FIGURA v. NORTH COUNTRY JANITORIAL INC

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Gregg W. FIGURA, Plaintiff, v. NORTH COUNTRY JANITORIAL, INC. and Matthew Montesi, Individually and in his Capacity as President and Owner of North Country Janitorial, Inc., Defendants.

No. 62064.

Decided: September 09, 2016

Gleason, Dunn, Walsh & O'Shea, (Brendan D. Sansivero of counsel), Albany, for Plaintiff. Fitzgerald Morris Baker Firth P.C., (John Aspland of counsel), Glens Falls, for Defendant.

In February 2013, plaintiff commenced full-time employment with defendant North Country Janitorial, Inc. (hereinafter NCJ) as a Restoration Field Technician. Plaintiff was thereafter promoted to Director of Restoration and Marketing Development in May 2013, with a base salary of $47,500.00 and commissions based on the monthly gross revenue of the Restoration Division. Specifically, plaintiff was to receive 0% of monthly gross revenue under $35,000.00; 3% of monthly gross revenue of $35,000.00–$43,999.00; 4% of monthly gross revenue of $45,000.00–$64,999.00; and 5% of monthly gross revenue of $65,000.00 and above.

In June 2014, defendant Matthew Montesi—the President and Owner of NCJ—apparently “burst into plaintiff's office and told him that his payout program would no longer be in effect.” Plaintiff then received no commission payments for the months of June and July 2014. In August 2014, Montesi advised plaintiff that his compensation package had changed and he would now be receiving a base salary of $47,500.00, plus commissions based on the monthly net profit of the Restoration Division. Specifically, plaintiff was to receive “10% of any net profit” and “2% discretionary bonus, if applicable.” With the new compensation package based on monthly net profit—as opposed to monthly gross profit—plaintiff became concerned about the financial condition of the Restoration Division. As a result, he requested access to information pertaining to the Restoration Division's income and expenses several times, which requests were denied.

Plaintiff received reduced commission payments in August, September and October 2014. He then received no commission payments in November and December 2014 and January and February 2015. By email dated February 16, 2015 to Montesi and Christopher Barden—NCJ's Chief Operating Officer—plaintiff requested that a monthly reporting system be implemented whereby he would receive specific financial information regarding the income and expenses of the Restoration Division, which formed the basis of his new commission payments. Plaintiff did not receive any response to this email and, on February 24, 2015, was advised that his position had been eliminated. Plaintiff commenced this action on October 9, 2015 alleging three causes of action: (1) breach of his employment contract; (2) failure to pay wages in violation of Labor Law article 6; and (3) retaliation in violation of Labor Law article 7. Presently before the Court is defendants' pre-answer motion to dismiss the second and third causes of action and plaintiff's cross motion to amend the complaint. The motion and cross motion will be addressed in seriatim.

“On a motion to dismiss for failure to state a cause of action, [the Court] must afford the pleadings a liberal construction, accept the facts alleged therein as true, accord the plaintiff the benefit of every possible inference and determine whether the facts alleged fit within any cognizable legal theory” ‘ (Nelson v. Capital Cardiology Assoc., P.C., 97 A.D.3d 1072, 1073 [2012], quoting Matter of Upstate Land & Props., LLC v. Town of Bethel, 74 A.D.3d 1450, 1452 [2010] ).

With respect to the second cause of action, defendants contend that plaintiff failed to state a cause of action for the failure to pay wages because the monthly commissions do not constitute wages under Labor Law § 190(1). Rather, according to defendants, these monthly commissions were part of an incentive compensation plan.

Labor Law § 190(1) defines “wages” as “the earnings of an employee for labor or services rendered, regardless of whether the amount of earnings is determined on a time, piece, commission or other basis.” “It is settled that [t]he term wages,' despite its broad definition ․ does not encompass an incentive compensation plan” (Truelove v. Northeast Capital & Advisory, 268 A.D.2d 648, 649 [2000], affd 95 N.Y.2d 220 [2000], quoting Matter of Dean Witter Reynolds v. Ross, 75 A.D.2d 373, 381 [1980] [citation omitted]; see Magness v. Human Resource Servs., 161 A.D.2d 418, 419 [1990] ). “Compensation will be found to be part of an incentive compensation plan where an employee receives a guaranteed salary and may also receive supplemental income based upon the dual performance of the employee and the business or as a result of other factors outside of the employee's control” (Truelove v. Northeast Capital & Advisory, 268 A.D.2d at 649, 702 N.Y.S.2d 147 [emphasis added]; see Matter of Dean Witter Reynolds v. Ross, 75 A.D.2d at 381, 429 N.Y.S.2d 653 [citations omitted] ). “The dispositive factor in determining whether compensation constitutes wages is not the labeling of the plan but whether the compensation is vested and mandatory as opposed to discretionary and forfeitable” (Truelove v. Northeast Capital & Advisory, 268 A.D.2d at 649, 702 N.Y.S.2d 147; see Caruso v. Allnet Communication Servs., 242 A.D.2d 484, 484–485 [1997] ).

Affording the pleadings a liberal construction and accepting the facts alleged therein as true, the Court finds that plaintiff has succeeded in stating a cause of action for the failure to pay wages with respect to the commission payments due and owing from May 2013 to June 2013. Plaintiff has alleged that these commission payments were mandatory and not discretionary. The Court similarly finds that plaintiff has succeeded in stating a cause of action for the failure to pay wages with respect to that portion of the commission payments due and owing from August 2014 to February 2015 which were comprised of “10% of any net profit.” Again, plaintiff has alleged that this portion of the commission payments was mandatory and not discretionary. With that said, the Court finds that plaintiff has failed to state a cause of action for the failure to pay wages with respect to that portion of the commission payments due and owing from August 2014 to February 2015 which were comprised of “2% discretionary bonus, if applicable.” Indeed, the term “discretionary” is used to describe this portion of the commission payments and, as such, it cannot be alleged that this portion of the payments was mandatory.

With respect to the third cause of action, defendants contend that plaintiff failed to state a claim for retaliation. Specifically, defendants contend that plaintiff failed to allege that he complained about a specific violation of the Labor Law.

To state a claim under Labor Law § 215, “a plaintiff must adequately plead that while employed by the defendant, he or she made a complaint about the employer's violation of New York Labor Law and was terminated or otherwise penalized, discriminated against, or subjected to an adverse employment action as a result” (Higueros v. New York State Catholic Health Plan, Inc., 526 F.Supp.2d 342, 347 [ED N.Y.2007]; see Epifani v. Johnson, 65 A.D.3d 224, 236 [2009]; Kelly v. Xerox Corp., 256 A.D.2d 311, 312 [1998] ). Significantly, “an employee need not allege that [he] notified [his] employer of the exact section [of the Labor Law he] relies on” ‘ (Antolino v. Distrib. Mgt. Consolidators Worldwide, LLC, 2013 N.Y. Slip Op 31815[U], *1 [Sup Ct, N.Y. County 2013, quoting Weiss v. Kaufman, 2010 N.Y. Slip Op 33261[U], *2 [NY County 2010] ). Rather, “[a]ll that is required is that the complaint to the employer be of a colorable violation of the statute” (Weiss v. Kaufman, 2010 N.Y. Slip Op 33261[U] at *2; accord Antolino v. Distrib. Mgt. Consolidators Worldwide, LLC, 2013 N.Y. Slip Op 31815[U] at *1).

Affording the pleadings a liberal construction and accepting the facts alleged therein as true, the Court finds that plaintiff has succeeded in stating a claim for retaliation. Plaintiff alleges that he complained because he was not receiving his commission payments, as well as because he was not given access to the Restoration Division's income and expenses, which information was requested after the payments were stopped. While plaintiff does not allege that he notified defendants of the exact section of the Labor Law upon which he was relying, his complaints were nonetheless of a colorable violation of the statute.

Defendants further contend that plaintiff failed to provide notice of this action to the attorney general prior to its commencement and, as a result, the third cause of action must be dismissed.

Labor Law § 215(2)(b) provides that, “[a]t or before the commencement of any action under this section, notice thereof shall be served upon the attorney general by the employee.” Neither the Court of Appeals nor the Appellate Division has addressed the question of whether the notice requirement set forth in Labor Law § 215(2)(b) should be construed as a condition precedent to suit. The issue has been considered by certain lower courts, but with conflicting results (see Aurelien v. Albert Augustine Ltd., 2012 N.Y. Slip Op 32901[U], *1 [Sup Ct, N.Y. County 2012] [in the absence of any prejudice caused by late notice, plaintiff's retaliation claim not barred by the failure to comply with Labor Law § 215(2)(b) ]; Antolino v. Distrib. Mgt. Consolidators Worldwide, LLC, 2011 N.Y. Slip Op 33138[U] [Sup Ct, N.Y. County 2011] [dismissing plaintiff's retaliation claim based upon the failure to comply with Labor Law § 215(2)(b) ] ). Federal courts have also disagreed on the issue (see Robledo v. No. 9 Pargume Leasehold, 2013 WL 1718917, *8 [SD NY, Apr. 9, 2013, No. 12 Civ 3579 (ALC/DF) ] [plaintiff's retaliation claim not barred based upon the failure to comply with Labor Law § 215(2)(b) ]; Crosland v. City of New York, 140 F.Supp.2d 300, 312 [SD N.Y.2001], affd 54 Fed Appx 502 [2d Cir2002] [dismissing plaintiff's retaliation claim based upon the failure to comply with Labor Law § 215(2)(b) ] ).

In the absence of any direct precedent on the issue, this Court—like the courts in Aurelien v. Albert Augustine Ltd., supra and Robledo v. No. 9 Pargume Leasehold, supra—will look to the reasoning of the Court of Appeals in Columbia Gas of N.Y. v. New York State Elec. & Gas Corp. (28 N.Y.2d 117 [1971] ) (hereinafter Columbia Gas ). Columbia Gas involved General Business Law § 340(5), which requires that “[a]t or before the commencement of any civil [antitrust] action ․, notice thereof shall be served upon the attorney-general.” There, the case was allowed to proceed in the absence of timely notice under General Business Law § 340(5), with the Court of Appeals stating as follows: “The requirement that notice be given is designed solely to apprise the Attorney–General that such an action was commenced so that he would be aware of the circumstances. It may not be considered a condition precedent to the plaintiff's cause of action” (id. at 129, 320 N.Y.S.2d 57, 268 N.E.2d 790 [internal quotation marks and citation omitted] ). Applying this same reasoning, the Court finds that plaintiff's failure to comply with Labor Law § 215(2)(b) should not result in dismissal of the third cause of action. Indeed, plaintiff provided the attorney general with notice of the action on December 15, 2015 which—while untimely—certainly did not result in any prejudice (see Aurelien v. Albert Augustine Ltd., 2012 N.Y. Slip Op 32901[U] ).

Based upon the foregoing, defendants' motion to dismiss is granted to the extent that the aspect of the second cause of action alleging loss of wages for that portion of commission payments due and owing from August 2014 to February 2015 which were comprised of “2% discretionary bonus, if applicable” is dismissed, and the motion is otherwise denied.

Turning now to plaintiff's cross motion, “[w]hether leave to amend a complaint should be granted rests within the sound discretion of the trial court, although leave should be freely granted if the amendment is not plainly lacking in merit and does not unduly prejudice or surprise the nonmoving party” (Vermont Mut. Ins. Co. v. Mowery Constr., Inc., 96 A.D.3d 1218, 1219 [2012] [citation omitted]; see Dever v. DeVito, 84 A.D.3d 1539, 1541 [2011], lv dismissed 18 N.Y.3d 864 [2012]; Architectural Bldrs. v. Pollard, 267 A.D.2d 704, 705 [1999] ).

Here, plaintiff seeks to amend the complaint so as to (1) include certain additional allegations relative to his claim for failure to pay wages in violation of Labor Law article 6; and (2) include an allegation that he served notice of his retaliation claim on the attorney general as required under Labor Law § 215(2)(b).

The Court finds that these amendments arguably have merit and, further, that they will not result in any prejudice to defendants, who have yet to serve an answer.

Based upon the foregoing, plaintiff's cross motion for leave to amend the complaint is granted in its entirety. Plaintiff is hereby directed to file and serve its amended complaint within thirty (30) days of the date of this Decision and Order.

Therefore, having considered the Affirmation of Mary Elizabeth Kissane, Esq. with exhibit attached thereto, dated November 30, 2015, submitted in support of the motion; Memorandum of Law of Mary Elizabeth Kissane, Esq., dated November 30, 2015, submitted in support of the motion; Affidavit of Brendan D. Sansivero, Esq. with exhibits attached thereto, sworn to January 18, 2016, submitted in opposition to the motion and in support of the cross motion; Memorandum of Law of Brendan D. Sansivero, Esq., dated January 18, 2016, submitted in opposition to the motion and in support of the cross motion; and Affirmation of Mary Elizabeth Kissane, Esq., dated February 12, 2016, submitted in opposition to the cross motion and in further support of the motion, and oral argument having been heard on September 1, 2016 with Brendan D. Sansivero Esq. appearing on behalf of plaintiff and John Aspland, Esq. appearing on behalf of defendants, it is hereby

ORDERED that defendants' motion to dismiss is granted to the extent that the aspect of the second cause of action alleging loss of wages for that portion of commission payments due and owing from August 2014 to February 2015 which were comprised of “2% discretionary bonus, if applicable” is dismissed, and the motion is otherwise denied; and it is further

ORDERED that plaintiff's cross motion for leave to amend the complaint is granted in its entirety; and it is further

ORDERED that plaintiff is hereby directed to file and serve its amended complaint within thirty (30) days of the date of this Decision and Order.

The original of this Decision and Order has been filed by the Court together with the Notice of Motion dated November 30, 2015, Notice of Cross Motion dated January 18, 2016 and the submissions enumerated above. Counsel for plaintiff is hereby directed to promptly obtain a filed copy of the Decision and Order for service with notice of entry upon defendants in accordance with CPLR 5513.

ROBERT J. MULLER, J.