Carusillo v. FanSided, Inc.

BRANDON CARUSILLO and DAVID GATE, on behalf of himself and others similarly situated, Plaintiffs, v. FANSIDED, INC., d/b/a FANSIDED, et al., Defendants.

No. 20-CV-4766 (JPO)

United States District Court, S.D. New York

September 21, 2021

OPINION AND ORDER

J. PAUL OETKEN, UNITED STATES DISTRICT JUDGE

Plaintiffs Brandon Carusillo and David Gate, individually and on behalf of all persons similarly situated, filed a collective action complaint against Defendants FanSided, Inc., d/b/a FanSided (“FanSided”) and Sportority, Inc., d/b/a Minute Media, d/b/a FanSided (“Sportority, ” and collectively “Defendants”), alleging violations of the Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et. seq. (“FLSA”). Carusillo additionally seeks relief in his individual capacity for violations of Massachusetts law.

Plaintiffs have moved to certify a collective pursuant to 29 U.S.C § 216(b). They also request that the Court toll the statute of limitations of all potential opt-in plaintiffs from the date this action was filed - June 22, 2020 - through the conclusion of the action. Defendants have moved to dismiss Plaintiffs' second amended complaint (“SAC”). They also request that the Court permit Defendants to communicate with putative members to roll out an updated Expert Services Agreement that includes an arbitration agreement with no carve-out provision for this litigation.

I. Background

A. Factual Allegations^[1]

FanSided, a media corporation that operates sports and other special interest websites, merged with Minute Media in May 2020. (Dkt. No. 30 ¶ 11.) In approximately August 2017 and January 2018, respectively, Plaintiffs Carusillo and Gate signed “Expert Services Agreements, ” which governed the terms of their employment with Defendants. (Dkt. No. 30 ¶¶ 13, 15.) From approximately January 2018 to June 7, 2018, Carusillo served as a “Site Expert” for one of FanSided's sports websites, and from approximately August 2017 to January 2020, Gate served as a Site Expert for a different FanSided sports website. (Dkt. No. 30 ¶¶ 14, 16.) Each website for which Carusillo and Gate produced content had an Editorial Director whose role was to hire and supervise site experts at FanSided. (Dkt. No. 30 ¶¶ 19-21.) Pursuant to the Expert Services Agreements, Carusillo and Gate were required to create content for the FanSided websites. (Dkt. No. 30 ¶ 17.)

During Carusillo's employment, he watched and analyzed Boston Red Sox games, published at least twenty articles a week, managed unpaid writers, edited new writers' articles, monitored search engine optimization data, and managed the comment sections on FanSided's Red Sox website, known as “BoSox Injection.” (Dkt. No. 30 ¶ 22.) Additionally, Carusillo controlled BoSox Injection's Twitter account. (Dkt. No. 30 ¶ 23.). Carusillo consistently worked about thirty to thirty-five hours per week during the baseball season and slightly less during the offseason. (Dkt. No. 30 ¶ 24.) He was paid about $150-$220 every two weeks, resulting in an hourly wage of $2.14-$4.40. (Dkt. No. 30 ¶ 24.) Gate performed substantially similar work but for FanSided's Liverpool soccer team website, known as “Rush the KOP.” (Dkt. No. 30 ¶¶ 25-26.) Gate consistently worked about thirty hours per week. (Dkt. No. 30 ¶ 27.) He was paid about $300-$400 every two weeks, resulting in an hourly wage of $5.00-$6.66 per hour. (Dkt. No. 30 ¶ 27.)

B. Procedural History

On June 22, 2020, Carusillo filed a complaint alleging violations of the FLSA against FanSided, Inc. (Dkt. No. 1). On June 26, 2020, Carusillo filed an amended complaint in which Carusillo, in his individual capacity, additionally alleged violations of the Massachusetts Fair Minimum Wage Act, M.G.L. c. 151 § 1. (Dkt. No. 9.) On September 4, 2020, Carusillo filed a motion to conditionally certify a collective action. (Dkt. No. 21.) Defendants filed a motion to dismiss the amended complaint (Dkt. No. 24), and Plaintiffs filed a second amended complaint in response, adding Gate as a plaintiff. (Dkt. No. 30.) Plaintiffs also filed a motion seeking to toll the statute of limitations for putative collective members' FLSA claims from the date of the filing of the first complaint, June 22, 2020, until the resolution of this action. (Dkt. No. 32.) On October 30, 2020, Defendants moved to dismiss the SAC and sought approval to communicate with putative collective members. (Dkt. Nos. 35 and 40.)

II. Discussion

A. Motion to Dismiss

The party facing a motion to dismiss under Rule 12(b)(6) must plead “enough facts to state a claim to relief that is plausible on its face.” BellAtl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In resolving a motion to dismiss, the court “must accept as true all well-pled factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor.” Doe v. Indyke, 457 F.Supp.3d 278, 282 (S.D.N.Y. 2020) (citing Steginsky v. Xcelera Inc., 741 F.3d 365, 368 (2d Cir. 2014)).

In their motion to dismiss, Defendants make the following arguments: (1) Plaintiffs' FLSA claims should be dismissed because they are time barred; (2) Plaintiffs' federal claims and Carusillo's state claim should be dismissed because they have not sufficiently alleged an employment relationship with Defendants; and (3) Plaintiffs' federal and state claims should be dismissed because they failed to sufficiently allege that they suffered a minimum wage violation. (Dkt. No. 36 at 6-25.).^[2] Each argument is addressed in turn.

1. Statute of Limitations

Generally, an action under the FLSA has a two-year statute of limitations for the recovery of back pay. See 29 U.S.C. § 255(a). However, “a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued.” Id. Carusillo worked for Defendants from January 2018 to June 7, 2018, and Gate worked for Defendants from August 2017 to January 2020. The complaint was filed on June 22, 2020. If the two-year statute of limitations applies, as Defendants argue, any alleged violation of the FLSA prior to June 22, 2018 would be time barred (see Dkt No. 36 at 6-13), knocking Carusillo out of the action altogether, and limiting Gate's claims to between June 22, 2018 and June 22, 2020. But if the three-year statute of limitations applies, as Plaintiffs argue, only alleged violations prior to June 22, 2017 would be time barred.

Although Plaintiffs point to case law in this Circuit that concluded that simply alleging that a defendant acted willfully is enough to pass muster at the pleading stage (see Dkt. No. 58 at 13-14), the Second Circuit recently weighed in on this issue and held otherwise. In Whiteside v. Hover-Davis, Inc., over the dissent of Judge Chin, the Second Circuit held that “the mere allegation of willfulness is insufficient to allow an FLSA plaintiff to obtain the benefit of the three-year exception at the pleadings stage. Rather, a plaintiff must allege facts that permit a plausible inference that the defendant willfully violated the FLSA for that exception to apply.” 995 F.3d 315, 320 (2d Cir. 2021).

Plaintiffs primarily argue that litigation in the District Court for the District of Columbia challenging practices similar to those at issue here put Defendants on notice that there was a substantial risk that their practices were illegal. (See Dkt. No. 48 at 15-16.) In Bradley v. Vox Media, Inc., a group of individuals who worked at Vox Media as “Site Managers” for various Vox sports websites sued the company for FLSA violations on the grounds that they were improperly classified as independent contractors. See 320 F.Supp.3d 178, 179-81 (D.D.C. 2018). Indeed, the Site Managers at Vox appear to have roles that are very similar to those of the Site Experts at FanSided: they watched sports games, published articles on those games, managed other writers, monitored search engine optimization, and controlled the websites' social media accounts. See id. The Bradley action was filed in September 2017 and Plaintiffs allege that Defendants were aware of the litigation since its inception. (See Dkt. No. 30 at ¶¶ 47, 49.) The Bradley action was also widely reported - in September 2018, the sports website, Deadspin, published an article about Defendants' labor practices for Site Experts, mentioned the Bradley action, and requested a comment from FanSided's CEO, who declined to comment. (See Dkt. No. 30 at ¶¶ 47, 51.)

Plaintiffs have sufficiently alleged willfulness at this early stage of litigation. Based on the SAC, this Court can plausibly infer that Defendants were on notice that very similar conduct was being challenged in the Bradley action and yet failed to take any action to remedy these alleged violations. Accordingly, the three-year statute of limitations applies, and only alleged violations prior to June 22, 2017 are time barred.

2. Failure to Allege an Employment Relationship

“To state a FLSA minimum wage claim, a plaintiff must allege that she was the defendant's employee, that her work involved interstate activity, and that she worked hours for which she did not receive minimum and/or overtime wages.” Tackie v. Keff Enters. LLC, No. 14 Civ. 2074, 2014 WL 4626229, at *2 (S.D.N.Y. Sept. 16, 2014).^[3]

The parties dispute whether Plaintiffs have sufficiently alleged that Defendants were their “employers” under the FLSA and Massachusetts law. Defendants argue that Plaintiffs were properly classified independent contractors rather than employees. To determine whether a plaintiff is an employee under the FLSA, courts consider the “economic reality” of a working relationship: “(1) the degree of control exercised by the employer over the workers (2) the worker's opportunity for profit or loss and their investment in the business, (3) the degree of skill and...