Graham v. Word Enters. Perry, LLC

• Decision Date: 19 June 2018
• Docket Number: Case No. 18-cv-0167
• Parties: MARION LEA GRAHAM, ET AL., individually and on behalf of similarly situated persons, Plaintiffs, v. THE WORD ENTERPRISES PERRY, LLC ET AL., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

MARION LEA GRAHAM, ET AL., individually and on behalf of similarly situated persons, Plaintiffs, v. THE WORD ENTERPRISES PERRY, LLC ET AL., Defendants.

Case No. 18-cv-0167

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

June 19, 2018

UNITED STATES DISTRICT COURT JUDGE GERSHWIN A. DRAIN

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' FIRST AMENDED COMPLAINT [# 31]

I. INTRODUCTION

Presently before the Court is Plaintiff's First Amended Complaint against Defendant alleging violations of the Federal Labor Standards Act ("FLSA") and the Michigan Workforce Opportunity Wage Act ("WOWA"). Pending before the Court is Defendants' Kevin Dittrich and Dittrich Investments II, Inc.'s Motion to Dismiss Plaintiffs' First Amended Complaint. Dkt. No. 31. For the reasons discussed below, the Court will grant in part and deny in part Defendants' Motion to Dismiss.

II. FACTUAL BACKGROUND

This case is a companion to another case before this Court, McFarlin v. The Word Enterprises, et al., case number 16-cv-12536 ("McFarlin"). Defendant Kevin Dittrich is an owner of Defendant Dittrich Investments, II, Inc. ("Dittrich II"). Dkt. No. 31, pg. 13 (Pg. ID 480). Defendant Mr. Dittrich has been an owner of several Hungry Howie's franchise stores in Michigan through his Dittrich II company. Id. The named Plaintiffs in this complaint are former delivery drivers at a Hungry Howie's store in Durand, Michigan. Dkt. No. 28, pgs. 5-6 (Pg. ID 347-46). The Durand store was previously owned in part by Mr. Dittrich through Dittrich II. Dkt. No. 31, pg. 13 (Pg. ID 480). The named Plaintiffs did not opt-in to the McFarlin case and are not members of the certified Rule 23 class in McFarlin. Id. Defendants require pizza delivery drivers to use and maintain their personal vehicles to make pizza deliveries. Dkt. No. 28, pg. 9 (Pg. ID 351). Defendants pay delivery drivers a cash wage that is below the federal and state minimum wages, and take a tip credit to get drivers' salaries to equal the exact minimum wage. See id. at pg. 21 (Pg. ID 363). Delivery drivers incur costs for gas, repair, maintenance, depreciation, and other expenses while driving their cars to make deliveries. Id. at pg. 9 (Pg. ID 351). Plaintiffs allege that with vehicle expenses, they are paid wages below the federal and state minimum wages. Id. at pg. 21, 25 (Pg. ID 363, 367).

On January 15, 2018, Plaintiffs brought their complaint on behalf of themselves and all similarly-situated individuals. Dkt. No. 1. On April 26, 2018, Plaintiffs filed their First Amended Complaint. Dkt. No. 28. Defendants Mr. Dittrich and Dittrich II filed the present Motion to Dismiss on May 10, 2018. Dkt. No. 31. On May 15, 2018, the remaining Defendants filed a Response and Request for Concurrent Relief. Dkt. No. 33. The Motion requests that the Court grant the non-moving Defendants the same relief as it grants Mr. Dittrich and Dittrich II. Id. at pg. 2 (Pg. ID 532). The Plaintiffs responded in opposition to Defendants' Motion to Dismiss on May 31, 2018. Dkt. No. 35. In their response, Plaintiffs also asserted that this Court should not grant concurrent relief to the non-moving Defendants because the non-moving Defendants are required to file a separate motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Id. at pg. 5 n.1 (Pg. ID 541). Defendants filed a reply on June 5, 2018. Dkt. No. 36.

III. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) governs motions to dismiss. The court must construe the complaint in favor of the plaintiff, accept the allegations of the complaint as true, and determine whether plaintiff's factual allegations present plausible claims. See Fed. R. Civ. P. 12(b)(6). To survive a motion to dismiss, a complaint must "allege enough facts to make it plausible that the defendant bears legal liability." Agema v. City of Allegan, 826 F.3d 326, 331 (6th Cir. 2016). The facts need to make it more than "merely possible that the defendant is liable; they must make it plausible." Id. "Bare assertions of legal liability absent some corresponding facts are insufficient to state a claim." Id. A claim will be dismissed "if the facts as alleged are insufficient to make a valid claim or if the claim shows on its face that relief is barred by an affirmative defense." Riverview Health Inst., LLC v. Med. Mut. Of Ohio, 601 F.3d 505, 512 (6th Cir. 2010). The district court generally reviews only the allegations set forth in the complaint in determining whether to grant a Rule 12(b)(6) motion to dismiss, however "matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint, also may be taken into account." Amini v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001). Documents attached to a defendant's "motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim." Id.

IV. DISCUSSION

Defendants' Motion brings three grounds on which they argue this Court should dismiss Plaintiffs' First Amended Complaint. First, Defendants argue that Plaintiffs lack standing to bring Count I because the Durand store where Plaintiffs worked is not a party to Count I. Dkt. No. 31, pg. 20 (Pg. ID 487). Second, Defendants argue that Counts I and II fail to state a claim that Defendants are unable to take a tip credit up to the minimum wage. Id. Third, Defendants argue that the remainder of Count II fails to state a claims because unreimbursed automobile expenses are not factored into the minimum wage under WOWA. Id.

1. Standing

The named Plaintiffs in this action are former delivery drivers who worked at the Hungry Howie's store in Durand, Michigan. Dkt. No. 28, pgs. 5-6 (Pg. ID 347-46). However, Count I of Plaintiffs' complaint excludes the Durand location, where Plaintiffs worked, from its list of Defendant stores. Id. at pg. 13-14 (Pg. ID 355-56). Therefore, Defendants argue that Plaintiffs lack standing to bring Count I of their complaint because Plaintiffs excluded themselves from Count I. Dkt. No. 31, pg. 21 (Pg. ID 488). Plaintiffs assert that they have standing to bring Count I because they allege that all of the Defendants are a single enterprise and/or joint employer. Dkt. No. 35, pg. 11 (Pg. ID 547).

To establish standing, a plaintiff must allege an "(1) an injury-in-fact, which is (2) fairly traceable to the defendant's challenged conduct, and that in turn is (3) likely redressable by a favorable judicial decision." Duncan v. Muzyn, 885 F.3d 422, 427 (6th Cir. 2018). Defendants presumably assert that Plaintiffs cannot meet elements two or three because the Durand Defendants are not in the complaint. See Dkt. No. 31, pg. 22 (Pg. ID 488). Because Plaintiffs allege that Defendant stores are a single enterprise and/or joint employers, this Court finds that Plaintiffs have standing. The Sixth Circuit recognizes the single employer doctrine. Under this doctrine, courts can treat multiple interrelated companies as a single employer. Swallows v. Barnes & Noble Book Stores, Inc., 128 F.3d 990, 993 (6th Cir. 1997). Thus, as joint employers, all of the Defendants would constitute a single employer. Therefore, the injuries Plaintiffs sustained from the Durand store are injuries that Plaintiffs sustained from any/all of the stores. Accordingly, Plaintiffs' complaint alleges an injury that is traceable to Defendants' conduct.

Further, as joint employers, Defendant stores would be jointly and severally liable for FLSA violations. See 29 C.F.R. § 791.2(a) (stating that "all joint employers are responsible, both individually and jointly, for compliance with all of the applicable provisions of the [FLSA], including the overtime provisions, with respect to the entire employment for the particular workweek."); Kis v. Covelli Enters., Inc., No. 4:18-cv-54; 4:18-cv-434, 2018 WL 2227782, at *2 (N.D. Ohio May 16, 2018) (stating that "joint employers are usually jointly and severally liable for FLSA violations"); LeMaster v. Alt. Healthcare Sols., Inc., 726 F. Supp. 2d 854, 864 (M.D. Tenn. 2010) (holding that joint employers were jointly and severally liable for FLSA violations). Consequently, Plaintiffs' allegations against any of the Defendant stores is an allegation for which the Durand store will be liable. Therefore, this Court will deny Defendants' Motion to dismiss Count I of Plaintiffs' complaint for lack of standing. The Court also finds that this holding applies to both the moving and non-moving Defendants because Plaintiffs bring Count I against all of the Defendants.

2. Tip Credit

Counts I and II of Plaintiffs' First Amended Complaint alleges that Defendants are not allowed to take a tip credit because they did not give proper notice. Dkt. No. 28, pg. 22, 25 (Pg. ID 364, 367). Defendants argue that this Court's holding in McFarlin¹ that Defendants can take a tip credit up to the minimum wage estops Plaintiffs from making this argument. Dkt. No. 31, pg. 23 (Pg. ID 490). Plaintiffs assert that the McFarlin opinion never decided whether Defendants' tip credit method is legal or valid. Dkt. No. 35, pg. 12 (Pg. ID 548). Therefore, Plaintiffs cannot be estopped from advancing their tip credit argument. Id.

First, this Court must consider whether it can consider its holdings in the McFarlin case to determine the tip credit issue in this case. The Sixth Circuit has held that "matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint" may be taken into account when deciding a motion to dismiss. Amini v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001) (emphasis added). Further, documents attached to a defendant's "motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim." Id.

Here, Defendants attached this Court's McFarlin opinion to its Motion to Dismiss. Dkt. No. 31-2. Plaintif...