Co-authored by Robert S. Whitman and Howard M. Wexler

It has been a very busy summer for Judges on the Second Circuit, who on Wednesday issued their third decision in the past two months (most recently reported on here), and their fourth since March, addressing the adequacy of pleading in wage-hour cases.

In Gordon v. Kaleida Health [here], one of many large class/collective actions brought against New York-area hospitals and healthcare institutions alleging unlawful pay practices, the plaintiffs asked the Second Circuit to review a District Court decision dismissing their complaints.  They argued that once the lower court decided to dismiss their federal claims, it should have declined to exercise jurisdiction over their remaining state law claims and simply sent the case to State court. 

The Second Circuit disagreed.  It first upheld the dismissal of the plaintiffs’ RICO claim — which was based on allegations that the employers used a scheme to cheat them out of their lawful earnings.  Confirming its rulings from earlier this year in Lundy v. Catholic Health Sys. of Long Island [here] and Nakahata v. N.Y. Presbyterian Healthcare Sys., Inc. [here], the court held that, under RICO, “the mailing of pay stubs cannot further the fraudulent scheme because the pay stubs would have revealed (not concealed) that plaintiffs were not being paid for all of their alleged compensable overtime.”

The Second Circuit also rejected the plaintiffs’ contention that the lower court should have remanded the case rather than dismiss it outright.  The Second Circuit said it was a “wise exercise of judicial economy” for the District Judge to dismiss the state law breach of contract claim (and related claims alleging breach of an implied covenant of good faith and fair dealing, unjust enrichment and quantum meruit) as they all lacked merit.

Kaleida is yet another solid win for health care employers, which have been the target of several class/collective actions in New York courts over the past few years.  But this summer’s flurry of decisions (snow in August?) should benefit all employers are faced with cookie-cutter complaints challenging their pay practices without any factual (or legal) support.

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