ASHANTE CHARLES, individually and on behalf of all others similarly situated v. UNITED STATES OF ARITZIA INC.
23-CV-09389 (MMG)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
September 12, 2024
MARGARET M. GARNETT, United States District Judge
Case 1:23-cv-09389-MMG Document 26 Filed 09/12/24
OPINION & ORDER
MARGARET M. GARNETT, United States District Judge:
Plaintiff Ashante Charles (“Plaintiff” or “Charles“) initiated the above-captioned action to recover damages for allegedly delinquent wage payments made to her and similarly situated employees of Defendant United States of Aritzia Inc. (“Defendant” or “Aritzia“) who qualify as manual workers pursuant to New York Labor Law (“NYLL“) Article 6
Before the Court is Defendant‘s motion to dismiss pursuant to
Defendant Aritzia is a Delaware corporation with its principal place of business in Vancouver, Canada, that owns and operates multiple retail establishments, and employs “in excess of hundreds of employees.” Dkt. No. 4 at ¶¶ 4, 13, 16. Plaintiff Charles alleges that between September 2019 and March 2020 she was a non-exempt, hourly employee at several Aritzia locations, two of which are located in Manhattan. Id. at ¶ 7. According to Plaintiff, more than 25% of her job duties comprised physical tasks, such as “stocking shelves, moving inventory, receiving, unpacking, organizing, storing, packaging, and labeling merchandise, and generally remaining on her feet for the entirety of her shift.” Id. at ¶ 8.2
It is undisputed that Defendant paid Plaintiff on a bi-weekly schedule, instead of a weekly schedule, without authorization from the New York State Department of Labor Commissioner. Id. at ¶ 3; see also Dkt. No. 16 at 1. Plaintiff alleges that the bi-weekly payments prevented her and her putative class members from “spending money earned on a bevy of everyday expenses and to provide for their basic needs, including but not limited to, purchasing food and groceries, making rent or mortgage payments, settling bills for utilities, medical supplies and services, insurance, automobile payments, and other basic living expenses.” Dkt. No. 4 at ¶ 11. The delayed payments caused her to “los[e] the time value of that money” because she “could not save, invest, earn interest on, or otherwise use these monies that were rightfully hers.” Id. at ¶¶ 9.
Defendant moves to dismiss Plaintiff‘s FAC and strike the class allegations therein under
I. Plaintiff Has Article III Standing
To satisfy the Article III injury-in-fact requirement, “a plaintiff must show (1) it has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Friends of the Earth, Inc. v. Laidlaw Environ. Serv.‘s, 528 U.S. 167, 180-81 (2000) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). Certain harms “readily qualify as concrete injuries under Article III,” including “traditional tangible harms, such as physical harms and monetary harms.” TransUnion LLC v. Ramirez, 594 U.S. 413, 425 (2021). The Supreme Court has rejected the proposition that “a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right. Article III standing requires a concrete injury even in the context of a statutory violation.” Spokeo, Inc. v. Robins, 578 U.S. 330, 341 (2016); see also TransUnion, 594 U.S. at 426.
Plaintiff‘s stated injury is that Defendant‘s bi-weekly payment structure violated her right, under Section 191, to receive payment weekly and deprived her of the time value of money which she was owed. Dkt. No. 4 at ¶¶ 9-12. This is an injury that courts throughout the Second Circuit have recognized as sufficient to establish standing. See, e.g., Zachary v. BG Retail, LLC, 22-cv-10521 (VB), 2024 WL 554174, at *3 (S.D.N.Y. Feb. 12, 2024) (“Courts in this Circuit have commonly held that the temporary deprivation of money to which a plaintiff has a right constitutes a sufficient injury in fact to establish Article III standing.” (internal references omitted)); Rankine v. Levi Strauss & Co., 674 F. Supp. 3d 57, 63-64 (S.D.N.Y. 2023) (collecting cases); Levy v. Endeavor Air Inc., 638 F. Supp. 3d 324, 330 (E.D.N.Y. 2022) (“Plaintiffs’ claim that Endeavor‘s deprivation of the time value of their wages was in violation of New York statutory law is enough to establish Article III standing.“). Even though Plaintiff does not dispute that she received the full amount of wages she was owed, the “delay of payment, in and of itself, constitutes a concrete harm that suffices for purposes of Article III.” Gillett v. Zara USA, Inc., 20-cv-03734 (KPF), 2022 WL 3285275, at *6 (S.D.N.Y. Aug. 10, 2022).
Defendant‘s second argument combines injury-in-fact with redressability, claiming that Plaintiff has “no injury that could be remedied in this suit.” Dkt. No. 16 at 16. According to Defendant, Plaintiff “seeks to recover a penalty in the form of liquidated damages,” but because she is not “due” any wages, her liquidated damages award would be $0. Id. The amount of
Defendant‘s motion to dismiss for lack of standing is denied.
II. The First Amended Complaint States a Claim
a. Legal Standard on a Motion to Dismiss
In order to survive a motion to dismiss under
When ruling on a
b. Section 191 of New York Labor Law
Here, the Defendant‘s motion to dismiss under
Defendant argues that Plaintiff‘s claim must be dismissed because neither Section 191 nor Section 198(1-a) confer an express or implied private right of action upon employees, like Plaintiff, to sue their employers for pay frequency violations. Dkt. No. 16 at 1. Plaintiff, on the other hand, argues that Sections 191 and 198(1-a) contain both an express and implied private right of action. Dkt. No. 18 at 7-9. Which of these positions is correct is a question of New York state law. Federal courts applying state law “are generally obliged to follow the state law decisions of state intermediate appellate courts.” Broder v. Cablevisions Sys. Corp., 418 F.3d 187, 199-200 (2d Cir. 2005) (quoting Pentech Int‘l, Inc. v. Wall St. Clearing Co., 983 F.2d 441, 445 (2d Cir. 1993)).
In Vega v. CM & Associates Construction Management, LLC, the First Department held that Section 191 and 198(1-a) confer both an express and implied private right for employees to sue their employer for pay frequency violations. 107 N.Y.S.3d 286, 288-89 (1st Dep‘t 2019). According to Vega, “the term underpayment [within Section 198(1-a)] encompasses the instances where an employer violates the frequency requirements of section 191(1)(a) but pays all wages due before the commencement of an action,” thus permitting express private rights of action for violations of Section 191. Id. at 288. The Vega court continued that even if there were no express right of action, one could be implied because doing so would be consistent with the legislative scheme, promotes the legislative purpose of “protect[ing] workers who are generally dependent upon their wages for sustenance,” and the plaintiff in Vega was a member of the class-manual workers—for whose benefit the statute was enacted. Id. at 289 (internal references omitted).
Vega and Grant have created a split in authority within New York‘s intermediate appellate courts with respect to whether Section 191 and Section 198 confer an express or implied private right of action. The New York Court of Appeals has not yet addressed the issue. Thus, the Court must attempt to predict “how the Court of Appeals would rule[.]” Michalski, 225 F.3d at 113, 116.
c. Sections 191 and 198(1-a) Contain a Private Right of Action
After considering Vega and Grant, in addition to the cases applying each decision, this Court finds the reasoning of Vega more persuasive than that of Grant, and predicts that the New York Court of Appeals is more likely to adopt Vega. This is the same conclusion reached by the majority of district courts in our Circuit that have confronted the split in authority in the months since Grant was decided. See, e.g., Covington v. Childtime Childcare, Inc. et al., 23-cv-00710 (BKS/MJK), 2024 WL 2923702, at *4 (N.D.N.Y. June 10, 2024) (“District courts sitting in this
i. Express Private Right of Action
As to an express private right of action, Section 198(1-a) contains an express right of action for “wage claim[s],” including “underpayment[s],” that occur in violation of Article 6, and expressly permits these actions to be brought “by an employee[.]”
Thus, if a manual worker is not paid on the date required by Section 191(1)(a), he or she is underpaid and expressly authorized under Section 198 to bring a “wage claim[]” for the “underpayment” that occurred in violation of Section 191, even if the full earned wages are eventually paid. See e.g., Levy, 2024 WL 1422322, at *2; Zachary, 2024 WL 554174, at *7-8; Bazinett, 2024 WL 1116287, at *9. Accordingly, the Court finds that Sections 191 and 198(1-a) contain an express private right of action permitting employees to sue employers for pay frequency violations. Defendant‘s motion to dismiss on this basis is denied.
ii. Implied Private Right of Action
Moreover, even if there was not an express private right of action, the Court adopts the reasoning of Vega and Zachary that a private right of action for untimely wage payments can be implied from Sections 191 and 198(1-a). Under New York law, three elements must be satisfied to find that there is an implied private right of action in a particular statute: ““(1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme[.]“” Ortiz v. Ciox Health LLC, 37 N.Y.3d 353, 360 (2021) (quoting Sheehy v. Big Flats Cmty. Day, 73 N.Y.2d 629, 633 (1989)).
plaintiff is a ‘manual worker’ as defined by the statute, and allowing her to bring suit would promote the legislative purpose of § 191, which is to protect workers who are generally dependent upon their wages for sustenance[,] and § 198, which was enacted to deter abuses and violations of the labor laws. It would also be consistent with the legislative scheme, as section 198 explicitly provides that individuals may bring suit against an employer for violations of the labor laws, even if the Commissioner chooses not to do so.
107 N.Y.S.3d at 289 (quotations and citations omitted).
Grant, on the other hand, held that Sections 191 and 198 did not confer an implied right of action allowing employees to sue for pay frequency violations. 204 N.Y.S.3d at 125. The Grant court did not dispute the first two elements of the implied right test, but only analyzed the third element in reaching this conclusion. See id.; see also Zachary, 2024 WL 554174, at *8 (noting that “[t]he Grant majority did not dispute that the first and second factor were satisfied when an employee is paid twice monthly in violation of Section 191“). Grant drew support from the New York Court of Appeals decision in Konkur v. Utica Academy of Science Charter School in concluding that a private right of action would be inconsistent with the legislative scheme of Section 198(1-a). Grant, 204 N.Y.S.3d at 125 (citing Konkur, 38 N.Y.3d at 43). Konkur held that the New York Labor Law‘s anti-kickback statute, which is wholly separate from the pay frequency statute at issue in this case (and Vega and Grant), did not contain an implied private right of action. 38 N.Y.3d at 44-45. Importantly, Konkur distinguished the anti-kickback provision from “the substantive provisions of Labor Law article 6[,]” and Section 191 in particular, which “generally regulates payment of wages by employers and creates reciprocal rights of employees.” Id. at 44 (citations omitted); see also Zachary, 2024 WL 554174, at *7.
The clear weight of authority among district courts in the Second Circuit is aligned with the conclusion in Vega that there is an implied private right of action to enforce Section 191. The Court agrees that Vega‘s analysis of the three Sheehy factors is persuasive. Accordingly, Defendant‘s motion to dismiss on this basis is denied as well.
III. Defendant‘s Motion to Strike Class Allegations is Premature
Finally, Defendant argues that Plaintiff‘s class allegations should be stricken from her FAC pursuant to
A “fail-safe” class is a class “whose definition shields the putative class members from receiving an adverse judgment” because “the class itself is defined in a way that precludes membership unless the liability of the defendant is established.” Mazzei v. Money Store, 288 F.R.D. 45, 55 (S.D.N.Y. 2012) (references omitted). Courts faced with a putative fail-safe class have “broad discretion to modify the class definition as appropriate.” In re LIBOR-Based Fin. Instruments Antitrust Litig., 299 F. Supp. 3d 430, 463-64 (S.D.N.Y. Feb. 28, 2018) (citation omitted).
Here, Defendant claims that Plaintiff‘s putative class is an “impermissible fail-safe class” and Plaintiff‘s class allegations should be stricken. Dkt. No. 16 at 17; Dkt. No. 21 at 6-7. According to Defendant, the question of whether Defendant‘s employees performed physical tasks for more than 25% of their workdays “requires a fact-intensive inquiry into the actual duties performed by the specific employee, which goes to the very issue of liability.” Dkt. No. 16 at 17-18. Plaintiff argues that the Court should not strike her class allegations at this stage because Defendant‘s motion to strike is “premature and will remain so until the parties reach the class certification phase.” Dkt. No. 18 at 9.
Defendant is incorrect. Its liability for purposes of the Section 191 Claim turns on whether defendant timely paid its manual workers. Conversely, whether a particular employee is a manual worker because physical tasks comprise at least twenty-five percent of their duties bears on whether the putative class satisfies the commonality and predominance requirements of Rule 23. Fed. R. Civ. P. 23(a)(2), (b)(3). Therefore, the motion to strike is procedurally premature because it is based on grounds that are not “separate and apart from the issues that will be decided on a class certification motion.” See Chen-Oster v. Goldman, Sachs & Co., 877 F. Supp. 2d 113, 117 (S.D.N.Y. 2012). Moreover, at this time, defendant has not demonstrated “it would be impossible to certify the alleged class regardless of the facts Plaintiffs may be able to obtain during discovery.” Mayfield v. Asta Funding, Inc., 95 F. Supp. 3d 685, 696 (S.D.N.Y. 2015).
Id.
The same is true here. The issues presented in Defendant‘s motion to strike pursuant to Rule 12(f), including whether the Rule 23 requirements are met, are more properly considered at the class certification stage, at which time the Court will have “a more complete factual record from which to make its determination.” Greene v. Gerber Prods. Co., 262 F. Supp. 3d 38, 53 (E.D.N.Y. 2017). Defendant‘s motion to strike Plaintiff‘s class allegations pursuant to Rule 12(f) is denied.
For the reasons explained above, Defendant United States of Aritzia‘s motion to dismiss is DENIED. The Clerk of Court is directed to terminate Dkt. No. 15.
Dated: September 12, 2024
New York, New York
SO ORDERED.
MARGARET M. GARNETT
United States District Judge