Morangelli v. Chemed Corp.

922 F.Supp.2d 278

Anthony MORANGELLI et al., Plaintiffs,

v.CHEMED CORPORATION et al., Defendants.

No. 10 Civ. 0876(BMC).

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

Feb. 4, 2013.

Brent E. Pelton, Pelton & Associates, PC, New York, NY, Michael J.D. Sweeney, Getman & Sweeney, PLLC, New Paltz, NY, for Plaintiffs.

Jared Ian Heller, Kerri Ann Law, Robert Neil Holtzman, Kramer Levin Naftalis & Frankel, LLP, New York, NY, for Defendants.

MEMORANDUM DECISION AND ORDER

COGAN, District Judge.

This litigation is a collective action under the Fair Labor Standards Act (“FLSA”), as well as a certified wage and hour class action under the laws of 14 states. Currently before the Court are three motions: (1) plaintiffs' motion for summary judgment, (2) defendants' motion for summary judgment and/or decertification of the class and collective actions, and (3) plaintiffs' motion to amend the definition of the certified classes.

For the reasons set forth below: (1) plaintiffs' motion for summary judgment is denied, (2) defendants' motion for summary judgment and/or decertification of the class and collective actions is granted in part and denied in part, and (3) plaintiffs' motion to amend the definition of the certified classes is denied.

BACKGROUND

Defendant Roto–Rooter Services Co. (“RRSC”) operates Roto–Rooter, a business which provides plumbing repair and maintenance services to residential and commercial customers. Defendant Chemed Corp. (“Chemed”) is the indirect parent corporation of RRSC.¹

Roto–Rooter has 50 branches, approximately 110 company-owned service locations, and employs over 1,600 technicians nationwide. Plaintiffs are employed as technicians for Roto–Rooter. They provided drain cleaning and plumbing services for Roto–Rooter's customers and are compensated on a commission basis. The commissions that technicians received were based on the amounts they collected or billed, as well as the type of work they performed, less certain costs, such as outside labor and insurance surcharges.

Plaintiffs allege that a number of Roto–Rooter policies violated the FLSA and the wage and hour laws of the states in which they worked. They assert three categories of claims. First, plaintiffs claim that Roto–Rooter required them to bear business expenses that had the effect of bringing their wages below the applicable minimum wage. This category of claims is labeled as the “Business Expense Claims.” Second, plaintiffs allege that Roto–Rooter failed to compensate them for all hours they worked, including time shaved from their actual working hours and time spent at “turn-in.” “Turn-in” is a weekly process during which technicians review their time records for accuracy and submit records of their expenses, receipts, and money orders for that week. This category of claims is labeled as the “Uncompensated Hours Claims.” Third, plaintiffs allege that Roto–Rooter violated state law by taking deductions from plaintiffs' wages for call-back work for warranty service. This category of claims is labeled as the “Illegal Deductions Claims.”

In June 2010, the Court certified a FLSA collective action on the Business Expense and Uncompensated Hours Claims.² Subsequently, in a Memorandum Decision and Order dated June 16, 2011, 275 F.R.D. 99 (E.D.N.Y.2011) (the “Class Certification Order”), the Court certified 14 state law class actions for liability purposes only based on the three categories of claims.³ Since then, the Court has amendedor modified the definitions of several classes.

At the time the instant motions were filed, 432 plaintiffs, representing approximately 48 branches in 25 states, had opted-in to assert FLSA claims. Notice of the certified class actions was sent to approximately 1,971 current and former Roto–Rooter technicians. At the time the instant motions were filed, 3 technicians had opted not to participate in this litigation. Further, the parties designated 39 technicians, including all of the named plaintiffs and several opt-in plaintiffs, as “Discovery Plaintiffs” for purposes of representative discovery.

Additional facts relevant to the instant motions will be set forth in greater detail below, as they relate to each of the motions and arguments at issue.

DISCUSSION

Plaintiffs have moved for summary judgment on four grounds, namely: (1) that defendants' policy of shifting expenses to plaintiffs violates the FLSA and state minimum wage laws when it has the effect of bringing earnings below the applicable minimum wage; (2) that defendants violated their record-keeping duties under the FLSA; (3) that defendants' taking of wage deductions for warranty call-back work violates state laws regulating wage deductions; and (4) that plaintiffs are entitled to liquidated damages under the FLSA for defendants' alleged minimum wage violations. Separately, defendants have moved for decertification or dismissal of the Business Expense, Uncompensated Hours, and Illegal Deductions Claims. Finally, defendants move for summary judgment on all claims against Chemed, arguing that it cannot be liable because it was not plaintiffs' employer.

I. The Summary Judgment Standard

A court may grant summary judgment if the moving party shows that “there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” SeeFed.R.Civ.P. 56(a). A dispute is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). “In deciding whether there is a genuine issue of material fact as to an element essential to a party's case, the court must examine the evidence in the light most favorable to the party opposing the motion, and resolve ambiguities and draw reasonable inferences against the moving party.” Abramson v. Pataki, 278 F.3d 93, 101 (2d Cir.2002) (internal quotation marks omitted).

On the other hand, in order “[t]o survive summary judgment ... the non-moving party must come forward with ‘specific facts showing that there is a genuine issue for trial.’ ” Reiseck v. Universal Commc'ns of Miami, No. 06 Civ. 777, 2012 WL 3642375, at *2 (S.D.N.Y. Aug. 23, 2012) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n. 11, 106 S.Ct. 1348, 1355 n. 11, 89 L.Ed.2d 538 (1986)). However, “[c]onclusory allegations, conjecture, and speculation ... are insufficient to create a genuine issue of fact[,]” Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir.1998), and the “mere existence of a scintilla of evidence” is not sufficient to defeat summary judgment. Anderson, 477 U.S. at 252, 106 S.Ct. at 2512.

II. Chemed's Liability

In their summary judgment motion, defendants argue that the claims against Chemed should be dismissed because there is no evidence that Chemed acted as plaintiffs' employer under the FLSA and the applicable state labor laws.

Only an “employer” may be liable under the FLSA, Herman v. RSR Sec. Servs., Ltd., 172 F.3d 132, 139 (2d Cir.1999), which defines “employer” to include “any person acting directly or indirectly in the interest of an employer in relation to an employee[.]” 29 U.S.C. § 203(d). The Supreme Court has noted the “expansiveness” of the FLSA's definition of “employer.” Falk v. Brennan, 414 U.S. 190, 195, 94 S.Ct. 427, 431, 38 L.Ed.2d 406 (1973). See also Carter v. Dutchess Cmty. Coll., 735 F.2d 8, 12 (2d Cir.1984) (observing that the FLSA is a “remedial” statute, “written in the broadest possible terms so that” its provisions “would have the widest possible impact in the national economy.”). The relevant states use definitions of “employer” that are similar to the FLSA definition.⁴

In determining whether an entity can be considered an “employer,” “the overarching concern is whether the alleged employer possessed the power to control the workers in question, with an eye to the ‘economic reality’ presented by the facts of each case.” Herman, 172 F.3d at 139 (internal citations omitted). Courts applying the “economic reality” test consider “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.” Reiseck, 2012 WL 3642375, at *3 (quoting Carter, 735 F.2d at 12). These factors are not exhaustive and no single factor is determinative. Rather, the test “encompasses the totality of the circumstances.” Herman, 172 F.3d at 139. Further, “[o]fficers and owners that do not directly supervise workers may nonetheless be deemed employers under the FLSA where ‘the individual has overall operational control of the corporation, possesses an ownership interest in it, controls significant functions of the business, or determines the employees' salaries and makes hiring decisions.” Reiseck, 2012 WL 3642375, at *3 (quoting Ansoumana v. Gristede's Operating Corp., 255 F.Supp.2d 184, 192 (S.D.N.Y.2003)).

Defendants do not contest that RRSC was plaintiffs' employer. Indeed, defendants point to a number of RRSC's employment policies in their motion. Instead, defendants argue that Chemed cannot be considered an “employer” for liability purposes because it is merely RRSC's indirect parent company and the record demonstrates that Chemed was not involved in RRSC's day-to-day business operations, particularly with regard to compensation and time-keeping.

Plaintiffs, on the other hand, claim that Chemed and RRSC “are two nominally separate entities that are actually part of a single integrated enterprise.” They rely on the “single employer” or “integrated employer” doctrine, which provides that “[t]o prevail in an employment action against a defendant who is not the plaintiff's direct employer, the plaintiff must establish that the defendant is part of an ‘integrated enterprise’ with the employer, thus making one liable for the illegal acts of the other.”...