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Jacobs v. Floorco Enterprises, LLC

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

November 16, 2018

MICHAEL JACOBS Plaintiff
v.
FLOORCO ENTERPRISES, LLC Defendant

          MEMORANDUM OPINION AND ORDER

          Rebecca Grady Jennings, District Judge

         This matter is before the Court on Defendant Floorco Enterprises, LLC's (“Floorco”) Motion to Dismiss. [DE 19]. The parties filed a timely Response and Reply. [DE 20; DE 21]. The matter is now ripe for adjudication. For the reasons outlined below, the Motion is GRANTED IN PART and DENIED IN PART.

         I. BACKGROUND

         Floorco is located in Bardstown, Kentucky and operates as a wholesaler of materials used in the construction and installation of hardwood flooring.[1] [DE 18, Am. Compl. at ¶ 5]. Plaintiff, Michael Jacobs (“Jacobs”), was a citizen of Nassau County, New York during the time relevant to this litigation. [Id. at ¶ 1]. Jacobs began working as a commission-based independent contractor for Floorco in early 2002. [Id. at ¶ 6]. In July 2005, the president and sole owner of Floorco, Paul Tu (“Tu”), offered Jacobs the position of Vice President of Sales and Marketing, a full-time position that would pay $150, 000 per year. [Id. at ¶¶ 6-8]. Tu presented the offer orally, and Jacobs accepted orally. [Id. at ¶¶ 8-9]. The parties understood that Jacobs would perform the work for an indefinite period. [Id. at ¶ 8].

         Jacobs's duties included contacting new and existing customers and providing information regarding Floorco products, as well as taking customer orders and arranging for product shipment. [Id. at ¶ 11]. Jacobs claims, however, that for large orders, he was required to receive permission from at least two superiors before filling the orders and shipping the product. [Id.]. Jacobs lacked the authority to hire and fire, did not supervise two or more employees, or possess discretionary authority in matters of significance. [Id. at ¶ 12].

         From 2005 through 2008, Jacobs performed his duties, and Floorco paid him the agreed upon $150, 000 per year. [Id. at ¶ 13]. Jacobs asserts that, around July 16, 2007, Tu transferred all company assets and liabilities into the business now known as Floorco. [Id. at ¶ 15]. Jacobs further asserts that Tu reassured him that their prior employment relationship was still in effect, and Floorco would continue to pay Jacobs for performing the same duties. [Id.].

         But in late January 2009, Jacobs's paychecks began coming up short. [Id. at ¶ 16]. Jacobs approached Tu about the discrepancy. Tu informed Jacobs that the company was experiencing hard times, but that Jacobs would be paid back in full if he were patient. [Id. at ¶ 16-17]. Floorco continued to short Jacobs intermittently through June 2013, at which time Tu fired Jacobs with Floorco owing Jacobs $287, 580.35. [Id. at ¶¶ 17, 19]. Upon firing Jacobs, Floorco admitted in writing that it owed Jacobs back wages and made efforts to make good on its debt, paying the balance down to $218, 750.02. [Id. at ¶ 9 n.2; DE 18-1, Letter from Frieda Bayliss].

         Jacobs filed a complaint with the Kentucky Labor Cabinet on December 28, 2015. [DE 18 at ¶ 20]. Tu initially accepted responsibility for the debt and told Labor Cabinet investigator Patricia Major (“Major”) that he intended to pay Jacobs the wages owed him in a series of installment payments. [Id.; DE 18-8, Letter from Tu to Major]. Tu continued making these promises until fall 2016, when he abruptly changed course. [DE 18 at ¶ 20]. Kyle Johnson (“Johnson”), counsel for Floorco, informed the Labor Cabinet that Floorco would no longer cooperate with the Labor Cabinet's investigation. [DE 18-11, Johnson Letter]. In this letter, Johnson claimed it was Floorco's position that it did not owe Jacobs any additional money. [Id.]. Finally, Johnson claimed that Jacobs had never been an “employee” of Floorco, as that term is defined in KRS Chapter 337. [Id.]. The Labor Cabinet closed the investigation on November 10, 2016. [DE 18 at ¶ 20]. This lawsuit followed.

         In the Amended Complaint, Jacobs asserts two claims against Floorco. First, Jacobs asserts that Floorco's failure to pay Jacobs was a material breach of an oral employment contract. [Id. at ¶¶ 37-41]. In addition, Jacobs claims that Floorco's failure to pay Jacobs violated the Kentucky Wage and Hour Act, KRS Chapter 337. [Id. at ¶¶ 42-46]. In the present Motion, Floorco seeks dismissal of both claims. [DE 19].

         II. STANDARD OF REVIEW

         Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must dismiss a complaint if it “fail[s] to state a claim upon which relief can be granted[.]” Fed.R.Civ.P. 12(b)(6). To properly state a claim, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief[.]” Fed.R.Civ.P. 8(a)(2). When considering a motion to dismiss, courts must presume all factual allegations in the complaint to be true and make all reasonable inferences in favor of the non-moving party. Total Benefits Planning Agency, Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008) (citation omitted). “But the district court need not accept a bare assertion of legal conclusions.” Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (citation omitted). “A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citation and quotation omitted).

         To survive a motion to dismiss under Rule 12(b)(6), the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Traverse Bay Area Intermediate Sch. Dist. v. Mich. Dep't of Educ., 615 F.3d 622, 627 (6th Cir. 2010) (internal quotation omitted) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim becomes plausible “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, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “A complaint will be dismissed pursuant to Rule 12(b)(6) if no law supports the claims made, if the facts alleged are insufficient to state a claim, or if the face of the complaint presents an insurmountable bar to relief.” Southfield Educ. Ass'n v. Southfield Bd. of Educ., 570 Fed.Appx. 485, 487 (6th Cir. 2014) (citing Twombly, 550 U.S. at 561-64).

         III. DISCUSSION

         A. ...


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