir. 2007).

When considering a

motion pursuant to Rule 12(c), a “court must view the facts
contained in the pleadings in the light most favorable to the
nonmovant and draw all reasonable inferences therefrom . . .” Id.
(internal quotation and citation omitted).
Rule 12(c) permits a party to move for judgment on the
pleadings.

Fed.R.Civ.P. 12(c).

When deciding a Rule 12(b)(6)

motion, and, by extension, whether a plaintiff’s complaint survives
a Rule 12(c) motion, a court uses a two pronged approach to
determine whether the complaint provides “fair notice to the
defendants” and states “a facially plausible legal claim.”

See

Ocasio-Hernandez v. Fortuño-Burset, 640 F.3d 1, 11-12 (1st Cir.
2011). First, the Court can disregard statements that “offer legal
conclusions couched as fact,” because the plaintiff must do more
than “parrot the elements of the cause of action.”

Id. at 12.

Second, the Court is bound to treat all “properly pled factual
allegations” as true and draw all reasonable inferences in the
plaintiff’s favor.

Id.

The Court must base its determination

solely on the material submitted as part of the complaint and

Civil No. 11-2099 (FAB)

8

expressly incorporated within it.

See Alt. Energy, Inc. v. St.

Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001).
The factual material pled must be sufficient “to raise a right
to relief above the speculative level,” and to permit the Court to
“draw the reasonable inference that the defendant is liable for the
misconduct alleged.”

Ocasio-Hernandez, 640 F.3d at 12 (quoting

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

The Supreme Court

has held that a plaintiff’s pleading must cross “the line between
possibility and plausibility.”
U.S. 544, 577 (2007).

Bell Atl. Corp. v. Twombly, 550

A district court should not attempt to

forecast the likelihood of success even if proving the alleged
facts is “improbable.”

Id. at 556.

A complaint that contains a

plausible basis for relief, therefore, “may proceed even if it
appears that a recovery is very remote and unlikely.”
(internal citation omitted).
experience

and

plausibility.

common

Id. at 556

The Court will draw “on its judicial

sense”

in

evaluating

the

complaint’s

Grajales v. P.R. Ports Auth., 682 F.3d 40, 44 (1st

Cir. 2012) (internal citation omitted).
III. DISCUSSION
A.

Motion for Judgment on the Pleadings
The second amended complaint fails to change the facts

pled significantly. While the Court will allow the complaint to be
amended a second time, it will decide the motion for judgment on

Civil No. 11-2099 (FAB)

9

the pleadings submitted on August 20, 2012, because the facts added
in the second amended complaint do not change the Court’s analysis.
In their motion for judgment on the pleadings, defendants
first

argue

that

plaintiff

Villafañe

fails

to

allege

that

defendants Talk 2 ME, Inc., Talk Time PR, Inc., and Stargazer, Inc.
are her employers under Title VII or the ADA.

(Docket No. 50 at

p. 5.) Second, defendants argue that the Court should not exercise
supplemental

jurisdiction

defendant Rivera.

over

the

Id. at pp. 8-11.

state

law

claims

against

The Court will address each

argument in turn.
1.

Allegations Against Corporate Defendants
The Court finds that pursuant to the standards

set out in Iqbal and Twombly, plaintiff Villafañe’s complaint
plausibly alleges that defendants Talk 2 ME, Inc., Talk Time PR,
Inc., and Stargazer, Inc. were her employers.

Plaintiff Villafañe

alleges that those same corporate defendants “were at all times
relevant to the facts alleged in this [c]omplaint [plaintiff]
Villafañe’s former single and/or joint employer.”
at p. 8.)

(Docket No. 35

Defendants argue that plaintiff Villafañe fails to

allege how the corporate defendants, other than defendant B Open,
were involved in her employment based on the tests for “single
employer” and “joint employer” previously used by the First Circuit
Court of Appeals at summary judgment and to rule on injunctive
relief.

(Docket No. 50 at pp. 6-9.)

At the motion to dismiss

Civil No. 11-2099 (FAB)
stage,

however,

the

10

claim

survives

if

the

Court

can

make

a

plausible inference that one of these tests will be met; the
heightened analysis argued by defendants is more appropriate later
in the judicial process, such as at the summary judgment stage.
See, e.g., Rivas v. Federacion de Asociaciones Pecuarias de Puerto
Rico, 929 F.2d 814, 816 (1st Cir. 1991) (reviewing the district
courts denial of summary judgement on whether an entity was a
“joint employer”).
The

First

Circuit

Court

of

Appeals

has

indicated that at the motion to dismiss stage, it “require[s] only
that the complaint contain well-pleaded allegations that, taken as
true, establish[] an employment relationship between plaintiffs and
defendants.” Melendez-Fernandez v. Special Care Pharmacy Services,
Inc., No. 11-1662, 2012 WL 4813528, at *5 (D.P.R. 2012) (citing
Cavallaro v. Umass Mem’l Healthcare, Inc., 678 F.3d 1, 9-10 (1st
Cir.

2012)

(finding

that

a

“joint

employer”

or

“integrated

enterprise” theory failed to withstand a 12(b)(6) motion to dismiss
because the plaintiff pled no facts that if proven would establish
any of the eight corporate defendants as her direct employer in a
Fair

Labor

plaintiff

Standards
Villafañe

Act

It

not

In

Cavallaro,

an

had

alleged

that

she

that

employee of one of the alleged corporate defendants, B Open.
plaintiffs

alleged

disputed

an

the

sufficiently

is

is

where

has

claim)).

there

was

affiliation between the eight hospital defendants, but failed to

Civil No. 11-2099 (FAB)

11

allege which was the direct employer, the First Circuit Court of
Appeals found that the plaintiffs should be entitled to amend their
complaint again.2

Cavallaro, 678 F.3d at 10.
Plaintiff Villafañe’s second amended complaint

alleges that all of the individual defendants were employees of all
of the corporate defendants.

(See Docket No. 53-1 at pp. 5-11.)

She also alleges that there was common ownership and management of
the corporate defendants and that funds were intermingled between
the businesses.

Id. at pp. 8-9.

Because plaintiff Villafañe has

sufficiently alleged a direct employment relationship with B Open
and a connection between her work for it and the other corporate
defendants,

a

plausible

inference

can

be

made

that

these

corporations will satisfy at least one of the tests for either a
“joint” or “single” employer pursuant to the ADA and Title VII.
Defendants’ motion for judgment on the pleadings of the Title VII
and ADA claims is DENIED.
2.

Supplemental Claims
The Court has dismissed the individual capacity

claims against the defendants because neither Title VII nor the ADA
provide for an individual cause of action outside of allegations
against

the

employer.

(Docket

No.

26.)

When

the

amended

complaints were filed, plaintiff Villafañe left the allegations

2

Similarly to this case, the Cavallaro plaintiffs had
previously amended their complaints at least once. Cavallaro, 678
F.3d at 10.

Civil No. 11-2099 (FAB)

12

against the individual defendants unedited, but the individual
capacity pursuant to Title VII and ADA remain dismissed.
Defendants ask the Court to decline to exercise
supplemental jurisdiction over the Commonwealth claims against
defendant Rivera because either all claims over which the Court has
original jurisdiction have been dismissed or because there are
other compelling reasons.

(Docket No. 50 at pp. 9-11.)

Federal

courts have jurisdiction over state claims when they are “so
related to claims in the action within such original jurisdiction
that they form part of the same case or controversy.”
§ 1367.

28 U.S.C.

Although the federal causes of actions against the

individual defendants have been dismissed, the Court can maintain
jurisdiction over the Commonwealth claims remaining against them
because there is a complete overlap in the factual allegations in
these Commonwealth claims and the federal claims which remain
against the corporate defendants.

See Torres-Ramos v. Metro Guard

Serv., Inc., 394 F.Supp.2d. 465, 469 (D.P.R. 2005) (finding that
when the individual Commonwealth claims against defendants were
based on the same common nucleus of operative facts as the Title
VII claims before the court, supplemental jurisdiction was properly
exercised).

Defendants’ motion for judgment on the pleadings on

the Commonwealth claims over defendant Rivera is DENIED.

Civil No. 11-2099 (FAB)
B.

13

Motion to Stay
Plaintiff Villafañe incorrectly states that this Court

does not have the power to stay the proceedings because the
Bankruptcy Court has jurisdiction and defendants would be required
to request a withdrawal of reference.

(Docket No. 63 at p. 8.)

The Court’s ability to stay proceedings:
is a well established accoutrement of its broad
discretion to manage and dispose of cases on its docket.
A properly granted stay operates as an invaluable tool to
conserve party and judicial resources, and to avoid
inconsistent procedural and legal rulings. In granting
a stay, however, the Court must also be mindful of the
hardship and inequity to the moving party if the action
is not stayed, and of the potential prejudice to the nonmovant.
Ramos-Martir v. Astra Merck, Inc., No.Civ.50-2038, 2005 WL 3088372,
at *1 (D.P.R. 2005) (citing Rivers v. The Walt Disney Co., 980 F.
Supp. 1358, 1360 (C.D.Cal. 1997)).
Defendants argue that the proceedings should be stayed
against them because the costs of discovery will be too great while
defendant B Open is in bankruptcy and many other relevant parties
are not subject to the same discovery requirements because they
were not correctly served when plaintiff Villafañe filed the
complaint against them.

(Docket No. 62 at p. 8.)

Plaintiff

Villafañe contends that there are no unusual circumstances in this
case that warrant a stay of the proceedings, also arguing that
proceeding against the non-debtors will not affect defendant B
Open’s bankruptcy proceedings. (Docket No. 63 at p. 5.)

The Court

Civil No. 11-2099 (FAB)
finds

plaintiff

14

Villafañe’s

arguments

unavailing

because,

as

plaintiff herself alleges in her latest amended complaint, the nondebtor defendants have almost a complete identity of interests with
defendant B Open and proceedings against them have the potential to
impact defendant B Open’s bankruptcy.
The Bankruptcy Code provides for an automatic stay of
judicial proceedings against debtors when they seek bankruptcy
protection, but that protection does not extend to non-debtor third
parties or co-defendants.

11 U.S.C. 362(a)(1);3 In re Bora Bora,

Inc., 424 B.R. 17, 23 (Bankr.D.P.R. 2010).

“The automatic stay is

imposed by operation of law and does not require an injunction but
it is clear that the statutory language of 11 U.S.C. § 362 imposes
the automatic ex parte injunction only as to actions against the
debtor.”

Bora Bora, 424 B.R. at 23 (citing In re Supermercado

Gamboa, 68 B.R. 203, 232 (Bankr. D.P.R. 1986)).
“Pursuant to 11 U.S.C. § 105, [however], the Court has
‘general equity power to stay litigation that could interfere with
the reorganization of the debtor.’”

Rivera-Olivera v. Antares Oil

Services, 482 B.R. 44, 47 (D.P.R. 2012) (quoting In re A.H. Robins

3

Section 362(a)(1) provides that when a petition for
bankruptcy is filed pursuant to section 301, 302, or 303 of the
Bankruptcy Code, a stay is issued to all entities of “the
commencement or continuation, including the issuance or employment
of process, or a judicial, administrative, or other action or
proceeding against the debtor that was or could have been commenced
before the commencement of the case under this title, or to recover
a claim against the debtor that arose before the commencement of
the cause under this title.” 11 U.S.C. § 362(a).

Civil No. 11-2099 (FAB)

15

Co. Inc., 828 F.2d 1023, 1025 (4th Cir. 1987)).
extended

to

non-debtor

co-defendants

or

The stay may be

“third

parties

when

‘unusual circumstances’ exist, such as when (i) the non-debtor and
debtor enjoy such an identity of interests that the suit of the
non-debtor is essentially a suit against the debtor; or (ii) the
third-party action will have an adverse impact on the debtor’s
ability to accomplish reorganization.’”

Id. (quoting Bora Bora,

424 B.R. at 27)).
Defendants argue that defendant Talk 2 ME, Inc. and Talk
Time PR, Inc. do not exist and that defendant Stargazer, Inc. is in
the funeral arrangement business, and, therefore, has nothing to do
with the claims in this case.

Id. at 9.

Plaintiff Villafañe

alleges that defendants B Open, Talk 2 ME, Inc., Stargazer, Inc.,
Rival Enterprises, Inc., and Talk Time PR, Inc. are all commonly
owned and managed.

(Docket No. 53-1 at pp. 9-10).

She further

contends that the business operations of all of the defendant
corporations, including B Open, are “interrelated, intertwined and
intermingled.” Id. Plaintiff Villafañe also alleges that B Open’s
president and general manager are also the president and general
manager of the other defendant corporations.

Id. at p. 12.

As a

result, the Court concludes that the non-debtor corporations and
the debtor corporation in this case may have an identity of
interests, and that the suit against Talk 2 ME, Inc., Stargazer,
Inc.,

and

Talk

Time

PR,

Inc.

is

essentially

a

suit

against

Civil No. 11-2099 (FAB)

16

defendant B Open. There are, therefore, “unusual circumstances”
present, justifying a stay against the non-debtor defendants.
While the Court is aware that delaying the case will
present some hardship to plaintiff Villafañe, judicial resources
and the resources of the parties will be conserved if this case
proceeds as a whole, not piece meal.

Most of the allegations in

plaintiff Villafañe’s complaint directly relate to defendant B
Open, not the other defendants.

(See Docket No. 53-1.)

Without

defendant B Open’s participation in the case, efforts would be
duplicated if and when the stay is lifted as to B Open.
Additionally, plaintiff Villafañe incorrectly states that
as B Open’s insurer, Universal Insurance Company, is a non-debtor
and that the stay should not extend to it.
p. 12.)

(Docket No. 63 at

Bankruptcy Code Section 541(a)(1) describes the property

of a bankruptcy estate.

11 U.S.C. § 541(a)(1).

The First Circuit

Court of Appeals has held that the language of that section “is
broad enough to cover an interest in liability insurance, namely,
the debtor’s right to have the insurance company pay money to
satisfy one kind of debt - debts accrued through, for example the
insured’s negligent behavior.” Tringali v. Hathaway Machinery Co.,
Inc., 796 F.2d 553 (1st Cir. 1986) (finding that proceeds from the
liability insurance were subject to the automatic stay order).

In

addition to being property of the estate, the insurer would be in
effect defending the claims against defendant B Open in its place,

Civil No. 11-2099 (FAB)

17

which again shows an identity of interest so that the suit against
the non-debtor insurer is essentially a suit against the debtor.
Therefore, the Court GRANTS the motion to stay this case, pending
the outcome of defendant B Open’s bankruptcy proceedings.
IV.

CONCLUSION
For the reasons expressed above, the Court DENIES defendants’

motion for judgment on the pleadings and GRANTS defendants’ motions
to stay proceedings in this case, pending the outcome of B Open’s
bankruptcy proceedings.
IT IS SO ORDERED.
San Juan, Puerto Rico, March 26, 2013.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE