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Rosemary Smith v. Mastercraft Decorators

October 25, 2011


The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court



Plaintiff, Rosemary Smith, a former employee of Defendant, Mastercraft Decorators Inc. ("Mastercraft"), brings this action alleging violations of 29 U.S.C. §§ 201,et seq., the Fair Labor Standards Act ("Labor Act"). (Docket No. 1.) Smith also alleges Mastercraft fraudulently induced her to leave her previous employer, eventually breached their employment contract, and violated New York State Labor Law, §§ 190 et seq. Presently before this Court is Mastercraft's Motion to Dismiss. (Docket No. 6) Mastercraft argues that this Court lacks subject-matter jurisdiction, that venue is improper, and that Smith has failed to state a claim for which relief can be granted. For the following reasons, Mastercraft's motion is granted.


Before joining Mastercraft, Smith worked for Starline U.S.A. Inc. ("Starline"), a competitor in the "promotional products" industry. (Complaint, ¶ 11.) Both companies produce, sell, and distribute products that can be customized with a logo or slogan to promote a company, recognize an event, or mark a special achievement. (Id.) Smith's last position at Starline was Vice President of Sales and Marketing. (Id., 14.)

From 2000 to 2005, Smith asserts that Arthur Mcleod, the owner and CEO of Mastercraft, frequently attempted to recruit her. (Id., ¶¶ 16-21.) She eventually accepted an offer and signed an agreement on November 21, 2005, making her the Vice President of Sales and Marketing for Mastercraft. (Id., 35.) The position provided a base salary of $105,000 per year, health insurance benefits, and quarterly performance-based bonuses or commissions. (Id., ¶¶ 21, 35.) Smith states that she decided to leave Starline, where she earned a higher salary, for two principal reasons: (1) Mcleod represented that the company was on track to gross over $3 million in sales and (2) he promised to assign a sales staff to her position -- nearly ensuring that she would be able to meet the sales quotas triggering the lucrative bonus. (Id., ¶¶ 29-31.) However, Smith alleges that Mcleod knew that the company was actually not on track to meet the 3 million dollar sales figure and that he never intended to provide her with a sales staff. (Id., ¶¶ 33-37.) Eventually Smith learned that the company made only $1.8 million in 2005. (Id., ¶ 40.) Further, despite repeated requests, Smith never received her support staff and she only received one bonus -- though she claims she was entitled to more -- in the time she worked for Mastercraft. (Id.,¶¶ 41, 42-45.)

On November, 25, 2008 Smith was told that her salary would be reduced by 50% and that the existing incentive package would be replaced with a new system. (Id., 47.) From that point, Smith's paycheck reflected a salary of $52,000 per year. (Id., 48.) In addition to compensation Mastercraft owed her from before the restructuring, Smith alleges that Mastercraft has refused to pay any commission under this new arrangement.

Upset by these conditions, Smith tendered her resignation on March 16, 2009. (Id., ¶ 61.) She commenced this litigation three months later.


A. Legal Standard

Rule 12 (b)(6) allows dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12 (b)(6). Federal pleading standards are generally not stringent: Rule 8 requires only a short and plain statement of a claim. Fed. R. Civ. P. 8 (a)(2). But the plain statement must "possess enough heft to show that the pleader is entitled to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1966, 167 L.Ed.2d 929 (2007).

When determining whether a complaint states a claim, the court must construe it liberally, accept all factual allegations as true, and draw all reasonable inferences in the plaintiff's favor. ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007). Legal conclusions, however, are not afforded the same presumption of truthfulness. See Ashcroft v. Iqbal, 556 U.S. __, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) ("The tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.").

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S.Ct. at 1945 (quoting Twombly, 550 U.S. at 570). Labels, conclusions, or "a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. Facial plausibility exists when the facts alleged allow for a reasonable inference that the defendant is liable for the misconduct charged. Iqbal, 129 S.Ct. at 1949. The plausibility standard is not, however, a probability requirement: the pleading must show, not merely allege, that the pleader is entitled to relief. Id. at 1950; Fed. R. Civ. P. 8 (a)(2). Well-pleaded allegations must nudge the claim "across the line from conceivable to plausible." Twombly, 550 U.S. at 570.

Courts therefore use a two-pronged approach to examine the sufficiency of a complaint, which includes "any documents that are either incorporated into the complaint by reference or attached to the complaint as exhibits." Blue Tree Hotels Inv. (Can.), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 217 (2d Cir. 2004). This examination is context specific and requires that the court draw on its judicial experience and common sense. Iqbal, 129 S.Ct. at 1950. First, statements that are not entitled to the presumption of truth - such as conclusory allegations, labels, and legal conclusions - are identified and stripped away. See Iqbal, 129 S.Ct. at 1950. Second, well-pleaded, nonconclusory factual allegations are presumed true and examined to determine whether they ...

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