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Park v. FDM Group Holdings Inc.

United States District Court, S.D. New York

March 9, 2017

GRACE PARK, individually and on behalf of all others similarly situated, Plaintiffs,
v.
FDM GROUP HOLDINGS PLC and FDM GROUP, INC. Defendants.

          MEMORANDUM ORDER AND OPINION

          LAURA TAYLOR SWAIN United States District Judge

         Plaintiff Grace Park (“Plaintiff”) brings this collective and class action against FDM Group (Holdings) PLC and FDM Group, Inc. (collectively, “FDM” or “Defendants”) both individually and collectively, on behalf of putative members who were “FDM Trainees” or “FDM Consultants.” Plaintiff asserts claims for minimum wage and overtime violations under the Fair Labor Standards Act (“FLSA”) and claims for minimum wage, overtime, gap time and record-keeping violations under the New York Labor Law (“NYLL”).

         Defendants have moved, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss the First Amended Complaint (“FAC”), which was filed after Plaintiff had an opportunity to consider Defendants' arguments for dismissal, for failure to state a claim. The Court has subject matter jurisdiction of the action pursuant to 28 U.S.C. §§ 1331, 1337, and 1367. The Court has reviewed thoroughly the submissions of all parties with respect to the motion to dismiss. For reasons stated below, Defendants' motion to dismiss is granted.

         Background

         The following facts are taken from the FAC, or from documents relied upon by the FAC, and are assumed to be true for the purposes of this motion practice.

         FDM's main business activities involve recruiting and training individuals (“Trainees”) in information technology related skills, and placing the individuals with FDM's institutional clients (“FDM Consultants”) across a range of technical and business disciplines. (See FAC ¶¶ 7, 18, 21, 23.) Plaintiff was a Trainee from August 2014 to around October 2014, and signed a Training Agreement on June 30, 2014, which set forth the terms of her relationship with FDM during her training period. (See id. ¶ 5; Ascher Decl. Ex. A, “Training Agmt, ” docket entry no. 29-1.) The Agreement provides that “nothing in this Agreement shall give rise to a relationship of employee and employer between you and FDM, or between you and an FDM client with whom you may be on Placement. To the extent that we choose to offer any work to you for a Placement, such matters will be set out in an employment contract and separate documentation.” (Id. at 4.) Although the value of the training program as specified in the Training Agreement is up to $30, 000, the Trainee is not responsible for paying for any of the training unless he or she breaches the trainees' obligations laid out by the Training Agreement, principally the successful completion of the training program and cooperation with placement efforts by FDM. (See id.) The Training Agreement permits termination by the Trainee, with no obligation to pay any costs, within 14 days of the date of the Training Agreement or if the Trainee is not placed with an FDM client for the first 90 days after “sign-off” of completion of the training. (Id.) The training itself lasts between two and six months, and “consists of foundation training followed by a specialized training program, ” and teaches Trainees to “perform professional business and IT consultancy” for FDM's clients. (FAC ¶¶ 25-27.) During her training period, Plaintiff participated in classroom and practical skill development training, as did all of the other trainees. (Id. ¶ 34.)

         Following the completion of her training, Plaintiff was placed as an FDM Consultant at a financial institution for a two-year placement term. (Id. ¶ 22.) Plaintiff signed an “Employment Agreement, ” dated October 20, 2014, between herself and FDM Group. (Id. ¶¶ 16, 42; Ascher Decl. Ex. B, “Employment Agmt, ” docket entry no. 29-2.) All FDM Consultants were classified as W2 employees of FDM. (FAC ¶ 41.) As an FDM Consultant, Plaintiff was paid according to a hybrid compensation structure, which included a base pay of $23, 000 for the first year (or $1916.67 per month) and a daily bonus of $88.00 if she worked a full 8-hour day, and a half-day bonus of $44.00 if she worked at least four hours. (Id. ¶¶ 47-48, 50.) The FAC does not proffer any information as to whether and to what extent Plaintiff was paid daily bonus compensation. Plaintiff's Employee Agreement provides that, if an FDM Consultant does not complete the minimum two-year commitment, the Consultant must pay a Termination Fee of $30, 000 if the Consultant leaves employment within the first year, and $20, 000 in the event the Consultant leaves employment in the second year. (See Employment Agmt.) Plaintiff resigned from her FDM Consultant position shortly before the start of her second year, and paid a Termination Fee of $20, 000 shortly after resigning. (FAC ¶ 60.)

         Plaintiff also alleges that, “[d]uring her employment, ” she informed her “FDM supervisor” that she was regularly working over forty hours per week and was informed that, unless her placement manager approved, she was ineligble for overtime pay. (Id. ¶ 44.) Plaintiff had emailed her account manager that she “arrives at work ‘by 8:30 am' and gets out ‘around 6:45-7:15 pm'” and further stated that she “‘quite frequently' had to work on weekends and that she was not “able to even have a one hour lunch break [unpaid]. . . .” (Id. ¶ 45.) The FAC offers no other specific allegations regarding the hours Plaintiff worked or her work schedule. The quoted email, dated February 7, 2015, and in the record as an exhibit in connection with collective action certification motion practice, indicates that the arrival/departure schedule described applied “4 out of 5 days a week.” (Docket entry no. 22-11 at 3.)

         Discussion

         On a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. 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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 570 (2007)) (internal quotation marks omitted).

         Claims for Wages During Training Period

         Defendants move to dismiss Counts 3 and 4 (failure to pay minimum wage as to Trainees) on the basis that Plaintiff was not an “employee” subject to the requirements of the FLSA (or the NYLL) while she was a trainee with the FDM Training Academy. It almost goes without saying that the requirements of the FLSA, including payment of minimum wages, apply only to employees. See Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528, 533-34 (2d Cir. 2016). The Second Circuit has instructed courts to use a “primary beneficiary test, ” derived from precedents involving trainees and interns, that considers a number of “non-exhaustive” factors, to determine whether an individual, such as an intern, is an employee. See id. at 536- 38.[1] Any such inquiry is “high context-specific” and requires consideration of the “totality of circumstances, ” to determine, given the economic reality of the relationship, who was “the primary beneficiary of the relationship.” Id. at 535-36. In the trainee context specifically, in applying the Glatt test, courts have considered, among other factors, whether: (1) the trainees replace regular employees, (2) the trainees have an expectation of compensation, (3) the training sessions are similar to ones offered in vocational school, and (4) whether the employer received an immediate advantage from the trainees' work. Warman v. Am. Nat'l Standards Inst., No. 15 CV 5486, 2016 WL 3647604, at *4 (S.D.N.Y. Jun. 27, 2016) (citing Glatt, 811 F.3d at 536).

         The Court reviews Plaintiff's allegations concerning her Trainee status in light of these factors in determining whether she has pleaded plausibly that she was an employee entitled to minimum wages during her Trainee period. Plaintiff's relationship as a trainee with FDM was governed by the Training Agreement she signed. (Ascher Decl. Ex. A.) The Training Agreement explicitly provides that “nothing in this Agreement shall give rise to a relationship of employee and employer between you and FDM, or between you and an FDM client with whom you may be on Placement. To the extent that we choose to offer any work to you for a Placement, such matters will be set out in an employment contract and separate documentation.” (Id. at 4.) Plaintiff has not alleged that she received compensation, nor that she had an expectation of compensation during her training. The Agreement thus dispels any inference of an expectation on Plaintiff's part that she would receive compensation as a Trainee. Nor does the FAC plead facts indicating that FDM Trainees replace paid employees. To the contrary, the Agreement makes it clear that they are trained for placement at a separate client site after the training is complete. (See FAC ¶¶ 28, 31.) Although the stated value of the training program is up to $30, 000 ($75 per unit), the Trainee is not responsible for paying any training cost unless he or she breaches the trainees' obligations laid out by the Agreement, principally the successful completion of the training program and cooperation with placement efforts thereafter. (Id.) The Agreement permits termination by the Trainee, with no obligation to pay any costs, within 14 days of the date of the Training Agreement or if the Trainee is not placed with an FDM client for the first 90 days after “sign-off” of completion of the training. (Id.) The training, which consisted of classroom and practical skill development training, was designed to teach the Trainees to perform professional, business and IT consultancy work. (Id. ¶¶ 27, 34.) The training, as described in the Complaint, resembles what would be offered at a vocational school, “including the clinical and other hands-on training provided by educational institutions, ” Glatt, 811 F.3d at 537, providing skills that are marketable beyond any particular FDM client. None of these factors is indicative of employee status; Plaintiff has not pleaded facts that would support a reasonable inference that she was an FDM employee during the training period. All point to the Trainee as the primary beneficiary of the training period agreement.

         Plaintiff alleges, in a conclusory manner, that she was “required to agree to the terms of both a Training Agreement and an Employment Agreement as a condition of her employment with FDM” and contends that her training period was “post-hire” because it was done after a full interview and assessment and after a signed “contract outlining the terms of [her] employment with FDM.” (See FAC ¶ 16; Pl. Opp. at 5.) The employment-related aspects of these allegations are inconsistent with the plain terms of the relevant documents and thus are not plausible. The Training Agreement explicitly stated that it was not an employment agreement, and that it did not guarantee actual job placement. (See Training Agmt at 4.) Plaintiff did not sign an Employment Agreement until October 2014, after she had completed her training. (FAC ΒΆ 5; Employment Agmt.) Plaintiff has not pleaded plausibly that she was ...


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