Fuller v. Two Men And A Truck International, Inc. et al

MEMORANDUM BRIEF in Support of 9 MOTION to Dismiss

W.D. Ark.September 22, 2016

IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF ARKANSAS FAYETTEVILLE DIVISION HASKELL FULLER IV PLAINTIFF V. NO. 16-5256 TLB TWO MEN AND A TRUCK INTERNATIONAL, INC., a Michigan Corporation; and TMT ARKANSAS, INC. d/b/a TWO MEN AND A TRUCK/NW ARKANSAS, an Arkansas Corporation DEFENDANTS DEFENDANT TWO MEN AND A TRUCK INTERNATIONAL’S BRIEF IN SUPPORT OF MOTION TO DISMISS FACTS Defendant Two Men and a Truck International, Inc. (“TMTI”) is a Michigan based franchisor engaged in licensing, pursuant to written franchise agreements, the use of its distinctive TWO MEN AND A TRUCK ® registered service mark and operating system for operating businesses moving furniture, appliances and other tangible goods and items. As a franchisor, TMTI neither employees franchisee employees nor does it control the operations of a franchisee. The franchisor/franchisee relationship is memorialized in franchise agreements that are legally required to be publicly disclosed in many states. For instance, in Minnesota, the form franchise agreement is publicly available on the state website.1 The form 1 The current form franchise agreement required to be filed in Minnesota is attached to the motion to dismiss as Exhibit A and is publicly available on the Minnesota state website, here: https://www.cards.commerce.state.mn.us/CARDS/security/search.do?method=showPoup&do cumentId={F1684E06-8B42-4D8A-96E8-B51B66178BB7}&documentTitle=1534-201604- 07&documentType=4 The 2013 Minnesota agreement is here: Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 1 of 12 PageID #: 457 1342005-v1 2 franchise agreements are also publicly available in seven other states.2 Under the terms of the franchise agreement: We [TMTI] do not control, and do not have the right to control, decisions regarding the persons you hire, discipline, or terminate as employees or agents. We do not control, and do not have the right to control your other day-to-day franchise activities . . . In all cases you will remain solely responsible for decisions regarding hiring and maintaining your employees, including determinations of whether the prospective employee meets hiring and performance standards or is suitable for the employment position (Ex. A, Agreement at 34). In addition, as a condition of becoming a “Two Men” franchise, franchisees must agree that they will comply with any applicable wage and hour laws. Specifically, the form franchise agreement states: Franchisee must comply with all federal, state, county, municipal or other statutes, laws, ordinances, regulations, rules or orders applicable to the Franchise Business, including but not limited to state and federal labor and employment laws, such as the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), Occupational Safety and Health Act (OSHA), Employee Retirement Income Security Act (ERISA), Title VII, the Age Discrimination in Employment Act, and the Affordable Care Act. Franchisee must promptly pay all payroll and business taxes, fees and expenses, and any and all other amounts required by law. (Ex. A at 9). https://www.cards.commerce.state.mn.us/CARDS/security/search.do?method=showPoup&do cumentId={6FC3F3AB-CB48-4269-AE5C- B19E4425944D}&documentTitle=43614&documentType=4 2 A list of these states and their address is attached to the motion to dismiss as Exhibit B. As stated in more detail, below, Defendant TMTI requests this Court to take judicial notice of these publicly filed documents that have also been incorporated by reference in Plaintiffs’ Complaint. Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 2 of 12 PageID #: 458 1342005-v1 3 ARGUMENT I. LEGAL STANDARD Given the above public records, Plaintiff’s Complaint against TMTI “[t]hat the Plaintiff at all times material hereto was an employee of the Defendants . . .” and that “TMT[I]’s policies violate Federal law . . . .” fail to state a claim upon which relief may be granted. [Cmpl., ¶ 14-15, 19, 21]. Because Plaintiff’s Complaint against TMTI lacks any basis in fact or law, Defendant TMTI moves to dismiss under Fed. R. Civ. P. 12(b)(6). The Supreme Court has held that “[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). “Threadbare recitals of all the elements of a cause of action, supported by mere conclusory statements do not suffice . . .” and pleadings must contain “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009). Further, a court is “not bound to accept as true a legal conclusion couched as a factual allegation.” Id. at 1950. In addition, “[t]o 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.” Id. at 1949. “A claim has facial plausibility when the plaintiff pleads Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 3 of 12 PageID #: 459 1342005-v1 4 factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Thus, “only a complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 1950. When considering a motion to dismiss, the Court must accept all of the plaintiff's allegations as true in determining whether a plaintiff has stated a claim for which relief could be granted. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). II. PLAINTIFF CANNOT STATE A CLAIM UPON WHICH RELIEF MAY BE GRANTED AGAINST NON-EMPLOYER FRANCHISOR TMTI. Plaintiff’s Complaint must be dismissed because (a) Plaintiff has failed to sufficiently plead any plausible claim upon which relief may be granted against TMTI, and (b) even if Plaintiff sought to amend, the publicly available records referenced in Plaintiff’s Complaint refute Plaintiff’s conclusory allegation of an employment relationship. Therefore, under Rule 12(b)(6), Plaintiff cannot state a claim upon which relief may be granted as these records can be judicially noticed to refute the legal conclusions in Plaintiff’s Complaint. A. Plaintiff Has Failed to Plead a Plausible Claim Against TMTI and Has Not Even Alleged Any Facts Regarding Joint Employment with TMTI. Plaintiff has not pleaded, as required under the FLSA and AMWA, facts sufficient to show how TMTI “employs” Plaintiff or how TMTI has allegedly created a “policy” that somehow violates the FLSA. The existence of an employer-employee relationship is a prerequisite to asserting a claim under the FLSA. See 29 U.S.C. § 216(b). The plaintiff bears the burden of proving that an employer-employee relationship exists. Reich v. ConAgra, Inc., 987 F.2d 1357, 1360 (8th Cir.1993). As Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 4 of 12 PageID #: 460 1342005-v1 5 such, Plaintiff must plead at least some factual basis to establish “joint employer” liability utilizing the joint employer test utilized by courts in the Eighth Circuit. Specifically, Plaintiff must plead facts relating to: (1) whether the alleged employer had the power to hire and fire the plaintiff; (2) whether the alleged employer supervised and controlled plaintiff's work schedules or conditions of employment; (3) whether the alleged employer determined the rate and method of payment; and (4) whether the alleged employer maintained plaintiff's employment records. Schubert v. Bethesda Health Group, Inc., 319 F.Supp.2d 963, 971 (E.D.Mo.2004); Childress v. Ozark Delivery of Missouri L.L.C., 95 F. Supp. 3d 1130, 1139 (W.D. Mo. 2015). Cases have uniformly held that Plaintiff must at least plead some plausible factual basis for a joint employment relationship. For instance, in Ash v. Anderson Merchandisers, LLC, 799 F.3d 957, 961 (8th Cir. 2015), cert. denied, 136 S. Ct. 804, 193 L. Ed. 2d 713 (2016), the plaintiffs brought suit against several defendants alleging a failure to pay overtime under the FLSA. The defendants filed a motion to dismiss arguing that they were not employers under the FLSA. The Eighth Circuit noted that the plaintiffs’ complaint “made only one allegation with regard to the defendants' status as their employer.” That allegation was conclusory and merely stated that the defendants “were part of an integrated enterprise and, as such, were plaintiffs' employer. During all relevant times, and upon information and belief, all of these defendants shared interrelated operations, centralized control of labor relations, common management and common ownership and/or financial control.’” Id. at 961. The court held that “[t]his conclusory allegation is insufficient to satisfy Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 5 of 12 PageID #: 461 1342005-v1 6 the pleading requirements of Rule 12(b)(6).” Id. The court further held that the plaintiffs must plead additional facts to support their allegations and cannot simply restate the legal test in order to survive a motion to dismiss. Id. In support of this conclusion, the Ash court reasoned that the plaintiffs’ “complaint does not include any facts describing the ‘economic reality’ of their employment, such as their alleged employers' right to control the nature and quality of their work, the employers' right to hire or fire, or the source of compensation for their work.” Id. citing Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 32-33 (1961), see also Loyd v. Ace Logistics, LLC, No. 08–CV–00188–W–HFS, 2008 WL 5211022, at *4 (W.D.Mo. Dec. 12, 2008)(the district court granted two of the four defendants' motion to dismiss the complaint as to them because the FLSA plaintiff did not allege that they hired or fired her, controlled her work schedule or conditions of employment, or maintained employment records.) Here, Plaintiff has failed to plead any joint employment relationship under any of the above factors. Instead, Plaintiff pleads the legal conclusion that “[t]hat the Plaintiff at all times material hereto was an employee of the Defendants . . .” [Cmpl., ¶ 14-15, 19, 21]. Unlike Ash, Plaintiff did not even plead the legal standard for joint employment, much less any factual basis for this conclusory allegation. As in the Ash case, “[t]his conclusory allegation is insufficient to satisfy the pleading requirements of Rule 12(b)(6).” Ash, 799 F.3d at 961. Plaintiff has failed to allege any fact indicating that TMTI, a franchisor, has asserted any control as an employer, and thus Plaintiff’s Complaint against it must be dismissed. Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 6 of 12 PageID #: 462 1342005-v1 7 B. Plaintiff Cannot Amend to Cure as This Court May Take Judicial Notice of Public Records That Refute Plaintiff’s Joint Employer Allegations. Even if Plaintiff had pleaded more facts relating to joint employment, or if Plaintiff sought to amend to do so, publicly available records and records incorporated by reference into Plaintiff’s Complaint establish that there is no joint employment relationship and disprove any alleged unlawful “policy.” i. This Court May Take Judicial Notice of Publicly Filed Two Men and a Truck Franchise Documents or, in The Alternative, Documents Incorporated by Reference in Plaintiff’s Complaint. In ruling on a motion under Fed. R. Civ. P. 12(b)(6), a district court may consider judicially noticed documents. Papasan v. Allain, 478 U.S. 265, 269 n. 1, (1986)(“the court is “not precluded in [its] review of the complaint from taking notice of items in the public record.”); Stahl v. U.S. Dep't of Agric., 327 F.3d 697, 700 (8th Cir. 2003)(“The district court may take judicial notice of public records and may thus consider them on a motion to dismiss.”); Faibisch v. Univ. of Minn., 304 F.3d 797, 802–03 (8th Cir.2002); Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir.1999);); Nixon v. Coeur D'Alene Tribe, 164 F.3d 1102, 1107 (8th Cir.1999)(“In this circuit, Rule 12(b)(6) motions are not automatically converted into motions for summary judgment simply because one party submits additional matters in support of or opposition to the motion . . . Some materials that are part of the public record or do not contradict the complaint may be considered by a court in deciding a Rule 12(b)(6) motion.”). Moreover, documents that are incorporated by reference in a Complaint may also be considered in weighing a motion to dismiss even if not attached to the Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 7 of 12 PageID #: 463 1342005-v1 8 pleadings. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (holding that court must consider, on 12(b)(6) motion, “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.”) citing 5B Wright & Miller § 1357 (3d ed. 2004 and Supp. 2007)). Here, Plaintiff’s Complaint states that “TMT[I]’s policies violate Federal law . . . .” [Cmpl., ¶ 14-15, 19, 21]. Presumably, therefore, the Complaint is referencing the TMTI franchise agreement. TMTI’s form franchise agreement is publicly available in eight states based on state legal requirements to file the franchise agreement. (Ex. B). Thus, pursuant to Rule 201 of the Federal Rules of Evidence, TMTI hereby requests this Court to take judicial notice of the attached franchise document (Ex. A) to determine whether the conclusory allegations made by Plaintiff are directly negated by information in the judicially noticeable documents. ii. The Publicly Available Franchise Records Negate the Allegations regarding TMTI. Here, the form franchise agreement—incorporated by reference in Plaintiff’s Complaint and publicly available—specifically establishes that TMTI exercises no control over the employees of its franchisees and also demonstrates that there is no “policy” of FLSA violations. As such, Plaintiff could not plausibly plead joint employer liability. The form agreement available on Minnesota’s website addresses the relevant joint employment factors: (1) whether the alleged employer had the power to hire and fire the plaintiff; (2) whether the alleged employer supervised and controlled plaintiff's work schedules or conditions of employment; (3) whether the alleged Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 8 of 12 PageID #: 464 1342005-v1 9 employer determined the rate and method of payment; and (4) whether the alleged employer maintained plaintiff's employment records. Schubert v. Bethesda Health Group, Inc., 319 F.Supp.2d 963, 971 (E.D.Mo.2004)). The franchise agreement states that TMTI does not “control” or “have the right to control, decisions regarding the persons you hire, discipline, or terminate as employees or agents.” The franchise agreement goes on to specify that TMTI does not control or “have the right to control your other day-to-day franchise activities . . . . In all cases you will remain solely responsible for decisions regarding hiring and maintaining your employees . . . .” (Ex. A at 34).3 Thus, under the Schubert factors, TMTI is not a joint employer as a matter of law. In addition, as a condition of joining the franchise, franchisees must “comply with all federal, state, county, municipal or other statutes, laws, ordinances, regulations, rules or orders applicable to the Franchise Business, including but not limited to state and federal labor and employment laws, such as the Fair Labor Standards Act (FLSA) . . . .” (Ex. A at 9). Thus, TMTI’s only “policy” regarding wages is to follow the law. Plaintiff cannot plead a contrary “policy” even assuming TMTI had sufficient control to impose such a policy—which it does not. Furthermore, any alleged “policy” of violating the FLSA is insufficient to state a claim under the FLSA without an employment relationship between Plaintiff and TMTI, which Plaintiff has not plausibly alleged and cannot plausibly allege. As 3 As noted in the Fact section, this record is available from the State of Minnesota’s website: https://www.cards.commerce.state.mn.us/CARDS/security/search.do?method=showPoup&do cumentId={F1684E06-8B42-4D8A-96E8-B51B66178BB7}&documentTitle=1534-201604- 07&documentType=4 Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 9 of 12 PageID #: 465 1342005-v1 10 such, Plaintiff cannot amend his Complaint to state a plausible claim upon which relief may be granted as to TMTI, and Plaintiff’s Complaint against TMTI must be dismissed with prejudice. CONCLUSION For the foregoing reasons, Defendant TMTI, respectfully requests the Court to take judicial notice of the facts set forth in Exhibits A and B attached hereto, enter an Order dismissing the claims in Plaintiff’s Complaint against Defendant TMTI with prejudice, for failure to state a claim upon which relief can be granted, award Defendant TMTI its attorneys’ fees and costs incurred in defending this action, and grant such further relief as the Court may deem appropriate and necessary. Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 10 of 12 PageID #: 466 1342005-v1 11 Brett J. Miller BUTZEL LONG 150 W. Jefferson Ave, Ste 100 Detroit, Michigan 48226 (313) 225-5316 Fax: 313-225-7080 millerbr@butzel.com and WRIGHT, LINDSEY & JENNINGS LLP 200 West Capitol Avenue, Suite 2300 Little Rock, Arkansas 72201-3699 Tel: (501) 371-0808 Fax: (501) 376-9442 Email: mkaemmerling@wlj.com By: /s/ Michelle M. Kaemmerling Michelle M. Kaemmerling (2001227) Attorneys for Defendant Two Men and a Truck International, Inc. Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 11 of 12 PageID #: 467 1342005-v1 12 CERTIFICATE OF SERVICE I hereby certify that on September 22, 2016, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system, which shall send notification of such filing to the following: Mr. Joshua Q. Mostyn MOSTYN PRETTYMAN, PLLC 1700 W. Industrial Dr., Ste. D. Rogers, Arkansas 72756 josh@arklawyers.com joshmostyn@cox.net Attorneys for Plaintiff Ms. Constance Clark Ms. Kelly Carithers DAVIS, CLARK, BUTT, CARITHERS & TAYLOR, PLC P.O. Box 1688 Fayetteville, Arkansas 72701-1688 cclcark@davis-firm.com Attorneys for TMT Arkansas, Inc. d/b/a Two Men and a Truck/NW Arkansas /s/ Michelle M. Kaemmerling Michelle M. Kaemmerling (2001227) Attorneys for Two Men and a Truck International, Inc. WRIGHT, LINDSEY & JENNINGS LLP 200 West Capitol Avenue, Suite 2300 Little Rock, Arkansas 72201-3699 (501) 371-0808 Fax: (501) 376-9442 Email: mkaemmerling@wlj.com Case 5:16-cv-05256-TLB Document 10 Filed 09/22/16 Page 12 of 12 PageID #: 468