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Jones v. Changsila

United States District Court, District of Columbia

September 20, 2017

ALSIS JONES, Plaintiff,
PRAMOTE CHANGSILA, et al., Defendants.



         Plaintiff Alsis Jones, a former employee at two Sala Thai restaurants, brings this action against both restaurants as well as the restaurants' owner and accountant. Jones asserts two sets of claims relating to the restaurants' payroll and tax reporting practices: First, he contends that the restaurants, their owner, and the accountant violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207, by failing to pay him overtime wages to which he was entitled. Second, he alleges that they committed an assortment of common law torts by falsely reporting to the Internal Revenue Service (“IRS”) and state tax authorities that he was paid several thousands of dollars in tips, which, in fact, he never received. He alleges that these false reports caused him to incur substantial, unfounded tax liabilities.

         Defendants move to dismiss all of these claims, as well as a claim that Jones does not bring but that he alludes to in the background section of his amended complaint.[1] Dkt. 16. Most notably, Defendants contend that Jones fails to state a claim under the FLSA, that his common law claims are preempted by the FLSA, and that, in any event, his claims are time barred. For the reasons explained below, the Court will GRANT in part and DENY in part Defendants' motion to dismiss.

         I. BACKGROUND

         The complaint, Dkt. 14, sets forth the relevant facts, which the Court must accept as true for purposes of the pending motion. See Wood v. Moss, --- U.S. ---, 134 S.Ct. 2056, 2065-67 & n.5 (2014).

         A. The Parties

         Originally from Thailand, Jones immigrated to the United States and was employed at two Sala Thai restaurants in the D.C. metropolitan area from 2006 to 2008. Dkt. 14 at 4-6 (Am. Compl. ¶¶ 5, 16). One restaurant was located in the District of Columbia and was incorporated under D.C. law as “Green T Group, Inc.” See Dkt. 14-1 at 2; Dkt. 14 at 4-5 (Am. Compl. ¶ 8 & n.3). At some point after Jones ceased working for Sala Thai, Green T Group was sold to “Green T Group II, Inc., ” which continues to do business in the District of Columbia. See Dkt. 14 at 4-5 (Am. Compl. ¶ 8 & n.3). According to Jones, Green T Group II is the “successor in interest” to the original Green T Group. Id. at 4 (Am. Compl. ¶ 6). The second Sala Thai restaurant is located in Bethesda, Maryland and is incorporated under Maryland law as “Ja-Roen-D Inc.” See Id. at 5 (Am. Compl. ¶ 9); Dkt. 14-1 at 2.

         During Jones's employment, Green T Group and Ja-Roen-D (collectively, “Sala Thai”) “shar[ed] the same employees [and] management.” Dkt. 14 at 4 (Am. Compl. ¶ 7). Both companies were owned (in whole or in part) by Pramote Changsila, who “operated the [Sala Thai restaurants] under his sole control” and was responsible for “all employment decisions.” Id. (Am. Compl. ¶¶ 6-7). The companies also shared “accounting[, ] . . . tax preparation[, ] and payroll services, ” which were provided by Hans Ravesteijn. Id. at 4-5 (Am. Compl. ¶¶ 7, 10).

         The complaint names Changsila, Ravesteijn, and the two Sala Thai restaurants-Green T Group II and Ja-Roen-D-as defendants.

         B. Overtime Allegations

         Changsila initially hired Jones to work at the D.C. restaurant as a “manager.” Id. at 5-6 (Am. Compl. ¶ 16). But, although given this title, Jones did not have the power to hire or fire employees, and “Changsila required [him] to perform standard labor . . . duties as a cook, busboy, bartender, waiter or even cashier on a daily basis.” Id. at 8-9 (Am. Compl. ¶¶ 26, 30). Jones also was told that he would “be compensated every two weeks . . . with a salary in the approximate amount of $1, 500.00 based on a 40-hour workweek, ” yielding an hourly rate of $18.75 per hour and an annual salary of “approximately $30, 000.”[2] Id. at 6 (Am. Compl. ¶¶ 16, 18). Soon after Jones started, however, Changsila increased his hours to “70-80 hours” per week and required him also to work at the Bethesda, Maryland restaurant. Id. (Am. Compl. ¶ 18). Jones alleges that despite working more than 70 hours each week, he “never received more than . . . $1, 500 every two weeks [in] compensation.” Id. (Am. Compl. ¶ 17). Rather, according to Jones, Changsila and Ravesteijn told him “throughout his . . . employment” that he was not entitled to overtime wages because he was a “manager.” Id. at 8 (Am. Compl. ¶ 27). Finally, Jones claims that Changsila and Sala Thai “did not keep records of work hours for any employee, ” id. at 10 (Am. Compl. ¶ 33), nor did Changsila or Ravesteijn document Jones's compensation, id. at 8-9 (Am. Compl. ¶ 28).

         C. Tax Reporting Allegations

         Jones further alleges that Changsila “individually and through his agents [Ravesteijn and Sala Thai] willfully and systematically engaged in ‘wage theft' or ‘payroll fraud.'” Id. at 7 (Am. Compl. ¶ 23). In particular, Ravesteijn “falsely and knowingly” prepared tax documents, including W-2 forms, that “misrepresented [Jones's] pay” by reporting tip income, id. (Am. Compl. ¶ 22), and Defendants then submitted these false documents to the IRS and tax authorities in the District of Columbia and Maryland, id. at 8 (Am. Compl. ¶ 24). Jones maintains that he “never received any tip[s], ” and that, in fact, Changsila or Ravesteijn told him that he was not entitled to receive tips because he was a manager. Id. at 10-11 (Am. Compl. ¶ 37).

         By way of example, the complaint sets forth detailed allegations with respect to tax year 2007. According to Jones, Defendants reported his income for 2007 in multiple W-2s, which, taken together, falsely indicated that he earned nearly $30, 000 in tips. Id. at 11 (Am. Compl. ¶¶ 39, 40). These allegedly fraudulent W-2s had the effect of doubling his reported income from the $30, 000 or so that he actually received to the $60, 000 or so that Defendants reported, leaving Jones with a tax liability of approximately $14, 000. Id. at 10-12 (Am. Compl. ¶¶ 36, 40). In support of this allegation, Jones points to a “Wage and Income Transcript” for the 2007 tax period from the IRS, which is attached to his complaint. See Id. at 11 (Am. Compl. ¶ 40); Dkt. 14-1. That “transcript” indicates (1) that Jones was issued a W-2 from “Green T Group” and a second W-2 from “Ja-Roen-D;” (2) that he received $32, 907 for his work at Green T Group ($19, 607 in wages and $13, 300 in tips); and (3) that he received $28, 610 for his work at Ja-Roen-D ($18, 610 in wages and $10, 000 in tips). Dkt. 14-1 at 2. In the aggregate, then, the two restaurants reported that Jones received $61, 517 in compensation ($38, 217 in wages and $23, 300 in tips).

         Jones was unaware of Defendants' “fraudulent accounting practices, ” Dkt. 14 at 10 (Am. Compl. ¶ 35), and, indeed, he was affirmatively misled by Changsila, who told him between 2009 and 2013 that “the additional income [in the form of tips] . . . was an IRS or accounting mistake” and that Changsila and Ravesteijn “were working with the taxing authorities . . . to correct the situation[, ] [which] had been complicated by the sale of one . . . of the Sala Thai restaurants, ” id. at 12 (Am. Compl. ¶ 47). For several years, Jones apparently believed Changsila and expected that Defendants would fix the purported mistake. Id. at 12 (Am. Compl. ¶ 48). Meanwhile, because an outstanding tax liability would have impaired his ability to bring his minor daughter from Thailand to the United States, Jones “had no choice but to enter into a payment plan . . . to pay the[] taxes until the issue was cleared up by the defendants.” Id. at 12- 13 (Am. Compl. ¶ 49). He completed the five-year plan in 2015.[3] Id. at 11-12 (Am. Compl. ¶¶ 40, 48). At some point in early 2014, Jones asked Changsila to remedy the reporting error with the IRS. Id. at 13 (Am. Compl. ¶ 51). Changsila “felt insulted and became angry and threatened [him].” Id. (Am. Compl. ¶ 51). When Jones requested Sala Thai's records on tips from Changsila, he “was told that no accounting records exist[ed]” due to the sale of one of the restaurants. Id. (Am. Compl. ¶ 52).

         Jones retained counsel in February 2014, id. at 13-14 (Am. Compl. ¶ 54), and his attorney sent a letter to Changsila complaining about the reporting error, see Dkt. 14-2 at 2-3 (letter from Athan Tsimpedes to Ja-Roen-D). In response, Changsila allegedly “sent a relative to [Jones's] [place of] employment, ” which Jones interpreted as a “veiled threat” intended to “intimidat[e]” him and to discourage him “from taking legal action.” Dkt. 14 at 13-14 (Am. Compl. ¶ 54). In addition, counsel for Sala Thai wrote to Jones's lawyer, asserting that Sala Thai was “at a loss to understand the allegations your letter raises;” that the “separate[] incorporat[ion]” of the two Sala Thai restaurants “probably account[ed] for [Jones's] confusion;” that the description of the facts contained in the letter from Jones's counsel was “inaccurate;” and that Sala Thai had “no knowledge of any incorrect payroll check being issued to your client.” Dkt. 14-3 at 2-3. That letter closed by requesting that Jones's counsel provide copies of “his tax returns and any IRS audit or assessment notice so the years in question can be researched to see what paychecks are at issue, and how the withholding tax computations were prepared incorrectly, as you contend.” Id. at 3. Jones's lawyer responded by providing additional details about Jones's allegations and threatening to bring suit in the absence of a resolution of the dispute. Dkt. 14-4 at 2-3.

         D. Procedural History

         Jones filed this action in July 2015. See Dkt. 1. After Defendants moved to dismiss for failure to state a claim, Dkt. 8, Jones filed an amended complaint, Dkt. 14. The now-operative complaint asserts seven claims. Jones first alleges that Defendants intentionally violated the FLSA, 29 U.S.C. § 207, by “fail[ing] and refus[ing] to compensate” him for overtime work (Count I). Dkt. 14 at 19-20 (Am. Compl. ¶¶ 82-84). By his calculations, Defendants owe him approximately $67, 500 (or, if treble damages are available, $202, 500). Id. at 6 (Am. Compl. ¶ 19). Jones also seeks to pursue his FLSA claim as a “collective action on behalf of himself and all other similarly situated individuals” who worked for Sala Thai from 2007 to the present, a class that he estimates would comprise at least forty individuals. Id. at 18-19 (Am. Compl. ¶¶ 71-76). On behalf of the putative class, Jones seeks damages for “all unpaid overtime wages” as well as “an equal amount in liquidated damages.” Id. at 20 (Am. Compl. Count I Prayer).

         The complaint also asserts six common law claims based on the alleged fraudulent tax reporting scheme. He brings the first four of those claims against Changsila and Ravesteijn, including claims for (1) intentional misrepresentation (Count II); (2) constructive fraud (Count III); (3) fraudulent concealment (Count IV); and (4) aiding and abetting (Count V). Id. at 20-22 (Am. Compl. ¶¶ 85-108). And he asserts his final two claims against all four defendants, including claims for (5) an accounting (Count VI), and (6) unjust enrichment (Count VII). Id. at 22-23 (Am. Compl. ¶¶ 109-117).

         Defendants have moved to dismiss for failure to state a claim. Dkt. 16. They first contend that the complaint fails adequately to allege that Jones was eligible for overtime compensation under the FLSA or that Green T Group II and Ravesteijn were his “employers.” Dkt. 16-1 at 6-11. Second, Defendants take issue with references to the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962, 1964, found in the background section of the complaint; recognizing that Jones does not invoke RICO in any of the substantive counts of his complaint, Defendants nonetheless, out of an abundance of caution, move to dismiss any RICO claim that he might be deemed to have brought. Dkt. 16-1 at 11-20. Third, Defendants argue that the FLSA preempts Jones's common law claims. Id. at 5-6. Finally, they maintain that all of Jones's claims are time barred. Id. at 20-23.


         To survive a motion to dismiss, a complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible if the plaintiff pleads “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Although “detailed factual allegations” are not required, the complaint must contain “more than labels and conclusions, [or] a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. The Court must “assume [the] veracity” of “well-pleaded factual allegations, ” Iqbal, 556 U.S. at 679, and must “grant [the] plaintiff the benefit of all inferences that can be derived from the facts alleged, ” Sparrow v. ...

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