United States District Court, S.D. Texas, Corpus Christi Division
MEMORANDUM AND RECOMMENDATION ON DEFENDANTS'
MOTIONS TO DISMISS
B. LIBBY UNITED STATES MAGISTRATE JUDGE.
former restaurant employees, filed this Fair Labor Standards
Act (“FLSA”) collective action for unpaid wages
and overtime pay against six Defendants, Gracia Mexican
Kitchen, LLC (“Gracia”), Pasta Company, Ltd.
(“Pasta”), Matthew Hoeg (“Hoeg”),
Brian Smith (“Smith”), David Martinez
(“Martinez”) and Adrian Hembree
“Defendants”), alleging Defendants are their
joint employers. (D.E. 51). This matter has been referred to
the undersigned Magistrate Judge for case management and
making recommendations on dispositive motions pursuant to 28
U.S.C. § 636. (D.E. 27).
December 4, 2018, the undersigned entered a Memorandum and
Recommendation (“M & R”) recommending
Plaintiffs had pled sufficient facts to state viable claims
against Defendants Hoeg, Martinez, Pasta and Gracia but not
Defendant Smith. (D.E. 44). Plaintiffs were given leave to
amend their complaint, which they did on December 18, 2018,
adding Adrian Hembree as a Defendant as well as additional
allegations. (D.E. 51). On January 2, 2019, Defendants Hoeg
and Smith filed the pending Motion to Dismiss. (D.E. 58).
Subsequently, Plaintiffs filed a Response to which
Defendants' replied. (D.E. 64 and D.E. 70). On January
28, 2019, Defendant Hembree filed a Motion to Dismiss, to
which Plaintiffs responded and Defendant Hembree replied.
(D.E. 67, D.E. 71 and D.E. 75).
March 18, 2019, the Honorable Nelva Gonzales Ramos entered an
order adopting the December 4, 2018 M & R, finding the
original complaint pled sufficient facts to state a viable
claim under the FLSA against all Defendants, with the
exception of Defendant Smith. (D.E. 79). For the reasons
stated below, the undersigned recommends Defendants'
Motions to Dismiss be DENIED. (D.E. 58 and
12(b)(6) MOTION STANDARD OF REVIEW
Rule of Civil Procedure 12(b)(6) allows a party to move to
dismiss an action for failure to state a claim upon which
relief can be granted. Fed.R.Civ.P. 12(b)(6). In deciding a
Rule 12(b)(6) motion to dismiss for failure to state a claim,
“[t]he 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) (citation
omitted). To survive the motion, a nonmovant must plead
“enough facts to state a claim to relief that is
plausible on its face” and must plead those facts with
enough specificity “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).” Id. (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)).
court's task is to determine whether the plaintiff has
stated a legally cognizable claim that is plausible, not to
evaluate the plaintiff's likelihood of success.”
Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC,
594 F.3d 383, 387 (5th Cir. 2010) (citing Ashcroft v.
Iqbal, 556 U.S. 662 (2009)). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678 (citation omitted).
“The plausibility standard is not akin to a
‘probability requirement,' but it asks for more
than a sheer possibility that a defendant has acted
unlawfully.” Id. (citation omitted).
recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice. Id.
(citation omitted). “While legal conclusions can
provide the framework of a complaint, they must be supported
by factual allegations” to be entitled to the
assumption of truth. Id. at 679 (“When there
are well-pleaded factual allegations, a court should assume
their veracity and then determine whether they plausibly give
rise to an entitlement to relief.”). Under Rule
8(a)(2), plaintiffs are not required to include
“detailed factual allegations, ” but at the same
time “more than an unadorned,
the-defendant-unlawfully-harmed-me accusation” is
needed. Iqbal, 556 U.S. at 678. “To survive a
Rule 12(b)(6) motion to dismiss, the complaint ‘does
not need detailed factual allegations,' but it must
provide the plaintiff's grounds for entitlement to relief
- including factual allegations that, when assumed to be
true, ‘raise a right to relief above the speculative
level.'” N. Cypress Med. Ctr. Operating Co.,
Ltd. v. Cigna Healthcare, 781 F.3d 182, 191 (5th Cir.
2015) (citing Twombly, 550 U.S. at 555).
“EMPLOYER” UNDER THE FLSA
in both Motions to Dismiss, argue Plaintiffs have failed to
adequately plead that each were “employed” by
them. “Employer” is defined by the FLSA to mean
“any person acting directly or indirectly in the
interest of an employer in relation to an employee.” 29
U.S.C. § 203(d); Lee v. Coahoma Cnty., 937 F.2d
220, 226 (5th Cir. 1991). Interpreted expansively, the
“term employer includes individuals with managerial
responsibilities and ‘substantial control over the
terms and conditions of the [employee's]
work.'” Id. at 226 (citation omitted).
While “merely being an officer or shareholder”
will not subject an individual to FLSA liability,
“employer status may be appropriate where operational
control coincides with one's position as a shareholder,
officer, or owner.” Gray v. Powers, 673 F.3d
352, 355-56 (5th Cir. 2012).
Fifth Circuit uses the “economic reality” test to
evaluate whether a person possesses such operational control
with respect to the employment relationship. Id. at
355-57. The Court should consider whether the alleged
employer: (1) possessed the power to hire and fire the
employees; (2) supervised and controlled employee work
schedules or conditions of employment; (3) determined the
rate and method of payment; and (4) maintained employment
records. Id. at 355 (citation omitted). Where there
may be more than one employer, courts “must apply the
economic realties test to each individual or entity alleged
to be an employer and each must satisfy the four part
test.” Id. at 355 (citation omitted).
“While each element need not be present in every case,
” the person must have control over at least some
aspects of the employment relationship as “finding
employer status when none of the factors is present would
make the test meaningless.” Gray, 673 F.3d at
357 (“While the Fifth Circuit ‘has on several
occasions found employment status even though the
defendant-employer had no control over certain aspects of the
relationship,' it does not follow that someone who does
not control any aspect of the employment relationship is an
employer.”) (citation omitted).
Court has now decided the original complaint pled sufficient
facts to state a viable claim under the FLSA against
Defendant Hoeg, the undersigned recommends the amended
complaint, which contains additional allegations, is also
sufficient as to Defendant Hoeg. (D.E. 79). Considering the
pending Motions, applying the economic reality test, the
undersigned recommends the allegations in the Complaint are
sufficient to support Plaintiffs' contention that
Defendants Hoeg, Smith and Hembree were joint employers. In
the Complaint, relevant to the issue of joint employers,
Plaintiffs assert Defendants Hoeg, Smith, and Hembree, as
well as Martinez, are Managing Members of Defendant Gracia.
(D.E. 51, Page 5). Plaintiffs also allege, relevant to
Defendants Hoeg, Smith and Hembree:
Defendants are joint employers pursuant to 29 C.F.R. §
791.2. Defendants directly or indirectly hired Plaintiffs and
the Putative Class Members, controlled their work schedules
and conditions of employment, and ...