Wanken v. Wanken
| Decision Date | 01 May 2013 |
| Docket Number | Civil Action No. 3:12-CV-2107-BK |
| Parties | CHRIS WANKEN, Plaintiff, v. DWIGHT WANKEN, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
Pursuant to the parties' consent to proceed before the undersigned Magistrate Judge, this cause is now before the Court on Defendant's Motion to Dismiss Pursuant to Rule 12(b)(6)or, in the Alternative, for More Definite Statement. (Doc. 27). For the reasons that follow, the Motion to Dismiss is GRANTED IN PART.
Plaintiff filed this pro se action in July 2012 against Defendant, his father, asserting claims under the Fair Labor Standards Act ("FLSA"), the Employee Retirement Income Security Act ("ERISA"), and the Internal Revenue Code. (Doc. 3 at 2, 9-13). Plaintiff alleges in his complaint that he and Defendant verbally agreed to operate a financial services firm as partners, but Defendant ultimately terminated Plaintiff's financial services license in March 2008 for personal reasons. Id. at 2-3, 5. Plaintiff states that he filed an action in state court against Defendant for breach of contract, and Defendant moved to compel arbitration. The case was arbitrated before the Financial Industry Regulatory Authority ("FINRA") and ultimately resolved unfavorably to Plaintiff when, according to Plaintiff, Defendant allegedly falsely testified that Plaintiff was not his partner, but was merely a low-level administrative employee. Id. at 5-8.
In his FLSA claim, Plaintiff asserts that he regularly worked over 40 hours per week, but Defendant did not pay him the overtime compensation which was required if Plaintiff was truly his employee. Id. at 9-10. Plaintiff also alleges that Defendant violated multiple provisions of ERISA with regard to how Defendant "classified" him, and Defendant never made mandatory contributions to a qualified retirement plan for Plaintiff. Id. at 11. Finally, Plaintiff claims that Defendant violated the Internal Revenue Code in order to evade paying employment taxes, and he forced Plaintiff to pay self-employment taxes that Defendant should have paid. Id. at 11-13. Defendant now moves to dismiss and, alternatively, requests that the Court order Plaintiff to file a more definite statement. (Doc. 28 at 8).
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff must allege enough facts to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). In ruling on a motion to dismiss, a court must accept all factual allegations in the complaint as true. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 572 (2007). In order to overcome a Rule 12(b)(6) motion, a plaintiff's complaint should "contain either direct allegations on every material point necessary to sustain a recovery ... or contain allegations from which an inference may fairly be drawn that evidence on these material points will be introduced at trial." Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995) (quotation omitted). Moreover, the complaint should not simply contain conclusory allegations, but must be pled with a certain level of factual specificity because the district court cannot "accept as true conclusory allegations or unwarranted deductions of fact." Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000) (quotation omitted).
Defendant first urges that Plaintiff's ERISA claim fails because no ERISA-related employee benefit plan exists; thus, Plaintiff cannot prove that he had the right to enforce the terms of any such plan. (Doc. 28 at 3-4). Defendant also asserts that Plaintiff has not alleged that he exhausted ERISA's required administrative procedures. Id. at 7-8.
Plaintiff responds that Defendant made regular contributions for himself to a Simplified Employee Pension plan ("SEP") and, as such, ERISA required Defendant to make similar contributions for Plaintiff if Plaintiff was indeed Defendant's "employee." (Doc. 31 at 5-7). Defendant replies that an SEP is simply an individual retirement account, which is not the type of account that falls under ERISA. (Doc. 37 at 2-4). Defendant maintains that he established the SEP on his own as a self-employed individual and as part of his own retirement plan, which Plaintiff conceded by acknowledging that Defendant's SEP was "his own retirement account." Id. at 3-4.
As an initial matter, the Court must consider the types of ERISA claims that Plaintiff is raising before discussing whether any of those claims are viable. Plaintiff contends in his complaint that Defendant's actions violated three ERISA provisions, namely sections 1131, 1132, and 1134. (Doc. 3 at 10-11). Section 1131, however, sets forth the criminal penalties available for willful violations of ERISA. In order for a private right of action to exist under a criminal statute, there must be "a statutory basis for inferring that a civil cause of action of some sort lay in favor of someone." Cort v. Ash, 422 U.S. 66, 79 (1975). Nothing in section 1131 indicates that it is anything more than a "bare criminal statute," demonstrating that no civil enforcement of any kind is available. Id. at 79-80; see also Linda R.S. v. Richard D., 410 U.S.614, 619 (1973) (). Accordingly, any claim that Plaintiff is attempting to bring under section 1131 must fail. Section 1134 also does not provide a private cause of action as it merely sets forth the powers of the Secretary of Labor to conduct administrative investigations. 29 U.S.C. § 1134. Accordingly, Plaintiff's purported claims under sections 1131 and 1134 are DISMISSED WITH PREJUDICE. McConathy v. Dr. Pepper/Seven Up Corp., 131 F.3d 558, 561-62 (5th Cir. 1998) ().
Section 1132 does, however, allow a private cause of action to be brought by an ERISA plan participant or beneficiary to, inter alia, "recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a). Thus, Plaintiff potentially may state a claim under section 1132 if Defendant's SEP qualified as an ERISA plan under which Defendant was required to open a retirement account and make contributions thereto on Plaintiff's behalf. (Doc. 3 at 10-11).
Nevertheless, the Court of Appeals for the Fifth Circuit requires that claimants seeking ERISA plan benefits in court must first exhaust the administrative remedies that are available under the plan. Bourgeois v. Pension Plan for Employees of Santa Fe Intern. Corp., 215 F.3d 475, 479 (5th Cir. 2000). Plaintiff did not allege in his complaint either that he exhausted such remedies or that it would have been futile for him to do so under the circumstances. Id. Accordingly, his ERISA claim under section 1132 fails, but the Court will allow him theopportunity to amend his complaint to restate his ERISA claim if he wishes to do so.1 See Jacquez v. Procunier, 801 F.2d 789, 792 (5th Cir. 1986) ().
Defendant next urges that dismissal of Plaintiff's overtime claim under the FLSA is warranted because any such claim is barred by the statute of limitations. (Doc. 28 at 4). Defendant acknowledges Plaintiff's attempt to avoid the limitations bar by arguing that he did not learn of his status as an "employee" until Defendant testified to such during the FINRA proceeding in December 2009. Id. at 5. Nevertheless, Defendant argues that this Court should reject that argument because Plaintiff (1) admitted in his December 2008 FINRA statement of claim that he had seen a March 2008 email from defense counsel suggesting that Plaintiff was an employee; and (2) noted in his statement of claim that Defendant said he wanted to reclassify Plaintiff's tax status to "employee." Id. at 5-6 (citing Doc. 24-1, App. at 19, 20, 30).
On the merits, Defendant asserts that Plaintiff was an exempt employee under the FLSA because Plaintiff alleged in his FINRA statement of claim that he was the "Vice President and Chief Investment Strategist at Beacon Financial Advisors." Id. at 6 (citing Doc. 24-1, App. at 30). Defendant notes that Plaintiff claimed he was an "executive employee" whose duties were primarily those of management, he was involved in general business operations and exercised independent judgment, and he analyzed financial information and advised clients regarding financial products based on his advanced knowledge in that field. Id. at 6-7 (citing Doc. 10 App.at 4). Lastly, Defendant contends that Plaintiff's FLSA claim should be dismissed because it is "incomprehensible" insofar as he fails to allege sufficiently specific facts. Id. at 7-8.
Plaintiff responds that Defendant has contradicted his prior FINRA testimony regarding the nature of Plaintiff's work because he previously averred that Plaintiff was an administrative employee who had no investment responsibilities and engaged in no independent decision-making. (Doc. 31 at 3, 13). Plaintiff also denies that his claims are time-barred, noting that Defendant testified in December 2009 that Plaintiff was his employee, which is the first time that Defendant informed Plaintiff that he believed Plaintiff was his employee. Id. at 7, 25. Prior to that time, Plaintiff asserts that Defendant repeatedly acknowledged him as a partner, even after they had begun to litigate in advance of the arbitration. Id. at 8-11, 18-19. Plaintiff contends that Defendant is suggesting that he should have predicted that Defendant was...
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