United States District Court, E.D. Michigan, Southern Division
HARRY BENION, ZACHARY GOODGALL, DAMON FRANKLIN, and LESLIE MORGAN, Plaintiffs,
LECOM, INCORPORATED, and LECOM COMMUNICATIONS, INC., Defendants.
OPINION AND ORDER DENYING PLAINTIFFS' MOTION TO
M. Lawson United States District Judge
case brought under the Fair Labor Standards Act (FLSA), 29
U.S.C. § 201, et seq., the plaintiffs have
moved to amend their complaint to add a count for common law
and statutory conversion. Plaintiff Harry Benion and three
others commenced this action against LeCom, Incorporated and
LeCom Communications, Inc. alleging that these companies
misclassified them as independent contractors in order to
avoid the minimum wage and overtime obligations established
by the FLSA. The basis of their proposed conversion count is
that the defendants also imposed backcharges and illegally
withheld compensation for substandard work and lost
equipment. The defendants oppose the motion, disputing the
truth of the allegations in the proposed amended complaint
that there was an employer-employee relationship and that the
plaintiffs were entitled to the compensation as wages. But
denying the truth of well-pleaded allegations is no basis to
resist a motion to amend. However, because adding the new
count for conversion would be futile (for the reasons stated
below), the motion to amend the complaint will be denied.
LeCom Communications, Inc. and LeCom, Inc. (collectively
“LeCom”) contract with Comcast Cable Company to
perform telecommunication installations and repair services
for Comcast's customers in Michigan. The plaintiffs
allege that LeCom hires both employees and independent
contractors, whose sole job responsibilities are to install
and repair cable services. The plaintiffs allege that all of
the cable installers perform the same type of work and are
under LeCom's control and direction regardless of how
LeCom classifies them. The plaintiffs contend that the
defendants misclassified the plaintiffs as independent
contractors, thus denying them the protections of employees
under the FLSA, which includes overtime pay for hours worked
in excess of 40 hours per week.
plaintiffs also contend that the defendants withheld
compensation. For example, if a customer reports signal loss
for any reason after a repair or installation, the technician
must return to the job site; if he or she fails to do that,
s/he will be penalized by not being compensated for the job.
LeCom also unilaterally deducts money from the
technicians' wages if LeCom believes, correctly or
incorrectly, that a technician lost equipment that LeCom
issued to the technician. Even if LeCom pays a technician for
completing a job, LeCom may still retroactively apply
backcharges if LeCom believes a job was billed incorrectly
and resulted in overpayment. Technicians are not allowed to
challenge LeCom's decision to withhold pay, and LeCom has
the authority to terminate any technician at any time, and
for any reason.
plaintiffs' original complaint was brought under the
FLSA, and it also included a count alleging unjust enrichment
to recover the unpaid wages that were withheld or back
charged. On the defendants' motion, the Court dismissed
the claim of unjust enrichment because the parties'
relationship was governed either by subcontractor agreements
or oral contracts of employment, and no contract would be
implied in law where an express contract governs the same
subject matter. The Court noted that if the backcharges and
other costs withheld by the defendants caused the
plaintiffs' wages to fall below minimum wage, then they
can recover under the FLSA. Otherwise, the recovery must come
under a breach of contract theory focusing on the employment
contract. The plaintiffs filed a motion for reconsideration,
which was denied.
present motion, the plaintiffs want to amend the complaint to
include a count of conversion in an attempt to recover the
allegedly withheld compensation. The plaintiffs' proposed
amended complaint is identical to the original complaint
except for the following addition:
Defendant's conduct, as set forth above, in applying
chargebacks and withholding Plaintiffs' wages, violates
Michigan law making it a crime for employers “to demand
or receive any remuneration as a condition to hiring or
continued employment”, MCL § 750.351, and
constitutes a distinct act of dominion over Plaintiffs'
personal property (Plaintiffs' earned but unpaid wages)
for Defendants' own use, rendering them liable for
conversion pursuant to Michigan common law and statute, MCL
defendants oppose the motion.
Federal Rule of Civil Procedure 15(a)(2), a party seeking to
amend the pleadings at this stage of the proceedings must
obtain leave of court. “The court should freely give
leave when justice so requires.” Fed.R.Civ.P. 15(a)(2).
But leave may be denied on the basis of undue delay, bad
faith by the moving party, repeated failure to cure defects
by previously-allowed amendments, futility of the proposed
new claim, or undue prejudice to the opposite party.
Foman v. Davis, 371 U.S. 178, 182 (1962);
Duggins v. Steak ‘N Shake, Inc., 195 F.3d 828,
834 (6th Cir. 1999); Fisher v. Roberts, 125
F.3d 974, 977 (6th Cir. 1997).
may deny a motion for leave to amend when the proposed
amendment would be futile. United States ex rel. Harper
v. Muskingum Watershed Conserv. Dist., __ F.3d __, __,
Slip op. at 12, Docket No. 15-4406 (Nov. 21, 2016). “A
proposed amendment is futile if the amendment could not
withstand a Rule 12(b)(6) motion to dismiss.” Rose
v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420
(6th Cir. 2000).
proposed conversion count would be brought under Michigan
law. The plaintiffs argue a Michigan statute makes illegal an
employer's act of demanding or receiving any remuneration
as a condition to hiring or continued employment.
See Mich. Comp. Laws § 750.351. The plaintiffs
reason that the defendants' taking of deductions and
chargebacks from the plaintiffs amounts to appropriating the
plaintiffs' personal property, and constitutes unlawful
conversion in violation of Michigan Compiled Laws §
600.2919a. See Aroma Wines & Equip, Inc. v. Columbian
Distribution Servs., Inc., 497 Mich. 337, 871 N.W.2d 136
defendants impliedly argue (although they do not say so
explicitly) that adding the count of conversion would be
futile, because the plaintiffs have failed to show that there
was any personal property in terms of unpaid wages, and the
plaintiffs have not shown that the defendants converted
anything to their own use. The defendants contend that it has
not been determined that the plaintiffs were employees, ...