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Beck v. Financial Technology Corp.

United States District Court, N.D. Alabama, Western Division

November 27, 2017

JACKI BECK, Plaintiff,
v.
FINANCIAL TECHNOLOGY CORP., et al., Defendants.

          MEMORANDUM OF OPINION

          L. SCOTT COOGLER, UNITED STATES DISTRICT JUDGE.

         The Court has before it Defendants' Rule 12(b)(6) Motion to Dismiss. (Doc. 20.) Plaintiff Jacki Beck (“Beck”) brought this action alleging unpaid minimum wages and overtime violations under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq., as well as breach of contract, fraud, and unjust enrichment under Alabama state law. All Defendants, Financial Technology Corp (“FITECH”), Teachers ‘N Tools, Inc. (“TNT”), Smart Data Strategies, Inc. (“Smart Data Strategies”), Marion Edwin Lowery (“Lowery”), Isaac A. Smith, II (“Smith”), move to dismiss Beck's FLSA claims against them because she has failed to state a valid claim for unpaid minimum wages, and all Defendants except FITECH move to be dismissed as party defendants because they lack the requisite employer-employee relationship with Plaintiff. For the reasons below, the Motion to Dismiss is due to be GRANTED. (Doc. 20.)

         I. Background[1]

         Plaintiff, Jacki Beck, (“Beck”) commenced this action on November 15, 2016, and defendants filed a motion to dismiss on December 12. In its July 17, 2017, Memorandum of Opinion and Order (doc. 18), the Court dismissed Plaintiff's claims under the FLSA for failure to state a claim, and her state law claims for lack of subject matter jurisdiction, giving Plaintiff leave to amend her complaint to avoid dismissal. Plaintiff filed her first amended complaint (doc. 19) within the ten (10) days proscribed by the Court's Order. Defendant's filed the pending motion to dismiss all claims in Plaintiff's first amended complaint on August 8, 2017. (Doc. 20.)

         Beck was employed by Teachers ‘N Tools, Inc. (“TNT”) as a sales representative, selling retail products to school systems in the southeastern United States. Defendants Lowery and Smith purchased TNT and FTC-Teachers ‘N Tools, Inc. (“FTC-TNT”) in 2013. Lowery and Smith made TNT a subsidiary of Financial Technology Corp. (“FITECH”). TNT appeared as an employer on Beck's W-2 form and also withheld taxes from Beck's paychecks in 2015. Lowery and Smith later made FTC-TNT an assumed name of FITECH. Lowery and Smith also own Smart Data Strategies (“SDS”).

         After purchasing TNT, Lowery and Smith retained Beck to sell products and services in exchange for an annual salary of $36, 000, plus commissions on sales and renewals. Commissions were equal to 30% of the gross profit on any new software sales, 20% of gross profit on any renewals of software sales, and 25% of gross profits on all other sales. Beck was also guaranteed commission on all renewals of products or software originally sold by her. When Beck made a sale, Lowery would obtain the product to provide to the customer.

         Beck was a competent employee, and was the top salesperson in 2014 and 2015. However, Defendants were routinely late in paying Beck, or simply did not pay her at all. Whether Beck was paid monthly or bi-monthly, the payments were made for the same amount. Beck alleges she was paid $38, 125.32 for 2015 and $24, 240.61 for the relevant part of 2016. Beck claims she is owed more than $32, 797.10 in commissions for 2015, and $9, 845.55 in commissions for 2016, amounting to approximately $42, 642.65 in total unpaid commissions. In 2016, Lowery and Smith sent a letter to Beck purporting to change her salary and commission structure. Lowery also fired Beck's co-worker in 2016, and gave a raise to another co-worker around the same time. In 2015, Beck traveled extensively and frequently worked more than forty hours per week. Beck personally incurred travel expenses because the firm credit card provided by Defendants was often declined. These costs included mileage and gas, hotel stays, food, and other expenses. Beck claims that a sum of approximately $155.86 for miscellaneous expenses has not been reimbursed. Beck also claims that she was enrolled in Defendants' group health plan, and Defendants paid a portion of her health insurance premiums. In 2015, Defendants lost the health insurance plan, but continued to deduct insurance premiums from Beck's paycheck totaling $2, 277.00 over several pay periods. After losing health insurance, Beck incurred out-of-pocket medical expenses amounting to $964.03. Smith was involved in the decision of whether to reimburse Beck for improper insurance withholdings, in addition to the travel and medical expenses. Though Defendants promised to reimburse Beck for these expenses, they have not done so in full.

         II. Standard

         To survive a 12(b)(6) motion to dismiss for failure to state a claim, the complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). However, to satisfy this standard, the complaint must also include “sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.” Id. at 678 (internal quotations omitted).

         Iqbal establishes a two-step process for evaluating a complaint. First, the Court must “identify[] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id. at 679. Second, “[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. Factual allegations in a complaint need not be detailed, but they “must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         A party need not specifically plead each element in his or her cause of action, but the pleading must contain “enough information regarding the material elements of a cause of action to support recovery under some viable legal theory.” Am. Fed'n of Labor & Cong. of Indus. Orgs. v. City of Miami, Fla., 637 F.3d 1178, 1186 (11th Cir. 2011). Ultimately, the Court must be able to draw a reasonable inference from the facts that the other party is liable. Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1215 (11th Cir. 2012). The Court must construe pleadings broadly and resolve inferences in the nonmoving party's favor. Levine v. World Fin. Network Nat'l Bank, 437 F.3d 1118, 1120 (11th Cir. 2006).

         III. Discussion

         A. Employers

         Defendants do not dispute that FITECH was Beck's employer during the relevant employment period. (Doc. 20 at 1.) Defendants TNT, Lowery, Smith, and SDS, however, move to dismiss the claims against them under Rule 12(b)(6). These defendants claim they had neither an employer-employee relationship nor a contract with Beck during the period relevant to her FLSA claim. In order to recover under the FLSA, a plaintiff must show that a defendant is her “employer” as defined by the FLSA. 29 U.S.C § 207(a)(1). The FLSA broadly defines an employer to include “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C § 203(d). This analysis is broad and depends “on the circumstances of the whole activity.” Alvarez Perez v. Sanford-Orlando Kennel Club, Inc., 515 F.3d 1150, 1160 (11th Cir. 2008) (quoting Hodgson v. Griffin & Brand of McAllen, Inc., 471 F.2d 235, 237 (5th Cir. 1973)).

         Further, to employ means to “suffer or permit to work, ” and “[a]n entity suffers or permits an individual to work if, as a matter of economic reality, the individual is dependent on the entity.” Antenor v. D & S Farms, 88 F.3d 925, 929 (11th Cir. 1996) (internal quotations omitted). This “economic reality” test considers “whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and ...


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