United States District Court, District of Columbia
MEMORANDUM OPINION AND ORDER
P. Mehta United States District Judge
Michael Molock, Randal Kuczor, Carl Bowens, Jose Fuentes,
Christopher Milner, Jon Pace, and Sarah Strickland
(collectively, “Plaintiffs”) are current and
former employees of Whole Foods grocery stores in the
District of Columbia, Georgia, Maryland, North Carolina,
Oklahoma, and Virginia. On behalf of a putative class of
similarly-situated past and present employees of Whole Foods,
they bring this action against Defendants Whole Foods Market,
Inc. (“WFMI”), and Whole Foods Market Group, Inc.
(“WFM Group”), to recover all wages and damages
owed to them as a result of the allegedly unlawful manner in
which Whole Foods conducted its “Gainsharing”
program, a bonus program designed to incentivize individual
Whole Foods grocery store departments to operate under budget
by sharing cost savings with employees.
the court is Defendants' Motion to Dismiss
Plaintiffs' Second Amended Class Action Complaint. For
the reasons herein, the court grants in part and denies in
part Defendants' Motion to Dismiss.
the seven named Plaintiffs in this action are or were
employed in Whole Foods grocery stores throughout the United
States. Second Am. Compl., ECF No. 28 [hereinafter 2d Am.
Compl.], ¶¶ 32-99. Beginning in 1986 and throughout
Plaintiffs' employment, Whole Foods stores nationwide
used a profit-sharing program-what Whole Foods referred to as
its “Gainsharing” program-to incentivize
department productivity and revenue. Id. ¶ 15.
Under the program, as part of the employee compensation
package, Whole Foods awarded bonuses to employees whose
departments performed under budget by automatically
distributing the surplus savings among the employees in that
department. Id. During the hiring and orientation
process for new Whole Foods stores employees, Defendants
provided Plaintiffs with information about the Gainsharing
program. See Id. ¶ 16 (Benefits Orientation
Training illustrations). Plaintiffs assert that Whole Foods
store managers, department team leaders, and human resources
employees provided each of them with materials explaining
Gainsharing bonuses and expressly represented during their
interviews and throughout their employment that mandatory
Gainsharing bonuses were part of the employee compensation
package. See Id. ¶¶ 32-99. Plaintiffs also
assert that throughout their employment, Defendants posted
Gainsharing reports listing guaranteed wages for employees to
view each month, at least once a month. See Id.
Plaintiffs relied on these representations to accept offers
of employment, and once employed, to work to increase the
productivity of their departments in order to create a
surplus. See id.
Plaintiffs accepted employment and became Team
Members-thereby vesting in the Gainsharing program-they
worked to create a surplus in their departments and therefore
were entitled to Gainsharing bonuses. See Id.
However, each Plaintiff alleges that he or she was denied
these bonuses throughout his or her entire employment at
Whole Foods stores, because Defendants intentionally
manipulated and undermined the Gainsharing program in two
ways: (1) by imposing a nationwide scheme of
“shifting” labor costs, and (2) by establishing
“Fast Teams.” Id. ¶¶ 18-25.
Under the practice of “shifting” labor costs, if
a department came in over budget, Defendants instructed store
leadership to “shift” the labor costs of that
department to a department that had a budget surplus.
Id. ¶¶ 18-31. Payroll/Benefits Specialists
at each Whole Foods grocery store then effectuated labor cost
shifting by manually altering employee time records otherwise
automatically recorded in a Kronos computer system and then
submitting the manipulated records to WFMI corporate
headquarters for payroll processing. Id. ¶ 20.
As a result of this practice, the Gainsharing bonuses owed to
employees of departments that performed under
budget-including Plaintiffs-were reduced by the costs
unlawfully “shifted” to those departments.
Id. ¶¶ 24-25. The decisio n to
“shift ” labor costs was authorized, made, and
ratified at the executive level by Defendants in order to
steal bonuses earned by employees nationwide and pad company
profits. Id. ¶ 21. Additionally, the use of
“Fast Teams” allowed employees to float from one
department to another, purportedly to help departments out as
needed. Id. ¶ 22. According to Plaintiffs,
however, Defendants used Fast Teams to shift labor costs
among departments without properly accounting for their work,
thereby failing to administer and pay the appropriate bonuses
required by the Gainsharing program. Id.
admitted to misconduct publicly, but claimed that
manipulation of the Gainsharing program was an isolated
problem, not one that plagued stores nationwide. In public
statements, Defendants asserted that the malfeasance occurred
in only nine of the 457 Whole Foods stores and was
perpetrated by nine store managers who “engaged in a
policy infraction that allowed the managers to benefit from a
profit-sharing program at the expense of store
employees.” Defs.' Mot. to Dismiss Second Am.
Compl., ECF No. 30 [hereinafter Defs.' Mot.], Ex. A-1,
ECF No. 30-3 [hereinafter AP Article]; see 2d Am.
Compl. ¶¶ 26, 29; Pls.' Mem. in Opp'n to
Defs.' Mot., ECF No. 32 [hereinafter Pls.'
Opp'n], Ex., ECF No. 32-4 [hereinafter Washington Post
Article]. Defendants terminated those nine store managers.
Molock, Kuczor, Milner, Bowens, Pace, and Fuentes each were
employed in at least one of the nine Whole Foods grocery
stores in which Defendants have admitted that employees were
deprived of earned Gainsharing bonuses. 2d Am. Compl. ¶
26. Defendants subsequently sent Whole Foods executives to
the nine stores, where they spoke to store emplo
yees-including Plaintiffs-and admitted to misconduct related
to the Gainsharing program. Plaintiffs claim that Defendants
attempted to pay small sums to employees at these nine stores
to “buy peace.” Id. ¶¶ 27-28.
Class Action Allegations
seek to bring this case on behalf of themselves and all other
employees of Whole Foods who were employed by Whole Foods in
the District of Columbia, Georgia, Maryland, North Carolina,
Oklahoma, Virginia, and throughout the country. Id.
¶ 100. They seek to define the putative class as
“past and present employees of Whole Foods who were not
paid wages owed to them under the Gainsharing program.”
Id. ¶ 101. Plaintiffs propose to include within
the class the following subclasses:
a. Past and present employees of Whole Foods who were
employed in the District of Columbia and did not receive all
earned wages at least twice during each calendar month on
regular paydays in violation of the District of Columbia Wage
Payment and Collection Law.
b. Past employees of Whole Foods who were employed in the
District of Columbia and were not paid all earned wages
within 7 days after resignation or termination.
c. Past and present employees of Whole Foods who were
employed in the State of Maryland and did not receive all
earned wages at least once in every 2 weeks or twice in each
month on regular paydays, in violation of MD Code, Labor and
Employment, § 3-502.
d. Past employees of Whole Foods who were employed in the
State of Maryland and were not paid all earned wages for work
that the employee performed before the termination of
employment, on or before the employee's next anticipated
payday, in violation of MD Code, Labor and Employment, §
e. Past and present employees of Whole Foods who were
employed in the State of Maryland and were not at the time of
their hiring provided full and accurate notice of their rates
of pay, in violation of MD Code, Labor and Employment, §
f. Past and present employees of Whole Foods who were
employed in the State of Oklahoma and did not receive all
earned wages at least twice each calendar month on regular
paydays designated in advance by the employer, in violation
of 40 Okl. St. § 165.2.
g. Past employees of Whole Foods who were employed in the
State of Oklahoma and were not paid all earned wages, less
offsets and less any amount over which a bona fide
disagreement exists, at the employee's next anticipated
payday, in violation of 40 Okl. St. § 165.3.
Id. ¶ 101(a)-(g).
filed this action on December 20, 2016. See Compl.,
ECF No. 1. After Plaintiffs amended their original Complaint,
Defendants moved for dismissal, and the court heard oral
argument on Defendants' motion on May 19, 2017.
See Defs.' Mot. to Dismiss Am. Compl., ECF No.
15. Before the court ruled, Plaintiffs moved for leave to
file a Second Amended Complaint, and over Defendants'
objection, the court granted leave to amend. See
Mem. Op. & Order, ECF No. 27.
the third iteration of the Complaint, Plaintiffs assert the
following claims: (1) breach of contract and breach of the
duty of good faith and fair dealing (Count I); (2) unjust
enrichment (Count II); (3) failure to pay wages upon
discharge in violation of D.C. Code § 32-1303 (Count
III); (4) failure to pay wages in violation of D.C. Code
§ 32-1302 (Count IV); (5) failure to maintain accurate
employment records in violation of D.C. Code § 32-1008
(Count V); (6) failure to pay wages upon discharge in
violation of Md. Code § 3-504 (Count VI); (7) failure to
pay wages in violation of Md. Code § 3-502 (Count VII);
(8) failure to inform of wages in violation of Md. Code
§ 3-504 (Count VIII); (9) failure to pay wages upon
discharge in violation of Okla. Stat. tit. 40, § 165.3
(Count IX); (10) failure to pay wages in violation of Okla.
Stat. tit. 40, § 165.2 (Count X); and (11) fraud (Count
XI). 2d Am. Compl. ¶¶ 107-70.
moved to dismiss the Second Amended Complaint in its entirety
on July 21, 2017, pursuant to Rules 12(b)(1), 12(b)(2), and
12(b)(6) of the Federal Rules of Civil Procedure. Defs.'
Mot. Specifically, Defendants contend that: (1) all claims
against WFMI and portions of the claims against WFM Group
should be dismissed for lack of personal jurisdiction
pursuant to Rule 12(b)(2); (2) all claims, including the
nationwide class claims, should be dismissed for lack of
Article III standing pursuant to Rule 12(b)(1); and (3) all
claims should be dismissed for failure to state a claim
pursuant to Rule 12(b)(6). Defs.' Mot., Defs.' Mem.
of Points & Auth. in Supp. of Defs.' Mot., ECF No.
30-1 [hereinafter Defs.' Mem.], at 6. Plaintiffs opposed
Defendants' Motion. See Pls.' Opp'n.
Defendants' motion is now ripe for consideration.
motion to dismiss under Rule 12(b)(2), the plaintiff bears
the burden of establishing a factual basis for personal
jurisdiction. Crane v. N.Y. Zoological Soc., 894
F.2d 454, 456 (D.C. Cir. 1990). A plaintiff can survive a
motion to dismiss if she makes a “prima facie”
showing of personal jurisdiction. Edmond v. U.S. Postal
Serv. Gen. Counsel, 949 F.2d 415, 424 (D.C. Cir. 1991).
“[T]o establish a prima facie case, plaintiffs are not
limited to evidence that meets the standards of admissibility
required by the district court. Rather, they may rest their
argument on their pleadings, bolstered by such affidavits and
other written materials as they can otherwise obtain.”
Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005).
The court resolves all factual discrepancies in the record in
favor of the plaintiff. See Crane, 894 F.2d at 456.
Rule 12(b)(1), the plaintiff bears the burden of establishing
that the court has subject-matter jurisdiction. See Lujan
v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). In
deciding a Rule 12(b)(1) motion, the court “may
consider materials outside the pleadings, ” but
“must still accept all of the factual allegations in
the complaint as true.” Jerome Stevens Pharm., Inc.
v. Food & Drug Admin., 402 F.3d 1249, 1253-54 (D.C.
Cir. 2005) (citation and alteration omitted). “Because
subject-matter jurisdiction focuses on the court's power
to hear the plaintiff's claim, a Rule 12(b)(1) motion
imposes on the court an affirmative obligation to ensure that
it is acting within the scope of its jurisdictional
authority.” Grand Lodge of Fraternal Order of
Police v. Ashcroft, 185 F.Supp.2d 9, 13 (D.D.C. 2001).
As such, “‘the plaintiff's factual
allegations in the complaint will bear closer scrutiny in
resolving a 12(b)(1) motion' than in resolving a 12(b)(6)
motion for failure to state a claim.” Id.
(quoting 5A Charles A. Wright & Arthur R. Miller, Fed.
Prac. & Proc. Civ. 2d § 1350).
evaluating a motion under Rule 12(b)(6), the court
“construe[s] 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, however, “a legal conclusion couched as a factual
allegation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007)). To survive a motion to dismiss, the
complaint “must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.'” Id. (quoting
Twombly, 550 U.S. at 570). A claim is plausible on
its face “when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Rule 12(b)(2) Personal Jurisdiction
court begins by determining whether it can exercise personal
jurisdiction over WFMI and WFM Group. E.g.,
Forras v. Rauf, 812 F.3d 1102, 1105 (D.C. Cir.
2016); see Williams v. Romarm, SA, 756 F.3d 777, 781
n.1 (D.C. Cir. 2014) (approving district court's decision
to address personal jurisdiction before deciding whether it
had subject matter jurisdiction). Personal jurisdiction takes
two forms: (1) “general or all-purpose
jurisdiction” or (2) “specific or case-linked
jurisdiction.” Goodyear Dunlop Tires Operations,
S.A. v. Brown, 564 U.S. 915, 919 (2011). The court need
not address general jurisdiction here because Plaintiffs only
contend that the court has specific jurisdiction over
Defendants. See Pls.' Opp'n at 5, 12
(asserting that Plaintiffs have established “specific
personal jurisdiction” over WFMI and WFM Group).
Specific jurisdiction is case-specific. “In contrast to
general, all-purpose jurisdiction, specific jurisdiction is
confined to adjudication of issues deriving from, or
connected with, the very controversy that establishes
jurisdiction.” Goodyear, 564 U.S. at 919
(citation omitted). Stated differently, specific jurisdiction
exists if a claim is related to or arises out of the
non-resident defendant's contacts with the forum. See
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466
U.S. 408, 414 n.8 (1984).
plaintiff seeking to establish specific jurisdiction over a
non-resident defendant must make two showings. She must
“establish that specific jurisdiction comports with the
forum's long-arm statute, D.C. Code § 13-423(a), and
does not violate due process.” FC Inv. Group LC v.
IFX Markets, Ltd., 529 F.3d 1087, 1094-95 (D.C. Cir.
2008). As pertinent to this case, the District of Co
lumbia's long-arm statute ...