FLSA Pleading – Your Way, My Way, and the “Middle” Way

In Davis v. Abington Mem’l Hosp., the Third Circuit, with Judge Chagares writing for the unanimous panel in an FLSA overtime case, affirmed the district court’s dismissal on the ground that plaintiffs’ third amended complaint did not state a plausible claim of an overtime violation.  Nos. 12-3514, 3515, 3521, and 3522, 2014 U.S. App. LEXIS 16472 (3d Cir. Aug. 26, 2014).  This question has “divided courts around the country.”  Nakahata v. N.Y.-Presbyterian Healthcare Sys., Inc., 723 F.3d 192, 200 (2d Cir. 2013). 

At the outset of its analysis, the Third Circuit identifies both the most “lenient” and most “stringent” approaches to pleading standards.  The most stringent, in the Court’s view, is exemplified by Jones v. Casey’s Gen. Stores, 538 F. Supp. 2d 1094, 1102-03 (S.D. Iowa 2008).  There, the Judge held that a complaint alleging that the plaintiffs “regularly worked regular time and overtime each week but were not paid regular and overtime wages” was “implausible on its face.”  (internal quotation marks omitted).  See also Villegas v. J.P. Morgan Chase & Co., 2009 U.S. Dist. LEXIS 19265, 2009 WL 605833 at *5 (N.D. Cal. Mar. 9, 2009) (granting motion to dismiss where the plaintiff “attempt[ed] to state a claim by reciting that she did not receive properly computed overtime wages . . . . because it is not much more informative than an allegation that she was not paid for overtime work in general"); Bailey v. Border Foods, Inc., 2009 U.S. Dist. LEXIS 93378, 2009 WL 3248305 at *2 (D. Minn. Oct. 6, 2009) (granting motion to dismiss where the plaintiff "failed to identify their hourly pay rates, the amount of their per-delivery reimbursements, the amounts generally expended in delivering pizzas, or any fact that would permit the Court to infer that [plaintiffs] actually received less than minimum wage”).

The most lenient, by contrast, is characterized by the approach of the federal district court for the District of Maryland in Butler v. DirectSat USA, LLC, 800 F. Supp. 2d 662, 668 (D. Md. 2011).  In Butler, Judge Deborah K. Chasanow held that “[w]hile defendants might appreciate having Plaintiffs’ estimate of the overtime hours worked at [the pleading stage],” an FLSA complaint will survive dismissal so long as it alleges that the employee worked more than forty hours in a week and did not receive overtime compensation.  See also Uribe v. Mainland Nursery, Inc., 2007 U.S. Dist. LEXIS 90984, 2007 WL 4356609 at *3 (E.D.Cal. Dec. 11, 2007) (denying motion to dismiss where plaintiffs alleged they were "non-exempt employees for a wholesaler of plants who have not been paid the applicable overtime wages under the FLSA"); Xavier v. Belfor, USA Group, Inc., 2009 U.S. Dist. LEXIS 11751, 2009 WL 411559 at *5 (E.D.La. Feb. 13, 2009) (denying motion to dismiss where the plaintiff alleged that "they were paid on an hourly basis, that they routinely worked in excess of 40 hours per week, and that they were not paid an overtime premium").

Rather than adopt either the Jones or Butler approaches, the panel stated that it agreed with “the middle-ground approach” adopted by the Second Circuit in Lundy v. Catholic Health Sys. of Long Island, Inc., 711 F.3d 106 (2d Cir. 2013).  In that case, Chief Judge Dennis Jacobs, writing for the unanimous panel, stated: “[I]n order to state a plausible FLSA overtime claim, a plaintiff must sufficiently allege [forty] hours of work in a given workweek, as well as some uncompensated time in excess of the [forty] hours.”  Id. at 114. 

Having adopted the Lundy approach, the Third Circuit held that the plaintiffs’ allegations in Davis, the case at issue, failed to satisfy the Lundy test.  In Davis, the named plaintiffs alleged that they “typically” worked 37.5 hours per week and “occasionally” worked an additional 12.5 hour shift or “slightly longer”.  Plaintiff also indicated that she “typically” worked during thirty-minute meal breaks, and was not compensated for this work.  Plaintiff argued that these allegations were sufficient to plausibly plead that at least some uncompensated work was performed during weeks when the plaintiffs’ total work time was more than forty hours. 

The Third Circuit disagreed.  While noting that the determination whether a plausible claim has been pled is context-specific, the Court found that none of the named plaintiffs had alleged a single workweek in which they worked at least forty hours and also worked uncompensated time in excess of forty hours.  Accordingly, the court found the allegations to be insufficient and declined to provide plaintiffs with an opportunity to file a fourth amended complaint.  In rejecting plaintiffs’ pleadings, the Court cited and quoted at length from Lundy and an earlier Second Circuit decision, Nakahata v. N.Y. Presbyterian Healthcare Sys., Inc., 723 F.3d 192, 200 (2d Cir. 2013).  In Nakahata the Court held that “[p]laintiffs must prove sufficient detail about the length and frequency of their unpaid work to support a reasonable inference that they worked more than forty hours in a given week”.

The Court then went on to state that it was not holding that a plaintiff must identify the exact date(s) and time(s) that s/he worked overtime.  The Court stated: “for instance, a plaintiff’s claim that she ‘typically’ worked forty hours per week, worked extra hours during such a forty-hour week, and was not compensated for extra hours beyond forty hours he or she worked during one of those forty hour weeks would suffice.”  (footnote omitted).  Finally, on the pleading issue, the Court emphasized that it read Lundy to hold only that “a plaintiff must connect the dots between bare allegations of a ‘typical’ ‘forty-hour workweek’ and bare allegations of work completed outside of regularly scheduled shifts, so that the allegations concerning a typical forty-hour week include an assertion that the employee worked additional hours during such a week, and we believe that this middle-ground approach is the correct one.”

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Ward & Solomon – The D.C. Circuit Can Be Quite Accommodating

In Ward v. McDonald, the D.C. Circuit addressed the case of an individual who had requested that she be permitted to work from home on a full-time basis as a reasonable accommodation for her medical condition.  No. 12-5374, 2014 U.S. App. LEXIS 15402 at *1-*2 (D.C. Cir. Aug. 12, 2014).  In Ward plaintiff had been diagnosed with a medical condition which rendered her unable to sit for long periods of time.  Id.  In addition, plaintiff required “routine daily care at home”.  Id. at *5.  These daily treatments required 1 to 3 hours, and sometimes required that plaintiff disrobe.  Id. *4 to *5.  Plaintiffs job was “the quintessential desk job”, and required little or no physical exertion – indeed, the by far the bulk of plaintiff’s work was performed sitting at her desk.  Id. at *4, *8. 

            Although plaintiff “struggled at times” to perform her job, she nevertheless was rated “[f]ully [s]uccessful or better” on her performance reviews.  Id. at *5.  Nevertheless, the long periods of sitting exacerbated plaintiff’s condition, and she applied for a reasonable accommodation to be permitted to work at home.  Id. at *5 to *6.  There followed a series of conversations between plaintiff and her supervisors regarding her requested accommodation, during which time period plaintiff provided additional documentation regarding her medical condition, the basis for her requested accommodation, and how it would enable her to perform her job duties.  Id. at *6 to *9.  During these conversations, plaintiff’s employer indicated that it could allow her to work from home on a part-time schedule.  Plaintiff’s supervisors indicated that, as she would need to sit for long periods of time regardless of her work location, and due to the substantial time needed for her treatments, they were concerned about her ability to maintain a full-time work schedule.  Id. at *7.  In that communication, defendant requested additional information regarding plaintiff’s ability to work a full time schedule.  Id.  Plaintiff failed to respond, instead tendering her resignation.  Id. at *9. 

            Although plaintiff tendered her resignation, she indicated that consideration of her resignation be delayed.  Id.  In response to plaintiff’s resignation, defendant indicated that it had not denied any requested accommodation.  Id. at *9 to *10.  Defendant also indicated that it would consider allowing plaintiff to “try work-from-home on a full-time basis.”  Id. at *10.  Plaintiff never responded to that communication.  The district court granted summary judgment for defendant.  In so doing, the district court found that the defendant had participated in the interactive process and had offered plaintiff the very accommodation which she sought while, on the other hand, plaintiff had failed to participate in the interactive process and had not demonstrated that she could perform the essential functions of her job.

            On appeal, the D.C. Circuit issued a split decision.  The dispute centered primarily around the employer’s requests for additional information regarding plaintiff’s medical condition.  The majority found that plaintiff’s failure to respond to the employer’s request for medical information constituted a failure to participate in the interactive process.  Affirming the district court’s grant of summary judgment, the majority explained that “[plaintiff] did not provide the requested information.  Instead, she resigned.  No reasonable juror could have found that the [defendant] denied [plaintiff’s] request for an accommodation, then, because [plaintiff] abandoned the interactive process before the [defendant] had the information it needed to determine the appropriate accommodation.” Id. at *22. 

            By contrast, the dissent emphasized that the employer did not need any of the information which it requested to reasonably accommodate plaintiff, nor did the information requested relate to any essential function of plaintiff’s job.  Id. at *30.  Indeed, the employer had admitted that this was the case.  In the dissent’s view the employer had discriminated against plaintiff by “needlessly prolonging” the process of applying for defendant’s flexi-place program, and emphasized that “[plaintiff’s] increasing inability to properly treat her [condition] in the office was literally endangering her life, making the delay caused by her supervisors’ unjustified factual detours acutely harmful.”

            The plaintiff in Solomon v. Vilsack had been denied her requested accommodation of a flexible work schedule (a “maxiflex” schedule) despite apparently similarly situated employees being permitted to make use of such a schedule.  No. 12-5123, 2014 U.S. App. LEXIS 15671 (D.C. Cir. 2014).  The court’s decision focuses primarily on whether such flexible work schedules can be, as a matter of law, “reasonable” accommodations under the Rehabilitation Act.  Id. at *16 to *17.  The Court found that such schedules can, as a matter of law, be reasonable accommodations.  Id. 

As an initial matter, it is worth noting that plaintiff’s medical expert provided evidence that “to a reasonable degree of medical certainty [defendant’s actions] substantially worsened [plaintiff’s] condition” to the point that she was eventually rendered unable to work.  Id. at *10.  Although plaintiff took a disability-related retirement, the Court held that she was not precluded from pursuing a disability discrimination claim because her retirement application “never stated that she would have been unable to work if she had been afforded the accommodations she sought”. Id. at *13.  However, the Court appears to have limited her claim to “spring and summer of 2004” – in other words, prior to the worsening of her condition due to the employer’s actions.  Id. at *13.

            As noted above, the Court seems to have cut off liability at the time after which plaintiff’s conditions worsened to the point that she could no longer work.  Id. at *13, *38.  This is true even though plaintiff’s medical expert proffered evidence that plaintiff’s worsened condition was due, at least in part, to the employer’s actions.  Id.  While the Court devotes little time or analysis to this issue, a paragraph at the end is telling:

Finally, Solomon points to her requests in late May to telecommute or to work part-time. But for that period of time, correspondence from Solomon herself and Dr. Cozzens led Solomon's supervisors to believe that her condition had deteriorated to the point that she was medically unable to work in any capacity. Even if the supervisors incorrectly assessed Solomon's condition, and the Department was thus obligated to provide reasonable accommodation, Solomon must still present evidence casting doubt on the sincerity of the Department's proffered non-retaliatory justification for its action.

Id. at *38 to *39.

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Check Your Privilege – Does Judicial Privilege Apply to Cease & Desist Letters?

Your client signs a non-compete agreement and later leaves to go work for another employer.  Your client’s former employer sends a “cease and desist” letter to the new employer, resulting in your client being terminated or suffering other damages.  Does your client have a claim?  This basic, and increasingly common, scenario, has played out in numerous courts across the country to widely disparate outcomes.

In Murphy v. LivingSocial, Inc., 931 F. Supp. 2d 21 (D.D.C. 2013), Judge Sullivan held that the defendant’s letter to plaintiff and plaintiff’s new employer, which asserted that plaintiff had violated her non-compete agreement with defendant, was insulated from plaintiff’s libel claim on the ground that the letter was protected by the judicial proceedings privilege because it was clear that defendant was seriously considering litigation.  The court stated that “the Travelzoo [the new employer] Letter was written by LivingSocial’s attorney, to advise Travelzoo of plaintiff’s contractual obligations, explained that plaintiff’s actions appeared to have been taken in violation of the contract, stated that LivingSocial reserved its rights to take all legal and equitable action to protect its business interests, and demanded that Travelzoo immediately cease and desist from any further solicitation of LivingSocial employees, customers, or prospective customers.” In dismissing the case, the Court noted that the non-compete agreement provided that LivingSocial was permitted to communicate the terms of the non-compete agreement to a perspective or current employer of plaintiff. 

By contrast, in SCI Funeral Servs. of Fla., Inc. v. Henry, the District Court of Appeal for the Third District of Florida found that the “litigation privilege” did not extend to a cease and desist letter seeking to enforce a non-compete agreement.  839 So. 2d 702 (Fla. App. 2002).  In SCI Funeral, defendant moved to dismiss plaintiff’s claims, arguing that its demand letter was absolutely privileged under the “litigation privilege”.  This privilege “bars causes of action in tort for statements made in connection with a judicial proceeding.”  The court, however, found that defendant’s conduct was not protected by the litigation privilege, reasoning that “an employer cannot threaten an employee with litigation over a non-compete agreement which has expired.  If the employer wrongly does so, thus causing the employee to lose his or her job, there must necessarily be a judicial remedy for such conduct.”

This position finds indirect support in the treatment of such claims by other courts.  For example, in Hidy Motors, Inc. v. Sheaffer, the Court of Appeals of Ohio focused on the enforceability of the non-compete agreement in addressing plaintiff’s claims based on the transmission of a Cease & Desist letter to plaintiff’s new employer. 916 N.E.2d 1122 (Ohio App. 2009).  Although it does not appear that the employer raised a “litigation privilege” defense, the employer did contend that it was “privileged to protect [its] legitimate business interest[s]”.  Id. at 1131.  The Court, however, noted because “[t]he trial court did not address whether the covenant not to compete…was enforceable” that “[it] erred in assuming that the covenant not to compete could be relied on as the basis for [defendant’s] privilege defense[.]”  Id. at 1132.  Other courts have also endorsed such analysis on similar facts.  See Gentile v. Olan, No. 12-cv-3664, 2013 U.S. Dist. LEXIS 64472, 2013 WL 1880771 (S.D.N.Y. 2013) (finding that cease and desist letter may constitute actionable tortious interference when defendant’s letter was “unwarranted” by plaintiff’s conduct and when “a material question of fact exists as to whether Plaintiff ever signed [the] agreement”);Voorhees v. Guyan Machinery Co., 446 S.E.2d 672 (W. Va. 1994) (no privilege where the plaintiff’s alleged “competition” was “so insignificant as to render [defendant’s] claim that it was protecting its business interests by enforcing the noncompetition agreement [with plaintiff] absurd.”); Carter v. Aramark Sports & Entm’t Servs, Inc., 835 A.2d 262 (Md. Ct. Spec. App. 2003) (tortious interference claim can be based on at-will relationship); but see Bonds v. Philips Electronic N.A., No. 2:12-cv-10371, 2014 U.S. Dist. LEXIS 6845, 2014 WL 222730 (E.D. Mich. Jan. 21, 2014) (“Defendant’s actions cannot be improper because they were motivated by legitimate business reasons”).  

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Statute of Limitations Starts Running Before Constructive Discharge

In Green v. Donahoe, No. 13-1096, 2014 U.S. App. LEXIS 14290, 2014 WL 3703823 (10th Cir. July 28, 2014), a panel of the 10th circuit, Judge Hartz writing, held that a claim for constructive discharge does not accrue at the time when plaintiff resigns.  Instead, the claim accrues on the date of the employer’s last misconduct.  In Green the plaintiff, a postal employee, agreed to resign his employment on December 16, 2009, but was permitted to use accrued annual and sick leave until March 31, 2010, at which point he could choose either to retire or accept a significantly lower position at a facility some 300 miles distant.  Plaintiff filed an informal charge of retaliation with an EEO counselor on January 7, 2010, but did not file a formal charge until February 17, 2010. On February 9, 2010, plaintiff notified his employer that he planned to retire, pursuant to their earlier agreement, effective March 31, 2010.  Plaintiff initiated EEO counseling on March 22, and filed another formal charge of retaliation on April 23, alleging constructive discharge for his forced retirement.  Plaintiff’s eventual lawsuit was dismissed when the district court held that it was untimely because plaintiff had not contacted an EEO counselor about it within 45 days.

In reviewing the lower court’s decision, the Tenth Circuit first examined the nature of a constructive discharge claim.  The Court explained that “c]onstructive discharge occurs when an employer unlawfully creates working conditions so intolerable that a reasonable person in the employee’s position would feel forced to resign.”  Green, 2014 U.S. App. LEXIS 14290 at *19, quoting Lockheed Martin Corp. v. Admin. Review Bd., 717 F.3d 1121, 1133 (10th Cir. 2013).  The key issue before the court was when the constructive discharge claim accrued.  The Court framed its analysis by noting that “[f]or most federal limitations periods, the clock starts running when the plaintiff first knew or should have known of his injury.”  Green, 2014 U.S. App. LEXIS 14290 at *22 (internal quotations omitted).  In the employment context, this generally means that the claim accrues when the “disputed employment practice” occurs.  Id. (internal quotations omitted). 

However, the Tenth Circuit found this general rule to be inappropriate in the context of constructive discharge claims.  The Tenth Circuit distinguished constructive discharges from other adverse actions, stating “[a] constructive discharge involves both an employee’s decision to leave and [the employer’s] precipitating conduct.”  Id. (emphasis in original) (alterations in original) (quotations omitted). 

The Tenth Circuit went on to identify the core question for resolution – whether the date of the accrual of plaintiff’s constructive discharge claim “can be postponed from the date of the employer’s misconduct until the employee quits or announces his future departure.”  Id. at *22.  The Court framed this question as a choice between accrual at the time when the “employee quits or announces his future departure” and when the last “discriminatory act” occurs.  As an initial matter, the Court noted that most courts to consider this issue had “no occasion” to choose between these approaches.  See, e.g., Jeffery v. City of Nashua, 163 N.H. 683, 48 A.3d 931, 936 (N.H. 2012) (plaintiff unsuccessfully argued that claim accrued on effective date of resignation, not when she gave notice of resignation); Patterson v. Idaho Dept. of Health & Welfare, 151 Idaho 310, 256 P.3d 718, 725 (Idaho 2011) (same); Whye v. City Council, 278 Kan. 458, 102 P.3d 384, 387 (Kan. 2004) (same); Hancock v. Bureau of Nat'l Affairs, Inc., 645 A.2d 588, 590 (D.C. 1994) (same)  However, the Court did identify “several” decisions holding that the claim accrued on the date of the resignation, on the rationale that the resignation was a “distinct discriminatory act”.  See Flaherty v. Metromail Corp., 235 F.3d 133, 138 (2d Cir. 2000); Draper v. Coeur Rochester, Inc., 147 F.3d 1104, 1111 (9th Cir. 1998); Young v. Nat'l Center for Health Servs. Research, 828 F.2d 235, 237-38 (4th Cir. 1987). 

The Court rejected that approach.  Declaring that “we cannot endorse the legal fiction that the employee's resignation, or notice of resignation, is a ‘discriminatory act’ of the employer”, the Court sided with the Seventh and D.C. Circuits in holding that a claim for constructive discharge must be filed such that there is at least one “discriminatory act” by the employer within the statutory limitations period.  See Mayers v. Laborers' Health & Safety Fund, 478 F.3d 364, 367, 370, 375 U.S. App. D.C. 134 (D.C. Cir. 2007) (notice of resignation was within limitations period but no discriminatory act of employer was); Davidson v. Ind.-Am. Water Works, 953 F.2d 1058, 1059-60 (7th Cir. 1992) (same).  In so holding, the Court reasoned that “delaying accrual past the date of the last discriminatory act and setting it at the date of notice of resignation would run counter to an essential feature of limitations periods by allowing the employee to extend the date of accrual indefinitely.”  Green, 2014 U.S. App. LEXIS 14290 at *25 to *26. 

This leaves us with three distinct approaches to the accrual of constructive discharge claims for limitations purposes:

1)     The limitations period runs from the date on which the employee provides notice of her resignation.  This is the approach adopted by the Second, Fourth, and Ninth Circuits.

2)     The limitations period runs from the date of the final discriminatory act, which cannot be the employee’s resignation.  This is the approach adopted by the Seventh, Tenth, and D.C. Circuits.

3)     The limitations period runs from the date on which the employee actually ceases to work for the employer.  This appears to be a minority position, but has been endorsed, for example, by the Court of Appeals for Oregon.  See Hernandez-Nolt v. Wash. Cnty., 315 P.3d 428 (Ore. App. 2013).

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