Patricia Thompson v. Real Estate Mortgage Network , 748 F.3d 142 ( 2014 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 12-3828
_____________
PATRICIA THOMPSON,
Appellant
v.
REAL ESTATE MORTGAGE NETWORK;
SECURITY ATLANTIC MORTGAGE COMPANY;
NOEL CHAPMAN, an individual; SAMUEL
LAMPARELLO, an individual
_____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 2:11-cv-01494)
District Judge: Honorable Dennis M. Cavanaugh
_____________
Argued November 6, 2013
Before: GREENAWAY, JR., VANASKIE, and ROTH,
Circuit Judges
(Filed: April 3, 2014)
Mitchell A. Schley, Esq. [ARGUED]
Two Tower Center Boulevard, 8th Floor
East Brunswick, NJ 08816
Counsel for Appellant
Judith L. Spanier, Esq.
Abbey Spanier
212 East 39th Street
New York, NY 10016
Counsel for Appellant
Ari Karen, Esq. [ARGUED]
Offit Kurman
8171 Maple Lawn Boulevard, Suite 200
Maple Lawn, MD 20759
Counsel for Appellees
Douglas R. Kay, Esq.
Offit Kurman
8000 Towers Crescent Drive, Suite 1450
Tysons Corner, VA 22182
Counsel for Appellees
Forrest G. Read, IV, Esq.
Offit Kurman
4800 Montgomery Lane, 9th Floor
Bethesda, MD 20814
Counsel for Appellees
_____________
OPINION OF THE COURT
_____________
2
VANASKIE, Circuit Judge.
In this case we consider the efforts of plaintiff Patricia
Thompson to hold her former employers responsible for
alleged overtime violations under the Fair Labor Standards
Act (“FLSA”), 29 U.S.C. §§ 201–219, and the New Jersey
Wage and Hour Law, N.J. STAT. ANN. §§ 34:11-56a – 34:11–
56a38. Thompson appeals from an order of the United States
District Court for the District of New Jersey, which granted
the motion of defendants to dismiss each of Thompson’s
claims under Rule 12(b)(6) of the Federal Rules of Civil
Procedure. For the following reasons, we will vacate and
remand.
I.
In June 2009, appellant Patricia Thompson, a New
Jersey resident, was hired as a mortgage underwriter by
defendant Security Atlantic Mortgage Company (“Security
Atlantic”), a “nationwide direct mortgage lender.”1 App. 23.
Shortly thereafter, however, she was assigned to a training
class led by a representative for a different mortgage
company, defendant Real Estate Mortgage Network
(“REMN”). That employee “represented that REMN was a
sister company of Security Atlantic.” App. 93.
1
Our recitation of the factual background of this
appeal is derived from Thompson’s Amended Complaint.
For purposes of this appeal, we accept as true all facts set
forth in the Amended Complaint, and draw all reasonable
inferences from such allegations in favor of the complainant.
Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir.
2011).
3
In February 2010, allegedly in response to an
investigation being conducted by the U.S. Department of
Housing and Urban Development (“HUD”) into Security
Atlantic’s mortgage practices, Thompson and many of her
colleagues were asked by supervisors to fill out new job
applications to work for REMN. Thompson completed the
application as requested. From roughly that date forward,
Thompson’s paychecks were issued by REMN instead of
Security Atlantic. Defendants characterize Security Atlantic,
which is no longer in business, as “defunct.”2
Despite Thompson’s transfer to REMN, virtually no
change occurred in on-site operations. Thompson and her
colleagues continued to do the same work, at the same desks,
at the same location. Thompson’s pay rate, work email
address, and direct supervisors remained the same.
Thompson alleges that no employees were laid off during this
transition, although some of her colleagues continued to
receive paychecks from Security Atlantic.
The basis for this lawsuit against both Security
Atlantic and REMN is Thompson’s allegation that between
June 2009 and the end of her employment with REMN on
August 5, 2010:
[D]efendants suffered and
permitted plaintiff and other
underwriters, closers and HUD
reviewers to regularly work more
2
Because that representation was made in defendants’
motion papers before the District Court, App. 42, we treat it
as a judicial admission. See Berckeley Inv. Grp. v. Colkitt,
455 F.3d 195, 211 n.20 (3d Cir. 2006).
4
than eight hours per day and more
than forty hours per week without
overtime compensation for all
overtime hours worked.
Employees [were] given
turnaround times for assignments
and employees routinely worked
through lunch and at home to
meet these requirements.
App. 99. Thompson also alleges that “[d]efendants uniformly
misrepresented to plaintiff and other mortgage underwriters,
closers and HUD reviewers that they were exempt, salaried
employees and, therefore, ineligible to receive overtime pay.”
App. 101. The misconduct was allegedly “widespread,
repeated and consistent.” Id.
Aside from her claims against Security Atlantic and
REMN, Thompson also seeks relief from defendants Samuel
Lamparello (the co-owner and President of Security Atlantic)
and Noel Chapman (the co-owner and Executive Vice
President of Security Atlantic). The Amended Complaint
alleges that throughout the time periods at issue, Chapman
and Lamparello “made decisions concerning [Security
Atlantic’s] and REMN’s day-to-day operations, hiring, firing,
promotions, personnel matters, work schedules, pay policies,
and compensation.” App. 93. When a work or personnel
issue arose at Security Atlantic or REMN that Thompson’s
immediate supervisor could not address alone, “the supervisor
would consult with, among others, Chapman or Lamparello.”
Id.
In June 2010, Thompson directly asked Chapman
about overtime compensation. He responded that he “did not
5
pay overtime to underwriters.” App. 99. In July 2010,
Chapman sent an email to “All Departments” stating, in part,
“So many of you worked long hours, late nights and even
weekends to make sure that all REMN customers are happy
customers.” App. 92. Thompson quit her job at REMN on
August 5, 2010. In 2011, both Chapman and Lamparello
became officers of REMN.
Thompson filed her “class and collective action”
complaint on March 16, 2011.3 On December 30, 2011, the
District Court dismissed the complaint without prejudice for
failure to state a claim.
Thompson filed her Amended Complaint on January
27, 2012. She asserts that all four defendants violated the
FLSA by “failing to properly compensate plaintiff, failing to
pay plaintiff overtime pay for time worked in excess of 40
hours in a workweek, and misclassifying plaintiff as exempt
from the overtime wage requirements of the FLSA.” App.
95. Thompson further seeks to hold REMN liable for
SAMC’s own statutory violations under theories of joint
liability and successor liability. She also contends that
Chapman and Lamparello were her “employer[s] and/or joint
employer[s]” by virtue of their positions with the defendant
companies, and therefore are “personally, jointly and
severally liable for the violations of the FLSA and the [New
Jersey Wage and Hour Law] by [Security Atlantic] and
REMN.” App. 92–93.
3
Because the subject of this appeal is the District
Court’s dismissal of Thompson’s personal claims for relief,
we do not address Thompson’s “class and collective action”
claims in any way.
6
On August 31, 2012, the District Court dismissed
without prejudice the entirety of Thompson’s Amended
Complaint. Thompson filed a timely notice of appeal and has
not sought leave to file a second amended complaint.
II.
We have jurisdiction under 28 U.S.C. § 1291 over a
district court’s dismissal without prejudice where, as here, the
plaintiff elects to stand on the dismissed complaint without
further amendment. Hagan v. Rogers, 570 F.3d 146, 151 (3d
Cir. 2009).4 Our review of a District Court’s dismissal under
Rule 12(b)(6) is de novo. Fowler v. UPMC Shadyside, 578
F.3d 203, 206 (3d Cir. 2009). Under the “notice pleading”
standard embodied in Rule 8 of the Federal Rules of Civil
Procedure, a plaintiff must come forward with “a short and
plain statement of the claim showing that the pleader is
entitled to relief.” As explicated in Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009), a claimant must state a “plausible”
claim for relief, and “[a] claim has facial plausibility when the
pleaded factual content allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Although “[f]actual 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), a
plaintiff “need only put forth allegations that raise a
reasonable expectation that discovery will reveal evidence of
the necessary element.” Fowler, 578 F.3d at 213 (quotation
marks and citations omitted); see also Covington v. Int’l
Ass’n of Approved Basketball Officials, 710 F.3d 114, 117–18
(3d Cir. 2013).
4
The District Court had jurisdiction pursuant to 28
U.S.C. §§ 1331 and 1367(a).
7
III.
A.
The FLSA and its state-law counterpart, the New
Jersey Wage and Hour Law, allow employees to sue their past
or present employers for various employment-related causes
of action. Like the District Court and parties, we will
distinguish between Thompson’s federal-law claims and
state-law claims only as necessary.
Relevant here, the FLSA provides:
[N]o employer shall employ any
of his employees who in any
workweek is engaged in
commerce or in the production of
goods for commerce, or is
employed in an enterprise
engaged in commerce or in the
production of goods for
commerce, for a workweek longer
than forty hours unless such
employee receives compensation
for his employment in excess of
the hours above specified at a rate
not less than one and one-half
times the regular rate at which he
is employed.
8
29 U.S.C. § 207(a)(1). 5 For employees who have been
wrongly denied overtime pay, the FLSA offers a private
cause of action to recover the corpus of the unpaid
compensation along with equivalent liquidated damages,
costs, and attorney’s fees. Id. § 216(b).
Our first inquiry in most FLSA cases is whether the
plaintiff has alleged an actionable employer-employee
relationship. An “employer” is “any person acting directly or
indirectly in the interest of an employer in relation to an
employee . . . .” Id. § 203(d). An “employee” is “any
individual employed by an employer.” Id. § 203(e)(1). To
“employ” means “to suffer or permit to work.” Id. § 203(g).
As we have recently recognized, the breadth of these
definitions is both intentional and obvious:
When determining whether
someone is an employee under the
FLSA, “economic reality rather
than technical concepts is to be
the test of employment.” Under
this theory, the FLSA defines
employer “expansively,” and with
“striking breadth.” The Supreme
Court has even gone so far as to
acknowledge that the FLSA's
definition of an employer is “the
5
The language of New Jersey Wage and Hour Law §
34:11-56a4 is substantially similar to the FLSA, and provides:
“Each employer shall pay to each of his employees . . . 1 1/2
times such employee’s regular hourly wage for each hour of
working time in excess of 40 hours in any week[.]” § 34:11-
56a4.
9
broadest definition that has ever
been included in any one act.”
In re Enterprise Rent-A-Car Wage & Hour Emp’t Prac.
Litig., 683 F.3d 462, 467–68 (3d Cir. 2012) (citations
omitted).
Thompson first challenges the District Court’s
dismissal of her most straightforward claims, i.e., that (1)
Security Atlantic committed statutory violations by failing to
compensate Thompson appropriately between her date of
hiring in June 2009 and her transfer to REMN in February
2010, and (2) REMN committed entirely separate statutory
violations by failing to compensate Thompson appropriately
between her date of hiring in February 2010 and the
conclusion of her employment in July 2010. The District
Court did not explain its reasoning for dismissal of these
claims. Nor did defendants below mount a serious argument
for such dismissal. Accordingly, we are left without the
benefit of an articulated legal basis for the District Court’s
ruling. Defendants now attempt to justify the dismissal of
these claims by arguing that Thompson’s allegations
improperly “group[] all defendants—individual and
corporate—together and fail[] to differentiate between them
as to alleged wrongful conduct.” Appellees’ Br. at 20.
The pleadings here put the corporate defendants on fair
notice that the alleged violations began during Thompson’s
employment with Security Atlantic and persisted throughout
her relatively brief tenure with the two companies.
Accordingly, we will vacate the District Court’s dismissal of
Thompson’s claims against Security Atlantic and REMN
under a theory of primary liability.
10
B.
Thompson also appeals from the District Court’s
dismissal of her claims insofar as they depend on a theory of
joint employment between Security Atlantic and REMN.
Under the FLSA, multiple persons or entities can be
responsible for a single employee’s wages as “joint
employers” in certain situations. 29 C.F.R. § 791.2. One
such scenario occurs where both employers “exert significant
control” over the employee, N.L.R.B. v. Browning–Ferris
Indus. of Pa., Inc., 691 F.2d 1117, 1124 (3d Cir. 1982), “by
reason of the fact that one employer controls, is controlled by,
or is under common control with the other employer.” 29
C.F.R. § 791.2(b)(3). Under these circumstances, each joint
employer may be held jointly and severally liable for the
FLSA violations of the other, in addition to direct liability for
its own violations.
We have recently treated this topic in some depth, see
In re Enterprise, 683 F.3d at 467–71, and in so doing
announced a directive that we described as the “Enterprise
test.” 6 When assessing whether a “joint employer”
6
Defendants suggest that Thompson’s failure to cite
Enterprise in the District Court, and the District Court’s
subsequent omission of that precedent from its opinion of
August 31, 2012, precludes Thompson from benefitting from
it now. The Enterprise decision, however, does not constitute
a “claim” requiring presentation to the District Court. See Yee
v. City of Escondido, 503 U.S. 519, 534 (1992) (“Once a
federal claim is properly presented, a party can make any
argument in support of that claim; parties are not limited to
the precise arguments they made below.”). Thompson’s
“joint employer” claims were well established in the record.
11
relationship exists, a court should consider the following non-
exhaustive list of relevant factors:
(1) the alleged employer’s
authority to hire and fire the
relevant employees; (2) the
alleged employer’s authority to
promulgate work rules and
assignments and to set the
employees’ conditions of
employment: compensation,
benefits, and work schedules,
including the rate and method of
payment; (3) the alleged
employer’s involvement in day-
to-day employee supervision,
including employee discipline;
and (4) the alleged employer’s
actual control of employee
records, such as payroll,
insurance, or taxes.
Id. at 469. As with the existence of an employer-employee
relationship in the first instance, however, the determination
depends on “all the facts in the particular case.” 29 C.F.R. §
791.2(a).
Here, the District Court emphasized that Thompson’s
employment by Security Atlantic was separate and distinct
from her employment by REMN. This may be correct if one
We would be remiss if we failed to apply our own binding
precedent simply because it was not cited before the District
Court.
12
considers only the name of the payor appearing on
Thompson’s pay stubs. But Thompson alleges more. The
Amended Complaint states that an employee of REMN
conducted Thompson’s training immediately after she was
hired by Security Atlantic in June 2009, indicating that
REMN had at least some authority to “promulgate work rules
and assignments” even before REMN formally hired
Thompson in February 2010. The employee responsible for
Thompson’s training allegedly described REMN as Security
Atlantic’s “sister company,” a term which suggests some
broader degree of corporate intermingling. And the scenario
described by Thompson, in which she and virtually all other
Security Atlantic employees were abruptly and seamlessly
integrated into REMN’s commercial mortgage business while
some of those same employees continued to be paid by
Security Atlantic, supports Thompson’s claim that the two
companies shared authority over hiring and firing practices.
We caution that our assessment rests heavily on the
procedural posture of this litigation. Thompson, a low-level
employee with each of the defendant companies, has had no
opportunity for discovery as to payroll and taxation
documents, disciplinary records, internal corporate
communications, or leadership and ownership structures. It
may well be that a fully developed factual record will
preclude a finding that Security Atlantic and REMN were
“joint employers” of Thompson for any of the pay periods at
issue. But under these circumstances, we cannot say that
Thompson’s Amended Complaint fails to state a claim upon
which relief can be granted. We will vacate the District
Court’s dismissal of Thompson’s claims in this regard and
remand for further proceedings.
C.
13
Thompson alternatively seeks to hold REMN liable for
Security Atlantic’s alleged violations not only on a joint
employer theory, but also on the theory that REMN, as an
alleged successor in interest to Security Atlantic, is obligated
to assume that company’s debts and liabilities. The parties
dispute which law, state or federal, governs Thompson’s
FLSA successor liability claims.7
Defendants urge that we apply New Jersey law, which
holds that successor corporations are legally distinct from
their predecessors and do not assume any of the debts or
liabilities of the prior entity, except where:
7
Defendants argue that Thompson waived the
opportunity to rely on federal common law by failing to raise
the issue of its applicability before the District Court. The
prudential rule that we not consider claims raised for the first
time on appeal is at its strongest when a party presents an
issue for the first time on appeal and thereby prevents the
opposing party from introducing evidence relevant to that
issue. See Harris v. City of Philadelphia, 35 F.3d 840, 845
(3d Cir. 1994). In this case, the proceedings remain at the
pleadings stage. Neither party has introduced evidence of any
kind. Nor is it a surprise to defendants on appeal that
Thompson seeks relief on a theory of successor liability.
Because we consider it extremely unlikely that our de novo
analysis would be materially affected if that question had
been presented squarely at an earlier juncture, and because
the question of the law applicable to a claim predicated upon
successor liability under the FLSA is an open and important
question in this Circuit, we decline to hold that Thompson’s
failure to raise the issue effected a waiver in this instance.
14
(1) the purchasing corporation
expressly or impliedly agreed to
assume such debts and liabilities;
(2) the transaction amounts to a
consolidation or merger of the
seller and purchaser; (3) the
purchasing corporation is merely
a continuation of the selling
corporation, or (4) the transaction
is entered into fraudulently in
order to escape responsibility for
such debts and liabilities.
Ramirez v. Amsted Indus., Inc., 431 A.2d 811, 815 (N.J.
1981). Here, Thompson claims that REMN is a “mere
continuation” of Security Atlantic, and is therefore
accountable for its legal liabilities. We have previously
summarized New Jersey law pertaining to the “mere
continuation” rule as follows:
Factors relevant to the “mere
continuation” exception include
continuity of ownership;
continuity of management;
continuity of personnel;
continuity of physical location,
assets and general business
operations; and cessation of the
prior business shortly after the
new entity is formed. Also
relevant is the extent to which the
successor intended “to incorporate
[the predecessor] into its system
with as much the same structure
15
and operation as possible.” Thus
the court should determine
whether “the purchaser holds
itself out to the world as the
effective continuation of the
seller.” However, the proponent
of successor liability need not
necessarily establish all of these
factors.
Marshak v. Treadwell, 595 F.3d 478, 490 (3d Cir. 2009)
(quoting Bowen Engineering v. Estate of Reeve, 799 F. Supp.
467, 487–88 (D.N.J. 1992)).
Thompson urges that, as to her FLSA claim, we apply
a federal common law standard for successor liability that has
slowly gained traction in the field of labor and employment
disputes over the course of almost fifty years. That standard,
which presents a lower bar to relief than most state
jurisprudence, was designed to “impos[e] liability upon
successors beyond the confines of the common law rule when
necessary to protect important employment-related
policies[,]” Einhorn v. M.L. Ruberton Constr. Co., 632 F.3d
89, 94 (3d Cir. 2011), and dictates consideration of only the
following factors: “(1) continuity in operations and work
force of the successor and predecessor employers; (2) notice
to the successor-employer of its predecessor’s legal
obligation; and (3) ability of the predecessor to provide
adequate relief directly.” Brzozowski v. Corr. Physician
Servs., Inc., 360 F.3d 173, 178 (3d Cir. 2004) (quoting Rego
v. ARC Water Treatment Co. of Pa., 181 F.3d 396, 402 (3d
Cir. 1999)).
16
The Supreme Court crafted the federal common law
standard in the context of a claim under the Labor
Management Relations Act, see John Wiley & Sons, Inc. v.
Livingston, 376 U.S. 543, 548–51 (1964), and later applied
the standard to claims under the National Labor Relations
Act. See Golden State Bottling Co. v. N.L.R.B., 414 U.S. 168,
181–85 (1973). In the past decade we have further extended
the federal standard to claims brought under Title VII, see
Brzozowski, 360 F.3d at 177–79, and ERISA, see Einhorn,
632 F.3d at 93–99.
Two of our sister circuits have addressed the merits of
this issue and concluded that application of the federal
standard to claims under the FLSA is the logical extension of
existing case law. See, e.g., Teed v. Thomas & Betts Power
Solutions, 711 F.3d 763, 765–77 (7th Cir. 2013); Steinbach v.
Hubbard, 51 F.3d 843, 845 (9th Cir. 1995). We agree. In
Teed, Judge Posner, writing for the Court of Appeals for the
Seventh Circuit, stated the following case for the ongoing
vitality of the standard itself and for its applicability to claims
under the FLSA:
The idea behind having a
distinct federal standard
applicable to federal labor and
employment statutes is that these
statutes are intended either to
foster labor peace, as in the
National Labor Relations Act, or
to protect workers' rights, as in
Title VII, and that in either type of
case the imposition of successor
liability will often be necessary to
achieve the statutory goals
17
because the workers will often be
unable to head off a corporate sale
by their employer aimed at
extinguishing the employer's
liability to them. This logic
extends to suits to enforce the Fair
Labor Standards Act. “The FLSA
was passed to protect workers'
standards of living through the
regulation of working conditions.
29 U.S.C. § 202. That
fundamental purpose is as fully
deserving of protection as the
labor peace, anti-discrimination,
and worker security policies
underlying the NLRA, Title VII,
42 U.S.C. § 1981, ERISA, and
MPPAA.” Steinbach v. Hubbard,
51 F.3d 843, 845 (9th Cir. 1995).
In the absence of successor
liability, a violator of the Act
could escape liability, or at least
make relief much more difficult to
obtain, by selling its assets
without an assumption of
liabilities by the buyer (for such
an assumption would reduce the
purchase price by imposing a cost
on the buyer) and then dissolving.
And although it can be argued that
imposing successor liability in
such a case impedes the operation
of the market in companies by
18
increasing the cost to the buyer of
a company that may have violated
the FLSA, it's not a strong
argument. The successor will
have been compensated for
bearing the liabilities by paying
less for the assets it's buying; it
will have paid less because the net
value of the assets will have been
diminished by the associated
liabilities.
...
Thomas & Betts argues
that the Act imposes liability only
on “employers,” 29 U.S.C. §§
203(d), 216(b), and Thomas &
Betts was not the employer of the
suing workers when the Act was
violated. But that is equally true
when successor liability is
imposed in a Title VII case, as the
case law requires. It argues that
Wisconsin has an interest in this
case because it too has minimum
wage and overtime laws. But
states also have their own laws,
paralleling Title VII, forbidding
employment discrimination. It
points out that most FLSA suits
are brought by individuals for the
recovery of individual damages
rather than by the government
19
(though in fact the Department of
Labor brings many), but likewise
most Title VII suits are private
rather than public. It argues that
violations of the FLSA are
“victimless,” because no one is
compelled to work for a company
that violates that Act. Neither is
anyone forced to work for a
company that discriminates on
grounds forbidden by Title VII,
such as race and sex. Yet there
are victims of the violations in
both FLSA and Title VII cases—
workers who would be paid
higher wages if their employer
complied with the FLSA and
workers who would have better
jobs and working conditions if
their employer complied with
Title VII. Moreover, there is an
interest in legal predictability that
is served by applying the same
standard of successor liability . . .
to all federal statutes that protect
employees . . . .
Id. at 766-67.
We find that pronouncement well reasoned, directly
applicable, and in accord with our own jurisprudence. 8
8
Indeed, this case mirrors Einhorn, in which we
declared that “[i]n light of the Seventh Circuit's
20
Moreover, defendants provide no compelling reason why the
federal common law standard should not be applied, as in
Brzozowski and Einhorn, to this employment-related claim
arising under a broad and worker-friendly federal statute. See
29 U.S.C. § 202.
The issue remains as to whether Thompson’s
allegations satisfy the federal common law standard in the
case at hand. Here, the District Court concluded that the
Amended Complaint, with respect to successor liability,
alleges only “retention of employees and office space.” App.
10. That assessment of the facts alleged in the Complaint is
unduly narrow. The Amended Complaint in fact alleges that
essentially all facets of the business at issue, including
operations, staffing, office space, email addresses,
employment conditions, and work in progress, remained the
same after the February 2010 intercession of REMN. App.
94–95. We presently need not speculate as to the technical
nature of the relationship between the two companies,
although such evidence may be of great importance upon a
motion for summary judgment. See, e.g., Steinbach, 51 F.3d
at 846 (finding no successor liability where the purported
successor had only leased the predecessor’s equipment and
used employees “on a temporary basis”). For purposes of the
instant motion we find Thompson’s allegations sufficient to
demonstrate a plausible “continuity in operations and work
force.” Brzozowski, 360 F.3d at 178.
With respect to the second factor, pre-transfer notice of
the obligation’s existence to REMN, Thompson alleges that
comprehensive analysis [applying the federal common law
standard to ERISA claims], we need not reinvent the wheel.”
632 F.3d at 96.
21
Security Atlantic was essentially controlled by a small
supervisory and managerial group, including Lamparello and
Chapman, who dictated payroll and scheduling and had
ongoing knowledge of systematic FLSA violations.
Thompson contends that when she and her colleagues were
hired by REMN, the same practices continued under the same
management, who were eventually integrated into corporate
leadership roles with REMN. On these allegations it is
unclear whether REMN had knowledge of Security Atlantic’s
allegedly improper overtime practices prior to the transfer.
And we have no desire to undermine the importance of this
factor with respect to REMN’s ultimate liability. As we
stated in Einhorn, “[t]he requirement of notice and the ability
of the successor to shield itself during negotiations temper
concerns that imposing successor liability might discourage
corporate transactions.” 632 F.3d at 96. But this factor, like
others in this case, is not one as to which Thompson should
be expected to come forward with detailed proof at this stage.
As to the third factor, the predecessor’s “ability . . . to
provide adequate relief directly,” defendants have represented
that Security Atlantic is now “defunct,” which we take to
mean that it is likely incapable of satisfying any award of
damages to Thompson. In total, then, these allegations are
enough to surmount a motion to dismiss under the federal
standard.
We must give separate consideration to Thompson’s
claims under the New Jersey Wage and Hour Law. Because
these claims were cognizable in the District Court only by
virtue of supplemental jurisdiction, they are governed by the
New Jersey standard for successor liability. Even so,
however, we conclude for the same reasons described above
that dismissal is not appropriate at this time. The Amended
22
Complaint describes continuity of operations, management,
physical location, assets, and general operations. The
predecessor corporation, Security Atlantic, went out of
business shortly after the transfer. In light of these claims, we
will not fault Thompson for her inability to make specific
allegations as to continuity of ownership at this stage,
particularly given her reasonable assertion that the inner
workings of the privately held corporations at issue remain
hidden to her. She has adequately raised a plausible claim for
relief on a successor liability theory under the New Jersey
Wage and Hour Law. Accordingly, we will vacate the
District Court’s order with respect to Thompson’s claims
under the FLSA and New Jersey Wage and Hour Law against
REMN on a theory of successor liability and remand for
further proceedings.
D.
The FLSA imposes individual liability on “any person
acting directly or indirectly in the interest of an employer in
relation to an employee . . . .” 29 U.S.C. § 203(d). Aside
from the corporate entity itself, a company’s owners, officers,
or supervisory personnel may also constitute “joint
employers” for purposes of liability under the FLSA. We
have addressed that specific topic in the analogous context of
the Family and Medical Leave Act:
[A]n individual is subject to
FMLA liability when he or she
exercises “supervisory authority
over the complaining employee
and was responsible in whole or
part for the alleged violation”
while acting in the employer's
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interest. Riordan v. Kempiners,
831 F.2d 690, 694 (7th Cir. 1987)
(discussing individual liability
under the FLSA's analogous
definition of an “employer”). As
the Fifth Circuit explained in
interpreting the FLSA's analogous
employer provision, an individual
supervisor has adequate authority
over the complaining employee
when the supervisor
“independently exercise[s] control
over the work situation.”
Donovan v. Grim Hotel Co., 747
F.2d 966, 972 (5th Cir. 1984)
(quoting Donovan v. Sabine
Irrigation Co., 695 F.2d 190, 195
(5th Cir. 1983)); see also Falk v.
Brennan, 414 U.S. 190, 195
(1973) (holding that a company
exercising “substantial control of
the terms and conditions of the
work” of the employees is an
employer under the FLSA).
Haybarger v. Lawrence County Adult Prob. & Parole, 667
F.3d 408, 417 (3d Cir. 2012). The focus is on “the totality of
the circumstances rather than on technical concepts of the
employment relationship.” Id. at 418 (quotation marks
omitted).
Here, the Amended Complaint alleges that Lamparello
and Chapman “made decisions concerning Security Atlantic’s
and REMN’s day-to-day operations, hiring, firing,
24
promotions, personnel matters, work schedules, pay policies,
and compensation.” App. 93. When a work or personnel
issue arose at Security Atlantic that Thompson’s immediate
supervisor could not address alone, “the supervisor would
consult with, among others, Chapman or Lamparello.” Id.
And in June 2010, when Thompson asked Chapman about
overtime compensation, he responded that he “did not pay
overtime to underwriters.” App. 99.
Defendants argue that Thompson’s allegations as to
the workplace roles and responsibilities of Chapman and
Lamparello are limited and conclusory. Thompson responds
that, as a former low-level employee in a privately held
corporation, she will not have access to the specific facts
regarding Chapman and Lamparello’s involvement in
Security Atlantic and REMN until after discovery, and that
her limited allegations regarding their substantial workplace
decision-making authority and involvement in day-to-day
operations are sufficient for purposes of the pleadings.
We conclude that Thompson provides enough
information in the Amended Complaint, including allegations
of the scope of the individual defendants’ workplace authority
and of specific statements by Chapman as to overtime pay, to
“allow[] the court to draw the reasonable inference that the
defendant[s] [are] liable for the misconduct alleged.” Iqbal,
556 U.S. at 678. We will therefore vacate the District Court’s
order with respect to its dismissal of Thompson’s claims
against Chapman and Lamparello in their individual
capacities and remand for further proceedings.
IV.
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For the foregoing reasons, we will vacate the District
Court’s order of August 31, 2012, and remand for further
proceedings consistent with this Opinion.
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