United States District Court, D. Rhode Island
DARLENE A. D'AREZZO, OLIVIA M. HOWARD, and JOELLE A. DEPEYROT, individually and on behalf of other similarly situated individuals, Plaintiffs,
v.
THE PROVIDENCE CENTER, INC., alias, Defendants. DARLENE A. D'AREZZO, STACEY L. SALYERS and JOSEPH K. REARDON, individually and on behalf of other similarly situated individuals, Plaintiffs,
v.
FAMILY SERVICE OF RHODE ISLAND, INC., alias, Defendants
For
Darlene A. D'Arezzo, Individually and on behalf of other
similarly situated individuals, Olivia M. Howard,
Individually and on behalf of other similarly situated
individuals, Joelle A. Depeyrot, Individually and on behalf
of other similarly situated individuals, Plaintiffs
(1:15-cv-00120-M-LDA): Richard A. Sinapi, Sinapi Law
Associates, Ltd., Warwick, RI.
For
Stacey L. Salyers, Individually and on behalf of other
similary situated individuals, Joseph K Reardon, Individually
and on behalf of other similarly situated individuals, Consol
Plaintiffs (1:15-cv-00120-M-LDA): Richard A. Sinapi, LEAD
ATTORNEYS, Sinapi Law Associates, Ltd., Warwick, RI.
For The
Providence Center, Inc., Defendant (1:15-cv-00120-M-LDA,
1:15-cv-00121-M-PAS): Joseph D. Whelan, Meghan E. Siket, LEAD
ATTORNEYS, Whelan, Corrente, Kinder & Siket LLP, Providence,
RI.
For
Family Service of Rhode Island, Inc., Consol Defendant
(1:15-cv-00120-M-LDA): Christina L. Lewis, LEAD ATTORNEY,
Brendan J. Lowd, Hinckley Allen, Boston, MA.
For
Darlene A. D'Arezzo, Individually and on behalf of other
similarly situated individuals, Stacey L. Salyers,
Individually and on behalf of other similarly situated
individuals, Joseph K. Reardon, Individually and on behalf of
other similarly situated individuals, Plaintiffs
(1:15-cv-00121-M-PAS): Richard A. Sinapi, Sinapi Law
Associates, Ltd., Warwick, RI.
For
Family Service of Rhode Island, Inc., Defendant
(1:15-cv-00121-M-PAS): Christina L. Lewis, LEAD ATTORNEY,
Brendan J. Lowd, Hinckley Allen, Boston, MA.
Page 225
MEMORANDUM
& ORDER
John J.
McConnell, Jr., United States District Judge.
This
case is before the Court on Defendants' Motions to
Dismiss the consolidated lawsuits brought by two sets of
plaintiffs against their current and former employers,
alleging violations of the Federal Labor Standards Act (FLSA)
and the Rhode Island Minimum Wage Act (RIMWA). (ECF Nos, 12,
13). After reviewing the pleadings and the relevant
substantive and procedural law, Defendants' Motions to
Dismiss are GRANTED without prejudice.
I.
PROCEDURAL BACKGROUND
Plaintiffs
Darlene D'Arezzo, Olivia Howard, and belle Depeyrot
brought suit individually and on behalf of all persons
similarly situated in the State of Rhode Island against their
employer, The Providence Center. C.A. 1:15-cv-00120-M-LDA. On
the same date, Ms. D'Arezzo and two others, Stacey
Salyers and Joseph Reardon,
Page 226
brought a nearly identical lawsuit against their former
employer, Family Service of Rhode Island, Inc. C.A.
1:15-cv-00121-M-LDA. Both sets of plaintiffs claim violations
of the FLSA and the RIMWA. (ECF No. 1 ¶ ¶
2-3).[1] Both Defendants moved to dismiss for
failure to state a claim upon which relief can be granted
pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure. (ECF Nos. 12, 13). Plaintiffs filed a single
objection to both motions, (ECF No. 15), and Defendants filed
separate replies. (ECF Nos. 16, 17).
II.
FACTS ALLEGED IN THE COMPLAINTS
Plaintiffs
are social services professionals who refer to themselves as
" Fee-For-Service Therapists." (ECF No. 1 ¶
19). They allege that they are non-exempt employees under the
FLSA and the RIMWA, or in the alternative, exempt employees
whose rights were nonetheless violated. Id. ¶
¶ 51-55. They provide mental health, marriage and family
therapy, and other counseling services to needy families and
citizens across the state. Id. ¶ ¶ 5-7,
34. Defendants are two institutions that employed Plaintiffs.
Id. ¶ 8.
Plaintiffs
allege that they were " paid under a purported 'fee
for service' arrangement as described [in the
Complaint]." Id. ¶ ¶ 5-7, 19. The
Complaint describes the arrangement as " a purported
hybrid compensation plan typically consisting of flat rates
for certain tasks and hourly rates for certain other services
provided or work performed." [2] Id. ¶ 36.
The
crux of Plaintiffs' complaint is that they were paid flat
fees for recurring, time-specific jobs, but no fees for
certain tasks related to those jobs -- tasks that Defendants
required them to do, regardless of how long they took to
complete. For example, while Plaintiffs typically received
$40 for each 45-minute therapy session, they received no
compensation for various time-consuming tasks attendant to
each session. Id. ¶ 37, Plaintiffs do not
specify whether their employment contract with Defendants
contemplated and encompassed these attendant tasks, or
whether Defendants simply required Plaintiffs to complete
these tasks in addition to their bargained-for duties.
Plaintiffs
allege the following typical scenario: Because therapy
sessions were sometimes located outside Defendants'
facilities, Plaintiffs would have to travel to and from some
sessions. Id. ¶ 45. When they arrived at the
location of a session, they were required to wait at least 15
minutes for a client to show up. Id ¶ ¶
41, 46, 48. If the client did not show up, they had to
complete certain follow up work pursuant to the
Defendants' " no show" policies. Id.
¶ 46-49. This follow up work required Plaintiffs to
" 1) conduct a family outreach by phone, 2) complete and
submit an encounter form, 3) draft, print, and mail the
no-show client a letter, and/or 4) update the no-show
client's progress notes and/or discharge paperwork."
[3]
Id. ¶ 42. Plaintiffs were not paid for any of
these tasks because Defendants only permitted Plaintiffs to
" report hours/time for client
Page 227
appointments that were actually kept, and not for other work
performed." Id. ¶ 49.
Relatedly,
Plaintiffs were also required to do uncompensated work if a
client canceled within 24 hours of a scheduled session. In
those situations, Plaintiffs were " typically
required" to " 1) provide notice directly or
indirectly to the 'canceled client'; 2) complete and
submit an encounter form, and 3) update the progress
notes." Id. ¶ 43. They were not
compensated for these tasks or the time it took to complete
them.
Plaintiffs
also allege they were never compensated for " [t]ime
spent obtaining insurance authorizations," and for
[t]ime spent attending mandatory follow-up paperwork, and
record keeping for clients, including but not limited to
calling, emailing and writing letters to clients and others
involved in the care or supervision of the clients, such as
schools, hospitals, other psychotherapists, physicians, other
social agencies, authorized family and clients'
associates, [Rhode Island Department of Children, Youth &
Families], and law enforcement as well as writing follow-up
notes of such actions.
Id. ¶ 50.[4]
III.
STANDARD OF REVIEW
At the
motion to dismiss stage, the Court accepts as true all
well-pleaded factual allegations in the complaint and makes
all reasonable inferences therefrom in favor of the
Plaintiffs. Bergemann v. Rhode Island Dep't of Envtl.
Mgmt., 665 F.3d 336, 339 (1st Cir. 2011) (citing
Dominion Energy Brayton Point, LLC v. Johnson, 443
F.3d 12, 16 (1st Cir. 2006)). The Federal Rules of Civil
Procedure only require Plaintiffs to provide Defendants with
" a short and plain statement of the claim showing that
the pleader is entitled to relief." Fed.R.Civ.P.
8(a)(2). This requirement is satisfied when Plaintiffs
include sufficient factual allegations in their complaint to
nudge their claims " across the line from conceivable to
plausible." Bell A. Corp. v. Twombly, 550 U.S.
544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
Nonetheless, to stave off a motion to dismiss, Plaintiffs are
also " required to set forth factual allegations, either
direct or inferential, respecting each material element
necessary to sustain recovery under some actionable legal
theory." Gooley v. Mobil Oil Corp., 851 F.2d
513, 514 (1st Cir. 1988) (citing Conley v. Gibson,
355 U.S. 41, 45-48, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).
IV.
LEGAL ANALYSIS
Plaintiffs
allege they were paid below the minimum wage in violation of
FLSA provision 29 U.S.C. § 206 (2013).[5] " To
state a valid FLSA claim, [P]laintiffs had to allege (1) that
they were employed by [Defendants]; (2) that their work
involved interstate activity; and (3) that they performed
work for which they were under-compensated." Pruell
v. Caritas Christi, 678 F.3d 10, 12 (1st Cir. 2012).
Defendants challenge the sufficiency of the third element of
Plaintiffs' claim.
To
satisfy the third element, Plaintiffs must plead that they
performed compensable work, for which they were compensated
at a rate below the federal hourly
Page 228
minimum wage. Defendants argue that Plaintiffs failed this
requirement, citing the so-called Klinghoffer rule.
United States v. Klinghoffer Bros. Realty Corp., 285
F.2d 487, 490 (2d Cir. 1960) (holding that FLSA minimum wage
claims are only viable when a covered employee's wages
for a single workweek divided by hours worked dip
below the federal minimum wage -- hereinafter referred to as
the " weekly measuring rod" ). Plaintiffs do not
allege in their complaints that the wages they earned in any
given workweek divided by hours worked ever dipped below the
minimum wage.
Defendants
also challenge whether Plaintiffs pleaded the alleged
violations with sufficient factual specificity, and whether
Plaintiffs have sufficiently asserted " willful"
violations of the FLSA so that the statute of limitations can
be extended from two years to three years under 29 U.S.C.
§ 255(a) (2013).
Plaintiffs
urge the Court to reject the Second Circuit's
Klinghoffer rule in favor of the " hourly
measuring rod" adopted in 2011 by a First Circuit sister
district court in Norceide v. Cambridge Health
Alliance, 814 F.Supp.2d 17, 23, 25 (D. Mass.
2011).[6] Under the Plaintiffs' theory, the
employer must pay them at least a minimum wage for each hour
worked, regardless of what their contract provides. Relying
on Norceide, Plaintiffs claim that Defendants
compensated Plaintiffs with a flat fee for time-specific
jobs, but did not compensate Plaintiffs for the
additional time they were required to spend on tasks
attendant to those jobs. Plaintiffs do not state in their
complaints whether their employment contracts with Defendants
contemplated and included those attendant tasks.
After
reviewing the relevant case law, the controlling statute, and
the regulations interpreting that statute, the Court finds
that the FLSA does not prescribe a single measuring rod for
all covered employees, but rather instructs courts to look to
the employment contract between the parties to determine
whether the statute has been violated. Therefore, Plaintiffs
could state a claim under a " contract measuring
rod" theory when their employer requires them to put in
additional work, not required by their contract, at a
compensation rate below the minimum wage.[7] Plaintiffs could
also state a claim under the " weekly measuring
rod" theory when the wages they earn in a given
workweek, divided by hours worked, dip below the minimum
wage.[8] Because the current versions of
Plaintiffs' complaints do not state a claim under either
theory, the Court grants Defendants' motions to dismiss,
but allows Plaintiffs leave to amend their complaints within
14 days.
A.
Background on Relevant Case Law
If
Klinghoffer were a United States Supreme Court
decision, Plaintiffs' federal minimum wage claims would
be dismissed with a one-line order. However,
Klinghoffer was a Second Circuit panel's
decision, and therefore this Court finds itself
Page 229
duty-bound to examine Plaintiffs' claims, and the FLSA
provision authorizing it, in a more rigorous fashion.
The
First Circuit has not adopted the Klinghoffer rule,
which has led to some disagreement among the First Circuit
sister district courts. In a 2010 decision, the District of
Massachusetts applied the Klinghoffer rule to grant
a defendant's 12(b)(6) motion. Pruell v. Caritas
Christi, No. C.A. 09-11466-GAO, 2010 WL 3789318, at *3
(D. Mass, Sept. 27, 2010). On appeal, the First Circuit did
not have the opportunity to address the Klinghoffer
issue.[9] Pruell v. Caritas Christi,
678 F.3d 10 (1st Cir. 2012). In 2011, a district judge in the
District of Massachusetts forcefully and persuasively
rejected the Klinghoffer rule in favor of the hourly
measuring rod.[10] Norceide, 814 F.Supp.2d at
21-26. In 2014, that judge's decision was sustained at
the summary judgment stage under the law of the case doctrine
by a different district judge who had taken over the case
after the original judge's retirement. Norceide v.
Cambridge Health Alliance, No. C.A. 10-11729-NMG, 2014
WL 775453, at *4 (D. Mass. Feb. 24, 2014). However, in 2015,
the District Court of New Hampshire cited to the
Klinghoffer rule, without analysis of the underlying
Act or Norceide, to dismiss a minimum wage claim.
Chesley v. DIRECTV Inc., No. 14-CV-468-PB, 2015 WL
3549129, at *5 (D.N.H. June 8, 2015).
Of the
thirteen federal circuits, eight have not taken a position on
the Klinghoffer rule, while five have adopted it.
285 F.2d 487 (2d Cir. 1960); Blankenship v. Thurston
Motor Lines, 415 F.2d 1193, 1198 (4th Cir. 1969);
US. Dep't of Labor v. Cole Enter., Inc., 62 F.3d
775, 780 (6th Cir. 1995); Hensley v. MacMillan Bloedel
Containers, Inc., 786 F.2d 353, 357 (8th Cir. 1986);
Dove v. Coupe, 759 F.2d 167, 171-72, 245
U.S.App.D.C. 147 (D.C. Cir. 1985). Among the
Klinghoffer rule Circuits, all but the D.C. Circuit
acquiesced to the rule without any independent
Page 230
analysis of the FLSA. See Norceide, 814 F.Supp.2d at
22 (examining Circuit decisions adopting Klinghoffer
rule). And while the D.C. Circuit conducted its own analysis,
its decision was no doubt colored by Klinghoffer,
which is quoted at length in the opinion. Dove, 759
F.2d at 171. Because of the large influence that the
Klinghoffer decision has had on this area of law,
this Court now turns to examining whether that case correctly
reached the conclusion that the " weekly measuring
rod" is the only permissible method of alleging minimum
wage violations under the FLSA.
B.
Klinghoffer Decision
Upon a
close examination of the Klinghoffer decision, this
Court is convinced that the Second Circuit panel's
holding was correct, but its dictum, which has become known
as the Klinghoffer rule, was mistaken. Specifically,
this Court finds that the Klinghoffer rule is
dependent on principles of lenity unique to the criminal
aspects of that case, and compromised by an incomplete, and
seemingly results-driven assessment of legislative history.
1.
...