711 F.3d 106 (2nd Cir. 2013), 12-1453, Lundy v. Catholic Health System of Long Island Inc.

Docket Nº:12-1453.
Citation:711 F.3d 106
Opinion Judge:DENNIS JACOBS, Chief Judge:
Party Name:Dennis LUNDY, on behalf of themselves and all other employees similarly situated, Patricia Wolman, Kelly Iwasiuk, Plaintiffs-Appellants, v. CATHOLIC HEALTH SYSTEM OF LONG ISLAND INCORPORATED, dba Catholic Health Services of Long Island, Good Samaritan Hospital Medical Center, Mercy Medical Center, New Island Hospital, aka St. Joseph Hospital, St. C
Attorney:Michael J. Lingle, Thomas & Solomon LLP, Rochester, NY, (J. Nelson Thomas, Guy A. Talia, Jessica L. Witenko, on the brief), for Appellants. James E. McGrath, III, Putney, Twombly, Hall & Hirson LLP, New York, N.Y. (Daniel F. Murphy, Jr., Michael T. McGrath, Randi B. Feldheim, Adriana S. Kosovych,...
Judge Panel:Before: JACOBS, Chief Judge, WALKER, Circuit Judge, and O'CONNOR, Associate Justice (retired).[*]
Case Date:March 01, 2013
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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711 F.3d 106 (2nd Cir. 2013)

Dennis LUNDY, on behalf of themselves and all other employees similarly situated, Patricia Wolman, Kelly Iwasiuk, Plaintiffs-Appellants,

Daisy Ricks, on behalf of herself and all other employees similarly situated, Plaintiff,

v.

CATHOLIC HEALTH SYSTEM OF LONG ISLAND INCORPORATED, dba Catholic Health Services of Long Island, Good Samaritan Hospital Medical Center, Mercy Medical Center, New Island Hospital, aka St. Joseph Hospital, St. Catherine of Siena Medical Center, St. Charles Hospital and Rehabilitation Center, St. Francis Hospital, Roslyn, New York, Our Lady of Consolation Geriatric Care Center, Nursing Sisters Home Care, dba Catholic Care Home, James Harden, Defendants-Appellees,

Long Island Health Network, Incorporated, Brookhaven Memorial Hospital Medical Center Incorporated, aka Brookhaven Memorial Hospital Medical Center, John T. Mather Memorial Hospital of Port Jefferson, New York, Incorporated, aka John T. Mather Memorial Hospital, South Nassau Communities Hospital, Winthrop-University Hospital, Terry Hargadon, Brian Currie, Kathleen Masiulis, Defendants.

No. 12-1453.

United States Court of Appeals, Second Circuit.

March 1, 2013

Argued: Oct. 25, 2012.

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Michael J. Lingle, Thomas & Solomon LLP, Rochester, NY, (J. Nelson Thomas, Guy A. Talia, Jessica L. Witenko, on the brief), for Appellants.

James E. McGrath, III, Putney, Twombly, Hall & Hirson LLP, New York, N.Y. (Daniel F. Murphy, Jr., Michael T. McGrath, Randi B. Feldheim, Adriana S. Kosovych, Putney, Twombly, Hall & Hirson LLP, New York, NY, on the brief; Stephen J. Jones, Todd R. Shinaman, Joseph A. Carello, Nixon Peabody LLP, Rochester, NY, on the brief), for Appellees.

Before: JACOBS, Chief Judge, WALKER, Circuit Judge, and O'CONNOR, Associate Justice (retired).[*]

DENNIS JACOBS, Chief Judge:

Plaintiffs, a respiratory therapist and two nurses, allege that the Catholic Health System of Long Island Inc., a collection of hospitals, healthcare providers, and related entities (collectively, " CHS" ), failed to compensate them adequately for time worked during meal breaks, before and after scheduled shifts, and during required training sessions. They sued on behalf of a purported class of similarly situated employees

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(collectively, " the Plaintiffs" ) and take this appeal from orders of the United States District Court for the Eastern District of New York (Seybert, J. ), dismissing the claims asserted under the Fair Labor Standards Act (" FLSA" ), the Racketeer Influenced and Corrupt Organizations Act (" RICO" ), and the New York Labor Law (" NYLL" ).

We affirm the dismissal of the FLSA and RICO claims for failure to state a claim. We also affirm the dismissal of Plaintiffs' NYLL overtime claims, which have the same deficiencies as the FLSA overtime claims. However, because the district court did not explain why Plaintiffs' NYLL gap-time claims were dismissed with prejudice, we vacate that aspect of the judgment and remand for further consideration of the NYLL gap-time claims.

BACKGROUND

The original complaint, alleging violations of FLSA and RICO, was filed in March 2010 by Daisy Ricks, a healthcare employee, on behalf of similarly situated employees, against the Long Island Health Network, Inc., Catholic Health Services of Long Island, and various related entities.1 The First Amended Complaint, filed in June 2010, substituted Dennis Lundy, Patricia Wolman, and Kelly Iwasiuk as lead plaintiffs, dropped some defendants, and added claims under NYLL and state common law. The twelve causes of action pleaded were FLSA, RICO, NYLL, implied contract, express contract, implied covenants, quantum meruit, unjust enrichment, fraud, negligent misrepresentation, conversion, and estoppel. This case is one of many similar class actions brought by the same law firm, Thomas & Solomon LLP, against numerous healthcare entities in the region. A dozen of them are currently on appeal before this Court.2

The FLSA claims focused on alleged unpaid overtime. In relevant part, FLSA's overtime provision states that " no employer shall employ any of his employees ... for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed." 29 U.S.C. § 207(a)(1).3

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It is alleged that CHS used an automatic timekeeping system that deducted time from paychecks for meals and other breaks even though employees frequently were required to work through their breaks, and that CHS failed to pay for time spent working before and after scheduled shifts, and for time spent attending training programs.4

The procedural history of this case was prolonged by four attempts to amend the complaint, and various orders dismissing the claims, as recounted below.

A Second Amended Complaint, filed in August 2010, replaced some of the defendants that had been sued in error. On motion, the district court dismissed most of the claims, without prejudice. The FLSA overtime claims were dismissed for failure to approximate the number of uncompensated overtime hours. The FLSA claim for " gap-time" pay ( i.e., for unpaid hours below the 40-hour overtime threshold) was dismissed— with prejudice— on the ground that FLSA does not permit gap-time claims when the employment contract explicitly provides compensation for gap time worked. The RICO claims were dismissed— with prejudice— for insufficient allegations of any pattern of racketeering activity. Once the federal claims were dismissed, the state law claims were dismissed without prejudice.

The district court granted leave to replead the FLSA overtime claims that were dismissed without prejudice, but cautioned that any future complaint " should contain significantly more factual detail concerning who the named Plaintiffs are, where they worked, in what capacity they worked, the types of schedules they typically or periodically worked, and any collective bargaining agreements they may have been subject to." Special App. 18. The district court said that it would " not be impressed if the Third Amended Complaint prattle[d] on for another 217 paragraphs, solely for the sake of repeating various conclusory allegations many times over." Id. at 19.

The Third Amended Complaint, filed in January 2011, was largely identical to the Second (with the addition of approximately ten paragraphs). When CHS moved to dismiss, the court issued an order sua sponte urging supplemental briefing and a more definite statement. Observing that Plaintiffs had again failed to achieve sufficient specificity, the court added:

[T]he Court does not believe that it would serve anyone's interest to enter another dismissal without prejudice, which would be followed almost assuredly by another amended complaint and then a full round of Rule 12(b)(6) briefing. Instead, the Court considers it more appropriate to sua sponte direct Plaintiffs to file a more definite statement, which it will then use to judge the sufficiency of the [Third Amended Complaint].

Special App. 26. The court expressed concern with the vagueness of the pleading, directed Plaintiffs to stop " hiding the ball," id. at 27, and listed specific information needed for a more definite statement.

Plaintiffs failed to issue a more definite statement and instead filed a Fourth Amended Complaint (hereinafter, " the Complaint" ) in May 2011. The RICO and estoppel claims were dropped, and the remaining causes of action were pleaded as before, supplemented with some more facts.

CHS's renewed motion to dismiss was largely granted in February 2012, on the following grounds:

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1. Plaintiffs insufficiently pled the requisite employer-employee relationship as to each named defendant, because Lundy, Wolman, and Iwasiuk worked only at Good Samaritan Hospital, and because the " economic realities" of the relationships among defendants did not constitute a single employment organization. The FLSA claims against all defendants other than Good Samaritan were dismissed with prejudice.5

2. The FLSA claims against Defendant James Harden (the CEO, President, and Director of CHS) were dismissed with prejudice because the economic reality of his relationship with Lundy, Wolman, and Iwasiuk did not amount to an employer-employee relationship.

3. As to the claim that the automatic timekeeping deductions allegedly violated FLSA as applied to Plaintiffs (even though they were not per se illegal), the Plaintiffs failed to show that they were personally denied overtime by this system.

4. As to their FLSA overtime allegations against Good Samaritan, Plaintiffs were required to plead that they worked (1) compensable hours (2) in excess of 40 hours per week, and (3) that CHS knew that Plaintiffs were working overtime. Only some of the categories of purportedly unpaid work— meal breaks, time before and after scheduled shifts, and training— constituted " compensable" hours.

Work during meal breaks is compensable under FLSA if " predominantly" for the employer's benefit. Special App. 62. Although Plaintiffs alleged that their meal breaks were " typically" missed or interrupted, the Complaint " is void of any facts regarding the nature and frequency of these interruptions during the relevant time period or how often meal breaks were missed altogether as opposed to just interrupted." Id. at 63. Absent such specificity, there is no claim for compensable time.

Time spent working before and after scheduled shifts is compensable if it is " integral and indispensable" to performance of the job and not de minimis. Id. at...

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