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Mica Saint-Jean, et al v. District of Columbia

March 7, 2012

MICA SAINT-JEAN, ET AL., PLAINTIFFS,
v.
DISTRICT OF COLUMBIA, DEFENDANT.



The opinion of the court was delivered by: Richard W. Roberts United States District Judge

MEMORANDUM OPINION AND ORDER

Plaintiffs Mica Saint-Jean, Guerline Bourciquot, and Marie Dorlus have brought claims against defendant District of Columbia ("D.C.") under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 207, et seq., the D.C. Whistleblower Protection Act ("WPA"), D.C. Code § 1-615.51, et seq., and local statutory and common law arising from an alleged scheme which required them to pay kickbacks to their supervisor in order to receive overtime assignments. D.C. has moved to dismiss those claims.*fn1 Because the plaintiffs' FLSA and WPA claims are sufficiently pled and not foreclosed by the unclean hands doctrine, the motion to dismiss will be denied as to those claims. The motion will be granted as to the plaintiffs' quantum meruit claim because it was based upon an illegal arrangement, and as to their unexhausted defamation claim which, in any event, fails to state a claim for relief.

BACKGROUND

The plaintiffs allege the following facts, many of which are set forth in Saint-Jean v. D.C. ("Saint-Jean II"), Civil Action No. 08-1769 (RWR), 2012 WL 547814, at *1-*2 (D.D.C. Feb. 21, 2012). The plaintiffs, all Haitian immigrants, worked at a school bus terminal of the D.C. Public Schools Division of Transportation ("DOT"). They were denied the opportunity to work overtime hours unless they paid illegal kickbacks to their former supervisor, Michelle Smith, the Terminal Manager. (2d Am. Compl. ¶¶ 2, 13-15, 24, 192.) Saint-Jean and Dorlus each paid Smith between $75 and $150 per pay period to obtain overtime assignments.*fn2 (2d Am. Compl. ¶¶ 30, 34-35.) When they stopped paying Smith in September of 2007, Smith retaliated by refusing to assign them overtime hours, selectively enforcing DOT policies against them, "issuing repeated and unnecessary warnings[,]" and suspending Bourciquot without pay. (2d Am. Compl. ¶¶ 5, 45-47, 57, 62-63, 193.)

A group of Haitian DOT employees discussed Smith's scheme with DOT's Transportation Administrator, David Gilmore, in October of 2006. As a result, Smith was suspended for six weeks. Smith resumed her scheme after she returned. (2d Am. Compl. ¶¶ 4, 38-42). In November or December of 2007, Saint-Jean and Dorlus reported Smith's illegal kickback scheme and retaliation to the Mayor's office, the Office of the Inspector General ("OIG"), the Office of the Attorney General ("OAG"), and the FBI. (Id. ¶ 6.) Bourciquot disclosed the scheme to DOT Assistant Manager Janice Waters in March of 2008.*fn3 (Id. ¶ 56.) Between July 10 and 16, 2008, "Hastings-Carey" and "Washington" issued four written warnings and a written reprimand to each of Saint-Jean and Bourciquot for allegedly refusing a directive and padding the clock. (Id. ¶¶ 64-65, 184-85.)

The plaintiffs discussed some of Smith's discrimination against Haitians with Gilmore on July 17, 2008. (2d Am. Compl. ¶ 77.) The following day, Saint-Jean told Gilmore that Smith accepted bribes in exchange for paying employees for hours not worked, and that Smith let her boyfriend use DOT buses for personal purposes. (2d Am. Compl. ¶¶ 79, 82.) DOT Deputy Terminal Manager Michael Roberts suspended Bourciquot and Dorlus without pay on July 21, 2008, for five days, for an alleged failure to "call to report they would be late [to work] on July 18th" (id. ¶¶ 86-87), and directed a security guard to escort them off DOT property later that afternoon. (Id. ¶ 183.) On July 29, 2008, DOT notified Bourciquot and Dorlus of their "proposed termination[s]" for insubordination to an immediate supervisor. (Id. ¶¶ 97, 99.) Their effective date of termination was August 14, 2008. (2d Am. Compl. ¶ 100.) DOT placed Saint-Jean on a ten-day administrative leave for insubordination on September 10, 2008, with notice that she would be terminated effective September 24, 2008. (2d Am. Compl. ¶¶ 114-115.)

The defendant has moved in part to dismiss the plaintiffs' claims under the FLSA and the WPA and for defamation and quantum meruit relief for failure to state claims upon which relief can be granted. The plaintiffs oppose the motion.

DISCUSSION

The Federal Rules of Civil Procedure provide for "extremely liberal" pleading standards. Vila v. Inter-Am. Inv., Corp., 570 F.3d 274, 291 (D.C. Cir. 2009). Under Rule 8(a)(2), a complaint need only contain "'a short and plain statement of the claim'" giving "'the defendant fair notice of what the . . . claim is and the grounds upon which it rests'" and "'showing that the pleader is entitled to relief.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957). "[D]etailed factual allegations" are likewise unnecessary under Rule 12(b)(6), id., which authorizes dismissing a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion, "'a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ivey v. Fenty, 65, 67-68 (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)) (citation omitted). Facially plausible claims permit "the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949. "Th[is] plausibility standard . . . asks for more than a sheer possibility that a defendant has acted unlawfully." Id.

In considering a Rule 12(b)(6) motion to dismiss, a court "assume[s] all the allegations in the complaint are true (even if doubtful in fact)" and "must give the plaintiff[s] the benefit of all reasonable inferences derived from the facts alleged." Aktieselskabet AF 21. November 2001 v. Fame Jeans Inc., 525 F.3d 8, 17 (D.C. Cir. 2008) (internal quotation marks and citation omitted); accord Simba v. Fenty, 754 F. Supp. 2d 19, 22 (D.D.C. 2010). However, "'the court need not accept [unsupported] inferences[,] . . . [nor must it] accept legal conclusions cast in the form of factual allegations.'" Vila, 570 F.3d at 291 (quoting Kowal v. MCI Communic'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994)). Any "labels and conclusions," "naked assertion[s]," and "unadorned, the-defendant-unlawfully-harmed-me accusation[s]," will not suffice to avoid dismissal. Iqbal, 129 S. Ct. at 1949; Mekuria v. Bank of Am., Civil Action No. 10-1325 (JEB), 2011 WL 4430868, at *3 (D.D.C. Sept. 23, 2011).

I. FLSA "'The central aim of the [FLSA] was to achieve, in those industries within its scope, certain minimum labor standards.'" McMaster v. State of Minn., 30 F.3d 976, 980 (8th Cir. 1994) (quoting Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 292 (1960)). It was enacted to support the "'minimum standard of living necessary for health, efficiency, and general well-being of workers[,]'" and "to prevent unfair competition resulting from the use of underpaid labor." Id. (quoting 29 U.S.C. § 202(a)) (citation omitted).

A. Overtime provision

"The FLSA provides affected employees with a cause of action to recover for violation of its overtime provision," Figueroa v. D.C. Metro. Police Dep't, 633 F.3d 1129, 1132 (D.C. Cir. 2011) (citing 29 U.S.C. § 216(b)), "which ordinarily requires employers*fn4 to pay employees time-and-one-half for hours worked beyond forty per week[.]" Saint-Jean v. D.C. Pub. Sch. Div. of Transp. ("Saint-Jean I"), Civil Action No. 08-1769 (RWR), 2011 WL 4552982, at *2 (D.D.C. Mar. 31, 2011) (quoting Smith v. Gov't Emp. Ins. Co., 590 F.3d 886, 888 (D.C. Cir. 2010)). D.C. argues that the plaintiffs' claim for overtime payments under FLSA fails because it is time-barred, because Smith acted outside the scope of her employment while orchestrating the illegal scheme, because DOT paid plaintiffs "free and clear" for any and all overtime hours, and because the plaintiffs were willing and voluntary participants in Smith's cash-for-overtime arrangement. (Def.'s Mot. [Dkt. #23] to Dismiss Pls.' Compl. ("Def's Mot. [Dkt. #23]") at 10-14; Def.'s Mot. [Dkt. #37-1] to Dismiss Pls.' Am. Compl. or for Summ. J. ("Def.'s Mot. [Dkt. #37-1]") at 14-19.)

The plaintiffs counter that they were not paid "free and clear" for their overtime hours since they were compelled to pay Smith kickbacks, that DOT's FLSA violation was willful, and that their participation in the scheme does not bar relief. (Pls.' Mem. in Opp'n to Def.'s Mot. to Dismiss Pls.' Compl. ("Pls.' Opp'n") at 16-21.) They allege that while they worked for more than 40 hours per week, Smith, DOT's agent, reduced their wages by requiring them to pay kickbacks. (2d Am. Compl. ¶¶ 2, 29, 31, 156.) For example, Saint-Jean and Dorlus paid Smith as much as $150 per pay period in order to obtain overtime work. (Id. ¶¶ 2, 30, 32, 34-35.) The plaintiffs claim that DOT was aware of Smith's kickback scheme but repeatedly failed to take corrective action against her. (Id. ¶¶ 156-57.)

1. Time bar

For actions against employers, the FLSA provides statute of limitations periods of two years for non-willful violations and three years for willful violations. Desmond v. PNGI Charles Town Gaming, L.L.C., 630 F.3d 351, 357 (4th Cir. 2011) (citing 29 U.S.C. § 255(a)). Plaintiffs bear the burden to make a "factual showing" of willfulness, Clarke v. JPMorgan Chase Bank, N.A., No. 08 Civ. 2400, 2010 WL 1379778, at *10 (S.D.N.Y. Mar. 26, 2010), which the Supreme Court has described as an employer's "either [knowing] or . . . reckless disregard for the matter of whether its conduct was [statutorily] prohibited." McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988)). "Reckless disregard . . . involves actual knowledge of a legal requirement, and deliberate disregard of the risk that one is in violation." Clarke, 2010 WL 1379778, at *10 (internal quotation marks and citation omitted). Neither mere negligence nor a merely unreasonable determination of the employer's obligations under the FLSA suffice to show willfulness. Id.

"[J]udicial experience and common sense[]" nudge the allegations of DOT's reckless disregard for FLSA's requirements "across the line from conceivable to plausible." Iqbal, 129 S. Ct. at 1950, 1951 (internal quotation marks and citations omitted). D.C. does not dispute that it knew of its legal obligation to pay overtime wages undiminished by extorted kickbacks. See Teoba v. Trugreen Landcare, LLC, 769 F. Supp. 2d 175, 184 (W.D.N.Y. 2011) (stating that "FLSA's anti-kickback regulation holds that any money an employee 'kicks back directly or indirectly to the employer or another person for the employer's benefit' must be excluded from calculating the employee's actual wages.") (citing 29 C.F.R. § 531.35) (additional quotation marks and citation omitted). The plaintiffs have pled that Gilmore became aware of Smith's kickback scheme in 2006. (2d Am. Compl. ¶ 4.) After DOT suspended Smith for six weeks because of the scheme, it nevertheless reinstated her and restored her responsibility for assigning overtime hours. (Id. ¶¶ 40, 42.) She resumed the scheme, and employees "increased the amount of their kickbacks to Smith [upon her return] and . . . [were] rewarded with more overtime." (Id. ¶¶ 4, 42.) These facts adequately allege that DOT deliberately disregarded the risk of recurring FLSA violations by re-appointing Smith to the same position with the same responsibilities, and failing to monitor the kickback scheme's resurgence. (See Pls.' Opp'n at 20.) Accordingly, the three-year statute of limitations applies. See 29 U.S.C. § 255(a). The plaintiffs may challenge any alleged FLSA violations occurring after October 16, 2005 --- the date three years before the plaintiffs filed this action.*fn5

2. Agency relationship

D.C. argues that DOT did not violate the FLSA since Smith acted outside the scope of her employment by orchestrating the kickback scheme. (Def.'s Mot. [Dkt. #23] at 13-14; Def.'s Mot. [37-1] at 17.) The plaintiffs respond that Smith's malfeasance is attributable to D.C. (Pls.' Opp'n at 6-8.)

"Agency is the fiduciary relationship that arises when . . . a 'principal' manifests assent to . . . an 'agent['] that the agent shall act on the principal's behalf and subject to the principal's control, and the agent manifests assent or otherwise consents so to act." Restatement (Third) of Agency § 1.01 (2006).*fn6 As a principal, "[a]n employer is subject to liability for torts committed by [agent] employees while acting within the scope of their employment." Id. § 2.04. D.C. law governs the question of vicarious liability. Sharma v. D.C., 791 F. Supp. 2d 207, 212 (D.D.C. 2011) ("It is well-settled that on issues of District of Columbia law this Court defers to the decisions of the local D.C. courts."). The D.C. Circuit recently stated that the scope-of-employment test, which "D.C. [caselaw] appl[ies] . . . very expansively," "often is akin to asking whether the defendant merely was on duty or on the job when committing the" challenged conduct. Harbury v. Hayden, 522 F.3d 413, 422 n.4 (D.C. Cir. 2008). "[S]everal D.C. cases hold[] that seriously criminal and violent conduct can still fall within the scope of a defendant's employment . . . -- including sexual harassment, a shooting, armed assault, and rape." Id. at 422.*fn7 Accordingly, in identifying conduct within the scope of a defendant's employment, a court may consider whether the challenged conduct "w[as] incidental to the defendant['s] legitimate employment duties" or "foreseeable as a direct outgrowth of [her] responsibility" and "undertaken on [the employer's] behalf."*fn8

Id. at 422.

Here, the plaintiffs sufficiently have pled facts reflecting that Smith's conduct was incidental to her legitimate responsibility to assign overtime hours and foreseeable as a direct outgrowth of that responsibility -- certainly after Gilmore became aware of the scheme in October of 2006. Id. (See 2d Am. Compl. ¶¶ 17, 22, 24, 38.) The complaint articulates that Smith's "scheme was designed to extract money[]" rather than to benefit DOT. (Id. ¶ 37.) The process Smith followed for assigning overtime hours, corrupted as it was by kickback requirements, can fairly be said to have been undertaken nonetheless on DOT's behalf and ...


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