Desilva v. North Shore–long Island Jewish Health System Inc.

• Decision Date: 16 March 2011
• Docket Number: No. 10–CV–1341 (JFB)(ETB).,10–CV–1341 (JFB)(ETB).
• Parties: Claudia DeSILVA, et al., Plaintiffs,v.NORTH SHORE–LONG ISLAND JEWISH HEALTH SYSTEM, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of New York

770 F.Supp.2d 497

50 Employee Benefits Cas. 2829

Claudia DeSILVA, et al., Plaintiffs,

v.NORTH SHORE–LONG ISLAND JEWISH HEALTH SYSTEM, INC., et al., Defendants.

No. 10–CV–1341 (JFB)(ETB).

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

March 16, 2011.

OPINION TEXT STARTS HEREWest CodenotesLimited on Preemption Grounds18 U.S.C.A. § 1964

J. Nelson Thomas, Esq. and Michael J. Lingle, Esq. of Thomas & Solomon LLP, Rochester, NY, for Plaintiffs.Anthony J. D'Auria, Esq. of Winston & Strawn LLP, New York, NY, for Defendants.

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge:

Plaintiffs Claudia DeSilva, Gregg Lambdin, Kelly Iwasiuk, Eileen Bates–Bordies, Margaret Hall, and Brenda Gaines (collectively, “plaintiffs”) commenced this action on March 24, 2010, on behalf of themselves and others similarly situated, against defendants North Shore–Long Island Jewish Health System, Inc., North Shore–Long Island Jewish Health Care, Inc., Peninsula Hospital Center, Forest Hills Hospital, Franklin Hospital, Glen Cove Hospital, Huntington Hospital Association, Long Island Jewish Medical Center, Long Island Jewish Hospital, Zucker Hillside Hospital, North Shore University Hospital, Plainview Hospital, Schneider Children's Hospital, Southside Hospital, Staten Island University Hospital, Syosset Hospital, Michael J. Dowling, Joseph Cabral, and North Shore–Long Island Jewish Health System 403B Plan (collectively, “defendants” or “LIJ”),¹ alleging violations of the Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201 et seq. (“FLSA”), the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. (“ERISA”), the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq. (“RICO”), and New York Labor Law (“NYLL”). Plaintiffs also alleged a number of state common law claims, namely: breach of implied oral contract, breach of express oral contract, breach of implied covenant of good faith and fair dealing, quantum meruit, unjust enrichment, fraud, negligent misrepresentation, conversion, and estoppel. Plaintiffs are seeking, inter alia, unpaid wages and overtime, an order enjoining defendants from engaging in the pay violations that form the basis of plaintiffs' complaint, an award crediting plaintiffs for all hours worked, liquidated damages under the FLSA and NYLL, and an amount equal to the value that would make plaintiffs whole for defendants' alleged violations.

Defendants contend, inter alia, that plaintiffs have failed to state plausible FLSA or ERISA claims and that plaintiffs' civil RICO and state common law claims are preempted by the FLSA, and, accordingly, defendants have moved to dismiss plaintiffs' Second Amended Complaint. Plaintiffs oppose defendants' motion and, in turn, have moved for expedited notice to all class members. For the reasons set forth herein, the Court grants in part and denies in part defendants' motion to dismiss, and denies plaintiffs' motion for expedited notice as moot. Specifically, plaintiffs' FLSA claims—construed only as claims regarding overtime and not as claims regarding “straight time” or “gap time” pay—are dismissed without prejudice for failure to state a claim. Likewise, plaintiffs' NYLL claim is dismissed without prejudice for failure to state a claim. Plaintiffs' RICO cause of action is dismissed with prejudice to the extent that this claim is based upon defendants' failure to pay plaintiffs overtime, and thus is duplicative of plaintiffs' FLSA claim. However, to the extent that the RICO cause of action is based upon defendants' alleged failure to pay plaintiffs for “straight time” wages, this claim is not preempted by the FLSA. Nevertheless, this remaining RICO cause of action is dismissed without prejudice for failure to state a claim. As to plaintiffs' state common law claims, these claims are dismissed with prejudice as preempted by the FLSA to the extent that they seek overtime wages and, thus, are duplicative of the FLSA claim. The surviving common law claims are construed as seeking only unpaid “straight time” pay. However, plaintiffs' breach of implied oral contract, breach of express oral contract, breach of implied covenant of good faith and fair dealing, quantum meruit, fraud, and negligent misrepresentation claims are dismissed without prejudice for failure to state a claim. Plaintiffs' estoppel claim is dismissed because, as pled by plaintiffs, “estoppel” is not a distinct cause of action but instead is an equitable bar to defendants' assertion of a statute of limitations defense. Plaintiffs, however, may assert equitable estoppel at an appropriate point in the litigation, should defendants choose to assert a statute of limitations defense. Regarding plaintiffs' ERISA claims, the claim for failure to keep accurate records is dismissed without prejudice for failure to plead exhaustion of administrative remedies. As to the breach of fiduciary duty claim, the Court is denying defendants' motion to dismiss this claim, but will allow defendants to renew this motion after the parties have conducted limited discovery on the issue of how benefits are determined under the controlling ERISA plans. Defendants' motion to dismiss on the grounds of preemption under the Labor Management Relations Act (“LMRA”) is also denied at this juncture without prejudice. Finally, plaintiffs' motion for expedited notice is dismissed with leave to renewal at a later date, if plaintiffs choose to re-plead their FLSA claims and are able to sufficiently plead a cause of action.

I. Background

A. Facts ²

Named plaintiffs work or have worked for defendants in various nursing positions and in various locations.³ (Second Amended Complaint (“SAC”) ¶¶ 65–71.) According to plaintiffs, each of the hospitals and locations for which plaintiffs worked is part of the North Shore–Long Island Jewish Health System (“LIJ”), which is a consortium that operates over seventy health care facilities and centers. ( Id. ¶¶ 21–23.) Plaintiffs purport to represent a class of over 38,000 current and former employees of the defendant hospitals and LIJ system “whose pension and 401(k) or 403(b) plans were not credited with their non-reduced weekly wages and correct overtime compensation” and “who were injured by defendants' scheme to cheat employees out of their property and to convert the employees' property, including their wages and/or overtime pay....” ( Id. ¶¶ 7, 12.)

Specifically, plaintiffs contend that LIJ maintained three illegal pay policies—the meal and break deduction policy, the unpaid pre-and post-schedule work policy, and the unpaid training policy—that denied plaintiffs and class members compensation for all hours worked, including overtime hours and hours that would have been compensated at applicable premium pay rates. ( Id. ¶¶ 74, 104, 159.) As to the meal and break deduction policy, plaintiffs note that defendants' timekeeping system automatically deducts time from employees' paychecks for meals and breaks. ( Id. ¶ 75.) However, plaintiffs allege that they do, in fact, work during their meals and breaks and are not paid for that work. ( Id. ¶ 77; see also id. ¶ 82 (“[D]efendants expect Plaintiffs and Class Members to be available to work throughout their shifts and consistently require their employees to work during their unpaid breaks.”).) Plaintiffs further allege that defendants know, or should have known, that plaintiffs work through their breaks, because, inter alia, such work has been performed in plain sight of defendants' management and also at management's request. ( Id. ¶ ¶ 78, 87–88.) When asked by employees about the meal and break deduction policy, “defendants affirmatively stated that the employees were being fully paid for the work time for which they were entitled to be paid, even though defendants knew compensable work time was being excluded from the employees' pay.” ( Id. ¶ 90.) Plaintiffs claim that these representations by defendants were part of a course of conduct to defraud plaintiffs “from the pay they were owed, and to mislead them into believing they had been fully paid as required by law.” ( Id.) Plaintiffs state that they are entitled to compensation for all time spent working for defendants, including during plaintiffs' breaks, and that if all of their hours had been properly compensated, certain time spent working for defendants would have been compensated under “applicable premium pay rates.” ( Id. ¶¶ 93–94.)

Furthermore, plaintiffs allege that, pursuant to defendants' “unpaid pre- and post-schedule work policy,” plaintiffs are required to perform work before and after their scheduled shifts, but are not fully and properly compensated for such work. ( Id. ¶¶ 96–99.) Likewise, plaintiffs claim that, under defendants' “unpaid training policy,” plaintiffs are required to attend compensable training programs but are not paid for all time spent attending such programs. ( Id. ¶¶ 100–103.) As a result of these “unpaid work policies,” defendants required plaintiffs and class members to work hours under and in excess of forty hours per week without full compensation for those hours. ( Id. ¶¶ 174–75.) Plaintiffs also contend that, through paystubs and payroll information provided to employees, defendants deliberately concealed from plaintiffs and other employees that they were not being fully compensated for all hours worked and “misled them into believing they were being paid properly.” ( Id. ¶ 108.)

B. Procedural History

Plaintiffs filed their original Complaint in this action on March 24, 2010. Prior to defendants' answer, plaintiffs filed an Amended Complaint on June 16, 2010. On August 23, 2010, defendants filed a motion to dismiss, and plaintiffs filed a motion for expedited notice to affected employees pursuant to Section 216(b) of the FLSA. On September 24, 2010, plaintiffs filed their opposition to defendants' motion to dismiss, and defendants filed their opposition to plaintiffs' motion for expedited notice. The parties submitted their replies in support...