Henao v. Parts Auth., LLC

• Decision Date: 01 July 2021
• Docket Number: 19 Civ. 10720 (LGS)
• Citation: 557 F.Supp.3d 490
• Parties: Davidson HENAO, et al., Plaintiffs, v. PARTS AUTHORITY, LLC, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

557 F.Supp.3d 490

Davidson HENAO, et al., Plaintiffs,

v.PARTS AUTHORITY, LLC, et al., Defendants.

19 Civ. 10720 (LGS)

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

Signed July 1, 2021

Filed July 2, 2021

Amanda Chan, Andrew Charles White, Douglas Gregory Blankinship, Jeremiah Lee Frei-Pearson, Finkelstein, Blankinship, Frei-Pearson & Garber, LLP, White Plains, NY, Mark Alan Potashnick, Weinhaus & Potashnick, Saint Louis, MO, William Scott Terrell, III, New York, NY, for Plaintiffs Davidson Henao, Miguel Mero.

Amanda Chan, Jeremiah Lee Frei-Pearson, Finkelstein, Blankinship, Frei-Pearson & Garber, White Plains, NY, for Plaintiffs Deshawn Mclean, Shawn Williams, Omobowale Avoseh, Rasheem Martin.

Jeremiah Lee Frei-Pearson, Finkelstein Blankinship Frei-Pearson, White Plains, NY, for Plaintiffs Gerald Urrutia, Quinn McClaren, Patrick Imes.

Sharon P. Stiller, Abrams, Fensterman, LLP, Rochester, NY, for Defendants Parts Authority, Inc., Yaron Rosenthal, Parts Authority, LLC.

Andrew Paul Marks, David Scott Warner, Dorf & Nelson LLP, Rye, NY, for Defendants Michigan Logistics, Inc., Larry Browne.

Andrew Paul Marks, Christine Lee Hogan, David Scott Warner, Dorf & Nelson LLP, Rye, NY, for Defendant Northeast Logistics, Inc.

OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:

Plaintiffs bring this action alleging violations of the Fair Labor Standards Act ("FLSA") and the wage laws of nine states and the District of Columbia. Plaintiffs assert their claims against eight named Defendants and forty unnamed Defendants. Three of the named Defendants, BBB Logistics, Inc., Arizona Logistics, Inc. and Larry Browne (the "Moving Defendants"), move to dismiss the Third Amended Complaint ("TAC") with prejudice for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) and for failure to state a claim under Rule 12(b)(6). Browne also seeks dismissal for insufficient service of process under Rule 12(b)(5). For the reasons stated below, the motion is granted in part and denied in part.

I. BACKGROUND

The following facts are taken from the TAC and are assumed to be true for purposes of this motion. See R.M. Bacon, LLC v. Saint-Gobain Performance Plastics Corp. , 959 F.3d 509, 512 (2d Cir. 2020).

Defendants Parts Authority, LLC, Parts Authority, Inc. and Yaron Rosenthal (collectively, "Parts Authority") own and operate a chain of approximately 200 automobile part sales and distribution stores in New York, Arizona, California, Florida, Georgia, Maryland, New Jersey, Ohio, Oregon, Pennsylvania, Texas, Virginia, Washington State and Washington, D.C. Parts Authority stores engage delivery drivers through staffing agencies such as Defendants Northeast Logistics, Inc., Arizona Logistics, Inc., BBB Logistics, Inc., Michigan Logistics, Inc. and Does 1–20 doing business as "Diligent Delivery Systems" (collectively, with CEO Larry Browne, "Diligent"). Parts Authority also engages delivery drivers from unnamed delivery staffing companies Does 21–40. The delivery drivers are classified as independent contractors and use their personal vehicles to deliver auto parts to customers.

Plaintiffs were all employed as delivery drivers at Parts Authority stores as follows: Davidson Henao worked in New York for approximately eight months in 2016; Miguel Mero worked in New York for approximately six months in 2016; Rasheem Martin worked in New York for approximately seven months in 2017; Shawn Williams worked in Maryland and Washington, D.C. from 2014 to 2019; and Omobowale Avoseh worked in Maryland for approximately seven months in 2017 and 2018.

Plaintiffs, in various combinations, raise claims as putative class members under numerous federal and state labor statutes. The TAC alleges that Plaintiffs were misclassified as independent contractors when, in fact, they were employees of Parts Authority, Diligent or Does 21–40, which allegedly qualify as single or joint employers. The TAC claims that, as employees, Plaintiffs were underpaid in two ways -- first, that Defendants did not pay Plaintiffs required overtime wages; and second, that Defendants violated minimum wage laws by (1) paying Plaintiffs insufficient hourly wages and (2) requiring Plaintiffs to supply their own vehicles for delivery while failing to reimburse them for associated costs, thus effectively reducing their wages below statutory minimums. Plaintiffs also allege that Defendants failed to pay their New York delivery drivers "spread of hours pay" as required by the NYLL and did not provide accurate wage notices and statements in violation of the NYLL.

II. STANDARD

On a motion to dismiss, a court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in favor of the non-moving party, Montero v. City of Yonkers , 890 F.3d 386, 391 (2d Cir. 2018), but gives "no effect to legal conclusions couched as factual allegations," Stadnick v. Vivint Solar, Inc. , 861 F.3d 31, 35 (2d Cir. 2017) (internal quotations omitted). To withstand a motion to dismiss, a pleading "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. It is not enough for a plaintiff to allege facts that are consistent with liability; the complaint must "nudge[ ]" claims "across the line from conceivable to plausible." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. "To survive dismissal, the plaintiff must provide the grounds upon which his claim rests through factual allegations sufficient ‘to raise a right to relief above the speculative level.’ " ATSI Commc'ns, Inc. v. Shaar Fund, Ltd. , 493 F.3d 87, 98 (2d Cir. 2007) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).

III. DISCUSSION

A. Personal Jurisdiction

On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, a plaintiff "must make a prima facie showing that jurisdiction exists. Such a showing entails making legally sufficient allegations of jurisdiction, including an averment of facts that, if credited[,] would suffice to establish jurisdiction over the defendants." Charles Schwab Corp. v. Bank of Am. Corp. , 883 F.3d 68, 81 (2d Cir. 2018) (alteration in original).

"[A] federal court applies the forum state's personal jurisdiction rules if the federal statute does not specifically provide for national service of process." PDK Labs, Inc. v. Friedlander , 103 F.3d 1105, 1108 (2d Cir. 1997) (internal quotation marks omitted); accord Pettenato v. Beacon Health Options, Inc. , 425 F. Supp. 3d 264, 272 (S.D.N.Y. Oct. 25, 2019). "FLSA does not provide for nationwide service of process." Id. at 273 (collecting cases). As applicable here, under New York's long-arm statute, a court has specific jurisdiction "over any non-domiciliary ... who in person or through an agent ... transacts any business within the state," so long as the cause of action "aris[es] from" that transaction. CPLR § 302(a)(1). "[P]roof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted." Kreutter v. McFadden Oil Corp. , 71 N.Y.2d 460, 467, 527 N.Y.S.2d 195, 522 N.E.2d 40 (N.Y. 1988) ; accord James v. iFinex Inc. , 185 A.D.3d 22, 127 N.Y.S.3d 456, 461 (1st Dep't 2020).

Additionally, a plaintiff must "demonstrate that the exercise of personal jurisdiction comports with due process." Charles Schwab Corp. , 883 F.3d at 82. First, "[w]here the claim arises out of, or relates to, the defendant's contacts with the forum — i.e., specific jurisdiction is asserted — minimum contacts necessary to support such jurisdiction exist where the defendant purposefully availed itself of the privilege of doing business in the forum and could foresee being haled into court there." Id. (internal quotation marks omitted). "Second, once minimum contacts are established, a court considers those contacts in light of other factors to determine whether the assertion of personal jurisdiction would comport with fair play and substantial justice." Id. (internal quotation marks omitted). Those factors include:

(1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies.

Eades v. Kennedy, PC Law Offices , 799 F.3d 161, 169 (2d Cir. 2015) ; accord Ascento Capital, LLC v. MinervaWorks, LLC , No. 20 Civ. 6195, 2021 WL 2206487, at *5 (S.D.N.Y. June 1, 2021).

a. Personal Jurisdiction Over Defendants Arizona Logistics and BBB Logistics

The Court lacks personal jurisdiction over Defendants Arizona Logistics and BBB Logistics. Plaintiffs are incorrect that the Court has personal jurisdiction over Arizona Logistics and BBB Logistics solely because those two entities are part of a single integrated enterprise, other parts of which have contacts with New York. The TAC alleges that Arizona Logistics and BBB Logistics, along with other entities, are commonly owned and operated Texas corporations with their primary place of business at a common location in Houston, Texas, all doing business as "Diligent Delivery Systems." The TAC alleges that these entities are part of a single integrated enterprise and are joint employers, all ultimately owned and under the operational control of Defendant Browne, including as to wage and hour policies and practices. Defendant...