Molock v. Whole Foods Mkt., Inc.

• Decision Date: 15 March 2018
• Docket Number: Case No. 16–cv–02483 (APM)
• Citation: 297 F.Supp.3d 114
• Parties: Michael MOLOCK, et al., Plaintiffs, v. WHOLE FOODS MARKET, INC., et al., Defendants.
• Court: U.S. District Court — District of Columbia

297 F.Supp.3d 114

Michael MOLOCK, et al., Plaintiffs,

v.WHOLE FOODS MARKET, INC., et al., Defendants.

Case No. 16–cv–02483 (APM)

United States District Court, District of Columbia.

Signed March 15, 2018

Christopher J. Regan, Salvatore J. Zambri, Regan Zambri & Long, PLLC, Washington, DC, for Plaintiffs.

Gregory J. Casas, Greenberg Traurig, LLP, Austin, TX, David E. Sellinger, Greenberg Traurig, LLP, Florham Park, NJ, for Defendants.

MEMORANDUM OPINION AND ORDER

Amit P. Mehta, United States District Judge

I. INTRODUCTION

Plaintiffs Michael Molock, Randal Kuczor, Carl Bowens, Jose Fuentes, Christopher Milner, Jon Pace, and Sarah Strickland (collectively, "Plaintiffs") are current and former employees of Whole Foods grocery stores in the District of Columbia, Georgia, Maryland, North Carolina, Oklahoma, and Virginia. On behalf of a putative class of similarly-situated past and present employees of Whole Foods, they bring this action against Defendants Whole Foods Market, Inc. ("WFMI"), and Whole Foods Market Group, Inc. ("WFM Group"), to recover all wages and damages owed to them as a result of the allegedly unlawful manner in which Whole Foods conducted its "Gainsharing" program, a bonus program designed to incentivize individual Whole Foods grocery store departments to operate under budget by sharing cost savings with employees.¹

Before the court is Defendants' Motion to Dismiss Plaintiffs' Second Amended Class Action Complaint. For the reasons herein, the court grants in part and denies in part Defendants' Motion to Dismiss.

II. BACKGROUND

A. Factual Background

Each of the seven named Plaintiffs in this action are or were employed in Whole Foods grocery stores throughout the United States. Second Am. Compl., ECF No. 28 [hereinafter 2d Am. Compl.], ¶¶ 32–99. Beginning in 1986 and throughout Plaintiffs' employment, Whole Foods stores nationwide used a profit-sharing program—what Whole Foods referred to as its "Gainsharing" program—to incentivize department productivity and revenue. Id. ¶ 15. Under the program, as part of the employee compensation package, Whole Foods awarded bonuses to employees whose departments performed under budget by automatically distributing the surplus savings among the employees in that department. Id. During the hiring and orientation process for new Whole Foods stores employees, Defendants provided Plaintiffs with information about the Gainsharing program. See id. ¶ 16 (Benefits Orientation Training illustrations). Plaintiffs assert that Whole Foods store managers, department team leaders, and human resources employees provided each of them with materials explaining Gainsharing bonuses and expressly represented during their interviews and throughout their employment that mandatory Gainsharing bonuses were part of the employee compensation package. See id. ¶¶ 32–99. Plaintiffs also assert that throughout their employment, Defendants posted Gainsharing reports listing guaranteed wages for employees to view each month, at least once a month. See id. Plaintiffs relied on these representations to accept offers of employment, and once employed, to work to increase the productivity of their departments in order to create a surplus. See id.

Once Plaintiffs accepted employment and became Team Members—thereby vesting in the Gainsharing program—they worked to create a surplus in their departments and therefore were entitled to Gainsharing bonuses. See id. However, each Plaintiff alleges that he or she was denied these bonuses throughout his or her entire employment at Whole Foods stores, because Defendants intentionally manipulated and undermined the Gainsharing program in two ways: (1) by imposing a nationwide scheme of "shifting" labor costs, and (2) by establishing "Fast Teams." Id. ¶¶ 18–25. Under the practice of "shifting" labor costs, if a department came in over budget, Defendants instructed store leadership to "shift" the labor costs of that department to a department that had a budget surplus. Id. ¶¶ 18–31. Payroll/Benefits Specialists at each Whole Foods grocery store then effectuated labor cost shifting by manually altering employee time records otherwise automatically recorded in a Kronos computer system and then submitting the manipulated records to WFMI corporate headquarters for payroll processing. Id. ¶ 20. As a result of this practice, the Gainsharing bonuses owed to employees of departments that performed under budget—including Plaintiffs—were reduced by the costs unlawfully "shifted" to those departments. Id. ¶¶ 24–25. The decision to "shift" labor costs was authorized, made, and ratified at the executive level by Defendants in order to steal bonuses earned by employees nationwide and pad company profits. Id. ¶ 21. Additionally, the use of "Fast Teams" allowed employees to float from one department to another, purportedly to help departments out as needed. Id. ¶ 22. According to Plaintiffs, however, Defendants used Fast Teams to shift labor costs among departments without properly accounting for their work, thereby failing to administer and pay the appropriate bonuses required by the Gainsharing program. Id.

Defendants admitted to misconduct publicly, but claimed that manipulation of the Gainsharing program was an isolated problem, not one that plagued stores nationwide. In public statements, Defendants asserted that the malfeasance occurred in only nine of the 457 Whole Foods stores and was perpetrated by nine store managers who "engaged in a policy infraction that allowed the managers to benefit from a profit-sharing program at the expense of store employees." Defs.' Mot. to Dismiss Second Am. Compl., ECF No. 30 [hereinafter Defs.' Mot.], Ex. A–1, ECF No. 30–3 [hereinafter AP Article]; see 2d Am. Compl. ¶¶ 26, 29; Pls.' Mem. in Opp'n to Defs.' Mot., ECF No. 32 [hereinafter Pls.' Opp'n], Ex., ECF No. 32–4 [hereinafter Washington Post Article]. Defendants terminated those nine store managers.

Plaintiffs Molock, Kuczor, Milner, Bowens, Pace, and Fuentes each were employed in at least one of the nine Whole Foods grocery stores in which Defendants have admitted that employees were deprived of earned Gainsharing bonuses. 2d Am. Compl. ¶ 26. Defendants subsequently sent Whole Foods executives to the nine stores, where they spoke to store employees—including Plaintiffs—and admitted to misconduct related to the Gainsharing program. Plaintiffs claim that Defendants attempted to pay small sums to employees at these nine stores to "buy peace." Id. ¶¶ 27–28.

B. Class Action Allegations

Plaintiffs seek to bring this case on behalf of themselves and all other employees of Whole Foods who were employed by Whole Foods in the District of Columbia, Georgia, Maryland, North Carolina, Oklahoma, Virginia, and throughout the country. Id. ¶ 100. They seek to define the putative class as "past and present employees of Whole Foods who were not paid wages owed to them under the Gainsharing program." Id. ¶ 101. Plaintiffs propose to include within the class the following subclasses:

a. Past and present employees of Whole Foods who were employed in the District of Columbia and did not receive all earned wages at least twice during each calendar month on regular paydays in violation of the District of Columbia Wage Payment and Collection Law.

b. Past employees of Whole Foods who were employed in the District of Columbia and were not paid all earned wages within 7 days after resignation or termination.

c. Past and present employees of Whole Foods who were employed in the State of Maryland and did not receive all earned wages at least once in every 2 weeks or twice in each month on regular paydays, in violation of MD Code, Labor and Employment, § 3–502.

d. Past employees of Whole Foods who were employed in the State of Maryland and were not paid all earned wages for work that the employee performed before the termination of employment, on or before the employee's next anticipated payday, in violation of MD Code, Labor and Employment, § 3–505.

e. Past and present employees of Whole Foods who were employed in the State of Maryland and were not at the time of their hiring provided full and accurate notice of their rates of pay, in violation of MD Code, Labor and Employment, § 3–504.

f. Past and present employees of Whole Foods who were employed in the State of Oklahoma and did not receive all earned wages at least twice each calendar month on regular paydays designated in advance by the employer, in violation of 40 Okl. St. § 165.2.

g. Past employees of Whole Foods who were employed in the State of Oklahoma and were not paid all earned wages, less offsets and less any amount over which a bona fide disagreement exists, at the employee's next anticipated payday, in violation of 40 Okl. St. § 165.3.

Id. ¶ 101(a)–(g).

C. Procedural Background

Plaintiffs filed this action on December 20, 2016. See Compl., ECF No. 1. After Plaintiffs amended their original Complaint, Defendants moved for dismissal, and the court heard oral argument on Defendants' motion on May 19, 2017. See Defs.' Mot. to Dismiss Am. Compl., ECF No. 15. Before the court ruled, Plaintiffs moved for leave to file a Second Amended Complaint, and over Defendants' objection, the court granted leave to amend. See Mem. Op. & Order, ECF No. 27.

Now on the third iteration of the Complaint, Plaintiffs assert the following claims: (1) breach of contract and breach of the duty of good faith and fair dealing (Count I); (2) unjust enrichment (Count II); (3) failure to pay wages upon discharge in violation of D.C. Code § 32–1303 (Count III); (4) failure to pay wages in violation of D.C. Code § 32–1302 (Count IV); (5) failure to maintain accurate employment records in violation of D.C. Code § 32–1008 (Count V); (6) failure to pay wages upon discharge in violation of Md. Code § 3–504 (Count VI); (7) failure to pay wages in violation of Md. Code § 3–502 (Count VII); (8) failure to inform of wages in violation of Md. Code § 3–504 (Count VIII); (9) failure to pay wages upon discharge in...