Lehman v. Legg Mason, Inc., 1:06-CV-02484.

Decision Date20 September 2007
Docket NumberNo. 1:06-CV-02484.,1:06-CV-02484.
Citation532 F.Supp.2d 726
PartiesSheldon LEHMAN, individually and on behalf of all others similarly, situated, Plaintiff v. LEGG MASON, INC., Does 1 Through 10 Inclusive, and Citigroup Global Markets, Inc., Defendants.
CourtU.S. District Court — Middle District of Pennsylvania

Casandra Murphy, Gerald D. Wells, III, Joseph H. Meltzer, Robert J. Gray, Lisa Mellas, Schiffrin, Barroway, Topaz & Kessler, LLP, Radnor, PA, Gary F. Lynch, R. Bruce Carlson, Carlson Lynch Ltd., New Castle, PA, for Plaintiff.

Jc Miller, Saul Ewing LLP, Washington, DC, Michael A. Finio, Saul Ewing LLP, Harrisburg, PA, Beth M. Henke, Elizabeth S. Windsor, Morgan Lewis & Bockius, LLP, Pittsburgh, PA, Michael J. Ossip, Morgan, Lewis & Bockius, Philadelphia, PA, for Defendants.


SYLVIA H. RAMBO, District Judge.

Before the court are motions to dismiss by Defendants Legg Mason, Inc. ("LMI") and Citigroup Global Markets, Inc. ("Citigroup"). Plaintiff Sheldon Lehman filed an amended complaint in this matter op April 25, 2007, seeking relief against all Defendants by way of a nationwide collective action under the Fair Labor Standards Act ("FLSA") and a statewide Oak action under Pennsylvania law. Plaintiff alleges that he and other similarly-situated securities brokers have been and continue to be deprived of the proper wage due for the number of hours they have Worked. The court will address the motions by LMI and Citigroup in a single opinion, granting in part and denying in part the relief requested.

I. Background
A. Facts

All of the following facts are stated in the amended complaint and are accepted as true for the instant motions to dismiss. The court recounts only those facts necessary to the disposition of the motions. Plaintiff worked as a securities broker at Legg Mason Wood Walker, Inc. ("LMWW"). During his employment, his employer required him to work more than forty hours per week but did not pay overtime wages for the additional time. Further, his employer withheld compensation due to him to cover alleged errors made in conducting trades for clients and to provide discounts for clients.

LMWW operated as the retail division of LMI. On June 24, 2005, LMWW and Citigroup engaged in a financial transaction in which Citigroup exchanged its worldwide asset management business for LMWW's brokerage and capital markets business. LMWW brokerage offices are now branded as Smith Barney, the name of Citigroup's brokerage division. Plaintiff alleges that LMI and Citigroup were his employers at the relevant times and therefore are liable to him and the other securities brokers he proposes to represent for the wage and hour claims. (See Doc. 13 ¶¶ 4, 52-53.)

B. Procedural History

Plaintiff states seven counts in the amended complaint: Counts I and II are brought under the FLSA for failure to pay required overtime compensation to securities brokers and for failure to pay the required minimum wage for hours worked; Counts III and IV are bought under the Pennsylvania Minimum Wage Act ("MWA") for the same reasons. Counts V and VI are brought pursuant to the Pennsylvania Wage Payment and Collection Law ("WPCL") for failure to pay all wages due to the securities brokers and for improperly withholding certain wages. Count VII states a claim under Pennsylvania law for failure to keep accurate records of hours and wages earned and failure to provide a statement of the same to employees.1 LMI filed a motion to dismiss on May 9, 2007. (Doc. 14.) Citigroup filed a motion to dismiss on July 20, 2007. (Doc. 39.) Both motions to dismiss have been fully briefed and are ripe for disposition.

II. Legal Standard — Motion to Dismiss

Among other requirements, a sound complaint must set forth "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R.Civ.P. 8(a)(2). This statement must "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). A complaint need not contain detailed factual allegations, but a plaintiff must provide "more than labels and conclusions" or "a formulaic recitation of the elements of a cause of action" to show entitlement to relief as prescribed by Rule 8(a)(2). Id., at 1965; accord, e.g., Evancho v. Fisher, 423 F.3d 347, 350 (3d Cir.2005). A defendant may attack a complaint by a motion under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.

In deciding a motion to dismiss under Rule 12(b)(6), the court is required to accept as true all of the factual allegations in the complaint, Erickson v. Pardus, ___ U.S. ___, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081, (2007), and all reasonable inferences permitted by the factual allegations, Watson v. Abington Twp., 478 F.3d 144, 150 (3d Cir.2007), viewing them in the light most favorable to the plaintiff, Kanter v. Barella, 489 F.3d 170, 177 (3d Cir. 2007). The court is not, however, "compelled to accept unsupported conclusions and unwarranted inferences or a legal conclusion couched as a factual allegation." Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir.2007) (quotations and citations omitted). If the facts alleged are sufficient to "raise a right to relief above the speculative level" such that the plaintiffs claim is "plausible on its face," a complaint will survive a motion to dismiss.2 Bell Atlantic Corp., 127 S.Ct. at 1965, 1974; Victaulic Co. v. Tieman, 499 F.3d 227, 236 (3d Cir.2007).

III. Discussion

LMI argues that some or all of the claims in Plaintiffs amended complaint should be dismissed for the following reasons: 1) Plaintiffs state law class action claims may not be joined with claims under the FLSA;3 2) LMI is not an "employer" under the FLSA, WPCL, and the MWA, and therefore may not be sued for violations of those Acts; and 3) Plaintiff fails to state a claim under the WPCL in Count V of the amended complaint. (Doc. 15.)

A. Dual-Filed FLSA and State Labor Law Claims

LMI and Citigroup argue that Plaintiff may not join in a single suit in federal court a FLSA opt-in collective action and a state law opt-out class action because doing so creates an impermissible conflict with Congressional intent in drafting the FLSA, and violates the Rules Enabling Act, 28 U.S.C. § 2072(b). There is no dispute that Legg Mason and Citigroup have a legal obligation to conform to the substance of the standards put forth in both the federal and state paradigm. See 29 U.S.C. § 218(a) (requiring compliance with state law when state law provisions are more generous than the FLSA). The question before this court is whether the different procedural mechanisms for enforcement under each respective statutory scheme preclude a single action for recovery under both to be brought in federal court. The court is persuaded that such a suit is not precluded.

An employer who violates the provisions of the FLSA shall be liable to its employee in the amount of unpaid minimum wages due or unpaid overtime compensation, plus an equal amount of liquidated damages. 29 U.S.C. § 216(b). Liability may be enforced by "any one or more employees for and in behalf of himself or themselves and other employees similarly situated," but "[n]o employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought." Id. The requirement that an employee take this affirmative Step to become a plaintiff in a suit under § 216(b) has led to the description of these suits as "opt-in" collective actions. Here, Plaintiff seeks to bring a nationwide FLSA opt-in collective action on behalf of himself and other similarly situated securities brokers employed by Defendants to recover unpaid overtime wages due under federal law.

The "opt-in" mechanism distinguishes actions under § 216(b) from standard class actions under Federal Rule of Civil Procedure 23. Under Rule 23, the name plaintiff and purported class representative defines a class of persons on whose behalf he brings suit. If the court approves, every member of that class is deemed part of the class and bound by the adjudication of the merits unless he affirmatively opts out of the adjudication. Here, Plaintiff seeks to bring an opt-out statewide class action on behalf of all current and former securities brokers within the commonwealth of Pennsylvania to recover unpaid overtime wages due under Pennsylvania law.

LMI argues that Plaintiff's attempt to bring both actions in the same complaint "conflicts impermissibly with Congressional intent in crafting the FLSA." (Doc. 15 at 7.) The court disagrees. By. mandating an opt-in scheme under FLSA, Congress intended to balance the need for vindication of employees' federal statutory rights with the need to curb the number of lawsuits and the vast potential liability for employers under an opt-out federal class action. De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 306 (3d Cir.2003) (citing 93 Cong. Rec. 2,082 (1947)). Congress acted only with respect to federal claims, however, and did not preempt or limit the remedies available through state law. McLaughlin v. Liberty Mut. Ins. Co., 224 F.R.D. 304, 308 (D.Mass.2004). The plain language of the FLSA instructs that "[n]o provision of [the FLSA] or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance" establishing more favorable rights regarding minimum wage or maximum workweek. § 218(a). The intent of § 218(a) is to leave undisturbed "the traditional exercise of the states' police powers with respect to wages and hours more generous than the federal standards." Pac. Merch. Shipping Ass'n Aubry, 918 F.2d 1409, 1421 (9th Cir.1990); but see McClain v. Leona's Pizzeria, Inc., 222 F.R.D. 574, 577 (N.D.Ill....

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