United States District Court, N.D. Ohio, Western Division
Christy D. O'Neal, et al., Plaintiff
Denn-Ohio, LLC, Defendant.
MEMORANDUM OPINION AND ORDER
JEFFREY J. HELMICK UNITED STATES DISTRICT JUDGE
Introduction and Background
Plaintiffs Christie D. O'Neal and Dusty M. Shepard
brought this action on behalf of themselves and those
similarly situated who are or were servers at any of the
Denny's franchise locations owned by the Defendants.
Named Plaintiffs claim their former employers, Defendant
Denn-Ohio, LLC, violated several state and federal statutes
and regulations governing employee pay. (Doc. No. 1).
Plaintiffs sought leave to amend their complaint to add four
additional defendants: PTS Hospitality, LLC; JMAD
Hospitality, LLC; Thomas F. Pilbeam; and Jack Thompson. (Doc.
No. 21). Defendant Denn-Ohio filed a motion in
opposition. (Doc. No. 25).
moved for conditional certification of a collective action
and for equitable tolling of the statute of limitations for
individuals to opt-in to the collective action. (Doc. No.
22). Defendant Denn-Ohio filed a motion to dismiss counts one
and two of Plaintiffs' complaint (Doc. No. 7). Denn-Ohio
also challenged the Court's personal jurisdiction over
any claims against it by employees who work at Denny's
restaurants outside the state of Ohio. (Doc. No. 29).
O'Neal worked as a server at a Denny's restaurant in
Toledo, Ohio, from 2013 to 2017. (Doc. No. 22-1 at 9).
Plaintiff Shepard worked as a server at a Denny's
restaurant in Berkshire, Ohio, from 2016 to 2018.
(Id.). Plaintiffs allege Defendants operate these,
and other Denny's franchise locations, as a “single
enterprise” because Defendants perform related
activities through unified operation and common control for a
common business purpose: the operation of a chain of
Denny's restaurants. (Id. at 13).
Plaintiffs' Motion for Leave to Amend the
April 24, 2019 case management conference, I set May 24,
2019, as the deadline for amending the pleadings and adding
parties without leave of court. On August 21, 2019,
Plaintiffs filed a motion for leave to file a second amended
complaint under Rule 15(a) to add two individual defendants
and two corporate defendants. Because Plaintiffs seek to
amend their complaint after the deadline established by the
scheduling order, they must first show good cause.
See Fed. R. Civ. P. 16(b)(4).
Rule 16 Analysis
order to demonstrate good cause, the plaintiff must show that
the original deadline could not reasonably have been met
despite due diligence and that the opposing party will not
suffer prejudice by virtue of the amendment.” Ross
v. Am. Red Cross, 567 F. App'x. 296, 306 (6th Cir.
2014) (citing Leary v. Daeschner, 349 F.3d 888, 906
(6th Cir. 2003)).
claim they acted with due diligence by seeking leave to amend
their complaint as soon as they became aware of the factual
basis for their claims against the four additional
defendants. Until they received the defendant's
management handbook on July 29, 2019, Plaintiffs were not
aware the two individual defendants they seek to add, Thomas
F. Pilbeam and Jack Thompson, were the owners of Denn-Ohio,
LLC. (Doc. No. 21 at 2). Nor were they aware of the two
corporate entities they seek to add or the fact that those
entities may be involved in operating the restaurants at
issue. Id. Once Plaintiffs became aware of these
individuals and corporate entities, the Plaintiffs promptly
took steps to amend their complaint. See Callaway v.
Denone, LLC, No. 18-cv-01981, 2019 WL 1090346, at *4
(N.D. Ohio Mar. 8 2019) (granting leave to amend to add
additional defendant where plaintiff was not aware of basis
for claims against defendant until receipt of employee
argues that Plaintiffs should have been aware of the factual
basis for their claims because Denn-Ohio's corporate
filings are available to the public. (Doc. No. 25 at 3).
Denn-Ohio cites Commerce Benefits Group, Inc. for
the proposition that leave to amend should be denied when the
plaintiff “knew or should have known” of the
facts underlying the amendment. (Id. at 2) (citing
Commerce Benefits Grp, Inc. v. McKesson Corp., No.
1:107-cv-2036, 2008 WL 239550 (N.D. Ohio Jan. 28, 2008)).
While constructive knowledge may have played a role in
Commerce Benefits Group, Inc., it was not
dispositive. Instead, the court's decision emphasized the
plaintiff's failure to explain why it did not bring the
claim earlier, as well as the significant prejudice
defendants would suffer if the amendment was allowed.
Commerce Benefits Grp, Inc., 2008 WL 239550, at *3.
the Plaintiffs have provided an explanation for their failure
to bring the claim earlier. See Century Indem. Co. v.
Begley Co., 323 F.R.D. 237, 241 (E.D. Ky. 2018) (finding
good cause even though proposed amendments do not stem from
new information). Plaintiffs requested discovery on
Denn-Ohio's corporate structure and ownership on March
15, 2019. (Doc. No. 27-1). The due diligence requirement does
not impose on a plaintiff the burden to exhaust all avenues
to discover information that may serve as the basis of a
claim. Instead, Plaintiffs were entitled to presume they
would discover this kind of information the way many
litigants routinely do, through discovery.
potential prejudice to the nonmoving party also plays a role
in determining good cause. Leary, 349 F.3d at 909. I
find the Defendants will not suffer significant unfair
prejudice. This is not a case where the Defendants will be
confronted with a new substantive claim for which they must
prepare a defense. Instead, Plaintiffs are merely bringing
the same claims they have already brought against Denn-Ohio.
The two individual defendants, as Denn-Ohio's owners,
presumably have firsthand knowledge of many of the facts at
issue. The two corporate defendants, according to
Plaintiffs' allegations, work as part of a single
enterprise with Denn-Ohio and these individual defendants. If
this is true, they too likely already have knowledge of or
access to the information they would need to defend against
these claims. Further, unlike the situation in
Leary, where the litigation had been going on for
years and the court had already ruled on a motion for summary
judgment as well as a motion to dismiss the plaintiffs'
first amended complaint, the present case is still in the
relatively early stages of the litigation.
Rule 15 Analysis
Plaintiffs have shown good cause under Rule 16(b)(4), I now
consider whether leave to amend should be permitted under
Rule 15. Pursuant to Rule 15(a)(2), “a party may amend
its pleading only with the opposing party's written
consent or the court's leave. The court should freely
give leave when justice so requires.” Fed.R.Civ.P.
15(a)(2). Rule 15 sets forth a liberal policy of permitting
amendments. Springs v. U.S. Dept. of Treasury, 567
F. App'x. 438, 443 (6th Cir. 2014). But a motion for
leave to amend may be denied when: it is the product of undue
delay, bad faith, or dilatory motive; there would be unfair
prejudice to the opposing party; or amendment of the
complaint would be futile. Id.
addressed many of the Rule 15(a)(2) factors in the context of
analyzing Rule 16(b)(4)'s good cause requirement under
Rule 16(b)(4). There is no evidence of undue delay, bad
faith, or dilatory motive attributable to the plaintiffs. I
have already found granting leave to amend will not result in
significant prejudice. Denn-Ohio's final argument is that
amendment would be futile.
first asserts Plaintiffs failed to adequately plead that
individuals Thomas and Pilbeam are “employers”
under the FLSA. (Doc. No. 25 at 3-4). Relying on
Twombly and Iqbal, Denn-Ohio argues
Plaintiffs have failed to show “that Pilbeam or
Thompson actually engage in the tasks they are
asserting.” (Doc. No. 25 at 4). Denn-Ohio contends that
Plaintiffs must plead with particularity and identify exactly
how Thomas and Pilbeam are “employers” under the
FLSA. Denn-Ohio misconstrues both the facts and law here.
Twombly and Iqbal require plausibility, not
particularity. See Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). Further, although threadbare recitals of the
elements are not enough, Plaintiffs have done more here.
Specifically, Plaintiffs allege each of the parties they seek
to add “supervised and controlled work schedules or the
conditions of employment, determined the rate and method of
payment, and maintained employment records . . .” (Doc.
No. 21-1 at 11-13).
second argument fares no better. This time, they claim
Plaintiffs have failed to show how PTS or JMAD are related to
the allegations in their complaint. Again, this is not so. In
addition to alleging that each of the corporate entities took
the actions mentioned above, Plaintiffs allege that all four
new defendants acted with Denn-Ohio as a “single
enterprise” in the operation of a chain of Denny's
restaurants. (Doc. No. 21-1 at 11-13).
the Plaintiffs' motion for leave to file a second amended
Denn-Ohio's Motion to Dismiss Counts One and Two
to Denn-Ohio's motion to dismiss counts one and two of
ruling on a motion to dismiss under Rule 12(b)(6),
“[c]ourts must construe the complaint in the light most
favorable to [the] plaintiff.” Albrecht v.
Treon, 617 F.3d 890, 893 (6th Cir. 2010) (citation
omitted). To survive a motion to dismiss under Rule 12(b)(6),
“even though a complaint need not contain
‘detailed' factual allegations, its ‘factual
allegations must be enough to raise a right to relief above
the speculative level on the assumption that all the
allegations in the complaint are true.'”
Ass'n of Cleveland Fire Fighters v. City of
Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007)
(quoting Twombly, 550 U.S. at 555 (2007)).
allegations or legal conclusions masquerading as factual
allegations will not suffice. Twombly, 550 U.S. at
555 (stating that the complaint must contain something more
than “a formulaic recitation of the elements of a cause
of action”). A complaint must state sufficient facts
which, when accepted as true, state a claim “that is
plausible on its face.” Iqbal, 556 U.S. at 678
(2009) (explaining that the plausibility standard “asks
for more than a sheer possibility that a defendant has acted
unlawfully” and requires the complaint to allow the
court to draw the reasonable inference that the defendant is
liable for the alleged misconduct).
Fair Labor Standards Act requires employers to pay covered
employees a minimum wage of at least $7.25 an hour. 29 U.S.C.
§ 206(a)(1)(C). But there is an exception for a
“tipped employee, ” which is “any employee
engaged in an occupation in which he customarily and
regularly receives more than $30 a month in tips.” 29
U.S.C. § 203(t). Under this exception, the employee
still receives the minimum wage provided by § 206(a)(1),
but the employer is permitted to pay the employee as little
as $2.13 provided that the employee's tips bring their
hourly rate up to at least $7.25. 29 U.S.C. § 203(m).
motion to dismiss is based on a new Department of Labor
(“DOL”) interpretation of the “dual jobs
regulation, ” 29 C.F.R. § 531.56(e). The
interpretation is found in two guidance documents: (1) U.S.
Dep't Labor, Wage & Hour Div., Op. Ltr. FLSA2018-27
(Nov. 8, 2018); and (2) Field Assistance Bulletin No. 2019-2
(Feb. 15, 2019), which explains the changes made to Field
Operations Handbook § 30d00(e). I refer to these two
guidance documents collectively as “New
to Denn-Ohio, the interpretation of the dual jobs regulation
advanced in the New Guidance is controlling, and under this
interpretation, Plaintiffs' claims in counts one and two
must be dismissed. Before I decide whether dismissal is
warranted under this new interpretation of the dual jobs
regulation, I decide whether deference to the New Guidance is