This is an appeal from an order by the United States District Court for the Southern District of New York dismissing the complaint in each of four cases:
Nakahata v. New York-Presbyterian Healthcare System, Inc.,
No. 10 Civ. 2661;
Yarus v. New York City Health and Hospitals Corp.,
No. 10 Civ. 2662;
Megginson v. Westchester Medical Center,
No. 10 Civ. 2683; and
Alamu v. The Bronx-Lebanon Hospital Center, Inc.,
No. 10 Civ. 3247.
Nakahata v. New York-Presbyterian Healthcare Sys., Inc.,
We affirm in part the District Court’s decision and remand in part. We affirm the dismissal, with prejudice, of the FLSA gap-time, RICO, and certain common law claims. We also affirm the dismissal of the FLSA and NYLL overtime claims, but we remand these claims with leave to re-plead. We reserve judgment on the dismissal of the NYLL gap-time claims and remand for reconsideration. Finally, we vacate the dismissal of certain common law claims and remand with leave to replead.
BACKGROUND
The four cases before us on appeal are but a few among many such actions brought by a single law firm, Thomas
&
The parties are healthcare workers, on behalf of a putative class, and their alleged employers. The named Plaintiffs, identified only as “employees” or “employees of the defendants,” are Masahiro Nakahata and Diana Gardocki, Nakahata 2d Am. Compl. ¶ 62; Patricia Megginson, Megginson Am. Compl. ¶ 61; Olusola Ala-mu and Jаcqueline Cooper-Davis, Alamu Am. Compl. ¶ 64; and Jonathan Yarus and Mohamed Ali, Yarus Am. Compl. ¶ 52. Plaintiffs filed their suits as putative collective and class actions on behalf of “those employees of defendants who were suffered or permitted to work by defendants and not paid their regular or statutorily required rate of pay for all hours worked.” Alamu Am. Compl. ¶ 65; Megginson Am. Compl. ¶ 62; Nakahata 2d Am. Compl. ¶ 63; Yarus Am. Compl. ¶ 53. The Defendants named in the complaints include corporate healthcare systems, individual hospitals in those systems, persons in corporate leadership roles, and affiliated healthcare facilities. 2
Plаintiffs allege that it is Defendants’ policy not to pay employees for all hours worked, including some overtime hours. In particular, Plaintiffs allege: (1) Defendants have a policy of automatically deducting time for meal breaks from employees’ paychecks despite consistently requiring employees to work during meal breaks; (2) employees engage in work activities both before and after their shift without compensation; and (3) Defen
Defendants moved the District Court to dismiss the complaint in each case for failure to state a claim. The District Court, observing that all four complaints “contain[ed] strikingly similar allegations and deficiencies,”
Nakahata I,
JURISDICTION & STANDARD OF REVIEW
The District Court had original jurisdiction over Plaintiffs’ FLSA and RICO claims pursuant to 28 U.S.C. § 1331 (2006). See 29 U.S.C. § 216(b) (2006) (creating a civil right of action for violation of the FLSA); 18 U.S.C. § 1964(c) (2006) (creating a civil right of action for violation of RICO). The District Court had supplemental jurisdiction over the NYLL and common law claims pursuant to 28 U.S.C. § 1367. We have jurisdiction over the appeal pursuant to 28 U.S.C. § 1291.
We review a dismissal for failure to state a claim
de novo. Harris v. Mills,
A well-pled complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ”
Ashcroft v. Iqbal,
Allegations of fraud are subject to a heightened pleading standard. When alleging fraud, “a party must state with particularity the circumstances constituting fraud,” Fеd.R.Civ.P. 9(b), which we have repeatedly held requires the plaintiff to “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.”
DISCUSSION
On appeal, Plaintiffs challenge the dismissal of the FLSA and NYLL claims, dismissal of the common law claims, dismissal of the RICO claims, and the determination that there was no basis for a collective or class action. Plaintiffs have also requested assignment of a new district court judge on remand. Before discussing these challenges, hоwever, we address Plaintiffs’ argument that the District Court improperly denied leave to amend the complaints.
I
We review a district court’s denial of leave to amend for abuse of discretion.
See Anatian,
While we will not upset a denial of leave to amеnd where the plaintiff failed to seek such leave, the record in this case indicates that Plaintiffs were not provided an opportunity to seek leave to amend in response to the District Court’s order of dismissal. The District Court ordered the cases terminated with no indication that final judgment should await a motion for leave to amend.
See Nakahata I,
Nor can we deem this error harmless. The District Court did permit Plaintiffs to refile their FLSA and NYLL claims in a new action, which obviated much — but not all — of the prejudice Plaintiffs experienced from the denial of leave to amend. The option to file a new action preserved the FLSA and NYLL claims that remained timely on the date the new action was filed, but Plaintiffs lost the opportunity to pursue claims that became time-barred pursuant to the statute of limitations
4
in the interim between the filing of the original complaints and the filing of the new complaints. The cause of action for FLSA and NYLL claims accrues on the next regular payday following the work period when services are rendered. 29 C.F.R. § 790.21(b) (2012) (last revision 1947 Supp.);
see also Rigopoulos v. Kervan,
II
Plaintiffs allege twelve claims in their complaints, but the heart of their case is the allegation that Defendants failed to compensate them appropriately for all hours worked in violation of the FLSA and NYLL. Plaintiffs allege broadly that “Plaintiffs and Class members regularly worked hours both under and in excess of forty per week and were not paid for all of those hours.” Alamu Am. Compl. ¶ 148; Megginson Am. Compl. ¶ 145; Nakahata 2d Am. Compl. ¶ 146; Yarus Am. Compl. ¶ 136. Plaintiffs’ allegation that Defendants did not compensate them for hours worked in excess of forty per week alleges an overtime claim, whereas their allegation that Defendants did not compensate them for hours worked under forty per week alleges a gap-time claim.
The District Court dismissed both the FLSA and NYLL claims for lack of sufficient factual allegations. In particular, the District Court found three categories of facts lacking; (1) when unpaid wages were
The FLSA mandates that an employee engaged in interstate commerce be compensated at a rate of no less than one and one-half times the regular rate of pay for any hours worked in excess of forty per week,
7
29 U.S.C. § 207(a) (2006); the NYLL adopts this same standard, N.Y. Comp.Codes R.
&
Regs. tit. 12, § 142-2.2 (2011) (incоrporating the FLSA definition of overtime into the NYLL). As noted in the recent decision,
Lundy v. Catholic Health System of Long Island Inc.,
Prior to the decision in
Lundy,
we had not considered the degree of specificity necessary to state an FLSA overtime claim — an issue that has divided courts around the country,
see Butler v. DirectSat USA, LLC,
Lundy was an appeal from an Eastern District of New York decision dismissing essentially the same allegations presented in this case. 8 The plaintiffs in Lundy filed several amended complaints in the district court; therefore, the claims were pled with greater factual specificity than the complaints now before us. In particular, the Lundy complaint pled the number of hours the plaintiffs were typically scheduled to work in a week. See id. at 114-15. Given the number of hours worked in a typical week and the alleged time worked without pаy, Lundy concluded that the plaintiffs could not plausibly allege work in excess of 40 hours in any given week; 9 therefore, Lundy affirmed the district court’s dismissal.
The complaints currently before us
Because we hold that the Plaintiffs failed to plead sufficient facts to make it plausible that they worked uncompensated hours in excess of 40 in a given week, we need not decide whether the District Court’s other bases for dismissal were proper. Nonetheless, because we will remand this claim for amended pleadings, we note that Plaintiffs’ actual and direct emplоyer is an essential element of notice pleading under these circumstances. What aspects of Plaintiffs’ position, pay, or dates of employment are necessary to state a
plausible
claim for relief consistent with this decision and
Lundy
is a case-specific inquiry for the trial court.
Iqbal, 556
U.S. at 679,
While Plaintiffs’ overtime claims fail for the reasons discussed above, their allegations can also be read to state a gap-time claim. Gap-time claims are those “in which an employee has not worked 40 hours in a given week but seeks recovery of unpaid time worked, or in which an employee has worked over 40 hours in a given week but seeks recovery for unpaid work under 40 hours.”
Lundy,
As discussed in
Lundy,
the FLSA does not provide a cause of action for unpaid gap time.
Id.
at 116-17. The FLSA statute requires payment of minimum wages and overtime wages only,
see
29 U.S.C. §§ 201-19 (2006); therefore, the FLSA is unavailing where wages do not fall below the statutory minimum and hours do not rise above the overtime threshold.
Lundy,
Plaintiffs may, however, have a gap-time claim pursuant to the NYLL.
Lundy
acknowledged, without deciding, that a gap-time claim would be consistent with the language of NYLL § 668(1), which states that “[i]f any employee is paid by his or her employer less than the wage to which he or she is entitled ... he or she shall recover in a civil action the amount of any such underpayments.... ” N.Y. Lab. Law § 663(1) (McKinney Supp.2012),
as amended by
Wage Theft Prevention Act, ch. 564, § 16, 2010 N.Y. Sess. Laws 1446, 1457 (McKinney);
Lundy,
In this case, the District Court dismissed the gap-time claims on the same basis as the overtime claims without acknowledging the separate standard for a gap-time claim. Unlike an overtime claim, a gap-time claim requires no predicate showing of minimum hours worked; rather, an allegation of hours worked without compensation may give rise to a gap-time claim. Nonetheless, in the first instance it is for the trial court to decide whether the allegations in the complaints are plausible. Because the District Court did not сonsider the NYLL gap-time claims separately from the overtime claims, and because Plaintiffs will have an opportunity to amend their pleadings, we remand the NYLL gap-time claims to the District Court to consider in light of any amended pleadings.
Ill
In addition to their FLSA and NYLL claims, Plaintiffs allege nine common law claims. 11 The District Court dismissed the common law clams with prejudice on the grounds that they were preempted by collective bargaining agreements and on the basis of pleading deficiencies unique to each claim. 12 We address these arguments in turn.
The District Court dismissed the common law claims as preempted by applicable collective bargaining agreements (“CBAs”) and § 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185 (2006).
Nakahata I,
We do not consider matters outside the pleadings in deciding a motion to dismiss for failure to state a claim.
Global Network Commc’ns, Inc. v. City of New York,
Nor do we agree with the District Court that'Plaintiffs were responsible for pleading the CBAs in the complaints. The plaintiff is master of the complaint and may assert state law causes of action that are independent of the CBA.
See Caterpillar Inc. v. Williams,
The District Court also identified deficiencies unique to each common law claim. Some of the deficiencies may be corrected through amended pleading. We remand Plaintiffs’ claims for breach of express and implied oral contracts,
quantum meruit,
and unjust enrichment for reconsideration in light of any amended pleading. The District Court’s dismissal of those claims relied on the existence of a collective bargaining agreement, which was not included with the pleadings and could not be considered on a motion to dismiss. The claim for breach of an implied covenant of good faith and fair dealing was properly dismissed insofar as it
Plaintiffs’ other common law claims are unavailing on the facts of this case, and the dismissal with prejudice is affirmed. We affirm the District Court’s dismissal with prejudice of the fraud and negligent misrepresentation claims premised on the mailing of paychecks for the same reasons discussed below regarding the RICO claims. Dismissal of the conversion claim with prejudice is affirmed because Plaintiffs never had ownership, possession, or control of the wages in question prior to the alleged conversion.
See ESI, Inc. v. Coastal Power Prod. Co.,
Therefore, the District Court’s dismissal of the common law claims with prejudice is affirmed in part and vacated in part. Those claims that Plaintiffs may replead are remanded to the District Court.
IV
In addition to the claims for unpaid wages, Plaintiffs allege that the Defendants committed mail frаud in violation of RICO. Plaintiffs allege that their paychecks, delivered through the U.S. mail, misleadingly purported to pay Plaintiffs for all hours worked. Plaintiffs further allege that the purportedly complete paychecks concealed a scheme by Defendants to undercompensate the Plaintiffs.
RICO makes it unlawful “for any person employed by or associated with any enterprise ... to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity....” 18 U.S.C. § 1962(c) (2006);
First Capital Asset Mgmt., Inc. v. Satinwood, Inc.,
The District Court dismissed the RICO claims because the paychecks did not perpetuate a fraud; rather, they disclosed any alleged underpayment.
Nakahata I,
V
Finally, Plaintiffs challenge the District Court’s conclusion that there is no basis for a сollective or class action and request that the case be remanded to a new judge. Neither argument has merit. First, the District Court dismissed the Megginson, Alamu, and Yarus Plaintiffs’ motions to certify the collective and class actions as moot following dismissal of the complaints in their entirety, which was not error.
Nakahata I,
CONCLUSION
Consistent with the foregoing opinion, the District Court’s dismissal with prejudice of the FLSA gap-time, conversion, estoppel, fraud, negligent misrepresentation, and RICO claims is AFFIRMED. We REMAND the FLSA and NYLL overtime claims, the NYLL gap-time claims, the breach of express and implied oral contract claims, the breach of an implied covenant of good faith and fair dealing claims, the quantum meruit claims, and the unjust enrichment claims for amended pleading. Therefore, we VACATE the order terminating the case and REMAND for further proceedings consistent with this opinion.
Notes
. See Hinterberger v. Catholic Health Sys., Inc., No. 12-0630; Hinterberger v. Catholic Health Sys., Inc., No. 12-0918; Gordon v. Kaleida Health, No, 12-0654; Gordon v. Kaleida Health, 12-0670; Nakahata v. New York-Presbyterian Healthcare Sys., Inc., No. 12-4128; Megginson v. Westchester Med. Ctr., No. 12-4084; Alamu v. The Bronx-Lebanon Hosp. Ctr., No. 12-4085.
. Named Defendants include (1) The Bronx-Lebanon Hospital Center, The Bronx-Lebanon Hospital Center-Fulton Division, The Bronx-Lebanon Hospital Center-Concourse Division, Miguel A. Fuentes, Jr. (President and CEO of Bronx-Lebanon Hospital Center), and Sheldon Ortsman (former Vice President of tire Human Resources Division of Bronx-Lebanon Hospital Center), Alamu Am. Compl. ¶¶ 18, 40, 52; (2) Westchester Medical Center, Westchester County Health Care Corporation, Maria Fareri Children's Hospital at Westchester Medicаl Center, Michael D. Israel (President and CEO of Westchester Medical Center), and Paul S. Hochenberg (Senior Vice President of Human Resources for Westchester Medical Center), Megginson Am. Compl. ¶¶ 18, 41, 51; (3) New York-Presbyterian Healthcare System, Inc., The New York and Presbyterian Hospital, Herbert Pardes (President and CEO of New York-Presbyterian Healthcare System), and Wayne Osten (Senior Vice President and Director for New York-Presbyterian Healthcare System), Nakahata 2d Am. Compl. ¶¶ 18, 41, 51; and (4) New York City Health and Hospitals Corporation, Bellevue Hospital Center, Kings County Hospital Center, Jacobi Medical Center, Elmhurst Hospital Center, Harlеm Hospital Center, Metropolitan Hospital Center, Lincoln Medical and Mental Health Center, North Central Bronx Hospital, Coney Island Hospital, Woodhull Medical and Mental Health Center, Queens Hospital Center, and Alan D. Aviles (President and CEO of New York City Health and Hospitals Corporation), Yarus Am. Compl. ¶¶ 18, 39.
Plaintiffs' complaints also include extensive lists of affiliated healthcare facilities that Plaintiffs allege are under the operational control of the named Defendants. See Alamu Am. Compl. ¶¶ 19-20; Megginson Am. Compl. ¶¶ 19-20; Nakahata 2d Am. Compl. ¶¶ 19-20; Yarus Am. Compl. ¶¶ 19-20. These lists comprise several dozen entities and do not require reproduction in full.
. Plaintiffs in
Yarus v. New York City Health and Hospitals Corp.,
No. 11-0710, withdrew their NYLL claims prior to the District Court's decision. Pls.’ Mem. L. Opp’n Defs.' Mot. Dismiss at 1 n. 1,
Nakahata I,
. The limitations period for the FLSA is two years or, if the violation was willful, three years. 29 U.S.C. § 255(a) (2006). The limitations period for the NYLL is six years. N.Y. Lab. Law § 663(3) (McKinney 2002).
. This assumes that Plaintiffs were employed by Defendants prior to the statute of limitations period, a fact which is not pled in the complaints. This is a serious deficiency in the complaints, but, as discussed above, Plaintiffs should be provided the opportunity to amend lest they be time-barred from pursuing legitimate claims.
. Plaintiffs did pursue those FLSA and NYLL claims that were not time-barred by filing new actions in the Southern District of New York: Nakahata v. New York-Presbyterian Healthcare System, Inc., No. 11 Civ. 6658; Megginson v. Westchester Medical Center, No. 11 Civ. 6657; Alamu v. The Bronx-Lebanon Hospital Center, No. 11 Civ. 6366; and Ali v. New York City Health and Hospitals Corp., 11 Civ. 6393.
The District Court again dismissed three of these actions,
Nakahata, Megginson,
and
Ala-mu,
for failure to state a claim,
Nakahata v. New York-Presbyterian Healthcare Sys., Inc.,
The fourth action filed in response to Nakahata I, Ali, remains pending before the District Court. That case was filed by one, but nоt both, of the named plaintiffs in Yarus. In this regard, Plaintiff Ali is in a position similar to that of the plaintiffs in the three cases discussed above. Plaintiff Yarus has no second case pending either in the District Court or before this Court, but his claims have been preserved through appeal. As a result, on remand the time period for which causes of action are available may be different for Plaintiffs Ali and Yarus because Plaintiff Ali has pursued some causes of action in a separate case, whereas Plaintiff Yarus has not.
. The FLSA also permits employers and employees in the healthcare field to agree that overtime will be сalculated on the basis of eighty hours worked over two weeks instead of forty hours worked over one week. 29 U.S.C. § 207(j) (2006).
. Some of the claims raised in this case were not raised in
Lundy,
as will be discussed in detail below; however, the core claims of both cases — FLSA, NYLL, and RICO claims premised on unpaid hours worked during lunch breaks, before and after shifts, and at required trainings — are the same.
Lundy,
. For example, one of the Lundy plaintiffs alleged that she was typically scheduled to work 37.5 hours per week over three shifts with an additional 12.5 hour shift on occasion. She further alleged that she typically worked through her 30 minute meal break, worked an additional 15 minutes before or after her scheduled shift, and was required to attend monthly staff training of 30 minutes and an additional respiratory therapy training totaling 10 hours per year. Assuming she missed a meal and worked an additional 15 minutes every shift, the Lundy court deduced that she had alleged a total of only 39 hours and 45 minutes per week of work. Therefore, she had failed to allege work in excess of 40 hours in any given week. Id. at 114-15.
. Although the complaints currently before us clearly do not meet the
Lundy
standard, we should note that the standard employed by the District Court in this case was more demanding than that employed in
Lundy. Compare Nakahata I,
While the standard we reaffirm today does not require an approximate number of overtime hours, we reiterate that determining whether a claim is plausible is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense,”
Lundy,
. Plaintiffs allege (1) breach of an imрlied oral contract, (2) breach of an express oral contract, (3) breach of an implied covenant of good faith and fair dealing, (4)
quantum meruit,
(5) unjust enrichment/restitution, (6) fraud, (7) negligent misrepresentation, (8) conversion, and (9) estoppel.
Nakahata I,
. The parties also addressed FLSA preemption of the common law claims in their briefs; however, FLSA preemption was only given cursory treatment in the District Court’s opinion and was not essential to the disposition. Therefore, we do not address FLSA preemption.
. The District Court cited
I. Meyer Pincus & Assocs. v. Oppenheimer & Co.,
Pincus, however, is distinguishable from this case. Unlike the complaint in Pincus, the complaints currently before us do not ground their claims in the CBAs. Nor, is it Plaintiffs' responsibility to plead the CBAs. In short, the CBAs are not integral to the complaint in the same way that the prospectus in Pincus was integral; rather, the CBAs have been raised as an affirmative defense and can properly be considered on a motion for summary judgment.
.
Compare Tierney v. Omnicom Grp. Inc.,
No. 06 Civ. 14302,