Muhammad v. Alto Pharmacy LLC

• Court: District Court, S.D. New York
• Decided: January 17, 2025
• Docket: 1:23-cv-11315
• Status: Unknown

Opinion

UNITED STATES DISTRICT COURT USDC SDNY SOUTHERN DISTRICT OF NEW YORK DOCUMENT coerce X ELECTRONICALLY FILED AFIYFAH MUHAMMAD, DARWIN WILSON, and DOC #: DOMINIQUE SKINNER, collectively and on behalf DATE FILED: 1/17/2025 of themselves and all others similarly situated, ee Plaintiffs, OPINION AND ORDER ON MOTION FOR LEAVE TO FILE -against- SECOND AMENDED COMPLAINT ALTO PHARMACY LLC, JOHN DOES 1-10, JANE 23-CV-11315 (KHP) DOES 1-10, and ABC CORPS. 1-10, Defendants. □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□ KATHARINE H. PARKER, UNITED STATES MAGISTRATE JUDGE On September 4, 2024, the Court dismissed Plaintiffs’ claims under New York’s Wage Theft Prevention Act (“WTPA”), New York Labor Law (“NYLL”) §§ 195(1 & 3) for lack of standing. (ECF No. 54) These claims seek statutory damages for Defendants’ alleged failure to provide legally compliant wage notices and statements. Plaintiffs now move for leave to file a Second Amended Complaint (the “Motion”) to restore their WTPA claims on the ground that they have added sufficient facts to support a plausible inference of concrete injuries stemming from the wage notice/statement violations, consistent with the requirement of Article III of the United States Constitution. (ECF No. 57-59) For the reasons discussed below, the Motion is GRANTED. LEGAL STANDARD Under Rule 15(a) of the Federal Rules of Civil Procedure, a party may amend its pleading once as a matter of course within specified time periods not applicable here. Fed. R. Civ. P. 15(a)(1). “In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so

requires.” Fed. R. Civ. P. 15(a)(2). The Second Circuit has stated that “[t]his permissive standard is consistent with our strong preference for resolving disputes on the merits.” Williams v. Citigroup Inc., 659 F.3d 208, 212-13 (2d Cir. 2011) (citation omitted). Under Rule 15,

leave to amend should be given “absent evidence of undue delay, bad faith or dilatory motive on the part of the movant, undue prejudice to the opposing party, or futility.” Monahan v. N.Y.C. Dep't of Corrs., 214 F.3d 275, 283 (2d Cir. 2000). A court may deny a motion to amend a complaint when the proposed amendments are futile. Proposed amendments are futile when they would fail to state a claim under Rule 12(b)(6). IBEW Local Union No. 58 Pension Tr. Fund & Annuity Fund v. Royal Bank of Scotland

Grp., PLC, 783 F.3d 383, 389 (2d Cir. 2015) (quoting Panther Partners Inc. v. Ikanos Commc'ns, Inc., 681 F.3d 114, 119 (2d Cir. 2012)). “The party opposing the amendment has the burden of demonstrating that leave to amend would be futile.” Margel v. E.G.L. Gem Lab Ltd., 2010 WL 445192, at *3 (S.D.N.Y. Feb. 8, 2010) (citation omitted). Because determination of futility is subject to the same standards as a motion to dismiss under Rule 12(b)(6), “[f]utility is generally

adjudicated without resort to any outside evidence,” and the court must accept all facts pleaded as true. Wingate v. Gives, 2009 WL 424359, at *5 (S.D.N.Y. Feb. 13, 2009); Walker v. Schult, 717 F.3d 119, 124 (2d Cir. 2013). Finally, at the motion to dismiss stage of the case, the plainlff “bears the burden of alleging facts that affirmalvely and plausibly suggest” they have standing. Calcano v. Swarovski N. Am. Ltd., 36 F.4th 68, 75 (2d Cir. 2022) (citalon omioed). Here, Defendants argue the

2 amendment is fulle because the proposed amended pleading does not plausibly allege standing. DISCUSSION

Under Article III of the United States Constitution, “[o]nly those plaintiffs who have been concretely harmed by a defendant's statutory violation may sue that private defendant over that violation in federal court.” TransUnion LLC v. Ramirez, 594 U.S. 413, 427 (2021). A “concrete” harm is one that “has a ‘close relalonship’ to a harm tradilonally recognized as providing a basis for a lawsuit in American courts—such as physical harm, monetary harm, or various intangible harms.” Id. at 417 (quolng Spokeo, Inc. v. Robins, 578 U.S. 330, 340-41

(2016)). The Second Circuit recently evaluated what is required at the pleading stage to demonstrate Arlcle III standing for alleged violalons of New York’s WTPA, stalng that “a plainlff cannot rely on technical violalons” of the WTPA but rather must alleged “actual injuries suffered as a result” of those violalons. Guthrie v. Rainbow Fencing Inc., 113 4th 300, 305 (2d

Cir. 2024). It further explained that a plainlff “must show some causal conneclon between the lack of accurate nolces and the downstream harm.” Id. at 308. For example, if a violalon is alleged to have “prevented an employee from obtaining full payment of wages in a lmely fashion,” and such allegalon is supported by a “plausible ‘theory as to how he was injured’” by the wage nolce violalon, then Arlcle III standing is plausibly alleged. Id. at 309 (emphasis in original). That is, the unlmely discovery of underpayment of wages and/or a delay in obtaining

full pay are harms beyond the technical nolce violalons. Id. at 306 (cilng Harty v. West Point 3 Realty, Inc., 28 F.4th 435, 444 (2d Cir. 2022)). Similarly, if a plainlff alleges facts supporlng a plausible inference that the wage statement/nolce violalon prevented him from undertaking advocacy to obtain the correct wage payment and avoiding some actual harm, then Arlcle III

standing is salsfied. Id. at 308. Here, Plainlffs’ proposed Second Amended Complaint alleges that Defendants “concealed the company’s praclce of manually adjuslng couriers’ work hours to reduce their pay.” (PSAC, ECF No. 58-1 at ¶ 54) It further asserts that “the manual adjustments were completed by Alto Pharmacy staffers through the company’s digital lmekeeping sovware either aver a courier’s work shiv or aver a courier’s workweek” and that couriers did not have access

to pre-adjustment records to double check that their pay was correct. (Id. at ¶¶ 56-57, 60). While it is true that Plainlffs idenlfied some paychecks that they believe reflect underpayments, it is plausible that there are other underpayments that Plainlffs were not able to idenlfy due to Defendants’ alleged manipulalon of their hours. Relatedly, Plainlffs allege that Defendants “misclassified [their] couriers as independent

contractors in order to shiv pay, tax and benefits burdens of employment away from the company and to the couriers.” (Id. at ¶ 63) The Court understands this to mean that Plainlffs were paid as if they were independent contractors. Yet, at the same lme, Plainlffs assert that “Alto Pharmacy’s Courier Timekeeping Policy [] classified the couriers as employees and stated that Alto Pharmacy paid its couriers per the FLSA,” which suggests they should have been provided wage nolces which “would have alerted the couriers that they were improperly

classified as independent contractors.” (Id. at ¶ 64-67) As a consequence of being treated as 4 independent contractors, Plainlffs assert that they paid “more in taxes due to the self- employment tax,” were treated as ineligible for overlme pay, were ineligible for company benefits and were treated as if they were not protected “by laws that prescribe worker

proteclons.” (Id. at ¶ 68) These addilonal allegalons bolster a theory that Defendants deliberately concealed or created confusion about Plainlffs’ status (i.e., whether they were employees or independent contractors). That is, had Plainlffs received a wage nolce stalng that they were employees, Plainlffs would have quesloned why they were paid as independent contractors. And had they received an accurate statement of their hours together with access to pre-adjustment lme records, they also could have checked the accuracy of their pay and

quesloned not only why they were paid as independent contractors, but also why they were not enltled to overlme in weeks they worked more than 40 hours. Further, the allegalons plausibly allege that the pay statements that treated Plainlffs as if they were independent contractors had tax and benefit disadvantages – another concrete harm from the inaccurate wage statements and alleged concealment of their status as employees by failure to provide

wage nolces. Plainlffs’ new, more robust allegalons supply a theory as to how they were injured by the technical nolce violalons, idenlfy a concrete harm beyond the technical nolce violalons, and a plausible conneclon between the violalons and the harm. Thus, they are sufficient to confer Arlcle III standing on Plainlffs for the WTPA claims. See, e.g., Kaur v. Natasha Accessories Ltd., No. 23-CV-6948 (JPO), 2024 WL 3429129, *4 (S.D.N.Y. July 16, 2024) (holding

that plainlff established the required concrete harm and causal conneclon for Arlcle III 5 standing where plainlff alleged that her “wage statements showed fewer hours than what [she] actually worked, which prevented [her] from determining and seeking payment for the precise amount of [her] unpaid wages” and she was thus “harmed by being deprived of [her] income

for longer than [she] would have been had [she] been able to lmely raise [her] underpayment earlier”); Cas%llo v. Hollis Delicatessen Corp., 22-cv-5476 (AMD)(PK), 2024 WL 4107258, *1 n.1 (E.D.N.Y. Sept. 6, 2024) (holding that plainlff established the required concrete harm and causal conneclon for Arlcle III standing where plainlff alleged defendants “were able to hide their violalons of wage and hour laws and take advantage of [p]lainlff’s relalve lack of sophislcalon by failing to provide her with wage informalon”); Reyes v. Crystal Window & Door

Sys., No. 23-cv2578 (RPK)(JRC), 2024 WL 4828308, *1 (E.D.N.Y. Sept. 3, 2024) (holding that plainlff established the required concrete harm and causal conneclon for Arlcle III standing where plainlff alleged that “defendant’s failure to provide the nolces ‘resulted in Plainlffs working for years without knowledge of their correct pay frequency and overlme rate’ . . . ‘[resullng in] Defendant [] pay[in] [them] without proper overlme premium’”).

Defendants rely on Lock v. Costco Wholesale Corp. to argue that Plainlffs’ Molon should be denied for lack of Arlcle III standing, but their reliance is misplaced. No. 23-cv-07904 (E.D.N.Y Nov. 8, 2024). The Lock case is different from the present case in several important ways. First, in Lock, the court was confronted with declaralons from the plainlffs that contradicted allegalons in the complaint that undermined their asserlon that they could not compute the overlme they were owed. The court took nolce of the declaralons and found

that plainlffs knew how many hours of overlme they worked. The harm alleged was an 6 inability to compute overtime. In the instant case, Plaintiffs allege more than an inability to compute overtime. As discussed above, Plaintiffs allege that they suffered from underpayment, tax-related financial harm, ineligibility for company benefits, and a lack of worker protections stemming from an alleged concealment of their status as employees and manipulation of their time to reflect fewer hours than they had actually worked. Further, in Lock, there was no allegation that the employer altered clock-in hours on wage statements or deprived plaintiffs of information necessary to verify their hours worked and related pay. Therefore, the Court finds the Lock case to be unpersuasive. As noted above, at this stage of the case, the Court is merely evaluating whether the pleading alleges facts that affirmatively and plausibly suggest standing. The Court finds that the amended pleading satisfies this standard. CONCLUSION Accordingly, Plaintiffs’ Motion for Leave to File a Second Amended Complaint is granted. Defendants shall file their Answer to Plaintiffs’ Second Amended Complaint within 14 business days of the date of this Order. SO ORDERED. Dated: January 17, 2025 New York, New York fr thane H firke KATHARINE H. PARKER United States Magistrate Judge