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Garner v. Behrman Brothers IV, LLC

United States District Court, S.D. New York

June 16, 2017

WINIFRED MARIE GARNER and SOPHIA THEUS, on their own behalf and on behalf of all persons similarly situated, Plaintiffs,
v.
>BEHRMAN BROTHERS IV, LLC and BEHRMAN BROTHERS MANAGEMENT CORP., Defendants,

          OPINION & ORDER

          Paul A. Engelmayer United States District Judge.

         Plaintiffs Winifred Marie Garner and Sophia Theus bring this putative class action against Behrman Brothers IV, LLC and Behrman Brothers Management Corp. (collectively, "Behrman"), seeking recovery of unpaid wages and benefits under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq. (the "WARN Act"). Pending now are Behrman's motion to dismiss plaintiffs' First Amended Complaint ("FAC") under Federal Rules of Civil Procedure 12(b)(6) and 12(b)(7), Dkt. 42, and to drop both defendants under Rule 21, Dkt. 40. For the reasons that follow, the Court denies both motions.

         I. Background

         A. Factual Background[1]

         1. Plaintiffs' Employment with Atherotech

         Until February 26, 2016, Garner and Theus were "nominally employed" by Atherotech, Inc. and Atherotech Holdings, Inc. (collectively, "Atherotech"), and worked at Atherotech facilities in Birmingham, Alabama. FAC ¶¶ 5-8. They bring this suit on behalf of themselves and more than 300 other Atherotech employees who lost their jobs when these facilities closed in 2016. itf ¶¶ 11-12.

         2. The Relationship Between Atherotech and Behrman

         The FAC alleges that Atherotech and Behrman operated as a "single employer" and together "owned, operated and controlled" the Atherotech facilities at which Garner and Theus worked. Id. ¶¶ 10, 13(m). The FAC pleads the following in support of its "single employer" claim:

         In or about 2010, Behrman Brothers Management Corp. created Behrman Brothers IV, LLC for the purpose of acquiring Atherotech. Id. ¶ 13(a)-(b). In a Statement of Financial Affairs filed by Atherotech during bankruptcy proceedings on March 21, 2016, Atherotech disclosed that Behrman Brothers IV, LLC held at that time more than 90% of issued shares of Atherotech Holdings, Inc. Id. ¶ 13(c). Atherotech Holdings, Inc. in turn held a 100% interest in Atherotech, Inc. Id. J 13(d).

         Behrman and Atherotech shared multiple officers and directors. Such common personnel included: (1) Grant Behrman, a founding partner of Behrman Brothers Management Corp. and a director of Atherotech Holdings, Inc.; (2) Robert Flaherty, a former CEO of one of Behrman's portfolio companies and a director of Atherotech Holdings, Inc.; (3) Tom Perlmutter, a partner at Behrman Brothers Management Corp. and a director at Atherotech Holdings, Inc.; (4) Mark Visser, a partner at Behrman Brothers Management Corp. and a director at Atherotech Holdings, Inc.; and (5) Jim McClintic, a former CEO of one of Behrman's portfolio companies and a director of Atherotech Holdings, Inc. and CEO of Atherotech, Inc.[2] Id. ¶ 13(e)-(j).

         These common officers and directors helped Behrman to "at all times maintain[] de-facto control over the operations of Atherotech." Id. ¶ 13(1). After Behrman acquired Atherotech, Visser "took the lead for [Behrman] in managing the Atherotech entities." Id. Visser communicated with McClintic by telephone and email "on a daily or near daily basis" and transmitted to McClintic Behrman's instructions regarding the management of Atherotech. Id. McClintic carried out these instructions. Id.

         Behrman and Atherotech maintained common personnel policies implemented by Behrman through Visser, id. ¶ 13(k), and Behrman "exercised complete control over the labor decisions concerning Plaintiffs and the Class Members' employment, including the decision to shut down [the Atherotech facilities] and abruptly terminate their employment, " id. ¶ 13(n).

         3.Plant Closings and Alleged WARN Act Violations

         The FAC alleges that, after a failed attempt at a sale, Behrman decided to shut down Atherotech and have Atherotech file for bankruptcy. Id. ¶ 13(1). Visser communicated the news of that decision to McClintic. Id. Visser told McClintic "to keep employees in the dark about the impending shutdown" so that the employees would not leave before Behrman was ready. Id. Visser also told McClintic to hold "town hall" style meetings with Atherotech employees in the weeks before the shutdown and to give the employees "a false sense of hope that the company was going to continue operating." Id.

         While McClintic thus misled Atherotech employees regarding the company' future, the FAC alleges, Behrman drafted a "purported WARN notice" regarding the plant's closing. Id. Visser gave the notice to McClintic and, on behalf of Behrman, instructed McClintic as to how and when to distribute the WARN notice. Id. Visser told McClintic to distribute that notice after the "effective date" of the shutdown of the Atherotech facilities. Id.

         On or about February 26, 2017, Garner, Theus, and some 300 or more employees who worked at or reported to the Atherotech facilities were discharged without cause as a result of plant closings. Id. ¶¶ 11-12, 18.

         Plaintiffs' claims are under the WARN Act, which "requires employers to give sixty days' notice to their employees before mass layoffs or plant closings." Vogt v. Greenmarine Holding, ILC, 318 F.Supp.2d 136, 140 (S.D.N.Y. 2004). The FAC alleges that plaintiffs were not given 60 days advance written notice and did not receive wages and other employee benefits covering the 60-day period after termination. Id. ¶¶ 11, 16, 24, 29.

         B. Procedural History

         On September 6, 2016, plaintiffs filed an initial complaint, Dkt. 1. It sought (1) compensation for unpaid wages, salary, commissions, bonuses, accrued holiday pay, accrued vacation pay pension, 401(k) contributions, and ERISA benefits for 60 days after their termination; (2) interests on these amounts; (3) Rule 23 class certification; (4) appointment of their counsel as class counsel; and (5) attorneys' fees and costs, as authorized by the WARN Act, id. ¶ 52.

         On October 14, 2016, Behrman filed a motion to dismiss under Rules 12(b)(6) and 12(b)(7), Dkt. 9, and a memorandum of law in support, Dkt. 10. That same day, Behrman filed a motion to drop both defendants under Rule 21, Dkt. 11, and a memorandum of law in support, Dkt. 12. On November 4, 2016, Plaintiffs filed memoranda in opposition to these motions. Dkts. 25-26. On November 10, 2016, Behrman filed reply memoranda. Dkts. 27-28. On December 15, 2016, the Court heard argument on the pending motions.

         On February 7, 2017, plaintiffs filed a motion to file the FAC as an amended complaint. Dkt. 34. On February 16, 2017, Behrman filed a letter in opposition. Dkt. 38. On March 3, 2017, the Court granted the motion to file the FAC and denied as moot the pending motions directed to the underlying complaint. Dkt. 39.

         On March 17, 2017, Behrman again moved to drop both defendants under Rule 21, Dkt. 40, and filed a memorandum of law in support, Dkt. 44. Behrman also moved to dismiss the FAC under Rules 12(b)(6) and 12(b)(7), Dkt. 42, and a memorandum of law, Dkt. 45, and declarations, in support. Dkts. 46 and 47. On March 31, 2017, plaintiffs filed memoranda of law in opposition to these motions, Dkts. 48-49. On April 7, 2017, Behrman filed reply memoranda, Dkts. 50-51.

         II. Discussion

         As noted above, Behrman moves on three grounds: first, to dismiss the FAC under Rule 12(b)(6); second, to dismiss the FAC under Rule 12(b)(7); and third, to drop both defendants under Rule 21. The Court addresses each issue in turn.

         A. Rule 12(b)(6)

         To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim will only have "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, 663 (2009). A complaint is properly dismissed, where, as a matter of law, "the allegations in a complaint, however true, could not raise a claim of entitlement to relief." Twombly, 550U.S. at 558. Accordingly, a district court must accept as true all well-pleaded factual allegations in the complaint, and draw all inferences in the plaintiffs favor. ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007). However, that tenet "is inapplicable to legal conclusions." Iqbal, 556 U.S. at 678. Thus, a pleading that offers only "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555.

         As noted above, the WARN Act mandates that "an employer with 100 or more employees must, sixty days in advance of a plant closing or mass layoff, provide written notice to each affected employee or their representative, as well as the state." In re Great Atl. & Pac. Tea Co., Inc.,467 B.R. 44, 53 (S.D.N.Y. 2012), aff'd sub nom. Grocery Haulers, Inc. v. Great Atl. & ...


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