Flinn v. C Pepper Logistics LLC
2:20-cv-02215
| D. Kan. | Jan 8, 2021Background
- Plaintiff David Flinn (putative class) alleges C Pepper Logistics and Lanter Delivery Systems are joint employers who misclassified overnight delivery drivers as independent contractors.
- Flinn asserts two claims: (1) willful filing of fraudulent information returns under 26 U.S.C. § 7434 (1099s instead of W-2s), and (2) violations of state wage laws based on unlawful deductions and wage treatment.
- Facts alleged in the proposed Second Amended Complaint: Lanter exercised extensive direction and control over C Pepper (shared HQ, directed accounting/payroll, arranged/guaranteed truck leases, assigned a financial analyst), drivers worked out of Lanter distribution centers and used Lanter fuel cards later charged back on paystubs.
- The First Amended Complaint alleged C Pepper filed the 1099s; the proposed amendment sought to attribute the filings generically to all Defendants and add James Pepper as a defendant.
- Procedural posture: Lanter moved to dismiss the First Amended Complaint. Flinn moved for leave to file a Second Amended Complaint. The court denied amendment as to Count I (tax/fraud) as futile, granted amendment as to Count II (wage claims), and denied Lanter’s motion to dismiss as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Motion for leave to amend — undue delay/prejudice | Flinn sought to add defendants/facts after briefing to cure defects | Lanter argued Flinn delayed and prejudiced defense by waiting until after briefing | Court declined to deny leave for delay; no scheduling deadline, liberal Rule 15 standard applies |
| Scope and pleading of § 7434 claim (who can be liable) | Flinn: Defendants jointly liable; proposed complaint alleges all Defendants issued 1099s | Lanter: Only the filer can be liable; pleading fails to attribute filings to Lanter; Rule 9(b) requires particularity | Court: §7434 can reach persons who willfully cause fraudulent returns to be filed, not strictly limited to regulatory "filers," but Flinn failed to plead with particularity Lanter’s role in preparing/causing the 1099s; amendment as to Count I denied as futile |
| Wage claim — joint employer status under state wage laws | Flinn: Alleged sufficient control by Lanter (shared HQ, control of payroll/accounting, route/operations control, fuel cards/chargebacks) to support joint employment | Lanter: Allegations lump defendants and lack facts attributing conduct or control to Lanter | Court: Under Kansas 20-factor test and Illinois joint-employer test, allegations plausibly support employment relationship; leave to amend Count II granted |
| Lanter’s motion to dismiss First Amended Complaint | N/A (motion targeted prior pleading) | N/A | Denied as moot because court resolved leave to amend motion |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard; courts need not accept legal conclusions)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must state plausible claim)
- Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174 (12(b)(6) standard explained)
- Sinclair Wyo. Ref. Co. v. U.S. Env't Prot. Agency, 887 F.3d 986 (statutory interpretation begins with text/context)
- Thomas v. Metro. Life Ins. Co., 631 F.3d 1153 (use of context in statutory construction)
- United States v. Ron Pair Enters., Inc., 489 U.S. 235 (plain meaning controls statutory interpretation)
- Atl. Cleaners & Dyers v. United States, 286 U.S. 427 (similar words in different statutory contexts may have different meanings)
- Craig v. FedEx Ground Package Sys., Inc., 335 P.3d 66 (Kansas 20-factor economic-reality test for employment relationship)
- Keller Tank Servs. II, Inc. v. Comm'r, 854 F.3d 1178 (statutory interpretation principles)