Vasquez v. Whole Foods Mkt., Inc.

Decision Date09 February 2018
Docket NumberCase No. 17–cv–00112 (APM)
Citation302 F.Supp.3d 36
CourtU.S. District Court — District of Columbia
Parties Victor VASQUEZ, et al., Plaintiffs, v. WHOLE FOODS MARKET, INC., et al., Defendants.

Brendan James Klaproth, Klaproth Law PLLC, Washington, DC, Jesse Colin Klaproth, Klaproth Law PLLC, Philadelphia, PA, for Plaintiffs.

Gregory J. Casas, Greenberg Traurig, LLP, John H. Hempfling, II, Pro Hac Vice, Whole Foods Market Central Office, 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 Victor Vasquez, Nadeem Sheikh, Katia Sadoudi, Svetlana Bautista, Ibrahima Ba, Nicholas Miano, Pa M. Njie, Michael Amegnaglo, and David Berger (collectively, "Plaintiffs") are former Store Team Leaders for various Whole Foods grocery stores in the Washington, D.C., metropolitan area. They bring this action against Defendants Whole Foods Market, Inc. ("WFMI"), Whole Foods Market Group, Inc. ("WFM Group"), Whole Foods Market Services, Inc. ("WF Services"), and Whole Foods spokeswoman Brooke Buchanan (collectively, "Defendants" or "Whole Foods"), alleging that they were terminated in retaliation for blowing the whistle on the improper manner in which Whole Foods conducted its "Gainsharing" program, a bonus program designed to incentivize individual grocery store departments to operate under budget by sharing cost savings with employees. Plaintiffs also assert that, following their terminations, Defendants falsely accused them through published news stories of manipulating the Gainsharing program for their own benefit.

Before the court are the following motions: (1) Defendants' Motion to Dismiss Plaintiffs' Amended Complaint; (2) Plaintiffs' Motion for Leave to File Second Amended Complaint; and (3) Defendants' Motion to Stay. For the reasons herein, the court grants in part and denies in part Defendants' Motion to Dismiss. The court dismisses all claims against all Defendants, except Plaintiffs' claims for defamation and false light invasion of privacy, which may proceed against WFM Group and WF Services only. Additionally, the court grants Plaintiffs' Motion to File a Second Amended Complaint and denies Defendants' Motion to Stay as moot.

II. BACKGROUND
A. Factual Background

Each of the nine Plaintiffs in this action worked as a Store Team Leader—the highest level of leadership at a store location—for a Whole Foods grocery store in the Washington, D.C., metropolitan area before his or her termination in December 2016. Am. Compl., ECF No. 11, ¶ 24. During Plaintiffs' employment, Whole Foods used a profit-sharing program—what Whole Foods referred to as its "Gainsharing" program—in its stores to incentivize department productivity and revenue. Id.¶ 28. Under the program, Whole Foods awarded bonuses to employees whose departments performed under budget by distributing the surplus savings among the employees in that department. Id.

According to Plaintiffs, Whole Foods' corporate leadership undermined the Gainsharing program by imposing a nationwide scheme of "shifting" labor costs. Id. ¶ 29. Under this practice, if a department came in over budget, Whole Foods corporate leadership instructed store leadership—including Store Team Leaders—to "shift" the labor costs of that department to a department that had a budget surplus. Id. Payroll Specialists at each Whole Foods store then effectuated labor cost shifting by manually altering employee time records and submitting the manipulated records to corporate headquarters for payroll processing. Id. ¶ 33. As a result of this practice, the Gainsharing bonuses owed to employees of departments that performed under budget were reduced by the costs unlawfully "shifted" to those departments. Id. ¶ 29. Plaintiffs allege that Whole Foods corporate leadership imposed this practice of "shifting" labor costs in every Whole Foods grocery store to steal bonuses earned by employees and pad company profits. Id. ¶ 30.

In October 2016, a Whole Foods employee from the Mid–Atlantic region submitted an anonymous complaint to Whole Foods' employee tip line, complaining that he or she did not receive the proper Gainsharing bonus because labor costs had been shifted from another department to the employee's department. Id. ¶ 34. Whole Foods thereafter launched an investigation into this complaint. According to Plaintiffs, however, the investigation was a sham. Its true goal was "to concoct support for Whole Foods' pre-determined outcome that the ‘shifting of labor costs’ was limited to the store complained about" in the anonymous tip. Id. ¶ 35.

In early November 2016, Whole Foods investigators interviewed each Plaintiff about the Gainsharing program implemented in his or her respective store. Each Plaintiff explained that shifting labor costs was a standard practice throughout Whole Foods stores and some Plaintiffs stated they received explicit instructions from corporate officials to do so. Am. Compl. ¶¶ 35–37. After these meetings, Plaintiffs were immediately placed on administrative leave. Am. Compl. ¶ 37.

Soon thereafter, Plaintiffs were fired. On November 30, 2016, Plaintiffs were instructed to meet at Whole Foods' regional office on the following day. Am. Compl. ¶ 38. Each Plaintiff met individually with Regional President Scott Allshouse, Regional Vice–President Nicole Wescoe, and Human Resources Executive Coordinator David Gearhart. Each Plaintiff was terminated, purportedly (according to Whole Foods) for shifting labor costs and falsifying documents in violation of company policy. Id.

The firings made the news. On December 13, 2016, the Associated Press reported in an article titled "Whole Foods Fires 9 Store Managers Over Bonus Manipulation" that nine store managers of Whole Foods stores in Maryland, Virginia, and the District of Columbia were dismissed after a company-wide investigation determined that the managers "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, ECF No. 12 [hereinafter Defs.' Mot], Ex. C–2, ECF No. 12–7 [hereinafter AP Article]. The Associated Press article attributed Whole Foods' statements and details about the investigation to Defendant Brooke Buchanan, a spokeswoman for Whole Foods. Two days later, The Washington Post published a news article titled "Whole Foods Fires Managers in Md., Va., and D.C. for Manipulating Bonus System." Defs.' Mot., Ex. C–3, ECF No. 12–8 [hereinafter Washington Post Article]. In the article, Whole Foods confirmed that nine managers of Whole Foods stores in Maryland, Virginia, and the District were fired for manipulating a store bonus program. Washington Post Article, at 1. Whole Foods stated that the conduct was still under investigation but was isolated to a relatively small number of its 457 stores. Speaking on behalf of Whole Foods, Brooke Buchanan stated that "[Whole Foods] took swift action, but, relative to the rest of company, this manipulation only happened in nine of our locations." Id.

B. Procedural Background

Plaintiffs filed this action in the Superior Court for the District of Columbia on December 20, 2016, and Defendants removed the case to this court on January 17, 2017. See Notice of Removal, ECF No. 1. Plaintiffs' Amended Complaint asserts the following claims: (1) wrongful termination and retaliation for whistleblowing against all Defendants except Buchanan (Count I); (2) wrongful termination and retaliation for whistleblowing as to Plaintiff Bautista only against all Defendants except Buchanan (Count II); (3) breach of contract and breach of the duty of good faith and fair dealing against all Defendants except Buchanan (Count III); (4) defamation as to all Defendants (Count IV); and (5) false light invasion of privacy as to all Defendants (Count V). Am. Compl. ¶¶ 49–91.

Defendants moved to dismiss the Amended Complaint on April 3, 2017. Defs.' Mot. Defendants WFMI, WF Services, and Buchanan moved to dismiss pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure for lack of personal jurisdiction, and, in the alternative, for failure to state a claim pursuant to Rule 12(b)(6). Defs.' Mot. at 1 n.1. WFM Group moved to dismiss the complaint solely under Rule 12(b)(6). Id. Plaintiffs opposed Defendants' Motion and simultaneously sought leave from the court to amend their Amended Complaint to add a whistleblower retaliation claim under the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, 15 U.S.C. § 78u–6, against all Defendants except Buchanan. Pls.' Mem. in Opp'n. to Defs.' Mot., ECF No. 17 [hereinafter Pls.' Opp'n]; Pls.' Mot. for Leave to File a Second Am. Compl., ECF No. 16 [hereinafter Pls.' Mot. to Am.]. Defendants subsequently moved the court to stay consideration of Plaintiffs' Motion to Amend until the court ruled on the pending Motion to Dismiss. Defs.' Mot. to Stay Consideration of Pls.' Mot. to Am., ECF No. 21 [hereinafter Defs.' Mot. to Stay].

The parties' motions are now ripe for consideration.

III. LEGAL STANDARD

Upon a motion to dismiss under Rule 12(b)(2), the plaintiff bears the burden of establishing a factual basis for personal jurisdiction. Crane v. N.Y. Zoological Soc. , 894 F.2d 454, 456 (D.C. Cir. 1990) ). A plaintiff can survive a motion to dismiss if she makes a "prima facie" showing of personal jurisdiction. Edmond v. U.S. Postal Serv. General Counsel , 949 F.2d 415, 424 (D.C. Cir. 1991). "[T]o establish a prima facie case, plaintiffs are not limited to evidence that meets the standards of admissibility required by the district court. Rather, they may rest their argument on their pleadings, bolstered by such affidavits and other written materials as they can otherwise obtain." Mwani v. bin Laden , 417 F.3d 1, 7 (D.C. Cir. 2005). The court resolves all factual discrepancies in the record in favor of the plaintiff. See Crane , 894 F.2d at 456.

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