Martinez v. Petrenko
792 F.3d 173
| 1st Cir. | 2015Background
- Martinez worked for Ice Code LLC (startup) as COO under an executive agreement promising salary; he was underpaid and later granted 10,000 equity units as partial compensation.
- Ice Code faced serious cash-flow problems, lost its Dartmouth license, and effectively ceased; Petrenko (founder/board member) was involved in alternative "Plan B" to transfer the technology to a new entity.
- Martinez sued Petrenko alleging unpaid overtime under the FLSA and several New Hampshire state-law claims; Ice Code was dismissed and Petrenko remained the sole defendant.
- The complaint pleaded only enterprise FLSA coverage, alleging Ice Code’s annual gross volume exceeded $500,000 (including investments); defendant moved to dismiss for failure to plausibly plead coverage.
- District court denied dismissal, parties conducted discovery, and defendant later moved for summary judgment showing Ice Code’s non-investment sales were below $500,000; Martinez then attempted to rely on individual coverage (his own interstate activities) for the first time.
- District court granted summary judgment on the FLSA claim because Martinez had not pleaded individual coverage or sought timely amendment; it also granted summary judgment against Martinez on state-law claims for failure to establish veil-piercing. This appeal was affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint sufficiently alleged FLSA coverage | Martinez contended the complaint's allegation that Ice Code was a "covered employer" put defendant on notice and could include individual coverage | Petrenko argued the complaint pleaded only enterprise coverage (relied on AGV) and did not plead individual coverage facts | Court held conclusory enterprise allegation did not fairly notify defendant of individual-coverage theory; pleading insufficient |
| Whether plaintiff could rely on new individual-coverage theory at summary judgment without amending pleadings | Martinez argued he could rely on individual-coverage facts developed in discovery and affidavits | Petrenko argued the theory was new and unpleaded; amendment deadline had passed and no good cause shown | Court held Martinez could not raise a new, unadvertised theory at summary judgment; amendment would have been untimely and prejudicial |
| Whether veil-piercing under NH law permits insider (one director) to recover from another director | Martinez relied on alleged misrepresentations re: equity value and nondisclosure of Plan B to justify piercing the LLC veil | Petrenko argued no evidence he used corporate form to perpetrate fraud or remove assets; veil-piercing unavailable on facts | Court affirmed summary judgment: Martinez failed to show use of corporate form to promote injustice or fraud; no factual basis to pierce veil |
Key Cases Cited
- Chao v. Hotel Oasis, Inc., 493 F.3d 26 (1st Cir. 2007) (coverage is an element of an FLSA claim)
- Manning v. Boston Med. Ctr. Corp., 725 F.3d 34 (1st Cir. 2013) (complaint must plead facts showing entitlement to relief; interstate activity is a basic element for FLSA)
- Bacou Dalloz USA, Inc. v. Continental Polymers, Inc., 344 F.3d 22 (1st Cir. 2003) (district court may consider full record at summary judgment but need not hunt for unpleaded theories)
- Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315 (1st Cir. 2008) (denial of leave to amend after scheduling-order deadline affirmed where plaintiff offered no good cause)
- Torres-Rios v. LPS Labs., Inc., 152 F.3d 11 (1st Cir. 1998) (party may not present a new theory at summary judgment that was not part of the complaint and would prejudice defendant)