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Anderson v. P.F. Chang's China Bistro, Inc.

United States District Court, E.D. Michigan, Southern Division

August 23, 2017

JEREMY ANDERSON, Plaintiff,
v.
P.F. CHANG'S CHINA BISTRO, INC., DOES #1-10, Defendants.

          ORDER GRANTING PLAINTIFF'S MOTION TO DISMISS COUNTERCLAIMS [#14], AND DENYING PLAINTIFF'S MOTION FOR COLLECTIVE ACTION CERTIFICATION [#17] WITHOUT PREJUDICE

          DENISE PAGE HOOD, CHIEF, U.S. DISTRICT COURT

         BACKGROUND

         On November 29, 2016, Plaintiff Jeremy Anderson (“Anderson”) filed this case against Defendants P.F. Chang's China Bistro, Inc. (“P.F. Chang's”) and John Does # 1-10 alleging violations of the Fair Labor Standards Act (“FLSA”), Michigan labor law, and North Carolina labor law. (Doc # 1) Anderson seeks to prosecute his claims as a collective action on behalf of all persons who are or were formerly employed by Defendants as sous chef employees or similar positions with different titles who were non-exempt employees within the meaning of the FLSA and who were not paid minimum wage for hours worked and/or were not paid overtime for hours worked over 40 hours in a work week during the three years prior to the filing on this case.

         On February 1, 2017, P.F. Chang's filed an Answer and Counterclaims against Anderson alleging accounting and offset/recoupment, breach of contract, breach of good faith and fair dealing, unjust enrichment and restitution, and faithless servant. (Doc # 8) On March 8, 2017, Anderson filed a Motion to Dismiss P.F. Chang's Counterclaims. (Doc # 14) P.F. Chang's filed a Response on March 29, 2017. (Doc # 19) Anderson filed a Reply on May 12, 2017. (Doc # 25) On March 27, 2017, Anderson filed a Motion for Collective Action Certification. (Doc # 17) P.F. Chang's filed a Response on May 30, 2017. (Doc # 27) Anderson filed a Reply on June 12, 2017. (Doc # 29) The Court held a hearing on the Motions on June 21, 2017.

         Anderson began working for P.F. Chang's, an Asian-themed restaurant chain, in 2008 as a Line Cook in the Beachwood, Ohio restaurant. As a Line Cook, Anderson was paid by the hour. Anderson worked at this Ohio restaurant until about June 2013. Starting in or about August 2013, Anderson became a Sous Chef at the P.F. Chang's restaurant in Northville, Michigan. He worked at the Michigan restaurant until about September 2014. From about September 2014 to about March 2015, Anderson worked as a Sous Chef at the P.F. Chang's restaurant in Charlotte, North Carolina.

         Anderson asserts that, as a Sous Chef in the Michigan and North Carolina restaurants, he was a non-exempt employee within the meaning of the FLSA. He claims that he is entitled to back wages for work performed for which P.F. Chang's did not pay him the legal minimum wage or overtime wages. According to Anderson, he worked four days a week, for approximately 66.5 to 70.5 hours per week at the Michigan restaurant. He claims he worked five days a week, for approximately 55 hours per week at the North Carolina restaurant.

         Anderson alleges that, as a Sous Chef in the Michigan and North Carolina restaurants, he spent over 90 percent of his time cooking and preparing food. Anderson alleges that he did the same work as hourly Line Cooks except that he worked longer hours as a Sous Chef and was not paid any overtime premium for hours worked over 40 hours in a week. Anderson claims that he did not get any breaks and was not permitted to leave the kitchen at either the Michigan restaurant or the North Carolina restaurant. He alleges that his duties as a Sous Chef did not include managerial responsibilities or the exercise of independent business judgment. Anderson further alleges that he did not customarily direct the work of two or more employees, review or approve employee hours, or prepare schedules. According to the Complaint, Anderson did not have authority to and did not hire, fire, or discipline employees (except on one occasion when Anderson wrote up an employee as a result of the direct instruction to do so by the Chef at the Michigan restaurant).

         From about March 2015 to about June 2016, Anderson worked as an hourly Line Cook back at the P.F. Chang's restaurant in Ohio. From about August 2016 to about October 2016, Anderson worked as an hourly Line Cook at the P.F. Chang's restaurant in Palm Gardens, Florida. Anderson alleges that he observed Sous Chefs at the Ohio and Florida restaurants performing the same duties as Line Cooks, except that Sous Chefs worked weekly shifts that were over 40 hours and were not paid time and one half for their overtime.

         According to P.F. Chang's, Line Cooks are hourly, non-exempt employees who are responsible for preparing food for customers; Sous Chefs, on the other hand, receive salaries and are exempt employees not entitled to overtime compensation. P.F. Chang's alleges in its Counterclaims that the Sous Chef position entails additional pay and benefits, not available to hourly cooks, in exchange for the regular performance of managerial and other exempt duties.

         P.F. Chang's points to the Sous Chef Position Description that was applicable at the Ohio restaurant at the time that Anderson was being considered for the promotion from Line Cook to Sous Chef. This Position Description states that the Sous Chef position is a management position designed to manage and execute all kitchen functions. (Doc # 8-2) It describes the essential functions of the position to include: supervising, assigning, delegating tasks, and giving direction to the kitchen staff; ensuring proper timing and production of all food orders; preparing work schedules for all kitchen staff; supervising and facilitating training of all food preparation and execution of all menu items, procedure, and recipes; maintaining all product quality standards; completing prep lists; completing ordering guides; assisting with interviewing, hiring, and discharging employees; assisting in providing feedback to staff; handling disciplinary activities and recognition of staff; holding “front of the house” staff accountable for dress code standards; being accountable for following safety and sanitation guidelines; completing and costing all food inventories; completing opening and closing checklists; and managing the P.F. Chang's Message. Id. The Position Description also states: “The largest percentage of a Sous Chef['s] work day is spent directing and supervising the employees on that shift. S/he operates with a great deal of independent decision-making and discretionary authority. . . . In the absence of the Culinary Partner, the Sous Chef is the back of the house lead.” Id.

         According to P.F. Chang's, after learning of the aforementioned Sous Chef Position requirements, Anderson agreed to go through a “weeks' long” Manager in Training (“MIT”) formal training program. Anderson acknowledged and signed P.F. Chang's' Management Fraternization Policy, which prohibits managers from dating non-management employees. (Doc # 8-3) Anderson also acknowledged and signed P.F. Chang's' Immigration Policy and I-9 Compliance Plan, agreeing that he understood his “responsibility as a member of management to follow proper hiring and immigration-related procedures.” (Doc # 8-4) P.F. Chang's claims that Anderson was trained on managerial duties and received a copy of the Position Description.

         The Counterclaim alleges that Anderson was expected to, and did, instruct team members on best practices so that they could most effectively complete their own tasks and allow him the flexibility to supervise and support each station in the back of the house. P.F. Chang's claims that Anderson conducted one-on-one coaching and counseling sessions with employees, and he was not required to seek approval from any other member of management to do so. P.F. Chang's claims that Anderson provided formal and informal performance reviews to employees he managed, and he was required to draw on his observations while managing employees and exercise his independent judgment in determining whether employees were exceeding, meeting, or not meeting expectations. According to P.F. Chang's, Anderson also helped conduct interviews and hire new employees, and he could end a candidate's application process if, using his independent judgment, he did not feel the candidate was a good fit. The Counterclaim alleges that Anderson was expected to, and did, use his judgment when completing inventory for his specific restaurant, and after conducting an analysis of his particular restaurant's needs at any given moment, forecast what food and supplies to place in upcoming orders. According to P.F. Chang's, the Operating Partners and/or Culinary Partners at the Michigan and North Carolina restaurants observed Anderson perform hiring, training, coaching, scheduling, and disciplining of “back of the house” employees.

         P.F. Chang's claims that, as a Sous Chef, Anderson received a salary for all hours of work and was an exempt employee not entitled to overtime compensation. According to Anderson's Complaint, he received an annual salary of about $41, 000.00. According to the Counterclaim, as a Sous Chef, Anderson received and accepted an annual salary of $41, 000.00, which was thereafter increased to $42, 000.00 and subsequently increased to $43, 000.00. The Counterclaim further alleges that Anderson received and accepted paid vacation time, eligibility for health insurance benefits, long-term disability benefits, and short-term disability benefits-which are only provided to management and not to hourly employees.

         P.F. Chang's maintains that, to the extent Anderson is found to have regularly performed primarily non-exempt duties (as Anderson alleges in his Complaint) during any time he held the position of Sous Chef, he has materially breached his agreement to primarily perform exempt duties, and P.F. Chang's has suffered damages as a result of compensating Anderson for the performance of managerial duties which he agreed to, but allegedly did not, perform. P.F. Chang's further asserts that Anderson acted in bad faith by accepting a promotion to Sous Chef and accepting higher pay and additional benefits in exchange for the performance of managerial and exempt duties, and then performing primarily non-exempt duties without informing P.F. Chang's about it.

         II. MOTION TO DISMISS DEFENDANT'S COUNTERCLAIMS

         A. Standard of Review

         Rule 12(b)(1) of the Federal Rules of Civil Procedure provides for dismissal for lack of jurisdiction over the subject matter. Fed.R.Civ.P. 12(b)(1). Motions under Rule 12(b)(1) fall into two general categories: facial attacks and factual attacks. See RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996). A facial attack challenges the pleading itself. In considering this type of attack, the court must take all material allegations in the complaint as true, and construe them in the light most favorable to the non-moving party. Id. Where subject matter jurisdiction is factually attacked, the plaintiff bears the burden of proving jurisdiction to survive the motion, and “the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” Id. In a factual attack of subject matter jurisdiction, “no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.” Id.

         B. Subject Matter Jurisdiction

         Anderson argues that the Court lacks subject matter jurisdiction over P.F. Chang's' state-law Counterclaims because there is no original federal jurisdiction; the Counterclaims are not compulsory; the Counterclaims do not derive from a common nucleus of operative facts with Anderson's claims; and public policy weighs against allowing in the retaliatory Counterclaims.

         P.F. Chang's responds that the Counterclaims are compulsory because they arise out of the exact same transaction or occurrence as Anderson's claims. P.F. Chang's also argues that, even if the Court were to determine that the Counterclaims are not compulsory, the Counterclaims are permissive, and no facts or allegations exist to warrant declining supplemental jurisdiction.

         Anderson facially attacks the Counterclaims, so the Court takes the allegations in the Counterclaims as true and construes them in the light most favorable to P.F. Chang's. See RMI Titanium Co., 78 F.3d at 1134. The Counterclaims raise questions of state law, and do not raise federal questions. P.F. Chang's fails to allege the amount in controversy, which does not appear to meet the $75, 000.00 minimum for diversity jurisdiction. Accordingly, there is no original federal jurisdiction, and the Court must decide whether to exercise supplemental jurisdiction over P.F. Chang's' Counterclaims.

         28 U.S.C. § 1367 gives the Court discretion to exercise supplemental jurisdiction over state law claims “that are so related to claims in the action within [the court's] original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367.

         “Claims form part of the same case or controversy when they derive from a common nucleus of operative facts.” Harper v. AutoAlliance Int'l, Inc., 392 F.3d 195, 209 (6th Cir. 2004) (internal quotations and citation omitted). Section 1367 further guides a court in determining whether supplemental jurisdiction should be exercised:

         The district courts may decline to exercise supplemental jurisdiction over ...


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