Coleman v. H2S Holdings, LLC

230 F. Supp. 3d 1313, 2017 WL 210683, 2017 U.S. Dist. LEXIS 40737
CourtDistrict Court, N.D. Georgia
DecidedJanuary 18, 2017
DocketCIVIL ACTION NO. 1:15-CV-3563-SCJ
StatusPublished
Cited by2 cases

This text of 230 F. Supp. 3d 1313 (Coleman v. H2S Holdings, LLC) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Coleman v. H2S Holdings, LLC, 230 F. Supp. 3d 1313, 2017 WL 210683, 2017 U.S. Dist. LEXIS 40737 (N.D. Ga. 2017).

Opinion

ORDER

HONORABLE STEVE C. JONES, UNITED STATES DISTRICT JUDGE

In 2015, an Atlanta restaurant empire fell apart rather suddenly. Employees at the various establishments, including plaintiff Brandon Coleman, contend they received no pay for the last week they worked. In this case and others, they seek to recover that pay from the restaurant companies (Here to Serve Restaurants, Inc. and H2S Holdings, LLC) (“H2S”), their owner (Leigh Catherall), and the firm that provided human resources services to H2S (Oasis Outsourcing, Inc.). Oasis now moves for summary judgment on all remaining claims1 against it. Doc. 77.2

1. BACKGROUND

To the dining public, H2S restaurants ran like any other business. People interested in working at those establishments filled out employment applications, sat for [1316]*1316interviews conducted by other H2S employees, and took instruction from H2S managers. H2S employees waited tables, cooked food, and seated guests, while managers made work schedules, approved days off, and signed invoices for food deliveries. Put differently, no one ever walked into an H2S restaurant and saw an employee with an “Oasis” name tag on.3 Under the proverbial hood, however, the employer-employee relationship at H2S restaurants was a bit more complex than met the eye.

H2S, like many businesses, employed a third-party professional employer organization (PEO) “for payroll and other human resources services.” Doc. 77-2 at 3. From 2011 until very shortly before H2S’ demise, Oasis served as its PEO. Unsurprisingly, a contract governed Oasis’ business with H2S.

That “Service Agreement” (Agreement) defined the relationship between Oasis, H2S, and its workers (who the Agreement refers to as “leased employees”) as “co-employment,” not joint employment. Doc. 63-1 at 2. It gave H2S “exclusive control over the day to day job duties of all leased employees,” while Oasis assumed responsibility “for the payment of wages ... without regard to” whether H2S paid Oasis. Id. at 3. If H2S failed to pay Oasis, however, its pay obligations only ran to what minimum wage law required. Id. In conjunction with its obligation to pay Oasis for HR services rendered,4 H2S also agreed to “obtain and provide to Oasis at the end of each pay period records of actual time worked by each employee.” Id. at 8.5

An entire section of the Agreement detailed the “Effect of Termination” of the Agreement. Doc. 63-1 at 8-9. “If for any reason” H2S failed to pay Oasis as agreed, Oasis had “the right to immediately terminate its performance” under the Agreement. Id. at 8. “Upon termination [of the Agreement] ... all of the employees shall be deemed to have been laid off by Oasis and immediate notification of this shall be provided by [H2S] to employees who had been leased pursuant to this Agreement.” Id. (emphasis added).

H2S, not Oasis, assumed “all federal, state and local obligations of an employer to the employees” in the event of the Agreement’s termination. Id. Oasis, by contrast, was “immediately ... released” from those obligations. H. In fact, the Agreement made clear that “[i]t [was] the intent of the parties that, where allowed by law, they be placed in their respective positions immediately before their entry into this Agreement in the event of a termination or expiration or [H2S’] failure to pay OASIS.” Id.

The Agreement also declared that it created no rights in third-parties,” and that “no person not a party to th[e] Agreement may rely on any aspect of [it].” Doc. 63-1 at 9. Both Oasis and H2S had a duty to [1317]*1317notify leased employees of the Agreement’s termination. Id. Unlike H2S’ express duty to notify workers “immediately” the Agreement’s termination, however, this 'duty specified no timetable for notice. Id. at 8. And both parties agreed that the Agreement “shall be governed by and construed in accordance with the laws of the State of Florida.” Id. at 9.

Workers at H2S restaurants never saw the Agreement. What they did see (at the time H2S hired them) was an “Employee Acknowledgments” form that outlined the relationship between H2S and Oasis insofar as it affected workers. See, e.g., doc. 77-6 at 11. Among other things, it made clear that workers had “no contract of employment with Oasis.” Id. It said nothing about what would happen (who would give the worker notice that Oasis and H2S parted ways, etc.) if the Agreement terminated.

“Beginning in July 2015, H2S fell behind on its contractually required payment of [Oasis’] invoices.” Doc. 77-6 at 5. Although a material breach of the Agreement and grounds for termination, Oasis chose to continue paying workers at that time. A month later, by the end of August 2015, “H2S owed Oasis approximately $1 million” for services rendered under the Agreement. Id.

As a result, Oasis, via letter dated September 3, 2015, terminated the Agreement effective August 30, 2015, with the last paychecks dated September 4, 2015. Doc. 77-6 at 29. Oasis requested that H2S, in compliance with its obligations under the Agreement (doc. 63-1 at 8), advise its “employees of the discontinuance of Oasis’ services.” Doc. 77-6 at 29. H2S never did so.

After the termination letter issued, H2S and Oasis continued to discuss possibly reinstating Oasis’ services. See, e.g., doc. 77-6 at 33. Those discussions resulted in reinstatement for the August 30—Septem-ber 13, 2015 pay period, with the Agreement to terminate on September 13. W. at 31. Oasis never thereafter reinstated the Agreement. H2S, for its part, never told its workers that Oasis terminated the Agreement.

Oasis and H2S continued to discuss further reinstatement after September 13, 2015, and H2S eventually sent Oasis $295,-0006 “in the second half of September” 2015, which brought the balance it owed to approximately $765,000. Doc. 83-1 at 95. On September 30, 2015, Oasis sent H2S a letter “agreeing to provide services” under the Agreement “for the payroll period September 14, 2015 to September 27, 2015 (subject to receipt of prepayment in full and all other required performance).” doc. 77-6 at 46.

The reinstatement discussions nevertheless fell apart by October 2, 2015.7 That same day, Oasis mailed letters to all H2S [1318]*1318workers (Oasis’ co-employees) that the Agreement terminated “effective September 13, 2015.” Doc. 77-3 at 217. It further advised that the workers were “no longer covered by Oasis[’] ... worker’s compensation” and that H2S was “responsible for any pay due ... for any work performed after” the termination date. Id.

Before Oasis sent that termination notice, H2S paid the workers their wages for the pay period ending September 28, 2015. Doc. 77-3 at 78. Without warning to the workers (or customers), all H2S restaurants then shut their doors on October 5, 2015. Doc. 77-6 at 47. Plaintiff and other workers never received pay for the September 28—October 5, 2015 period. Doe. 63 at 13.

This ease originally began two days later, on October 7, 2015. Doc. 1. After many intervening procedural vicissitudes, Plaintiff filed the operative complaint on March 29, 2016. Doc. 63.

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Cite This Page — Counsel Stack

Bluebook (online)
230 F. Supp. 3d 1313, 2017 WL 210683, 2017 U.S. Dist. LEXIS 40737, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coleman-v-h2s-holdings-llc-gand-2017.