MATSUMOTO, District Judge:
The named plaintiffs Anthony Charlot, Alan Remache, and Jose Tejada (collectively, the "Named Plaintiffs" or "Plaintiffs") brought this individual, collective, and class action against Ecolab, Inc. ("defendant") for various alleged violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., the New York Labor Law, N.Y. Lab Law §§ 650 et seq.; and its supporting regulations, N.Y. Comp. Codes R. & Regs. tit. 12, Pt. 142 (collectively, the "New York Wage Laws"); and the New Jersey Wage-and-Hour Laws. N.F.S.A. §§ 34:11-56a et seq.; its supporting regulations, N.J. Admin. Code §§ 12:56-1.1 et seq.; and the New Jersey Wage Payment Law, N.J.S.A. §§ 34:11-4.1-33.6 (collectively, the "New Jersey Wage Laws").
The Plaintiffs moved for leave to amend their complaint to add additional named plaintiffs and their respective individual and representative state law claims and to have those new individual and representative state law claims relate back to September 11, 2012, the date the original complaint was filed. (See ECF No. 122, Plaintiffs' Memorandum in Support of Plaintiffs' Motion to Amend ("Pls. Mem.").) Specifically, the motion to amend concerns four proposed named plaintiffs that have opted into the FLSA collective action and their respective individual and representative state claims from four states: Illinois, North Carolina, Pennsylvania, and Washington (collectively, the "Proposed Named Plaintiffs"). (R & R at 5.) Each of these Proposed Named Plaintiffs filed a Consent to Sue form concerning their FLSA claims between April 2013 and March 2014. (Id.)
Defendant Ecolab consented to the addition of proposed individual and representative Pennsylvania and Washington state claims. (R & R at 6; ECF No. 124, Defendant's Opposition to Plaintiffs' Motion to Amend (Def. Opp.) at 2.) Defendant, however, opposed the Plaintiffs' motion to add the proposed Illinois and North Carolina state individual and representative class claims, on grounds of futility and prejudice.
By Order dated September 16, 2014, this court referred the Named Plaintiffs' motion for leave to amend to Judge Scanlon for a report and recommendation. (See Order Referring Motion dated 9/16/14.) After considering the parties' submissions and their arguments before the court, Judge Scanlon issued a Report and Recommendation on December 12, 2014, recommending that this court grant in part and deny in part the Named Plaintiffs' motion for leave to amend the complaint. (ECF No. 159, Report and Recommendation (the "R & R").) Specifically, Judge Scanlon recommended that this court permit the Plaintiffs to amend the complaint to add the Proposed Named Plaintiffs and their respective individual and representative state claims, but only to the extent that the statute of limitations for each claim had not expired as of April 15, 2014, the date that defendant admittedly received notice of the proposed amended complaint. (R & R at 51.) In reaching this conclusion, Judge Scanlon found that the Plaintiffs' proposed North Carolina and Illinois claims were neither futile nor prejudicial to defendant under Rule 15(a), nor were the Illinois claims barred by the first-filed rule in light of the pending action against defendant in the United States District Court in the Northern District of Illinois. (See R & R at 6-20.)
Although Judge Scanlon recommended that Plaintiffs' motion to amend be granted, Judge Scanlon found that the Plaintiffs did not demonstrate fair notice or mistake and, thus, recommended against granting the relation back of the state claims pursuant to Federal Rules of Civil Procedure 15(c)(1)(B), 15(c)(1)(C). Accordingly, Judge Scanlon limited her recommendation that this court permit the Plaintiffs to amend their complaint to add state law claims that were timely as of April 15, 2014. (R & R at 51.)
On January 14, 2015, the Named Plaintiffs timely filed their objections to Judge Scanlon's R & R.
The court presumes familiarity with the underlying facts of this case, which have been set forth comprehensively in Judge Scanlon's December 14, 2014 R & R, and are adopted herein. (R & R at 1-5.)
In reviewing a report and recommendation, the district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1)(C). The district court "shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). Where "the objecting party makes only conclusory or general objections, or simply reiterates the original arguments, the Court will review the report and recommendation strictly for clear error." Zaretsky v. Maxi-Aids, Inc., No. 10-CV-3771, 2012 WL 2345181, at *1 (E.D.N.Y. June 18, 2012) (internal quotation marks omitted); see also Soley v. Wasserman, 823 F.Supp.2d 221, 228 (S.D.N.Y.2011). Furthermore, even on de novo review of specific objections, the court "will not consider `arguments, case law, and/or evidentiary material which could have been, but were not, presented to the magistrate judge in the first instance.'" VOX Amplification Ltd. v. Meussdorffer, 50 F.Supp.3d 355, 370, 2014 WL 4829578, at *11 (E.D.N.Y.2014); Brown v. Smith, No. 09-CV-4522, 2012 WL 511581, at *1 (E.D.N.Y. Feb. 15, 2012).
Presently before the court is the Report and Recommendation issued by Magistrate Judge Scanlon on December 14, 2014, the Named Plaintiffs' objections and defendant's response.
Neither party objects to Judge Scanlon's recommendation that the court allow the Named Plaintiffs to amend their complaint to add the Proposed Named Plaintiffs and their individual and representative state claims pursuant to Rule 15(a)(2). Plaintiffs, however, object to Judge Scanlon's recommendation denying the relation back of claims. In particular, neither party objects to the R & R's finding that the proposed additional state claims under Illinois and North Carolina state law are not futile or prejudicial pursuant to Rule 15(a). Furthermore, the parties do not object to the finding that defendant's "invocation of the first-filed rule as a basis for denying the Named Plaintiffs' motion to amend . . . does not bar the motion to amend to add Illinois state law claims, given the status of Illinois class discovery" in Schneider v. Ecolab, No. 14-CV-1044 (N.D. Ill. Feb 13, 2014). (R & R at 9-12.) Nor do the parties object to the R & R's finding that defendant failed to establish futility with regard to the Illinois and North Carolina state claims, because outstanding factual and legal questions existed rendering resolution at this stage of the proceedings inappropriate. (R & R at 14, 18-19.)
Additionally, neither party objects to Judge Scanlon's finding that the Proposed Named Plaintiffs' individual FLSA and state claims are timely, with the exception of Mr. Riggs' Washington state law claims that pre-date April 15, 2011,
The Named Plaintiffs' objections are limited to Judge Scanlon's recommendation that this court deny the Named Plaintiffs' request to relate back the proposed individual and representative state law claims to the date of the original complaint, September 11, 2012. Specifically, the Named Plaintiffs argue that the R & R was correct in finding that the proposed state law claims arise "out of the conduct, transaction, or occurrence set out—or attempted to be set out—in the original pleading," but it "misapplied the law governing what establishes notice and prejudice" when finding that the new state law claims should not relate back to the filing of the original complaint on September 11, 2012. (Pls. Objs. at 5.)
The Named Plaintiffs assert that defendant had fair notice of the new state law overtime claims and is not prejudiced by the relation back of these proposed state claims to the original filing. Specifically, the Named Plaintiffs contend that the proposed additional state claims meet the basic requirements for relation back under Rule 15(c) because the original complaint gave defendant sufficient notice of the proposed state claims. (Pls. Objs. at 5.) The Named Plaintiffs further argue that the state claims are substantially the same as
The Named Plaintiffs also argue that the R & R's conclusion that defendant did not have fair notice of the proposed state law claims was clearly erroneous and advance four specific bases for their position. (Pls. Objs. at 11.) First, the Named Plaintiffs object to the R & R's finding that defendant was not given fair notice in the original complaint that the proposed amendments would increase the numbers and identities of the potential plaintiffs. (Id.) Second, the Named Plaintiffs argue that the R & R erred in reaching its finding that fair notice was lacking on the basis that "the proposed amendments would also involve state law classes not contemplated by the original complaint." (Id. at 12.) Third, the Named Plaintiffs object to the R & R's finding that fair notice was lacking because the "state standards vary such that a defendant facing multi-state claims must analyze its records and scope of liability under each state law separately." (Id.) Fourth, the Named Plaintiffs argue that the R & R erroneously found that relation back of the additional state law overtime claims would include claims that have already been lost because the statute of limitations for the filing of an FLSA collective opt-in action does not toll individual claims, whereas an opt-out class action tolls all claims upon filing. (Pls. Objs. at 12.)
The Named Plaintiffs also argue that Judge Scanlon misapplied the law when she required the Named Plaintiffs to establish mistake pursuant to Rule 15(c)(1)(C). (Pls. Objs. 13-14.) The Named Plaintiffs object on the grounds that mistake under Rule 15(c)(1)(C) is not required when a party seeks to add new plaintiffs, but instead is limited to the addition of new defendants. (Id.) Finally, the Named Plaintiffs argue that comity concerns are not a basis to deny relation back of new claims, and that the R & R erroneously relied on comity grounds when reaching the conclusion that the proposed state claims should not relate back to the original complaint. (Id. at 16.)
Defendant responds to the Named Plaintiffs' objections by asserting that the Named Plaintiffs fail to identify any controlling law that compels relation back, fail to show any error in Judge Scanlon's analysis, and merely re-argue their relation back theory in their objections or posit new arguments not previously presented to Judge Scanlon. Specifically, defendant contends that Judge Scanlon properly concluded that the Named Plaintiffs failed to satisfy the notice requirement of Rule 15(c)(1)(B). (Def. Resp. at 7-9.) Moreover, defendant argues that even if the Named Plaintiffs had established fair notice, their failure to include the new plaintiffs and their state representative claims in the original complaint was not due to mistake; thus, the Named Plaintiffs failed to satisfy the mistake requirement under Rule 15(c)(1)(C). (Id. at 16.) Finally, defendant argues that the court should reject the Named Plaintiffs' objection with regard to comity as a "straw man" argument because the Named Plaintiffs' claim that
The court adopts the R & R's findings and recommendation with respect to the Plaintiffs' motion to amend their complaint to include four additional named plaintiffs and their respective individual and representative state claims. Based upon a review of the record and Judge Scanlon's thorough and well-reasoned R & R, the court agrees, and finds independently, that Plaintiffs' motion to amend their complaint pursuant to Rule 15(a) should be granted. Moreover, the court also agrees that at this stage of the proceedings, no circumstances barring amendment, such as futility, undue delay, bad faith, dilatory motive, or undue prejudice, exist under a liberal application of Rule 15(a). The court notes that, although amendment may not be untimely at this stage of the proceedings, any future amendment may not receive similar treatment because partial summary judgment motions are now fully briefed.
There is no objection to, and the court finds no error in, Judge Scanlon's analysis with respect to the addition of North Carolina and Illinois state claims.
As such, in their Motion to Amend, the Named Plaintiffs argued that Ecolab's policy manual (the "Manual") established an employment agreement, whereas Ecolab responded that the Manual's disclaimer precluded the Manual from being an agreement. (Pls. Mem. at 13; Def. Opp. at 10-11; Plaintiffs' Reply Memorandum in Support of its Motion to Amend ("Pls. Reply Mem.") at 7-8.) Specifically, the Manual, which applies to all employees of Ecolab, expressly provides that the Manual "is not intended to create an employment contract or a contract of any kind." (Declaration of Shirley Lerner in Support of Defendant's Opposition to Plaintiffs' Motion to Amend ("Lerner Decl.") Ex. B at 1.) The Manual also provides that "[defendant] reserves its right to apply and interpret these policies in its sole discretion. The Company further reserves its right, in its sole discretion, to revise, supplement, or rescind any portion of the Policy from time to time, without notice. . . ." (Id.) The language suggests that the Manual may not be construed as an agreement and, in any event, if it were an agreement, Plaintiffs have agreed that defendant is permitted to construe and interpret its terms in its "sole discretion."
Defendant thus argues, (see Def. Opp. at 11), that the Named Plaintiffs are unable to state a claim under the IWPCA, because there is no agreement as required for the IWPCA to apply, or, alternatively, if the Manual is an agreement as the Named Plaintiffs contend, the Named Plaintiffs agreed that defendant had the "sole discretion" to classify them as exempt. The Manual provides that defendant may apply, interpret, revise or rescind the policy at their "sole discretion." (Lerner Decl. Ex. B at 1.) Although defendant's argument regarding the inherent paradox in the Named Plaintiffs' proposed claim under the IWPCA may have merit, the court finds that it is too early in this stage of proceedings to reach a finding of futility as to the proposed IWPCA claims.
The court notes that the Manual also indicates that Ecolab "uses a variety of agreements, including agreements with confidentiality, non-competition, non-solicitation, trade secret and patent protection provisions" which are "a material condition of an employee's employment." (Id.) The Manual further indicates that the "agreements must be completed and signed prior to or on the first day of employment in a position." (Id.) The language of the Manual suggests that at least some, if not many or all, of its employees are required to sign some type of agreement as a "material condition" of employment. Accordingly, the court agrees with Judge Scanlon's determination that dismissal of the IWPCA claims at this stage of the proceedings is premature as there are sufficient questions of material fact with regard to whether the Manual or other employment agreements exist to meet the requirements under the IWPCA.
The R & R properly analyzes relation back of amendments under Rule 15(c). First, Rule 15(c) permits relation back of an amendment to the original complaint, where "the amendment asserts a claim . . . that arose out of the same conduct, transaction, or occurrence set out . . . in the original pleading." Fed.R.Civ.P. 15(c)(1)(B). The R & R also properly analyzes relation back under Rule 15(c)(1)(C)(i) and (ii), which require that 15(c)(1)(B) is satisfied, and the amendment seeks to change a "party against whom a
The Named Plaintiffs dedicate many pages of their objections to a re-hashing of their original arguments in support of their motion to amend and relate back their proposed new claims. (See Pls. Objs. 4-11.) Specifically, the Named Plaintiffs argue that defendant received sufficient notice of the proposed claims from the original complaint and defendant is not prejudiced by the relation back of the new state claims. (Id.) To the extent the Named Plaintiffs "simply reiterate[] the original arguments" previously made before Magistrate Judge Scanlon, the court has reviewed these findings for clear error and finds none. Zaretsky, 2012 WL 2345181, at *1.
The Named Plaintiffs argue that the R & R erroneously concluded that defendant did not receive fair notice of the proposed class claims for several reasons. In support, the Named Plaintiffs largely reiterate the arguments advanced in their original submissions and do not identify any controlling or overlooked legal authority suggesting that this court should reach any findings or conclusions contrary to the R & R.
The Named Plaintiffs also argue for the first time in their objections that the original complaint explicitly provided notice by stating in its Prayer for Relief that plaintiffs intended "to plead individual state law wage claims for individuals who have joined this action." (Pls. Objs. at 9; see ECF No. 1, Complaint ("Compl.") at 19.) The court notes that it is well-established in this district and circuit that a district court generally will not consider new arguments raised for the first time in objections to a magistrate judge's report and recommendation that could have been raised before the magistrate but were not. See Pizarro v. Gomprecht, No. 10-CV-4803, 2013 WL 990997, at *2 n. 1 (E.D.N.Y. Mar. 13, 2013), appeal dismissed (July 18, 2013) (quoting Chalasani v. Daines, No. 10-CV-1978, 2011 WL 4465408, at *1 n. 3 (E.D.N.Y. Sept. 26, 2011)) ("Generally, courts do not consider such `new arguments' or new evidence `raised in objections to a magistrate judge's report and recommendation that could have been raised before the magistrate but were not' and the Court declines to do so."); Illis v. Artus, No. 06-CV-3077, 2009 WL 2730870, at *1 (E.D.N.Y. Aug. 28, 2009) ("In this district and circuit, it is established law that a district judge will not consider new arguments raised in objections
In any event, the court is unpersuaded that the statement in the original complaint sufficiently put defendant on notice of potential state claims by individuals who had not yet been identified or opted into the collective action at the time the complaint was filed. The language of the complaint indicates that plaintiffs "reserve the right to plead individual state law wage claims for individuals who have joined this action." (Compl. at 19 (emphasis added).) The alleged "notice" does not suggest that Plaintiffs would bring state class claims, nor did this clause in the original complaint state law class claims would be added for all future individual opt-in plaintiffs from potentially every state.
The Named Plaintiffs object to Judge Scanlon's analysis and findings that the states' more generous statutes of limitations and tolling differences between collective and class actions expand potential plaintiff class sizes. Specifically, the Named Plaintiffs' argue that the proposed state claims' statutes of limitations are "substantially the same" as the FLSA. (Pls. Objs. at 11.) This court agrees that nearly all of the proposed states' statutes of limitations of two or three years are equal to or less than the statute of limitations of two years, or three years upon on a finding of defendant's willfulness, prescribed by the FLSA, with the exception of Illinois which is ten years.
The court is also unpersuaded by the Named Plaintiffs' argument that Judge Scanlon's tolling analysis, with regard to lost FLSA claims and the relation back of new state law claims, was "incorrect factually and an invalid reason to deny relation back." (Pls. Objs. at 12.) The Named Plaintiffs do not support their objections to Judge Scanlon's tolling analysis with facts or controlling legal authority. Plaintiffs instead contend that defendant was on notice of the proposed state law claims based on their complaint's class description of "all Route Managers throughout the country
In advancing their arguments with respect to statutes of limitations and tolling, the Named Plaintiffs ignore the R & R's solid analysis of relation back under Rule 15(c)(1)(B), and its emphasis, consistent with Supreme Court guidance, on a class action defendant's need for notice of the newly alleged claims, the scope of its liability, and the identity and size of the class members. See American Pipe & Construction v. Utah, 414 U.S. 538, 554-55, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974); see also Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1132-33 (11th Cir.2004). "Indeed, the Named Plaintiffs erroneously argue that the "dramatic difference in class size between an FLSA collective action clam [sic] and Rule 23 class claims" is irrelevant." (Pls. Reply at 3.) This court respectfully denies the Named Plaintiffs' objection and adopts the R & R's well-reasoned analysis of fair notice, based on the rationale in American Pipe, which found that fair notice should alert a defendant to "not only the substantive claims being brought against [defendant], but also of the number and generic identities of the potential plaintiffs who may participate in the judgment." American Pipe, 414 U.S. at 554-55, 94 S.Ct. 756 (1974); see also Cliff, 363 F.3d at 1132-33 (affirming district court's finding that plaintiff asserting class claims on behalf of Florida residents did not provide adequate notice to defendant of proposed claims on behalf of national class for purposes of relation back); Senterfitt v. SunTrust Mortgage, Inc., 385 F.Supp.2d 1377, 1380 (S.D.Ga.2005) (finding that second amended complaint could not relate back because prior pleadings did not adequately put defendant on notice of a significantly larger class whose claims stretched twenty years into the past); Anderson v. City of Wood Dale, IL, No. 93-CV-425, 1995 WL 106318, at *3 (N.D.Il. March 9, 1995) (noting that, "[w]hile ... an increase in potential liability is not sufficient prejudice to deny the relation back of new plaintiffs, a defendant is entitled to notice of the existence and involvement of new plaintiffs"). Further, the Named Plaintiffs' ignore the R & R's recognition that plaintiffs wishing to rely on relation back must bear some responsibility to define the scope of the action they are bringing, so that defendants may properly evaluate and respond to such claims. (R & R at 27.)
Moreover, as Judge Scanlon aptly noted, the inherent differences between state class opt-out procedures and FLSA collective action opt-in procedures, exacerbated by the possibility of different and lengthier statutes of limitations, such as under Illinois law, result in a significant expansion
In practical terms, as Judge Scanlon aptly noted in her R & R, plaintiffs would be "permitted to stop the clock on all state law wage-and-hour claims possibly brought against an employer in multiple states by filing a single FLSA collective action, as long as they were later able to identify plaintiffs in other states." (R & R at 28.) This result would be inherently unfair to a defendant that has not been afforded fair notice of these potential state claims. Accordingly, the court respectfully overrules the Named Plaintiffs' objections to the R & R's analysis and recommendations with regard to statutes of limitations and tolling.
The court also finds unavailing the Named Plaintiffs' argument that defendant received fair notice under Rule 15(c)(1)(B) because the state law classes were contemplated in the original complaint. The Named Plaintiffs argue that "all the members of the new state law overtime classes are members of the original FLSA class, and they raise the same claims ... based on the same facts for the same claim period." (Pls. Objs. at 12.) The Named Plaintiffs also argue that standards in the state law claims are "substantially the same under the FLSA." (Pls. Objs. at 12.)
Judge Scanlon thoroughly and correctly addressed and rejected all of the Named Plaintiffs' arguments that the defendant had fair notice because the proposed state amendments were contemplated in the original complaint, which alleged a nationwide FLSA collective, and because the state claims largely mirror the FLSA. (R & R at 24-26, 28.) Plaintiffs' conclusory objection that defendant was on notice of the claims based on the original complaint merely rehashes the same arguments made to Judge Scanlon. Thus, these portions of Judge Scanlon's R & R may be reviewed for clear error. Gowanus Indus. Park, Inc. v. Arthur H. Sulzer Associates, Inc., No. 06-CV-105, 2013 WL 1334164, at *3 (E.D.N.Y. Mar. 29, 2013) (citing Caldarola v. Town of Smithtown, No. 09-CV-272, 2011 WL 1336574, at *1 (E.D.N.Y. Apr. 4, 2011)) ("[G]eneral or conclusory objections, or objections which merely recite the same arguments presented to the magistrate judge, are reviewed for clear error." (internal quotation marks omitted)); see also Zaretsky, 2012 WL 2345181, at *1; Soley, 823 F.Supp.2d at 228.
Nevertheless, even applying a de novo review, the court concludes for the following reasons that the original complaint failed to provide defendant with fair notice of the proposed state law amendments. In support of their arguments, the Named Plaintiffs rely on cases previously cited in their motion and cases and new cases that are non-binding and inapposite to the present case, or involve relation back of claims
Lastly, the Named Plaintiffs cite for the first time in their objections In re Am. Family Mut. Ins. Co. Overtime Pay Litig., 638 F.Supp.2d 1290, 1295 (D.Colo.2009), a case which Judge Scanlon discussed and declined to follow in her thorough analysis because it focused on a question of supplemental jurisdiction, rather than on fair notice as required in this Circuit. (R & R at 26 n. 19 (noting that neither party cited In re Am. Family Mut. Ins. Co. Overtime Pay Litig., analyzing the and nevertheless finding it unpersuasive).) See also Stevelman v. Alias Research Inc., 174 F.3d 79, 86 (2d Cir.1999) ("Under Fed.R.Civ.P. 15(c), the central inquiry is whether adequate notice of the matters raised in the amended pleading has been given to the opposing party within the statute of limitations by the general fact situation alleged in the original pleading.") (internal quotation marks and citation omitted); In re Gilat Satellite Networks, Ltd., No. 02-CV-1510, 2005 WL 2277476, at *26 (E.D.N.Y. Sept. 19, 2005) (citing In re Simon II Litig., 211 F.R.D. at 146) (noting that pertinent inquiry for relation back was "whether the defendants had adequate notice of the claims of the newly added plaintiffs and whether the late assertion of their claims would `surprise and frustrate reasonable possibilities for a defense.'"). As such, the Named Plaintiffs fail to identify any legal authority indicating that a defendant has fair notice of potential out-ofstate claims, when only a federal collective action involving a nationwide class has been pled.
In addition, this court recognizes, as did the R & R, that existing FLSA claims and the proffered state law claims will be determined by many of the same underlying facts regarding the alleged wage-and-hour violations by defendant, and that many of the state wage-and-hour claims bear some resemblance to the FLSA. The court, however, agrees with Judge Scanlon's observation that the state law standards "vary such that a defendant facing multi-state claims must analyze its scope of liability under each state law separately" and independently of its analysis under the FLSA. (R & R at 28.) The court further agrees with Judge Scanlon that the differences in state and federal law support a finding that defendant was not given fair notice, because "[i]t would be unfair to expect a defendant to engage in [review under every state law separately] before at least one employee from a state has stepped forward ... and force[d] the defendant to consider its liability." (Id.) As Judge Scanlon
Indeed, under the Named Plaintiffs' theory, a national defendant should be on notice of potential class claims in any state it operated as soon as an FLSA collective action was filed, and before any representative plaintiffs were identified and joined the action. This reasoning would defeat the purpose of Rule 15(c)'s notice requirement, if the filing of a single FLSA collective action automatically put a national defendant on notice of any and all potentially related state class claims that may arise. See, e.g., Cliff, 363 F.3d at 1132-33 (denying relation back where original complaint alleging Florida class claim did not put defendant on notice of proposed nationwide class); Midland Funding LLC v. Brent, No. 08-CV-1434, 2010 WL 703066, at *3 (N.D.Ohio Feb. 22, 2010) (denying relation back where original complaint alleging Ohio class claim did not put defendant on notice of proposed nationwide class); Feuerstack v. Weiner, No. 12-CV-04253, 2013 WL 3949234, at *4 (D.N.J. July 30, 2013) (denying relation back where original complaint alleging New Jersey class claim did not put defendant on notice of proposed nationwide class). Thus, the court is unpersuaded that the original complaint afforded defendant fair notice of the proposed individual and representative state law claims that the original plaintiffs did not allege, and did not have standing to bring at the time the original complaint was filed.
This court finds the Named Plaintiffs' objections with regard to fair notice unpersuasive and respectfully overrules the objections to the R & R on these grounds. Accordingly, the R & R is adopted with respect to its findings and conclusions regarding fair notice and its denial of relation back under Rule 15(c)(1)(B).
As an initial matter, because the court adopts Judge Scanlon's R & R with respect to her findings and recommendations regarding lack of fair notice, the court's analysis may end here. Failure to satisfy the notice requirement under Rule 15(c)(1)(B) warrants denial of relation back under Rule 15(c)(1)(C) because Rule 15(c)(1)(C)(i) requires that notice be given "within the period provided by Rule(m)" or 120 days after the filing of the complaint. Fed.R.Civ.P. 15(c)(1)(C)(i). The Named Plaintiffs have failed to satisfy this requirement. Nevertheless, the court will address the Named Plaintiffs' objections to the R & R's determination that the Named Plaintiffs failed to make a showing of "mistake" as required under Rule 15(c)(1)(C).
The Named Plaintiffs contend that fair notice and lack of undue prejudice are the only requirements pursuant to Rule 15(c)(1)(C) for a proposed amendment to add new plaintiffs and relate their new claims back to the original pleading, and that Judge Scanlon erred by requiring a showing of "mistake". (Pls. Objs. at 13-15.) Judge Scanlon's well-reasoned R & R thoroughly addresses whether Rule 15(c)(1)(C) applies to amendments seeking to add plaintiffs, and recognizes that it is not well-settled within the Second Circuit whether the mistake requirement of Rule 15(c)(1)(C) applies to amendments seeking to add plaintiffs. Indeed, the R & R identifies numerous decisions by district courts in the Second Circuit that either apply or reject the mistake requirement, and ultimately concludes that Rule 15(c)(1)(C)'s
Thus, this court is unpersuaded by the Named Plaintiffs objections to the R & R on the grounds that Judge Scanlon "misapplied the law" when requiring the Named Plaintiffs to meet the Rule 15(c)(1)(C)(ii)'s mistake requirement. Because there is no clear guidance in this Circuit on whether Rule 15(c)(1)(C)(ii)'s mistake requirement applies to amendments seeking to add plaintiffs, and indeed, because several district courts in this Circuit have required a showing of mistake in the context of newly added plaintiffs, (see R & R at 43-44), Judge Scanlon did not misapply the law. The Named Plaintiffs do not assert, much less demonstrate, that their failure to include the proposed plaintiffs in their original complaint was the result of mistake of identity. As Judge Scanlon noted, "the Named Plaintiffs could have taken steps to promptly identify the Proposed Named Plaintiffs," but waited until April 15, 2014 to notify defendant of their motion to add new plaintiffs and claims. (R & R at 47.) Accordingly, the Named Plaintiffs' objection to the R & R is overruled and this court adopts Judge Scanlon's finding that a showing of mistake concerning the proper party's identity is required under Rule 15(c)(1)(C)(ii) with respect to the addition of plaintiffs, and also adopts the recommendation that relation back be denied because the Named Plaintiffs failed to meet the mistake requirement.
The Named Plaintiffs argue that "[a]ny potential comity concerns are not a basis to deny relation back of the new Plaintiffs' claims." (Pls. Objs. at 16; see R & R at 29.) Defendant correctly argues that Judge Scanlon merely recited comity concerns as additional support of her ultimate determination that relation back was not appropriate pursuant to her Rule 15(c) analysis. (Def. Resp. at 18.) Indeed, Judge Scanlon did not base her recommendations on comity grounds and found that relation back was improper on the grounds that the conditions of Rule 15(c)(1)(A)-(C) were not satisfied. Thus, the court respectfully overrules the Named Plaintiffs' objections to Judge Scanlon's reference to comity as additional support for her recommendations under her Rule 15(c) analysis.
Upon both clear error and de novo review of the record and Judge Scanlon's well-reasoned and thorough Report and Recommendation, the court adopts the Report and Recommendation in all respects as the opinion of the court. Accordingly, the Named Plaintiffs' Motion to Amend is granted to the extent that the claims are timely as of April 15, 2014. The Named Plaintiffs are directed to file an Amended Complaint consistent with this Order and Judge Scanlon's R & R within fourteen (14) days of this Order.
VERA M. SCANLON, United States Magistrate Judge:
The named Plaintiffs Anthony Charlot, Alan Remache and Jose Tejada (collectively,
The Named Plaintiffs move for leave to amend their Complaint pursuant to Federal Rules of Civil Procedure ("Rules") 15(a) and 21, and for relation back pursuant to Rule 15(c). The Named Plaintiffs seek to add four new named plaintiffs (the "Proposed Named Plaintiffs") to assert individual and representative claims under the FLSA and the wage-and-hour laws of four additional states: the Illinois Minimum Wage Law, 820 Ill. Comp. Stat. § 105/1 et seq.; the Illinois Wage Payments and Collections Act, 820 Ill. Comp. Stat. § 115/1 et seq.; and their implementing regulations, 56 Ill. Admin. Code §§ 210.100-300.850 (collectively, the "Illinois Wage Laws"); the North Carolina Wage-and-Hour Act, N.C. Gen.Stat. § 95-25.1 et seq.; and its implementing regulations, 13 N.C. Admin. Code 12.0300 et seq. (collectively, the "North Carolina Wage Laws"); the Pennsylvania Minimum Wage Act, 43 Pa. Stat. § 333.101 et seq.; and the Pennsylvania Wage Payment and Collection Law, 43 Pa. Stat. § 260.1 et seq. (collectively, the "Pennsylvania Wage Laws"); and the Washington Minimum Wage Act, Rev. Code Wash. §§ 49.46.005 et seq.; Washington Industrial Welfare Act, Rev.Code Wash. §§ 49.12.005 et seq.; Washington Wage Rebate Act, Rev.Code Wash. §§ 49.52.050 et seq.; and Washington Administrative Code §§ 296-126-092 and 296-126-050 (collectively, the "Washington Wage Laws"). The amended pleading alleges that, for statute of limitations purposes, the Proposed Named Plaintiffs' individual and representative state law claims relate back to the date of the original Complaint.
Defendant Ecolab, Inc. ("Ecolab" or "Defendant") opposes, in part, the motion to amend. Specifically, Ecolab opposes amending the Complaint to include the Illinois and North Carolina claims, and opposes the relation back of each state law claim to the filing date of the original Complaint.
The motion to amend was referred to the undersigned by the Honorable Kiyo A. Matsumoto. For the reasons stated below, this Court respectfully recommends that the Named Plaintiffs' motion be granted in part and denied in part, in that the Named Plaintiffs be permitted to amend the Complaint to add the Proposed Named Plaintiffs and their claims, but only to the extent that the statute of limitations for each claim had not expired as of April 15, 2014, the date that Ecolab admittedly received notice of the proposed amended complaint.
Unless otherwise noted, the following facts are taken from the Complaint and are accepted as true for purposes of the motion to amend. See Compl., ECF No. 1.
The Named Plaintiffs worked as Route Managers ("RMs") for Ecolab, providing maintenance, installation and repair service on commercial dishwashing equipment. Compl. If 2. On September 11, 2012, the Named Plaintiffs filed their Complaint alleging that Ecolab failed to pay overtime premium pay to them and to similarly situated employees, in violation of the
Pursuant to a stipulated case management plan, the Parties limited their initial discovery in this matter to two of Ecolab's affirmative defenses to the FLSA claims: that the RMs were properly classified as exempt from receiving premium overtime wages because they met the outside sales exemption of 29 U.S.C. § 213(a)(1), and that the RMs were properly compensated under 29 U.S.C. § 207(i). Stip. Case Mgmt. Plan, ECF No. 41-1; Order, Feb. 21, 2013, ECF. Also pursuant to the case management plan, the Parties are in the process of briefing cross-motions for summary judgment on the two affirmative defenses. Stip. Case Mgmt. Plan; see Order, Oct. 23, 2014.
On May 5, 2014, the Named Plaintiffs requested leave for a pre-motion conference before the District Judge concerning a motion to amend. Letter, ECF No. 101. The motion was referred to the undersigned, and this Court set a briefing schedule. Thereafter, the Named Plaintiffs moved for leave to amend the Complaint. Not. of Mot. to Am. Compl., ECF No. 121. In support of their motion, the Named Plaintiffs submitted a memorandum of law, Pls. Mem., ECF No. 122; the declaration of their attorney, Justin M. Swartz, Esq. ("Mr. Swartz"), with exhibits, Swartz Decl., ECF No. 123; a reply memorandum of law, Pls. Reply Mem., ECF No. 126; and Mr. Swartz's supplemental declaration, with exhibits, Swartz Reply Decl., ECF No. 127. The Named Plaintiffs submitted the Proposed Amended Complaint (hereinafter, the "Amended Complaint") as an attachment to Mr. Swartz's first declaration. See Am. Compl., ECF No. 123-1.
Ecolab opposes the Named Plaintiffs' motion, and in support of its opposition, Ecolab filed a memorandum of law, Def. Mem., ECF No. 124, and the declaration of its attorney, Shirley Lerner, Esq. ("Ms. Lerner"), with exhibits, Lerner Decl., ECF No. 125. Ecolab contends that it received a copy of the Named Plaintiffs' proposed amended pleading on April 15, 2014, and that this was the first notice Ecolab had of Plaintiffs' intent to amend. Def. Mem. 2.
This Court heard oral argument on the motion to amend. Tr., ECF No. 126. Following oral argument, the Parties submitted supplemental letter briefs in accordance with this Court's Order. Pls. Letter, ECF No. 132; Def. Letter, ECF No. 133; Tr. 73:21-74:6.
Between the filing of the Complaint and the filing of the present motion, seventysix workers from twenty states have filed Consent to Sue forms alleging FLSA claims against Ecolab. Pls. Mem. 2.
Am. Compl. 111121-28.
Like the Named Plaintiffs, the Proposed Named Plaintiffs allegedly worked for Ecolab as RMs; were subject to the same corporate policies and practices; and worked overtime hours for which they did not receive any overtime premium pay because Ecolab classified them as exempt under the same blanket exemption policy. Am. Compl. 111121-29; Pls. Mem. 8. Between April 2013 and March 2014, the Proposed Named Plaintiffs filed Consent to Sue forms concerning their FLSA claims; these forms did not mention their state law claims. See Consent to Sue Forms, ECF Nos. 46-2 (Mr. Germuska's form, filed April 17, 2013), 83-1 (Mr. Riggs's form, filed February 26, 2014), 91-1 (Mr. Hendley's form, filed March 20, 2014), 95-2 (Mr. Richmond's form, filed March 28, 2014).
The Named Plaintiffs move to amend their Complaint pursuant to Rules 15(a) and 21, and for relation back of the Proposed Named Plaintiffs' state law claims pursuant to Rule 15(c). Pls. Mem. 5, 9. Ecolab consents to the addition of the proposed Pennsylvania and Washington state claims; however, for the reasons discussed below, Ecolab does not consent to the addition of the proposed Illinois and North Carolina state claims. Pls. Mem. 2-3; Def. Mem. 2. Ecolab also objects to the relation back of each of the proposed state law claims to the date of the original Complaint. Pls. Mem. 2-3; Def. Mem. 2. The Parties do not raise any pleading dispute concerning the Proposed Named Plaintiffs' individual or representative FLSA claims.
Under Rule 15(a), when a party cannot amend its pleading as a matter of course, "a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." Fed. R.Civ.P. 15(a)(2). "This permissive standard is consistent with our strong preference for resolving disputes on the merits." Williams v. Citigroup, Inc., 659 F.3d 208, 212-13 (2d Cir.2011). In addition, Rule 21 permits the Court to "on just terms, add or drop a party." Fed.R.Civ.P. 21. "[Milder Rule 21, courts should apply the same standard of liberality afforded to motions to amend pleadings under Rule 15." Ingenito v. Riri, USA, Inc., No. 11 Civ. 2569(MKB), 2013 WL 752201, at *3 (E.D.N.Y. Feb. 27, 2013) (quoting Diggs v. Marikah, No. 11 Civ. 6382(PAE), 2013 WL 227728, at *2 (S.D.N.Y. Jan. 22, 2013)).
In determining whether to grant leave to amend, the Court must accept the moving party's non-conclusory factual pleadings and draw all reasonable inferences in that party's favor, "to determine whether the allegations plausibly give rise to an entitlement to relief." Panther Partners Inc. v. Ikanos Commc'ns, Inc., 681 F.3d 114, 119 (2d Cir.2012).
As a preliminary matter, Ecolab briefly argues that the amendments are untimely for being proposed two years after the original Complaint. Def. Mem. 1; Def. Letter 3.
Ecolab's primary objection to the proposed Illinois and North Carolina amendments is that they are futile and/or prejudicial. See Def. Mem. 3. This Court will first consider the contested amendments under Illinois and North Carolina state law, and will then consider the relation back of each of the state law claims to the date of the original Complaint.
Ecolab objects to the proposed Illinois state law claims on two grounds: first, that they are duplicative of claims filed in Schneider v. Ecolab, Inc., No. 14 Civ. 1044(EEC) (N.D.Ill. Feb. 13, 2014), a case presently before the United States District Court for the Northern District of Illinois, and are therefore prejudicial, and, second, that any claims under the Illinois Wage Payment and Collection Act would be futile
"As part of its general power to administer its docket, a district court may stay or dismiss a suit that is duplicative of another federal court suit." Curtis v. Citibank, N.A., 226 F.3d 133, 138 (2d Cir.2000). Under the first-filed rule, "where there are two [or more] competing lawsuits, the first suit should have priority, absent the showing of balance of convenience or special circumstances giving priority to the second." Wyler-Wittenberg v. MetLife Home Loans, Inc., 899 F.Supp.2d 235, 243 (E.D.N.Y.2012) (quoting First City Nat. Bank & Trust Co. v. Simmons, 878 F.2d 76, 79 (2d Cir.1989)); see Castillo v. Taco Bell of Am., LLC, 960 F.Supp.2d 401, 404 (E.D.N.Y.2013) (same).
Ecolab argues that the first-filed rule should be applied to deny Plaintiffs' motion to amend because Plaintiffs were not the first litigants to raise Illinois state law class claims concerning Ecolab's alleged failure to pay premium overtime pay to RMs. Def. Mem. 8. According to Ecolab, the first-filed case was Schneider, No. 14 Civ. 1044(EEC) (N.D.I11. Feb. 13, 2014), filed on January 6, 2014 in the Circuit Court of Cook County, Illinois and removed by Ecolab to the United States District Court for the Northern District of Illinois on February 13, 2014. Id. at ECF No. 1 (Notice of Removal). The original complaint in Schneider raised individual and representative claims under the FLSA and the Illinois Wage Laws. Id. at ECF No. 1-1 (the complaint); see id. 113 ("Plaintiff seeks to represent both a nationwide class of Route Sales Managers under the FLSA, and Illinois state law classes of Route Sales Managers under the IMWL and IWPCA."). The plaintiff in Schneider then filed an amended pleading in which he abandoned his FLSA claims and asserted only individual and class claims under the Illinois Wage Laws. Schneider, No. 14 Civ. 1044(EEC) (N.D.Ill. Mar. 11, 2014) (ECF No. 19). Thereafter, in Schneider, Ecolab filed a motion to stay the action in light of Chariot. Schneider, No. 14 Civ. 1044(EEC) (N.D.Ill. Mar. 26, 2014) (ECF No. 27) (motion to stay).
The court in Schneider denied Ecolab's motion to stay that case pending the resolution of dispositive motions in Chariot. Schneider v. Ecolab, Inc., No. 14 Civ. 1044, 2014 WL 2871502, at *1 (N.D. Ill. June 12, 2014). The court reasoned that despite similarities between Schneider and Chariot, the balance of the factors weighed against a stay because the plaintiff in Schneider had abandoned his FLSA claims; decisions in Chariot would have no binding effect on the plaintiff in Schneider; and a stay would disadvantage him. Id. The court also noted that the parties had previously agreed to focus discovery in Schneider on the named plaintiff's individual claims. Id. at *2; see Schneider, No. 14 Civ. 1044(EEC) (N.D.Ill. Oct. 28, 2014) (ECF No. 56 at 9) (Ecolab acknowledged "Ecolab's request to defer class discovery until after individual plaintiff discovery" and that "[t]he Court has agreed to defer class discovery for now."). Indeed, after the denial of the motion to stay, the parties in Schneider proceeded with discovery only as to the named plaintiff's individual claims, not the Illinois state law class claims. Schneider, No. 14 Civ. 1044(EEC)
Ecolab contends that if the Named Plaintiffs' motion to amend is granted, Ecolab will be required to litigate the Illinois class claims in two forums, which would be costly and prejudicial. Def. Mem. 9. The Named Plaintiffs respond that Ecolab's reliance on the first-filed rule is premature, and that there is no danger of duplicated efforts because the litigation in Schneider is focused on that named plaintiffs individual claims. Pls. Reply Mem. 5. The Named Plaintiffs further argue that the complaint in Schneider is a "copy-cat lawsuit"
Ecolab's invocation of the firstfiled rule as a basis for denying the Named Plaintiffs' motion to amend is not persuasive in this case given the status of Illinois class discovery in Schneider. The firstfiled rule is a jurisprudential guide to discourage forum shopping and promote judicial economy. "[T]he `first filed' rule is not a hard and fast rule, but rather, subject to the discretion of the district court judge." Silverman Partners, L.P. v. First Bank, 687 F.Supp.2d 269, 292 (E.D.N.Y.2010). Although the class claims in Schneider are live, they are not being actively litigated at this time. Discovery in the Schneider case has been limited to the named plaintiffs individual claims. In this case, the Parties have already completed discovery concerning Ecolab's FLSA exemption defenses which is likely to be relevant to the proposed Illinois class claims, due to the similar defenses available under Illinois state law. See, e.g., 820 Ill. Comp. Stat. § 105/4a(2)(F) (incorporating the FLSA's exception to overtime premium pay at 29 U.S.C. § 207(i)).
Ecolab does not explain why, in such circumstances, denying the motion to amend is the appropriate remedy. Indeed, in the case Ecolab cites supporting the analogous remedy of dismissal, Def. Mem. 9, the court dismissed the action (rather than staying or transferring it) because there had been "little progress" in discovery compared to the competing action, where "the end of discovery is near." Castillo v. Taco Bell of Am., LLC, 960 F.Supp.2d 401, 404 (E.D.N.Y.2013); see Wyler-Wittenberg, 899 F.Supp.2d at 248 (denying the requested relief of dismissing the second-filed FLSA action, as "a dismissal would not bring about an equitable result"; the court instead transferred the case to the appropriate district). The record before the Court does not suggest that discovery on the Illinois class claims in Schneider has progressed significantly beyond that of the discovery in this case.
Furthermore, there is no conflict between duplicative or competing lawsuits, but should such a situation arise, the Parties could then move the Illinois district court for a transfer, stay or dismissal of
Under the Illinois Wage Payment and Collection Act, an employer must pay each employee "at least semi-monthly ... all wages earned during the semi-monthly pay period." 820 Ill. Comp. Stat. § 115/3. The Illinois Wage Payment and Collection Act defines "wages" as "any compensation owed an employee by an employer pursuant to an employment contract or agreement between the 2 parties." 820 Ill. Comp. Stat. § 115/2. "The IWPCA does not establish a substantive right to payment of any particular regular or overtime wage," and "mandates payment of wages only to the extent the parties' contract or employment agreement requires such payment." Hoffman v. RoadLink Workforce Solutions, LLC, No. 12 Civ. 7323(GSF), 2014 WL 3808938, at *4 (N.D.I11. Aug. 1, 2014). Moreover, such an agreement "need not be formally negotiated or written." Id.
To demonstrate an agreement to pay premium overtime wages, the Named Plaintiffs appended to their proposed amended pleading an excerpt from Ecolab's employment policy manual (the "Manual") which states, "[i]n accordance with the federal wage and hour law, nonexempt employees are eligible to receive overtime premium pay for time worked in excess of forty (40) hours per workweek." Am. Compl. Ex. 1 at 1. The Named Plaintiffs argue that the Manual is sufficient to establish an employment agreement. Pls. Mem. 12-13. Ecolab responds that the Manual is not an employment agreement due to its express disclaimer. Def. Mem. 1012. This disclaimer states that the Manual "is not intended to create an employment contract or a contract of any kind," and that Ecolab may interpret and revise its policies "in its sole discretion." Lerner Decl. Ex. B; Def. Mem. 11.
The Parties have identified an Illinois federal district court split on the issue of whether employment handbook language can create an employment agreement within the meaning of 820 Ill. Comp. Stat. § 115/2, notwithstanding express disclaimers. See Def. Mem. 11-12; Pls. Reply Mem. 7-8. Some courts in Illinois have found that express disclaimers preclude an employment handbook from being considered as a contract or agreement. See Brand v. Cornetist Corp., No. 12 Civ. 1122(YBK), 2013 WL 1499008, at *3 (N.D.Ill. Apr. 11, 2013) (in a wage-and-hour case, listing cases holding that "express disclaimers within employee handbooks negate a finding of mutual assent, which is a prerequisite to the formation of an agreement actionable under the IWPCA"); see also Mooney v. Wyndham Worldwide Operations, Inc., No. 13 Civ.
The Parties have thus identified factual and legal disputes concerning whether the Manual created an employment agreement sufficient to meet the requirements of the Illinois Wage Payment and Collections Act. These issues would benefit from discovery on the meaning and significance of the handbook language. In any event, Ecolab has not established that this claim would be futile.
Ecolab objects to the proposed North Carolina state law claims on the grounds that the overtime claims are preempted by the FLSA and that the Named Plaintiffs have not stated a separate and distinct
Concerning the proposed overtime claims, the North Carolina Wage-and-Hour Act specifies that its overtime provisions (as well as its minimum wage and recordkeeping provisions) do not apply to "[a]ny person employed in an enterprise engaged in commerce or in the production of goods for commerce as defined in the Fair Labor Standards Act." N.C. Gen.Stat. Ann. § 95-25.14(a). Ecolab argues that, since the Named Plaintiffs assert FLSA claims, the proposed amendment to add North Carolina state law claims would be contradictory, and therefore futile. Def. Mem. 3. The Named Plaintiffs argue that they should be permitted to plead the North Carolina state law claims in the alternative. Pls. Reply Mem. 9.
Per Rule 8(d), "[a] party may state as many separate claims or defenses as it has, regardless of consistency." Fed.R.Civ.P. 8(d)(3); see Fed.R.Civ.P. 8(d)(2) ("A party may set out 2 or more statements of a claim or defense alternatively or hypothetically...."); St. John's Univ., N.Y. v. Bolton, 757 F.Supp.2d 144, 184 (E.D.N.Y. 2010) (plaintiffs may "allege claims in the alternative, even if the legal theories underlying those claims are technically inconsistent or contradictory"); see also Adler v. Pataki, 185 F.3d 35, 41 (2d Cir.1999) (The Federal Rules offer "sufficient latitude to construe separate allegations in a complaint as alternative theories, at least when drawing all inferences in favor of the nonmoving party.... ").
Here, the Named Plaintiffs have identified several cases, see Pls. Mem. 14-15; Pls. Reply Mem. 9, in which the plaintiffs were permitted to plead North Carolina overtime claims in addition to FLSA overtime claims, notwithstanding any possible contradiction between these claims. See Scott, 300 F.R.D. at 196-97; Cancilla v. Ecolab, No. 12 Civ. 3001 (N.D.Cal. Mar. 21, 2014) (Minute Entry, ECF No. 118); Blount v. Carlson Hotels, Inc., No. 11 Civ. 452(MOC)(DSC), 2012 WL 1021735, at *5 (W.D.N.C. Mar. 1, 2012), report & recommendation adopted, No. 11 Civ. 452(MOC) (DSC) (W.D.N.C. Mar. 26, 2012).
Ecolab also asserts that the Named Plaintiffs' North Carolina overtime claims are futile because they are subject to the same exemptions as the FLSA, and therefore cannot be used to salvage claims barred by the FLSA's exemptions. 13 N.C. Admin. Code 12.0501(c)(4); Def. Letter 1.
Given the early stage of the proceedings, the Court recommends permitting the Named Plaintiffs to add the proposed North Carolina overtime claims in the alternative, although the dismissal of these claims may be appropriate at a later time. Indeed, in a case the Named Plaintiffs rely on, see Pl. Mem. 14, a court dismissed on summary judgment North Carolina overtime claims that had been pled "as an alternative remedy," because they were "preempted by the FLSA." Martinez-Hernandez v. Butterball, LLC, 578 F.Supp.2d 816, 819, 822 (E.D.N.C.2008).
In addition to the North Carolina overtime claims, the Named Plaintiffs argue, in their motion papers, that they seek to add a North Carolina wage payment or "payday" claim under N.C. Gen.Stat. Ann. § 95-25.6, which requires that "[e]very employer shall pay every employee all wages and tips accruing to the employee on the regular payday." Pl. Mem. 14. Unlike North Carolina overtime claims, payday claims are not preempted by the FLSA pursuant to N.C. Gen.Stat. Ann. § 95-25.14(a)(1), which specifically limits such preemption to minimum wage, overtime and recordkeeping claims.
In this case, the Named Plaintiffs assert that "Ecolab failed to pay Hendley and the North Carolina class earned wages" and that "Ecolab also failed to pay Hendley and the North Carolina class members wages for all hours worked," Am. Compl. ¶¶ 107, 210. The Amended Complaint contains no allegations that more specifically state a payday claim. Ecolab contends that "[n]owhere in Plaintiffs' amended complaint ... do Plaintiffs allege a `payday' claim, i.e., that they are entitled to "accrued wages" or wages separate and apart from their overtime claims." Def. Mem. 4. Ecolab's concern is that the Named Plaintiffs may use the payday statute "to bring `back-door' overtime claims against FLSA covered employers, which would otherwise be expressly disallowed by N.C. Gen.Stat. 95-25.14(a)(1)." Def. Mem. 4-5.
Courts may deny a motion to amend where the proposed claims would be time-barred and therefore futile. See Twersky v. Yeshiva Univ., 579 Fed.Appx. 7, 12 (2d Cir.2014) (summary order) ("[T]he district court correctly concluded that amendment would have been futile"
Otherwise untimely claims may be permitted under the relation back doctrine. Per Rule 15(c)(1), "[a]n amendment to a pleading relates back to the date of the original pleading when:
Fed.R.Civ.P. 15(c)(1)(A)-(C). Rule 15(c) "mandates relation back once the Rule's requirements are satisfied; it does not leave the decision whether to grant relation back to the district court's equitable discretion." Krupski v. Costa Crociere S.p.A., 560 U.S. 538, 553, 130 S.Ct. 2485, 177 L.Ed.2d 48 (2010). As long as the requirements of Rule 15(c) are met, considerations such as the general timeliness of the proposed amendment are not relevant. Id.
In this case, Ecolab objects to each of the proposed state law claims as futile and prejudicial to the extent those claims rely on using the September 11, 2012 filing date of the original Complaint—rather than the April 15, 2014 date on which Ecolab received notice of the Named Plaintiffs' intent to amend the Complaint—to define the temporal scope of each class. Def. Mem. 6-7.
The Parties in this case limited their legal arguments to whether the proposed amendments met the requirements of Rule 15(c)(1)(B). The Parties did not discuss Rule 15(c)(1)(A) or (C). As discussed in detail infra, Sections II.D.1-2, relation back in this case must be analyzed under subsection (A), because state law provides the applicable statute of limitations, as well as (C), because the amendment seeks to add new plaintiffs; the Named Plaintiffs cannot rely on Rule 15(c)(1)(B) alone. See Levy v. U.S. Gen. Accounting Office, 175 F.3d 254, 254 (2d Cir.1999) (when an amendment seeks to add plaintiffs, satisfying Rule 15(c)(1)(C)(ii) is "required"); cf. Hogan v. Fischer, 738 F.3d 509, 518 (2d Cir.2013) (considering relation back of amendments to add John Doe defendants under both Rule 15(c)(1)(A) and (C)). I analyze each section separately as to the text of each provision, beginning with subsection (B) because this is the subsection briefed by the Parties and because, as will become apparent, the considerations relevant to subsection (B) are also relevant to subsections (A) and (C).
Rule 15(c)(1)(B) allows relation back when "the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out—or attempted to be set out—in the original pleading." F ed. R. Civ.P. 15(c)(1)(B). "Where the amended complaint does not allege a new claim but renders prior allegations more definite and precise, relation back occurs." Slayton v. Am. Exp. Co., 460 F.3d 215, 228 (2d Cir. 2006), as amended (Oct. 3, 2006). In this case, the question is the relation back of newly added claims, rather than the elaboration of prior claims. "Where the amendment would involve a new cause of action [], the district court may deny leave unless the original complaint gave the defendant fair notice of the newly alleged claims.'"
The Named Plaintiffs argue that Ecolab received appropriate notice of the Proposed Named Plaintiffs' claims because these claims "stem from the same conduct at issue in the original complaint," Pls. Mem. 10, and the original complaint "alleged nationwide violations of the FLSA," Pls. Reply Mem. 4. Ecolab contends that the original Complaint did not mention the proposed state law claims; that the amendments would "alter[] and greatly expand[ ] the scope of the case"; and that Ecolab did not receive fair notice of the proposed state law claims for purposes of relation back. Def. Mem. 7.
The Named Plaintiffs' position has some facial appeal, in that there is overlap between the facts relevant to FLSA and state overtime claims. Depending on the allegations in a plaintiffs FLSA complaint, an employer may be on notice that the plaintiff also has state wage-and-hour law claims, or that other employees may have the same wage-and-hour claims raised in the original complaint.
Thus, in the cases on which the Named Plaintiffs rely, Pls. Mem. 9-10; Pls. Reply Mem. 4, courts considered the relation back of new claims brought by the original plaintiff, see Wilson, 143 F.3d at 734, 738-39 (the plaintiffs failure-to-promote claim did not relate back to his race-discrimination claim), as well as the claims of newly added plaintiffs whose claims were identical to those of the original plaintiffs, see Bensinger v. Denbury Res. Inc., No. 10 Civ.1917(JG), 2013 WL 3353975, at *4-5 (E.D.N.Y. July 3, 2013) (allowing the substitution of a new plaintiff who had standing to bring the claim that the original plaintiff lacked standing to bring); Perkins, 2009 WL 3754097, at *5-6 (allowing the newly added plaintiffs' representative FLSA claims to relate back to the original FLSA complaint).
In American Pipe, which held that the commencement of a class claim tolls the statute of limitations for potential class members, the Supreme Court recognized the importance of providing defendants with notice of the potential scope of a class action, stating that:
Am. Pipe & Const. Co. v. Utah, 414 U.S. 538, 554-55, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974) (quoting Burnett v. N.Y. Central R. Co., 380 U.S. 424, 428, 85 S.Ct. 1050, 13 L.Ed.2d 941 (1965)). Thus, in Cliff v. Payco General American Credits, Inc., 363 F.3d 1113,
The requirement of fair notice recognizes that plaintiffs wishing to rely on relation back bear some responsibility to define the scope of the action they are bringing, so that defendants may properly evaluate and respond to such claims. In this case, the proposed amendments would increase the number and identities of the potential plaintiffs, as a result of the more generous statutes of limitations of states such as Illinois in comparison to what is available under the FLSA. The proposed amendments would also involve state law classes not contemplated by the original complaint—an expansion of the class claims that is arguably more significant than that considered by the courts in Cliff, Feuerstack and Midland Funding
Under the Named Plaintiffs' theory, plaintiffs would be permitted to stop the clock on all state law wage-and-hour claims possibly brought against an employer in multiple states by filing a single FLSA collective action, as long as they were later able to identify plaintiffs in other states. Indeed, the Named Plaintiffs' reasoning suggests that Ecolab has received adequate notice that Ecolab might, at some later point, be subject to the relation back of even more state wage-and-hour-law claims—such as claims by other individuals (located in at least fourteen additional states) who filed Consent to Sue forms in this action. This is not fair notice. Although the basic facts of the alleged wageand-hour violation purportedly committed by Ecolab is the same under federal law, the state standards vary such that a defendant facing multi-state claims must analyze its records and scope of liability under each state law separately. It would be unfair to expect a defendant to engage in this review before at least one employee from a state has stepped forward as a plaintiff to show that there is a plaintiff with standing to raise the challenge and force the defendant to consider its liability.
Furthermore, a collective action member's FLSA claim is not tolled until he or she files a Consent to Sue form. 29 U.S.C. § 256; see D'Arpa v. Runway Towing Corp., No 12 Civ. 1120(JG), 2013 WL 3010810, at *5 (E.D.N.Y. June 18, 2013). The FLSA thus requires each affected employee to make him or herself known to the court in order to assert his or her claim. The Named Plaintiffs would use the FLSA—a statute which does not allow tolling based on the filing of the
In the circumstances of this case, the Named Plaintiffs' pleading of a nationwide FLSA collective action was not fair notice of individual and class action claims under state law, notwithstanding the similarity of the relevant facts.
Alternately, relation back is appropriate when "the law that provides the applicable statute of limitations allows relation back." Fed.R.Civ.P. 15(c)(1)(A). Under Rule 15(c)(1)(A), "if the applicable statute of limitations is determined by state law ... courts should assess both the state and federal relation back doctrines and apply whichever law is more generous." Anderson v. City of Mount Vernon, No. 09 Civ. 7082(ER)(PED), 2014 WL 1877092, at *2 (S.D.N.Y. Mar. 28, 2014); see In re Vitamin C Antitrust Litig., 995 F.Supp.2d 125, 131-32 (E.D.N.Y.2014) (same); Amaya v. Garden City Irrigation, Inc., 71 Fed.R.Serv.3d 137, 2008 WL 2940529 (E.D.N.Y.2008) (same). "The Rules Advisory Committee directs courts to look to the `controlling body of limitations law'—not merely the limitations law's test for relation back." Hogan, 738 F.3d at 518 (quoting Fed.R.Civ.P. 15 (Advisory Comm. Notes 1991)) (finding that, per N.Y. C.P.L.R. § 1024, New York law provides a more forgiving principle for relation back in the context of naming John Doe defendants described with particularity in the complaint).
In this case, state law determines the statute of limitations to be applied to the proposed state law claims. With the above principles in mind, the Court will consider the body of limitations law for each state,
Concerning the relation back of newly added claims, Illinois law provides that,
735 Ill. Comp. Stat. § 5/2-616(b). Illinois law contains a separate provision related to the addition of new defendants, 735 Ill. Comp. Stat. § 5/2-616(d), but Illinois courts have found that 735 Ill. Comp. Stat. § 5/2-616(b), and not (d), applies to the addition of new plaintiffs. See Albany Park Serv., Inc. v. Kenny-Paschen Joint Venture, 209 Ill.App.3d 432, 435, 154 Ill.Dec. 230, 568 N.E.2d 230, 232 (App.Ct. 1st Dist.1991) (applying 735 III. Comp. Stat. § 5/2-616(b) in the context of newly added plaintiffs; "section 2-616(d) applies only where the party seeking the amendment is attempting to join a new defendant as opposed to a new plaintiff').
The Supreme Court of Illinois has described 735 Ill. Comp. Stat. § 5/2-616(b) as "similar" to Rule 15(c)(1)(B). Porter v. Decatur Mem'l Hosp., 227 Ill.2d 343, 357, 317 Ill.Dec. 703, 882 N.E.2d 583, 591 (2008); see id. at 227 Ill.2d at 358, 317 Ill.Dec. 703, 882 N.E.2d at 592 (noting the similarity of the texts and that there "is some interest in having a uniform body of precedent where many cases involving a diversity of citizenship could be brought in either state or federal court"). Illinois state courts have long looked to Rule 15(c) for guidance on the interpretation of 735 Ill. Comp. Stat. § 5/2-616(b), such as by requiring a showing of "adequate notice," even though 735 Ill. Comp. Stat. § 5/2-616(b) does not explicitly mention notice. Porter, 227 Ill.2d at 357, 317 Ill.Dec. 703, 882 N.E.2d at 591 (2008) (citing Zeh v. Wheeler, 111 Ill.2d 266, 280, 95 Ill.Dec. 478, 489 N.E.2d 1342, 1348 (1986)).
"[B]oth the statute of limitations and section 2-616(b) are designed to afford a defendant a fair opportunity to investigate the circumstances upon which liability is based while the facts are accessible." Porter, 227 Ill.2d at 355, 317 Ill.Dec. 703, 882 N.E.2d at 590; see Metzger a New Century Oil & Gas Supply Corp. Income & Dev. Program-1982, 230 Ill.App.3d 679, 698-99, 171 Ill.Dec. 698, 594 N.E.2d 1218, 1232 (App.Ct. 1st Dist.1992) ("The policy of statutes of limitation is to provide a defendant with a sufficient opportunity to investigate the factors upon which his liability may be based while such evidence is still ascertainable ...."). Although "[c]ourts should [] liberally construe the requirements of section 2-616(b) to allow resolution of litigation on the merits and to avoid elevating questions of form over substance," ultimately, "these concerns do not trump considerations of whether a defendant was given adequate notice and knowledge of the incident giving rise to the lawsuit." Porter, 227 Ill.2d at 355, 358, 317 Ill.Dec. 703, 882 N.E.2d at 590-92 (citing Zeh, 111 Ill.2d at 278-79, 95 Ill.Dec. 478, 489 N.E.2d at 1348); see Bemis, 2009 WL 1972169, at *6; Boatmen's Nat. Bank of Belleville v. Direct Lines, Inc., 167 Ill.2d 88, 102, 212 Ill.Dec. 267, 656 N.E.2d 1101, 1107 (1995).
North Carolina's relation back rule states that,
N.C. Gen.Stat. § 1A-1, Rule 15(c). This rule is not based on federal law but "is drawn from the New York Civil Practice Law and Rules, Rule 203[f]." Grossman v. Moore, 341 N.C. 185, 187, 459 S.E.2d 715, 717 (1995).
The North Carolina Supreme Court in Grossman stated that, "[n]owhere in the rule is there a mention of parties. It speaks of claims and allows the relation back of claims if the original claim gives notice of the transactions or occurrences to be proved pursuant to the amended pleading." Crossman, 341 N.C. at 187, 459 S.E.2d at 717. North Carolina courts subsequently "construed the Grossman decision to `mean that Rule 15(c) is not authority for the relation back of claims against a new party, but may allow for the relation back of an amendment to correct a mere misnomer.'" Liss v. Seamark Foods, 147 N.C. App. 281, 283, 555 S.E.2d 365, 367 (Ct.App.2001) (quoting Piland v. Hertford County Bd. of Comm'rs, 141 N.C. App. 293, 299, 539 S.E.2d 669, 673 (Ct.App.2000)); see generally In re Vitamin C Antitrust Litig., 995 F.Supp.2d at 132 (listing North Carolina as among states that "have expressly rejected the concept of relationback in `additional party' cases as opposed to `wrong party' cases").
Even under the North Carolina rule, the Named Plaintiffs have not met their burden. To the extent North Carolina courts have relied on Key International Manufacturing and other cases interpreting New York law, the proposed amendment contemplates an impermissible expansion of the class and Defendant's liability. The Named Plaintiffs no doubt anticipate that the North Carolina class claim will involve more North Carolina employees than the FLSA action alone, as the class claim does not share the collective action's requirement that members opt-in. Moreover, the Named Plaintiffs seek "[d]ouble [d]amages under the North Carolina Wage and Hour Act for the North Carolina Class." Am. Compl. at 41.
Although Pennsylvania's statute concerning amendments to pleadings does not specifically mention relation back, Pennsylvania courts have interpreted that statute as allowing relation back, in limited circumstances. The Pennsylvania statute governing amendments provides that,
Pa.R.C.P. 1033 (amended Dec. 20, 2013 and effective Jan. 23, 2014; the amendment added the words "add a person as a party," but made no other changes).
Thus, several courts, including the Third Circuit, have recognized that "Pennsylvania law does not afford a more forgiving relation back principle, so [that] Rule 15(c)(1)(A) is inapplicable." Stroud v. Abington Mem'l Hosp., No. 06 Civ. 4840(DRS), 2008 WL 2061408, at *18 (E.D.Pa. May 13, 2008); see Urrutia v. Harrisburg Cnty. Police Dep't, 91 F.3d 451, 457 (3d Cir.1996) (same); Nelson v. Cnty. of Allegheny, 60 F.3d 1010, 1014 n. 4 (3d Cir.1995) (same); Fields v. Blake, 349 F.Supp.2d 910, 917 (E.D.Pa.2004) (same). Therefore, in this case, Pennsylvania law does not provide a basis for allowing relation back under Rule 15(c)(1)(A).
Washington's relation back law closely tracks the language in the federal rule, as it states,
Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him.
Wash. R.Super. Ct. Civ. CR 15(c) (hereinafter, "CR 15(c)").
Although CR 15(c) refers to amendments "changing the party against whom a claim is asserted," id., it applies equally to amendments adding plaintiffs. See Heaphy v. State Farm Mut. Auto. Ins. Co., No. 05 Civ. 5404(RBL), 2005 WL 1950244, at *3 n. 5 (W.D.Wash. Aug. 15, 2005) (under both CR 15(c) and Rule 15(c), applying the same standard for the addition of plaintiffs as applies to the addition of defendants); Perrin v. Stensland, 158 Wn.App. 185, 194 n. 10, 240 P.3d 1189, 1193 n.
Washington's relation back rule is not more generous than the federal standard. See Armas v. New Albertson's Inc., No. 13 Civ. 3036(LRS), 2013 WL 6498295, at *1 (E.D.Wash. Dec. 11, 2013) ("Washington law does not provide a more liberal standard regarding `relation back.'"); Heaphy, 2005 WL 1950244, at *3 n. 5 ("the resolution of the `relation back' issue is the same under Washington or Federal law"). In fact, Washington law is arguably more demanding, because "[i]n addition to the requirements of [CR 15(c)], an amended complaint changing or adding a [party] will not relate back if the original omission of the [party] resulted from `inexcusable neglect.'" Armas, 2013 WL 6498295, at *1; see Perrin, 158 Wash.App. at 198-99, 240 P.3d at 1195 ("inexcusable neglect has become firmly embedded in Washington case law"). "Inexcusable neglect exists where a party is ascertainable upon reasonable investigation and no reason for the initial failure to name the party appears in the record." Armas, 2013 WL 6498295, at *1; see Martin v. Dematic, 178 Wn.App. 646, 667-68, 315 P.3d 1126, 1137-38 (Ct. App.2013) (excusable neglect was not demonstrated where the plaintiffs "provide no evidence of actions that they took to determine the correct parties before the statute of limitations expired or what information any investigation revealed"), review granted, 180 Wn.2d 1009, 325 P.3d 914 (2014); Perrin, 158 Wash.App. at 201, 240 P.3d at 1197 ("Failing to name [parties] when their identities are known or easily ascertainable is likely to be a strategic choice rather than a mistake."). Washington courts recognize that defendants have "`a strong interest in repose' once the deadline passe[s]." Perrin, 158 Wash.App. at 202, 240 P.3d at 1197 (quoting Krupski, 560 U.S. at 550, 130 S.Ct. 2485). In addition, while Rule 15(c)(1)(C) requires that the defendant receive notice of the amendment within 120 days of the filing of the complaint, under CR 15(c), notice must occur "before the limitations period expires." Russi v. Maersk, Inc., No. 06 Civ. 5416(RBL), 2007 WL 562491, at *3 (W.D.Wash. Feb. 16, 2007).
In this case, the Named Plaintiffs have not made a showing of excusable neglect or that Ecolab received notice prior to the expiration of the limitations period. In any event, Washington law does not support the relation back of the proposed claims, as that state's law is either identical to or more demanding than federal law.
In summary, the Court does not recommend granting Plaintiff's motion pursuant to Rule 15(c)(1)(A), as none of the relevant state relation back rules would allow relation back on the facts of this case.
Finally, under Rule 15(c)(1)(C), relation back may be appropriate when,
Fed.R.Civ.P. 15(c)(1)(C); see Krupski, 560 U.S. at 541, 130 S.Ct. 2485; 3 Moore's Fed. P. § 15.19 (3d ed. 2010) ("The test for relation back ... is more strenuous in the context of changed or new parties to the action ....").
Courts in this Circuit have come to differing conclusions as to whether Fed. R.Civ.P. 15(c)(1)(C) applies to amendments seeking to add plaintiffs. Although on its face Rule 15(c)(1)(C) applies only to amendments in "the party or the naming of the party against whom a claim is asserted," the Advisory Committee's notes to Rule 15 state that "the chief consideration of policy is that of the statute of limitations, and the attitude taken in revised Rule 15(c) toward change of defendants extends by analogy to amendments changing plaintiffs." Fed.R.Civ.P. 15 (Advisory Committee Notes to 1966 Amendment).
On several occasions, the Second Circuit has applied Rule 15(c)(1)(C) to amendments adding plaintiffs. The Second Circuit in Levy affirmed dismissal of an amended complaint as time-barred where the proposed additional plaintiffs were not added "because of a mistake, as required by [Rule 15(c)(1)(C)]." Levy, 175 F.3d at 255; see Advanced Magnetics, 106 F.3d at 19 ("While Rule 15(c) is framed in terms of an amendment that would change the party `against' whom a claim is asserted and of the new party's ability to maintain a `defense,' it is also applicable to a proposed change of plaintiffs"; allowing the substitution of plaintiffs as the real parties in interest under Rule 17(a).).
Rule 15(c) toward change of defendants extends by analogy to amendments changing
In addition, several district courts in this Circuit have applied Rule 15(c)(1)(C) in the context of newly added plaintiffs by requiring the demonstration of a mistake pursuant to subsection (ii). See In re Morgan Stanley Mortgage Pass-Through Certificates Litig., 23 F.Supp.3d 203, 208-09 (S.D.N.Y.2014) (quoting Levy); Dumont v. Litton Loan Servicing, LP, No. 12 Civ. 2677(ER)(LMS), 2014 WL 815244, at *16 (S.D.N.Y. Mar. 3, 2014) (citing and following Levy, but recognizing the disagreement among district courts on this issue); Lee v. Marvel Enters., Inc., 765 F.Supp.2d 440, 455 (S.D.N.Y.2011) (after noting the disagreement among the district courts, discussing factors relevant to Rule 15(c)(1)(C)), affd, 471 Fed.Appx. 14 (2d Cir.2012); Javier H. v. Garcia-Botello, 239 F.R.D. 342, 350 (W.D.N.Y.2006) (where the amendment sought to add new plaintiffs, " lance the new names were added not to correct a mistake but to correct a lack of knowledge, the requirements of Rule 15(c) for relation back are not met'" (quoting Barrow v. Wethersfield Police Dep't, 66 F.3d 466, 470 (2d Cir.1995), modified, 74 F.3d 1366 (2d Cir.1996))); Espinosa v. The Delgado Travel Agency, Inc., No. 05 Civ. 6917(SAS), 2006 WL 2792689, at *84 (S.D.N.Y. Sept. 27, 2006) (applying the mistake requirement where proposed amendments would add new plaintiffs); Andujar v. Rogowski, 113 F.R.D. 151, 155 (S.D.N.Y.1986) (Rule 15(c)(1)(C) "clearly applies to amendments substituting or changing the plaintiff as well"); see also Asher v. Unarco Material Handling, Inc., 596 F.3d 313, 319 (6th Cir.2010) (holding that Rule 15(c) does not permit relation back where an amendment adds new plaintiffs whose claims are untimely and who are neither being substituted for the original plaintiffs nor were omitted from the original complaint due to a mistake concerning identity).
Notwithstanding Levy and Advanced Magnetics, some district courts in this Circuit have not applied Rule 15(c)(1)(C) to the relation back of newly added plaintiffs' claims, and therefore have not required the demonstration of a mistake in such cases. One court described the Second Circuit's decision in Levy, a "one paragraph per curiam opinion," as involving "unique concerns pertaining to piggybacking employment discrimination claims," In re S. African Apartheid Litig., 617 F.Supp.2d 228, 290 (S.D.N.Y.2009), and several courts in this Circuit have instead followed the reasoning of District Judge Jack B. Weinstein in finding that Rule 15(c)(1)(C)'s requirement of a mistake, "`by its express language, appears not to be relevant when adding a plaintiff.'" Id. (quoting In re Simon II Litig., 211 F.R.D. 86, 145 (E.D.N.Y.2002) (Weinstein, J.), order confirmed (Oct. 15, 2002), vacated & remanded on other grounds, 407 F.3d 125 (2d Cir.2005)); see Beach v. Citigroup Alternative Invs. LLC, No. 12 Civ. 7717(PKC), 2014 WL 904650, at *19 (S.D.N.Y. Mar. 7, 2014) ("In this Circuit, courts have rejected the `mistake' requirement when adding new named plaintiffs in a class action and focus on whether the new plaintiffs claims were reasonably foreseeable and whether their addition would prejudice the defendants."); Bensinger v. Denbury Res. Inc., No. 10 Civ. 1917(JG), 2013 WL 3353975, at *45 (E.D.N.Y. July 3, 2013) (citing In re Simon II Litig.; holding that "`mistake' need not be shown in this context, as Rule 15(c) extends to plaintiffs as long as defendants had reasonable notice of the existence of the proper party"); Perkins, 2009 WL 3754097, at *4 (collecting cases in which courts in this Circuit "have rejected the mistake requirement [in Rule 15(c)(1)(C)(ii)] when amendments seek to
In line with Second Circuit precedent and the Advisory Committee's notes on Rule 15, this Court will apply Rule 15(c)(1)(C) to the Named Plaintiffs' proposed amendments, but even were the Court to decline to apply Rule 14(c)(1)(C) in the present circumstances, the result would be the same due to the Named Plaintiffs' failure to meet the requirements of subsections Fed.R.Civ.P. 15(c)(1)(A) or Fed.R.Civ.P. 15(c)(1)(B).
As to Rule 15(c)(1)(C)'s first requirement that "Rule 15(c)(1)(B) is satisfied," the Named Plaintiffs have not met their burden under Rule 15(c)(1)(B), for the reasons discussed above. Fed.R.Civ.P. 15(c)(1)(C); see supra, Section II.D.1. This alone warrants denying relation back under Rule 15(c)(1)(C). Even assuming arguendo that the Named Plaintiffs satisfied Rule 15(c)(1)(B), they would not be able to demonstrate that both the notice requirement of Rule 15(c)(1)(C)(i) and the mistake requirement of Rule 15(c)(1)(C)(ii) were met "within the period provided by Rule 4(m)," which ended on January 9, 2013, or 120 days after the filing of the Complaint. Fed.R.Civ.P. 15(c)(1)(C)(i)-(ii).
The Court will first address the mistake requirement of Rule 15(c)(1)(C)(ii), then the notice requirement of Rule 15(c)(1)(C)(i). As the Supreme Court stated in the context of amending to add a defendant,
Krupski, 560 U.S. at 550, 130 S.Ct. 2485; see Nelson v. Cnty. of Allegheny, 60 F.3d 1010, 1015 (3d Cir.1995) (the relation back rule "does not save the claims of complainants who have sat on their rights" or who "seek to take advantage of the rule to perform an end-run around the statute of limitations that bars their claims"). In Krupski, the Supreme Court made clear that in the context of an amendment to add a defendant, the relevant inquiry is not whether the plaintiff made a mistake, but whether the defendant "knew or should have known that it would have been named as a defendant but for an error." Krupski, 560 U.S. at 548, 130 S.Ct. 2485. In addition, a plaintiff's lack of knowledge of a party's identity is not sufficient to establish a mistake. See Barrow, 66 F.3d at 470; cf. Hogan v. Fischer, 738 F.3d 509, 517 (2d Cir.2013) ("This Circuit has interpreted the rule to preclude relation back for amended complaints that add new defendants, where the newly added defendants were not named originally because the plaintiff did not know their identities.").
Applying the same reasoning to the current motion seeking to add plaintiffs, the record before the Court does not contain any suggestion that Ecolab was aware of a mistake concerning the proper plaintiffs' identities. Instead, it appears the Named Plaintiffs themselves were not aware of the Proposed Named Plaintiffs at the time of the original Complaint. Although the Named Plaintiffs were aware that Ecolab was a nationwide company, they appear to have made a strategic decision to file their
Rule 15(c)(1)(C)(i) requires that the defendant "received such notice of the action that it will not be prejudiced in defending on the merits." Fed.R.Civ.P. 15(c)(1)(C)(i). Thus, Rule 15(c)(1)(C)(i) requires that notice be both timely and sufficient to address any prejudice that might have resulted by the delay in naming the additional party. See S.A.R.L. Galerie Enrico Navarra v. Marlborough Gallery, Inc., No. 10 Civ. 7547(KMW)(RLE), 2013 WL 1234937, at *5 (S.D.N.Y. Mar. 26, 2013), reconsideration denied, No. 10 Civ. 7547(KMW)(RLE), 2013 WL 5677045 (S.D.N.Y. Oct. 18, 2013). Both Rules 15(c)(1)(B) and (C)(i) require that the defendant receive proper notice; (C)(i) also requires that such notice occur within the time period proscribed by Rule 4(m), which is "120 days after the complaint is filed." Fed.R.Civ.P. 4(m). In this case, 120 days after the filing of the September 11, 2012 Complaint is January 9, 2013. Additionally, courts in this Circuit have "generally held that Rule 15(c) [(1)(C)(i)] is satisfied where the original party and added party have a close identity of interests." Id. (citing and quoting In re Integrated Res. Real Estate Ltd. P'ships Sec. Litig., 815 F.Supp. 620, 645 (S.D.N.Y. 1993)); see 6A Fed. Prac. & Proc. Civ. § 1501 (3d ed.) (concdrning amendments to add plaintiffs, "[r]elation back thus will be permitted unless the court finds that defendant did not have adequate notice or that the new and the existing plaintiffs did not share a sufficient identity of interest.").
Here, the Court need not determine the extent to which the notice provisions of Rule 15(c)(1)(B) and Rule 15(c)(1)(C)(i) differ in any respect other than subsection (C)(i)'s 120-day deadline, as the Court has already determined that the Named Plaintiffs did not satisfy subsection (B)—the satisfaction of which is itself a requirement of subsection (C). Nevertheless, at least one court has suggested that Rule 15(c)(1)(C)(i) sets a higher standard for notice in circumstances such as the ones presented here. The court in Andujar reasoned that where the proposed amendment involves additional plaintiffs without "a strict identity of interests," such as "a new plaintiff who makes a distinct or aggregate claim [ ], Rule 15(c) demands some kind of notice of the new party and its claim beyond notice, afforded by institution of the original suit, of the transaction or occurrence out of which the claim arises." Andujar, 113 F.R.D. at 156 (allowing the relation back of new plaintiffs' claims that were identical to the original claims). Otherwise, the notice requirement under Rule 15(c)(1)(C)(i) would be duplicitous of Rule 15(c)(1)(B). Furthermore, the court in Andujar considered that:
Id. at 156 (quoting Leachman v. Beech Aircraft Corp., 694 F.2d 1301, 1309 (D.C.Cir.1982)); see Asher, 596 F.3d at 319 (the plaintiffs could not "circumvent the statute of limitations, adding new parties and new claims," notwithstanding that the claims concerned the same events); Young v. Lepone, 305 F.3d 1, 15-16 (1st Cir.2002) ("flatly reject[ing] the proposition that relation back is available merely because a new plaintiffs claims arise from the same transaction or occurrence as the original plaintiffs claims" and "repudiat[ing] the conceit that an action filed by one plaintiff gives a defendant notice of the impending joinder of any or all similarly situated plaintiffs," as "[s]uch a rule would undermine applicable statutes of limitations and make a mockery of the promise of repose"); Sturm v. CB Transp., Inc., 943 F.Supp.2d 1102, 1123 (D.Idaho 2013) (in an FLSA action that did not involve a collective action, denying relation back of the newly added plaintiffs' FLSA claims where the original plaintiffs "could have been more diligent in seeking out additional individuals" to join the action from the out-set; "[i]ndividuals should not be permitted to wait on the sidelines and sit on their hands, and later benefit from doing so"); Kahn v. Chase Manhatan Bank, N.A., No. 90 Civ. 2824(LMM), 1995 WL 491067, at *3 (S.D.N.Y. Aug. 17, 1995) ("The spirit and the letter of statutes of limitations require the [c]ourt to recognize a defendant's interest in foreclosing claims by additional plaintiffs arising out of identical but separate acts.").
In this case, the Named Plaintiffs failed to satisfy Rule 15(c)(1)(B), see supra Section II.D.1, let alone any heightened notice requirement that would differentiate Rule 15(c)(1)(C)(i) from subsection (B); in addition, the Named Plaintiffs have not shown that such notice was provided within 120 days. In other words, the Named Plaintiffs have not demonstrated that, as of January 9, 2013, Ecolab "received such notice of the action that it will not be prejudiced in defending on the merits." Fed.R.Civ.P. 15(c)(1)(C)(i). Indeed, the Proposed Named Plaintiffs filed their Consent to Sue forms several months to over a year after this deadline. See Consent to Sue Forms, ECF Nos. 46-2, 83-1, 91-1, 95-2. Any identity of interests is further undermined by the fact that none of the Named Plaintiffs could have brought the proposed state law claims. See Palmer v. Stassinos, 236 F.R.D. 460, 466 (N.D.Cal. 2006) (there was no identity of interests for purposes of relation back where the newly added plaintiffs brought a state law claim that the original plaintiffs had no standing to bring). Thus, the concern raised in Andujar, 113 F.R.D. at 156, as to strangers in a multi-victim incident benefiting from the efforts of more diligent plaintiffs is present in this case. Rather than begin this litigation with all of the intended named plaintiffs, the Named Plaintiffs seek to piggyback the tardy claims of the Potential Named Plaintiffs onto their timely claims, even where the statute of limitations has lapsed. Additionally, Ecolab would be prejudiced because it would be called on to defend claims dating as far back as 2002, when the FLSA claims in the original Complaint dated back only as far as 2009. Therefore, the Named Plaintiffs have not demonstrated notice and lack of prejudice within the meaning of subsection (C)(i).
In summary, the Named Plaintiffs have not established that relation back is appropriate under either part of Rule 15(c)(1)(C), when both parts are required.
For the foregoing reasons, this Court respectfully recommends that the Named
Written objections to this Report and Recommendation must be filed with the Clerk of Court in accordance with the Individual Rules of the District Judge within fourteen days of service of this report. 28 U.S.C. § 636(b)(1); Fed. R. Civ. Proc. 72(b). Failure to file objections within the specified time waives the right to appeal any order or judgment entered based on this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. Proc. 72(b); see Caidor v. Onondaga Cnty., 517 F.3d 601, 604 (2d Cir.2008).
Filed Dec. 12, 2014.
The court finds, as it has previously, that the proper classification as dispositive or non-dispositive of a motion for leave to file an amended complaint is not settled within the Second Circuit. See Louis v. Metro. Transit Auth., No. 12-CV-6333, 2014 WL 5311455, at *1 (E.D.N.Y. Oct. 16, 2014) (noting that the Second Circuit has referred to a motion to amend as a non-dispositive matter, but has not explicitly decided the issue, and that district courts in this circuit have suggested that a magistrate judge's denial of a motion to amend a complaint should be treated as dispositive, while a grant of the same motion should be treated as non-dispositive); Allen v. United Parcel Serv., Inc., 988 F.Supp.2d 293, 297 (E.D.N.Y.2013) (noting that authority is divided about whether a motion to amend a complaint is a dispositive or non-dispositive matter and declining to take a position where court would adopt the R & R under either standard); Dollar Phone Corp. v. St. Paul Fire, No. 09-CV-1640, 2011 WL 837793, at *1 (E.D.N.Y. Mar. 4, 2011) ("The proper standard of review to apply to objections to a magistrate's order denying leave to amend is not clearly settled in this Circuit."). Under both a de novo or clearly erroneous standard of review, this court would adopt the ruling of Judge Scanlon. Accordingly, in the discussion that follows, plaintiffs' objections are considered timely and this court shall apply, without deciding, a de novo standard of review to the Plaintiffs' specific objections to Judge Scanlon's Report and Recommendation.
Defendant's citation to Harris v. Seyfarth Shaw LLP, No. 09 Civ. 3795(EEB), 2010 WL 3701322, at *2-3, 2010 U.S. Dist. LEXIS 93911, at *6 (N.D.I11. Sept. 9, 2010), is inapposite. Def. Mem. 11. In Harris, the court issued rulings relevant to an opt-in class settlement, including that "because [the plaintiff] was misclassified as exempt and was paid a fixed weekly amount regardless of the number of hours she actually worked, there is no reason to think that she had any agreement with [the defendant] that she would be paid at a particularly hourly rate for weeks in which she worked fewer than forty hours." Id. The court in Harris made determinations about the terms of plaintiff's employment that would be premature in this case, on a motion to amend.
The Named Plaintiffs applied a date of September 11, 2002 to the Illinois class, consistent with the ten-year statute of limitations applicable to the Illinois Wage Payment and Collection Act, see 735 Ill. Comp. Stat. § 5/13-206; Am. Compl. Tr 80, although the statute of limitations under the Illinois Minimum Wage Law is three years, 820 Ill. Comp. Stat. 105/12(a).
The Named Plaintiffs applied a date of November 18, 2009 to the Washington class, which is 2 years, 9 months and 24 days before the filing of the Complaint. Am. Compl. ¶ 91. The Named Plaintiffs do not explain this choice of date, but it is within the three-year statute of limitations applicable to the Washington Minimum Wage Act, see Seattle Profl Eng'g Employees Ass'n v. Boeing Co., 139 Wn.2d 824, 837, 991 P.2d 1126, 1133 (2000) ("the three-year statute of limitations of RCW 4.16.080(3) applies to WMWA claims"), opinion corrected on denial of reconsideration, 1 P.3d 578 (2000), and the Washington Industrial Welfare Act, see Walsh v. Health Mgmt. Assocs., Inc., No. 11 Civ. 3125(TOR), 2012 WL 1424411, at *7 (E.D.Wash. Apr. 23, 2012). The reasoning in Seattle Professional would suggest that a three-year statute of limitations also applies to the Washington Wage Rebate Act. Id.
Finally, the Named Plaintiffs applied a date of September 11, 2010 to the North Carolina class, which is consistent with the two-year statute of limitations applicable to the North Carolina Wage-and-Hour Act. See N.C. Gen. Stat. Ann. § 95-25.22(f); Am. Compl. ¶ 91.
In addition, the Named Plaintiffs rely on Cancilla, Pls. Mem. 11, another litigation involving Ecolab as the defendant, in which the plaintiffs were allowed to add state law wageand-hour claims, using time periods that relied on relation back. The decision in Cancilla is reflected in a Minute Order rather than in a memorandum and order, Cancilla v. Ecolab, No. 12 Civ. 3001 (N.D.Cal. Mar. 21, 2014) (Minute Entry, ECF No. 118), so it is unclear whether that court considered the factors relevant in this Circuit, including fair notice. In addition, the plaintiffs in Cancilla argued that the amendments would have been made earlier but for the litigation schedule requested by Ecolab, see Cancilla, No. 12 Civ. 3001 (N.D.Cal. Feb. 25, 2014) (plaintiff's reply memorandum of law; ECF No. 113), a circumstance which is not at issue in this case. In any event, the Cancilla and American Family decisions are not binding on this Court.
735 Ill. Comp. Stat. § 5/2-616(d). This provision was amended in 2002 "to bring the section into line with the Federal Rules of Civil Procedure," Carr v. City of Chicago Police Dep't, No. 09 Civ. 1623(CRN), 2011 WL 3793416, at *4 (N.D.Ill. Aug. 22, 2011). As discussed infra, Section II.D.3.a, the federal rule concerning relation back of new defendants' claims, Fed.R.Civ.P. 15(c)(1)(C), also applies to new plaintiffs' claims. Nevertheless, Illinois courts do not apply 735 Ill. Comp. Stat. § 5/2-616(d) to the relation back of new plaintiffs' claims. See Albany Park Service, 209 Ill.App.3d at 435, 154 Ill.Dec. 230, 568 N.E.2d at 232.
3 Moore's Federal Practice § 15App.07 (Text of 1993 Amendment to Rule 15). "[P]rovision (2)" refers to what is now Rule 15(c)(1)(B). Id.
