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Tracy v. NVR

September 30, 2009

PATRICK TRACY, ON BEHALF OF HIMSELF AND ALL OTHER EMPLOYEES SIMILARLY SITUATED, ET AL., PLAINTIFFS,
v.
NVR, INC., DEFENDANT.



The opinion of the court was delivered by: Marian W. Payson United States Magistrate Judge

PRELIMINARY STATEMENT

REPORT & RECOMMENDATION and DECISION & ORDER

Plaintiff Patrick Tracy ("Tracy"), a former employee of defendant NVR, Inc. ("NVR"), has filed this collective action under the Fair Labor Standards Act ("FLSA") and the New York Labor Law alleging that NVR failed to compensate him and other similarly-situated employees at the required rate for overtime work. (Docket # 80). By order dated January 5, 2007, the above-captioned matter was referred to the undersigned for the supervision of pretrial discovery and the hearing and disposition of all non-dispositive motions, pursuant to 28 U.S.C. §§ 636(b)(1)(A) and (B). (Docket # 10). Currently pending before this Court are three motions by Tracy. The first seeks leave to amend the complaint to join three additional defendants. (Docket # 336). The second seeks an order striking several of NVR's affirmative defenses. (Docket # 347). The third seeks a preclusion order. (Docket # 376). Each is addressed in turn below.

FACTUAL BACKGROUND

Tracy was a Sales and Marketing Representative ("SMR") employed by NVR from 2000 to 2005. (Docket # 394 at 1). He alleges that during his employment with NVR, he was improperly classified as an exempt employee under the FLSA, and thus unlawfully denied payment for overtime hours he worked. ( Id. at 1-2). NVR is a public corporation engaged in the home construction business. (Docket # 338-2, Exhibit ("Ex.") B at 1). Headquartered in Reston, Virginia, NVR conducts business in twenty-two metropolitan areas in twelve states, and in 2007 generated $5 billion in revenue. ( Id. at 1-2).

Since 2007, approximately 150 current and former SMRs have joined the lawsuit as party plaintiffs. In late 2007, Tracy moved for summary judgment on his individual claims. (Docket # 269). Pursuant to the terms of an agreed-upon scheduling order, the parties proceeded first to conduct discovery on Tracy's claims, with discovery on the claims of the other plaintiffs to occur thereafter. (Docket # 291). Following discovery on Tracy's claims, United States District Judge David G. Larimer denied Tracy's summary judgment motion.*fn1 (Docket # 394).

REPORT & RECOMMENDATION

I. Motion to Amend the Complaint

Tracy has moved to amend his complaint to add three individual NVR corporate officers as defendants. (Docket # 336). Specifically, Tracy seeks to add NVR's Chairman of the Board, Dwight Schar ("Schar"), NVR's President and Chief Executive Officer, Paul C. Saville ("Saville"), and its Vice President of Human Resources, Joseph Madigan ("Madigan"). (Docket # 338-2, Ex. A at ¶¶ 17, 37, 60). Tracy seeks to establish liability against Schar, Saville and Madigan as employers under the FLSA in order to "protect [the plaintiffs'] future monetary compensation for unpaid overtime in the event NVR . . . defaults on payments, claims financial hardship, or files for bankruptcy protection." (Docket # 344 at 8).

NVR opposes the amendment as futile because the complaint "attributes no specific conduct to any of the three individuals. . . , [and] instead rel[ies] exclusively on their status as officers of NVR." (Docket # 342 at 1). NVR further contends that the amendment would prejudice NVR by requiring additional discovery. ( Id . at 16-19).

A. Legal Standards

Rule 15(a) provides that once the time for amending a pleading as of right has expired, a party may request leave of the court to amend, which shall be "freely give[n] . . . when justice so requires." Fed. R. Civ. P. 15(a)(2). Generally, under Rule 15, if the underlying facts or circumstances relied upon by the party seeking leave to amend may be a proper subject of relief, the party should be afforded the opportunity to test the claim on its merits. See United States ex rel. Maritime Admin. v. Continental Illinois Nat'l Bank and Trust Co. of Chicago , 889 F.2d 1248, 1254 (2d Cir. 1989). "In the absence of any apparent or declared reason -- such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. -- the leave sought should, as the rules require, be 'freely given.'" Foman v. Davis , 371 U.S. 178, 182 (1962).*fn2

If the amendment proposed by the moving party is futile, however, "it is not an abuse of discretion to deny leave to amend." Ruffolo v. Oppenheimer & Co. , 987 F.2d 129, 131 (2d Cir. 1993) ( per curiam ). "An amendment to a pleading is futile if the proposed claim could not withstand a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6)." Lucente v. Int'l Bus. Machines Corp ., 310 F.3d 243, 258 (2d Cir. 2002) (citing Dougherty v. North Hempstead Bd. of Zoning Appeals , 282 F.3d 83, 88 (2d Cir. 2002)). To avoid dismissal, the proposed amended claim must contain "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal , 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570 (2007)).*fn3 "[T]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id . Rather, the complaint "must allege facts that are not merely consistent with the conclusion that the defendant violated the law, but which actively and plausibly suggest that conclusion." Port Dock & Stone Corp. v. Oldcastle Northeast, Inc. , 507 F.3d 117, 121 (2d Cir. 2007) (citing Bell Atlantic Corp. v. Twombly , 550 U.S. at 557-58).

The Supreme Court has counseled district courts to employ a two-step analysis in evaluating the sufficiency of a proposed amended claim. Ashcroft v. Iqbal , 129 S.Ct. at 1950. First, the court must "identify[] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id . Thus, the court should accept as true any well-pleaded factual allegations, but reject legal conclusions unsupported by facts. Id . Next, the court should "determine whether [the well-pleaded factual allegations] plausibly give rise to an entitlement to relief." Id . In doing so, the court is permitted to "draw on its judicial experience and common sense." Id .

Utilizing this framework, courts have dismissed complaints containing no factual allegations, but only legal conclusions tracking the language of a statute. See , e.g. , Inst. for the Dev. of Earth Awareness v. People for Ethical Treatment of Animals , 2009 WL 2850230, *3-4 (S.D.N.Y. 2009) (dismissing cause of action that contained only "conclusory assertions [, but] . . . no factual allegations," and rather "simply restated the [statutory] language"); Willey v. J.P. Morgan Chase, N.A. , 2009 WL 1938987, *4 (S.D.N.Y. 2009) (dismissing complaint that contained only "formulaic recitations" of the elements of the claim, unsupported by factual allegations; " ipse dixit pleading is insufficient" under ...


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