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Bey v. WalkerHealthCareIt, LLC

United States District Court, S.D. Ohio, Eastern Division

May 1, 2018

DEBRA BEY, Plaintiff,
v.
WALKERHEALTHCAREIT, LLC, et al., Defendants.

          Jolson Judge

          OPINION AND ORDER

          GEORGE C. SMITH, JUDGE UNITED STATES DISTRICT COURT

         This matter is before the Court on the Motion to Dismiss of WalkerHealthCareIT, LLC, WalkerSearchGroup, LLC, [1] Tifiany Walker, and Gregory Walker (collectively, “Walker Defendants”) (Doc. 51) and the Motion to Dismiss of Encore Health Resources, LLC (“Encore”) (Doc. 52). The Walker Defendants have also filed a Motion to Strike consent forms filed by Plaintiff Debra Bey on behalf of other individuals seeking to opt in to Bey's proposed collective action under the Fair Labor Standards Act (Doc. 64). The motions are fully briefed and ripe for disposition. For the following reasons, the Walker Defendants' Motion to Dismiss is GRANTED IN PART and DENIED IN PART; Encore's Motion to Dismiss is DENIED; and the Walker Defendants' Motion to Strike is DENIED.

         I. FACTUAL BACKGROUND

         For the purpose of the motions to dismiss, the Court accepts the following facts alleged by Bey as true. Bey was employed by the Walker Defendants and Encore as an ATE Go-Live Support Consultant (“ATE”), stationed at OhioHealth in the state of Ohio, for some period of time “during the applicable statute of limitations period.” (Doc. 49, Am. Compl. ¶ 6). Although Bey's employment contract (attached to her Amended Complaint) references WalkerHealthCareIT as her employer and refers to Encore as a “client” (Doc. 49-2, Employment Contract), Bey alleges that all defendants, in a “joint business effort, ” recruited, placed and managed ATEs at various healthcare entities across the country, including OhioHealth, for limited periods of time, to assist with the implementation and administration of integrated health computer systems. Projects varied in length but, on average, lasted a few weeks at a time. (Id. ¶ 7). Bey's primary duty as an ATE was to provide first line troubleshooting relating to the implementation of Defendants' software system, and other duties were to reinforce training for software programs and provide “at-the-elbow” IT support. (Id. ¶¶ 22, 23).

         Although Bey alleges she was jointly employed by all defendants, she describes the WalkerHealthCareIT as being responsible for recruiting and hiring ATEs, arranging their travel and expense reimbursement, and issuing their paychecks; and Encore would manage the day-today duties of ATEs, such as conducting orientation and training sessions, setting ATE work schedules, approving and maintaining ATEs' time and expense reports, and evaluating the ATE's performance. (Id. ¶¶ 8-9, 15-16). Each ATE was assigned to a specific Encore Team Manager or Project Manager who served as the first point of management contact for the ATE. (Id. ¶ 17).

         Bey alleges that ATEs were assigned a schedule of at least 45 hours per week. (Id. ¶ 21). However, ATEs were allegedly not paid in compliance with state and federal labor laws in two ways: (1) ATEs were paid only for hours worked that were also billed to Defendants' clients. ATEs were not compensated for hours worked that were not billed to clients (id. ¶ 25, Doc. 49-2, Employment Contract at 1); and (2) for all hours for which ATEs were paid, they were compensated at the standard “straight time” hourly rate of pay, including all hours over 40 per workweek, which should have been compensated at the 1.5 overtime premium rate. (Doc. 49, Am. Compl. ¶ 26; Doc. 49-2, Employment Contract at 1). Bey also alleges that Defendants did not keep accurate records of the hours ATEs actually worked; rather, ATEs were required to record only the hours they had been scheduled to work. (Doc. 49, Am. Compl. ¶ 28). All of these actions are alleged by Bey to violate both the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (the “FLSA”), and the Ohio Fair Minimum Wage Standards Act, R.C. § 4111.01 et seq. (the “OMFWSA”).

         Anticipating that Defendants may argue that ATEs qualify for one or more exemptions from the FLSA and OMFWSA, Bey also alleges that ATEs do not so qualify inasmuch as they did not have management as their primary duty; did not have a primary duty that required use of discretion or independent judgment; did not perform work requiring advanced knowledge in a field of science or learning; did not perform work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor; and were not employed as computer systems analysts, computer programmers, software engineers, or similarly skilled computer employees. (Id. ¶¶ 29-33).

         II. PROCEDURAL HISTORY

         Bey commenced this action on December 13, 2016, asserting individual claims on her own behalf, and also seeking to act as representative plaintiff for a collective action under the FLSA and a Rule 23 class action under the OFMWSA. (Doc. 1, Compl.) The Walker Defendants and Encore filed motions to dismiss (Docs. 14, 32), but in opposing those motions, Bey also sought leave to amend the Complaint. (Docs. 21, 37). To further the Court's preference to allow cases to reach the merits rather than through early dismissal, the Court granted leave for Bey to amend her Complaint to cure whatever deficiencies Plaintiff believed existed. (Doc. 48). Bey filed her Amended Complaint on September 9, 2017, which mooted the previous motions to dismiss. (Docs. 49, 50). The Walker Defendants and Encore now move again to dismiss Bey's Amended Complaint for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). (Docs. 51-52).

         Shortly after Bey filed her Amended Complaint, she also began periodically filing consent forms executed by other ATEs who wished to join Bey's proposed FLSA collective action. (Docs. 59-60, 65-66, 68-70, 73-74, 78-80). Bey has not at this time filed a motion under 29 U.S.C. § 216 seeking conditional certification of the proposed collective action. The Walker Defendants have moved to strike the consent forms as premature prior to the Court's conditional certification of the collective action, and to enjoin Bey from filing any further consent forms until the Court grants conditional certification. (Doc. 64).

         III. MOTIONS TO DISMISS

         A. Standard for dismissal under Rule 12(b)(6)

         Under the Federal Rules, any pleading that states a claim for relief must contain a “short and plain statement of the claim” showing that the pleader is entitled to such relief. Fed.R.Civ.P. 8(a)(2). To meet this standard, a party must allege sufficient facts to state a claim that is “plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A claim will be considered “plausible on its face” when a plaintiff sets forth “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         Rule 12(b)(6) allows parties to challenge the sufficiency of a complaint under the foregoing standards. In considering whether a complaint fails to state a claim upon which relief can be granted, 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.” Ohio Police & Fire Pension Fund v. Standard & Poor's Fin. Servs. LLC, 700 F.3d 829, 835 (6th Cir. 2012) (quoting Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007)). However, “the tenet that a court must accept a complaint's allegations as true is inapplicable to threadbare recitals of a cause of action's elements, supported by mere conclusory statements.” Iqbal, 556 U.S. at 663. Thus, while a court is to afford plaintiff every inference, the pleading must still contain facts sufficient to “provide a plausible basis for the claims in the complaint”; a recitation of facts intimating the “mere possibility of misconduct” will not suffice. Flex Homes, Inc. v. Ritz-Craft Corp of Mich., Inc., 491 Fed.Appx. 628, 632 (6th Cir. 2012); Iqbal, 556 U.S. at 679.

         B. Walker Defendants' Motion to Dismiss

         The Walker Defendants argue that Bey's Amended Complaint remains deficient for several reasons, which the Court will address in turn.

         1. Bey's Amended Complaint is not deficient for making allegations on “information and belief.”

         The factual allegations of Bey's Amended Complaint are prefaced with a general statement that her claims are brought “upon personal belief as to herself and her own acts, and as for all other matters, upon information and belief, and based upon the investigation made by her counsel.” (Doc. 49, Am. Compl. at 1). The Walker Defendants argue that, as a result of this statement, Bey's Amended Complaint must be dismissed because “it is impossible to delineate which of her seventy-nine (79) paragraph allegations are based upon (1) her own personal knowledge, (2) her personal belief, (3) some other information and belief, or (4) investigation by her counsel.” (Doc. 51, Walker Mot. at 8). According to the Walker Defendants, this constitutes an “utter failure to differentiate between fact and speculation” and “precludes any opportunity to infer sufficient facts that ‘raise a right to relief above the speculative level.'” (Id., quoting Twombly, 550 U.S. at 555-56).

         The Court disagrees. Allegations made on information and belief have been held permissible, even after the Twombly and Iqbal decisions. Cassidy v. Teaching Co., LLC, No. 2:13-CV-884, 2014 WL 1599518, at *3 (S.D. Ohio Apr. 21, 2014) (Graham, J.) (quoting Charles A. Wright and Arthur R. Miller, 5 Fed. Prac. & Proc. Civ. § 1224 (3d ed. 2013)). Whether allegations are “speculative” depends on whether the plaintiff sets forth sufficient factual content, rather than mere conclusory statements, that demonstrate a plausible right to relief. Allegations do not become “speculative” merely because they are made on information and belief rather than personal knowledge. Antioch Litig. Trust v. McDermott Will & Emery LLP, 738 F.Supp.2d 758, 765 (S.D. Ohio 2010).

         Nor have the Walker Defendants offered any authority requiring that defendants or the Court need to be able to delineate specifically which allegations are based on knowledge versus belief. The purpose of a complaint is to provide defendants with “a short and plain statement of the claim showing that the pleader is entitled to relief, ” not to provide a detailed outline of the evidence plaintiffs have in their possession at the outset of an action. Fed.R.Civ.P. 8(a). As explained above, the Court's task at this early stage is to evaluate whether Bey has set forth “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. Thus, the Court will evaluate Bey's allegations based on their substantive factual content.

         2. Bey has sufficiently alleged enterprise coverage under the FLSA.

         Not all employees are governed by the FLSA's minimum wage and overtime provisions; rather, only those who are engaged in interstate commerce as defined by 29 U.S.C. §§ 206(a) and 207(a) are protected. Employees can meet these requirements in one of two ways: “First, employees may be employed in an enterprise engaged in commerce or the production of goods for commerce and thus enjoy ‘enterprise coverage.' Second, employees may themselves be engaged in commerce or in the production of goods for commerce, enjoying ‘individual coverage.'” Kowalski v. Kowalski Heat Treating, Co., 920 F.Supp. 799, 802-03 (N.D. Ohio 1996); see also Usery v. Yates, 565 F.2d 93, 96 (6th Cir. 1977).

         The Walker Defendants argue, and Bey does not dispute, that she has not alleged individual coverage. Bey argues, however, that she has sufficiently alleged enterprise coverage. An enterprise is “engaged in commerce or in the production of goods for commerce” sufficient to provide coverage for its employees if it (1) has “employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person, ” and (2) “is an enterprise whose annual gross volume of sales made or business done is not less than $500, 000.” 29 U.S.C. § 203(s)(1)(A)(i)-(ii). “Commerce” is further defined by the FLSA as “trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.” 29 U.S.C. § 203(b).

         “Courts have consistently construed the FLSA liberally to apply to the farthest reaches consistent with congressional direction.” Kowalski, 920 F.Supp. at 803 (citing Tony & Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 296 (1985)). As a result, “[c]ourts in this circuit have not required plaintiffs to allege [the enterprise coverage] element of a FLSA claim in detail.” Simpson v. Baskin, No. 3:17-CV-01077, 2018 WL 1070897, at *6 n.6 (M.D. Tenn. Feb. 26, 2018), report and recommendation adopted, 2018 WL 1288908 (M.D. Tenn. Mar. 13, 2018). See Burman v. Everkept, Inc., No. 1:15-CV-596, 2017 WL 1150664, at *3, 5 (W.D. Mich. Mar. 27, 2017) (holding that plaintiffs had adequately pleaded enterprise coverage where they alleged that defendant was an enterprise engaged in interstate commerce with annual sales of not less than $500, 000, and described their role as “residential pick-up drivers' for defendant's “garbage, recycling, and yard waste collection business”); Duby v. Shirley May's Place, LLC, No. 16-11443, 2017 WL 1021062, at *5 (E.D. Mich. Mar. 16, 2017) (plaintiff's allegations that he handled and sold goods “moved in or produced for interstate commerce” as a retail clerk in a convenience store were sufficient to establish that his employer was engaged in commerce at the motion to dismiss stage); Gulden v. Menages, Inc., No. 3:14-cv-1041, 2014 WL 4232791, at *3 (M.D. Tenn. Aug. 25, 2014) (concluding plaintiff had sufficiently alleged enterprise coverage by claiming that he “handled and unloaded goods from outside the state to be sold to club patrons”).

         Bey's factual allegations meet this standard. She alleged that WalkerHealthCareIT, LLC's “main function was to recruit and hire individuals to assist hospitals and healthcare organizations with their implementation and administration of an integrated health computer system” and that, from its principal place of business in Michigan, WalkerHealthCareIT provides services to customers nationwide. (Doc. 49, Am. Compl. ¶ 8). Further, all Defendants placed Bey and other ATEs at various healthcare entities across the country to assist with the implementation and administration of integrated health computer systems. (Id. ¶ 7). These facts, if true, are sufficient to establish that WalkerHealthCareIT has “employees engaged in commerce.”

         It is true, as pointed out by the Walker Defendants, that Bey did not explicitly allege the second prong of the enterprise coverage definition: that WalkerHealthCareIT has an annual gross volume of sales made or business done of at least $500, 000 as required by 29 U.S.C. § 203(s)(1)(A)(ii). However, Bey did allege that Defendants “are engaged in commerce within the meaning of [ ] 29 U.S.C. § 203(s)(1)(A).” (Doc. 49, Am. Compl. ¶ 60). And at least one district court in this Circuit has held that incorporating 29 U.S.C. § 203(s)(1)(A) into a complaint is sufficient to allege the annual gross sales criterion. Gulden, Inc., 2014 ...


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