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Luann Lepkowski, On Behalf of Herself and Others Similarly Situated v. Telatron Marketing Group

February 1, 2011

LUANN LEPKOWSKI, ON BEHALF OF HERSELF AND OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
TELATRON MARKETING GROUP, INC, AND BANK OF AMERICA CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Erie Judge McLaughlin

MEMORANDUM OPINION

McLAUGHLIN, SEAN J., J.

Presently pending before the Court is Defendant Bank of America's Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6). Also before the Court is Plaintiff Luann Lepkowski's Motion for Conditional Class Certification. For the reasons which follow, both motions will be granted.

I. BACKGROUND

Plaintiff Luann Lepkowski ("Lepkowski") is employed as a phone operator in the Erie, Pennsylvania call center of Defendant Telatron Marketing Group, Inc. ("Telatron"), a North Carolina corporation in the business of providing "customer relationship management services" for corporate clients located throughout the United States. (Amended Complaint, ¶¶ 7, 9). Defendant Bank of America ("BoA"), a large financial services company, is one of Telatron's corporate clients. (Amended Complaint, ¶ 8). As such, Telatron phone operators handle and process inbound telephone calls from BoA customers related to BoA's financial services. (Amended Complaint, ¶ 8). Since February 16, 2006, approximately 200 Telatron employees, including Lepkowski, have been assigned by Telatron to work exclusively on BoA accounts. (Amended Complaint, ¶ 9).

Phone operators at Telatron are paid on an hourly basis and usually work at least 40 hours per week. (Amended Complaint, ¶ 10). However, Lepkowski alleges that phone operators are not compensated for approximately 15 minutes per day of time spent logging into their computer systems and gaining access to the computer programs that they use throughout the work day. (Amended Complaint, ¶ 12). She further alleges that phone operators are not compensated at the appropriate overtime premium rate of pay for hours worked in excess of 40 in a week. (Amended Complaint, ¶¶ 32, 39). Lepkowski contends that these alleged actions violate the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201, et seq., and the Pennsylvania Minimum Wage Act ("PMWA"), 43 P.S. §§ 333.101, et seq. Lepkowski also asserts a claim of unjust enrichment based upon the alleged acts. Finally, Lepkowski alleges that the approximately 200 Telatron employees assigned to work on BoA accounts since February 16, 2006 are similarly situated and have been subjected to the same unfair business practices such that class action certification is appropriate.*fn1 (Amended Complaint, ¶¶ 18-26).

In its motion to dismiss, BoA primarily contends that it cannot be liable under either the FLSA because it was not Plaintiffs' "employer" within the meaning of that statute. Relative to the issue of joint employership, the Amended Complaint contains the following averments:

Telatron's corporate clients include BoA, which is one of the Nation's largest financial services companies. Telatron acts directly in the interest of BoA. In particular, Telatron and BoA maintain a joint contractual relationship whereby Telatron service representatives handle and process inbound telephone calls from BoA customers pertaining to BoA credit card and debt services and products. These Telatron service representatives work exclusively on the BoA account. Plaintiff and other class members use computers, computer software programs, and computer databases that are owned and maintained by BoA and that enable Plaintiff and other class members to access confidential BoA customer account information during their phone calls with BoA customers. The use of such computers, computer software programs, and computer databases is integral and indispensable to the work performed by Plaintiff and the class members on BoA's behalf.

Plaintiff and the other class members are under the common control of both Telatron and BoA. For example, Telatron issues paychecks to Plaintiff and the class members, provides them with office space, and serves as their employer-of-record. BoA, meanwhile, directly trains Plaintiff and other class members concerning BoA products, procedures, and protocols and oversees the day-to-day work of Plaintiff and other class members by, inter alia, monitoring the content of phone calls between the class members and BoA customers to ensure that the class members are following detailed BoA procedures and protocols. Class members who fail to follow BoA's mandatory procedures and protocols are subject to disciplinary action.

Plaintiff and other class members perform work that simultaneously benefits both Telatron and BoA. For example, Telatron has earned substantial fees stemming from its BoA account. BoA, meanwhile, has benefitted from the services that Plaintiff and the class members directly provide to BoA customers.

The work performed by Plaintiff and other class members is integral to BoA's communications with its customers, and, in fact, Plaintiff and the class members identify themselves as BoA representatives during phone calls with customers.

(Amended Complaint, ¶¶ 8, 11, 13-15).

Oral argument on BoA's Motion to Dismiss and Plaintiffs' Motion for Conditional Certification was held on December 7, 2010. This matter is ripe for review.

II. STANDARD FOR REVIEW

Rule 8(a) of the Federal Rules of Civil Procedure states that a pleading must set forth a claim for relief which contains a short and plain statement of the claim showing that the pleader is entitled to relief. A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) must be viewed in the light most favorable to the plaintiff and all the well-pleaded allegations of the complaint must be accepted as true. Erickson v. Pardus, 551 U.S. 89, 93-94 (2007); Neitzke v. Williams, 490 U.S. 319 (1989); Estelle v. Gamble, 429 U.S. 97 (1976). The issue is not whether the plaintiff will prevail at the end but only whether he should be entitled to offer evidence to support his claim. Neitzke; Scheuer v. Rhodes, 419 U.S. 232 (1974). As the United States Supreme Court recently held in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), a complaint must be dismissed pursuant to Rule 12 (b)(6) if it does not allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570 (rejecting the traditional 12 (b)(6) standard set forth in Conley v. Gibson, 355 U.S. 41 (1957)). The court must accept as true all allegations of the complaint and all reasonable factual inferences must be viewed in the light most favorable to plaintiff. Angelastro v. Prudential-Bache Securities, Inc., 764 F.2d 939, 944 (3rd Cir. 1985). The Court, however, need not accept inferences drawn by plaintiff if they are unsupported by the facts as set forth in the complaint. See California Pub. Employee Ret. Sys. v. The Chubb Corp., 394 F.3d 126, 143 (3rd Cir. 2004) (citing Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3rd Cir. 1997)). Nor must the court accept legal conclusions set forth as factual allegations. Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Although the United States Supreme Court does "not require heightened fact pleading of specifics, [the Court does require] enough facts to state a claim to relief that is plausible on its face." Id. at 570.

In other words, at the motion to dismiss stage, a plaintiff is "required to makes a 'showing' rather than a blanket assertion of an entitlement to relief." Smith v. Sullivan, 2008 WL 482469 (D. Del. 2008) (quoting Phillips v. County of Allegheny, 515 F.3d 224, 233 (3rd Cir. 2008)). "This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element." Phillips, 515 F.3d at 234 (quoting Twombly, 550 U.S. at 555 n.3).

III. ANALYSIS

A. BoA's Motion to Dismiss It is axiomatic that only "employers" are liable for violations of the FLSA. See 29 U.S.C. §§ 201, et seq. In her Amended Complaint, Plaintiffs assert that both Telatron and BoA are liable for the alleged FLSA violations because they acted as joint employers. Federal regulations provide that an entity may be a "joint employer" in certain circumstances:

A single individual may stand in the relation of an employee to two or more employers at the same time . . . A determination of whether the employment by the employers is to be considered joint employment or separate and distinct employment for purposes of the act depends upon all the facts in the particular case. 29 C.F.R. § 791.2(a).

Analysis of whether a party such as BoA is a joint employer requires a court to take into account the "'real economic relationship' between the employee, employer, and putative joint employer." Jacobson v. Comcast Corp., 2010 WL 3769120, *3 (D. Md. 2010) (citing Schultz v. Capital Int'l Sec. Inc., 466 F.3d 298, 306 (4th Cir. 2006); Tony and Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 301 (1985)). There is no mechanical test to evaluate the economic reality between employees and putative joint employers; rather, "[j]oint employment is to be assessed in light of the totality of the circumstances." Braden v. County of Washington, 2010 WL 1664895, *6 (W.D. Pa. 2010) (citing 29 C.F.R. § 825.106(b)(1)); Jacobson, 2010 WL 3769120 at *3.

There is no unanimity of opinion, however, as to the appropriate factors to be considered in analyzing whether a joint employment relationship exists. See Zavala v. WalMart Stores, Inc., 393 F.Supp.2d 295, 329-30, n. 26 (D.N.J. 2005) (noting the various factors utilized by different federal circuits). For example, in Zheng v. Liberty Apparel Co., Inc. 355 F.3d 61, 72 (2nd Cir. 2003), the Second Circuit listed the following factors as pertinent to such an analysis:

(1) whether the premises and equipment of the purported joint employer are used for the plaintiffs' work; (2) whether the contractors had a business that could or did shift as a unit from one putative joint employer to another; (3) the extent to which plaintiffs performed a discrete line-job that was integral to the process of production for the purported joint employer; (4) whether responsibility under the contracts could pass from one subcontract to another without material changes; (5) the degree to which the purported joint employer or their agents supervised the plaintiffs' work; and (6) whether plaintiffs worked exclusively or predominantly for the purported joint employer.

Zheng, 355 F.3d at 72. In the Ninth Circuit, courts focus primarily on whether the proposed employer (1) had the power to hire and fire employees, (2) supervised or controlled employee work schedules or conditions of employment, (3) determined the rate or method of payment, and (4) maintained employment records. See Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1470 (9th Cir. 1983). Other circuit and district courts typically apply their own variation of one or more of these tests. See, e.g., Zavala, 393 F.Supp.2d at 329-30, n. 26; Braden, 2010 WL 1664895 at *6; Jacobson, 2010 WL 3769120 at *3.

The Third Circuit has not specifically addressed what factors should be applied in determining whether a joint employment relationship exists. See Zavala, 393 F.Supp.2d at 329. The parties disagree as to what factors should be applied to the instant dispute. Plaintiff contends that the appropriate standard is the widely-cited six-factor test set forth in Zheng, while BoA urges the court to apply the four-factor test developed by the Ninth Circuit in Bonnette (and recently utilized by a court in this district in Braden). See Braden, 2010 WL 1664895 at *6 (holding that the relevant factors are "whether the alleged employer had the power to hire and fire the employees, supervised and controlled employee work schedules or conditions of employment, determined the rate and method of compensation, and maintained employment records"). In the interest of a thorough and complete analysis, and because I reach the same result under either standard, I will analyze the allegations set forth in the Amended Complaint pursuant to both Zheng and Bonnette, keeping in mind that it is "the totality of the circumstances, rather than any particular factor, [that] govern[s] the determination of whether joint employment exists." Zavala, 393 F.Supp.2d at 329 (citing Johnson v. The Unified Gov't of Wyandotte County, 371 F.3d 723, 729 (10th Cir. 2004)).

1. Did BoA have the power to hire or fire Telatron employees?

The first Bonnette factor asks whether BoA had the power to hire or fire Telatron customer service representatives such as the Plaintiffs. At oral argument, Plaintiffs' counsel conceded that the Amended Complaint ...


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