United States District Court, E.D. Missouri, Eastern Division
OPINION, MEMORANDUM AND ORDER
EDWARD AUTREY, UNITED STATES DISTRICT JUDGE.
matter is before the Court on Plaintiffs' Motion to
Withdraw Reference, [Doc. No. 1]. Defendants oppose the
Motion. The Court conducted a hearing on the Motion on
January 16, 2019. For the reasons set forth below, the Motion
will be granted.
relevant procedural background is set forth in the pleadings
and summarized below:
October 14, 2016, Debtor Directory Distributing Associates,
Inc., (“DDA”), filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code in the
Bankruptcy Court for the Eastern District of Missouri. On
November 23, 2016, DDA filed a Notice of Removal with the
Bankruptcy Court for the Southern District of Texas seeking
the removal of the state court action Walker, et al. v.
Directory Distributing Associates, Inc. et. al., cause
number 2011-50578, in the 269th District Court of Harris
County, Texas to the Bankruptcy Court for the Southern
District of Texas. This removed action is one part of a Fair
Labor Standards Act collective action, both parts of which
originally were filed with the Texas state court. The other
part of the collective action was proceeding in the Northern
District of California until the proceedings were stayed.
cases began in 2011, when the original plaintiff, Ervin
Walker, filed his lawsuit in Harris County District Court.
Mr. Walker, and other plaintiffs who joined the action,
alleged violations of the Fair Labor Standards Act based on a
refusal by DDA and AT&T-their alleged joint employers-to
compensate them in the manner required by federal wage and
hour laws. In 2012, the state court conditionally certified a
nationwide collective action and allowed similarly situated
individuals from across the country to opt into the lawsuit.
Thousands of additional plaintiffs opted in and joined the
2013, the state court, based on a state multiparty venue
statute, granted defendants' request to dismiss more than
15, 500 opt-in plaintiffs who neither lived nor worked in
Texas. In late 2013, plaintiffs took an accelerated appeal of
that decision, and the district court stayed enforcement of
its order pending resolution of that appeal. The appellate
process lasted until April 1, 2016, when the Texas Supreme
Court denied review of the appellate decision affirming the
state district court's order. Approximately one month
later, a second suit was filed against these same defendants
in the United States District Court for the Northern District
of California, in the case styled James Krawczyk, et al.
v. Directory Distributing Associates, Inc. and AT&T
Corp., Cause No. 3:16-cv-02531-vc.
Krawczyk matter encompasses the non-Texas opt-in
plaintiffs dismissed from this case, as well as certain
Texas-based plaintiffs seeking damages for the later time
period encompassed by that case. The AT&T entities and
DDA filed motions to dismiss plaintiffs' claims pursuant
to Fed.R.Civ.P. 12, raising procedural as well as substantive
FLSA issues. Plaintiffs filed their Responses to these
motions. Defendant AT&T Corp. filed a Reply in Support of
AT&T Corp.'s Motion to Dismiss. On December 1, 2017,
Judge Chhabria addressed these motions with the parties and
subsequently issued his decision on December 9, 2017,
substantially denying the motions.
in these cases is still ongoing. The unusual procedural
history and the complex web of corporate affiliations among
DDA, AT&T, and AT&T's subsidiaries have already
raised a number of complex factual and legal issues. The
substantive factual and legal issues involve the application
and interpretation of the FLSA and its regulations, such as
whether the delivery workers were improperly classified by
Defendants as independent contractors.
their Motion, Plaintiffs argue that withdrawal is appropriate
under both the mandatory and discretionary provisions of 28
U.S.C. § 157(d). They argue that mandatory withdrawal is
required for Plaintiffs' claims arising under the Fair
Labor Standards Act, 29 U.S.C. § 201 et seq.
because absent withdrawal, the Bankruptcy Court would be
impermissibly required to resolve federal law regulating
organizations and activities affecting interstate commerce.
relevant part, 28 U.S.C. § 157(d) states, “[t]he
district court shall, on timely motion of a party, so
withdraw a proceeding if the court determines that resolution
of the proceeding requires consideration of both title 11 and
other laws of the United States regulating organizations or
activities affecting interstate commerce.” In support
of mandatory withdrawal of the FLSA claims, Plaintiffs
the factual and legal claims as well as any defenses raised
may be adjudicated only by and through interpreting the FLSA
and its various regulations as well as the administrative and
judicial determinations and rulings of the FLSA. Plaintiffs
who were hired as delivery workers to deliver telephone
directories allege that Defendants misclassified them as
“independent contractors” when they were, in
fact, “employees” as defined by the FLSA.
Specifically, Plaintiffs seek the remedies afforded them
under the FLSA for such misclassification, that being the
recovery of the minimum wage rate of pay established pursuant
to the FLSA for all hours worked during a work week and the
overtime wage rate for all hours worked above forty hours in
a work week. To resolve this litigation, the Court and the
jury must determine whether Plaintiffs were
“employees” or “independent
contractors” as such characterizations are defined by
the FLSA and its interpretations. The fact-finder must
evaluate such factors as (1) the degree of control exercised
by the employer over the workers, (2) the workers'
opportunity for profit or loss and their investment in the
business, (3) the degree of skill and independent initiative
necessary to perform the work, (4) the duration of the
working relationship, and (5) the extent to which work is an
integral part of the employer's business. See Brock
v. Superior Care, Inc., 840 F.2d 1054 (2nds Cir. 1988);
See also Mednick v. Albert Enterprises, Inc., 508
F.2d 297, 303 (1975) (Court considers economic reality of
worker rather than mere label; where economic reality is that
worker is not and never was independently in business for
himself, label of independent contractor will not relieve
employer of liability under Fair Labor Standards Act.)
[T]the issue of whether plaintiffs are
“employees” as defined by the FLSA or
“independent contractors” not subject to the
FLSA's protections is hotly contested. Additionally,
defendants contest whether the opt-in plaintiffs are
“similarly situated, ” an issue that will require
analysis and interpretation of case law that has evolved in
interpreting this statute… Defendants specifically
contest that plaintiffs and the opt-in plaintiffs are
“employees rather than “independent contractors,
” that plaintiffs are entitled to damages, that
plaintiffs have any damages, that plaintiffs' damages are
barred by the statutes of limitations, which would require
potentially an analysis of equitable tolling, whether the
defendants' actions were willful, whether defendants
acted in “good faith” and, of course, whether
plaintiffs and opt-in plaintiffs were similarly situated such
that they are entitled to bring a collective action. The
Court will be required to analyze, evaluate, interpret and
apply the FLSA to the claims and defenses… There is no
other substantial and material law that the Court must apply
to adjudicate either Plaintiffs' claims for unpaid wages,
overtime and minimum-wage violations or Defendants'
defenses to those claims.
in this Circuit have followed “the approach adopted by
the Seventh Circuit, which has held that mandatory withdrawal
is required only when those issues require the
interpretation, as opposed to mere application, of the
non-title 11 statute, or when the court must undertake
analysis of significant open and unresolved issues regarding
the non-title 11 law.” In re Miller Auto.
Grp., 2013 U.S. Dist. LEXIS 32956, at *5 (W.D. Mo. Mar.
11, 2013). See also Fayne v. Innovations 365, LLC,
2018 WL 3614983, at *1-3 (W.D. Mo. July 27, 2018).
Court finds that Plaintiffs have met their burden to
establish mandatory withdrawal of ...