Elmy v. W. Express, Inc.

Decision Date10 April 2020
Docket NumberNO. 3:17-cv-01199,3:17-cv-01199
PartiesJOHN ELMY, individually and on behalf of all other similarly situated persons, Plaintiffs, v. WESTERN EXPRESS, INC., et al., Defendants.
CourtU.S. District Court — Middle District of Tennessee

JOHN ELMY, individually and on behalf of
all other similarly situated persons, Plaintiffs,
v.
WESTERN EXPRESS, INC., et al., Defendants.

NO. 3:17-cv-01199

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

April 10, 2020


JUDGE CAMPBELL
MAGISTRATE JUDGE FRENSLEY

MEMORANDUM

Pending before the Court is the Partial Motion to Dismiss filed by Defendant Western Express, Inc. ("Western" or "Western Express") (Doc. No. 170), and the Partial Motion to Dismiss filed by Defendant New Horizons Leasing, Inc. ("New Horizons") (Doc. No. 172). Plaintiff filed a Response in Opposition (Doc. No. 202) and Defendants filed Replies. (Doc. Nos. 211, 213). For the reasons discussed below, the Defendants' Partial Motions to Dismiss are DENIED.

I. FACTUAL AND PROCEDURAL BACKGROUND

Defendant Western is a motor carrier, engaged in interstate shipment of freight. (Doc. No. 162 ¶ 34). Defendant New Horizons leases trucks to truckers who will drive for Western. (Id. ¶ 37). On February 12, 2016, Plaintiff entered into an Equipment Lease with New Horizons and a Contract Hauling Agreement with Western Express. (Id. ¶ 130). The present lawsuit arises from Plaintiff's work as a long-haul truck driver for Defendants.

On April 12, 2019, Plaintiff filed an Amended Collective & Class Complaint ("Amended Complaint") against Defendants alleging numerous causes of action, specifically Federal Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201, et seq., Tennessee common law fraud, Tennessee

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common law negligent misrepresentation, Tennessee common law unenforceable contract, Tennessee common law unjust enrichment, Federal Forced Labor, 18 U.S.C. §§ 1589 and 1595, Truth-in-Leasing Act, 49 U.S.C. § 14704, and breach of contract. (Doc. No. 162).

On May 6, 2019, Western Express moved to dismiss Plaintiff's Federal Forced Labor, Tennessee common law unenforceable contract, Tennessee common law unjust enrichment, Truth-in-Leasing Act, and breach of contract causes of action for failure to state a claim upon which relief can be granted. (Doc. No. 170). Also on May 6, 2019, New Horizons moved to dismiss Plaintiff's Federal Forced Labor, Tennessee common law unenforceable contract, Tennessee common law unjust enrichment, FLSA misclassification, Truth-in-Leasing Act, and breach of contract causes of action for failure to state a claim upon which relief can be granted. (Doc. No. 172).

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6), permits dismissal of a complaint for failure to state a claim upon which relief can be granted. For purposes of a motion to dismiss, a court must take all of the factual allegations in the complaint as true. Ashcroft v. Iqbal, 556 U.S. 662 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual allegations, accepted as true, to state a claim for relief that is plausible on its face. Id. at 678. A claim has facial plausibility when the plaintiff pleads facts that allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. In reviewing a motion to dismiss, the Court construes the complaint in the light most favorable to the plaintiff, accepts its allegations as true, and draws all reasonable inferences in favor of the plaintiff. Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). Thus, dismissal is appropriate only if "it appears beyond doubt that the

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plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Guzman v. U.S. Dep't of Children's Servs., 679 F.3d 425, 429 (6th Cir. 2012).

III. ANALYSIS

A. FLSA Misclassification

The FLSA "was enacted by Congress to be a broadly remedial and humanitarian statute. The Act was designed to correct labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers ..." Sec'y of Labor v. Timberline S., LLC, 925 F.3d 838, 845 (6th Cir. 2019) (quoting Donovan v. Brandel, 736 F.2d 1114, 1116 (6th Cir. 1984) (internal quotations omitted)). As such, the FLSA "must not be interpreted or applied in a narrow, grudging manner." Id. (citing Herman v. Fabri-Centers of Am., Inc., 308 F.3d 580, 585 (6th Cir. 2002) (quoting Tenn. Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 597, 64 S. Ct. 698, 88 L. Ed. 949 (1944), superseded by statute on other grounds, Portal-to-Portal Act of 1947, 29 U.S.C. §§ 251-262)).

New Horizons argues that Plaintiff's FSLA claim against it must be dismissed because the Amended Complaint fails to adequately allege enterprise status with respect to New Horizons. (Doc. No. 173 at 18). Under 29 U.S.C. § 203(r)(1), an "enterprise" means "the related activities performed (either through unified operation or common control) by any person or persons for a common business purpose, and includes all such activities whether performed in one or more establishments or by one or more corporate or other organizational units . . .". Accordingly, for enterprise liability to attach to New Horizons, the Plaintiff will ultimately have to prove the following three elements with respect to the interrelationship between Western Express and New Horizons: (1) related activities; (2) performed through unified operations or common control; (3)

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for a common business purpose." See Marshall v. Shan-An-Dan, Inc., 747 F.2d 1084, 1085 (6th Cir. 1984).

"[A]ctivities are 'related' when they are the same or similar...." Brennan v. Arnheim & Neely, Inc., 410 U.S. 512, 518 (1973) (quoting S. REP. NO. 145-87, at 41 (1961)). "Unified operation" combines, unites, and organizes "related activities" in a way that creates a "single business unit or an organized business system...." 29 C.F.R. § 779.217. "Common control" means the "related activities" are "controlled by one person or by a number of persons, corporations, or other organizational units acting together." 29 C.F.R. § 779.221. A "common business purpose" is present when activities "are directed to the same business objective or to similar objectives in which the group has an interest." 29 C.F.R. § 779.213.

New Horizons generally asserts that the Amended Complaint pleads nothing more than threadbare recitals of the elements of the integrated enterprise. (Doc. No. 173 at 18-20). In Response, Plaintiff argues the Amended Complaint adequately pleads that New Horizons operated a single enterprise under the FLSA with Defendant Western Express. Plaintiff contends the allegations demonstrate the common business purpose and objective whereby Western Express and New Horizons jointly provided an integrated set of Agreements in order to get drivers into New Horizons trucks and delivering Western Express freight for Western Express customers. Specifically, Plaintiff points to the allegations that the Agreements were presented jointly, drivers had to sign both the Lease and the Contract, drivers could only drive the New Horizons trucks for Western Express, the Vehicle Lease required drivers authorize Western to deduct and pay New Horizons out of the drivers' pay, drivers automatically default on the vehicle lease if their Western contract terminates, and that Western and New Horizons jointly ensure the vehicle is being maintained. (Doc. No. 202 at 31 (citing Amended Complaint, Doc. No. 162 ¶¶ 66, 68, 71, 75-76,

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88)). Plaintiff argues the foregoing allegations, well-pleaded and accepted as true, demonstrate the "related activities" that formed a single organized business system. (Doc. No. 202 at 31 (citing 29 C.F.R. § 779.217)).

Additionally, Plaintiff points to the allegations that Western and New Horizons both work out of the same office; that New Horizons is essentially a partner-company of Western Express with a primary purpose of leasing trucks to truckers who will drive for Western, going so far as to require these truckers to sign Contracts to drive for Western; that New Horizons' purpose in exclusively leasing trucks to drivers who will drive for Western is to further Western's shipping business for their mutual and common gain; and that New Horizons and Western Express are both owned and operated by the same management and ownership team. (Doc. No. 202 at 31 (citing Amended Complaint, Doc. No. 162 ¶¶ 33, 35-39)). Plaintiff argues the "common business purpose" New Horizons shares with Western is sufficiently pleaded insofar as Plaintiff has pleaded that New Horizons' "only business purpose" is to provide the dedicated truck fleet for Western's lease operator business line. (Doc. No. 202 at 32).

The Court finds that the foregoing facts alleged, taken as true and drawing all reasonable inferences in favor of Plaintiff, adequately allege New Horizons was an enterprise with Western Express within the meaning of § 203(r) of the Act. Accordingly, New Horizons' motion to dismiss Plaintiff's FLSA claims against it is DENIED.

B. Tennessee Common Law Unenforceable Contract

Defendants contend that Plaintiff's unconscionability claim should be dismissed for two reasons: (1) because unconscionability is not available to obtain affirmative relief, and (2) because Plaintiff fails to adequately plead both procedural and substantive unconscionability. (Doc. No. 171 at 4-8; Doc. No. 173 at 9-13).

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1. Ability to Bring and Unconscionability Claim Seeking Solely Declaratory Relief

First, Defendants argue that Plaintiff is not entitled to an unconscionability claim against them because "the doctrine of unconscionability is not available to obtain affirmative relief, but is available only as a defense." (Doc. No. 171 at 5 and Doc. No. 173 at 9 (citing Mullin v. SouthEast Bank, No. 2:18-CV-00046, 2019 WL 2482162, at *11 (M.D. Tenn. Feb. 4, 2019)1 and Greer v. Home Realty Co. of Memphis, Inc., No. 07-2639, 2010 WL 11493119, at *5 (W.D. Tenn. May 18, 2010)).2

In Response, Plaintiff argues Tennessee law permits him to seek declaratory relief to find the contracts at issue are void for...

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