# DeSilva v. North Shore-Long Island Jewish Health System, Inc.

> District Court, E.D. New York · March 16, 2011 · 770 F. Supp. 2d 497

URL: https://www.frixlaw.com/law-library/cases/2474543

## Case

- **Full name:** Claudia DeSILVA, Et Al., Plaintiffs, v. NORTH SHORE-LONG ISLAND JEWISH HEALTH SYSTEM, INC., Et Al., Defendants
- **Court:** District Court, E.D. New York
- **Decided:** March 16, 2011
- **Citations:** 770 F. Supp. 2d 497; 50 Employee Benefits Cas. (BNA) 2829; 2011 U.S. Dist. LEXIS 27138; 2011 WL 899296
- **Precedential status:** Published
- **Opinion:** Opinion by Bianco
- **Judges:** Joseph F. Bianco
- **Cited by:** 63 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/2474543

## How later opinions describe it (automated extraction)

- explaining that while “the Court finds that the FLSA preempts the state common law claims [including breach of contract claims] that are based upon defendants’ alleged failure to fully compensate plaintiffs for all overtime hours worked, … the common law claims [including brea…
- finding RICO claim preempted because, inter alia, “allowing plaintiffs to pursue a civil RICO claim grounded in the same facts as plain *490 tiffs’ FLSA claim would, essentially, create a new 'private right of action that would allow plaintiffs to seek treble damages— instead …
- finding RICO claim preempted because, inter alia, ‘‘allowing plaintiffs to pursue a civil RICO claim grounded in the same facts as plaintiffs’ FLSA claim would, essentially, create a new private right of action that would allow plaintiffs to seek treble damages — instead of ..…
- holding that to state a claim for wage violations under the FLSA “plaintiffs must provide at least some approximation of the overtime hours that defendants required them to work and a time frame for when those hours were worked”
- explaining that “civil RICO claims [are] precluded where . . . the RICO claims are based on the same facts that would allow recovery under [an] alternative scheme” such as the NLRA

## Opinion text

MEMORANDUM AND ORDER
JOSEPH F. BIANCO, District Judge:
Plaintiffs Claudia DeSilva, Gregg Lamb-din, Kelly Iwasiuk, Eileen Bates-Bordies, Margaret Hall, and Brenda Gaines (collectively, “plaintiffs”) commenced this action on March 24, 2010, on behalf of themselves and others similarly situated, against defendants North Shore-Long Island Jewish Health System, Inc., North Shore-Long Island Jewish Health Care, Inc., Peninsula Hospital Center, Forest Hills Hospital, Franklin Hospital, Glen Cove Hospital, Huntington Hospital Association, Long Island Jewish Medical Center, Long Island Jewish Hospital, Zucker Hillside Hospital, North Shore University Hospital, Plain-view Hospital, Schneider Children’s Hospital, Southside Hospital, Staten Island University Hospital, Syosset Hospital, Michael J. Dowling, Joseph Cabral, and North Shore-Long Island Jewish Health System 403B Plan (collectively, “defendants” or “LIJ”),
1
alleging violations of the Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201
et seq.
(“FLSA”), the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001
et seq.
(“ERISA”), the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961
et seq.
(“RICO”), and New York Labor Law (“NYLL”). Plaintiffs also alleged a number of state common law claims, namely: breach of implied oral contract, breach of express oral contract, breach of implied covenant of good faith and fair dealing,
quantum meruit,
unjust enrichment, fraud, negligent misrepresentation, conversion, and estoppel. Plaintiffs are seeking,
inter alia,
unpaid wages and overtime, an order enjoining defendants from engaging in the pay violations that form the basis of plaintiffs’ complaint, an award crediting plaintiffs for all hours worked, liquidated damages under the FLSA and NYLL, and an amount equal to the value that would make plaintiffs whole for defendants’ alleged violations.
Defendants contend,
inter alia,
that plaintiffs have failed to state plausible FLSA or ERISA claims and that plaintiffs’ civil RICO and state common law claims are preempted by the FLSA, and, accordingly, defendants have moved to dismiss plaintiffs’ Second Amended Complaint. Plaintiffs oppose defendants’ motion and, in turn, have moved for expedited notice to all class members. For the reasons set forth herein, the Court grants in part and denies in part defendants’ motion to dismiss, and denies plaintiffs’ motion for expedited notice as moot. Specifically, plaintiffs’ FLSA claims — construed only as
*504
claims regarding overtime and not as claims regarding “straight time” or “gap time” pay — are dismissed without prejudice for failure to state a claim. Likewise, plaintiffs’ NYLL claim is dismissed without prejudice for failure to state a claim. Plaintiffs’ RICO cause of action is dismissed with prejudice to the extent that this claim is based upon defendants’ failure to pay plaintiffs overtime, and thus is duplicative of plaintiffs’ FLSA claim. However, to the extent that the RICO cause of action is based upon defendants’ alleged failure to pay plaintiffs for “straight time” wages, this claim is not preempted by the FLSA. Nevertheless, this remaining RICO cause of action is dismissed without prejudice for failure to state a claim. As to plaintiffs’ state common law claims, these claims are dismissed with prejudice as preempted by the FLSA to the extent that they seek overtime wages and, thus, are duplicative of the FLSA claim. The surviving common law claims are construed as seeking only unpaid “straight time” pay. However, plaintiffs’ breach of implied oral contract, breach of express oral contract, breach of implied covenant of good faith and fair dealing,
quantum meruit,
fraud, and negligent misrepresentation claims are dismissed without prejudice for failure to state a claim. Plaintiffs’ estoppel claim is dismissed because, as pled by plaintiffs, “estoppel” is not a distinct cause of action but instead is an equitable bar to defendants’ assertion of a statute of limitations defense. Plaintiffs, however, may assert equitable estoppel at an appropriate point in the litigation, should defendants choose to assert a statute of limitations defense. Regarding plaintiffs’ ERISA claims, the claim for failure to keep accurate records is dismissed without prejudice for failure to plead exhaustion of administrative remedies. As to the breach of fiduciary duty claim, the Court is denying defendants’ motion to dismiss this claim, but will allow defendants to renew this motion after the parties have conducted limited discovery on the issue of how benefits are determined under the controlling ERISA plans. Defendants’ motion to dismiss on the grounds of preemption under the Labor Management Relations Act (“LMRA”) is also denied at this juncture without prejudice. Finally, plaintiffs’ motion for expedited notice is dismissed with leave to renewal at a later date, if plaintiffs choose to re-plead their FLSA claims and are able to sufficiently plead a cause of action.
I. Background
A. Facts
2
Named plaintiffs work or have worked for defendants in various nursing positions and in various locations.
3
(Second Amended Complaint (“SAC”) ¶¶ 65-71.) Accord
*505
ing to plaintiffs, each of the hospitals and locations for which plaintiffs worked is part of the North Shore-Long Island Jewish Health System (“LIJ”), which is a consortium that operates over seventy health care facilities and centers.
(Id.
¶¶ 21-23.) Plaintiffs purport to represent a class of over 38,000 current and former employees of the defendant hospitals and LIJ system “whose pension and 401(k) or 403(b) plans were not credited with their non-reduced weekly wages and correct overtime compensation” and “who were injured by defendants’ scheme to cheat employees out of their property and to convert the employees’ property, including their wages and/or overtime pay....”
(Id.
¶¶ 7,12.)
Specifically, plaintiffs contend that LIJ maintained three illegal pay policies — the meal and break deduction policy, the unpaid pre-and post-schedule work policy, and the unpaid training policy — that denied plaintiffs and class members compensation for all hours worked, including overtime hours and hours that would have been compensated at applicable premium pay rates.
(Id.
¶¶74, 104, 159.) As to the meal and break deduction policy, plaintiffs note that defendants’ timekeeping system automatically deducts time from employees’ paychecks for meals and breaks.
(Id.
¶ 75.) However, plaintiffs allege that they do, in fact, work during their meals and breaks and are not paid for that work.
(Id.
¶ 77;
see also id.
¶ 82 (“[Djefendants expect Plaintiffs and Class Members to be available to work throughout their shifts and consistently require their employees to work during their unpaid breaks.”).) Plaintiffs further allege that defendants know, or should have known, that plaintiffs work through their breaks, because,
inter alia,
such work has been performed in plain sight of defendants’ management and also at management’s request.
(Id.
¶¶ 78, 87-88.) When asked by employees about the meal and break deduction policy, “defendants affirmatively stated that the employees were being fully paid for the work time for which they were entitled to be paid, even though defendants knew compensable work time was being excluded from the employees’ pay.”
(Id.
¶ 90.) Plaintiffs claim that these representations by defendants were part of a course of conduct to defraud plaintiffs “from the pay they were owed, and to mislead them into believing they had been fully paid as required by law.”
(Id.)
Plaintiffs state that they are entitled to compensation for all time spent working for defendants, including during plaintiffs’ breaks, and that if all of their hours had been properly compensated, certain time spent working for defendants would have been compensated under “applicable premium pay rates.”
(Id.
¶¶ 93-94.)
Furthermore, plaintiffs allege that, pursuant to defendants’ “unpaid pre- and post-schedule work policy,” plaintiffs are required to perform work before and after their scheduled shifts, but are not fully and properly compensated for such work.
(Id.
¶¶ 96-99.) Likewise, plaintiffs claim that, under defendants’ “unpaid training policy,” plaintiffs are required to attend compensable training programs but are not paid for all time spent attending such programs.
(Id.
¶¶ 100-103.) As a result of these “unpaid work policies,” defendants required plaintiffs and class members to work hours under and in excess of forty hours per week without full compensation for those hours.
(Id.
¶¶ 174-75.) Plaintiffs also contend that, through paystubs and payroll information provided to employees, defendants deliberately concealed from plaintiffs and other employees that they were not being fully compensated for all hours worked and “misled them into believing they were being paid properly.”
(Id.
¶ 108.)
*506
B. Procedural History
Plaintiffs filed their original Complaint in this action on March 24, 2010. Prior to defendants’ answer, plaintiffs filed an Amended Complaint on June 16, 2010. On August 23, 2010, defendants filed a motion to dismiss, and plaintiffs filed a motion for expedited notice to affected employees pursuant to Section 216(b) of the FLSA. On September 24, 2010, plaintiffs filed their opposition to defendants’ motion to dismiss, and defendants filed their opposition to plaintiffs’ motion for expedited notice. The parties submitted their replies in support of their respective motions on October 8, 2010. The Court heard oral argument on the parties’ motions on November 22, 2010. During oral argument, the Court informed plaintiffs that their Amended Complaint clearly was deficient insofar as it did not provide sufficient information regarding the named plaintiffs. Accordingly, the Court granted plaintiffs leave to file a Second Amended Complaint to remedy this deficiency, and directed that the complaint as amended should set forth the facilities at which the named plaintiffs worked, the positions they held, and the approximate dates of their employment. Plaintiffs filed their Second Amended Complaint on December 8, 2010. The parties thereafter filed several letters to supply the Court with supplemental authority.
The motions are fully submitted and the Court has considered all of the parties’ arguments.
II. Motion to Dismiss
A. Standard of Review
In reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the plaintiff.
See Cleveland v. Caplaw Enters.,
448 F.3d 518, 521 (2d Cir.2006). “In order to survive a motion to dismiss under Rule 12(b)(6), a complaint must allege a plausible set of facts sufficient ‘to raise a right to relief above the speculative level.’ ”
Operating Local 619 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC,
595 F.3d 86, 91 (2d Cir.2010) (quoting
Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 , 127 S.Ct. 1955 , 167 L.Ed.2d 929 (2007)). This standard does not require “heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.”
Twombly,
550 U.S. at 570 , 127 S.Ct. 1955 .
The Supreme Court recently clarified the appropriate pleading standard in
Ashcroft v. Iqbal,
setting forth a two-pronged approach for courts deciding a motion to dismiss. — U.S. --■, 129 S.Ct. 1937 , 173 L.Ed.2d 868 (2009). The Court instructed district courts to first “identify[ ] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” 129 S.Ct. at 1950 . Though “legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”
Id.
Second, if a complaint contains “well-pleaded factual allegations^] a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.”
Id.
“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.”
Id.
at 1949 (quoting and citing
Twombly,
550 U.S. at 556-57 , 127 S.Ct. 1955 (internal citations omitted)).
The Court notes that, in adjudicating this motion, it is entitled to consider:
*507
“(1) facts alleged in the complaint and documents attached to it or incorporated in it by reference, (2) documents ‘integral’ to the complaint and relied upon in it, even if not attached or incorporated by reference, (3) documents or information contained in defendant’s motion papers if plaintiff has knowledge or possession of the material and relied on it in framing the complaint, (4) public disclosure documents required by law to be, and that have been, filed with the Securities and Exchange Commission, and (5) facts of which judicial notice may properly be taken under Rule 201 of the Federal Rules of Evidence.”
In re Merrill Lynch & Co., Inc.,
273 F.Supp.2d 351, 356-57 (S.D.N.Y.2003) (internal citations omitted),
affd in part and vacated in part on other grounds sub nom., Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
395 F.3d 25 (2d Cir. 2005),
vacated on other grounds,
547 U.S. 71 , 126 S.Ct. 1503 , 164 L.Ed.2d 179 (2006);
see also Cortee Indus., Inc. v. Sum Holding L.P.,
949 F.2d 42 , 48 (2d Cir.1991) (“[T]he district court ... could have viewed [the documents] on the motion to dismiss because there was undisputed notice to plaintiffs of their contents and they were integral to plaintiffs’ claim.”);
Brodeur v. City of N.Y.,
No. 04 Civ. 1859, 2005 WL 1139908 , at *2-3, 2005 U.S. Dist. LEXIS 10865 , at *9-10 (E.D.N.Y. May, 13, 2005) (stating court could consider documents within the public domain on a Rule 12(b)(6) motion to dismiss).
B. Discussion
1. FLSA
Defendants argue that plaintiffs have failed to set forth sufficient factual allegations to support a plausible claim for relief under the FLSA. For the reasons set forth below, the Court agrees.
Under the FLSA, “no employer shall employ any of his employees ... for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207 (a)(1). The regular, minimum rates at which employees must be paid are established by section 206 of the FLSA. 29 U.S.C. § 206 (a). In addition, the FLSA sets forth a broad civil enforcement scheme, pursuant to which “[a]ny employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages.” 29 U.S.C. § 216 (b). In an action to recover unpaid overtime wages under FLSA, a plaintiff must show that: “(1) he was an employee who was eligible for overtime
({i.e.,1
not exempt from the Act’s overtime pay requirements); and (2) that he actually worked overtime hours for which he was not compensated.”
Hosking v. New World Mortg., Inc.,
602 F.Supp.2d 441, 447 (E.D.N.Y.2009).
Plaintiffs have identified three policies or practices of defendants that allegedly have resulted in plaintiffs not being compensated for “all hours worked.” (SAC ¶ 74.) In particular, plaintiffs have pointed to: (1) defendants’ “meal and break deduction policy,” pursuant to which defendants would automatically deduct time from employees’ paychecks for meal and break time regardless of the fact that plaintiffs and class members were often required to work through those times
(id.
¶¶ 75-95); (2) defendants’ “unpaid pre- and post-schedule work policy,” pursuant to which plaintiffs and class members were not compensated for work that defendants “suffered or permitted” them to perform
*508
before and/or after their scheduled shifts
(id.
¶¶ 96-99); and (3) defendants’ “unpaid training policy,” under which plaintiffs and class members were not compensated for training sessions that defendants “suffered or permitted” them to attend
(id.
¶¶ 100-103). As a result of these policies, plaintiffs allege that they “regularly worked hours both under and in excess of forty per week and were not paid for all of those hours”
(id.
¶¶ 159, 174-75), and, likewise, that class members were employees who were “not paid their regular or statutorily required rate of pay for all hours worked”
(id.
¶ 72), including for hours worked in excess of forty hours per week
(id.
¶ 159).
4
At oral argument, the Court informed plaintiffs that their Amended Complaint clearly was deficient with regard to the information provided about the named plaintiffs. In particular, the Amended Complaint failed to state where the named plaintiffs worked, what positions they held, or what their dates of employment were. Accordingly, the Court directed that plaintiffs file a Second Amended Complaint solely for the purpose of correcting these specific defects. Plaintiffs followed the Court’s direction, and submitted a Second Amended Complaint that provides the positions that named plaintiffs held with defendants, the hospitals at which they worked, and the time periods during which they were employed. The Court finds that, with the addition of these facts, the Second Amended Complaint provides sufficient information regarding the named plaintiffs.
See Acho v. Cort,
No. C 09-00157 MHP, 2009 WL 3562472 , at *3 & n. 2 (N.D.Cal. Oct. 27, 2009) (noting that “the addition of an alleged employment period is required in the complaint” and finding that plaintiff stated a claim where plaintiff “indicated the time period during which he worked for defendant,” thereby enabling defendants to review its employment records to determine “the specific number of overtime hours worked by plaintiff’);
ef. Harding v. Time Warner, Inc.,
No. 09-cv-1212 (WQH)(WMC), 2010 WL 457690 , at *5 (S.D.Cal. Jan. 26, 2010) (“The First Amended Complaint contains no factual allegations indicating when and where Plaintiff was employed by Time Warner. This is a minimal requirement necessary
*509
to enable a defendant to frame a response to a FLSA complaint.”).
However, as to the specifics of the alleged FLSA overtime violations, the Court finds that plaintiffs have not alleged sufficient facts to survive a motion to dismiss. Significantly, after oral argument, three district courts in this Circuit dismissed complaints that were nearly identical to the complaint brought here.
See Sampson v. Medisys Health Network Inc.,
No. 10-ev-1342 (SJF)(ARL), 2011 WL 579155 (E.D.N.Y. Feb. 8, 2011);
Nakahata v. New York-Presbyterian Healthcare Sys., Inc.,
Nos. 10-cv-2661 (PAC), 10-cv-2662 (PAC), 10-ev-2683 (PAC), 10-cv-3247 (PAC), 2011 WL 321186 (S.D.N.Y. Jan. 28, 2011);
Wolman v. Catholic Health Sys. of Long Island, Inc.,
No. 10-cv-1326 (JS)(ETB), 2010 WL 5491182 (E.D.N.Y. Dec. 30, 2010). The Court finds the analysis in these decisions to be persuasive. In particular, each of these courts found that plaintiffs’ complaint — which appears to be a boilerplate complaint that has been filed, with only minor variations, in at least a dozen different cases — failed to state a claim for relief insofar as it contained “no factual allegations about when the alleged unpaid wages were earned
(i.e.,
which lunches and breaks were worked through without proper compensation), or the number of hours allegedly worked without compensation — the heart of the claim.”
Nakahata,
2011 WL 321186 , at *4;
accord Sampson,
2011 WL 579155 , at *4 (“These conclusory allegations are not sufficient to plead a violation of the overtime provision .... [Plaintiffs do not allege any facts to support the general conclusion that by working during the challenged periods they would have been working in excess of forty hours in one week period. Without alleging facts that support the claim that by working during the challenged periods plaintiffs, or the named plaintiff at a minimum, would be working compensable overtime hours, plaintiffs have not given defendants fair notice of the basis of the FLSA overtime claim as is required by
Twombly
and
Iqbal.”
(internal citations omitted));
Wolman,
2010 WL 5491182 , at *4. To state a claim for relief for overtime violations under the FLSA, “the complaint should, at least approximately, allege the hours worked for which these wages were not received.”
Zhong v. August August Corp.,
498 F.Supp.2d 625, 628 (S.D.N.Y.2007). Here, plaintiffs have alleged only that they “regularly” worked hours “in excess of forty” hours per week. (SAC ¶ 159.) However, as noted in
Wolman,
2010 WL 5491182 , it is not enough “to ‘merely allege[ ]’ that Plaintiffs worked ‘beyond forty hours per week.’ ”
Id.
at *4 (quoting
Zhong,
498 F.Supp.2d at 630 ). Instead, plaintiffs must provide at least some approximation of the overtime hours that defendants required them to work and a time frame for when those hours were worked.
See Connolly v. Smugglers’ Notch Mgmt. Co.,
No. 09-cv-131, 2009 WL 3734123 , at *2-3 (D.Vt. Nov. 5, 2009) (plaintiff stated a FLSA overtime claim where she alleged that she “averaged working between 2100-2300 hours every year. As best a [sic] she can recall, Plaintiff worked 60-70 hours in some work weeks, worked 50 hours in other weeks and up to 45 hours in other weeks.”);
Nichols v. Mahoney,
608 F.Supp.2d 526, 547 (S.D.N.Y.2009) (where plaintiffs alleged that they worked an average of fifty to sixty-five hours per week, plaintiffs stated an overtime violation claim because they “specified the approximate time period they were employed by defendants ... and the approximate number of overtime hours they each worked per week without receiving overtime pay”).
As stated by the court in
Pruell v. Caritas Christi,
No. 09-11466-GAO, 2010 WL 3789318 (D.Mass. Sept. 27, 2010), in dis
*510
missing another substantially similar complaint:
The plaintiffs also cannot avoid their pleading obligations by arguing that [their employer] has better access to information concerning hours worked or wages paid. Even when facts are peculiarly within the possession of a defendant, a plaintiff is not excused from his pleading obligations. The necessary facts should be pled upon “information and belief.” But that is not the case here. The facts necessary to state a claim ... are not peculiarly within the possession of [defendant]. The plaintiffs should know approximately how many hours they worked per week and their hourly rate or weekly wages. [Defendant] may have the exact records necessary to ultimately prove the wage claims, but approximations are sufficient to state a wage claim.
Id.
at *4 (internal citations omitted). Thus, the burden placed on plaintiffs here is not an onerous one. They are not required to state every single instance of overtime work or to state the exact amount of pay which they are owed; instead, they are only required to provide some approximation of the overtime hours that they worked. Plaintiffs here, however, have failed to satisfy even this minimal burden.
Furthermore, as to the “unpaid work policies” alleged in the complaint, plaintiffs have failed to provide
any
factual allegations whatsoever to support their claims regarding the “unpaid preliminary and postliminary schedule work policy” or the “unpaid training policy.” Their allegations regarding these policies consist only of four paragraphs per policy that contain nothing but vague and unfounded conclusions that plaintiffs were not being properly paid. As explained in
Wolman,
2010 WL 5491182 , at *2, “not all time spent on work related tasks before or after a shift is compensable.” Likewise, although time spent attending training sessions is generally compensable, there are specific statutory exceptions to this rule.
Id.
at *3 . The Second Amended Complaint, however, contains no factual allegations that would enable the Court to determine whether the training programs that defendants “suffered or permitted” plaintiffs to attend were compensable under the FLSA. Accordingly, this Court agrees with the court in
Wolman
and finds that plaintiffs have failed to state a plausible claim for relief based upon either the unpaid pre- and post-schedule work policy or the unpaid training policy.
See also Sampson,
2011 WL 579155 , at *4 n. 1.
But see Hinterberger v. Catholic Health,
No. 08-cv380S, 2008 WL 5114258 , at *2 (W.D.N.Y. Nov. 25, 2008) (finding plaintiffs satisfied notice pleading requirements where they identified specific policies and practices of defendants, including an automatic break deduction policy, a practice of not paying plaintiffs for work performed before and after their scheduled shifts, and a practice of not compensating plaintiffs for attendance at compensable training sessions).
Thus, because plaintiffs have failed to approximate the number of overtime hours that they worked as a result of any of the “unpaid work policies,” and because they have failed to provide any specific factual allegations for their claims regarding the unpaid training policy and the unpaid pre- and post-schedule work policy, the Court finds that plaintiffs have failed to state a claim for a FLSA overtime violation and, thus, dismisses plaintiffs’ FLSA claim without prejudice.
5
*511
2. RICO
In addition to their claims under the FLSA, plaintiffs have also brought a cause of action for civil RICO violations. Specifically, plaintiffs contend that defendants devised a scheme to defraud plaintiffs by concealing that defendants were willfully and systematically withholding from plaintiffs their regular or statutorily required rate of pay for all hours worked. (SAC ¶ 120.) In furtherance of this scheme, defendants allegedly mailed payroll checks to plaintiffs that were “false and deceptive because they misled Plaintiffs and Class Members about the amount of wages to which they were entitled, the number of hours which they had worked, and whether defendants had included all compensable time, as well as their status and rights under the FLSA.”
(Id.
¶ 128.) Plaintiffs claim that these deceptive payroll checks prevented plaintiffs from discovering that defendants were not paying them properly — in other words, because plaintiffs were not experts in proper payments under labor laws, were not aware of what time is compensable for interrupted and missed meal breaks, and did not know how defendants’ computer systems determined the amount plaintiffs were being paid, plaintiffs relied upon defendants’ representations (orally and in plaintiffs’ paychecks) that plaintiffs were being properly compensated.
(Id.
¶¶ 137-41.) Plaintiffs allege that the mailing of these misleading payroll checks constituted individual acts of mail fraud, which serve as the predicate acts underlying plaintiffs’ RICO claim.
(Id.
¶ 126.) Defendants have moved to dismiss this cause of action on the grounds that,
inter alia,
plaintiffs’ civil RICO claim is preempted
6
by the FLSA and plaintiffs
*512
lack standing under RICO because the alleged predicate acts (ie., the mailing of the paychecks) did not proximately cause plaintiffs’ claimed injuries. For the reasons set forth herein, the Court finds that the RICO cause of action is unavailable to the extent that it is duplicative of the FLSA claims seeking unpaid overtime. However, to the extent that plaintiffs are seeking unpaid wages for hours that were not overtime hours — in other words, wages that would not be covered by the requirements of the FLSA — the civil RICO claims are not duplicative of the FLSA claims and, thus, are not precluded. Nevertheless, the Court agrees with defendants that, regardless of the specific type of wages sought, plaintiffs lack standing under RICO because they cannot establish as a matter of law, given the allegations in the pleadings, that the defendants’ alleged “racketeering” activity was the proximate cause of plaintiffs’ injuries. Plaintiffs’ RICO claims also suffer from a number of other pleading defects. Accordingly, for the reasons set forth
infra,
the Court dismisses plaintiffs’ RICO cause of action,
a. FLSA Preemption
As an initial matter, it is a “well-established principle that, in most contexts, a precisely drawn, detailed statute pre-empts more general remedies.”
Hinck v. United States,
550 U.S. 501, 506 , 127 S.Ct. 2011 , 167 L.Ed.2d 888 (2007) (internal quotation marks and citations omitted). This principle was first espoused by the Supreme Court in
Brown v. General Services Administration,
425 U.S. 820 , 96 S.Ct. 1961 , 48 L.Ed.2d 402 (1976), in which the Court held that the “careful blend of administrative and judicial enforcement powers” set forth in Section 717 of the Civil Rights Act of 1964 led “unerringly to the conclusion that [Section 717] ... provides the exclusive judicial remedy for claims” falling within its scope.
Id.
at 833-35 , 96 S.Ct. 1961 . In so holding, the Court pointed to subsections (b) and (c) of the statute, which “establish[ed] complementary administrative and judicial enforcement mechanisms.”
Id.
at 831 , 96 S.Ct. 1961 . Specifically, subsection (b) delegated to the Civil Service Commission full authority to enforce the provisions of the statute, while subsection (c) permitted an aggrieved employee to file a civil action and have a federal district court review his claim.
Id.
at 831-32 , 96 S.Ct. 1961 . This private right of action was circumscribed, however, by the requirement that the aggrieved party satisfy certain preconditions before exercising this private right.
Id.
at 832 , 96 S.Ct. 1961 . In addition, subsection (d) of the statute set forth requirements governing venue, the appointment of attorneys, attorneys’ fees, and the scope of relief available.
Id.
The Supreme Court found that the “balance, completeness, and structural integrity” of Section 717 were “inconsistent with the ... contention that the judicial remedy afforded by § 717(c) was designed merely to supplement other putative judicial relief.”
Id.
Indeed, to allow parties “immediate access to the courts under other, less demanding statutes” would “drive[] [Section 717] out of currency.”
Id.
at 833, 96 S.Ct. 1961 . Accordingly, the Court explained that “[i]t would require the suspension of disbelief to ascribe to Congress the design to allow its careful and thorough remedial scheme to be circumvented by artful pleading.”
Id.
*513
Applying the reasoning in
Brown
to the instant case, this Court finds that the FLSA sets forth a similarly detailed statutory scheme that “provides for a careful blend of administrative and judicial enforcement powers,”
id.
at 833 , 96 S.Ct. 1961 , and that, accordingly, provides the exclusive remedy for wage and hour violations that fall within the FLSA’s scope. By way of example, the FLSA’s “unusually elaborate enforcement scheme,”
Anderson v. Sara Lee Corp.,
508 F.3d 181, 192 (4th Cir.2007) (citation omitted), establishes criminal penalties for willful violations of the Act, 29 U.S.C. § 216 (a), and specifies the damages that can be sought against employers who violate the FLSA, namely, unpaid wages, liquidated damages, and, in retaliation cases, appropriate legal and equitable relief, including reinstatement and promotion.
See id.
§ 216(b). In addition, the Secretary of Labor is authorized to bring an action in a court of competent jurisdiction to seek unpaid wages and liquidated damages, injunctive relief, and appropriate equitable relief, and to supervise the payment of any unpaid minimum wages or overtime compensation.
See id.
§§ 216-217. An employee may also institute an action against an employer in either federal or state court to recover unpaid wages, liquidated damages, attorneys’ fees, and costs, but, significantly, this private right of action terminates upon the filing of a complaint by the Secretary of Labor.
See id.
§ 216(b)-(c).
Although the Second Circuit has not yet spoken to the precise question raised in this case, this Court’s analysis regarding the comprehensive nature of the FLSA scheme is supported by the Second Circuit’s decision in
Herman v. RSR Security Services, Ltd.,
172 F.3d 132 (2d Cir.1999). In
Herman ,
the Court of Appeals addressed whether employers had a right to the remedy of contribution or indemnification under either the FLSA or through state law based on a violation of the FLSA. In evaluating whether the FLSA barred the remedies of contribution and indemnification, the Court noted that the FLSA had “a comprehensive remedial scheme as shown by the express provision for private enforcement in certain carefully defined circumstances,” and found that “[s]uch a comprehensive statute strongly counsels against judicially engrafting additional remedies.”
Id.
at 144 (internal quotation marks omitted). In addition, with regard to whether the employers could use state common law to pursue contribution or indemnification claims for a violation of the FLSA, the court held that “the FLSA’s remedial scheme is sufficiently comprehensive as to preempt state law in this respect.”
Id.
Furthermore, the First and Fourth Circuits, and several district courts, have similarly held that the FLSA’s broad remedial scheme is exclusive and can preclude parallel actions brought under federal and state law. For example, in
Kendall v. City of Chesapeake, Virginia,
174 F.3d 437 (4th Cir.1999), the Fourth Circuit held that “the elaborate remedial scheme provided in the FLSA demonstrates a congressional intent to prohibit § 1983 actions to enforce ... FLSA rights” to overtime compensation.
Id.
at 439. In
Kendall ,
the plaintiffs had alleged that the defendant City of Chesapeake had fraudulently induced plaintiffs to accept payments and sign releases that concealed defendant’s liability for wrongfully withheld overtime compensation and for liquidated damages.
Id.
at 440 . This fraudulent conduct, according to plaintiffs, violated § 1983 insofar as defendant had “acted ‘to disregard, dishonor, and defeat’ [plaintiffs’] rights under the FLSA.”
Id.
The Fourth Circuit disagreed with plaintiffs’ assessment of their claim, however, and found that although plaintiffs “suggested] that their claim is in some
*514
sense independent of the FLSA ... [they] identified] no source for the right giving rise to their § 1983 claim other than the FLSA.”
Id.
at 441. In holding that “the FLSA implicitly precludes the [plaintiffs’] § 1983 claim by creating a comprehensive enforcement scheme that is incompatible with individual enforcement under § 1983,”
id.
at 442 (internal quotation marks and citation omitted), the court pointed not only to the comprehensiveness of the FLSA scheme, but also to the fact that a plaintiffs private right of action is terminated upon commencement of an action by the Secretary of Labor.
Id.
at 443. Specifically, the Fourth Circuit explained:
[I]n the FLSA Congress manifested a desire to exclusively define the private remedies available to redress violations of the statute’s terms, for the FLSA mandates that the commencement of an action by the Secretary of Labor terminates an employee’s own right of action. [29 U.S.C.] § 216(b). If parallel § 1983 actions were allowed, this provision would become superfluous.
Id.
(internal quotation marks and citation omitted). Because plaintiffs had “cited nothing indicating a Congressional intent to permit a plaintiff to circumvent the carefully tailored statutory scheme created in the FLSA,” the court held that “Congress has evinced a clear intent to preclude the use of § 1983 for the protection of overtime compensation rights secured by the FLSA,” and accordingly dismissed plaintiffs’ § 1983 action.
Id.
(internal quotation marks and citation omitted).
Other courts have likewise held that the FLSA sets forth the exclusive remedy for wage and hour violations that fall within the statute’s scope, thus precluding the use of other statutes or common law actions to remedy alleged FLSA violations.
See, e.g., Anderson,
508 F.3d at 194 (“Congress’s intention to create exclusive remedies was clear in that ‘the FLSA mandates that the commencement of an action by the Secretary of Labor terminates an employee’s own right of action’ — a special feature of the FLSA’s enforcement scheme, found in 29 U.S.C. § 216 (b) and (c), that would be rendered superfluous if workers were able to circumvent that scheme while pursuing their FLSA rights.... Because the FLSA’s enforcement scheme is an exclusive one, we further conclude that the Class Members’ FLSA-based contract, negligence, and fraud claims are precluded under a theory of obstacle preemption.” (quoting
Kendall,
174 F.3d at 443 ));
Roman v. Maietta Constr., Inc.,
147 F.3d 71 , 76 (1st Cir.1998) (holding that plaintiff was not entitled under state law to damages in excess of those provided by the FLSA because “the FLSA is the exclusive remedy for enforcement of rights created under the FLSA” and a “plaintiff cannot circumvent the exclusive remedy prescribed by Congress by asserting equivalent state claims in addition to the FLSA claim” (internal quotation marks and citations omitted));
Petras v. Johnson,
No. 92-cv-8298 (CSH), 1993 WL 228014 , at *2 (S.D.N.Y. June 22, 1993) (dismissing plaintiffs common law tort claims for fraud on the ground that “Congress had created a very detailed and carefully defined right of action to enforce the FLSA overtime rules” and finding that “[c]ourts have consistently held that the [Section 216(b) of the FLSA] is the exclusive remedy for enforcing rights created under the FLSA” (internal quotation marks omitted) (collecting cases)).
7
*515
Applying the analysis of these cases (which the Court finds persuasive) to the current context, the Court finds that allowing plaintiffs to recover under civil RICO for claims that are, at their core, FLSA claims would thwart the careful and comprehensive scheme established by Congress to remedy wage and hour violations falling under the FLSA’s scope. In particular, allowing plaintiffs to pursue a civil RICO claim grounded in the same facts as plaintiffs’ FLSA claim would, essentially, create a new private right of action that would allow plaintiffs to seek treble damages — instead of merely seeking unpaid wages and liquidated damages — and would render meaningless the Secretary of Labor’s right to terminate any private party’s suit should the Secretary decide to file a complaint.
Accordingly, having concluded that FLSA’s remedial scheme is exclusive for violations falling under its purview, the key question for the Court to resolve is whether, and to what extent, plaintiffs’ civil RICO claims are duplicative of their FLSA claims. As alleged in the Second Amended Complaint, defendants’ scheme to defraud “consisted of illegally, willfully and systematically withholding or refusing to pay Plaintiffs and Class Members their regular
or statutorily required
rate of pay for all hours worked.... ” (SAC ¶ 120 (emphasis added).) In addition, plaintiffs allege that defendants concealed from plaintiffs “the amount of wages to which they were entitled, the numbers of hours which they had worked, and whether defendants had included all compensable work time,
as well as their status and rights under the FLSA.” (Id.
¶ 123 (emphasis added).) Thus, from the face of plaintiffs’ complaint, it is plain that their RICO claims rely, at least in part, on plaintiffs’ statutory right to overtime pay under the FLSA. Plaintiffs’ argue that their RICO claims stem not from defendants’ failure to properly compensate plaintiffs for all overtime hours, but instead from defendants’ mailing of deceptive paychecks and consequent “interfere[nce] with [plaintiffs’] legal rights to recover all wages due.” (Pis.’ Opp. at 9.) However, plaintiffs would not have any claim for mail fraud or interference with their rights if they did not have an independent right under the FLSA to compensation for all overtime hours worked. Indeed, as noted
supra,
plaintiffs’ complaint clearly states that the paychecks mailed by defendants were allegedly false and deceptive, in part, because they misled plaintiffs regarding “their status and rights under the FLSA.” (SAC ¶ 123.) Accordingly, to the extent that plaintiffs’ civil RICO claims stem from defendants’ failure to pay overtime due under the FLSA, and from their concealment thereof, the Court finds that the civil RICO claims are precluded under the exclusive remedial scheme set forth in the FLSA.
The Court notes that two other district courts — including the only other court in this Circuit to address this precise issue-have similarly found that the FLSA preempts duplicative actions brought under RICO. For example, in
Choimbol v. Fairfield Resorts, Inc.,
No. 05-cv-463, 2006 WL 2631791 (E.D.Va. Sept. 11, 2006), plaintiffs brought an action alleging that defendants failed to properly compensate plaintiffs for minimum wage and overtime compensation due under the FLSA.
Id.
at *4 . Plaintiffs also brought both a common law fraud claim, alleging that defendants misrepresented to plaintiffs that they were being appropriately compensated for minimum and overtime wages, and a RICO claim, based on the predicate acts of mail fraud, wire fraud, and money laundering.
Id.
In opposition to defendants’ motion to dismiss, plaintiffs argued that their RICO claims should survive because “the FLSA was intended to remedy ‘pedestrian’ viola
*516
tions by employers, [while] RICO [was] designed to address the grand systematic scheme present in this instant case.”
Id.
at *6 . The court, however, rejected plaintiffs’ argument, and noted that “[b]ut for the proscriptions of the FLSA, the Defendants[’] conduct would not constitute the fraudulent scheme Plaintiffs allege.”
Id.
at
*1.
Accordingly, because the FLSA provides “direct relief’ for the violations alleged by plaintiffs, the court held that “the FLSA preempts the assertion of RICO claims.”
Id.
Likewise, in
Eldred v. Corn-force Corporation,
No. 08-cv-1171, 2010 WL 812698 (N.D.N.Y. March 2, 2010), the court dismissed plaintiffs’ civil RICO claims, which were based in part on “mail and wire fraud stemming from the issuance of union cards, withholding of union dues, and failure to pay prevailing wages, overtime, and work-relate travel-time.”
Id.
at *10 . In holding that much of plaintiffs’ RICO claim was duplicative of their FLSA claim and accordingly should be dismissed, the court noted that “[t]his approach ensures that the ‘[a]rtful invocation of controversial civil RICO, particularly when inadequately pleaded’ does not endanger the uniform administration of core concerns of the primary enforcement scheme.”
Id.
(quoting
Norman v. Niagara Mohawk Power Corp.,
873 F.2d 634, 637 (2d Cir.1989)).
8
But see Kuznyetsov v. W. Penn. Allegheny Health Sys.,
No. 09-cv-379, 2009 WL 2175585 , at *3 (W.D.Pa. July 20, 2009) (“[B]ecause ... the general goals of RICO and the FLSA vary, [the court does] not find that the FLSA can preempt the RICO claim in this case.”).
Furthermore, other courts, including the Second Circuit, have found civil RICO claims to be precluded where another federal statute has set forth a broad remedial scheme and where the RICO claims are based on the same facts that would allow recovery under that alternative scheme. In
Norman,
873 F.2d at 636 , plaintiffs brought a RICO cause of action against defendant, alleging that defendant “engaged in a pattern of racketeering in furtherance of a scheme to conceal ... largely unspecified construction deficiencies, excessive costs and management failures.” However, in reality, plaintiffs’ claims stemmed not from these unspecified deficiencies and management failures, but from defendant’s retaliation against plaintiffs after plaintiffs had attempted to bring various violations and defects to the attention of defendant’s management.
Id.
at 635-36 . Accordingly, although plaintiffs had labeled their claims as arising under RICO, the Second Circuit noted that the claims were, in fact, harassment claims that fell directly under the scope of Section 210 of the Energy Reorganization Act. In particular, the Court noted that Section 210 not only “provides a remedy for an employee who has been discriminated against or discharged for making safety complaints” but also “creates a procedural framework for vindication of this right.”
Id.
at 637 . The remedy set forth in the statute, the court held, was exclu
*517
sive and covered plaintiffs’ RICO complaint, which “distilled to its essence, alleged] no more than that appellants were discriminated against for having made complaints about safety.”
Id.
at 637-38 . In so holding, the court explained that “[ajrtful invocation of controversial civil RICO, particularly when inadequately pleaded, cannot conceal the reality that the gravamen of the complaint herein is section 210 harassment.”
Id.
at 637 . Moreover, in
Danielsen v. Bumside-Ott Aviation Training Center, Inc.,
746 F.Supp. 170 (D.D.C.1990),
affd
941 F.2d 1220 (D.C.Cir.1991), the district court noted that courts have particularly refused to apply civil RICO where, as in this case, “a comprehensive administrative scheme exists to remedy violations of federal labor law.”
Id.
at 176. In
Danielsen,
the fraudulent scheme alleged by plaintiffs was the “underpayment of wages and fringe benefits due them pursuant to the [Service Contract Act (“SCA”) ].”
Id.
Because plaintiffs’ RICO claims were “all premised on alleged violations of the SCA,” the court held that the RICO claims could not proceed given the comprehensive scheme established in the SCA.
Id.
As explained by the district court, “[a]doption of plaintiffs’ arguments would, in effect, allow a private right of action under the SCA with a treble damage remedy,” and accordingly, “[b]ecause the Court concludes that plaintiffs’ RICO claims are inextricably intertwined with wage determinations under the SCA,” the court dismissed plaintiffs’ civil RICO claims.
Id.
at 177.
See also Brown v. Keystone Consol. Indus., Inc.,
680 F.Supp. 1212, 1224-26 (N.D.I11.1988) (plaintiff’s civil RICO claim that defendants “fraudulently deprived them of their employment benefits” was preempted by the Labor Management Relations Act and the National Labor Relations Act because “the underlying conduct is wrongful only by virtue of the labor laws”);
Butchers’ Union Local No. 198 v. SDC Inv., Inc.,
631 F.Supp. 1001, 1011 (E.D.Cal.1986) (plaintiffs’ RICO claims based on violations of mail and wire fraud were preempted by National Labor Relations Act because
“but for
the proscriptions of the labor law, defendants’ conduct simply would not be either mail or wire fraud.... Bluntly put, no matter how you cut the complaint, the only conceivable ‘fraud’ is the deprivation of plaintiffs rights under the labor law.” (emphasis in original)).
Accordingly, the Court concludes that, to the extent plaintiffs’ civil RICO claims have merely re-cast plaintiffs’ FLSA claims for unpaid overtime wages under a different label, those RICO allegations are precluded by the exclusive remedial scheme set forth in the FLSA. Plaintiffs, in opposition, point to the FLSA’s Savings Clause as evidence that the FLSA provides “a non-exclusive remedy [that] ... allows for similar claims under both federal and state law.” (Pis.’ Opp. at 7.) However, the Court disagrees that the language of the Savings Clause should be construed to allow plaintiffs to use civil RICO to seek treble damages for what is, in essence, a FLSA violation. Section 218(a) of the FLSA provides, in relevant part, that, “[n]o provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance
establishing a minimum wage higher than the minimum wage established under this chapter or a maximum work week lower than the maximum workweek established under this chapter.”
29 U.S.C. § 218 (a) (emphasis added). By the plain language of this provision, the Savings Clause applies only to laws that establish either a higher minimum wage or a lower maximum workweek. In other words, the Savings Clause operates only to allow states, municipali
*518
ties, or the federal government to pass more protective wage and hour laws in the labor law context. Thus, based upon the face of the statute, the Savings Clause indicates simply that Congress did not intend to preempt the entire labor law
field
— in the context of labor law statutes, the FLSA merely sets the floor for wages owed and the ceiling for hours that can be worked. However, “field preemption” and “obstacle preemption” are different concepts. “Field preemption,” which applies when “Congress has legislated so comprehensively that federal law occupies an entire field of regulation and leaves no room for state law,”
New York SMSA Ltd. Partnership v. Town of Clarkstown,
612 F.3d 97, 104 (2d Cir.2010) (internal quotation marks omitted), is not at issue in this ease. It is clear that New York and other states are free to legislate in the labor law context in order to set a higher minimum wage or a lower maximum workweek. Indeed, no one is arguing in this case that plaintiffs’ claims based upon the New York Labor Law are preempted by the FLSA. Instead, the question here is one of obstacle preemption, a concept which applies, for example, “when a state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”
Pac. Capital Bank, N.A. v. Connecticut,
542 F.3d 341, 351 (2d Cir. 2008) (internal quotation marks and alterations omitted). Here, the Court is analyzing RICO, a federal statute rather than a state law, which, as explained
supra
in note 6, makes the application of the term “preempt” slightly unusual in this context. Nevertheless, the concept is the same — in this case, allowing plaintiffs to pursue a RICO claim to remedy violations of their FLSA rights plainly would stand as an obstacle to enforcement of the FLSA. As explained
supra,
if plaintiffs were allowed to circumvent the remedies set forth in the FLSA and pursue a RICO cause of action instead, the provisions in the FLSA that set forth the damages that employees may seek (which do
not
include treble damages) and that allow the Secretary of Labor to terminate a plaintiffs private right of action should the Secretary choose to institute a suit would both be rendered superfluous. The Court finds that the Savings Clause should not be read to allow such an illogical result.
Cf. Sosnowy v. A. Perri Farms, Inc.,
764 F.Supp.2d 457, 464-68 , 2011 WL 488692, at *6-9 (E.D.N.Y. Feb. 10, 2011) (noting that although the Savings Clause “indicates that Congress did not intend to preempt the entire field of wage law,” the Savings Clause did not operate to allow a plaintiff to pursue remedies for a breach of contract action because “through the comprehensive remedial scheme, Congress struck the intended balance between the purpose of the FLSA and the vindication of its provisions, and therefore allowing additional remedies for duplicative claims would serve as an obstacle to the enforcement of the FLSA”).
Moreover, far from undermining the Court’s conclusion, the Court finds that the plain language of the Savings Clause clearly supports its holding here. As already described, the Savings Clause is carefully circumscribed and operates only to allow states, municipalities, or the federal government to pass more protective wage and hour laws in the labor law context. The Clause, however, says nothing to indicate that parties are allowed to circumvent the enforcement scheme established in the FLSA in order to pursue their wage and hour violation claims under other statutes that have no specific connection to labor laws whatsoever. Clearly, Congress knew how to draft a savings clause to provide that the enforcement of certain types of laws — as in, more protective wage and hour laws — would not be preempted by the requirements of the FLSA. In other
*519
words, Congress knew how to define the boundaries of a savings clause when it so desired, and the fact that it chose to specifically limit the applicability of Section 218(a) to labor laws that were more protective than the FLSA indicates that the Savings Clause was only intended to cover those types of laws and was
not
meant to allow plaintiffs to seek protection for FLSA violations under statutes that have no specific relevance to the labor law context.
Cf. 0 & G Indus., Inc. v. Natl R.R. Passenger Corp.,
537 F.3d 153, 161 (2d Cir.2008) (“[I]f Congress intended [49 U.S.C.] § 28103(b) to apply only to passenger claims, it would have included such qualifying language in the definition of the term ‘claims.’ Congress did not do so____ Because the language is unambiguous on this point, we cannot supply that which is omitted by the legislature.” (footnotes, citations, and quotation marks omitted));
CaHoon Network LP, LLLP v. CSC Holdings, Inc.,
536 F.3d 121, 133 (2d Cir.2008) (“If Congress had meant to assign direct liability to both the person who actually commits a copyright-infringing act and any person who actively induces that infringement, the Patent Act tells us that it knew how to draft a statute that would have this effect.”). The Court declines to extend the language of Section 218(a) to allow plaintiffs to bring parallel federal and state claims alongside an FLSA action where the plain language of the statute indicates that Congress had no such extension in mind.
Thus, to the extent that the factual basis for plaintiffs’ RICO claim is, ultimately, defendants’ failure to properly compensate plaintiffs for all overtime hours worked, the Court concludes that plaintiffs’ RICO claim is preempted. However, plaintiffs also allege that defendants withheld from plaintiffs their
regular
rate of pay for
all
hours worked. (SAC ¶ 120.) In other words, construing the complaint in favor of plaintiffs for purposes of defendants’ motion to dismiss, plaintiffs’ claims are not solely based on defendants’ failure to comply with the FLSA’s overtime compensation requirements, but also are based on defendants’ alleged failure to comply with their contractual obligation to pay plaintiffs for all hours worked, including non-overtime hours that fall outside of the FLSA’s scope. Accordingly, such claims based on unpaid “straight” or “regular” time are not duplicative of the FLSA claims and, accordingly, are not preempted by the FLSA. Nevertheless, for the reasons set forth in the following subsection, the Court finds that, regardless of the type of wages that form the basis for plaintiffs’ RICO claims, plaintiffs’ RICO claims suffer from a variety of pleading defects and, accordingly, must be dismissed.
b. Failure to State a Claim
i. RICO Standing
RICO provides a private cause of action for “[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter.” 18 U.S.C. § 1964 (c). “From this language, courts have extracted the conditions a plaintiff must meet to satisfy RICO’s standing requirements: (1) a violation of section 1962; (2) injury to business or property; and (3) causation of the injury by the violation.”
First Nationwide Bank v. Gelt Funding Corp.,
27 F.3d 763, 767 (2d Cir.1994) (internal quotation marks and citation omitted). “Standing” under RICO, for purposes of a motion to dismiss, is not a jurisdictional concept, but instead is analyzed as a merits issue under Federal Rule of Civil Procedure 12(b)(6).
See Lemer v. Fleet Bank, N.A.,
318 F.3d 113 , 116-17
&
129-30 (2d Cir.2003) (“We hold that lack of RICO standing does not divest the district court of jurisdiction over the action, because RICO standing, unlike other standing doctrines, is sufficiently in
*520
tertwined with the merits of the RICO claim that such a rule would turn the underlying merits questions into jurisdictional issues____In sum, despite describing the proximate causation requirement as ‘RICO standing,’ such standing is not jurisdictional in nature under Fed.R.CivJP. 12(b)(1), but is rather an element of the merits addressed under a Fed.R.Civ.P. 12(b)(6) motion for failure to state a claim.”). The Second Circuit has described RICO standing as “a more rigorous matter than standing under Article III.”
Denney v. Deutsche Bank AG,
443 F.3d 253, 266 (2d Cir.2006).
Moreover, “as a general rule, a cause of action does not accrue under RICO until the amount of damages becomes clear and definite,” and the RICO claims thus become ripe for review.
First Nationwide Bank,
27 F.3d at 768 ;
see also Motorola Credit Corp. v. Uzan,
322 F.3d 130, 135 (2d Cir.2003) (finding that amount of damages alleged was not “clear and definite” and holding that “Plaintiffs lack statutory standing under RICO because their claims are unripe”). Under this rule, a claim will be dismissed for lack of statutory standing, “where the extent of damages are still unknown, [and therefore] a RICO injury remains speculative and unprovable.”
DLJ Mortg. Capital, Inc. v. Kontogiannis,
726 F.Supp.2d 225, 237 (E.D.N.Y.2010) (internal quotation marks omitted).
In addition, as to the causation element, a plaintiff “must allege that the defendant’s violations were a proximate cause of the plaintiffs injury,
i.e.,
that there was a direct relationship between the plaintiffs injury and the defendant’s injurious conduct.”
First Nationwide Bank,
27 F.3d at 769 (internal quotation marks omitted). Thus, it is not enough for a plaintiff to merely allege that a defendant’s actions were the “but-for” cause of plaintiffs injuries; instead, the plaintiff must also allege that the alleged RICO violation was the legal or proximate cause.
Id.
(citing
Holmes v. Sec. Investor Prot. Corp.,
503 U.S. 258, 266 , 112 S.Ct. 1311 , 117 L.Ed.2d 532 (1992)). As recently explained by the Supreme Court, “proximate cause ... requires ‘some direct relation between the injury asserted and the injurious conduct alleged.’ A link that is ‘too remote,’ ‘purely contingent,’ or ‘indirect]’ is insufficient.”
Hemi Group, LLC v. City of New York, N.Y.,
— U.S. -, 130 S.Ct. 983, 989 , 175 L.Ed.2d 943 (2010) (quoting
Holmes,
503 U.S. at 268, 271, 274 , 112 S.Ct. 1311 ). In other words, focusing on “the directness of the relationship between the conduct and the harm .... the compensable injury flowing from a RICO violation necessarily is the harm caused by the predicate acts.”
Hemi Group,
130 S.Ct. at 991 (internal quotation marks and alterations omitted).
Here, plaintiffs have attempted to allege RICO violations under 18 U.S.C. §§ 1962 (a), (c), and (d),
9
and have alleged mail fraud as the predicate act underlying each of those violations.
(See
RICO Case Statement ¶ 1.) As a result of defendants’ alleged RICO violations, plaintiffs claim to have suffered two injuries: first, plaintiffs allege that the fraudulent mailings “concealed] from employees the fact that de
*521
fendants were defrauding them,” which consequently “prevent[ed] employees from discovering that they were being cheated out of their wages” and thus “interfer[ed] with their ability to recover on the legal claims for unpaid wages due to statutes of limitations,” and, second, plaintiffs claim that the mail fraud “made it possible for defendants to continue defrauding employees out of their wages,” thus reducing plaintiffs’ wages (Pis.’ Opp. at 12.) For the reasons set forth herein, the Court finds that neither of these alleged injuries provides plaintiffs with statutory standing under RICO.
(1) Interference with Plaintiffs’ Right to Recover
Plaintiffs’ claimed injury for interference with their right to recover for unpaid wages is not ripe for review. “Perhaps the most important consideration in determining whether a claim is ripe for adjudication is the extent to which the claim involves uncertain and contingent events that may not occur as anticipated, or indeed may not occur at all.”
Lincoln House, Inc. v. Dwpre,
903 F.2d 845, 847 (1st Cir.1990) (internal quotation marks omitted). Here, the injury plaintiffs have alleged — namely, their inability to pursue certain yet-unspecified claims — clearly is contingent upon a court actually dismissing those hypothetical claims as time-barred. However, if the facts alleged by plaintiffs are true, then they would amount to an allegation of fraudulent concealment, which could equitably toll any applicable statutes of limitations. (Indeed, plaintiffs made such an argument in Paragraph 136 of the SAC.) Thus, plaintiffs’ claimed injury is entirely speculative and hinges upon events that have not yet — and may never — come to fruition. A hypothetical inability to recover under certain claims that plaintiffs
might
have pursued and that
might
have been dismissed on statute of limitation grounds does not amount to an injury that ■ is ripe for review under RICO.
10
Other courts have reached a similar conclusion and found RICO claims to be unripe where the injury alleged was contingent upon Uncertain litigation-related events. For example, in
Magnum v. Archdiocese of Philadelphia,
No. 06-cv-2589, 2006 WL 3359642 (E.D.Pa. Nov. 17, 2006), plaintiffs alleged that defendants’ large-scale cover-up of child abuse in the Philadelphia Archdiocese injured plaintiffs by causing them to lose their “ability to pursue personal injury claims as a result of the running of the statute of limitations.”
Id.
at *3 . In holding that plaintiffs failed to state a RICO cause of action, the court noted that “determining the value of that injury for compensatory purposes would be a wholly speculative exercise.”
Id.
at *6 . In addition, the court explained:
Plaintiffs’ claim of injury is entirely contingent on the assumption that they would have prevailed in their individual tort claims in state court had they asserted them in a timely manner; had Plaintiffs’ claims been asserted and denied on the merits, those claims would have had no monetary value and thus cannot be “property” even under Plaintiffs’ theory.
Id.
at *7 . Accordingly, the court dismissed plaintiffs’ RICO cause of action predicated upon the loss-of-claim theory.
Similarly, in
Circiello v. Alfano,
612 F.Supp.2d 111 (D.Mass.2009), plaintiffs claimed injury was “the lost opportunity to
*522
have realized a $10 million award against [defendant] for the wrongful death of her father.”
Id.
at 114 . Specifically, plaintiff claimed that she relied upon defendants’ fraudulent misrepresentations and consequently was “dissuaded and prevented from initiating a claim for medical malpractice.”
Id.
at 113 . The Court found plaintiffs theory to be based on a “series of ‘what ifs’ ” and accordingly dismissed the claim as too speculative to confer standing under RICO.
Id.
at 114 (“If any proposition under RICO is well-established, it is that a RICO damages claim may not be based on mere speculation.”).
See also Lincoln House,
903 F.2d at 847 (“In this case, [plaintiffs] alleged injury is clearly contingent on events that may not occur as anticipated or may not occur at all.... [Plaintiff] alleges only that the [defendants] have engaged in a pattern of racketeering activity to divert the assets of [a defendant] ‘so that those assets might not be reached by [plaintiff], an organization which has a pending claim against [defendant].... Thus, the only injury alleged by [plaintiff] is its hypothetical inability to recover from [defendant],
if
[plaintiff] obtains a judgment, in some amount, in the pending state court breach of contract action. If [plaintiff] were to lose the breach of contract action ... [plaintiff] would have no RICO claim against [defendants]. In these circumstances, [plaintiffs] RICO claim is not now ripe for judicial resolution.” (emphasis in original)).
11
The Court agrees with the reasoning of these other cases and finds that plaintiffs’ alleged injury for their hypothetical inability to recover does not state a RICO claim that is ripe for adjudication.
(2) Reduction in Wages Due to Continuation of Defendants’ Alleged Scheme
Plaintiffs’ other alleged injury-reduction in wages- — also cannot provide standing to pursue a claim under either Section 1962(a) or Section 1962(c). To state a claim under Section 1962(a), a plaintiff must allege: “(1) that a defendant received income from a pattern of racketeering activity; (2) invested that income in the acquisition of a stake
in, or
establishment of, an enterprise distinct from the one from which the income was derived; and (3) that the plaintiff suffered an injury flowing from this reinvestment of racketeering income
distinct from any injury suffered because of the commission of the original predicate acts
of racketeering activity.”
Leung v. Law,
387 F.Supp.2d 105, 120 (E.D.N.Y.2005) (emphasis added). In other words, to establish a 1962(a) violation, the injury alleged must have resulted from the reinvestment of defendants’ rack
*523
eteering income, separate and apart from any injury resulting from the original predicate act.
See, e.g., Ouaknine v. MacFarlane,
897 F.2d 75, 83 (2d Cir.1990) (“[T]he [Supreme Court] specifically stated that a ‘plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property
by the conduct constituting the violation.’
We conclude that because the conduct constituting a violation of § 1962(a) is investment of racketeering income, a plaintiff must allege injury from the defendant’s investment of the racketeering income to recover under § 1962(a).” (quoting
Sedima, S.P.R.L. v. Imrex Co., Inc.,
473 U.S. 479, 496 , 105 S.Ct. 3275 , 87 L.Ed.2d 346 (1985)));
Falise v. Am. Tobacco Co.,
94 F.Supp.2d 316, 349 (E.D.N.Y.2000) (“For civil RICO actions alleging violations of section 1962(a), ‘the plaintiff [must] allege a ‘use or investment’ injury that is
distinct
from the injuries resulting from predicate acts.’ ” (emphasis in original) (quoting
Dis-con, Inc. v. NYNEX Corp.,
93 F.3d 1055, 1063 (2d Cir.1996),
rev’d on other grounds
525 U.S. 128 , 119 S.Ct. 493 , 142 L.Ed.2d 510 (1998))). Plaintiffs have made no such allegations here. In fact, plaintiffs have only alleged one paragraph in the complaint that even marginally addresses the receipt of racketeering proceeds, and have made no allegations whatsoever regarding the reinvestment of that income or how plaintiffs were injured as a result of that reinvestment.
(See
SAC ¶ 132 (“Each defendant received income from a pattern of conduct unlawful under RICO, in which defendants participated through continuous instances of providing Plaintiffs and Class Members with misleading documents which defendants mailed and upon which Plaintiffs and Class Members relied to their detriment.”).) To the extent that plaintiffs are seeking to argue that they were injured because the reinvestment of the funds allowed defendants to continue their scheme to defraud plaintiffs,
12
this claim must fail, as it does not present an injury distinguishable from the original wage theft.
See Lightning Lube, Inc. v. Witco Corp.,
4 F.3d 1153, 1188 (3d Cir. 1993) (“[W]e have recognized repeatedly that this type of allegation — that the use and investment of racketeering income keeps the defendant alive so that it may continue to injure plaintiff — is insufficient to meet the injury requirement of section 1962(a). In such situations, we have held that the fact that a plaintiff claims that the injury allegedly perpetrated on it would not have occurred without the investment of funds from the initial racketeering activity does not change the fact the plaintiffs alleged injury stems from the pattern of racketeering, and not from the investment of funds by the defendant.”);
Falise,
94 F.Supp.2d at 349 (“Plaintiffs allegation that the ‘reinvestment’ of proceeds from the ‘Tobacco Conspiracy Enterprise’ back into [the enterprise] harmed the Trust by perpetuating the scheme is not presently persuasive.... Where reinvestment of racketeering proceeds back into the same RICO enterprise is alleged, the injuries stem proximately not from the investment, but from the predicate acts that make up the racketeering activity.”);
Soberman v. Groff Studios Corp.,
No. 99-cv-1005, 1999 WL 349989 , at *5 (S.D.N.Y. June 1, 1999) (“The allegations that the money was used or invested to further the same scheme are insufficient [to state a claim under § 1962(a) ], since they do not allege a distinct [investment] injury.”).
Furthermore, the Court finds that plaintiffs also lack standing to bring a
*524
claim under 1962(c), insofar as their claimed injury of wage theft (as alleged in the Second Amended Complaint) could not have been, as a matter of law, proximately caused by the RICO predicate acts alleged here. As already noted, to determine whether a plaintiff has sufficiently alleged proximate causation for RICO purposes, “courts look,
inter alia,
to whether the complaint alleges that the plaintiff has suffered an injury flowing directly from the defendants’ commission of the identified predicate acts.”
Leung,
387 F.Supp.2d at 121-22 . However, “[a]n act which proximately caused an injury is analytically distinct from one which furthered, facilitated, permitted or concealed an injury which happened or could have happened independently of the act.”
Red Ball Interior Demolition Corp. v. Palmadessa,
874 F.Supp. 576, 587 (S.D.N.Y.1995). Thus, “a predicate act cannot be deemed to have proximately caused a plaintiffs injury, even if it was an integral part of the underlying criminal scheme, unless the plaintiffs original loss could not have occurred without the commission of the predicate act.”
Leung,
387 F.Supp.2d at 122 .
As an initial matter, a plain reading of the Second Amended Complaint makes clear that the crux of plaintiffs’ RICO allegations is defendants’ withholding of plaintiffs’ wages.
(See, e.g.,
SAC ¶ 120 (“Defendants’ Scheme consisted of illegally, willfully and systematically withholding or refusing to pay Plaintiffs and Class Members their regular or statutorily required rate of pay .... ”);
id.
¶ 121 (“The Scheme involved depriving Plaintiffs and Class Members of their lawful entitlement to wages and overtime.”);
id.
¶ 127 (“Defendants’ predicate acts were related, because they reflected the same purpose or goal (to retain wages and overtime pay due ...); [and] results (retention of wages and overtime pay).... ”).) Thus, the “original” injury forming the basis of plaintiffs’ RICO cause of action is, simply, the retention of plaintiffs’ wages. With this background in mind, it is clear that the predicate acts alleged by plaintiffs
(ie.,
mail fraud) did no more than “further, facilitate, permit, or conceal” plaintiffs’ “original” injury, and were not the acts from which this injury directly flowed. In fact, plaintiffs acknowledge as much in their opposition papers, in which they stated that “by
perpetuating
the defendants’ scheme, defendants’ mailings
made it possible for defendants to continue defrauding
employees out of their wages.” (Pis.’ Opp. at 12 (emphasis added).) Indeed, it is clear that plaintiffs’ original loss could have occurred independent of defendants’ alleged mail fraud, as evidenced by plaintiffs’ voluminous complaint, in which the reduction and withholding of plaintiffs’ wages has formed the basis for an entirely independent set of claims under the FLSA and a variety of common law doctrines.
The Court’s conclusion is supported by the holdings in
Red Ball
and
Leung ,
cited
supra,
in which courts dismissed similar claims for lack of standing. For example, in
Red Ball,
874 F.Supp. at 587 , defendant sent interstate mailings to plaintiff that contained information setting forth the financial condition of the plaintiff company. Defendant also made several oral representations to plaintiff concerning the operation and condition of the plaintiff company.
Id.
Plaintiffs claimed that these mailings and telephone calls were false and misleading because they failed to disclose a variety of acts that the defendant had taken which harmed the company.
Id.
In holding that these predicate acts were not the proximate cause of plaintiffs’ injuries, the court explained:
By the words of the Complaint itself, had the omissions in [defendant’s] mailings and telephone calls never taken place, [plaintiff] “would have been able
*525
to
more effectively
prevent
further
unlawful acts by [defendant].” (emphasis added). Taken at face value, this statement indicates that plaintiffs were harmed by unlawful acts which occurred irrespective of the omissions in the mailings and the telephone calls.... Put simply, plaintiffs assert[] that defendants are liable under RICO because [defendants] undertook a combination of unlawful and fraudulent activities against [plaintiff] ... and then [defendant] failed to inform [plaintiff] of these activities in their interstate telephone conversations and regular correspondence via the mails. Thus reduced, plaintiffs’ RICO claim is obviously beyond the appropriate ambit of RICO.
Id.
Similarly, in this case, plaintiffs state that defendants’ fraudulent mailings “perpetuated” defendants’ already on-going scheme, thus making it possible for defendants to “continue” defrauding plaintiffs— based on plaintiffs’ own arguments, plaintiffs could have been harmed (and allegedly were harmed) irrespective of the alleged misrepresentations in defendants’ mailings. Stated otherwise, defendants’ misrepresentations and omissions regarding their failure to fully compensate plaintiffs is not the proximate cause of the ultimate harm to plaintiffs, which instead originates in defendants’ underlying failure to properly pay plaintiffs for all hours worked.
As an additional example, in
Leung,
387 F.Supp.2d at 122 , plaintiff alleged that “defendants mailed fraudulent tax returns to various taxing authorities to deceive [plaintiff] about [the subject corporations’] true financial performance.” The court, however, held that this predicate act of mail fraud could not be construed as the proximate cause of plaintiffs losses, which instead stemmed from the devaluation of his ownership shares in the subject companies through the defendants’ allegedly unlawful acts.
Id.
In so holding, the court noted that although “[t]hese mailings may have been necessary to the defendants’ efforts to retain the property siphoned out of the corporations, [they] clearly were not an indispensible part of the theft itself.”
Id.
Likewise, although the allegedly fraudulent paychecks in the current case may have been an important part of allowing defendants to retain the funds that they withheld from plaintiffs, these fraudulent mailings were not an indispensible part of the original theft of wages from plaintiffs.
13
Accordingly, the Court finds that plaintiffs lack standing to pursue their RICO claims. Although it is unclear to the Court whether this defect can be corrected, in an abundance of caution, the Court will grant plaintiffs leave to re-plead this claim should they wish to do so.
ii. Failure to Plead Fraud with Particularity
With respect to plaintiffs allegations of mail fraud, plaintiff must allege “(1) the existence of a scheme to defraud, (2) defendant’s knowing or intentional participation in the scheme, and (3) the use of interstate mails or transmission facilities in furtherance of the scheme.”
S.Q.K.F.C.,
*526
Inc. v. Bell Atlantic TriCon Leasing Corp.,
84 F.3d 629, 633 (2d Cir.1996). Furthermore, when alleging fraudulent activities as predicate acts for a RICO claim, a plaintiff must satisfy the particularity requirements of Rule 9(b).
Moore v. PaineWebber, Inc.,
189 F.3d 165, 172-73 (2d Cir.1999). Therefore a RICO plaintiff must “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.”
Anatian v. Coutts Bank (Switz.) Ltd.,
193 F.3d 85 , 88 (2d Cir.1999) (internal quotations omitted).
Here, plaintiffs’ allegations of mail fraud in the Second Amended Complaint are wholly conclusory. For example, plaintiffs have failed to identify which defendants caused each allegedly fraudulent statement to be spoken, written, or mailed; what the content of the allegedly fraudulent misrepresentation was; or when the communication was made.
See McLaughlin v. Anderson,
962 F.2d 187, 191 (2d Cir.1992). Instead, plaintiffs merely allege that unspecified defendants “repeatedly” mailed payroll checks “on a regular basis ... in the last 10 years.” (SAC ¶ 122.) Plaintiffs make no allegations whatsoever regarding which hospitals or individual defendants were responsible for mailing these paychecks, and instead lump together the named defendant hospitals, the individual defendants, and their dozens of affiliated health care centers as the “defendants” responsible for mailing these payroll checks.
(Id.
¶¶21, 122.) Moreover, plaintiffs provide no particular allegations regarding the content of these allegedly deceptive payroll checks, and rely only upon the vague and conclusory statement that these paychecks “misled Plaintiffs and Class Members about the amount of wages to which they were entitled, the number of hours which they had worked, and whether defendants had included all compensable work time.... ”
(Id.
¶ 123.) As the Second Circuit has noted, “conclusory allegations that defendant’s conduct was fraudulent or deceptive are not enough.”
Decker v. Massey-Ferguson Ltd.,
681 F.2d 111, 114 (2d Cir. 1982);
see also Karagozian v. Coty US, LLC,
No. lO-cv-5482 (RMB), 2011 WL 536423 , at *4 (S.D.N.Y. Feb. 10, 2011) (where complaint alleged only that defendants intentionally placed fraudulent tax forms in the mail during each year of plaintiffs employment and that such forms damaged plaintiffs shifting various tax burdens to plaintiff, complaint did not state a RICO claim because it failed to plead with particularity “specific statements which were made, how they were false, and when they were made (and sent)”);
Leung,
387 F.Supp.2d at 114 (holding that “blanket accusations” in complaint that “name[d] whole documents, each of which encompasses numerous discrete statements, and allege[d], in vague and sweeping language, that each of these documents contained one or more false statements,” were “clearly insufficient to meet the particularity requirements of Rule 9(b)”). Moreover, plaintiffs’ vague allegation that the alleged misstatements were made “repeatedly” over the course of ten years is not sufficient under Rule 9(b) to state a claim for mail fraud.
See, e.g., Eldred,
2010 WL 812698 , at *11 (“[Plaintiffs] allege that ‘[defendant’s] project managers and others’ ‘repeatedly’ made ‘numerous’ and ‘various’ statements ‘to many if not all of the class plaintiffs’ ‘over the course of many years.’ [Plaintiffs] fail, however, to isolate any particular act or representation made by specific [defendant] personnel to any individual class plaintiff on any particular date.”);
Alnwick v. European Micro Holdings, Inc.,
281 F.Supp.2d 629, 640 (E.D.N.Y.2003) (“[The
*527
complaint] merely alleges that [the fraudulent statements] were made ‘in the Fall and Winter of 1996 and the first months of 1997.’ This vague window of time is insufficient to satisfy the pleading standards of Rule 9(b).” (collecting cases)). Likewise, courts have also found that complaints have failed to satisfy the particularity requirements of Rule 9(b) where, as here, they only “vaguely attribute^] the alleged fraudulent statements to ‘defendants.’ ”
Mills v. Polar Molecular Corp., 12
F.3d 1170, 1175-76 (2d Cir.1993) (noting that the court’s “conclusion that [plaintiffs] failed to satisfy Rule 9(b) demands as a corollary that these allegations cannot serve as predicate acts” under RICO);
see also Alnwick,
281 F.Supp.2d at 640 (allegations of fraud did not satisfy Rule 9(b) where complaint “lump[ed] [defendants] together and fail[ed] to specify what each defendant said”);
McNamara v. City of New York,
No. 05-cv-6025 (SJ)(RML), 2007 WL 1062564 , at *4 (E.D.N.Y. March 30, 2007) (“Plaintiff merely accuses handfuls of defendants of engaging in an alleged enterprise without identifying each defendants^] role in and relationship to the enterprise. Therefore, Plaintiff fails to meet the requirement under Rule 9(b) that allegations of fraud must connect to each individual defendant.”).
In addition, as to the elements of the mail fraud claim, plaintiffs have failed to allege how the purportedly fraudulent paychecks furthered defendants’ scheme. As explained by the court in
Cavallaro v. UMass Memorial Health Care Inc.,
No. 09-cv-40152-FDS, 2010 WL 3609535 (D.Mass. July 2, 2010) in dismissing a RICO claim that was nearly identical to the claim brought here:
Plaintiffs have failed to show how defendants furthered their allegedly fraudulent scheme by mailing the paychecks in question. According to plaintiffs, the mailed paychecks fraudulently omitted time that they had actually worked, and thus concealed from them the fact that they were not being fully compensated. But if the paychecks were as plaintiffs allege, they did not further defendants’ fraudulent scheme; to the contrary, they made the scheme’s discovery more likely.... Under plaintiffs’ version of events, the paychecks did not accurately reflect the number of hours worked, although they did accurately reflect the number of hours for which plaintiffs were paid.... [H]ere, the plaintiffs ... know better: they know how many hours they have worked and how much money they have been paid. Merely by looking at the face of their paychecks, the plaintiffs can ascertain whether they are being underpaid. And because those paychecks put them on notice of the alleged fraudulent scheme, plaintiffs have failed to state a cause of action under § 1961(c).
Id.
at *3-5. Relying upon
Cavallaro ,
several district courts in the Second Circuit have dismissed complaints that were virtually identical to the complaint in this case.
See Sampson,
2011 WL 579155 , at *6 (“[I]f plaintiffs were repeatedly not paid for time worked in violation of the contract, as plaintiffs allege, the conclusory allegation that the payroll checks constituted a fraudulent scheme to conceal that fact will not support the RICO claim. If plaintiffs are aware of their hours worked, the payroll checks would put plaintiffs on notice of any fraudulent scheme, not conceal it.”);
Nakahata,
2011 WL 321186 , at *5 (“[A]s the
[Cavallaro
court] observed in dismissing a nearly identical complaint, the mailing of the paychecks, if they did anything ‘serve[d] to expose, not further, the alleged fraud.’ ”);
Wolman,
2010 WL 5491182 , at *5-6 (same).
*528
Furthermore, plaintiffs have failed to allege with particularity that defendants had specific intent to defraud plaintiffs. “Although Rule 9(b) permits intent to be averred generally, the plaintiff must supply ‘[a]n ample factual basis’ giving rise to a ‘strong inference’ of fraudulent intent, not mere speculation and conclusory allegations.”
Nakahata,
2011 WL 321186 , at *3, *5 (quoting
Wexner v. First Manhattan Co.,
902 F.2d 169, 172 (2d Cir.1990)) (holding that “the provision of inaccurate paychecks and vague promises to pay employees for their work are insufficient to constitute fraud, particularly with regard to intent”). Plaintiffs here have alleged nothing beyond an unsupported, conclusory statements that “[a]t all relevant times ... defendants acted with malice, intent, knowledge, and in reckless disregard of Plaintiffs’ and Class Members’ rights.” (SAC ¶ 128;
see also id.)
¶ 120 (“Defendants’ Scheme consisted of ...
willfully ...
withholding or refusing to pay Plaintiffs .... (emphasis added).”) Moreover, the only allegation made regarding motive is the statement that defendants’ goal was to “retain wages and overtime pay due” to plaintiffs “for the economic benefits of defendants and members of the enterprise.”
(Id.
¶ 127;
see also id.
¶ 120 (“[Defendants devised, intended to devise, and carried out a scheme to cheat Plaintiffs and Class Members out of their property and to convert Plaintiffs’ and Class Members’ property, including their wages and/or overtime pay”)) Although “[m]otive often involves the potential for economic benefit,”
Buyers & Renters United to Save Harlem v. Pinnacle Grp. N.Y. LLC,
575 F.Supp.2d 499, 509 (S.D.N.Y.2008), plaintiffs here have provided no factual allegations beyond these conclusory statements to support an inference of scienter. Indeed, as alleged in the Second Amended Complaint, “[t]he only ‘motive’ ascribed to the Defendants is a generalized profit motive that could be imputed to any company,’ [which] ... has been consistently rejected as a basis for inferring fraudulent intent.”
Brookdale Univ. Hosp. & Med. Center, Inc. v. Health Ins. Plan of Greater N.Y.,
No. 07-cv-1471 (RRM)(LB), 2009 WL 928718 , at *6 (E.D.N.Y. March 31, 2009).
Accordingly, the Court finds that plaintiffs have failed to allege mail fraud with sufficient particularity and, as such, plaintiffs RICO claims are dismissed without prejudice.
Hi Failure to Plead a RICO Enterprise
A RICO enterprise under Section 1961(4) includes “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961 (4). An association-in-fact enterprise is “a group of persons associated together for a common purpose of engaging in a course of conduct” which is “proved by evidence of ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit.”
United States v. Turkette,
452 U.S. 576, 583 , 101 S.Ct. 2524 , 69 L.Ed.2d 246 (1981). Where a complaint alleges an association-in-fact enterprise, courts in this Circuit look to the “hierarchy, organization, and activities” of the association to determine whether “its members functioned as a unit.”
First Capital Asset Mgmt. v. Satinwood, Inc.,
385 F.3d 159, 174-75 (2d Cir. 2004) (citations and quotation marks omitted).
The Second Circuit has made clear that “the person and the enterprise referred to must be distinct,” and, therefore, “a corporate entity may not be both the RICO person and the RICO enterprise under section 1962(c).”
Riverwoods Chappaqua Corp. v. Marine Midland Bank,
*529
N.A.,
30 F.3d 339 (2d Cir.1994). However, “[t]his does not foreclose the possibility of a corporate entity being held liable as a defendant under section 1962(c) where it associates with others to form an enterprise that is
sufficiently distinct from itself.” Id.
at 344 (emphasis added). Thus, “a defendant may be a RICO person and one of a number of members of the RICO enterprise.”
Id.
(quotation marks omitted). Furthermore, an employee of a corporation is legally distinct from the corporation itself and therefore can function as a RICO person where the corporation is the alleged RICO enterprise.
See Cedric Kushner Promotions, Ltd. v. King,
533 U.S. 158, 163 , 121 S.Ct. 2087 , 150 L.Ed.2d 198 (2001).
Here, plaintiffs allege that the RICO “enterprise” is the “North-Shore Long Island Jewish Health System” (also a named defendant), which is a “healthcare consortium” “engaged in the operation of hospitals,” and which consists of the named defendants and their health care centers and affiliates. (SAC ¶¶ 21-22; RICO Case Statement ¶ 6.a.) Plaintiffs also claim that “[e]ach defendant is a ‘person’ within the meaning of 18 U.S.C. §§ 1961 (3) and 1962(c).” (SAC ¶ 130.) Although the dozens of health care facilities and affiliates listed in the SAC (see
id.
¶¶ 19-20 ) are not technically named as defendants in the case, plaintiffs refer to the North Shore-Long Island Jewish Health System (hereinafter “LIJ”)
and
its health care centers and affiliates collectively as “defendants” in the SAC.
(Id.
¶ 21.) These defendants, according to plaintiffs, have a “common ownership,”
(id.
¶ 31), and are operated, either directly or indirectly, by LIJ.
(Id.
¶¶ 32-34.)
The Court finds that there is no distinction between the RICO “persons” alleged in the complaint and the RICO “enterprise.” Specifically, although it is not clear whether the health care facilities and affiliates were, in fact, “subsidiaries” of LIJ, there is no allegation that the centers, affiliates, or individual defendants (who were officers of LIJ) were acting as anything other than agents of LIJ. Indeed, plaintiffs acknowledged that LIJ and the other defendants shared a common ownership and that LIJ was the entity ultimately responsible for operating its locations through its various health care centers and affiliates. The distinctness requirement may not be circumvented “by alleging a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant.”
Riverwoods Chappaqua Corp.,
30 F.3d at 344 .
See also Greenmanr-Perdesen, Inc. v. Berryman & Henigar, Inc.,
No. 09 Civ. 0167(TPG), 2009 WL 2523887 , at *6 (S.D.N.Y. Aug. 18, 2009) (“[T]o the extent that plaintiffs allege that [the corporate defendant B & H] itself is the RICO enterprise, they cannot claim that B
&
H also violated RICO. Similarly, to the extent that plaintiffs allege that the RICO enterprise was formed by the combination of B & H with its employees, they cannot show that the RICO enterprise was sufficiently distinct from B & H itself.”);
Physicians Mut. Ins. Co. v. Greystone Servicing Corp., Inc.,
No. 07 Civ. 10490(NRB), 2009 WL 855648 , at *7 (S.D.N.Y. March 25, 2009) (“[P]laintiffs allege that GSC is the RICO ‘enterprise,’ while Greystone & Co. and the individual defendants are the RICO ‘persons.’ ... However, plaintiffs also allege that GSC, Greystone & Co. and the individual defendants were ‘at all relevant times, the agents, servants, partners, aider and abettor, co-conspirator and/or alter ego of each other’ ... and that ‘GSC and Greystone & Co. were affiliated companies and shared common ownership, directors, managers and employees.’ The complaint thus fails to distinguish
*530
GSC’s and Greystone
&
Co.’s roles in the allegedly wrongful activities, indicating instead that those roles overlapped significantly. [T]he facts as alleged in the complaint do not reflect that Greystone & Co. and GSC are sufficiently separate such that GSC can be considered a distinct RICO ‘enterprise.’ ”);
In re Parmalat Sec. Litig.,
479 F.Supp.2d 332, 346-47 (S.D.N.Y.2007) (“[T]he Bank’s inclusion of ‘affiliates and subsidiaries located around the world,’ ‘culpable employees, directors and officers,’ and Parmalat’s counsel Zini do not distinguish the enterprise from the person. Nor does the reference to the ‘variety of third-party entities’ change anything. The counterclaims refer to them as ‘dummy entities’ and explain how they were ‘used [by Parmalat] to conceal the losses generated by its operating subsidiaries.’ As they thus were instrumentalities of Parmalat, these entities do not render the enterprise distinct from the person.”);
Manhattan Telecomms. Corp. v. DialAmerica Mktg., Inc.,
156 F.Supp.2d 376 , 383 n. 4 (S.D.N.Y.2001) (“[I]n its original complaint, plaintiff alleged that the RICO enterprise consisted only of [the corporate defendant] and the Individual Defendants ... thereby running afoul of the distinctness requirement.”).
Here, plaintiffs have alleged, in essence, that the enterprise was formed by the combination of LIJ with its individual officers and with hospitals, health care centers, and affiliates that it operated. These allegations clearly are insufficient to show that LIJ associated with others to form an enterprise that was “sufficiently distinct from itself,”
Riverwoods Chappaqua Corp.,
30 F.3d at 344 , and, accordingly, plaintiffs’ RICO cause of action must be dismissed for failure to state a claim.
In sum, the Court finds that plaintiffs’ RICO cause of action (to the extent it survives preemption) has been insufficiently plead in a variety of respects. Thus, to the extent that this claim is not preempted by the FLSA, the Court dismisses this cause of action without prejudice.
3. State Common Law Claims
Plaintiffs have alleged a number of state common law claims, seeking both “unpaid overtime hours under the FLSA ... [and] unpaid straight-time wages for work performed under 40 hours in a week.” (Pis.’ Opp. at 20;
see also
SAC ¶ 159 (“Plaintiffs and Class Members regularly worked hours both under and in excess of forty per week and were not paid for all of those hours.”).) For the reasons set forth herein, the Court finds that the FLSA preempts the state common law claims that are based upon defendants’ alleged failure to fully compensate plaintiffs for all overtime hours worked. However, the common law claims that are based upon the alleged failure to properly compensate plaintiffs for “straight time” wages are not duplicative of the FLSA cause of action, and therefore are not preempted. Nonetheless, of the remaining state-law claims, the Court finds that, as pleaded in the Second Amended Complaint, a number of them have been insufficiently pled and, accordingly, should be dismissed with leave to re-plead.
a. FLSA Preemption
As
set forth in great detail
supra,
the FLSA sets forth a broad and exclusive enforcement scheme to remedy wage and hour violations in the labor law context. Accordingly, a number of courts have held that where a state common law claim is based upon the same facts as a FLSA cause of action, the duplicative state-law claim is preempted by the FLSA and must be dismissed.
See, e.g., Anderson,
508 F.3d at 192-94 (finding state-law contract, negligence, and fraud claims to be
*531
preempted where they “essentially require[d] the same proof as claims asserted under the FLSA itself” and these claims therefore stood as “an obstacle to the accomplishment of the full purposes and objectives of the FLSA” (internal quotation marks and citation omitted));
Sosnovry,
764 F.Supp.2d at 467 , 2011 WL 488692, at *9 (“This Court finds that through the comprehensive remedial scheme, Congress struck the intended balance between the purpose of the FLSA and the vindication of its provisions, and therefore allowing additional remedies for duplicative claims would serve as an obstacle to the enforcement of the FLSA.”);
Lopez v. Flight Servs. & Sys., Inc.,
No. 07-cv-6186 (CJS), 2008 WL 208028 , at *7 (W.D.N.Y. Jan. 23, 2008) (dismissing state-law claims as preempted under the FLSA where they all pertained “to Defendants’ alleged failure to pay Plaintiff’s in accordance with the FLSA”);
Perez v. Jasper Trading, Inc.,
No. 05-cv-1725 (ILG)(VVP), 2007 WL 4441062 , at *4 (E.D.N.Y. Dec. 17, 2007) (“As the plaintiffs’ negligence claims ... are ultimately based on the same factual premises as their FLSA claims — i.e., the defendants’ failure to pay overtime compensation — they are duplicative of and preempted by the FLSA....”);
Chen v. St. Beat Sportswear, Inc.,
364 F.Supp.2d 269, 292-93 (E.D.N.Y.2005) (rejecting plaintiffs’ argument that they pled negligence claims in the alternative to their FLSA claims and finding negligence claim to be preempted where it was “founded upon the same facts as and therefore are duplicative of the FLSA claims”);
Petras,
1993 WL 228014 , at *2 (“Courts have consistently held that [Section 216(b) of the FLSA] is the exclusive remedy for enforcing rights created under the FLSA.... ‘It is true that nowhere in the statute is it provided that Section 216(b) provides the sole means of recovery for an employee.... On its face, however, a clearer case for implied intent to exclude other alternative remedies by the provision of one would be difficult to conceive.’ ” (quoting
Lerwill v. Inflight Motion Pictures, Inc.,
343 F.Supp. 1027, 1029 (N.D.Cal.1972))).
As an initial matter, in connection with their common law claims, plaintiffs acknowledge that they “do claim entitlement for unpaid overtime hours under the FLSA.” (Pis.’ Opp. at 20.) Plaintiffs, however, argue that these common law claims “provide independent claims and methods of recovery” and are asserted “in the alternative” to plaintiffs’ FLSA claims.
(Id.)
The Court disagrees. It is clear from the Second Amended Complaint that, contrary to plaintiffs’ contention, plaintiffs are using their state common law claims, in part, as a vehicle to enforce their FLSA right to overtime compensation for time worked in excess of forty hours per week.
(See, e.g.,
SAC ¶ 159 (“Plaintiffs and Class Members regularly worked hours both under
and in excess of forty per week
and were not paid for all of those hours.”) (emphasis added);
id.
¶ 174 (“[R]ather than incur additional labor costs by paying non-exempt hourly-paid employees for all of the hours that they worked, defendants required Plaintiffs and Class Members to work hours under
and in excess of forty
without receiving any compensation for those hours.”) (emphasis added);
id.
¶ 199 (“[D]efendants had and continue to have
a legal obligation to pay
Plaintiffs and Class Members all earnings and
overtime due.”)
(emphasis added).) These allegations are clearly duplicative of plaintiffs’ FLSA allegations and do not arise, as plaintiffs argue, from any violations that are “independent” of defendants’ obligations under the FLSA.
14
In fact, plaintiffs cite to Para
*532
graph 159,
15
quoted
supra,
in support of
both
their FLSA claim
and
their state common law claims, thus clearly demonstrating the co-extensive nature of these claims.
(Compare
Pis.’ Opp. at 5-6
with id.
at 20.)
As explained
supra
in connection with plaintiffs’ civil RICO claim, to allow plaintiffs to pursue duplicative state-law claims and thus circumvent the remedial scheme established by the FLSA would render superfluous the requirement in Section 216(c) that a party’s private right terminate upon commencement of an action by the Secretary of Labor. Consequently, allowing state common law claims to proceed based on the same facts as a party’s FLSA claims would present an obstacle to enforcement of the FLSA by allowing plaintiffs to thwart Congress’ preference, as evidenced in Section 216(c), to have FLSA violations be prosecuted by the Department of Labor, if and when the Secretary determines that such action is appropriate.
Plaintiffs, in opposition, urge the Court to adopt the reasoning of the Ninth Circuit, which has concluded that while the FLSA’s remedial scheme is “comprehensive,” it is not “exclusive” and it therefore does not preempt state-law claims relating to wage and hour violations.
See Williamson v. Gen. Dynamics Corp.,
208 F.3d 1144, 1151 (9th Cir.2000). The Court finds the Ninth Circuit’s reasoning unpersuasive in the circumstances of this case. As an initial matter,
Williamson
involved a common law fraud claim that was based upon conduct
not
within the scope of the FLSA, and thus is distinguishable from the instant case where plaintiffs’ state common law claims are partially duplicative of plaintiffs’ FLSA claims. In any event, both
Williamson
and the Ninth Circuit’s recent decision in
Wang v. Chinese Daily News, Inc.,
623 F.3d 743 (9th Cir.2010),
16
relied upon the FLSA’s Savings Clause in concluding that the FLSA “does not provide an exclusive remedy.”
Williamson,
208 F.3d at 1151 ;
Wang,
623 F.3d at 760 (“In
Williamson ...
[w]e held field preemption inapplicable because FLSA explicitly permits states and municipalities to enact stricter wage and hour laws.”). However, the plain language of the Savings Clause makes clear that it relates only to labor law
statutes
that explicitly provide greater wage and hour protection — it says nothing about a party’s ability to pursue general
common law
claims that have no specific relevance to the labor law context. In addition, as described
supra
in Section II.B.2.a, the Court does not find that the language of the Savings Clause operates to save plaintiffs’ claims here, to the extent that those claims are duplicative of their FLSA claims and serve as an obstacle to enforcement of the FLSA. Thus, this Court agrees with the
*533
numerous other courts that have found the FLSA’s civil enforcement scheme to be exclusive and, accordingly, concludes that FLSA preempts any state common law claims that are duplicative of plaintiffs’ FLSA cause of action.
17
Cf. Herman,
172 F.3d at 144 (noting that the FLSA’s “comprehensive remedial scheme ... strongly counsels against judicially engrafting additional remedies” and holding that “the FLSA’s remedial scheme is sufficiently comprehensive as to preempt” employers from using state common law to pursue contribution or indemnification claims for a violation of the FLSA);
see also Sosnowy,
764 F.Supp.2d at 467 , 2011 WL 488692, at *9 (discussing
Herman).
However, this conclusion does not end the Court’s inquiry, because plaintiffs are not merely using their common law claims to seek unpaid overtime wages that defendants are obligated to pay under the FLSA, but also are seeking to recover “straight time” pay that defendants’ allegedly withheld from plaintiffs for fours worked under forty hours per week. Defendants’ obligation to compensate plaintiffs for this work did not arise from their obligations under the FLSA, but instead arose from plaintiffs’ alleged employment contracts. Accordingly, because plaintiffs’ common law claims seeking “straight time” pay are not duplicative of their FLSA claims, they are not preempted by the FLSA and should not be dismissed on this ground.
18
See Sosnowy,
764 F.Supp.2d at 463 , 2011 WL 488692, at *4 (“To the extent that the state common law claims seek recovery for claims that are unavailable under the FLSA they are not preempted because an employer may contractually agree to compensate employees for time that is not mandatorily compensable under the FLSA.” (internal quotation marks and alterations omitted)). As set forth below, however, several of these claims are insufficiently pled and therefore must be dismissed with leave to re-plead.
*534
b. Non-Preempted Common Law Claims
Plaintiffs have brought nine common law causes of action for breach of implied oral contract, breach of express oral contract, breach of implied covenant of good faith and fair dealing,
quantum meruit,
unjust enrichment, fraud, negligent misrepresentation, conversion, and estoppel. For the reasons set forth below, the Court finds that, with the exception of the conversion and unjust enrichment claims, these state-law claims should be dismissed.
First, plaintiffs have failed to state a claim for fraud under Rule 9(b) for the same reasons discussed in connection with plaintiffs’ RICO claims.
See Nakahata,
2011 WL 321186 , at *6. Second, plaintiffs have also failed to plead either a breach of express contract or a breach of implied contract because they failed to “allege the essential terms of the parties’ purported contract ‘in noneonclusory language,’ including the specific provisions of the contract upon which liability is predicated.”
Sirohi v. Trustees of Columbia Univ.,
No. 97-cv-7912, 1998 WL 642463 , at
*2
(2d Cir. April 16, 1998) (quoting
Sud v. Sud,
211 A.D.2d 423 , 621 N.Y.S.2d 37, 38 (1995));
see also Nakahata,
2011 WL 321186 , at *6.
19
Third, given that plaintiffs’ contractual claims have been insufficiently pled, the Court finds that plaintiffs’ breach of implied covenant of good faith and fan-dealing claim, which is based upon the same conduct giving rise to the contract claims, also cannot survive.
See Blessing v. Sirius XM Radio Inc.,
756 F.Supp.2d 445, 460 , 2010 WL 4642607, at *12 (S.D.N.Y.2010) (“Under New York law, a cause of action for breach of the implied covenant of good faith and fair dealing should be dismissed where it is ‘duplicative of the insufficient breach of contract claim.’ ”) (quoting
Jacobs Private Equity, LLC v. 450 Park LLC,
22 A.D.3d 347 , 803 N.Y.S.2d 14, 15 (2005) and citing
Triton Partners LLC v. Prudential Secs., Inc.,
301 A.D.2d 411 , 752 N.Y.S.2d 870, 870 (2003)).
20
Fourth, plaintiffs have failed to
*535
state a cause of action for negligent misrepresentation because they have not alleged a “special relationship” sufficient to support such a claim.
See Kwon v. Yun,
606 F.Supp.2d 344, 356 (S.D.N.Y.2009) (“As courts have routinely held that the employer-employee relationship does not constitute a special relationship sufficient to support a claim for negligent misrepresentation, plaintiffs negligent misrepresentation claim is not viable as a matter of law.”). Fifth, because plaintiffs have set forth no more than vague and conclusory allegations regarding what services they provided to defendants or what the reasonable value for these services was, they have failed to state a claim for
quantum meruit. See Singerman v. Reyes,
240 A.D.2d 335 , 659 N.Y.S.2d 762, 763 (1997). Finally, plaintiffs’ claim for estoppel fails because estoppel, as pled by plaintiffs, is not a distinct cause of action but instead is an equitable bar to defendants’ assertion of a statute of limitations defense.
See Nakahata,
2011 WL 321186 , at *6. Plaintiffs, however, may assert equitable estoppel at an appropriate point in the litigation, should defendants choose to assert a statute of limitations defense.
See Tierney v. Omnicom G'rp.,
No. 06 Civ. 14302(LTS)(THK), 2007 WL 2012412 , at *9-10, 2007 U.S. Dist. LEXIS 50435 , at *29-30 (July 11, 2007) (“Plaintiffs remaining causes of action invoke the doctrines of waiver, estoppel, unclean hands, and specific performance. Defendant is correct in arguing that none of these doctrines are actually causes of action. Waiver, estoppel, and unclean hands are affirmative defenses Therefore, Defendant’s motion to dismiss Plaintiffs claims based on waiver, estoppel, and unclean hands is granted, but without prejudice to Plaintiffs appropriate use of these doctrines in the course of this litigation.” (internal citations omitted)).
Plaintiffs’ other common law claims, however, survive defendants’ motion to dismiss. As to the conversion claim, defendants’ only argument for dismissal is that this claim is duplicative of the contract claims. However, because the existence of a contract is plainly in dispute, plaintiffs are entitled to plead their conversion claim in the alternative to their breach of contract claims.
See also Picture Patents, LLC v. Aeropostale, Inc.,
No. 07 Civ. 5567(JGK), 2009 WL 2569121 , at *3 (S.D.N.Y. Aug. 19, 2009) (“Because there is a dispute over the existence of a contract between Picture Patents and IBM, conversion and unjust enrichment can be pleaded as alternative theories to breach of contract.”). As to the unjust enrichment claim, defendants did not make any arguments regarding why this claim should be dismissed, and the Court therefore need not address this claim.
4. ERISA
Plaintiffs have further brought two causes of action under ERISA. First, plaintiffs have brought a cause of action pursuant to 29 U.S.C. § 1132 (a)(3), alleging that defendants violated Section 209 of ERISA by failing to keep accurate records of “all time worked” by plaintiffs, and thus failing to keep records that were legally sufficient to determine the benefits owed to plaintiffs. (SAC ¶¶ 211-12.) Second, plaintiffs allege that defendants breached their fiduciary duties under ERISA by failing to credit plaintiffs “with all of the hours of service for which they were entitled to be paid” and by failing to even investigate “whether such hours should be credited.”
{Id.
¶ 118.)
*536
Defendants contend, in the first instance, that plaintiffs have failed to exhaust administrative remedies prior to pursuing these claims in federal court and that, accordingly, both of these claims should be dismissed. Plaintiffs do not contest that they failed plead exhaustion of their administrative remedies, but instead argue that this failure should be excused because they were not required to plead exhaustion for the types of claims that they seek to bring. In the alternative, defendants argue that the Court should dismiss both claims for failure to state a claim. For the reasons that follow, the Court finds plaintiffs’ recordkeeping claim must be dismissed for failure to plead exhaustion. As to plaintiffs’ breach of fiduciary duty claim, the Court is denying defendants’ motion to dismiss this claim, but will allow defendants to renew this motion after the parties have conducted limited discovery on the issue of how benefits are determined under the controlling ERISA plans.
a. Exhaustion of Administrative Remedies
The Second Circuit has recognized the “firmly established federal policy favoring exhaustion of administrative remedies in ERISA cases.”
Kennedy v. Empire Blue Cross & Blue Shield,
989 F.2d 588, 594 (2d Cir.1993) (internal quotation marks omitted). The doctrine of exhaustion of administrative remedies rests on the principle “ ‘that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted.’ ”
Id.
at 592 (quoting
Myers v. Bethlehem Shipbuilding Corp.,
303 U.S. 41, 50-51 , 58 S.Ct. 459 , 82 L.Ed. 638 (1938)). The purpose of the requirement is to “help reduce the number of frivolous lawsuits under ERISA; to promote the consistent treatment of claims for benefits; to provide a nonadversarial method of claims settlement; and to minimize the costs of claims settlement for all those concerned.”
Id.
at 594 (internal quotation marks omitted).
However, where a plaintiffs claims are statutory-based rather than plan-based, the plaintiff need not satisfy the exhaustion requirement. In determining whether a claim is statutory- or plan-based, courts look to whether a plaintiff is seeking equitable relief for a violation of ERISA that arises separate and apart from the terms of the plan or, alternatively, whether the plaintiff is ultimately seeking monetary relief for misapplication of the terms of the plan.
See, e.g., DePace v. Matsushita Elec. Corp. of Am.,
257 F.Supp.2d 543, 558-59 (E.D.N.Y.2003) (“District courts in the Second Circuit have routinely dispensed with the exhaustion prerequisite where plaintiffs allege a statutory ERISA violation---- Plaintiffs’ complaints of fraudulent inducement in this case are not based on a misinterpretation or misapplication of the terms of the pension plan.... Thus ... the issue is
not
an alleged violation of the terms of a pension plan, but an alleged violation of ERISA itself.” (internal quotation marks omitted) (emphasis in original));
Gray v. Briggs,
No. 97 CIV. 6252(DLC), 1998 WL 386177 , at *7 (S.D.N.Y. July 7, 1998) (where defendants were charged with breaching their fiduciary duties by,
inter alia,
investing plan funds unwisely and not solely in the plan participants’ interests, plaintiffs need
not
exhaust claims because “there is no exhaustion requirement in ERISA suits alleging a statutory violation rather than a denial of benefits”).
In addition, there is an exception to the administrative exhaustion requirement where a claimant makes a “clear and positive showing” that pursuing available administrative remedies would be futile because requiring exhaustion under those
*537
circumstances would eviscerate the purposes behind the requirement.
See Kennedy,
989 F.2d at 594 (internal quotation marks omitted). “In cases where the plan fiduciary has acted in bad faith or in breach of its fiduciary duties, federal courts have invoked the futility doctrine and waived exhaustion as a precondition for judicial review under ERISA.”
DePace,
257 F.Supp.2d at 560 ;
accord Smith v. Champion Int’l Corp.,
573 F.Supp.2d 599, 608 (D.Conn.2008) (“Allegations of bad faith or breach of fiduciary duties may be sufficient to establish futility.”).
i. Recordkeeping Claim,
Plaintiffs allege in their first ERISA cause of action that defendants violated Section 209 of ERISA, 29 U.S.C. § 1059 (a)(1), by failing to keep accurate records of “all time worked” by plaintiffs. (SAC ¶ 212.) Plaintiffs have brought this claim pursuant to Section 502(a)(3), 29 U.S.C. § 1132 (a)(3), which provides that,
inter alia,
a plan participant may bring a civil action: “(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.” As to damages, plaintiffs claim that they are only seeking equitable relief, namely, an award crediting plaintiffs for all hours worked.
(See
SAC
ad damnum
clause ¶ (b); Pl.’s Opp. at 28 (“[Pjlaintiffs are not seeking to recover unpaid benefits under any benefit plan. Here, plaintiffs are asserting violations of substantive provisions of ERISA and are seeking equitable relief; specifically, a crediting of all hours worked.”).)
The Court finds that, although plaintiffs have attempted to cast their claim as one seeking equitable relief under the “catch-all” provision of ERISA (Section 502), plaintiffs’ claim is inextricably intertwined with the benefits that they will receive under the plan and, as such, should be construed as plan-based claim seeking monetary damages. Specifically, plaintiffs have alleged that defendants have violated Section 209 of ERISA, which requires employers to keep records “sufficient to determine the benefits due or which may become due to [their] employees.” 29 U.S.C. § 1059 (a)(1). The statute does not define what constitutes “sufficient” records. Instead, to know what records are “sufficient” to determine benefits due, one must refer to the language of the applicable ERISA plan to determine how benefits are calculated. If benefits are based upon hours worked, then the records should reflect all hours worked by employees; alternatively, if benefits are based upon wages paid, then the records should reflect all wages paid to employees. Plainly, then, plaintiffs’ claim that defendants did not keep sufficient records hinges on an interpretation of the language of the ERISA plans. Such a claim should be pursued, in the first instance, with the plan administrators who “have expertise in interpreting the terms of the plan itself.”
DePace,
257 F.Supp.2d at 557 ;
see id.
at 559 (noting that “administrative procedures and remedies provided for in the [ERISA] plans are designed to deal with erroneously denied benefits or misapplication of the terms of the plan”).
Moreover, plaintiffs cannot avoid the fact that, ultimately, their claim is one for monetary relief. Indeed, this conclusion is demonstrated by the fact that if plaintiffs are successful on their claim to be credited for all hours worked (assuming
arguendo
that the plan requires such crediting), this crediting of hours will result in a recalculation of plaintiffs’ benefits, which, in turn, will result in a monetary gain to plaintiffs. Such a claim should be brought under
*538
Section 502(a)(1)(B), not Section 502(a)(3), and cannot be brought before plaintiffs have exhausted their administrative remedies.
Cf. Frommert v. Conkright,
433 F.3d 254, 269-70 (2d Cir.2006) (concluding there was “no need ... [to] allow equitable relief under § 502(a)(3)” where plaintiffs claim for “recalculation of their benefits consistent with the terms of the Plan” was ultimately a claim for monetary damages that fell “comfortably within the scope of § 502(a)(1)(B)”). Indeed, based upon claims that were nearly identical to those raised in this case (and were brought by the same plaintiffs’ counsel as in this case), the court in
Barrus v. Dick’s Sporting Goods, Inc.,
732 F.Supp.2d 243 (W.D.N.Y. 2010) found that this recordkeeping claim was, in actuality, “a claim for benefits [that] [plaintiffs] claim[] to be owed because [their] 401(k) account was allegedly shorted as a result of [defendant’s] failure to pay ... certain amounts of overtime.”
Id.
at 258-59 (citation omitted). The court concluded that “[i]n that vein, a claim for benefits from a functioning plan can only be brought under 29 U.S.C. § 1132 (a)(1)(B) and is not a claim for equitable relief, but rather one for damages.”
Id.
at 259 (internal quotation marks omitted). Accordingly, plaintiffs were required to plead exhaustion of administrative remedies under the plan.
Id.
This Court agrees with the decision in
Barms
and finds that, because plaintiffs were required to plead exhaustion of administrative remedies with regard to their recordkeeping claim but have failed to do so, this claim must be dismissed without prejudice.
ii. Breach of Fiduciary Duty
In contrast to plaintiffs’ recordkeeping claim, this Court finds that plaintiffs were not required to plead exhaustion of their breach of fiduciary duty claims. As an initial matter, at least one court has found that breach of fiduciary duty claims are statutory-based claims
21
to which the exhaustion requirement does not apply.
See Gray,
1998 WL 386177 , at *7 (where defendants were charged with breaching their fiduciary duties by,
inter alia,
investing plan funds unwisely and not solely in the plan participants’ interests, plaintiffs need not exhaust claims because “there is no exhaustion requirement in ERISA suits alleging a statutory violation rather than a denial of benefits”).
Cf. Firestone Tire and Rubber Co. v. Bruch,
489 U.S. 101, 110 , 109 S.Ct. 948 , 103 L.Ed.2d 80 (1989) (“ERISA explicitly authorizes suits against fiduciaries and plan administrators
to remedy statutory violations,
including breaches of fiduciary duty .... ” (emphasis added)).
Furthermore, in any event, “[i]n cases where the plan fiduciary has acted in bad faith or in breach of its fiduciary duties, federal courts have invoked the futility doctrine and waived exhaustion as a precondition for judicial review under ERISA.”
See DePace,
257 F.Supp.2d at 560 (citing
Ludwig v. NYNEX Service Co.,
838 F.Supp. 769, 781-82 (S.D.N.Y.1993) and
Riggs v. A.J. Ballard Tire & Oil Co.,
Nos. 91-2130, 91-2219, 1992 WL 345584 , at *2 (4th Cir. Nov. 19, 1992)). Here, plaintiffs allege that defendants breached their duties by failing to credit plaintiff for all hours worked, an allegation which at its
*539
core is based upon defendants’ allegedly fraudulent and illegal pay practices. “If, drawing all inferences in the plaintiffs’ favor, one assumes that the allegations of wrongdoing are true, then internal remedies indeed may have proven futile.”
Gray,
1998 WL 386177 , at *7. Accordingly, the Court finds that plaintiffs are excused for failing to plead exhaustion of their administrative remedies for their breach of fiduciary duty claim.
b. Failure to State a Claim for Breach of Fiduciary Duty
Plaintiffs claim that defendants breached their duty “to act prudently and solely in the interest of the Plans’ participants by failing to credit them with all of the hours of service for which they were entitled to be paid ... or to investigate whether such hours should be credited.” (SAC ¶ 118.) Defendants contend, however, that they were not acting in a “fiduciary capacity” in deciding whether to credit plaintiffs for hours worked and that, accordingly, their ERISA fiduciary obligations were never triggered in this case. Specifically, defendants’ argument is based upon the language of the applicable ERISA plan documents, which, according to defendants, pegs benefits owed not to “hours worked” but instead to “wages actually paid.” Thus, defendants argue that the decision whether to credit employees for “all hours worked” is not a fiduciary decision under the terms plan, but is instead a business decision that does not involve the administration of an ERISA plan or the investment of the plan’s assets. The Court finds that the parties must engage in limited discovery regarded the terms of the controlling plan documents before the Court is able to determine whether plaintiffs have failed to state a claim for breach of fiduciary duty under ERISA. Accordingly, defendants’ motion to dismiss this cause of a

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2474543. Public record. Not legal advice.