Maldonado v. Cultural Care, Inc.

FERNANDA MALDONADO, HEATHER LIEBER,and THAIS BLANDO, on behalf of themselves and all others similarly situated v. CULTURAL CARE, INC., GORAN RANNEFORS, NATALIE JORDON, and JENS APPELKVIST

CIVIL ACTION NO. 20-10326-RGS

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

July 29, 2020

MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO DISMISS

STEARNS, D.J.

Plaintiffs, who worked as local childcare consultants (the LCCs) for Cultural Care, Inc., filed this putative class action against the company and several of its officers, Goran Rannefors, the president, Natalie Jordon, a senior vice president, and Jens Appelkvist, who serves as treasurer. Cultural Care places foreign au pairs with host families in the United States. The LCCs allege violations of the federal Fair Labor Standards Act (FLSA) (Count I), the Massachusetts Wage Law (Count II), New York wage laws (Count III), and the wage laws of California (Count IV). Cultural Care moves to dismiss pursuant to Rule (12)(b)(1) for lack of subject matter jurisdiction and Rule (12)(b)(6) for failure to state a claim. For the reasons that follow, Cultural Care's motion to dismiss will be denied.

BACKGROUND

The facts, viewed in the light most favorable to the LCCs as the nonmoving party, are as follows. Cultural Care is one of fifteen approved sponsor organizations designated by the State Department to place foreign au pairs with host families in the United States. Cultural Care recruits, trains, places, and supervises the au pairs in exchange for fees from the host families. The State Department requires Cultural Care and similar agencies to use "local organizational representatives" to carry out many of its requirements.¹ The LCCs worked for Cultural Care in that capacity, under the title "local childcare consultants." The LCCS are the primary contacts with the au pairs and the host families on behalf of Cultural Care. Their duties include providing year-round support to au pairs and host families, hosting meetings, interviewing host families, welcoming au pairs to the community, and promoting the program.

Cultural Care provides job training for the LCCs and requires them to report to and take direction from their assigned Cultural Care supervisors.² The LCCs lack autonomy in making decisions and must refer certain matters to these supervisors. Cultural Care also requires LCCs to report notes of certain contacts in an online "Salesforce" database. The LCCs are paid a flat sum monthly according to the number of families they serve, regardless of the hours they work. In doing so, the LCCs allege that Cultural Care misclassifies them as independent contractors rather than employees. The gist of the Complaint is that the flat payment falls well short of federal and state minimum wage requirements under the FLSA and the wage laws of Massachusetts, New York, and California.

STANDARD OF REVIEW

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Two basic principles guide thecourt's analysis. "First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Id. at 678. "Second, only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 679. A claim is facially plausible if its factual content "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678. "If the factual allegations in the complaint are too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture, the complaint is open to dismissal." S.E.C. v. Tambone, 597 F.3d 436, 442 (1st Cir. 2010). However, a complaint need not plead facts sufficient to establish a prima facie case to survive a motion to dismiss. Cerroro-Ojeda v. Autoporidad de Engergia Electrica, 755 F.3d 711, 718 (1st Cir. 2014). While the elements of a prima facie case are relevant to a plausibility assessment, "there is no need to set forth a detailed evidentiary proffer in a complaint." Id., quoting Rodríguez-Reyes v. Molina-Rodríguez, 711 F.3d 49, 54 (1st Cir. 2013).

Ordinarily, a court looks only at the complaint when considering a motion to dismiss. If it considers additional documents not expressly incorporated in the complaint, the motion will be converted into a motion for summary judgment. See Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993). However, there is an exception "for documents the authenticity of which arenot disputed by the parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint." Watterson, 987 F.2d at 3; see also Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 17 (1st Cir. 1998). The rule is that a court will consider a document "integral to or explicitly relied upon in the complaint, even though not attached to the complaint" without converting the motion into one for summary judgment. Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 321 (1st Cir. 2008), quoting Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1220 (1st Cir. 1996); Watterson, 987 F.2d at 3-4.

Here, Cultural Care attached the LCCs' contracts, compensation records, and tax forms to the Declaration of Brian F. Shaughnessy (Dkt # 19), arguing that the LCC plaintiffs had incorporated the documents by reference in their Amended Complaint. The documents, however, were not "explicitly relied upon in the complaint," nor were the LCCs' factual allegations "expressly linked to" and dependent upon the specific agreements, tax forms, or pay statements. See Trans-Spec Truck Serv., 524 F.3d at 321. The issues in this case depend on the nature of the LCCs' working relationship with Cultural Care and the amounts they were paid during each statutorily defined pay period, on neither of which the proffered pay statements or tax forms shed any light. The court will proceed with its analysis looking only to theComplaint, the motion to dismiss, and the reply briefs, and not to the extrinsic evidence attached to Cultural Care's affidavit.

DISCUSSION

Cultural Care contends that this court lacks subject matter jurisdiction because the LCCs received aggregate compensation above the federal minimum wage, thereby defeating their FLSA claims, and eliminating the federal question basis for jurisdiction. Defs.' Mem. (Dkt # 18) at 2. Where a Rule 12(b)(1) motion is based on a plaintiff's alleged failure to state a federal claim, a court will assume jurisdiction to determine its own jurisdiction. Ne. Erectors Ass'n of BTEA v. Sec'y of Labor, Occupational Safety & Health Admin., 62 F.3d 37, 39 n.1 (1st Cir. 1995).

FLSA Claims

To state a valid FLSA claim, plaintiffs must "allege (1) that they were employed by [defendants]; (2) that their work involved interstate activity; and (3) that they performed work for which they were under-compensated." Pruell v. Caritas Christi, 678 F.3d 10, 12 (1st Cir. 2012); see also Manning v. Bos. Med. Ctr. Corp., 725 F.3d 34, 43 (1st Cir. 2013). The first and third elements are in dispute here. Cultural Care argues that the LCCs fail to make a plausible showing that they were employees of Cultural Care or that they were paid less than federal minimum wage for their services.

Employer-Employee Relationship

The FLSA "'contains its own definitions, comprehensive enough to require its application to many persons and working relationships which, prior to this Act, were not deemed to fall within the employer-employee category.'" Donovan v. Agnew, 712 F.2d 1509, 1513 (1st Cir. 1983), quoting Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (1947). In defining the scope of the FLSA, courts have consistently recognized that "'a broader or more comprehensive coverage of employees within the stated categories would be difficult to frame.'" Baystate Alt. Staffing, Inc. v. Herman, 163 F.3d 668, 675 (1st Cir. 1998), quoting United States v. Rosenwasser, 323 U.S. 360, 362 (1945).³

Rather than looking to "technical" common law concepts to determine whether an employment relationship exists under the FLSA, courts look holistically at the "economic reality." Rutherford Food Corp., 331 U.S. at 729; see also Baystate Alt. Staffing, 163 F.3d at 675; Agnew, 712 F.2d at 1513, citing Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33 (1961). Inparticular, the First Circuit uses a four-factor test in determining the existence of an employer-employee relationship: "whether the alleged employer (1) had the power to hire and fire the employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records." Baystate Alt. Staffing, 163 F.3d at 675, citing Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir. 1983).⁴

"[N]either the subjective intent of the worker in forming the employment relationship nor the label affixed by the putative employer controls the question whether a worker is an employee under the FLSA."Montoya v. S.C.C.P. Painting Contractors, Inc., 589 F. Supp. 2d 569, 577 (D. Md. 2008). "Where the work done, in its essence, follows the usual path of an employee, putting on an 'independent contractor' label does not take the worker from the protection of the Act." Rutherford Food Corp., 331 U.S. at 729. In the Supreme Court's view, "the purposes of the Act require that it be applied even to those who would decline its protections . . . [otherwise] employers might be able to use superior bargaining power to coerce employees . . . to waive their protections under the Act." Tony & Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 302 (1985).

Applying the four factors to the allegations set out in the Complaint, the LCCs have...