Wright et al v. Waste Pro USA Inc et al
Filing
170
ORDER granting in part and finding as moot in part 37 Motion to Dismiss for Lack of Jurisdiction (granting motion to dismiss for lack of personal jurisdiction over Waste Pro USA and finding as moot remaining grounds for mot ion); finding as moot 37 Motion to Dismiss for Failure to State a Claim; granting in part and finding as moot in part 38 Motion to Dismiss for Lack of Jurisdiction (granting motion to dismiss for lack of personal jurisdiction over Waste Pro Flo rida and finding as moot remaining grounds for motion); finding as moot 38 Motion to Dismiss for Failure to State a Claim; granting in part and denying without prejudice in part 39 Motion to Dismiss for Lack of Jurisdiction (granting motion to dismiss NCWHA claim on preemption grounds and denying without prejudice remaining grounds for motion);denying without prejudice 39 Motion to Dismiss for Failure to State a Claim; granting in part and denying without prejudice in part 40 Motion to Dismiss for Lack of Jurisdiction (granting motion to dismiss NCWHA claim on preemption grounds and denying without prejudice remaining grounds for motion); denying without prejudice 40 Motion to Dismiss for Failure to State a Claim; finding as moot 129 Motion to Sever Signed by Honorable David C Norton on July 25, 2019.(cban, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
Anthony Wright, Daniel Hansen, and
Kenneth Privette, all individually and
on behalf of all others similarly situated
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
Waste Pro USA Inc., Waste Pro of Florida, )
Inc., Waste Pro of South Carolina, Inc.,
)
Waste Pro of North Carolina, Inc.,
)
)
Defendants.
)
)
No. 2:17-cv-02654
ORDER
This matter comes before the court on defendants Waste Pro USA and Waste Pro
of Florida’s (“Waste Pro FL”) motions to dismiss for lack of personal jurisdiction, lack of
subject-matter jurisdiction, failure to state a claim, and preemption, ECF Nos. 37, 38; on
Waste Pro of South Carolina’s (“Waste Pro SC”) and Waste Pro of North Carolina’s
(“Waste Pro NC”) motions to dismiss for lack of subject-matter jurisdiction, failure to
state a claim, and preemption, ECF Nos. 39 and 40; and on plaintiffs Anthony Wright
(“Wright”), Daniel Hansen (“Hansen”), and Kenneth Privette’s (“Privette”) (collectively,
“plaintiffs”) motion to sever and transfer, ECF No. 129. For the reasons set forth below,
the court GRANTS Waste Pro USA and Waste Pro FL’s motions to dismiss and
DISMISSES them as defendants from this case. The court also DISMISSES all
plaintiffs who are not employees of Waste Pro SC or Waste Pro NC. The court
GRANTS Waste Pro NC and Waste Pro SC’s motion to dismiss plaintiffs’ North
Carolina Wage and Hour Act (“NCWHA”) claim. The court finds that the remaining
1
North and South Carolina plaintiffs do not have standing to sue both Waste Pro NC and
Waste Pro SC and orders plaintiffs to file an amended complaint pursuant to the
instructions given in this order. The court finds MOOT defendants remaining
arguments, but defendants may re-file their motions regarding standing and failure to
state a claim if plaintiffs do not properly re-plead their complaint. This order also renders
MOOT plaintiffs’ motion to sever and transfer.
I. BACKGROUND
Plaintiffs brought this action against defendants individually on a collective and
class wide basis. Plaintiffs are waste disposal drivers for defendants. They claim that,
due to the defendants’ company-wide policies, they were deprived of wages for hours
actually worked. According to plaintiffs, defendants did this in the following ways: (1)
erroneously calculating their prevailing hourly rate; (2) only paying plaintiffs “half-time”
for all hours worked over forty hours in a given workweek; (3) requiring them to perform
pre-shift and post-shift duties while not clocked in; and (4) automatically deducting thirty
minutes for lunch breaks that defendants knew plaintiffs worked through. Plaintiffs bring
this action on behalf of all other similarly situated non-exempt waste disposal drivers
who were paid a day rate and who have been employed by Waste Pro entities throughout
the United States, at any time from September 29, 2014 through the final disposition of
this matter. Plaintiffs all filed consent forms to join this collective action lawsuit against
Waste Pro USA only. ECF Nos. 30-3, 30-4, 30-5. However, each plaintiff specifies that
they work or worked for a particular Waste Pro facility—Wright worked at Waste Pro’s
facility in Florida, Hansen in South Carolina, and Privette in North Carolina.
2
Plaintiffs filed suit in this court on October 2, 2017, and filed their second
amended complaint on December 5, 2017, bringing the following causes of action: (1)
violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201, et seq.; (2)
violation of the South Carolina Payment of Wages Act (“SCPWA”), South Carolina
Code §§ 41-10-10, et seq.; and (3) violation of the NCWHA, North Carolina General
Statutes §§ 95-25.1, et seq.. ECF No. 30-2. On December 20, 2017, Waste Pro USA and
Waste Pro FL filed a motion to dismiss for lack of subject matter jurisdiction, lack of
personal jurisdiction, and failure to state a claim, and also seeking the dismissal of
plaintiffs’ North Carolina claim based on preemption grounds. ECF Nos. 37 and 38. The
other defendants filed nearly identical motions that same day, with Waste Pro SC and
Waste Pro NC declining to bring a motion to dismiss for lack of personal jurisdiction.
ECF Nos. 39 and 40. On January 16, 2018, plaintiffs filed virtually identical responses to
all of the motions. ECF Nos. 46, 47, 48, and 49. On February 2, 2018, defendants filed a
joint reply to those responses. ECF No. 54. Pursuant to the court’s order to conduct
jurisdictional discovery, WP USA and WP FL filed their supplemental briefing on the
personal jurisdiction issue on November 30, 2018, ECF No. 124, and plaintiffs filed their
supplemental briefing on February 15, 2019, ECF No. 141, and filed a reply to plaintiffs’
brief on February 25, 2019, ECF No. 143.
The matters have been fully briefed and are now ripe for the court’s review.
II. STANDARDS
A. Motion to Dismiss for Lack of Personal Jurisdiction
When the defendant challenges personal jurisdiction, the plaintiff has the burden
of showing that jurisdiction exists. See In re Celotex Corp., 124 F.3d 619, 628 (4th Cir.
3
1997). When the court decides a personal jurisdiction challenge without an evidentiary
hearing, the plaintiff must prove a prima facie case of personal jurisdiction. See Mylan
Labs, Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993). “In considering the challenge on
such a record, the court must construe all relevant pleading allegations in the light most
favorable to the plaintiff, assume credibility, and draw the most favorable inferences for
the existence of jurisdiction.” In re Celotex Corp., 234 F.3d at 628 (quoting Combs v.
Bakker, 886 F.2d 673, 676 (4th Cir. 1989)). However, the court need not “credit
conclusory allegations or draw farfetched inferences.” Masselli & Lane, PC v. Miller &
Schuh, PA, 215 F.3d 1320 (4th Cir. 2000).
B. Motion to Dismiss for Lack of Subject Matter Jurisdiction
Defendants’ standing argument implicates this court’s subject matter jurisdiction
and is governed by Rule 12(b)(1). Crumbling v. Miyabi Murrells Inlet, LLC, 192 F.
Supp. 3d 640, 643 (D.S.C. 2016). The determination of subject matter jurisdiction must
be made at the outset before any determination on the merits. Steel Co. v. Citizens for a
Better Environment, 523 U.S. 83 (1998). “The plaintiff bears the burden of persuasion if
subject matter jurisdiction is challenged under Rule 12(b)(1).” Williams v. United States,
50 F.3d 299, 304 (4th Cir. 1995). If the plaintiff cannot overcome this burden, then the
claim must be dismissed. Welch v. United States, 409 F.3d 646, 651 (4th Cir. 2005).
When a party contends that “the complaint [] fails to allege facts upon which subject
matter jurisdiction can be based[,] . . . all the facts alleged in the complaint are assumed
to be true.” Luna-Reyes v. RFI Const., LLC, 57 F. Supp. 3d 495, 499 (M.D.N.C. 2014)
(quoting Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)). “[A] trial court should
dismiss under Rule 12(b)(1) only when the jurisdictional allegations are ‘clearly . . .
4
immaterial, made solely for the purpose of obtaining jurisdiction or where such a claim is
wholly unsubstantial and frivolous.’” Kerns v. United States, 585 F.3d 187, 193 (4th Cir.
2009) (quoting Bell v. Hood, 327 U.S. 678, 682 (1946)).
C. Motion to Dismiss for Failure to State a Claim
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss for
“failure to state a claim upon which relief can be granted.” When considering a Rule
12(b)(6) motion to dismiss, the court must accept the plaintiff’s factual allegations as true
and draw all reasonable inferences in the plaintiff’s favor. See E.I. du Pont de Nemours
& Co. v. Kolon Indus., 637 F.3d 435, 440 (4th Cir. 2011). But “the tenet that a court
must accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). On a motion to dismiss, the
court’s task is limited to determining whether the complaint states a “plausible claim for
relief.” Id. at 679. Although Rule 8(a)(2) requires only a “short and plain statement of
the claim showing that the pleader is entitled to relief,” “a formulaic recitation of the
elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). The “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
Twombly, 550 U.S. at 570).
III. DISCUSSION
A. Motion to Dismiss for Lack of Personal Jurisdiction
Defendants Waste Pro USA and Waste Pro FL seek dismissal of plaintiffs’ second
amended complaint for lack of personal jurisdiction, pursuant to Federal Rule of Civil
5
Procedure 12(b)(2).1 ECF No. 37 at 4. The court has considered whether it may exercise
jurisdiction over these entities under various legal grounds—general personal
jurisdiction, specific personal jurisdiction, joint employer / single integrated enterprise
theory (“JE/SIE theory”),2 and agency theory. The court has analyzed the evidence the
parties have put forth in their supplemental briefings and finds that plaintiffs have not
demonstrated that the court should exercise personal jurisdiction over Waste Pro USA or
Waste Pro FL under any of these legal grounds.
1. Background Law on Personal Jurisdiction
In evaluating a challenge to personal jurisdiction under a state’s long-arm statute,
the court engages in a two-step analysis. Ellicott Mach. Corp. v. John Holland Party Ltd.,
995 F.2d 474, 477 (4th Cir. 1993). First, the long-arm statute must authorize the exercise
of jurisdiction under the facts presented. Id. Second, if the statute does authorize
jurisdiction, then the court must determine if the statutory assertion of personal
jurisdiction is consistent with due process. Id. South Carolina’s long-arm statute extends
to the outer limits allowed by the Due Process Clause. Foster v. Arletty 3 Sarl, 278 F.3d
409, 414 (4th Cir. 2002). Consequently, the only question before the court is whether the
1
Interestingly, Waste Pro NC has not contested the court’s personal jurisdiction over it,
despite being a foreign corporate defendant.
2
As the order will show, courts use a variety of titles to discuss this particular theory of
liability and jurisdiction. Plaintiffs have used the following terms to argue for the court’s
exercise of personal jurisdiction over all of the defendants as a single integrated business
entity: joint employment, joint employer, common business enterprise, joint and
integrated enterprise, single enterprise, single business enterprise. For the sake of
consistency, the court uses the terms joint employer / single integrated enterprise theory
(“JE/SIE theory”) because they are the terms most frequently used by other courts that
have addressed this potential legal theory for personal jurisdiction.
6
exercise of personal jurisdiction would violate due process. ESAB Grp., Inc. v.
Centricut, LLC, 34 F. Supp. 2d 323, 328 (D.S.C. 1999).
The due process test for personal jurisdiction involves two components: minimum
contacts and fairness. See World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286
(1980). Under the minimum contacts test, a nonresident defendant must have certain
minimum contacts such that the suit does not offend “traditional notions of fair play and
substantial justice.” Int’l Shoe Co. v. State of Wash., Office of Unemployment
Compensation and Placement, 326 U.S. 310, 316 (1945). Due process is satisfied if the
court asserts personal jurisdiction over a defendant who “purposefully avails itself of the
privilege of conducting activities within the forum state,” Hanson v. Denckla, 357 U.S.
235, 253 (1958), such that it “should reasonably anticipate being haled into court there,”
World-Wide Volkswagen, 444 U.S. at 297. After a showing of the defendant’s
purposeful availment, the reasonableness inquiry balances any burden on the defendant
against countervailing concerns such as the plaintiff’s interest in obtaining relief and the
forum state’s interest in the controversy. See id. at 292.
A party may be subject to the court’s power either through general personal
jurisdiction or specific personal jurisdiction. A court has general personal jurisdiction
over a foreign corporation when its contacts within the forum state “are so ‘continuous
and systematic’ as to render them essentially at home.” Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (quotes omitted). “[T]he paradigm
forum for the exercise of general jurisdiction is the individual’s domicile” and for a
corporation, it is the corporation’s place of incorporation and principal place of business.
Daimler AG v. Bauman, 571 U.S. 117, 137 (2014). While this is the general rule, there
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may be “an exceptional case” in which “a corporate defendant’s operations in another
forum ‘may be so substantial and of such a nature as to render the corporation at home in
that State.’” BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549, 1558 (2017) (quoting Daimler,
571 U.S. at 139 n.19). For example, the Supreme Court found a Philippine Island
corporation to be essentially at home in Ohio because it was forced to set up a temporary
principal place of business in Ohio while activities in the Philippines were ceased during
World War II. Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 447–48 (1952).
Specific personal jurisdiction arises when a cause of action is related to the
defendant’s activities within the forum state. See S.C. Code Ann. § 36-2-803;
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984). The
Fourth Circuit has established a three-part test for evaluating the propriety of exercising
specific jurisdiction: (1) whether and to what extent the defendant purposely availed itself
of the privileges of conducting activities in the forum state, and thus invoked the benefits
and protections of its laws; (2) whether the plaintiff’s claims arise out of those forumrelated activities; and (3) whether the exercise of jurisdiction is constitutionally
“reasonable.” Christian Sci. Bd. of Dirs. of the First Church of Christ v. Nolan, 259 F.3d
209, 215–216 (4th Cir. 2001) (citing Helicopteros, 466 U.S. at 414–16; Burger King v.
Rudzewicz, 471 U.S. 462, 472, 476–77 (1985)).
2. No General Personal Jurisdiction over Waste Pro USA
Plaintiffs have not demonstrated that Waste Pro USA should be subject to the
court’s general or specific personal jurisdiction. Courts can exercise general personal
jurisdiction over foreign (out of state) corporations in two ways: (1) if the corporation’s
contacts within the forum state “are so ‘continuous and systematic’ as to render them
8
essentially at home,” Goodyear, 564 U.S. at 919; and (2) if the foreign corporation is a
parent company with a subsidiary that is subject to the court’s general personal
jurisdiction and if “the subsidiary functions as the agent or mere department of the
parent” in a manner that justifies treating it as an alter ego and/or piercing the corporate
veil, Builder Mart of Am., Inc. v. First Union Corp., 563 S.E.2d 352, 358 (S.C. Ct. App.
2002), overruled on other grounds by Farmer v. Monsanto Corp., 579 S.E.2d 325 (S.C.
2003).
“A court can assert general jurisdiction over business entities only when the
‘continuous corporate operation within a state is thought so substantial and of such a
nature as to justify suit against it on causes of action arising from dealings entirely
distinct from those activities.’” Afa Polytek (N. Am.) Inc. v. Clorox Co., 2014 WL
12608562, at *4 (D.S.C. Jan. 17, 2014) (quoting Nichols v. G.D. Searle & Co., 991 F.2d
1195, 1199 (4th Cir. 1993)). “With respect to a corporation, the place of incorporation
and principal place of business are ‘paradig[m] . . . bases for general jurisdiction.’”
Daimler, 571 U.S. at 137. Although the standard for exercising general personal
jurisdiction over an out-of-state corporate defendant “is a stringent one, it is the
consequence of the problems inherent in attempting to sue a foreign corporation that has
carefully structured its business so as to separate itself from the operation of its whollyowned subsidiaries—as it may properly do.” Builder Mart, 563 S.E.2d at 358.
Furthermore, “the mere fact that a subsidiary has minimum contacts with a forum is not
enough to confer personal jurisdiction over the parent company.” Afa Polytek, 2014 WL
12608562 at *5; accord Jazini by Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir.
1998) (“[T]he presence of the subsidiary alone does not establish the parent’s presence in
9
the state.”). Such a model would “approve the exercise of general jurisdiction in every
State in which a corporation engages in a substantial, continuous, and systematic course
of business,” which is a formulation that the Supreme Court has held to be “unacceptably
grasping.” Daimler, 571 U.S. at 138.
Plaintiffs have not demonstrated that Waste Pro USA’s contacts with South
Carolina are so “continuous and systematic” that this state could be considered the
corporation’s home. Waste Pro USA’s state of incorporation and principal place of
business is Florida. ECF No. 37-2 ¶ 3. It is a holding company that does not provide
goods or services in South Carolina or elsewhere, nor is it authorized to conduct business
in South Carolina. Id. ¶ 4–5. It does not own any real property, have any bank accounts,
or pay taxes in this state. Id. ¶ 7, 9–10. Finally, Waste Pro USA does not have any direct
employees in South Carolina or maintain an agent for service of process here. Id. ¶¶ 6, 8.
Plaintiffs have provided certain evidence to the court of Waste Pro USA’s limited
involvement in South Carolina through its subsidiary, Waste Pro SC, which will be
discussed in greater detail in the sections on alter ego and piercing the corporate veil.
However, none of this evidence or any of plaintiffs’ allegations about Waste Pro USA
show that Waste Pro USA operates so continuously and systematically in South Carolina
as to render this state its “home.”
While the mere presence of a subsidiary within the court’s personal jurisdiction
does not subject a foreign corporation to the court’s reach, courts may rely on agency
principles to exercise personal jurisdiction over a parent corporation through its
subsidiary if the parent company exercises a certain level of control and supervision over
its subsidiary. South Carolina courts recognize two tests that will subject a parent
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corporation to the court’s personal jurisdiction through its subsidiary—alter ego and
piercing the corporate veil. See, e.g., Builder Mart, 563 S.E.2d at 358; Afa Polytek, 2014
WL 12608562, at *6; ScanSource, Inc. v. Mitel Networks Corp., 2011 WL 2550719, at
*6 (D.S.C. June 24, 2011); see also Mendez v. Pure Foods Mgmt. Grp., Inc., 2016 WL
183473, at *1–7 (D. Conn. Jan. 14, 2016) (“Under the agency test, the court may attribute
the subsidiary’s actions to the parent if the parent exerts considerable control over the
activities of the subsidiary.”); Wm. Passalacqua Builders, Inc. v. Resnick Developers S.,
Inc., 933 F.2d 131, 142–43 (2d Cir. 1991) (observing that when parties are actually alter
egos of one another, a “jurisdictional objection evaporates” because “the alter egos are
treated as one entity”).
i. Alter-Ego / Agency
In determining whether to exercise jurisdiction based on the alter-ego theory, the
court must find the following factors: (1) common ownership; (2) financial
independence; (3) degree of selection of executive personnel and failure to observe
corporate formalities; and (4) the degree of control over marketing and operational
policies. Builder Mart, 564 S.E.2d at 358. “For the courts to have personal jurisdiction”
under this theory, the plaintiff “must show that the subsidiary functions as the agent or
mere department of the parent—that is, that the subsidiary does all the business which the
parent corporation could do if here on its own.” Id. “It is essential that all four factors be
present with sufficient factual specificity to confer jurisdiction on [ ] courts.” Id.
Plaintiffs attached multiple exhibits to their supplemental briefing reflecting the
evidence they collected during jurisdictional discovery which they claim shows that
Waste Pro USA and Waste Pro SC were operating as mere alter-egos of each other, such
11
that the court should exercise personal jurisdiction over Waste Pro USA because it has
general personal jurisdiction over Waste Pro SC. First, plaintiffs’ supplemental briefing
does not include any evidence of common ownership, although it does show that all four
defendants have the same CEO and CFO. However, this alone does not create personal
jurisdiction via an alter ego theory. See ScanSource, Inc., 2011 WL 2550719, at *5
(“[T]he fact that [the parent and subsidiary], like many companies, share executives does
not establish that [the parent] controls the selection of the executives.”); Weiss v. La
Suisse, 69 F.Supp.2d 449, 458 (S.D.N.Y.1999) (“[T]he overlap of directors and officers
between parent and subsidiary alone does not render the subsidiary a ‘mere department’
for jurisdictional purposes.”). It is also worth noting that each subsidiary is
independently operated by a regional vice president, and the various regions within the
states controlled by those subsidiaries are operated by district managers who make most,
if not all, employment-related decisions independently from Waste Pro USA, as
discussed further along in this section.
With regard to the second factor, financial independence, plaintiffs have not given
the court much except for the fact that WP USA is the named insured on most Waste Pro
insurance policies, including worker’s compensation policies; but the subsidiaries also
appear as additional named insured on some policies. ECF No. 141 at 28 (citing ECF
No. 141-23). The fact that a parent corporation coordinates insurance policies with and
on behalf of its subsidiaries does not meet the level of integration required by the alterego theory. In regards to the third factor, the degree of selection of executive personnel
and failure to observe corporate formalities, neither party has offered any information
about whether the corporations have disregarded their corporate formalities—there is no
12
information on whether they have failed to issue stock, failed to hold shareholder
meetings and elect the necessary directors and executive personnel, or neglected to
properly document all transactions between the subsidiary and its parent.
Most of the evidence submitted by both parties relates to the fourth factor, the
degree of control over marketing and operational policies, or, more specifically, how
Waste Pro USA presents itself to the world and how much Waste Pro USA is involved in
the daily functions of Waste Pro SC. Plaintiffs argue that Waste Pro USA and its
subsidiaries consistently hold themselves out to the public as a single entity. ECF No.
144 at 22. In addition to testimony from employees that “Waste Pro” held itself out as a
single entity, plaintiffs point to “Waste Pro’s” single website that contains job postings
for all Waste Pro entities, using a single Waste Pro logo that is owned by Waste Pro
USA. Id. at 17. Additionally, regional vice presidents sometimes present themselves as
employees of Waste Pro USA, and a report from the Department of Labor discusses the
various subsidiaries of the company as “branches.” However, “unified marketing and
advertising and holding out to the public as a single entity, without more, [is] insufficient
to confer jurisdiction.” Builder Mart, 563 S.E.2d at 358–59 (finding that the
corporation’s use of a sign post with the moniker “First Union” throughout South
Carolina did not create personal jurisdiction through agency theory). Using a common
logo on a hiring website is not enough to create an agency relationship sufficient to
warrant personal jurisdiction, especially when the logo and hiring website are not
relevant to the plaintiff’s allegations, which center on the defendants’ failure to set
appropriate pay rates.
13
Plaintiffs submit to the court an offer letter sent to Christopher Montero in
Ladson, South Carolina on July 21, 2014, which says “[w]e are pleased to offer you the
position of Residential Driver with Waste Pro USA. We are looking forward to you
becoming a valuable addition to our team in the Waste Pro of South Carolina Department
. . . “ ECF No. 141-16, Ex. Q at 4. Plaintiffs argue that this language—offering him
employment with Waste Pro USA and not Waste Pro SC, but treating Waste Pro SC as a
department of Waste Pro USA—shows that Waste Pro USA is in fact a single entity over
which the court should have complete personal jurisdiction. However, as just discussed,
merely holding itself out as a single entity does not create personal jurisdiction through
agency, and referring to Waste Pro SC as a “department” in an offer letter does not
amount to a legal conclusion that the court can rely upon. The court does not find it
unusual that a company would use common language in an offer letter rather than
espousing the details of the proper corporate structure. Furthermore, that same letter
informs the new hire that he will report to James Lanier, Division Manager, who is an
employee of Waste Pro SC, not Waste Pro USA.
Plaintiffs also rely heavily on language in the company handbooks that use
phrases like “one company, one team,” “corporate behavior,” and “the culture of our
organization.” ECF No. 141 at 18. Having a central handbook that is used by each
subsidiary does not demonstrate that the various subsidiaries and Waste Pro USA are all
alter-egos of one another. And rhetoric such as this does not qualify as evidence of direct
control over the Waste Pro SC by its parent corporation. See Jazini v. Nissan Motor Co.,
148 F.3d 181, 183–86 (2d Cir. 1998) (“None of this material, and especially not a request
14
for world-wide cooperation, shows the pervasive control over the subsidiary that the
‘mere department’ standard requires.”)
Next, the court considers all of plaintiffs’ evidence regarding the systems and
processes that the subsidiaries share with Waste Pro USA. The Waste Pro entities all use
the same centralized computer network and software systems, including an ADP
computer system for paying employees. ECF No. 141 at 25. Waste Pro USA’s
Corporate Payroll Manager also signs off on Waste Pro SC time cards. The handbooks
themselves provide instructions to employees about family and medical leave, vacation,
insurance policies, and equal employment policies. Yet this alone is not evidence that
Waste Pro actually manages all of these things in place of the subsidiaries. In fact, the
various division managers and regional vice presidents, who are employed by the
subsidiaries in their respective states, have submitted declarations attesting to the high
level of involvement and control that they, and not Waste Pro USA, exercise over their
employees. Most importantly, the mere fact that a parent corporation provides support
services for its subsidiaries does not create agency or demonstrate an alter ego for
jurisdictional purposes. See Nat’l Prod. Workers Union Trust v. CIGNA Corp., 2007
WL 1468555, at * 10 (N.D.Ill. May 16, 2007) (finding that provision of support services,
including advanced costs, by parent for subsidiary, “are part and parcel of the normal
incidents of a parent-subsidiary relationship”); Action Mfg. Co. v. Simon Wrecking
Co., 375 F.Supp.2d 411, 425 (E.D. Pa. 2005) (finding that sharing services “such as
human resources and information technology services, and office space and
infrastructure,” does not indicate a lack of corporate formality).
15
This district addressed the issue of personal jurisdiction over a foreign parent
corporation through agency theories in ScanSource, Inc. v. Mitel Networks Corp., 2011
WL 2550719 (D.S.C. June 24, 2011). ScanSource involved some similar facts as in the
current case: (1) the parent’s website listed South Carolina subsidiary locations as its
“partners”; (2) there were emails between the parent company’s employees and the
plaintiff’s employees over payment issues for a contract the plaintiffs had signed with the
defendant subsidiary company; (3) there were customer applications and purchase orders
between the plaintiff and the defendant subsidiary regarding a contract between them in
which the subsidiary listed its parent company’s address as the subsidiary’s own address;
and (4) the plaintiffs unearthed a contract that the parent company had signed to
guarantee its subsidiary in the contract that was under dispute in the matter, in which the
same person who signed on behalf of the parent corporation signed on behalf of the
subsidiary. Yet the court found that “the fact that [the parent] and its subsidiaries share a
payment processing center does not equate to [the parent] and its subsidiaries failing to be
financially independent of each other.” ScanSource, 2011 WL 2550719 at *6. The court
also gave little weight to the fact that the parent served as a guarantor to its subsidiary or
had a website that listed contact information for all of its subsidiaries.
Like the inconsequential reference to “partners” in ScanSource, the fact that
Waste Pro USA has referred to its subsidiary companies by the informal title of
“division” rather than emphasizing these are distinct corporate entities does not give rise
to jurisdiction. Plaintiffs also submitted emails showing that Waste Pro USA employees
were “involved in bonus decisions for employees in the subsidiaries.” ECF No. 141 at
18, citing 141-7, Ex. G. Yet, as in ScanSource, emails from the parent company
16
regarding the business operations of the subsidiary not a smoking gun. Finally, the
plaintiffs have given the court a contract for sale of property in South Carolina that was
signed by the CEO of Waste Pro USA on behalf of Waste Pro SC. ECF No. 141-5, Ex.
E. While different than signing as a guarantor like in ScanSource, the fact that the
parent’s CEO signed a contract on behalf of the subsidiary is not surprising considering
that he is also the CEO of the subsidiary. This contract does not indicate that the
corporations are so financially intertwined that they should be treated as alter-egos of one
another.
The final group of evidence upon which plaintiffs rely in order to establish that
Waste Pro USA exercised control over Waste Pro SC’s operational policies are sections
from the 2017 Handbook that dictate the procedures concerning employees’
compensation, benefits, payroll deductions, paychecks, overtime, performance reviews,
and time records. ECF No. 141 at 18. The Handbook further states that “Waste Pro USA
Inc. entities” are allowed to develop their own departmental attendance policies, but they
must be “consistent with the overall corporate policy and approved by Human
Resources.” Id. at 17. First, the court notes that while plaintiffs cite to “WPSC 0210-216
and WPSC 0221” as support for these summaries of the Handbooks, there is no citation
reference to indicate where these documents reside on ECF, preventing the court from
confirming their accuracy by finding the proper attachments on ECF. However, even
presuming them to be accurate, such a scant indication from the 2017 Handbook that
Waste Pro USA is intimately involved in the daily operations of its subsidiaries is
buttressed by multiple declarations from employees of the various Waste Pro subsidiaries
showing that most operational decisions are carried out at the subsidiary level. For
17
example, each subsidiary is divided into regions, which are run by a regional vice
president; and each region can then be divided into divisions, which are controlled by a
division manager, who reports directly to the regional vice president. Both the regional
vice presidents and the division managers are employees, not of Waste Pro USA, but of
the subsidiary within their respective states. These regional vice presidents help
determine what contracts to pursue, how to price bids and market the company’s services,
and what personnel and equipment are needed in each division within their region. ECF
No. 104-3, Decl. Russell Mackie ¶ 2; ECF No. 104-5, Decl. David Schneider ¶ 5. They
have specific employees within their divisions to handle accounting, marketing,
operations, and human resources. The division managers are allowed to hire new
employees as the need arises and generally determine how to compensate them and
whether to terminate any employer. See, e.g., ECF No. 104-4 ¶ 7. As one regional vice
president put it, while “Waste Pro USA provides guidance to its subsidiaries [ ] regarding
employment policies . . . it is ultimately up to [ ] the Regional Vice President to adopt
policies that are appropriate for” his or her region. ECF No. 104-3 ¶ 10. The routes that
drivers take, as well as the days and times of shifts are decided by the division, without
any involvement by Waste Pro USA. ECF NO. 104-4 ¶ 9. Furthermore, these
declarations demonstrate that division managers, as employees of the subsidiaries, are the
ones making the vast majority of the decisions regarding salary, payroll, overtime, and
bonuses. This testimony from the various employees of Waste Pro subsidiaries show that
there are some differences across the subsidiaries as to how they operate their various
divisions, indicating that Waste Pro USA does not exercise a strict level of control over
its subsidiaries such that they are alter egos of one another. “If these facts were sufficient
18
to confer jurisdiction over a parent company, virtually all parent companies could be
hauled into every forum in which its subsidiaries did business.” ScanSource, 2011 WL
2550719, at *6.
Based on the foregoing, the court finds that Waste Pro USA is not subject to the
court’s general personal jurisdiction through agency / alter-ego theory.
ii. Piercing the Corporate Veil
While overlapping slightly with the alter-ego analysis, South Carolina’s test for
piercing the corporate veil requires that the court to find that “a number,” although not
all, of the following factors weigh in favor of “disregard[ing] the corporate entity”:
1.
2.
3.
4.
5.
6.
7.
8.
whether the corporation was grossly undercapitalized;
failure to observe corporate formalities;
non-payment of dividends;
insolvency of the debtor corporation at the time;
siphoning of funds of the corporation by the dominant stockholder;
non-functioning of other officers or directors;
absence of corporate records; and
the fact that the corporation was merely a facade for the operations of
the dominant stockholder.
Dumas v. InfoSafe Corp., 463 S.E.2d 641, 644 (S.C. Ct. App. 1995). In addition to these
factors, the plaintiff must prove “an element of injustice or fundamental unfairness if the
acts of the corporation be not regarded as the acts of the [parent].” Sturkie v. Sifly, 313
S.E.2d 316, 318 (S.C. Ct. App. 1984). To demonstrate the presence fundamental
unfairness, the plaintiff must show that “(1) the defendant was aware of the plaintiff’s
claims against the corporation, and (2) thereafter, the defendant acted in a self-serving
manner with regard to the property of the corporation and in disregard of the plaintiff’s
claim in the property.” Dumas, 463 S.E.2d at 644. “However, for purposes of piercing
19
the corporate veil, fundamental unfairness can exist in the absence of fraud, and may be
proved by a lesser showing than reckless disregard.” Id.
In Dumas v. InfoSafe Corp., a key case establishing South Carolina’s veilpiercing criteria, the court found sufficient evidence to pierce the corporate veil and find
its sole shareholder open to liability because: (1) the corporation had been
undercapitalized since its inception; (2) it failed to hold directors meetings and observe
other corporate formalities; (3) it did not pay dividends; (4) it was insolvent and could not
pay its employees’ wages; (5) the corporations funds were “regularly transferred to [the
sole shareholder and his wife], allegedly for repayment of certain loans to the company”;
(6) the shareholder, as the corporation’s president, made all the hiring decisions; and (7)
the shareholder put about $300,000 of his own money into the corporation and described
his occupation as “entrepreneur.” Id. These facts clearly demonstrate that the president,
as sole shareholder of the corporation, had created the corporation to act as a shield for
his own personal business dealings in order to protect himself from liability.
By contrast, the parties here have not presented the court with any evidence
regarding whether Waste Pro SC is undercapitalized or fails to observe corporate
formalities; there has been no reference to the payment of dividends or whether the
subsidiary is insolvent. There is no evidence before the court that Waste Pro USA
siphons funds from Waste Pro SC, that Waste Pro SC’s officers are non-functioning and
merely for show, or that Waste Pro SC lacks proper corporate records. In sum, there is
no evidence that Waste Pro SC “is merely a façade for the operations of” Waste Pro
USA. Id. Indeed, the evidence shows that Waste Pro SC hires and fires employees,
manages their own trash routes and business operations, and exists as a separate corporate
20
entity from its parent corporation. As the ScanSource court reiterated when declining to
pierce the corporate veil to exercise personal jurisdiction over the parent corporation,
“[t]he mere fact that [a parent company] shares administrative functions and some
executives with its subsidiaries, guarantees its subsidiaries, and has a Web site that lists
its and its subsidiaries’ business partners, is not enough to subject it to this Court's
general jurisdiction.” ScanSource, 2011 WL 2550719, at *5.
3. No Specific Personal Jurisdiction over Waste Pro USA
In addition to not having general personal jurisdiction over Waste Pro USA, the
court finds that it may not exercise specific personal jurisdiction over Waste Pro USA for
this case. The Fourth Circuit applies a three-part test when evaluating the propriety of
exercising specific personal jurisdiction: (1) whether and to what extent the defendant
purposely availed itself of the privileges of conducting activities in the forum state, and
thus invoked the benefits and protections of its laws; (2) whether the plaintiff’s claims
arise out of those forum-related activities; and (3) whether the exercise of jurisdiction is
constitutionally “reasonable.” Christian Sci. Bd. of Dirs. of the First Church of Christ v.
Nolan, 259 F.3d 209, 215–16 (4th Cir. 2001) (citing Helicopteros, 466 U.S. at 414–16;
Burger King v. Rudzewicz, 471 U.S. 462, 472, 476–77 (1985)). The first prong of the
Nolan test for specific personal jurisdiction concerns whether a defendant has
“purposefully avail[ed] itself of the privilege of conducting activities within the forum
State, thus invoking the benefits and protections of its laws.” J. McIntyre Mach., Ltd. v.
Nicastro, 564 U.S. 873, 877 (2011) (quoting Hanson, 357 U.S. at 253). The “purposeful
availment” element ensures that a defendant will not be haled into court in a jurisdiction
solely as a result of “random,” “fortuitous,” or “attenuated” contacts or the unilateral
21
activity of another person or third party. Burger King, 471 U.S. at 475. Even a single
contact with the forum state can constitute purposeful availment sufficient to satisfy due
process requirements, if substantial enough. Id. at 475 n.18 (“So long as it creates a
‘substantial connection’ with the forum, even a single act can support jurisdiction.”).
The Fourth Circuit has relied on several nonexclusive factors to determine
whether a defendant has purposefully availed itself of a forum in the context of a business
relationship, including:
whether the defendant maintains offices or agents in the forum state;
whether the defendant owns property in the forum state; whether the
defendant reached into the forum state to solicit or initiate business; whether
the defendant deliberately engaged in significant or long-term business
activities in the forum state; whether the parties contractually agreed that
the law of the forum state would govern disputes; whether the defendant
made in-person contact with the resident of the forum in the forum state
regarding the business relationship; the nature, quality and extent of the
parties’ communications about the business being transacted; and whether
the performance of contractual duties was to occur within the forum.
Consulting Eng’rs Corp. v. Geometric Ltd., 561 F.3d 273, 278 (4th Cir. 2009) (citations
omitted). The second factor in the specific jurisdiction analysis—that the litigation
results from alleged injuries that “arise out of or relate to” the defendants purposeful
availment into the state in question—is an equally important element in the court’s
analysis of this case.
Plaintiffs’ claims against defendants relate primarily to how plaintiffs are paid for
their work. Plaintiffs claim that Waste Pro3 violated the FLSA and various state statutes
3
While plaintiffs now argue that Waste Pro USA is equally responsible for all of these
claims as its subsidiaries, as it allegedly set the pay rate and made other determinations
regarding pay, the complaint refers primarily to “Waste Pro,” without a specific
designation as to which entity it means. This was apparently done pursuant to plaintiffs’
legal theory that all of the Waste Pro corporations were operating as a joint employer /
22
by improperly calculated their4 regular pay rate. Plaintiffs allege that this resulted in a
further miscalculation of plaintiffs’ overtime pay, meaning that they should have received
overtime compensation at a rate not less than one and one-half times their true regular
rate. Plaintiffs also claim that “Waste Pro violated the day rate plan” by compensating
plaintiffs with a date rate plus other forms of compensation that were not in compliance
with the day rate provision of 29 C.F.R. § 778.112. Plaintiffs also allege that they did not
receive their full day rate if they did not work a full day, in violation of § 778.112.
Additionally, “Waste Pro” allegedly permitted and even encouraged plaintiffs to perform
pre-trip and post-trip work duties without pay, and also deducted thirty-minute meal
periods from plaintiffs’ tally of daily hours worked, despite knowing that plaintiffs
routinely worked throughout their designated meal times. Plaintiffs bring causes of
action for recovery of overtime compensation, 29 U.S.C. § 207, and for violation of the
SCPWA and the NCWHA. The court must now consider whether Waste Pro USA
purposefully availed itself of the privilege of conducting business within South Carolina
and if those contacts are related to the claims in this matter.
In determining purposeful availment, the court relies on the seven factors the
Fourth Circuit set forth in Consulting Eng’rs Corp. First, Waste Pro USA does not
maintain offices or agents in the forum state. Next, Waste Pro USA does not own
single integrated enterprise. The court discusses this theory further in Section III.A.2.
For now, the court views the allegations in the light most favorable to the plaintiff and
treats them as if they were specifically alleged against Waste Pro USA, in addition to the
subsidiaries, in considering whether to exercise specific personal jurisdiction over Waste
Pro USA.
4
Plaintiffs include both named plaintiffs and putative class members in all of their
allegations.
23
property in South Carolina; rather, Waste Pro SC owns and operates all Waste Pro
facilities in this state. ECF No. 37-2, Aff. Of Waste Pro USA Chief Operating Officer ¶¶
5, 7. Third, regarding whether Waste Pro USA reached into South Carolina to solicit or
initiate business, the Waste Pro handbook allegedly says that
[n]o supervisor or member of management, except John Jennings (President
& CEO), has the authority to bind the company to any employment contract
for any specified period of time with any employee, either verbally or in
writing. The only valid contract for employment between the company and
any employee must be in writing and signed By John Jennings (President &
CEO).
ECF No. 141 at 18, citing WPSC00198. As previously mentioned, there is no ECF
citation to this handbook that would enable the court to confirm plaintiffs’ assertions
about the handbook’s contents. Even presuming that that the handbook does say this, it is
not evidence that Waste Pro USA has reached into South Carolina to solicit or initiate
business at a sufficient enough rate to constitute purposeful availment, especially
considering that John Jennings is also an officer of Waste Pro SC. Furthermore, the
various regional vice presidents and division managers of the subsidiaries have testified
that they are the ones who solicit business in their respective states by pursuing and
orchestrating contracts for service with various municipalities. ECF No. 104-3, Decl.
Russell Mackie ¶ 2; ECF No. 104-5, Decl. David Schneider ¶ 5.
Plaintiffs have not put forth evidence that Waste Pro USA deliberately engaged
in significant or long-term business actives in South Carolina or that it signed any
contracts with South Carolina entities in which the parties agree that South Carolina law
would govern disputes. In regards to the sixth factor, whether Waste Pro USA made inperson contact with South Carolina regarding the business relationship, there is some
24
evidence that Waste Pro USA employees and officers routinely communicated with
officers and employees for its subsidiaries about the business operations of the company.
Plaintiffs have also shown that Waste Pro USA executives physically travelled to South
Carolina to assist with Waste Pro USA’s operations. Yet in order for these trips to create
specific personal jurisdiction, they must relate directly to the claims in this case regarding
setting a pay rate and enforcing compensation policies and procedures, but none of the
alleged trips by Waste Pro USA employees to South Carolina related to the claims in this
case. ECF No. 141 at 31. Plaintiffs have also submitted to the court an email chain
between various Waste Pro employees in which Jennings, along with Shannon Early, the
Waste Pro USA HR Director, were involved in the decision to grant bonuses for
employees in the subsidiaries. ECF NO. 141 at 18, citing ECF No. 141-7, Ex. G.
However, the decision of whether or not to grant a bonus to the two employees
considered in this email chain is not related to the claims in this case. Furthermore, the
declarations submitted by defendants show that most employment decisions are made at
the subsidiary level. For example, an offer letter for a Waste Pro South Carolina
employee that plaintiffs rely on to support their jurisdictional arguments actually came
from the office manager for Waste Pro SC, not from a Waste Pro USA employee. ECF
No. 141-16 at 2–3.
Finally, the court considers the nature, quality, and extent of the parties’
communications about the business being transacted and whether the performance of
contractual duties was to occur within the forum. Waste Pro employees contract with
their respective subsidiary corporations, not with Waste Pro USA itself, when they sign
their employment contracts. Furthermore, even though there is evidence of
25
communication between the out of state corporate Waste Pro USA employees and Waste
Pro SC employees, in order for this to confer personal jurisdiction, it would have to
demonstrate that Waste Pro USA was directly involved in the decisions regarding pay
rate and compensation procedures in order to confer specific personal jurisdiction. The
only evidence in plaintiffs’ supplemental briefing which might support such a finding is
an email chain between various Waste Pro USA employees discussing a hand-out they
created to explain how the corporation calculates its overtime rate. ECF No. 141 at 27,
citing ECF No. 141-21. This proposed handout calculates overtime rate as one-half of an
employee’s normal hourly rate. This allegedly improper calculation forms the basis of
some of plaintiffs’ claims—that Waste Pro improperly paid them one-half of their hourly
rate as overtime compensation when they are actually entitled to time and a half (the
value of one hour of work plus half an hour of work). Even though this email chain
demonstrates that it is likely that Waste Pro USA either created or was involved in the
creation of the rate calculation policy that underlies this dispute, this is not enough to
create personal jurisdiction over Waste Pro USA. Plaintiffs have not presented, and the
court has not found, any case law in which a court has exercised specific personal
jurisdiction over a parent corporation merely because of the parent’s creation of a policy
that was then implemented by the subsidiaries that employed the plaintiffs. Such a
formula would render a parent corporation liable to suit in literally any state where the
employees of its subsidiaries live, so long as the parent engaged in any sort of corporatewide policy-making upon which a suit could be brought. Part of the purpose of creating
subsidiaries and holding companies is to mitigate liability, and corporations are allowed
to do this, absent evidence of fraud or ill intent. If a plaintiff seeks to hold a corporation
26
liable for its actions and cannot reach that parent corporation through its subsidiary based
on agency theories, then it should sue that corporation in the corporation’s home state.
Regarding plaintiffs’ claims that go beyond the pay rate calculation, such as the
subsidiaries deducting pay for lunch breaks even though plaintiffs worked through lunch,
the court’s review of the evidence demonstrates that the subsidiaries themselves made
most key decisions regarding compensation, not Waste Pro USA. First, several regional
vice presidents for various Waste Pro subsidiaries declared that Waste Pro USA does not
mandate the day rate that a division may assign a particular employee. ECF No. 104-1 ¶
6. Rather, when a driver is hired by the subsidiary, the rate of pay is determined by
whichever division manager supervises that driver. ECF No. 104-4 ¶ 8, 104-5 ¶ 8.
Furthermore, multiple regional vice presidents declared that each individual Waste Pro
subsidiary determines how to staff their respective locations and makes all decisions
regarding management, accounting, and personnel matters. See All Declarations in ECF
No. 401. The regional vice presidents and division managers, who are employees of the
subsidiaries, not Waste Pro USA, have full authority regarding how to compensate their
employees and whether to grant bonuses. Id. Furthermore, the declarants said that the
payroll for employees is handled by the human resources departments of the various
regions within the subsidiary, and that Waste Pro USA’s only involvement in the payroll
process is ensuring that all of its subsidiaries timely submit payroll records to ADP, their
third-party processor.
Thus, the court finds that it does not have specific personal jurisdiction over
Waste Pro USA and dismisses it as a defendant from this case.
27
4. No General or Specific Personal Jurisdiction over Waste Pro FL
Plaintiffs have not demonstrated that Waste Pro FL should be subject to the
court’s general or specific personal jurisdiction. It is a Florida corporation with its
principal place of business in Florida. As such, it is not subject the court’s general
personal jurisdiction. It is also not subject to specific personal jurisdiction in South
Carolina because there has been no evidence or even credible allegations that Waste Pro
FL has had any relationship with South Carolina relating to plaintiffs’ claims.
Plaintiffs have also attempted to persuade the court that it should exercise
personal jurisdiction over all defendants through a JE / SIE theory, alleging that all
defendants operate as a common business. The court has researched this issue
extensively and has found only one FLSA case in which a court exercised personal
jurisdiction over out of state subsidiaries based on a JE / SIE theory. Gilbert v.
Freshbikes, LLC, 32 F. Supp. 3d 594, 598 (D. Md. 2014). Yet the weight of the authority
on this question has determined that the JE / SIE theory applies only to liability and
cannot be relied upon to create personal jurisdiction. See, e.g., Creech v. P.J. Wichita,
L.L.C., 2017 WL 914810, at *1–8 (D. Kan. Mar. 8, 2017) (finding that a personal
jurisdiction analysis should not involve an examination of the plaintiff’s causes of action
because, while “legislatures may enact different standards for what constitutes an
employer or integrated enterprise for the purpose of liability,” it would result in “in
inconsistent determinations of personal jurisdiction if the Court were to find personal
jurisdiction arising from employer liability theories,” and personal jurisdiction “is a
consistent standard that does not change based on the law a case hinges on”); Mendez v.
Pure Foods Mgmt. Grp., Inc., 2016 WL 183473, at *1–7 (D. Conn. Jan. 14, 2016)
28
(finding that “legislators do not have that same flexibility to fashion a more relaxed
standard of personal jurisdiction” and that none of the JE / SIE theories “—which might
be appropriate for determining employer liability at a later stage of this litigation—are
appropriate for determining in the first instance whether this court can exercise personal
jurisdiction over” out of state defendants); In re Enter. Rent-A-Car Wage & Hour
Employment Practices Litig., 735 F. Supp. 2d 277, 325–28 (W.D. Pa. 2010), aff’d, 683
F.3d 462 (3d Cir. 2012) (“The fact that a defendant would be liable under a statute if
personal jurisdiction over it could be obtained is irrelevant to the question of whether
such jurisdiction can be exercised.”); Rodriguez v. Diego’s Rest., Inc., 619 F. Supp. 2d
1345, 1350 (S.D. Fla. 2009) (applying the Supreme Court’s reasoning from a Title VII
case to the FLSA context in finding that “enterprise coverage is not jurisdictional”). The
court agrees with the reasoning of these cases and finds that it may not exercise personal
jurisdiction over any defendant through JE / SIE theory. Thus, the court dismisses Waste
Pro FL from this action.
B. Motions to Dismiss for Lack of Subject Matter Jurisdiction
Before analyzing the parties’ motions to dismiss for lack for subject matter
jurisdiction, the court must first note the changes in subject matter jurisdiction already
rendered by this order. Because the court dismisses Waste Pro USA and Waste Pro FL as
defendants from this action, leaving only Waste Pro SC and Waste Pro NC, the court
must also dismiss all plaintiffs who were not employed by Waste Pro SC and Waste Pro
NC. The court now considers the remaining arguments made by Waste Pro SC and
Waste Pro NC in their motions to dismiss.
29
These remaining defendants both argue that plaintiffs’ claims should be dismissed
for lack of subject matter jurisdiction. First, defendants argue that plaintiffs lack standing
to bring claims against Waste Pro SC and Waste Pro NC because no plaintiffs have
alleged that either of these entities were their employer, which defendants argue is an
essential element of all FLSA, SCPWA, and NCWHA claims. Defendants are correct
that these statutes require plaintiffs to plead an employer-employee relationship.
Defendants are also correct that the “consent to join wage claim” forms that plaintiffs
submitted with their amended complaint state that the plaintiffs consent to participate in a
collective action lawsuit against Waste Pro USA and do not specify the subsidiaries that
actually employed them. See ECF Nos. 30-3, 30-4, and 30-5. Other than listing Waste
Pro SC and Waste Pro NC as defendants in this action, the complaint itself does not bring
allegations against these subsidiaries specifically; rather, the complaint refers consistently
to “Waste Pro” and then alleges that Waste Pro USA and its various subsidiaries operated
as a joint enterprise under the FLSA. Plaintiffs expound upon this theory in their
responses to the motions for summary judgment, arguing that all defendants are joint
employers of plaintiffs due to the corporation being a single enterprise. An employer
under the FLSA is “any person acting directly or indirectly in the interest of an employer
in relation to an employee.” 29 U.S.C. § 203(d). Under this section, “[s]eparate persons
or entities that share control over an individual worker may be deemed joint employers . .
. .” Roman v. Guapos III, Inc., 970 F. Supp. 2d 407, 413 (D. Md. 2013).
Defendants also argue that the court should dismiss the case because not all
plaintiffs have standing to sue each defendant. The “irreducible constitutional minimum
of standing” requires (1) “an injury in fact—a harm suffered by the plaintiff that is
30
concrete and actual or imminent, not conjectural or hypothetical”; (2) “causation—a
fairly traceable connection between the plaintiff's injury and the complained-of conduct
of the defendant”; and (3) “redressability—a likelihood that the requested relief will
redress the alleged injury.” McBurney v. Cuccinelli, 616 F.3d 393, 402 (4th Cir. 2010).
Defendants argue that the North Carolina plaintiffs cannot bring suit against Waste Pro
SC as they do here, because Waste Pro SC did not cause those plaintiffs’ alleged injuries
and could not redress them, since Waste Pro SC does not employ the North Carolina
plaintiffs. The same reasoning applies to the South Carolina plaintiffs being a part of a
lawsuit against Waste Pro NC, which is not their employer and which cannot provide
redressability for their alleged harms.
When faced with a similar situation, this district has previously found that
“Plaintiffs’ injuries are only traceable to, and redressable by, those who employed
them.” Crumbling v. Miyabi Murrells Inlet, LLC, 192 F. Supp. 3d 640, 644 (D.S.C.
2016) (quoting Roman, 970 F.Supp.2d at 412). “Therefore, the Court must conduct an
employer analysis to determine whether Plaintiffs may trace their injuries to each
Defendant.” Id. Other courts have been more lenient and have allowed suits like this one
to proceed if plaintiffs sufficiently alleged joint employment under the FLSA. If Waste
Pro USA were still a defendant in this action, the court might be able to overlook the lack
of specificity regarding employment by Waste Pro SC and Waste Pro NC in the
complaint, because plaintiffs did allege joint employment / joint enterprise theory in the
complaint. However, that argument hinged on Waste Pro USA being a defendant, and
there is no way for plaintiffs to allege that Waste Pro SC and Waste Pro NC are joint
employers without their parent company linking them together. The Fourth Circuit has
31
set forth the following factors to aid in determining whether two entities are joint
employers:
(1) Whether, formally or as a matter of practice, the putative joint employers
jointly determine, share, or allocate the ability to direct, control, or supervise
the worker, whether by direct or indirect means;
(2) Whether, formally or as a matter of practice, the putative joint employers
jointly determine, share, or allocate the power to—directly or indirectly—
hire or fire the worker or [ ] modify the terms or conditions of the worker’s
employment;
(3) The degree of permanency and duration of the relationship between the
putative joint employers;
(4) Whether through shared management or a direct or indirect ownership
interest, one putative joint employer controls, is controlled by, or is under
common control with the other putative joint employer;
(5) Whether the work is performed on a premises owned or controlled by one
or more of the putative joint employers, independently or in connection with
one another; and
(6) Whether, formally or as a matter of practice, the putative joint employers
jointly determine, share, or allocate responsibility over functions ordinarily
carried out by an employer, such as handling payroll; providing workers’
compensation insurance; paying payroll taxes; or providing the facilities,
equipment, tools, or materials necessary to complete the work.
Id. at 140–43, 2017 WL 360542 at *10–11. Further, because the status of a
particular employment relationship is highly fact-dependent, we
emphasized that the absence of a single factor—or even a majority of
factors—is not determinative of whether joint employment does or does not
exist. Id. at 142, 2017 WL 360542 at *11.
Hall v. DIRECTV, LLC, 846 F.3d 757, 769–70 (4th Cir. 2017), cert. denied, 138 S. Ct.
635 (2018) (emphasis added). The only factor that could possibly support finding that
the relationship between Waste Pro SC and Waste Pro NC gives rise to joint employment
is the fourth—“[w]hether through shared management or a direct or indirect ownership
interest, one putative joint employer controls, is controlled by, or is under common
control with the other putative joint employer.” Id. However, even if the court were to
find that these subsidiaries were under the common control of Waste Pro USA, this one
factor must be balanced against the other Hall factors, which are not present in this case.
32
Thus, the court finds that the remaining defendants are not joint employers and that the
complaint, as it stands, does not sufficiently allege that these particular defendants were
the employers of the remaining plaintiffs.
Considering the fact that plaintiffs alleged joint employer theory in their
complaint and that this theory is now rendered useless by the dismissal of Waste Pro
USA, the court orders plaintiffs to file an amended complaint. This new complaint
should reflect the court’s determination that plaintiffs may not bring a claim in which
both North and South Carolina plaintiffs are suing both Waste Pro NC and Waste Pro SC.
Regardless of whether plaintiffs choose to re-file with North Carolina plaintiffs against
Waste Pro NC or with South Carolina Plaintiffs against Waste Pro SC, this amended
complaint should allege with appropriate specificity the existence of an employment
relationship between the remaining plaintiffs and the remaining defendants.
C. Motion to Dismiss for Failure to State a Claim
Waste Pro SC and Waste Pro NC also both ask the court to dismiss the complaint
for failure to state a claim upon which relief may be granted, pursuant to Federal Rule of
Civil Procedure 12(b)(6). The defendants use almost identical arguments as when they
asked the court to dismiss the complaint for lack of subject matter jurisdiction—that the
complaint does not specify against which defendant it brings the case. This issue is
rendered moot by the court’s directive that plaintiffs file a new complaint. However,
should plaintiffs’ fail to properly re-file an amended complaint pursuant to the court’s
instructions, defendants may reassert their motion to dismiss for failure to state a claim.
33
D. Preemption
Both Waste Pro SC and Waste Pro NC’s motions to dismiss ask the court to
dismiss the NCWHA claim, based on preemption grounds. Plaintiffs’ responses to both
motions to dismiss do not address the preemption argument. Instead, plaintiffs’ response
to Waste Pro SC’s motion to dismiss drops the following footnote:
Defendant also seeks dismissal of Plaintiffs’ North Carolina Wage and Hour
Act state law claim contained within the Second Amended Complaint (see
D.E. 30-2, Count III, pp. 24-25). Plaintiffs do not concede that such a claim
is preempted by the FLSA, but do agree to dismiss this count without
prejudice. Therefore, Defendant’s Motion to Dismiss is moot in this regard.
ECF No. 47 at 2 n.1. Plaintiffs’ response to Waste Pro NC’s motion to dismiss says
nothing about preemption, although its first footnote appears to be an incomplete attempt
to use the same language from its response to Waste Pro SC’s motion and merely says
“Defendant also seeks dismissal of Plaintiffs’ North Carolina Wage and Hour Act state
law [ ]”. ECF No. 46 at 2, n.1. In their reply, defendants do not address the preemption
issue again, but they certainly do not concede to plaintiffs’ proposal to dismiss the
NCWHA count without prejudice. Absent consent from defendants, the court will not
dismiss a cause of action without prejudice merely because plaintiffs want it to. That is a
decision for the court to make after both parties have argued the issue in their motions
and responses. Plaintiff has failed to raise any argument in response to defendants’
motions to dismiss the NCWHA claim on preemption grounds, and as such, the court
grants the motions and dismisses this claim with prejudice.
E. Motion to Severe and Transfer
On December 14, 2018, plaintiffs filed a motion to sever and transfer to Florida
the claims against Waste Pro USA and Waste Pro FL. ECF No. 129. This was filed
34
weeks after defendants filed their supplemental briefing on personal jurisdiction. ECF
No. 124. The court declined to enter an order granting the motion to sever and transfer,
preferring instead to reach a decision on the merits of the motions to dismiss for lack of
personal jurisdiction. Now that the court has found that it lacks personal jurisdiction over
Waste Pro USA and Waste Pro FL, it finds the motion to transfer and sever to be moot.
IV. CONCLUSION
For the reasons set forth above, the court GRANTS Waste Pro USA and Waste
Pro FL’s motions to dismiss and DISMISSES them as defendants from the case. The
court also DISMISSES all plaintiffs who are not employees of Waste Pro SC and Waste
Pro NC. The Court GRANTS Waste Pro NC and Waste Pro SC’s motion to dismiss
plaintiffs’ NCWHA claim. The court finds that the remaining North and South Carolina
plaintiffs do not have standing to sue both Waste Pro NC and Waste Pro SC and orders
plaintiffs to file an amended complaint within 15 days of the date of this order pursuant to
the instructions given in this order. Defendants may re-allege their motions if plaintiffs
do not properly re-file their complaint, as discussed in this order. The court also finds
MOOT plaintiffs’ motion to sever and transfer.
AND IT IS SO ORDERED.
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
July 25, 2019
Charleston, South Carolina
35
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