Fernandez v. Kinray, Inc.

406 F.Supp.3d 256

Freddy FERNANDEZ, Esmeralda Amaya, Rafael Casasola, Arturo Coello, Franky Dorado, Paula Dorado, Ruben Espinoza, Julio Gomez, Giovanny Gonzalez, Neil Guzman, Henry Narvaez, Luis Fernando Navarrete, Maria Romero, Freddy Vasquez, and Luis Velasquez, on behalf of themselves and all others similarly situated, Plaintiffs,

v.KINRAY, INC., and Cardinal Health, Inc., Defendants.

13-CV-04938 (LDH) (SMG)

United States District Court, E.D. New York.

Signed March 28, 2018

Daniel Maimon Kirschenbaum, Douglas Weiner, Josef Nussbaum, Lucas C. Buzzard, Joseph Herzfeld Hester & Kirschenbaum LLP, New York, NY, for Plaintiffs.

Felice B. Ekelman, Laura McCabe Bedson, Lori A. Jablczynski, Jackson Lewis, P.C., Harris Michael Mufson, Joseph Baumgarten, Proskauer Rose LLP, New York, NY, Noel P. Tripp, Jackson Lewis, P.C., Melville, NY, for Defendants.

MEMORANDUM OF DECISION AND ORDER

LaSHANN DeARCY HALL, United States District Judge Plaintiffs,¹ on behalf of themselves and the collective class, bring this action against Defendants Kinray, Inc. and Cardinal Health. Inc. (collectively referred to as "Kinray" or "Defendants"),² asserting claims for unpaid overtime under the Fair Labor Standards Act (the "FLSA" or the "Act") and New York Labor Law ("NYLL"), notice violations under the NYLL, and unlawful deductions and untimely payment of wages under the NYLL. Plaintiffs' claims arise out of Defendants' alleged misclassification of Plaintiffs as independent contractors rather than employees. In addition, Plaintiff Freddy Fernandez brings retaliation claims under the FLSA and NYLL, arising out of Defendants' cancellation of his delivery services contracts. Defendants move pursuant to Federal Rule of Civil Procedure 56 for summary judgment.

BACKGROUND

Kinray is a wholesale pharmaceutical distributor. (Pls.' Reply 56.1, ¶10, ECF No. 338-1.) After Kinray purchases pharmaceuticals from manufacturers, it resells and delivers the products to pharmacy retailers. (Id. ¶12.) Throughout the relevant time period, Kinray delivered its products to its customers using large couriers, such as UPS and FedEx, or using workers engaged under Independent Contractor Agreements ("IC Agreements"). (Id. ¶16.)

Approximately half of the Bellwether Plaintiffs were individuals who or proprietors of corporations that entered into IC Agreements with Kinray to provide pick-up, delivery, and return services for Kinray ("Routeholders"). (Id. ¶¶8, 37, 40.) The remaining Bellwether Plaintiffs, "Helpers," were not parties to the IC Agreements but instead were engaged by Routeholders to perform services under the IC Agreements on the Routeholder's behalf. (Id. ¶8.) The IC Agreements were for terms ranging from two to eleven years. (Defs.' Reply 56.1 ¶¶140-41, ECF No. 354.) The IC Agreements included the following provision:

This Agreement is not intended, and shall not be construed, as creating an employer-employee relationship; and the relationship of Contractor to KINRAY is that of an independent contractor. The mode, manner, method and means used by Contractor to achieve the delivery results as set forth in this Agreement are within the sole selection, direction and control of Contractor. This Agreement shall not preclude Contractor from performing delivery services for others, including but not limited to competitors of KINRAY.

(Ekelman Aff., Ex. AG ¶4, ECF No. 327-34.) Plaintiffs do not dispute the terms of the IC Agreements. (Pls.' Reply 56.1, ¶39.) Instead, Plaintiffs contend that Defendants exerted extra-contractual control over the drivers, thus rendering Routeholders and Helpers subject to the protections of the FLSA. (Pls.' Mot. at 6-22, ECF No. 359.)

Plaintiff Fernandez also brings a retaliation claim, alleging that Defendants cancelled his IC Agreements because he filed the instant action. (Am Compl. ¶¶312-320, ECF No. 191-3; Pls.' Mot. at 30.) It is undisputed that Defendants cancelled a "substantial" number of IC Agreements in September 2013 and September 2015. (Pls.' Reply 56.1 ¶¶17-18.) Plaintiff Fernandez testified that his IC Agreements were cancelled in October 2013. (Ekelman Aff., Ex. K at 21:15-22, ECF No. 327-12.)

STANDARD OF REVIEW

Summary judgment must be granted when there is "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine dispute of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson , 477 U.S. at 248, 106 S.Ct. 2505. The movants bear the initial burden of demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Feingold v. New York , 366 F.3d 138, 148 (2d Cir. 2004). Where the non-movants bear the burden of proof at trial, the movants' initial burden at summary judgment can be met by pointing to a lack of evidence supporting the non-movants' claim. Celotex Corp. , 477 U.S. at 325, 106 S.Ct. 2548.

Once the movants meets their initial burden, the non-movants may defeat summary judgment only by producing evidence of specific facts that raise a genuine issue for trial. See Fed. R. Civ. P. 56(e) ; see also Anderson , 477 U.S. at 250, 106 S.Ct. 2505 ; Davis v. New York , 316 F.3d 93, 100 (2d Cir. 2002). The Court is to believe the evidence of the non-movants and draw all justifiable inferences in their favor, Anderson , 477 U.S. at 255, 106 S.Ct. 2505, but the non-movants must still do more than merely assert conclusions that are unsupported by arguments or facts. Castro v. Cty. of Nassau , 739 F. Supp. 2d 153, 165 (E.D.N.Y. 2010) (citing Bellsouth Telecomms., Inc. v. W.R. Grace & Co. , 77 F.3d 603, 615 (2d Cir. 1996) ). That is, the non-movants cannot survive summary judgment merely by relying on the same conclusory allegations set forth in their complaint. See Murphy v. Lajaunie , No. 13-CV-6503, 2016 WL 1192689, at *2 (S.D.N.Y. Mar. 22, 2016) (citing Kerzer v. Kingly Mfg. , 156 F.3d 396, 400 (2d Cir. 1998) ).

DISCUSSION

I. Classification of Plaintiffs' Employment under the FLSA and NYLL

Defendants maintain that Plaintiffs' FLSA claims must be dismissed a matter of law, because Plaintiffs were not their employees, and, therefore, Defendants are not subject to the requirements of the Act. (See generally Defs.' Mot. at 1-26, ECF No. 357.) In opposition, Plaintiffs contend that the record raises triable issues of fact as to Plaintiffs' employment status precluding summary judgment. (See generally Pls.' Mot. at 1-28.) The Court agrees.

The FLSA is a remedial statute designed to "prevent abuses by unscrupulous employers, and remedy the disparate bargaining power between employers and employees." Cheeks v. Freeport Pancake House, Inc. , 796 F.3d 199, 207 (2d Cir. 2015). To that end, the FLSA establishes minimum wage, overtime pay, recordkeeping, and other employment standards as well as creates a private right of action against employers who violate its terms. See 29 U.S.C. § 216(b). The statute defines an "employer" as "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). Significantly, courts are required to construe the FLSA liberally, including its definition of "employer." See Carter v. Dutchess Cmty. Coll. , 735 F.2d 8, 12 (2d Cir. 1984). Indeed, the Second Circuit has long recognized that FLSA was "written in the broadest possible terms" that "would have the widest possible impact in the national economy." Id. Accordingly, it has consistently declined to impose limitations on the definition of employer that would "run[ ] counter to the breadth of the statute." Id.³

In assessing whether an individual or entity should be deemed an employer under the FLSA, the Second Circuit has adopted what is known as the "economic reality test." Barfield v. N.Y. City Health & Hosps. Corp. , 537 F.3d 132, 141 (2d Cir. 2008) (citing Goldberg v. Whitaker House Coop., Inc. , 366 U.S. 28, 33, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961) ). This test does not adhere to rigid formulations or labels to determine the existence of an employer/employee relationship. Id. at 143. Rather, the inquiry focuses on the relationship between the purported employer and employee, asking how much authority the "employer" exercised over the "employees." Id. This test has been articulated to include the following factors under circumstances such as here: "(1) the degree of control exercised by the employer over the workers, (2) the workers' opportunity for profit or loss and their investment in the business, (3) the degree of skill and independent initiative required to perform the work, (4) the permanence or duration of the working relationship, and (5) the extent to which the work is an integral part of the employer's business."⁴ Saleem v. Corp. Transp. Grp., Ltd. , 854 F.3d 131, 139 n.19 (2d Cir. 2017) (citing U.S. v. Silk , 331 U.S. 704, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947) ). Significantly, although each of these factors may prove helpful in assessing a worker's employment classification, no single factor of the test is dispositive. Instead, any determination regarding an alleged employment relationship must be based on the totality of the circumstances. See Barfield , 537 F.3d at 141 ("[T]he determination of whether an employer-employee relationship exists for purposes of the FLSA should be grounded in economic reality rather than technical concepts, determined by reference not to isolated factors, but rather upon the circumstances of the whole activity.") (internal citations omitted). Defendants maintain that all of the material facts necessary for the Court to properly employ the economic reality test and reach a finding in favor of Defendants are undisputed. The Court disagrees.

In assessing the degree of control in the context of transportation workers similar...