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Rodriguez v. Shan Namkeen Inc.

United States District Court, N.D. Texas, Dallas Division

May 16, 2017

DIMAS RODRIGUEZ, and all others similarly situated under 29 U.S.C. § 216 (b), Plaintiff,
v.
SHAN NAMKEEN, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          RENEE HARRIS TOLIVER UNITED STATES MAGISTRATE JUDGE.

         Pursuant to the parties' consent to proceed before the magistrate judge, Doc. 9 at 5, this case has been transferred to the undersigned for a final ruling, Doc. 10. The Court now considers Defendants' Emergency Motion to Stay Discovery, Doc. 35, and Motion to Dismiss Plaintiff s Second Amended Complaint, Doc. 41. After carefully reviewing the pleadings, the parties' briefing, and the applicable law, Defendants' Motion to Dismiss is GRANTED IN PART and its Motion to Stay Discovery is DENIED AS MOOT.

         I. BACKGROUND AND PROCEDURAL HISTORY

         In October 2015, Plaintiff Dimas Rodriguez filed this claim under the Fair Labor Standards Act ("FLSA") alleging that Defendants, Shan Namkeen, Inc. ("SNI") and Shailesh Patel violated provisions related to the payment of overtime and minimum wages. Doc. 1 at 1. In September 2016, Plaintiff sought and obtained leave to file his First Amended Complaint, Doc. 24, which added a joint enterprise[1] allegation and two additional defendants, Manisha and Shirish Patel. See Doc. 24 at 1, 3-4. In October 2016, Defendants moved to dismiss Plaintiffs claims under Federal Rule of Civil Procedure 12(b)(6). See Doc. 29. The Court granted Defendants' motion, yet permitted Plaintiff to amend his complaint a second time. Doc. 34. Shortly thereafter, and in response to Plaintiffs discovery requests, Defendants filed an Emergency Motion to Stay Discovery until Plaintiff filed his amended complaint and Defendants' forthcoming motion to dismiss was decided. Doc. 35. Since that time, Plaintiff has filed his Second Amended Complaint, Doc. 39, which Defendants again move to dismiss under Rule 12(b)(6), Doc. 41. Following Plaintiffs response, Doc. 42, and Defendants' reply, Doc. 43, the motion is now ripe for consideration.[2]

         II. LEGAL STANDARD

         A plaintiff fails to state a claim for relief under Rule 12(b)(6) when the complaint does not contain "enough facts to state a claim to relief that is plausible on its face." BellAtl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In making this determination, the court accepts "all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff." In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (internal quotation marks and citation omitted). However, the 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) (internal quotation marks and citation omitted). In sum, a plaintiffs factual allegations "must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Twombly, 550 U.S. at 555 (internal citations and footnote omitted).

         III. ANALYSIS

         Defendants again argue that Plaintiffs pleadings are factually deficient and fail to establish (1) individual coverage, (2) enterprise coverage, and (3) that SNI is engaged in a joint enterprise with S2. Doc. 41 at 2, 4-11. In response, Plaintiff contends that his pleadings contain sufficient factual support, and alternatively he requests leave to amend his complaint should the Court find his pleadings deficient in whole or in part. Doc. 42 at 4-15.

         The sections of the FLSA dealing with minimum wage and overtime pay requirements apply only to (1) an employer with "employees who in any workweek [are] engaged in commerce or in the production of goods for commerce" ("individual coverage"), or (2) to an employer with employees "employed in an enterprise engaged in commerce or in the production of goods for commerce" ("enterprise coverage").[3] 29 U.S.C. §§ 206(a)(1), 207(a)(1); see Martin v. Bedell, 955 F.2d 1029, 1032 (5th Cir. 1992) (using the terms "individual" and "enterprise" coverage). While "[e]ither individual or enterprise coverage is enough to invoke FLSA protection, " Martin, 955 F.2d at 1032 (emphasis in original), the plaintiff has the burden or establishing the application of either. Mendoza v. Detail Sols., L.L.C., 911 F.Supp.2d 433, 439 (N.D. Tex. 2012) (Fish, J.).

         A. Individual Coverage

         Plaintiff plausibly alleges individual coverage. While the FLSA does not define "individual coverage, " the Court of Appeals for the Fifth Circuit instructs courts to determine whether the employee's job "is so directly and vitally related to the functioning of an instrumentality or facility of interstate commerce as to be, in practical effect, a part of it, rather than isolated local activity." Sobrinio v. Med. Ctr. Visitor's Lodge, Inc., 474 F.3d 828, 829 (5th Cir. 2007) (per curiam) (quoting Mitchell v. KB. Zachry Co., 362 U.S. 310, 324 (I960)). If an employer conducts business in several states, then an employee of that business engages in commerce "when their work is an essential and integral part of the employer's interstate business." Barr v. Custom Design & Installation, Inc., No. 13-CV-4925-M, 2015 WL 1255870, at *2 (N.D. Tex. Mar. 19, 2015) (Lynn, J.) (citing Wirtz v. WohlShoe Co., 382 F.2d 848, 851 (5th Cir. 1967)). "Employees are engaged 'in the production of goods for commerce' if they are involved with any 'incidental operation preparatory to putting goods into the stream of commerce.'" Flores v. ACTEvent Servs., Inc., 55 F.Supp.3d 928, 935 (N.D. Tex. 2014) (Fish, J.) (quoting W. Union Tel. Co. v. Lenroot, 323 U.S. 490, 503 (1945)).

         Plaintiffs Second Amended Complaint expands on the allegation of individual coverage the Court previously found lacking in factual specificity. It includes allegations that (1) the products, ingredients, and tools Plaintiff transported and used to prepare Defendants' goods had previously traveled across state lines; (2) SNI conducted business outside of Texas; and (3) the goods Plaintiff prepared for Defendants were sold outside of Texas.[4] See Doc. 39 at 3-5.

         However, the fact that Plaintiff may have used tools or worked on products that previously traveled across state lines does not establish individual coverage. Devore v. Lyons, No. 16-CV-1083-BN, 2016 WL 6277810, at *9 (N.D. Tex. Oct. 25, 2016) (Horan, J.) (citations omitted); see also Tran v. Thai, No. H-08-3650, 2010 WL 5232944, at *4 (S.D. Tex. Dec. 16, 2010) ("[R]eception of items from out of state wholesalers ends the interstate journey and employees engaged in further intrastate movement of the goods are 'not covered under the [FLSA]'") (citation omitted). That being said, Plaintiff alleges that (1) Defendants conduct business outside of Texas, and (2) the goods Plaintiff manufactured for Defendants during the course of his employment were being distributed to states surrounding Texas, as well as Illinois and North Carolina. Doc. 39 at 4-5. Taken as true, these allegations show that Plaintiff was engaged in commerce, as the preparation of goods for interstate sale would necessarily be an "essential and integral" part of Defendants' interstate business, and not - as Defendants suggest - tangentially related thereto. Barr, 2015 WL 1255870, at *2; see also Walling v. Sondock, 132 F.2d 77, 78 (5th Cir. 1942) ("[I]f an employee's services are part of and contribute materially to the consummation of transactions in interstate commerce, the employee is engaged in commerce as defined by the [FLSA].").

         While Defendants demand that Plaintiff further specify the states to which SNFs products were sent, and the regularity with which the products he worked on were sold out of state, they fail to cite - and the Court is unable to find - any authority suggesting Plaintiffs fact7ual enhancements to his amended complaint are insufficient to overcome a Rule 12(b)(6) challenge. Additionally, Plaintiffs Second Amended Complaint specifically mentions that Defendants' products were sent to Illinois and North Carolina; the mere fact that Plaintiff also generally mentions "states surrounding Texas" does not make his allegation of individual coverage implausible or conclusory. Doc. 39 at 5; Doc. 43 at 3-4. On the contrary, Plaintiffs allegations demonstrate that he regularly "work[ed] with goods intended for use, ...


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