Razak v. Uber Techs., Inc., CIVIL ACTION NO. 16-573

ALI RAZAK, KENAN SABANI, KHALDOUN CHERDOUD v. UBER TECHNOLOGIES, INC., GEGAN, LLC

CIVIL ACTION NO. 16-573

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

October 7, 2016

Baylson, J.

MEMORANDUM RE: DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS

I. Introduction

Plaintiffs Ali Razak ("Razak"), Kenan Sabani ("Sabani"), and Khaldoun Cherdoud ("Cherdoud" and, together with Razak and Sabani, "Plaintiffs") bring putative class, individual and representative claims for violations of federal and Pennsylvania wage and labor laws by defendants Gegen, LLC ("Gegen") and its sole member Uber Technologies, Inc. ("Uber" and, together with Gegen, "Defendants").

Plaintiffs' Complaint ("Compl.") contains six Causes of Action ("Counts")¹:

1) Failure to pay the federal minimum wage, in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq.;

2) Failure to pay an overtime premium for every hour worked in excess of forty (40) hours in a workweek, in violation of the FLSA;

3) Failure to pay "free and clear" wages, in violation of the FLSA;

6) Failure to pay minimum and overtime wages, in violation of the Pennsylvania Minimum Wage Act ("PMWA"), 42 Pa. Cons. Stat. § 333.101 et seq.;

7) Failure to designate regular paydays, in violation of the Pennsylvania Wage Payment and Collection Law ("WPCL"), 43 Pa. Cons. Stat. § 260.1 et seq.; and

8) Breach of fiduciary duty for "purposefully creating, marketing and managing UberX."

(Compl. ¶¶ 1, 126, 135, 140, 146, 152, 166). For purposes of all Counts, Plaintiffs allege that Defendants misclassified Plaintiffs as "independent contractors" when they are actually "employees." (Id. ¶¶ 3-4).

On August 19, 2016, Defendants moved for judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c). (See Defendants' Motion for Judgment on the Pleadings ("Defs.' Mot.), ECF 38). On September 2, 2016, Plaintiffs filed an opposition to Defendants' Motion, (see Plaintiffs' Opposition to Defendants' Motion for Judgment on the Pleadings ("Pls.' Opp."), ECF 41), to which Defendants filed a reply on September 16, 2016. (See Defendants' Reply in Support of Motion for Judgment on the Pleading ("Defs.' Rep. Mem."), ECF 44).

For the following reasons, Defendants' Motion will be GRANTED without prejudice with respect to Count Two; GRANTED with prejudice with respect to Count Eight; GRANTED in part and DENIED in part without prejudice with respect to Count Six; and DENIED with respect to Count One, Count Three and Count Seven.

II. Factual Background

Plaintiffs are Pennsylvania drivers participating in the Uber ride-sharing service who bring this action on behalf of a putative class of "[a]ll persons who provided limousine services, now known as UberBLACK, through Defendants' App in Philadelphia, Pennsylvania." (Compl. ¶ 108). Uber furnishes a mobile phone application (the "Uber App") "providing on-demand car services to the general public." (Id. ¶ 24). Uber App users (the "Rider") can request a ride on their mobile phone. (Id. ¶ 30). When a request is received on the Uber App, the request is submitted to one of Uber's subsidiaries, referred to as "Transportation Companies," which then forwards the request to a driver (the "Driver") logged into the Uber App. (Id. ¶¶ 31, 33). Defendant Gegen is Uber's "Transportation Company" in Philadelphia. (Id. ¶ 32). When the trip is completed, Uber automatically charges the Rider's credit or debit card, whichmust first be supplied in order to use the Uber App. (Id. ¶ 36). As such, no money changes hands directly between Rider and Driver. (Id. ¶ 36).

Plaintiffs are certified limousine drivers who provide services as Drivers through the Uber App's UberBLACK platform. (Id. ¶¶ 2, 65). Plaintiffs Sabani, Cherdoud and Razak have each completed a required sign-up process to use the UberBLACK platform to book Riders, which involved "enter[ing] into an agreement with Uber setting forth the terms for using Uber's Technology," known as the Software and Online Service Agreement (the "Service Agreement"). (Defendants' Motion to Dismiss, Ex. 1 (the "Colman Decl.") ¶¶ 7, 11-13, ECF 15-1).

III. Procedural History & Jurisdiction

Plaintiffs commenced this action on January 6, 2016, by filing a complaint in the Court of Common Pleas of Philadelphia County. (ECF 1, Ex. A). On February 4, 2016, Defendants removed the action to this court under 28 U.S.C. §§ 1331, 1332(a)(1), 1367(a), 1441, and 1446, citing federal question and diversity jurisdiction. (Id.)

On March 22, 2016, Defendants previously moved to dismiss this case and compel arbitration, and, in a separate motion, to stay this action. (See ECF 15, 18). In those motions, Defendants argued that an order issued by Judge Chen in the Northern District of California in related cases had "nullified" the arbitration provision in Defendant Uber's Service Agreement, thereby raising a "threshold question of arbitrability" that had to be decided by an arbitrator. Finding that Judge Chen's order had no such effect, this court concluded that Plaintiffs had complied with the arbitration opt-out procedures allowed by the Service Agreement. The Court denied both motions. (ECF 37); Razak v. Uber Techs., Inc., No. 16-cv-573, 2016 WL 3960556, at *1 (E.D. Pa. July 21, 2016).

This Court has jurisdiction pursuant to 28 U.S.C. § 1331, and venue is proper pursuant to 28 U.S.C § 1441(a).

IV. Legal Standard

Federal Rule of Civil Procedure 12(c) provides that "after the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Judgment on the pleadings is appropriate only when the movant "clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law." Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008). "The standard for deciding a motion for judgment on the pleadings filed pursuant to Federal Rule of Civil Procedure 12(c) is not materially different from the standard for deciding a motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6)." Zion v. Nassan, 283 F.R.D. 247, 254 (W.D. Pa. 2012). Either motion may be used to seek the dismissal of a complaint based on a plaintiff's "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6), (h)(2)(B). The only difference between the two motions is that a Rule 12(b) motion must be made before a "responsive pleading" is filed, whereas a Rule 12(c) motion can be made "[a]fter the pleadings are closed."

The United States Supreme Court has established a two-part test to determine whether to grant a motion to dismiss. See Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). First, the court must ascertain whether the complaint is supported by well-pleaded factual allegations. Iqbal, 556 U.S. at 679. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Twombly, 550 U.S. at 555. In turn, these factual allegations must be sufficient to provide a defendant the type of notice contemplated in Rule 8. See Fed. R. Civ. P. 8(a)(2) (requiring a short and plain statement of the claim showing the pleader is entitled to relief); see also Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008).

Taking the well-pleaded facts as true, the court must then determine whether the plaintiff is "plausibly" entitled to relief. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). That is, the pleadings must contain enough factual content to allow a court to make "a reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 679. In short, a complaint must not only allege entitlement to relief, but must also demonstrate such entitlement with sufficient facts to push the claim "across the line from conceivable to plausible." Id. at 683; accord Holmes v. Gates, 403 F. App'x 670, 673 (3d Cir. 2010).

To decide a motion for judgment on the pleadings, like a motion to dismiss, courts consider only the allegations contained in the complaint, exhibits attached to the complaint, matters of public record, and, where appropriate and necessary, "an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document." Pension Ben. Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).

V. Analysis

a. Fair Labor Standards Act

i. Background

Counts One, Two and Three of the Complaint are brought under the FLSA, which was enacted to "govern the maintenance of standard hour and wage practices." De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 305-06 (3d Cir. 2003). Specifically, the FLSA "establishes federal minimum-wage, maximum hour, and overtime guarantees that cannot be modified by contract." Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 1527 (2013). Under the FLSA, employers are required "to pay their employees at least a specified minimum hourly wage for work performed, 29 U.S.C. § 206, and to pay one and one-half times the employee's regular rate of pay for hours worked in excess of forty hours per week, 29 U.S.C. § 207." De Asencio, 342 F.3d at 306.

An employer who violates § 206 or § 207 is subject to § 216(b), which provides, in relevant part:

Any employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages.

"Unlike the complex antitrust scheme at issue in Twombly that required allegations of an agreement suggesting conspiracy, the requirements to state a claim of a FLSA violation are quite simple and straightforward." Harris v. Scriptfleet, Inc., 11-cv-4561, SRC, 2011 WL 6072020, at *3 (D.N.J. Dec. 6, 2011) (citing Sec'y of Labor v. Labbe, 319 Fed....