Elsayed v. Family Fare LLC

Decision Date18 February 2020
Docket Number1:18-cv-1045
CourtU.S. District Court — Middle District of North Carolina
PartiesAMRO ELSAYED and LOLA SALAMAH (H/W), Plaintiffs, v. FAMILY FARE LLC, and M.M. FOWLER, INC. and LEE BARNES, JR., individually and as President of Family Fare LLC, and M.M. Fowler, Inc. and DONALD PILCHER, individually, Defendants.

LORETTA C. BIGGS, District Judge.

Plaintiffs initiated this action on December 26, 2018, alleging that Defendants misclassified them as franchisees rather than employees in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 203, and terminated their franchise agreement because they are Arab Americans in violation of the Civil Rights Act of 1866, 42 U.S.C. §1981, along with several violations of North Carolina law. (ECF No. 1.) Before the Court are Defendants' Motion for Partial Judgment on the Pleadings, (ECF No. 16), and Plaintiffs' Motion for Leave to File Supplemental Pleading, (ECF Nos. 21; 22). For the reasons stated below, Defendants' motion will be granted in part and denied in part and Plaintiffs' motion will be denied with prejudice as to Defendant Pilcher and without prejudice as to the other Defendants.


In the summer of 2012, Plaintiffs Lola Salamah and Amro Elsayed, a married couple, moved to North Carolina to start operating a convenience store attached to a gas station. (See ECF No. 20 at 1-2.) To open the store, Salamah formed Almy, LLC ("Almy"). (Id. at 8.) Salamah acts as the President and Guarantor of Almy. (ECF No. 8-3 at 48.) On June 29, 2012, Almy entered into a contract operator agreement with Defendant M.M. Fowler, Inc., ("M.M. Fowler"), the owner of "certain proprietary and property rights in and to the 'Family Fare'" brand of gas station convenience stores. (See ECF Nos. 8-1 at 5; 8-3 at 5.) The contract permitted Almy to operate a Family Fare convenience store located at 3836 Reynolda Road in Winston-Salem. (ECF No. 8-1 at 5.) On December 11, 2013, Almy and Defendant Family Fare, LLC ("Family Fare"), an affiliate of M.M. Fowler that licenses from M.M. Fowler the right to franchise the Family Fare brand, entered into a franchise agreement in which Almy became the franchisee of the Reynolda Road store, with Family Fare acting as Franchisor, and M.M. Fowler acting as landlord. (ECF No. 8-3 at 5, 8.) This franchise agreement ran for five years and was renewed on May 10, 2018 for a second five-year term. (ECF No. 8-8 at 2.) On November 30, 2018, Family Fare and M.M. Fowler terminated the franchise agreement with Almy, alleging that it had "repeatedly skimmed from lottery funds collected at [the Reynolda Road location]," resulting in a cash deposit deficiency of at least $10,651. (ECF No. 8-6 at 2.) Plaintiffs then filed this suit. (See ECF No. 1.)

Plaintiffs allege that they were employees of Family Fare and that Defendants failed to pay them overtime. (ECF No. 1 ¶¶ 6, 61, 160.) Plaintiffs further allege that Defendants terminated their franchise agreement because of their bias against Arab Americans. (See id. ¶¶71-88, 206.) Specifically, Plaintiffs in their complaint allege eight claims as follows: (1) violation of the overtime provisions of the FLSA and the North Carolina Wage and Hour Act ("NCWHA"); (2) an unlawful salary deduction in violation of the NCWHA; (3) national origin discrimination in violation of 42 U.S.C. § 1981; (4) termination of a contract in violation of public policy as defined by N.C. Gen. Stat. § 75B-2; (5) common law claims including breach of the covenant of good faith and fair dealing, unfair and deceptive trade practices, and fraud; (6) violation of the North Carolina Business Opportunity Sales Act, N.C. Gen. Stat. § 66-99; (7) termination in bad faith and breach of contract; and (8) wrongful forcible self-help eviction. (ECF No. 1 ¶¶ 135-214.) In addition, on July 31, 2019, Plaintiffs filed a motion to add a ninth claim alleging that Elsayed was fired because of his national origin in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2. (ECF Nos. 21; 21-1; 22.)

Defendants now move pursuant to Federal Rule of Civil Procedure 12(c) for partial judgment on the pleadings and for the dismissal of counts one, two, four, five, and six in Plaintiffs' complaint. (ECF No. 16 at 2.) They also oppose Plaintiffs' motion to add the Title VII claim. (ECF No. 24 at 7.)


Under Rule 12(c) of the Federal Rules of Civil Procedure, "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). "Judgment on the pleadings is appropriate where the case turns on a legal question and the pleadings demonstrate that the moving party is entitled to judgment as a matter of law." Fed. Ins. Co. v. S. Lithoplate, Inc., 7 F. Supp. 3d 579, 583 (E.D.N.C. 2014). Such a motion is generally analyzed "under the same standards as a motion to dismissunder Rule 12(b)(6)." Occupy Columbia v. Haley, 738 F.3d 107, 115 (4th Cir. 2013). "The court assumes the facts alleged by the nonmoving party are true" and draws all reasonable inferences in favor of the nonmoving party. Lithoplate, 7 F. Supp. 3d at 583. Like a Rule 12(b)(6) motion, a "Rule 12(c) motion tests only the sufficiency of the complaint and does not resolve the merits of the plaintiff's claims or any disputes of fact." Drager v. PLIVA USA, Inc., 741 F.3d 470, 474 (4th Cir. 2014). However, unlike when deciding a Rule 12(b)(6) motion to dismiss, the Court, when deciding a motion for judgment on the pleadings, may consider the Answer. Alexander v. City of Greensboro, 801 F. Supp. 2d 429, 433 (M.D.N.C. 2011). The factual allegations contained in the Answer "are taken as true only where and to the extent they have not been denied or do not conflict with the complaint." Jadoff v. Gleason, 140 F.R.D. 330, 331 (M.D.N.C. 1991). Because the plaintiff is not required to reply to the Answer, "all allegations in the answer are deemed denied." Id. at 332. The defendant cannot therefore "rely on allegations of fact contained only in the answer, including affirmative defenses, which contradict Plaintiffs' complaint." Id.

When considering a motion for judgment on the pleadings, "a [district] court evaluates the complaint in its entirety, as well as documents attached [to] or incorporated into the complaint." Vincent v. Vick, 1:17CV762, 2018 WL 3827636, at *2 (M.D.N.C. Aug. 10, 2018) (quoting E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011)). A district court may also "consider a document submitted by the movant that was not attached to or expressly incorporated in a complaint, so long as the document was integral to the complaint and there is no dispute about the document's authenticity." Id. (quoting Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016)). However, going "beyond thesedocuments . . . converts the motion into one for summary judgment," and "[s]uch conversion is not appropriate where the parties have not had an opportunity for reasonable discovery." Id. (quoting E.I. du Pont de Nemours & Co., 637 F.3d at 448).

A court should grant a motion for judgment on the pleadings "only . . . if, after accepting all well-pleaded allegations in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief." Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999) (applying the 12(b)(6) standard to a motion for judgment on the pleadings).


In their motion for partial judgment on the pleadings, Defendants argue that five of Plaintiffs' claims fail as a matter of law: count one (violation of federal and state wage and hour provisions); count two (violation of the NCWHA); count four (termination of a contract in violation of public policy); count five (common law claims); and count six (violation of the North Carolina Business Opportunity Sales Act). (See ECF Nos. 1 ¶¶ 135-214; 16 at 1.) The Court will examine each of these claims.

A. Plaintiffs' FLSA Claim

Defendants argue that Plaintiffs' FLSA claim is barred as a matter of law because the parties' relationship is governed by contractual agreements between Defendants and Almy that expressly provide that "Defendants are not the employers of Almy's employees for any purpose." (See ECF No. 17 at 8.) Plaintiffs contend, on the other hand, that they were employees of Defendants and so were owed overtime pay under the FLSA. (ECF No. 1 ¶160.) Thus, to determine whether Plaintiffs have stated a claim in their complaint under the FLSA, the Court must resolve whether Plaintiffs have adequately pled (1) that Defendants and Almy were Plaintiffs' joint employers and (2) that Plaintiffs were employees and not independent contractors. As explained below, the Court concludes that Plaintiffs have made an adequate showing as to both inquiries. Thus, Defendants' motion for judgment on the pleadings will be denied as to Plaintiffs' FLSA claim.

"Congress enacted the FLSA in 1938 to ensure that the nation's workers received 'a fair day's pay for a fair day's work.'" Kenter v. Branch Banking & Tr. Co., 143 F. Supp. 3d 370, 374 (M.D.N.C. 2015) (quoting A.H. Phillips, Inc. v. Walling, 324 U.S. 490, 493 (1945)). The "FLSA establishes federal minimum-wage, maximum-hour, and overtime guarantees that cannot be modified by contract." Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 69 (2013). The Act requires that employers pay their employees at least the federal minimum wage and provide them overtime in the amount of one and a half times their regular rate of pay for each hour worked beyond forty hours in a given work week. 29 U.S.C. §§ 206(a)(1), 207(a)(1).

In enacting the FLSA, Congress chose to define "employ," "employee," and "employer" broadly to better effectuate the "...

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