Linda Ash v. Anderson Merchandisers, LLC

United States Court of Appeals
For the Eighth Circuit
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No. 14-3258
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Linda Ash; Abbie Jewsome
lllllllllllllllllllll Plaintiffs - Appellants
v.
Anderson Merchandisers, LLC; West AM, LLC; AnConnect, LLC
lllllllllllllllllllll Defendants - Appellees
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Appeal from United States District Court
for the Western District of Missouri - Kansas City
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Submitted: April 16, 2015
Filed: August 21, 2015
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Before MURPHY, COLLOTON, and KELLY, Circuit Judges.
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KELLY, Circuit Judge.
Linda Ash and Abbie Jewsome appeal the dismissal of their complaint alleging
violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and the
denial of their post-dismissal motion to vacate the district court’s1 order pursuant to
1
The Honorable Dean Whipple, United States District Judge for the Western
District of Missouri.
Federal Rules of Civil Procedure 60(b) and 59(e) and request for leave to file an
amended complaint. Having jurisdiction under 28 U.S.C. § 1291, we affirm the
district court.
I. Background
Ash and Jewsome filed suit against Anderson Merchandisers, West AM, and
AnConnect under the FLSA on April 21, 2014, on behalf of themselves and similarly-
situated persons. The original complaint alleged that Anderson, West, and
AnConnect, the plaintiffs’ employer, had violated the FLSA by failing to pay required
overtime compensation. The defendants filed a motion to dismiss on May 23, 2014,
and the district court granted the motion without a hearing on July 2, 2014. Judgment
was entered on behalf of Anderson, West AM, and AnConnect on July 9, 2014.
On July 11, Ash and Jewsome moved to vacate the district court’s order
pursuant to Federal Rules of Civil Procedure 60(b) and 59(e) and requested leave to
file their First Amended Complaint. The district court denied Ash and Jewsome’s
motion to vacate and request to file an amended complaint on September 11, 2014.
Ash and Jewsome timely appealed the district court’s dismissal of their complaint and
denial of their motion to vacate and request for leave to amend.
II. Discussion
A. Motion to Dismiss
The district court dismissed Ash and Jewsome’s complaint for failure to state
a claim for two reasons: failure to allege that Anderson, West, and AnConnect were
their employer for purposes of the FLSA, and failure to allege a substantive FLSA
cause of action. Ash and Jewsome assert on appeal that their complaint was sufficient
to state a claim for relief, and that the district court erred in determining otherwise.
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“We review the dismissal of a complaint for failure to state a claim de novo,
affirming dismissal if the complaint fails to state a claim upon which relief can be
granted.” Horras v. Am. Capital Strategies, Ltd., 729 F.3d 798, 801 (8th Cir. 2013)
(quotation, alteration, and internal citation omitted). For a pleading to state a claim
for relief it must contain a short and plain statement of the claim showing that the
pleader is entitled to relief. Id. (citing Fed. R. Civ. P. 8(a)(2)). The complaint must
contain facts sufficient to state a claim that is plausible on its face. Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570 (2007). “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). “A pleading that offers ‘labels and conclusions’ or ‘a formulaic
recitation of the elements of a cause of action will not do.’” Id. (quoting Twombly,
550 U.S. at 555).
In their complaint, Ash and Jewsome made only one allegation with regard to
the defendants’ status as their employer: “During all relevant times, [Anderson, West,
and AnConnect] 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.” Ash and
Jewsome provided no additional facts to support these assertions. Their only
allegation is simply a restatement of the legal test used to determine whether certain
entities constitute a joint employer for the purpose of civil rights litigation. See Baker
v. Stuart Broadcasting Co., 560 F.2d 389, 392 (8th Cir. 1977). However, “the test of
employment under the FLSA is one of ‘economic reality.’” Tony and Susan Alamo
Found. v. Sec’y of Labor, 471 U.S. 290, 301 (1985) (quoting Goldberg v. Whitaker
House Co-op., Inc., 366 U.S. 28, 33 (1961)). Ash and Jewsome’s 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
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employers’ right to hire or fire, or the source of compensation for their work. See
Goldberg, 366 U.S. at 32–33. Effectively, the only allegation as to who Ash and
Jewsome’s employer was is the conclusory statement that Anderson, West, and
AnConnect were “part of an integrated enterprise.”
This conclusory allegation is insufficient to satisfy the pleading requirements
of Rule 12(b)(6). Ash and Jewsome failed to set forth any facts to support the legal
conclusion that Anderson, West, and AnConnect were their employer, instead
providing only “labels and conclusions” and “a formulaic recitation of the elements”
of their claim. Horras, 729 F.3d at 801 (quoting Iqbal, 566 U.S. at 678). Ash and
Jewsome could have alleged—and in their first amended complaint, did allege—such
facts as the name on their business cards, the identity of their supervisors, the source
of their work schedules, and the information they were given when they were hired.
It is this type of factual allegation that could “allow[] the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (quoting Iqbal,
566 U.S. at 678). However, without this type of factual allegation, the complaint is
insufficient for failure to state a necessary element of the claim.
It is important to note that Ash and Jewsome were not required to determine
conclusively which of the three defendant companies was their employer at the
pleadings stage or describe in detail the employer’s corporate structure, which they
contend was not within their ability to know so early in the litigation. The pleading
standard under Rule 12(b)(6) contemplates that plaintiffs will often be unable to
prove definitively the elements of the claim before discovery, particularly in cases
where the necessary information is within the control of the defendants. The pleading
standard therefore requires only that the plaintiff allege facts sufficient to state a
plausible claim. Here, however, Ash and Jewsome did not allege any facts at all that
would allow an inference that the defendants were their employer. Without any facts
to support their allegation, the complaint contained only the recitation of a legal
conclusion, and a mere legal conclusion is not enough to allege an employee-
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employer relationship as required for an FLSA claim. Because Ash and Jewsome did
not adequately allege that Anderson, West, and AnConnect were their employer, as
required to state a claim under the FLSA, the district court did not err in dismissing
their complaint for failure to state a claim.
The district court also concluded that Ash and Jewsome failed to allege
sufficient facts to support a substantive cause of action for overtime violations under
the FLSA. Ash and Jewsome assert that in reaching that conclusion, the district court
erroneously applied a heightened pleading standard. The proper pleading standard
for FLSA claims is a matter of first impression in this circuit following Iqbal and
Twombly, and those circuits to have considered the question have arrived at
somewhat variable conclusions. Compare Lundy v. Catholic Health Sys. of Long
Island Inc., 711 F.3d 106, 114 (2d Cir. 2013) (requiring a plaintiff to allege 40 hours
of work in a given workweek as well as some uncompensated time in excess of that
40 hours); and Davis v. Abington Mem. Hosp., 765 F.3d 236, 242–43 (3d Cir. 2014)
(adopting Lundy test); and Landers v. Quality Communications, Inc., 771 F.3d 638,
644–45 (9th Cir. 2014) (same); with Pruell v. Caritas Christi, 678 F.3d 10, 13–16 (1st
Cir. 2012) (requiring examples of unpaid time or a description of the nature of the
work performed). However, having concluded that Ash and Jewsome’s complaint
was insufficient because it did not adequately allege that the defendant companies
were their employer, we need not reach the question of whether the district court
correctly applied the proper pleading standard for the substantive FLSA claim.
B. Motion to Vacate and Request for Leave to File Amended Complaint
Ash and Jewsome argue that the district court’s denial of their motion to vacate
and request for leave to file an amended complaint was an abuse of discretion. The
stated basis for the motion to vacate is the filing of an amended complaint, therefore
we must only decide whether the district court erred in denying leave to amend.
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We “review the district court’s denial of [a plaintiff’s] motion for leave to
amend for an abuse of discretion.” Horras, 729 F.3d at 804 (quoting Morrison
Enters., LLC v. Dravo Corp., 638 F.3d 594, 602 (8th Cir. 2011)). “Although a district
court ‘may not ignore the [Federal Rule of Civil Procedure] 15(a)(2) considerations
that favor affording parties an opportunity to test their claims on the merits,’ it has
‘considerable discretion to deny a post judgment motion for leave to amend because
such motions are disfavored.’” Id. (alteration in original) (quoting United States ex
rel. Roop v. Hypoguard USA, Inc., 559 F.3d 818, 824 (8th Cir. 2009)). “Unexcused
delay is sufficient to justify the court’s denial . . . if the party is seeking to amend the
pleadings after the district court has dismissed the claims it seeks to amend,
particularly when the plaintiff was put on notice of the need to change the pleadings
before the complaint was dismissed, but failed to do so.” Id. (quoting Moses.com
Sec., Inc. v. Comprehensive Software Sys., Inc., 406 F.3d 1052, 1065 (8th Cir.
2005)).
Ash and Jewsome argue that the district court’s denial of their request for leave
to amend was an abuse of discretion because that denial prevented their claim from
being tested on its merits.2 Resolution of claims on their merits is favored under
Federal Rule of Civil Procedure 15(a)(2), and “decisions on the merits [should not]
be avoided on the basis of . . . mere technicalities.” Foman v. Davis, 371 U.S. 178,
181 (1962). However, that consideration is not the sole factor when determining
whether a plaintiff should be granted leave to amend a complaint post-judgment. A
district court may appropriately deny leave to amend “where there are compelling
2
Ash and Jewsome also argue that the district court abused its discretion in
failing to grant them leave to amend to meet what they consider to be a newly-
heightened pleading standard for FLSA overtime claims. However, because Ash and
Jewsome did not sufficiently plead the employer element of their FLSA claim, we do
not reach the question of what substantive pleading standard applies, or address the
purportedly heightened standard applied by the district court. This component of Ash
and Jewsome’s argument is therefore unavailing.
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reasons such as undue delay, bad faith, or dilatory motive, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the non-moving
party, or futility of the amendment,” even when doing so will necessarily prevent
resolution on the merits. Horras, 729 F.3d at 804 (quoting Moses.com, 406 F.3d at
1065) (internal quotations omitted). In this case, the district court concluded that Ash
and Jewsome had inexcusably delayed in properly requesting leave to amend and
denied the request.
There can be little doubt that it would have been within the district court’s
discretion to grant Ash and Jewsome’s request for leave to amend, just as it was
within the court’s discretion to deny that request. However, simply because Ash and
Jewsome could have benefited from a favorable exercise of the court’s discretion
does not mean that they were entitled to that exercise of discretion. Ash and Jewsome
are right when they say that defending a Rule 12(b)(6) motion (presumably instead
of requesting leave to amend) is not a “per se” ground for dismissing a case, and that
this court’s precedent “does not stand for the denial of all post-judgment motions for
leave to amend.” But Rule 15 does not provide for a post-judgment amendment as
a matter of right. While plaintiffs “remain free where dismissal orders do not grant
leave to amend to seek vacation of the judgment under Rules 59 and 60[b] . . . district
courts in this circuit [also] have considerable discretion to deny” such requests.
United States v. Mask of Ka-Nefer-Nefer, 752 F.3d 737, 742–743 (8th Cir. 2014)
(first alteration in original).
On appeal, Ash and Jewsome appear to conflate their right to request post-
judgment leave to amend with their right to receive leave to amend. Fundamentally,
“the grant or denial of an opportunity to amend is within the discretion of the District
Court.” Foman, 371 U.S. at 181. Here, the district court exercised its discretion and
concluded that Ash and Jewsome should not be granted leave to amend, and Ash and
Jewsome have failed to establish that the court’s decision constituted an abuse of
discretion. Ash and Jewsome essentially argue that because it is preferable that
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claims brought in federal court be tested on their merits, the district court’s denial of
post-judgment leave to amend—which did prevent their claim from proceeding on the
merits—was almost by definition an abuse of discretion. But in making this
argument, Ash and Jewsome fail to address the factual basis of the district court’s
decision. Ash and Jewsome did not seek leave to amend their complaint until nine
days after the district court granted the motion to dismiss and two days after judgment
was entered. The defendants’ motion to dismiss, filed 47 days before the district
court dismissed the case, put Ash and Jewsome on notice of the possible deficiencies
in their original complaint. They had the opportunity to request leave to amend at any
time before the district court ruled on the motion to dismiss. See Fed. R. Civ. P.
15(a)(2). Instead, they chose to rest on their original complaint,3 and did not seek
leave to amend until that complaint was found to be deficient. Asserting simply that
their claim should be tested on the merits, Ash and Jewsome offer nothing to explain
why their litigation decisions did not amount to undue delay, or why the resulting
delay was otherwise excusable. We recognize the preference for claims to be tested
on the merits, but under the circumstances presented in this case, we cannot say that
the district court abused its discretion in finding that Ash and Jewsome inexcusably
delayed in requesting leave to amend and denying their request.
3
The court is unpersuaded by Ash and Jewsome’s argument that it is somehow
“self-defeating” to favor seeking leave to correct deficiencies in a complaint while
simultaneously defending against a motion to dismiss that complaint. Ash and
Jewsome cite no authority for the proposition that a plaintiff should be permitted to
defend against a motion to dismiss and then amend their complaint as a matter of
course if the motion is resolved against them. It is well-established that pre-judgment
requests for leave to amend are preferred, see Horras, 729 F.3d at 804, and that the
decision whether to request leave to amend or stand on the complaint is an ordinary
tactical decision that is commonly required of litigants. Such decisions are not
always easy to make, but we see no reason to conclude that this relatively common
circumstance is somehow fundamentally unfair to plaintiffs.
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III. Conclusion
For the foregoing reasons, we affirm the district court’s dismissal of Ash and
Jewsome’s complaint, and affirm the denial of Ash and Jewsome’s motion to vacate
and request to file an amended complaint.
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