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Kuznyetsov v. West Penn Allegheny Health System

July 20, 2009


The opinion of the court was delivered by: Ambrose, Chief District Judge


Defendants urge dismissal of the second, third, fourth, and fifth counts of Plaintiffs' Complaint. For the reasons set forth in my opinion below, I am granting in part and denying in part the motion to dismiss and Plaintiffs will need to file an amended complaint.

A. Applicable Standards

Defendants filed their motion to dismiss under Fed.R.Civ.P. 12(b)(1) and 12(b)(6).*fn1 When deciding whether to grant or deny a 12(b)(6) motion the Supreme Court has held, "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Co. v. Twombly, 550 U.S. 544, 555 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). (Cites and fottnote omitted). See also, Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (a plaintiff's factual allegations must be enough to raise a right to relief above the speculative level).

Most recently, in Ashcroft v. Iqbal, ___ U.S.___, 129 S.Ct. 1937 (2009), the Supreme Court held, ". . . a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. 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." Iqbal, 129 S.Ct. at1949 (citations omitted).

In Iqbal, the Court specifically highlighted the two principles which formed the basis of the Twombly decision: First, for the purposes of a motion to dismiss, courts must accept as true all factual allegations set forth in the complaint, but courts are not bound to accept as true any legal conclusions couched as factual allegations. Id. at 1949-1950. Second, a complaint will only survive a motion to dismiss if it states a plausible claim for relief, which requires a court to engage in a context-specific task, drawing on the court's judicial experience and common sense. Id. at 1950. Where well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged -- but has not shown -- the complainant is entitled to relief. Id., citing, F.R.Civ.P. 8(a)(2).

B. Factual Background

With the above law in mind and solely for the purposes of ruling on this motion, I assume the following facts are true:

Plaintiffs have sued Defendants alleging, inter alia, violations under the Fair Labor Standards Act ("FLSA"), the Employee Retirement Income Security Act ("ERISA") and the Racketeer Influenced and Corrupt Organizations Act ("RICO"). Defendants are a healthcare consortium, operating 56 health care facilities and centers, employing over 12,000 people and have integrated financial, computer, payroll and health records systems throughout their locations. Christopher T. Olivia is the President and CEO, while John Lasky is the Vice President of Human Resources for Defendants. Both Mr. Olivia and Mr. Lasky set the rate and method of payment for employees, established and controlled all payroll functions and systems for keeping and maintaining payroll and other employment-related records, established work schedules, and created policies relating to all of the above. (Complaint, ¶¶18-72).

Defendants' had a "meal-break deduction policy," whereby a computerized time-keeping system automatically deducted one half-hour for every shift worked from every employee's paycheck without confirming that the employee actually was relieved from duty for one half-hour. Plaintiffs claim they often were not relieved for one half-hour and/or were expected to work during this one half-hour meal break, and yet they were not compensated for this half-hour of work. (Complaint, ¶¶80-98).

Defendants had another policy requiring Plaintiffs to perform work before and/or after the end of their scheduled shifts without pay and/or appropriate pay. Finally, Defendants had a policy requiring Plaintiffs to attend training sessions but allegedly did not pay Plaintiffs appropriately for time they spent in these training sessions. (Complaint, ¶¶99-107).

By intending to devise and carry out and by actually devising and carrying out these policies which allegedly deprived employees of wages and/or appropriate pay, Plaintiffs claim Defendants designed a "scheme" to defraud them and other employees. The scheme allegedly includes Defendants' act of intentionally and repeatedly mailing wage and payroll information to employees to mislead them about the amount of wages to which they were entitled, for the purpose of retaining the wages. (Complaint, ¶¶108-128). Plaintiffs further alleged that when employees "questioned" Defendants about non-payment or inadequate payment of wages, Defendants knowingly misled them into thinking they were not entitled to remuneration. (Complaint, ¶92).

C. Dismissal of the RICO Claim

Defendants offered five reasons why Plaintiffs' RICO claim should be dismissed at this stage of the litigation. Although I decline to dismiss the claim for the reasons set forth below, Plaintiffs must file an amended complaint to address the statute of limitations issue.

1. Preemption

First, Defendants urge dismissal of Plaintiffs' RICO claim (count four of Plaintiffs' complaint) by arguing that Plaintiffs' FLSA claim (count one of the complaint) preempts the RICO claim. Defendants argue that the FLSA provides comprehensive and exclusive remedies and rely primarily on two cases in support of preemption: Anderson v. Sara Lee Corp., 508 F.3d 181 (4th Cir. 2007) and Choimbol v. Fairfield Resorts, Inc., No. 05-463, 2006 WL 2631791 (E.D.Va. September 11, 2006) (hereinafter "Choimbol II" ).

In Anderson, the defendant required the plaintiffs to don their work clothing before walking to the time clock and clocking in for their shift. The plaintiff-workers had to clock out before doffing their work attire and donning their street clothes. Unlike the instant matter, the Anderson plaintiffs did not assert a claim under RICO, but they did raise FLSA and state law claims. The Fourth Circuit held that the FLSA provided the exclusive remedy for ...

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