Vaughn v. Phx. House N.Y. Inc.

• Decision Date: 22 April 2020
• Docket Number: August Term 2019,No. 19-517-cv,19-517-cv
• Parties: Mark VAUGHN, Plaintiff-Appellant, v. PHOENIX HOUSE NEW YORK INC., Phoenix House, Defendants-Appellees, Terrance Waring, House Manager of Phoenix House Long Island City Campus, Arthur Wallace, Substance Abuse Counselor, William Brown, House Programs of New York, Thomas Jasper, Chairman of Phoenix House Programs of New York, Denise Buckley, Managing Director Phoenix House L.I.C., Herman Lazada, Managing Director, Phoenix House Career Academy, Howard Meitiner, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

957 F.3d 141

Mark VAUGHN, Plaintiff-Appellant,

v. PHOENIX HOUSE NEW YORK INC., Phoenix House, Defendants-Appellees,Terrance Waring, House Manager of Phoenix House Long Island City Campus, Arthur Wallace, Substance Abuse Counselor, William Brown, House Programs of New York, Thomas Jasper, Chairman of Phoenix House Programs of New York, Denise Buckley, Managing Director Phoenix House L.I.C., Herman Lazada, Managing Director, Phoenix House Career Academy, Howard Meitiner, Defendants.

No. 19-517-cv

August Term 2019

United States Court of Appeals, Second Circuit.

Submitted: April 1, 2020

Decided: April 22, 2020

Mark Vaughn, pro se, Brooklyn, NY.

Marie D. Howick, Rachel G. Skaistis, and Justin Mungai, Cravath, Swaine & Moore LLP, New York, NY, for Defendants-Appellees.

Before: Kearse, Walker, and Cabranes, Circuit Judges.

José A. Cabranes, Circuit Judge:

Plaintiff-Appellant Mark Vaughn ("Vaughn")—proceeding pro se on appeal but counseled before the District Court—sued Phoenix House New York and Phoenix House Foundation (jointly, "Phoenix House"), a drug treatment facility, under 42 U.S.C. § 1983, the Fair Labor Standards Act ("FLSA") and the New York Labor Law ("NYLL"), alleging that he was not paid for work he performed while a patient there. The District Court (Ronnie Abrams, Judge ) dismissed Vaughn’s complaint.

In an earlier appeal, we affirmed the dismissal of the Section 1983 claim because it was untimely, but vacated the dismissal of the FLSA and NYLL claims and remanded them to the District Court to consider whether Vaughn stated an FLSA claim in light of Glatt v. Fox Searchlight Pictures, Inc. , 811 F.3d 528 (2d Cir. 2016).¹ On remand, Vaughn was appointed pro bono counsel, who filed a third amended complaint (the "TAC"). The District Court dismissed the TAC, reasoning that Vaughn failed to allege sufficient facts to show that he was an employee within the meaning of the FLSA, and declined to exercise jurisdiction over Vaughn’s remaining NYLL claims. Vaughn appeals, again proceeding pro se .

Because we conclude that Vaughn was not an employee of Phoenix House within the meaning of the FLSA, we AFFIRM the February 12, 2019 judgment of the District Court.

BACKGROUND

I. Factual Background

As set out in the TAC, in July 2009 Vaughn entered a program at the Phoenix House, a residential drug and alcohol treatment facility, pursuant to his state-court-approved agreement to participation in a rehabilitation program, in lieu of incarceration for existing criminal charges. Vaughn completed the inpatient phase of the program and then began an outpatient phase. In 2010, he violated a condition of his agreement and was reassigned to an inpatient program at Phoenix House beginning in February 2011. After Vaughn returned to Phoenix House, he attended a 30-day orientation period but then refused to complete work duties the program required of him. Vaughn alleged that the state court judge supervising his case told him that if he was removed from the Phoenix House program due to his non-compliance, he would go to jail.² He began performing his work responsibilities at Phoenix House in April 2011, and continued to do so until January 2012.³

Vaughn alleges that during his stays at Phoenix House, he was required to labor 8 hours a day, 6 days a week.⁴ He states that he complained about Phoenix House’s illegal work without any effect on Phoenix House’s conduct.

II. Procedural History

Vaughn filed suit against Phoenix House on May 12, 2014. After Vaughn amended his complaint, Phoenix House moved to dismiss the complaint for failure to state a claim upon which relief can be granted, which the District Court granted on September 25, 2015, without prejudice to the filing of an amended complaint.⁵ Vaughn again amended his complaint, which the District Court again dismissed, this time with prejudice, on August 9, 2016.⁶

Vaughn appealed the dismissal on August 30, and by summary order we affirmed the District Court’s judgment with respect to Vaughn’s Section 1983 and 1994 claims, but vacated it with respect to Vaughn’s FLSA and NYLL claims.⁷ In remanding, we directed the District Court to determine whether Vaughn, as an unpaid worker in a rehabilitative program, qualifies as an "employee" under the FLSA in light of our decision in Glatt v. Fox Searchlight Pictures, Inc.⁸ We also recommended that he be appointed pro bono counsel.⁹

Vaughn, accordingly represented by counsel, filed a third amended complaint on April 30, 2018 (the "TAC"). Following additional briefing, the District Court granted the motion of Phoenix House to dismiss the TAC on February 12, 2019, concluding that Vaughn’s "allegations do not make out a plausible claim that [he] was Phoenix House’s employee and thus entitled to wages under the FLSA" because "Vaughn was undoubtedly the primary beneficiary of his treatment at Phoenix House’s facilities."¹⁰

Vaughn timely appealed.

DISCUSSION

"We review de novo a district court’s dismissal of a complaint pursuant to Rule 12(b)(6), construing the complaint liberally, accepting all factual allegations in the complaint as true, and drawing all reasonable inferences in the plaintiff’s favor."¹¹ The complaint must plead "enough facts to state a claim to relief that is plausible on its face."¹² Although a court must accept as true all the factual allegations in the complaint, that requirement is "inapplicable to legal conclusions."¹³

I. Vaughn’s FLSA Claims

The District Court properly applied Glatt on remand in holding that Vaughn was not an employee of Phoenix House for the purposes of the FLSA.¹⁴

In Glatt , we addressed the question of whether an unpaid intern qualifies as an employee entitled to compensation under the FLSA,¹⁵ and we extend that analysis to the analogous circumstances presented in this case. Assessing the nature of the relationship between an intern and his employer, we concluded in Glatt that "the proper question is whether the intern or the employer is the primary beneficiary of the relationship."¹⁶ The "primary beneficiary test" has "three salient features:" (1) its "focus[ ] on what the intern receives in exchange for his work," (2) its "flexibility to [permit] examin[antion] of the economic reality" of the relationship, and (3) its acknowledgement that the intern-employer relationship is subject to unique considerations in light of the intern’s expected "educational or vocational benefits that are not necessarily expected with all forms of employment."¹⁷ In performing this analysis, we ask the district courts to evaluate a "non-exhaustive set of considerations," which include:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.

2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.

3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.

4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.

5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.

6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern. 7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.¹⁸

We emphasized that "[n]o one factor is dispositive and every factor need not point in the same direction for the court to conclude that the intern is not an employee entitled to the minimum wage."¹⁹

In carefully weighing each of these considerations in the context presented by Vaughn’s circumstances—in which he is not an intern, but a recipient of in-patient treatment in a court-approved rehabilitation program—the District Court properly assumed that all of Vaughn’s allegations were true²⁰ and correctly determined that Factors One, Five, and Seven weigh "strongly" against finding that Vaughn was an employee of Phoenix House; Factor Six weighs in Vaughn’s favor; and Factors Two, Three, and Four provide "mixed guidance."²¹ As the District Court rightly noted, however, the importance of Factor Six in the context of this case differs from that of an unpaid intern.²² And Vaughn received significant benefits from staying at Phoenix House, in large part because he was permitted to receive rehabilitation treatment there in lieu of a jail sentence, and was "provided with food, a place to live, therapy, vocational training, and jobs that kept him busy and off drugs."²³ Inasmuch as we agree with the District Court’s careful analysis of the Glatt factors in the context of Vaughn’s stay at Phoenix House, we cannot conclude that, in these circumstances, Vaughn was an employee of Phoenix House. Accordingly, Vaughn cannot state a claim under the FLSA.

Because the District Court properly dismissed Vaughn’s FLSA claims, the only claims over which it had original jurisdiction, it did not abuse its discretion by declining to exercise supplemental jurisdiction over his NYLL claims.²⁴

II. Vaughn’s Section 1983 Claim

In this appeal, Vaughn also seeks to renew his arguments regarding our prior affirmance of the District Court’s dismissal of his Section 1983 claim.²⁵ Those efforts are barred by the law-of-the-case doctrine, which "commands that when a court has ruled on an issue, that decision should generally be adhered to by that court in subsequent stages in the same case unless cogent and compelling reasons militate otherwise."²⁶ Compelling reasons include "an intervening change in law,...