Alley v. Quality Eco Techs., LLC

JACOB ALLEY, et al., Plaintiffs/Counterrespondents, v. QUALITY ECO TECHNOLOGIES, LLC, Defendant/Counterclaimant.

Civil Action No. 3:20cv355

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division

March 29, 2021

MEMORANDUM OPINION

This matter comes before the Court on two motions:

(1) Defendant and Counterclaim-Plaintiffs Quality Eco Technologies, LLC's ("QET") Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6)¹ (the "QET Motion to Dismiss") (ECF No. 8); and,

(2) Plaintiffs and Counterclaim-Defendants Jacob Alley, Paul Atkinson, and Christian Bratton's (collectively, the "Installers") Motion to Dismiss Counterclaims pursuant to Rule 12(b)(6) (the "Motion to Dismiss Counterclaims"), (ECF No. 12).

The Installers responded to the QET Motion to Dismiss, (ECF No. 11), and QET replied, (ECF No. 14). QET responded to the Motion to Dismiss Counterclaims, (ECF No. 15), and the Installers replied, (ECF No. 16). These matters are ripe for disposition.

The Court dispenses with oral argument because the materials before it adequately present the facts and legal contentions, and argument would not aid the decisional process. The Court exercises jurisdiction pursuant to 28 U.S.C. § 1331.² For the reasons that follow the Courtwill grant in part and deny in part the QET Motion to Dismiss and grant the Motion to Dismiss Counterclaims in its entirety.

I. Factual and Procedural Background

Because the Court addresses the QET Motion to Dismiss and the Motion to Dismiss Counterclaims separately, and each Motion requires the Court to accept certain well-pleaded factual allegations as true, the Court recounts the factual and procedural backgrounds for the Motions in separate sections.

A. QET Motion to Dismiss the Installers' FLSA Claims

1. Factual Background³

Plaintiffs, who worked as "Installers" for QET, bring this FLSA collective action against QET on behalf of themselves and others similarly situated.⁴ (Am. Compl. ¶ 2, ECF No. 3.) The Installers allege that QET required them, as a part of their job tasks, to make long drives andperform large volumes of work, resulting in their working overtime hours. (Id. ¶¶ 5-7.) The Installers argue that because QET "misclassifies Installers as independent contractors" and pays them only commission, QET "failed to pay them minimum wages as well as owed overtime." (Id. ¶ 27.)

QET operates as a Virginia business that "provid[es] and install[s] eco-friendly ventilation, air filtration, insulation, and power conservation products to residential and commercial customers." (Id. ¶ 4.) Plaintiffs all worked as "Installers" with QET at overlapping times.⁵ The Installers each "worked out of [QET's] Richmond area operations but serviced customers up and down the Eastern United States." (Id. ¶¶ 5-7.) In their roles, the Installers' job tasks included the "manual installation and delivery of insulation, air filtration, and ventilation products and systems." (Id. ¶ 29.) The Installers allege that QET regularly required them to take long drives "to and from out of town jobs" and perform a "large volume of jobs," which often "required [them] to work in excess of forty (40) hours a week." (Id. ¶¶ 23, 31.)

Despite being classified as "independent contractors," the Installers allege that they actually functioned as employees because they retained little control over their schedules and job tasks at QET. For example, QET assigned them to certain projects, and the Installers "did not have any control over the hours they worked." (Id. ¶ 25.) While performing their job duties, the Installers allegedly wore "QET uniform[s], typically drove QET vehicles, and used QET tools and supplies." (Id. ¶ 26.) QET also provided Installers with "a QET credit card for those instances when supplies or tools had to be purchased." (Id.) Further, QET trained the Installersabout its products and "how to perform said installations." (Id. ¶ 24.) Finally, QET required the Installers "to sign a non-compete agreement prohibiting them from performing work for any QET competitors both during, and for a time period after, their employment with QET." (Id. ¶ 25.)

The Installers allege that because QET classified them as independent contractors, QET paid them on a commission basis and did not guarantee them a weekly payment equivalent to the minimum wage. (Id. ¶¶ 27, 32.)⁶ In general, the Installers assert that QET had both "knowledge" and a "policy and practice of misclassifying Installers and/or Installation Techs as independent contractors and not properly compensating them with minimum and overtime wages due for work performed for [QET's] benefit." (Id. ¶¶ 34, 38.)

Additionally, the Installers allege that after learning of the present lawsuit, QET retaliated against Plaintiffs Atkinson and Bratton by terminating their employment contracts. On May 19, 2020, the Installers initiated the instant action. (Id. ¶ 50.) On May 20, 2020, the next day, QET's owner reached out to Atkinson and Bratton to discuss taking them off furlough status. (Id. ¶ 51.) For instance, at 12:54 p.m., QET owner text messaged Bratton, "Are you ready to start working." (Id.) Atkinson alleges he received a similar message about starting work "in Pennsylvania and Maryland." (Id.) Later, QET's owner contacted both Atkinson and Bratton to let them know he had become aware of the instant action and informed them both they were "no longer welcome at QET." (Id. ¶ 52.) Specifically, QET's owner texted Atkinson, "our atty just reached out to us. I guess you're looking for a lawsuit and working together?" (Id.) As to Bratton, QET's owner texted him:

[Y]ou ended the relationship when you wanted to sue us. . . . The moment you decided to sue us, you're claiming that you're being mistreated and underpaid. So yes, you are ending your relationship with us. . . . Yes, I did remove you after your lawsuit. What's there to pretend about?

(Id. ¶ 54.)

The Installers assert three FLSA violations against QET:

(1) Count I: Nonpayment of minimum wage (the "Minimum Wage Claim");

(2) Count II: Nonpayment of overtime wages (the "Overtime Wage Claim"); and,

(3) Count III: Retaliation for filing a lawful claim under the FLSA (the "Retaliation Claim").

(See generally id.) The Installers seek "statutory damages equal to the mandated overtime premium pay within three (3) years preceding the filing of th[e] Complaint." (Id. ¶ 46.) The Installers also request that the Court "[d]esignate this action as a collective action on behalf of the FLSA collective class." (Id. 11.)

2. Procedural Background as to the Motion to Dismiss the Amended Complaint

On May 19, 2020, the Installers filed their collective action in this Court. (ECF No. 1.) On June 23, 2020, within twenty-one days of receiving the summons, the Installers amended their Complaint as of right. (ECF No. 3.) On July 20, 2020, QET filed the Motion to Dismiss. (ECF No. 8.) On August 3, 2020, the Installers timely responded to the QET Motion to Dismiss, (ECF No. 11), and QET replied, (ECF No. 14). For the reasons that follow, the Court will grant in part and deny in part the QET Motion to Dismiss.

B. The Installers' Motion to Dismiss QET's Counterclaims

1. Factual Background⁷

QET brings six state law counterclaims (the "Counterclaims") against the Installers to recover damages "suffered by QET as a direct result of wrongdoing and misconduct engaged in by [the Installers] while acting . . . on behalf of QET." (Countercls. ¶ 1, ECF No. 10.) QET asserts that this Court has supplemental jurisdiction over these state law claims pursuant to 28 U.S.C. § 1367(a).⁸ (Id. ¶ 4.)

Between 2018 and 2020, QET entered into contracts with homeowners in various states. (Id. ¶ 6.) QET hired the Installers "to install the QET products" as directed by these contracts. (Id.) QET alleges that the Installers therefore owed it "a duty to install QET's products in customer's homes in a workmanlike manner and in accordance with customary standards in the industry" and to "repair any and all defects that arose as a result of substandard work." (Id. ¶ 7.) QET alleges that the Installers' performance and conduct related to these contracts was deficient in four ways.

First, QET alleges that the Installers breached these duties because their work "on many jobs was inferior, deficient and in breach of customary standards in the industry." (Id. ¶ 8.) QET alleges it received "numerous complaints about the substandard work," including issues with:"improper installation of systems and products, leaking systems, gaps in multi-layer insulation ('MLI'), errors programming expanded polystyrene ('EPS') foam, spillage of mold treatment on a customer's couch and floor, and many other damages to customer's homes and property." (Id. ¶ 9.) For example, QET cites one instance in which "Atkinson's work was so deficient that part of the customer's ceiling fell in, necessitating a $4,000 refund. Atkinson refused to return customer's calls and routinely failed to show-up when he had promised to repair his defective work." (Id.) As a result, QET alleges Atkinson caused it "to incur legal fees and costs." (Id.) Additionally, QET states that the Installers' alleged breaches required it to "engage[] technicians to repair and replace the defective work at great cost and expense." (Id. ¶ 10.)

Second, QET alleges that Alley defamed QET to two QET employees at a local gas station. (Id. ¶¶ 11-13.) On July 7, 2020, two QET employees were stopped to fuel up one of QET's company vehicles "when Alley drove by and spotted the QET van." (Id. ¶ 11.) Alley allegedly stopped at the gas station to talk with the QET employees. (Id.) During their conversation, Alley told the QET employees that QET "stole" from him and that QET was "scamming people." (Id. ¶ 12.) Alley further stated that QET had changed its name three or four times because of "shady business practices and because of QET's terrible online reputation." (Id. (quotations omitted).) Lastly, Alley told the QET employees that QET...