United States District Court, E.D. New York
NOEL VELASQUEZ and CARLOS RIVERA, individually and on behalf of all others similarly situated, Plaintiffs,
DIGITAL PAGE, INC. d/b/a FUSION WIRELESS; CELLULAR CONSULTANTS INC., d/b/a/, FUSION WIRELESS; CELLULAR CONSULTANTS OF NASSAU, INC., d/b/a/ FUSION WIRELESS; CELLULAR CONSULTANTS OF NASSAU ST I, d/b/a/ FUSION WIRELESS; CELLULAR CONSULTANTS OF FARMINGDALE, d/b/a/ FUSION WIRELESS; BRANDON HAENEL and ROBERT PACHTMAN, Defendants.
DECISION AND ORDER
A. KATHLEEN TOMLINSON, Magistrate Judge.
Plaintiffs Noel Velasquez and Carlos Rivera ("Plaintiffs") bring this action on behalf of themselves and all similarly situated persons seeking unpaid overtime compensation from Defendants Digital Page, Inc., Cellular Consultants Inc., Cellular Consultants of Nassau, Inc., Cellular Consultants of Nassau STI, Cellular Consultants of Farmingdale, Brandon Haenel and Robert Pachtman (collectively, "Defendants"), pursuant to the Fair Labor Standards Act of 1938 ("FLSA"), as amended, 29 U.S.C. §§ 201 et seq. and the New York Labor Law.
Plaintiffs have moved for leave to file an Amended Complaint. DE 105. Defendants do not oppose this motion. DE 108, DE 137. Plaintiffs have also moved for conditional certification as a collective action and for notice of pendency to potential collective action members, pursuant to 29 U.S.C. § 216(b). DE 100. Defendants do not oppose Plaintiffs' motion to proceed as a collective action but do oppose Plaintiffs' proposed Notice of FLSA Overtime Lawsuit and Consent to Join form (the "Notice and Consent"). DE 103. Based on the Court's review of the parties' submissions as well as the applicable case law, Plaintiffs' motions to amend and for conditional certification as a collective action are hereby GRANTED to the extent set forth below. Plaintiffs' Motion for Notice of Pendency to potential collective action members is GRANTED in part and DENIED in part.
The Complaint alleges violations of federal and state wage and hour laws requiring overtime pay against several named corporate entities - all doing business as Fusion Wireless - and against the principals of the corporate entities. Plaintiffs' proposed Amended Complaint revises Plaintiffs' Complaint to add the following seven previously undisclosed corporate entities which also do business as Fusion Wireless: Cellular Consultants Broadway Inc., Cellular Consultants of Port Washington, Inc., Cellular Consultants Ridgewood Inc., Cellular Consultants of West Islip Inc., Wireless Franchise Corp., Cellular Consultants Holding Corp., and Digital Page Sales Corp. The proposed Amended Complaint pleads the same causes of action against the new parties as were pled against the Defendants named in the Complaint. There are no new causes of action asserted.
II. Motion to Amend
A. Legal Standard
Rule 15(a) of the Federal Rules of Civil Procedure provides that in cases where a party cannot amend as a matter of course, "a party may amend its pleading only with the opposing party's written consent or the court's leave." Fed.R.Civ.P. 15(a); Lucente v. Int'l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002); Branum v. Clark, 927 F.2d 698, 705 (2d Cir. 1991). A court "should freely give leave when justice so requires" and such leave is in the court's discretion. Fed.R.Civ.P. 15(a)(1)(B)(2); accord Grace v. Rosenstock, 228 F.3d 40, 52 (2d Cir. 2000). When a proposed amendment seeks to add new parties, the propriety of the proposed amendment is governed by Federal Rule of Civil Procedure 21 which provides that "[o]n motion or on its own, the court may at any time, on just terms, add or drop a party." Fed.R.Civ.P. 21; see Addison v. Reitman Blactop, Inc., 283 F.R.D. 74, 79 (E.D.N.Y. 2011). "In deciding whether to permit the addition of defendants, courts apply the same standard of liberality afforded to motions to amend pleadings under Rule 15.'" Addison, 283 F.R.D. at 79 (quoting Soler v. G & U, Inc., 86 F.R.D. 524, 528 (S.D.N.Y.1980) (quoting Fair Hous. Dev. Fund Corp. v. Burke, 55 F.R.D. 414, 419 (E.D.N.Y.1972))). "Thus, leave to amend a complaint to assert claims against additional defendants should be denied only because of undue delay, bad faith, futility, or prejudice to the non-moving party, and the decision to grant or deny a motion to amend rests within the sound discretion of the district court.'" Id. (quoting DeFazio v. Wallis, No. 05-CV-5712, 2006 WL 4005577, at *1 (E.D.N.Y. Dec. 9, 2006)).
The Court concludes that Plaintiffs have not engaged in undue delay, bad faith, or any other conduct which would warrant denial of leave to amend. Thus, the only issue is whether the claims against the proposed defendants are untimely and therefore futile.
The FLSA provides a two-year statute of limitations on actions to enforce its provisions unless the violation was willful, in which case the limitations period is three years. 29 U.S.C. § 255(a) (2006). However, in FLSA collective actions, the statute of limitations is not tolled for opt-in plaintiffs until the "date on which [their] written consent is filed in the court in which the action was commenced." Id. § 256(b).
FLSA claims accrue with each payday "following the work period when services are rendered." Nakahata v. New York-Presbyterian Healthcare Sys., Inc., 723 F.3d 192, 198 (2d Cir. 2013) (citing 29 C.F.R. § 790.21(b) (2012)). Here, employees who worked for the proposed defendants will have timely claims as long as their allegedly unlawful pay periods fall within two or three years preceding the addition of the proposed defendants to the Complaint. Thus, to the extent there may be some employees with timely claims, Plaintiffs' claims are not futile. Accordingly, Plaintiffs' motion for leave to file an Amended Complaint to add the seven previously undisclosed corporate entities which also do business as Fusion Wireless is granted.
With regard to employees whose claims accrued before the two or three years preceding the addition of the proposed defendants, Plaintiffs argue that their claims would also be timely because they relate back to the Plaintiffs' original Complaint. For the reasons that follow, the Court disagrees.
"If a complaint is amended to include an additional defendant after the statute of limitations has run, the amended complaint is not time barred if it relates back' to a timely filed complaint." VKK Corp. v. Nat'l Football League, 244 F.3d 114, 128 (2d Cir. 2001) (citing Federal Rule of Civil Procedure 15(c)). A claim against a new defendant relates back to the original complaint if
(1) the claims against the new parties arise out of the same conduct, transaction, or occurrence as alleged in the original complaint; (2) the new party received notice of the suit within 120 days of institution so that it will not be prejudiced in its defense; and (3) the new party knew or should have known that, but for a mistake concerning the identity of the party, the action would have been brought against the party.
Addison, 283 F.R.D. at 82 (citing Fed.R.Civ.P. 15(c)). Here, the first two factors are easily satisfied.
First, the claims asserted against the new parties are identical to those raised in the Complaint and arose out of the same conduct. Defendants Haenal and Pachtman are the owners of all the Fusion Wireless corporate entities, and Haenal testified at his deposition that the overtime pay and eligibility policies at the non-named Fusion Wireless entities were identical to the overtime pay and eligibility policies at the Fusion Wireless entities which were originally named as Defendants in the Complaint. DE 107, Ex. 3.
Second, the new parties received notice of the suit within 120 days of institution because Defendants Haenal and Pachtman, the owners of all of the Fusion Wireless corporate entities, are named in the Complaint and have appeared in the action. Id.
Plaintiffs, however, cannot satisfy the final factor. The final prong of the relation back doctrine requires that the proposed defendants "knew or should have known that the action would have been brought against [them], but for a mistake concerning the proper party's identity." Fed.R.Civ.P. 15(c). "Rule 15(c)(1)(C)(ii) asks what the prospective defendant knew or should have known during the Rule 4(m) period, not what the plaintiff knew or should have known at the time of filing her original complaint." Krupski v. Costa Crociere, 560 U.S. 538, 548 (2010) (emphasis in original). "Following the Supreme Court's decision in Krupski, the Second Circuit's holding that a lack of knowledge is not a mistake is still intact.'" Urena v. Wolfson, No. 09-CV-1107, 2011 WL 7439005, at *4 (E.D.N.Y. Aug. 24, 2011); Dominguez v. City of N.Y., No. 10 Civ. 2620, 2010 WL 3419677, at *6 (E.D.N.Y. Aug. 27, 2010); see Barrow v. Wethersfield Police Dep't, 66 F.3d 466, 470 (2d Cir. 1995).
Notwithstanding the foregoing principle, as a threshold matter, courts in this district and other federal districts have held that Rule 15(c) does not apply in cases where a plaintiff seeks to add an additional party as a defendant, as is the case here. For example, as the court in In re Vitamin C Antitrust Litigation recently explained:
Rule 15(c)(1)(C) does not encompass just any mistake. It requires a mistake "concerning the proper party's identity" .... As a matter of plain language, this provision would appear to include only "wrong party" cases, and not "additional party" cases. This is because the "mistake" has to "concern[ ]" the "identity" of the "proper party [ ]." In an "additional party" case like this one, there generally will be no "mistake concerning" the proper party's "identity." The plaintiff has sued the right defendant, and simply neglected to sue another defendant who might also be liable. If the drafters of Rule 15 had meant to allow relation back in this situation, they could have easily done so.
Where a plaintiff has not mistakenly sued the wrong party, a court need not consider what a defendant knows and when the defendant knew it; the threshold requirement for Rule 15(c)(1)(C)-a "mistake concerning the proper party's identity"-has not been met.
In re Vitamin C Antitrust Litigation, ___ F.Supp.2d ___, 2013 WL 351896, at *3-4 (E.D.N.Y. 2014) (citing Fed.R.Civ.P. 15(c)(1)(C)); Turner v. Nicoletti, No. 12-1855, 2013 WL 3989071, at *3 (W.D. Pa. Aug. 2, 2013) (distinguishing Krupski and declining to grant relief under Rule 15(c) where "[p]laintiff did not identify the wrong parties... in his Complaint despite having sufficient information available to correctly identify them.... [Rather, plaintiff] has sued additional parties for additional and different reasons. ") (emphasis in original)).
In any case, even assuming the threshold requirement for examination under Rule 15(c) has been met, the court in In re Vitamin C Antitrust Litigation noted that "the most plaintiffs can say is that they were unaware of [the proposed defendant's] participation in the [allegations giving rise to the complaint] when they filed their first consolidated amended complaint.... In the Second Circuit, however, lack of knowledge does not constitute a mistake' for relation back purposes." ___ F.Supp.2d ___, 2014 WL 351896, at *4 (citing Barrow v. Wethersfield Police Dep't, 66 F.3d 466, 470 (2d Cir.1995)).
Here, Plaintiffs claim that they first learned the identity of five of the seven proposed defendants as a result of the August 23, 2012 deposition testimony of Defendant Haenal when five additional Fusion Wireless corporate entities were revealed. DE 106 at 3. Plaintiffs discovered the identity of the remaining two proposed defendants on April 30, 2013 when Plaintiffs performed a search of the New York State Division of Corporations public database and learned that Defendant Haenal filed Certificates of Incorporation for two previously undisclosed Fusion Wireless entities. Id. at 5. Plaintiffs' belated discoveries do not qualify as a mistake under Rule 15(c). Indeed, by acknowledging that they learned the identities of these corporate entities through the discovery process and upon their own investigation, Plaintiffs essentially concede that they "sued the right defendant[s], and simply neglected to sue other defendant[s] wh[ich] might also be liable." In re Vitamin C Antitrust Litigation, ___ F.Supp.2d ___, 2014 WL 351896, at *3. As the court in In re Vitamin C Antitrust Litigation explained, adopting Plaintiffs' theory of relation-back here would essentially eviscerate the statute of limitations requirements:
The theory upon which plaintiffs rely-that they were unaware of [the proposed defendant's] "role and status in the alleged conspiracy"-is a familiar one.... But the statute of limitations "is not tolled for a plaintiff's leisurely discovery of the full details of the alleged scheme." Glonti v. Stevenson, No. 08 cv 8960, 2009 WL 311293, at *10 (S.D.N.Y. Feb. 6, 2009). Adopting plaintiffs' expansive theory of relation back would gut the policies underlying periods of limitation, because filing a complaint would effectively become an indefinite toll of the statute of limitations against any defendants who learn of the action and who might also be liable for the conduct alleged, under the theory that those defendants "should have known" that the plaintiff had made a "mistake" in not suing them as well. Relation-back would swallow the general principles of statutes of limitations.
Id. at *5. Accordingly, the Court finds that Plaintiffs' lack of knowledge as to the identity of the proposed defendants does not satisfy the third prong of the Rule 15(c) analysis, i.e., the requirement that the proposed defendants should have known they would be named as defendants but for a mistake.
Plaintiffs, however, present an alternative argument as to why their proposed amendment is not futile. Relying on Addison v. Reitman Blactop, Inc., 283 F.R.D. 74 (E.D.N.Y. 2011), Plaintiffs contend that because the proposed Amended Complaint alleges that all of the Fusion Wireless entities - Defendants and the proposed defendants - together constitute a single employer, the proposed defendants ...