Cohen v. Gerson Lehrman Group, Inc.

• Decision Date: 07 January 2010
• Docket Number: No. 09 Civ. 4352(PKC).,09 Civ. 4352(PKC).
• Parties: Jeffrey COHEN, on behalf of himself and all similarly situated employees, Plaintiff, v. GERSON LEHRMAN GROUP, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

686 F.Supp.2d 317

Jeffrey COHEN, on behalf of himself and all similarly situated employees, Plaintiff, v. GERSON LEHRMAN GROUP, INC., Defendant.

No. 09 Civ. 4352(PKC).

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

January 7, 2010.

Douglas Holden Wigdor, Gregory Nicholas Filosa, Scott Browning Gilly, Thompson Wigdor and Gilly, New York, NY, for Plaintiff.

Andrew Jay Schaffran, Michael Jonathan Puma, Morgan, Lewis & Bockius LLP, New York, NY, for Defendant.

MEMORANDUM AND ORDER

P. KEVIN CASTEL, District Judge.

Plaintiff Jeffrey Cohen, purportedly on behalf of himself and others similarly situated, asserts that defendant Gerson Lehrman Group, Inc. ("Gerson" or "the Company") violated the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. § 201 et seq., and New York Labor Law § 663 by Ming to compensate its research associates for hours worked in excess of 40 hours per week. Three motions are now before this Court. First, Gerson moves pursuant to Rule 12(b)(6), Fed.R.Civ.P., to dismiss the plaintiffs claim arising under the New York Labor Law. Second, the plaintiff moves under Rule 12(b)(6) to dismiss Gerson's counterclaims, which assert violations of the federal Computer Fraud and Abuse Act, 18 U.S.C. § 1030, and two tort claims under the laws of the State of New York. Third, the plaintiff moves for preliminary certification of his FLSA claims as a collective action, and seeks court-facilitated notice to similarly situated persons and expedited discovery of potential collective action members.

As discussed below, many of the arguments asserted throughout the parties' submissions are properly raised only after a fully developed factual record. Hence, for the reasons explained, Gerson's motion to dismiss the New York Labor Law claim is denied; plaintiff's motion to dismiss Gerson's three counterclaims is denied; and the plaintiff's motion for preliminary certification of the collective action is granted.

BACKGROUND

For the purposes of this motion to dismiss, the allegations set forth below are accepted as true, with the exception of legal conclusions couched as factual allegations. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949-50, 173 L.Ed.2d 868 (2009); South Cherry Street, LLC v. Hennessee Group LLC, 573 F.3d 98, 100 (2d Cir.2009).

According to the Complaint, plaintiff Jeffrey Cohen is a former research associate employed by the defendant, a firm that provides consulting services to financial services firms and other professional organizations. (Compl. ¶¶ 10, 13.) As a research associate, his main responsibility was to act as a liaison between Gerson's clients and its research experts. (Compl. ¶ 15.) This included performing research tasks delegated by more senior employees and clients. (Compl. ¶ 15.)

According to the Complaint, the position of a research associate involved long hours, from 8:30 a.m. until 7:30 p.m., and often later. (Compl. ¶¶ 20-23.) These hours would extend beyond the Company's official office hours of 8:30 a.m. to 6 p.m., and, on occasion, research associates would be reprimanded for leaving work as early as 7 p.m. (Compl. ¶¶ 19, 21.) According to the Complaint, the plaintiff and other putative class members frequently worked between 50 and 60 hours per week. (Compl. ¶ 24.)

In December 2008, Gerson circulated a memo stating that, effective January 1, 2009, certain employees would be eligible for overtime compensation, "meaning those employees will be classified as `nonexempt' from the overtime provisions of the Fair Labor Standards Act...." (Compl. ¶ 25.) Such "non-exempt" employees would receive overtime compensation at 1.5 times their hourly rates. (Compl. ¶ 27.) Upon information and belief, the Complaint asserts that the reclassification notice was provided to all of the Company's research associates. (Compl. ¶ 26.)

According to the Complaint, prior to reclassification, Gerson had unlawfully classified its research associates as exempt from overtime requirements under the FLSA and New York Labor Law ("NYLL"). (Compl. ¶¶ 28-29.) Research associates exercise no discretion or independent judgment, instead following instructions of senior personnel. (Compl. ¶ 30.) The reclassification had no connection to a material change in the job responsibilities of Gerson's research associates, the Complaint states, (Compl. ¶ 35.) The Complaint asserts that, prior to reclassification, the Company unlawfully deprived its research associates of overtime pay in violation of the FLSA and the NYLL. (Compl. ¶¶ 37-38.)

The Complaint also asserts that this action should be certified as a collective action under the FLSA, 29 U.S.C. § 216(b), because the responsibilities of other Company research associates were "essentially the same" as the plaintiff's, and because all research associates were unlawfully deprived of overtime pay. (Compl. ¶¶ 40-45.) The Complaint seeks class certification under Rule 23, Fed.R.Civ.P., for the claim brought pursuant to the NYLL. (Compl. ¶¶ 49-59.) As noted above, Gerson now moves to dismiss the NYLL claim and opposes the plaintiffs motion for preliminary certification of an FLSA collective action.

Gerson has asserted counterclaims that allege wrongdoing by the plaintiff. According to Gerson's Amended Answers, Defenses and Counterclaims filed on October 1, 2009 (the "Counterclaims"), the plaintiff voluntarily resigned from the Company effective April 24, 2009, just before the commencement of this lawsuit. (Countercl. ¶¶ 1, 3, 19-20.) Prior to leaving the Company, plaintiff began to prepare for this lawsuit, and forwarded via email various documents and communications from his Company computer for his personal use. (Countercl. ¶¶ 21-23.) Gerson contends that plaintiff also deleted messages and materials from his Company-provided computer, including materials that he had already forwarded to himself. (Countercl. ¶¶ 23-26.) During the course of litigation, Gerson has been unable to restore these deleted materials. (Countercl. ¶¶ 36-37.) The Company contends that the plaintiff's conduct amounts to a violation of the federal Computer Fraud and Abuse Act, 18 U.S.C. § 1030, as well as the torts of conversion and trespass to chattel. (Countercl. ¶¶ 40-56.) Plaintiff moves to dismiss the counterclaims.

STANDARD GOVERNING A MOTION TO DISMISS

Rule 8(a)(2), Fed.R.Civ.P., requires "`a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to `give the defendant fair notice of what the ... claim is and the grounds upon which it rests.'" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)) (ellipsis in original). To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must provide the grounds upon which the claims rest, through factual allegations sufficient to raise a right to relief above the speculative level. ATSI Communications, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.2007) (citing Twombly, 127 S.Ct. at 1965). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. "The plausibility standard... asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Legal conclusions and "threadbare recitals of the elements of a cause of action" do not suffice to state a claim, as "Rule 8 . . . does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. at 1949-50.

The Supreme Court has described the motion to dismiss standard as encompassing a "two-pronged approach" that requires a court first to construe a complaint's allegations as true, while not bound to accept the veracity of a legal conclusion couched as a factual allegation. Id. Second, a court must then consider whether the complaint "states a plausible claim for relief," which is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.

DISCUSSION

I. Gerson's Motion to Dismiss Plaintiffs New York Labor Law Claim is Denied.

Gerson sets forth three principal arguments as to why plaintiffs claim under New York Labor Law § 663 should be dismissed. It argues that New York CPLR 901(b) does not allow for NYLL class actions, an opt-out class under the NYLL conflicts with the FLSA's "opt in" requirement and therefore is preempted, and, as pleaded, the purported class cannot satisfy threshold requirements of Rule 23, Fed.R.Civ.P. I address each of these arguments in turn.

A. CPLR 901(b) Does Not Bar Plaintiff's New York Labor Law Claim.

CPLR 901(b) states: "Unless a statute creating or imposing a penalty, or a minimum measure of recovery, specifically authorizes the recovery thereof in a class action, an action to recover a penalty or minimum measure of recovery created or imposed by statute may not be maintained in a class action." Under prevailing New York authority, "a statute imposes a penalty when the amount of damages that may be exacted from the defendant would exceed the injured party's actual damages." McKinney's CPLR, Practice Commentaries, § 901, at 104 (2006). New York Labor Law § 198(1-a) permits a party injured by way of a NYLL violation to receive "an additional amount as liquidated damages equal to twenty-five percent of the total amount of wages found to be due. . . ." Gerson contends that section 198(1-a) establishes a penalty, and that the plaintiff's NYLL claims therefore are barred by CPLR 901(b).

The First Department has, however, upheld the viability of a class action asserting NYLL violations, under the theory that any party who elects to seek liquidated damages—a "penalty" within the meaning of CPLR 901(b)-may opt out of the class. Pesantez v. Boyle Environmental Services, Inc., 251 A.D.2d 11, 673 N.Y.S.2d 659 (1st Dep't 1998) ("To the extent...