Authored by Kristin G. McGurn
In 2010, as healthcare employers adjusted to a changed landscape following legislative reform, many healthcare systems across the country also were forced to adapt to a litigation trend in which they were targeted in putative class and collective actions. The complaints typically alleged violations of the Fair Labor Standards Act (“FLSA”), among other statutory and state laws, claiming that healthcare employers require or permit workers to perform work off-the-clock for which they allegedly are not paid. As the year came to a close, Judge Seybert in the Eastern District of New York followed the lead of several other district court judges in New England [see 09-cv-11466; 09-cv-11722; 09-cv-40152; 09-cv-40181(D.Mass.)] by granting Catholic Health System of Long Island, Inc. and other named defendants a full dismissal. Wolman et al. v. Catholic Health System of Long Island, Inc., et al. The complaint had alleged that the defendants failed to compensate a purported class of similarly-situated employees for all hours worked, in violation of the FLSA, the Racketeer Influenced and Corrupt Organizations Act (RICO), New York Labor Law (NYLL), and common law. The Plaintiffs alleged that the putative class included thousands of current and former employees with a wide variety of duties, job titles and classifications, working for any one of twenty-eight health care facilities and scores of affiliates. Nearly identical complaints were filed simultaneously against ten other healthcare systems in and around New York City.
Ruling on Defendants’ motion to dismiss, and articulating the “two working principles” of plausible pleading under Ashcroft v. Iqbal, Judge Seybert noted that she need not accept as true the legal conclusions about which the complaint “prattles on” since ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.’” She reminded Plaintiffs that complaints cannot survive a motion to dismiss without stating a “plausible claim for relief.” Judge Seybert found that Plaintiffs pled sufficient plausible facts to support the allegation that they worked during unpaid meal periods with the defendants’ knowledge, but they failed to sufficiently plead the number and length of unpaid breaks or how frequently they worked through them. Likewise, Plaintiffs failed to plead any plausible facts regarding the kind of work this wide cross-section of employees performed, how much time it took them to complete the alleged off-the-clock work, or even whether they were full-time or part-time employees with overtime eligibility. Similarly, Judge Seybert held that Plaintiffs’ conclusory training time allegations failed to plausibly allege that the training was mandatory or compensable under the FLSA. Judge Seybert also dismissed Plaintiffs’ claim for unpaid work performed below the overtime threshold (so-called “gap time”). She noted that the Second Circuit does not recognize such claims for weeks in which no overtime is owed as long as the average wage for the period exceeds the statutory minimum, and expressed “serious concerns” about ever finding a gap time claim cognizable under the FLSA. She agreed with the majority of courts that refuse to recognize a gap time claim where an employment contract provides compensation for all non-overtime hours, and dismissed the claim with prejudice because Plaintiffs alleged express and implied contracts guaranteeing them pay for hours worked, and setting a rate and schedule.
Finally, Judge Seybert rejected Plaintiffs’ assertion that Defendants’ mailing of pay stubs to Plaintiffs amounted to mail fraud under RICO. She found that plaintiffs could not establish a corrupt scheme resulting from false or deceptive mailings given that the pay stubs clearly would reveal, rather than conceal, any alleged failure to pay for all hours worked.