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Katz v. DNC Services Corp.

United States District Court, E.D. Pennsylvania

September 27, 2019

BETHANY KATZ, on behalf of herself and all those similarly situated, Plaintiffs,
v.
DNC SERVICES CORPORATION, et al., Defendants.

          MEMORANDUM

          C. DARNELL JONES, II J.

         Pending before the Court are Defendant DNC Services Corporation d/b/a Democratic National Committee (“ Defendant DNC”) and Defendant Pennsylvania Democratic Party's (“Defendant PDP”) independent Motions to Dismiss the Third Amended Complaint (“TAC”) pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.[1] Named Plaintiff Bethany Katz (“Katz”) seeks to represent a putative class of former field campaign organizers (“Organizers”) in the 2016 presidential election who were allegedly denied overtime pay to which they were entitled in violation of the Fair Labor Standards Act (“FLSA” or “Act”) and Pennsylvania Minimum Wage Act (“PMWA”).[2] Defendants previously filed Motions to Dismiss the Second Amended Complaint (ECF Nos. 79 and 84), which the Court granted as to (1) Defendant DNC because Katz failed to establish that Defendant DNC employed her, and as to (2) Defendant PDP because Katz failed to plead that the FLSA governed her employment.

         Feb. 1st Mem.

         After reviewing the pending Motions to Dismiss (ECF Nos. 139, 140), all responses thereto (ECF Nos. 143, 149, 150), Katz's Motion for Judicial Notice (ECF No. 153), and all responses thereto (ECF Nos. 154, 155), the Court will grant Defendant DNC's Motion to Dismiss because Katz has again failed to plausibly plead Defendant DNC was her employer during the relevant time period. The Court will deny Plaintiff's Motion for Judicial Notice as it is now moot after Defendant DNC's dismissal. The Court will grant Defendant PDP's Motion to Dismiss, in part, and strike any allegations regarding a common law conspiracy claim from the Third Amended Complaint. The Court will deny the remainder of Defendant PDP's Motion to Dismiss and permit the FLSA and PMWA claims by Katz and the putative class of Organizers to proceed as to Defendant PDP alone.

         Standard of Review

          Courts reviewing a motion to dismiss pursuant to Rule 12(b)(6) must “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (internal quotation marks omitted). This inquiry requires courts to separate factual allegations from legal conclusions and determine whether the well-pled facts state a “plausible claim for relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007)). “In other words, a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to ‘show' such an entitlement with its facts.” Fowler, 578 F.3d at 211 (citing Phillips, 515 F.3d at 234-35).

         Relevant Factual Background and Procedural Posture

         Given the posture of the case, the Court will present the following facts in a light most favorable to Plaintiffs.

         A. Defendants' Organizational Hierarchy

         Defendant DNC is the governing body of the Democratic National Party. TAC at ¶ 10 (ECF No. 135). As such, “it raises money, hires staff, and coordinates strategy to support candidates throughout the United States for local, state, and national office and . . . direct[s] the operations of many state parties, including Defendant PDP.” TAC, ¶ 10. Pursuant to a Joint Fundraising Agreement entered into by Defendant DNC and Hillary for America (“HFA”) in August 2015, DNC's operational control was turned over to HFA. TAC, ¶¶ 14, 18-19. Consequently, during the 2016 election, HFA controlled “DNC's finances, strategy, money raised, and staffing decisions.” TAC, ¶¶ 14, 18-19. The Hillary Victory Fund (the “HVF”), an arm of HFA, controlled any fundraising monies received by Defendant DNC from the state parties, including Defendant PDP. TAC, ¶¶ 14, 24. The Joint Fundraising Agreement also provided that “HFA personnel [would] be consulted and have joint authority over strategic decisions over the staffing, budget, expenditures and general election related communications.” TAC, ¶ 25.

         Defendant PDP “[is] responsible for governing the Pennsylvania Democratic Party.” TAC, ¶ 11. However, during the 2016 election, it “raised money, hired staff, and coordinated strategy to support candidates throughout the Commonwealth of Pennsylvania for local, state, and national office . . . [a]t the direction of Defendant DNC and non-party Hillary for America [HFA].” TAC, ¶ 11. Consequently, although Defendant PDP generally governed itself, during the relevant time period it did so “[a]t the direction of Defendant DNC and non-party Hillary For America [HFA].” TAC, ¶ 11.

         Accordingly, during the 2016 presidential campaign “HFA and HVF essentially controlled all of the activities of [Defendant] DNC . . . which in turn controlled Defendant PDP.” TAC, ¶¶ 17, 21.

         B. The Pennsylvania Coordinated Campaign

         From August 2015 until August 2016, although Katz and the Organizers were directly employed by Defendant PDP some of their duties related to the Pennsylvania Coordinated Campaign, which was tasked with implementing “Pennsylvania campaign efforts” under the brand of Hillary for Pennsylvania. TAC, ¶¶ 35, 41, 44, 67. HFA oversaw the Pennsylvania Coordinated Campaign, but “Defendant DNC coordinate[d] and direct[ed] strategic initiatives directly with Defendant PDP.” TAC, ¶¶ 21, 27, 44. Consequently, as part of this arrangement, Defendant DNC “direct[ed] Defendant PDP to hire and retain organizers” and Defendant DNC “direct[ed] Defendant PDP regarding the qualifications and job duties of organizers.” TAC, ¶ 44. Additionally, when Defendant PDP began hiring field organizers for the 2016 election it did so with funds provided by Defendant DNC, and as a result, Defendant DNC determined the amount of certain “critical staff salaries” for Defendant PDP. This included setting the salaries of field organizers employed by Defendant PDP at $2, 500 or $3, 000 per month. TAC, ¶¶ 13, 22, 44.

         Katz and some of the other Organizers were hired after Defendant PDP deferred its hiring responsibilities to non-party HFA and Defendant DNC. TAC, ¶¶ 27, 43. To facilitate this process, Defendant DNC posted job applications for field organizers on its website and sent applications to its supporters. TAC, ¶ 47. Additionally, after field organizers were hired, Katz and her colleagues were trained, in part, by HFA and DNC employees. TAC, ¶¶ 27, 43, 47. Indeed, employees of both non-party HFA and Defendant DNC remained in Pennsylvania after training Katz and the Organizers to “oversee[] and direct[] the Pennsylvania campaign efforts, includ[ing] the work of the Organizers. TAC, ¶¶ 34-40.

         During their training, Katz and the Organizers were prepared for their job duties on the “PA Coordinated Campaign, ” which included: (1) promoting Defendants' “platform, program, and ideals” during the 2016 election, TAC, p. 2; (2) making “several calls per week” to voters in and outside of Pennsylvania to get-out-the-vote via an automated dialer system; (3) posting on social media at least once a week; (4) and collecting survey data from registered voters in and outside of Pennsylvania to input into an online database jointly operated by Defendant DNC and Defendant PDP known as “Votebuilder.” TAC, ¶¶ 21, 26-27, 73-75, 84-85. Katz and the other Organizers would input survey answers into Votebuilder from locations within Pennsylvania, though Katz believes the database was maintained in Washington D.C. TAC, ¶¶ 75, 78, 80-81. Votebuilder synthesized and aggregated voter information in one database, thus reducing the time a campaign would have to spend on obtaining this information itself. TAC, ¶ 90. Access to Votebuilder was sold and licensed to certain campaigns and other third-party organizations, including the Bernie 2016 campaign, which purchased access to information about Iowa's voters for $120, 000. TAC, ¶¶ 76, 85-86, 89, 97. Katz does not know the details of the licensing fee structure, but she believes the revenues from these licenses generated over $500, 000 in 2016. TAC, ¶ 98.

         In fulfilling their job duties, Katz and the other Organizers worked more than 40 hours per week without receiving overtime premium pay or any other extra compensation. TAC, ¶¶ 110-111. Indeed, Katz and the Organizers were told during their training that they would be required “to work 7 days per week and well in-excess of 40-hours per week.” TAC, ¶ 30.

         Discussion

         To survive a motion to dismiss an FLSA claim, a plaintiff must plausibly plead a prima facie case, alleging: (1) an actionable employer-employee relationship; (2) engagement in commerce or in the production of goods for commerce by either the employee or the employer; and (3) the employer's failure to pay the employee the federal minimum wage or overtime. Thompson v. Real Estate Mortg. Network, 748 F.3d 142, 147-148 (3d Cir. 2014). Defendant PDP concedes that it employed Katz, PDP Mot. Dismiss at 10 (ECF No. 139), but disputes that she is covered by the FLSA, arguing that neither she nor it were engaged in commerce as defined ...


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