United States District Court, S.D. New York
WINIFRED MARIE GARNER and SOPHIA THEUS, on their own behalf and on behalf of all persons similarly situated, Plaintiffs,
>BEHRMAN BROTHERS IV, LLC and BEHRMAN BROTHERS MANAGEMENT CORP., Defendants,
OPINION & ORDER
A. Engelmayer United States District Judge.
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.
Plaintiffs' Employment with Atherotech
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
The Relationship Between Atherotech and Behrman
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:
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).
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,
Id. ¶ 13(e)-(j).
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
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).
Closings and Alleged WARN Act Violations
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.
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
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.
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.
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.
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
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.
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.
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.
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.
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. & ...