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Zuniga v. Gracia Mexican Kitchen, LLC

United States District Court, S.D. Texas, Corpus Christi Division

July 10, 2019

JOSE ZUNIGA, et al, Plaintiffs,
v.
GRACIA MEXICAN KITCHEN, LLC, et al, Defendants.

          MEMORANDUM AND RECOMMENDATION ON DEFENDANTS' MOTIONS TO DISMISS

          JASON B. LIBBY UNITED STATES MAGISTRATE JUDGE.

         Plaintiff, Jose Zuniga, a former restaurant employee, filed this Fair Labor Standards Act (“FLSA”) collective action on January 16, 2019, for unpaid wages and overtime pay against five Defendants, Gracia Mexican Kitchen, LLC (“Gracia”), Matthew Hoeg (“Hoeg”), Brian Smith (“Smith”), David Martinez (“Martinez”) and Adrian Hembree (“Hembree”) (Collectively “Defendants”), alleging Defendants are their joint employers. (D.E. 1). Plaintiff has also asserted common law Quantum Meruit claims. (D.E. 1, Pages 12-13). On February 14, 2019, Defendants Hembree, Hoeg and Smith filed a Motion to Dismiss. (D.E. 11). Subsequently, Plaintiff filed a Response to which Defendants' replied. (D.E. 13 and D.E. 15). On April 16, 2019, Defendant Martinez also filed a Motion to Dismiss, to which Plaintiff filed a Response. (D.E. 27 and DE. 33).

         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. 4). For the reasons stated below, the undersigned recommends Defendants Hoeg, Smith and Hembree's Motion to Dismiss be DENIED and Defendant Martinez's Motion to Dismiss be GRANTED. (D.E. 11 and D.E. 27). However, Plaintiff is GRANTED leave to amend on or before July 19, 2019.

         I. 12(b)(6) MOTION STANDARD OF REVIEW

         Federal 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)).

         “The 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).

         “Threadbare 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).

         II.EMPLOYER” UNDER THE FLSA

         Defendants, in both Motions to Dismiss, argue Plaintiff has 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).

         The 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).

         III. ANALYSIS

         Plaintiff argues applying the economic reality test to all Defendants, the allegations in the Complaint are sufficient to support their contention that all Defendants were joint employers. In the Complaint, relevant to the issue of joint employers, Plaintiff asserts Defendants Hoeg, Smith, Hembree and Martinez are Managing Members of Defendant Gracia. (D.E. 1, Page 5). Plaintiff also states:

         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 determined the rate ...

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