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Harris v. Medical Transportation Management, Inc.

United States District Court, District of Columbia

March 5, 2018

ISAAC HARRIS, et al., Plaintiffs,
v.
MEDICAL TRANSPORTATION MANAGEMENT, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          AMIT P. MEHTA UNITED STATES DISTRICT JUDGE.

         This case concerns drivers who claim that they have not been paid in accordance with federal and local wage laws for transporting Medicaid patients in the District of Columbia. Defendant Medical Transportation Management, Inc., is a private company that contracts with the District of Columbia to “manage and administer” non-emergency transportation services for Medicaid recipients. Defendant does not itself supply these transportation services; rather, it contracts with various companies that own vehicles and employ drivers for that purpose. Defendant considers itself a “broker” of transportation services.

         Plaintiffs Isaac Harris, Darnell Frye, and Leo Franklin work as drivers for companies that contract with Defendant to provide transportation services. They bring this class action to recover wages that they allege their employers have not paid them and similarly situated drivers. Plaintiffs contend that, even though Defendant is not their “employer” in the ordinary sense of that word, Defendant is legally liable for their unpaid wages as a “joint employer” or “general contractor” under federal and local laws. Plaintiffs' claims arise under four federal and District of Columbia wage statutes: (1) the Fair Labor Standards Act, (2) the D.C. Minimum Wage Act, (3) the D.C. Living Wage Act, and (4) the D.C. Wage Payment and Collection Law. Plaintiffs also advance a common law breach-of-contract claim on the theory that they are third-party beneficiaries of the contract between Defendant and the District of Columbia, which requires Defendant and transportation companies to pay no less than the current living wage.

         Defendant seeks dismissal of Plaintiffs' claims in their entirety. In its Motion to Dismiss, Defendant argues that: (1) it cannot be held liable for the alleged wage violations because it is neither a “joint employer” nor “general contractor” under the relevant wage laws; (2) Plaintiffs' line of work is exempted from the D.C. Living Wage Act; and (3) Plaintiffs are not third-party beneficiaries of the contract between Defendant and the District of Columbia and, therefore, do not have standing to enforce it.

         For the reasons that follow, Defendant's Motion to Dismiss is granted as to the breach of contract claim, but denied as to the federal and District of Columbia wage claims.

         I. BACKGROUND

         A. Factual Background

         Federal Medicaid regulations provide that a state Medicaid plan must: “(a) [s]pecify that the [state] Medicaid agency will ensure necessary transportation for beneficiaries to and from providers; and (b) [d]escribe the methods that the agency will use to meet this requirement.” 42 C.F.R. § 431.53. Under its Medicaid State Plan, the District of Columbia uses both public and private transportation options to ensure that benefits recipients are able to get to and from providers. Depending on the circumstances, recipients may receive bus tokens, Metro fare cards, taxicab vouchers, medi-van or other van transportation, or non-emergency ambulance services to meet their transportation needs.[1]

         The District of Columbia does not deliver transportation services directly to Medicaid patients. Rather, it uses a “transportation broker system” to “effectively and efficiently administer [non-emergency transportation] services.” See generally Def.'s Motion to Dismiss, ECF No. 10, Ex. 2, ECF No. 10-2 [hereinafter “Contract”], ¶ C.4.3.3.; see also Compl., ECF No. 1, ¶¶ 22-24. To that end, the District of Columbia has contracted with Defendant Medical Transportation Management, Inc., to “manage and administer” the District's transportation broker system. Contract ¶ C.5. The District first contracted with Defendant around 2007, and during the last decade the parties have entered into new agreements or extensions multiple times. See Compl. ¶¶ 22-24. The most recent contract-a three-year, $85 million contract-took effect in December 2015. See id. at 24; see generally Contract. The court refers to this most recent contract when referencing the agreement's terms.

         Per the agreement, Defendant is required to serve as the “Gatekeeper of transportation service requests” from Medicaid recipients. Contract ¶ C.1(c). Defendant is required to create and operate a call center to receive and process patients' transportation requests. Id. ¶ C.1(b). Defendant must validate a recipient's eligibility and assess the medical necessity of the requested transportation, id., and upon doing so, determine the “most Appropriate Mode of Transportation, ” which may include public transportation, id. ¶ C.1(d). Additionally, Defendant must establish “a Comprehensive Transportation Network offering [a] number and variety of transportation providers to meet the needs of Recipients.” Id. ¶ C.1(a). This includes contracting with privately-owned transportation companies of the kind that employ Plaintiffs in this case. See Compl. ¶¶ 18- 19, 26. The Contract specifically bars Defendant from “own[ing] or operat[ing] any vehicle to be used for transport with the NET program, ” Contract ¶ C.5.1.5; see also Compl. ¶¶ 25, and federal regulations are to the same effect, 42 C.F.R. § 440.170(a)(4)(ii)(A).

         Plaintiffs Isaac Harris, Darnell Frye, and Leo Franklin are current or former drivers for companies that provide non-emergency medical transportation services to Medicaid patients in the District of Columbia. Compl. ¶¶ 1, 21; see id. ¶¶ 49, 62, 67, 78, 89. All of their employers have agreements with Defendant to provide such services. Id. ¶ 22; see also Id. ¶¶ 18, 26-28. According to Plaintiffs, although Defendant is not their direct employer, Defendant controls their “daily operations.” Id. ¶ 27. Specifically, they allege that Defendant has the authority to exercise control over the transportation provider in various ways, “including hiring and firing [of providers' employees], the terms and conditions of employment and employees' daily responsibilities, payment of wages, and record retention relating to the employees.” Id. Defendant's alleged control manifests itself in a multitude of ways. For example, Defendant “required” Plaintiffs to pass background checks and drug tests as a prerequisite to being hired as drivers. Id. ¶¶ 50, 68, 79; see also id. ¶ 34(c). Defendant also sets minimum qualifications for drivers, including that they must be at least 21 years old, speak English, and be physically capable of assisting patients. Id. ¶ 34(c). Once hired, Plaintiffs and all other drivers were required to complete a training administered by Defendant and held at its offices. Id. ¶¶ 51, 69, 80; see also id. ¶ 34(b). Some Plaintiffs even had to complete retraining during their employment in order to retain their positions. See, e.g., id. ¶¶ 69, 80. Defendant also requires providers to share copies of drivers' personnel records, and Defendant, in turn, maintains its own personnel files containing drivers' records. See id. ¶ 38. In addition, Defendant requires the transportation providers to ensure drivers are both insured and that Defendant is listed as an “Additional Insured” on their policies. Id. ¶ 37. Defendant also imposes upon drivers standards of conduct. See id. ¶ 82.

         The Contract also contains a wage provision. It requires Defendant to “comply with the most recent and future revisions of all federal and District of Columbia laws, ” and names the D.C. Living Wage Act as one of the laws by which Defendant must abide. Id. ¶¶ 39-40; see also Contract ¶¶ C.2, H.8.1, H.8.7-H.8.9.

         Plaintiffs allege that they have not been compensated consistent with federal and state wage laws. In all of their driving positions-collectively, they have worked for four different transportation companies-each Plaintiff worked 40-plus hour work-weeks for a fixed rate, regardless of the number of hours he worked. E.g. Id. ¶ 54-56 (alleging that Harris's “effective hourly wage” was approximately $7.12); id. ¶ 72-74 (alleging that Frye's “effective hourly wage” was about $4.79); id. ¶¶ 88-90 (alleging that Franklin's “effective hourly wage” ranged between $5 and $8.18 when working for one transportation provider, and between $3.61 to $8.63 when driving for another company). Plaintiffs did not receive time-and-a-half for their overtime hours. E.g., id. ¶¶ 55, 57 (alleging that Harris was paid a $463 a week by Star Transportation, even though he regularly worked 65-hour work weeks); id. ¶¶ 63-64 (alleging that Harris received a “flat rate of $1200.33 biweekly” for weeks in which he worked more than 40 hours while driving for a transportation provider); id. ¶¶ 72-75 (alleging Plaintiff Frye received $350 a week while driving for a transportation provider, despite working an average of 73 hours a week); id. ¶¶ 85-87, 90 (alleging that Franklin was paid between $325 to $475 a week while working for a transportation provider, even though he worked between 55 and 90 hours a week). As a result, Plaintiffs claim they, and other similarly situated drivers, were grossly underpaid.

         B. Procedural History

         On July 13, 2017, Plaintiffs filed a five-count class action against Defendant. See generally Compl. In Count One, they allege that Defendant violated the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., by failing to pay Plaintiffs the minimum wage and overtime rates required by the law. Compl. ¶¶ 124-32. Counts Two, Three, and Four respectively allege that Defendant violated the D.C. Minimum Wage Act, D.C. Code § 32-1001 et seq.; the D.C. Living Wage Act, D.C. § 2-220.01 et seq.; and the D.C. Wage Payment and Collection Law, D.C. Code § 32-1301 et seq. Compl. ¶¶ 133-162. Finally, Count Five alleges that Defendant breached its contract with the District of Columbia by violating the Living Wage Act. Id. ¶¶ 163-69.

         Defendant responded with a Motion to Dismiss on August 31, 2017. See generally Def.'s Mot. to Dismiss, ECF No. 10 [hereinafter Def.'s Mot.]. The court held argument on Defendant's Motion on January 22, 2018.

         II. LEGAL STANDARD

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a complaint. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). “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 facially plausible when “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The factual allegations in the complaint need not be “detailed”; however, the Federal Rules demand more than “an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id.

         In evaluating a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court must accept a plaintiff's factual allegations as true and “construe the complaint ‘in favor of the plaintiff, who must be granted the benefit of all inferences that can be derived from the facts alleged.'” Hettinga v. United States, 677 F.3d 471, 476 (D.C. Cir. 2012) (quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979)). The court need not accept as true either “a legal conclusion couched as a factual allegation, ” Papasan v. Allain, 478 U.S. 265, 286 (1986), or “inferences . . . unsupported by the facts set out in the complaint, ” Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). If the facts as alleged fail to establish that a plaintiff has stated a claim upon which relief can be granted, then a court must grant the defendant's Rule 12(b)(6) motion. See Am. Chemistry Council, Inc. v. U.S. Dep't of Health & Human Servs., 922 F.Supp.2d 56, 61 (D.D.C. 2013).

         III. DISCUSSION

         A. Fair Labor Standards Act Count

         There is no allegation in this case that any Plaintiff was employed directly by Defendant. Rather, Plaintiffs' contention is that, under the Fair Labor Standards Act (“FLSA”), Defendant is a “joint employer” equally responsible for the payment of legally compliant wages. Defendant argues that Plaintiffs have not alleged facts that could support the plausible inference that it- along with the transportation providers-jointly employed Plaintiffs. See Def.'s Mot. at 9-16. It advances two primary arguments. First, Defendant asserts that, to the extent Defendant imposes requirements on the hiring of drivers, including background checks and qualification requirements, those are mere “quality control” or “minimum qualification” standards that do not legally rise to employer-level control. Id. at 11-14. Indeed, Defendant states that many of Plaintiffs' allegations concerning its involvement in their work “are not imposed by [Defendant] MTM, but are in fact required by the District of Columbia as reflected in the Contract [between Defendant and the District].” Id. at 11. Second, Defendant maintains that Plaintiffs critically fail to allege facts showing that Defendant has any control over setting Plaintiffs' work schedules and their rates of pay. See Id. at 12-15. The absence of such facts, Defendant claims, is “inconsistent with the existence of an employer-employee relationship between the Plaintiffs and [Defendant].” Id. at 16. Plaintiffs counter that Defendant is taking an “unduly narrow interpretation” of the term “joint employer, ” and that, under a correct reading, they have alleged facts that are sufficient to establish a joint employer relationship. See Pls.' Mem. in Opp'n to Def.'s Mot. to Dismiss, ECF No. 13 [hereinafter Pl.'s Opp'n], at 1, 7-22.

         The FLSA conditions liability on the existence of an employer-employee relationship. See 29 U.S.C. § 206(a). The Act's definition of “employer” is expansive, as it “includes any person acting directly or indirectly in the interest of an employer in relation to an employee. Id. § 203(d); Falk v. Brennan, 414 U.S. 190, 195 (1973) (noting the “expansiveness of the FLSA's definition of ‘employer'”). An entity “employs” an individual if it “suffer[s] or permit[s]” the individual to work.” 29 U.S.C. § 203(g). To that end, an employee may be employed by more than one employer. The Act's regulations make this clear:

A single individual may stand in the relation of an employee to two or more employers at the same time under the Fair Labor Standards Act of 1938, since there is nothing in the act which prevents an individual employed by one employer from also entering into an employment relationship with a different employer. A determination of whether the employment by the employers is to be considered joint employment or ...

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