McCrea v. Blue Star Motel

ROD MCCREA, Plaintiff, v. BLUE STAR MOTEL, et al., Defendants.

No. 1:21-cv-270

United States District Court, W.D. Michigan, Southern Division

April 25, 2022

Hon Paul L. Maloney, Judge.

REPORT AND RECOMMENDATION

PHILLIP J. GREEN, United States Magistrate Judge.

This matter is before the Court on Defendant's Motion to Dismiss (ECF No. 36) and Plaintiff's Motion for Rule 11 Sanctions (ECF No. 38). Pursuant to 28 U.S.C. § 636(b)(1)(B), the undersigned recommends that Defendant's motion be granted in part and denied in part, and that Plaintiff's motion be denied.

BACKGROUND

Plaintiff initiated this action on March 25, 2021, asserting claims for unpaid wages and benefits under the Fair Labor Standards Act (FLSA) and the Michigan Wages and Fringe Benefits Act. Plaintiff also asserted a state law breach of contact claim. In their answer to Plaintiff's complaint, Defendants asserted a counterclaim, alleging that Plaintiff unlawfully converted Defendants' property. (ECF No. 13). Plaintiff responded by amending his complaint to allege that Defendants' conversion claim was asserted for unlawful retaliatory reasons. The Court subsequently dismissed Defendants' counterclaim. (ECF No. 42, 46).

At this juncture, Plaintiff is pursuing the following claims: (1) unpaid wages and benefits under the FLSA; (2) unpaid wages and benefits under the Michigan Wages and Fringe Benefits Act; (3) retaliation under FLSA; and (4) breach of contract. These claims are all asserted against the remaining defendants: (1) Blue Star Lodging, Inc.; (2) Robert Sievers and (3) Bradley Tyson. Defendant Blue Star Lodging now moves to dismiss Plaintiff's amended complaint. Plaintiff opposes the motion. Plaintiff also moves the Court to impose sanctions on Defendant on the ground that its motion to dismiss is “futile” and asserted with “vexatious intent.” The Court finds that oral argument is unnecessary to resolve these motions. See W.D. Mich. LCivR 7.2(d).

ANALYSIS

I. Defendant's Motion to Dismiss

A. Plaintiff's State Law Claims and FLSA Retaliation Claim

As previously noted, Plaintiff is asserting four claims against all three remaining defendants. Defendant Blue Star Lodging moves to dismiss Plaintiff's amended complaint in its entirety. But the only argument advanced by Defendant is addressed to Plaintiff's FLSA unpaid wages and benefits claim. Defendant has made no argument that Plaintiff's state law claims are subject to dismissal. Accordingly, as to Plaintiff's state law claims, the undersigned recommends that Defendant's motion to dismiss be denied.

The Court reaches the same conclusion regarding Plaintiff's FLSA retaliation claim. The Court can, perhaps, speculate that the analysis regarding Plaintiff's FLSA wages and benefits claim applies with equal force to Plaintiff's retaliation claim. It is not the Court's role, however, to dismiss claims based on speculation or arguments that have not been properly presented. Thus, as to Plaintiff's FLSA retaliation claim, the undersigned recommends that Defendant's motion to dismiss be denied.

B. Jurisdiction

Defendant first argues that dismissal of Plaintiff's FLSA wages and benefits claim is appropriate on jurisdictional grounds. As detailed below, in the context of FLSA wages and benefits claims, the statute articulates two distinct grounds for FLSA coverage: (1) enterprise liability, and (2) individual liability. See, e.g., Burman v. Everkept, Inc., 2017 WL 1150664 at *6 (W.D. Mich., Mar. 27, 2017) (collecting cases). These requirements are not jurisdictional, however, but are instead elements of Plaintiff's underlying claim. See, e.g., Gulden v. Menages, Inc., 2014 WL 4232791 at *2 (M.D. Tenn., Aug. 25, 2014) (collecting cases). Accordingly, to the extent Defendant seeks dismissal of Plaintiff's FLSA wages and benefits claim on jurisdictional grounds, the undersigned recommends that Defendant's motion be denied.

C. Failure to State a Claim

Defendant also argues that Plaintiff's FLSA wages and benefits claim must be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. For the reasons articulated below, the Court agrees.

A claim must be dismissed for failure to state a claim on which relief may be granted unless the “[f]actual allegations [are] enough to raise a right for relief above the speculative level on the assumption that all of the complaint's allegations are true.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007). The burden to obtain relief under Rule 12(b)(6), however, rests with Defendant and the Court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” DirecTV, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007).

Nevertheless, as the Supreme Court has held, to avoid dismissal, 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, 677-78 (2009). This plausibility standard “is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” If the complaint simply pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.'” Id. As the Court further observed:

Two working principles underlie our decision in Twombly. First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. . .Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. . .Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not “show[n]” - “that the pleader is entitled to relief.”

Id. at 678-79 (internal citations omitted).

1. FLSA Requirements

The FLSA provides certain protections to persons “engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce.” Specifically, such persons must be (a) paid a minimum wage and (b) paid “at a rate not less than one and one-half times the regular rate” when working longer than 40 hours in a single work week. See 29 U.S.C. §§ 206(a), 207(a)(1).

These protections do not apply in every employment situation, however. Instead, these protections apply in two circumstances. First, where the person is “engaged in commerce or in the production of goods for commerce.” This is generally referred to as “individual coverage.” See, e.g., Steimel v. Conway Prowash, LLC, 2016 WL 7616509 at *2 (W.D. Mich., May 31, 2016). Second, where the person “is employed in an enterprise engaged in commerce or in the production of goods for commerce.” This is generally referred to as “enterprise coverage.” See, e.g., Burman, 2017 WL 1150664 at *6-7.

Plaintiff need only satisfy one of these requirements to pursue his FLSA wages and benefits claim. As discussed below, however, the allegations in Plaintiff's First Amended Complaint, (ECF No. 23), are insufficient to satisfy either requirement.

2. Individual Coverage

In enacting the FLSA, “Congress intended to regulate only activities that actually constitute interstate commerce; it did not intend to regulate activities that merely affect that commerce.” Davis v. Patel, 2016 WL 4160967 at *7 (M.D. Tenn., Aug. 5, 2016) (citing McLeod v. Threlkeld, 319 U.S. 491, 497 (1943)). When an employee seeks the protections of “individual coverage, ” the focus is on his “employment activities and not the activities of the employer.” Steimel, 2016 WL 7616509 at *2. The employee must establish that he was “directly participating in the actual movement of persons or things in interstate commerce.” Ibid; see also, Spears v. Bay Inn & Suites Foley, LLC, 2021 WL 24455889 at *4 (S.D. Ala., June 15, 2021) (“individual coverage deals with the relationship of the employee to interstate commerce, not the employer's relationship to interstate commerce”).

A review of the allegations in Plaintiff's amended complaint reveals that, even if accepted as true, they are insufficient to satisfy this standard. Plaintiff alleges that his “duties and responsibilities included working at the front desk, answering phones, taking reservations, making sure rooms were cleaned and soiled linens were washed and replaced through other staff members or himself, maintenance of equipment on property, customer relations, as well as similar tasks. He was on call for customer complaints and alternated on call with the [General Manager].” (ECF No. 23, PageID.128).

Plaintiff further alleges that, “[d]uring the off-season, [he] kept an eye on the property, made sure the buildings were maintained, rooms were locked and secure, insured that no damage was incurred, and took reservations.”^[1] (Id.). The Court recognizes that Plaintiff's performance of these activities could possibly have constituted interstate commerce and, thus provide Plaintiff with individual coverage under the FLSA. The problem for Plaintiff,...