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Goodwin v. Huhtamaki, Inc.

United States District Court, W.D. Kentucky, Paducah Division

June 21, 2018



          Thomas B. Russell, Senior Judge

         This matter is before the Court on Defendant Huhtamaki, Inc.'s motion to dismiss and for fees and costs, [DN 20.] After the filing of Defendant's motion, Plaintiff Ashley Goodwin voluntarily dismissed her claims against all Defendants, [DN 23.] Therefore, the motion to dismiss portion of Defendant's motion is now moot. However, Defendant still wishes to pursue the portion of its motion seeking attorney's fees, costs, and sanctions. Accordingly, Plaintiff filed a response in opposition to that portion of Defendant's motion, [DN 26], and Defendant filed a reply in support, [DN 29.] Fully briefed, this matter is now ripe for adjudication. For the reasons explained in detail below, Defendant's motion for fees and costs is DENIED.


         Plaintiff Ashley Goodwin filed this action on January 22, 2018 alleging that Defendant Huhtamaki, Inc. violated the Fair Labor Standards Act (“FLSA”) and the Kentucky Wages and Hours Act (“KWHA”) by deducting meal periods from employees' pay and failing to pay overtime to employees who worked over forty hours per week. [DN 1 at 1-2.] Goodwin brought suit on behalf of herself and other similarly situated hourly employees of Huhtamaki. [Id. at 1.] On February 16, 2018, Huhtamaki moved to dismiss Goodwin's claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. [DN 14.] In its motion to dismiss, Huhtamaki argued that “Ashley Goodwin was (and may still be) employed by Crown Services, which assigned her to shifts at the Huhtamaki facility, and Ms. Goodwin completed about a little over one week's worth of those shifts before she failed to appear.” [DN 14-1 at 2.] Huhtamaki further asserted that,

[o]f central importance to this litigation, a General Staffing Agreement (the “Agreement”) defines the relationship between Huhtamaki and Crown Services conclusively. Pursuant to this Agreement, Crown Services maintains complete control over all of its employees. Specifically, Crown Service recruits, screens, hires, assigns, pays, withholds taxes, provides any benefits, and maintains employment records for its employees, like Ms. Goodwin. Relatedly, Huhtamaki explicitly excludes Crown Services employees from all of its benefits plans, policies, and practices and makes no offers or promises relating to compensation or benefits.

[Id. at 2.] Therefore, according to Huhtamaki, “[a]s a matter of law, Ms. Goodwin was never an employee of Huhtamaki or entitled to any compensation from Huhtamaki, so her claims fail.” [Id. at 3.]

         In lieu of filing a response to Huhtamaki's motion to dismiss for failure to state a claim, Goodwin's counsel filed a first amended complaint on March 9, 2018. [DN 15.] Goodwin's first amended complaint added Crown Services, Inc. as a party and asserted that Huhtamaki and Crown were “joint employers” of Goodwin and the putative class members within the meaning of 29 C.F.R. § 791.2. [Id. at 4, ¶ 3.5.] That section states, in part:

(a) A single individual may stand in the relation of an employee to two or more employers at the same time under the Fair Labor Standards Act of 1938, since there is nothing in the act which prevents an individual employed by one employer from also entering into an employment relationship with a different employer. 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. If all the relevant facts establish that two or more employers are acting entirely independently of each other and are completely disassociated with respect to the employment of a particular employee, who during the same workweek performs work for more than one employer, each employer may disregard all work performed by the employee for the other employer (or employers) in determining his own responsibilities under the Act. On the other hand, if the facts establish that the employee is employed jointly by two or more employers, i.e., that employment by one employer is not completely disassociated from employment by the other employer(s), all of the employee's work for all of the joint employers during the workweek is considered as one employment for purposes of the Act. In this event, all joint employers are responsible, both individually and jointly, for compliance with all of the applicable provisions of the act, including the overtime provisions, with respect to the entire employment for the particular workweek.

29 C.F.R. § 791.2. Goodwin asserted that, as joint employers, “Huhtamaki and Crown's corporate pay policies and practices have (and continue to) blatantly violated the FLSA and Kentucky Statutes.” [DN 15 at 6, ¶ 4.13.]

         On March 23, 2018, Huhtamaki filed a second motion to dismiss for failure to state a claim and moved to recover its fees and costs. [DN 20.] Therein, Huhtamaki reiterated many of its previous arguments, such as the argument that Huhtamaki never employed Goodwin and therefore that her FLSA and KWHA claims fail as a matter of law and that “[t]he Court should also dismiss the lawsuit because Ms. Goodwin has not pled plausible claims for unpaid wages or overtime.” [DN 20-1 at 5-10; 13-15.] Huhtamaki added a section to its second motion refuting Goodwin's new claim that Huhtamaki and Crown were joint employers and a section requesting its fees and costs “because Ms. Goodwin ignored documents attached by Huhtamaki to its first Motion to Dismiss and made bad-faith, baseless factual allegations in her First Amended Complaint.” [Id. at 15-17.]

         Three weeks later, on April 13, 2018, Goodwin voluntarily dismissed all of her claims against all Defendants. [DN 23.] Though the portion of Huhtamaki's motion seeking the dismissal of Goodwin's is now moot, it still wishes to pursue the portion seeking its attorney's fees and costs. Accordingly, Goodwin responded to that portion of Huhtamaki's motion on April 27, 2018, [DN 26], and Huhtamaki filed a reply on May 23, 2018. [DN 28.]


         Huhtamaki argues that it is entitled to its fees and costs because “Ms. Goodwin needlessly and improperly complicated these proceedings by utterly ignoring documents filed by Huhtamaki to demonstrate her factual allegations have no merit and, in bad faith and with no basis, doubling down on the very same baseless allegations again in her First Amended Complaint.” [DN 20-1 at 15.] Huhtamaki relies on two legal grounds in support of its argument.

         First, “[a] court may assess attorney's fees under its inherent powers ‘when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons, ” Metz v. Unizan Bank, 655 F.3d 485, 489 (6th Cir. 2011) (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991)), “or when the conduct is ‘tantamount to bad faith, '” id. (quoting Roadway Express, Inc. v. Piper, 447 U.S. 752, 767 (1980)). Courts within the Sixth Circuit apply a three-prong test to determine whether sanctions are warranted due to bad faith. Id. To impose sanctions under this standard, the Court must find “[1] that ‘the claims advanced were meritless, [2] that counsel knew or should have known this, and [3] that the motive for filing the suit was for an improper purpose such as harassment.'” Id. (quoting BDT Prod., Inc. v. Lexmark Int'l, Inc., 602 F.3d 742, 752 ...

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