     11-0734-cv, 11-0710-cv, 11-0713-cv, 11-0728-cv
     Nakahata, et al., v. New York-Presbyterian Healthcare System, Inc., et al.

 1                       UNITED STATES COURT OF APPEALS
 2
 3                            FOR THE SECOND CIRCUIT
 4
 5                               August Term, 2012
 6
 7          (Argued: November 9, 2012           Decided: July 11, 2012)
 8
 9              Docket Nos. 11-0734, 11-0710, 11-0713, 11-0728
10
11   - - - - - - - - - - - - - - - - - - - -x
12
13   MASAHIRO NAKAHATA, on behalf of herself and all other employees
14   similarly situated, DIANA GARDOCKI, on behalf of herself and all
15   other employees similarly situated,
16
17                    Plaintiffs-Appellants,
18
19   DIANE LEE SUSSMAN, STEVIE HARISTON, CAROLE TASSY, MARY MAHONEY,
20   LINDA MARRONE, MARY OLDAK, VOLVICK DESIL, STEPHANIE UHRIG,
21
22                    Plaintiffs,
23
24              - v.-
25
26   NEW YORK-PRESBYTERIAN HEALTHCARE SYSTEM, INC., HERBERT PARDES,
27   NEW YORK AND PRESBYTERIAN HOSPITAL, WAYNE OSTEN,
28
29                    Defendants-Appellees,
30
31   NEW YORK-PRESBYTERIAN FUND, INC., NEW YORK-PRESBYTERIAN
32   HOSPITAL, BROOKLYN HOSPITAL CENTER, HOLY NAME HOSPITAL, INC.,
33   HOLY NAME MEDICAL CENTER, LAWRENCE HOSPITAL CENTER, MARY IMOGENE
34   BASSETT, ONAL CARE NEW MILFORD HOSPITAL, INC., NEW YORK
35   COMMUNITY HOSPITAL OF BROOKLYN, INC., NEW YORK DOWNTOWN
36   HOSPITAL, NEW YORK HOSPITAL MEDICAL CENTER OF QUEENS, NEW YORK
37   METHODIST HOSPITAL, WESTCHESTER SQUARE MEDICAL CENTER, INC.,
38   NYACK HOSPITAL, PALISADES MEDICAL CENTER, STAMFORD HOSPITAL,
39   VALLEY HOSPITAL, WHITE PLAINS MEDICAL CENTER, WINTHROP-
40   UNIVERSITY HOSPITAL, WYCHOFF HEIGHTS MEDICAL CENTER, ST. MARY’S
41   HEALTHCARE SYSTEM FOR CHILDREN, INC., A. SOLOMON TORRES, NEW
42   YORK SOCIETY FOR THE RELIEF OF THE RUPTURED AND CRIPPLED,
43   MAINTAINING THE HOSPITAL FOR SPECIAL SURGERY, MARY IMOGENE
44   BASSETT HOSPITAL, NEW MILFORD HOSPITAL, INC., NORTHERN
45   WESTCHESTER HOSPITAL ASSOCIATION, WHITE PLAINS HOSPITAL MEDICAL
 1   CENTER, WYCKOFF HEIGHTS MEDICAL CENTER, NEW YORK GRACIE SQUARE
 2   HOSPITAL, INC., AMSTERDAM NURSING HOME CORPORATION,
 3
 4                 Defendants.
 5
 6   - - - - - - - - - - - - - - - - - - - -x
 7
 8   JONATHAN YARUS, on behalf of themselves and all other employees
 9   similarly situated, MOHAMED ALI, on behalf of himself and all
10   other employees similarly situated,
11
12                 Plaintiffs-Appellants,
13
14   LLOYD BLACKWOOD, on behalf of themselves and all other employees
15   similarly situated, MARTIN UKEJE, TAE JOO KIM, SHARON CAMPBELL,
16   JEROME CROMWELL, HELENA ACHAMPONG, ERNESTINE DANIEL, VOLVICK
17   DESIL, STEPHANIE UHRIG, GAIL WHICKUM,
18
19                 Plaintiffs,
20
21            - v.-
22
23   NEW YORK CITY HEALTH AND HOSPITALS CORPORATION, BELLEVUE
24   HOSPITAL CENTER, KINGS COUNTY HOSPITAL CENTER, JACOBI MEDICAL
25   CENTER, ELMHURST HOSPITAL CENTER, HARLEM HOSPITAL CENTER,
26   METROPOLITAN HOSPITAL CENTER, ALAN D. AVILES, LINCOLN MEDICAL
27   AND MENTAL HEALTH CENTER, NORTH CENTRAL BRONX HOSPITAL, CONEY
28   ISLAND HOSPITAL, WOODHULL MEDICAL AND MENTAL HEALTH CENTER,
29   QUEENS HOSPITAL CENTER,
30
31                 Defendants-Appellees.
32
33   - - - - - - - - - - - - - - - - - - - -x
34
35   PATRICIA MEGGINSON, on behalf of herself and all other employees
36   similarly situated,
37
38                 Plaintiff-Appellant,
39
40   HELEN BRUGGER, on behalf of herself and all other employees
41   similarly situated, MARY OLDAK, MICHELLE ALVAREZ, STEPHANIE
42   UHRIG,
43
44                 Plaintiffs,
45
46            - v.-
47

                                     2
 1   WESTCHESTER COUNTY HEALTH CARE CORPORATION, WESTCHESTER MEDICAL
 2   CENTER, MARIA FARERI CHILDREN’S HOSPITAL, MICHAEL D. ISRAEL,
 3   PAUL S. HOCKENBERG,
 4
 5                  Defendants-Appellees,
 6
 7   KERRY ORISTANO, PAULA REDD ZEMAN,
 8
 9                  Defendants.
10
11   - - - - - - - - - - - - - - - - - - - -x
12
13   OLUSOLA ALAMU, on behalf of himself and all other employees
14   similarly situated, JACQUELINE COOPER-DAVIS, on behalf of
15   herself and all other employees similarly situated,
16
17                  Plaintiffs-Appellants,
18
19             - v.-
20
21   BRONX-LEBANON HOSPITAL CENTER, INCORPORATED, BRONX-LEBANON
22   HOSPITAL CENTER-FULTON DIVISION, BRONX-LEBANON HOSPITAL CENTER-
23   CONCOURSE DIVISION, MIGUEL A. FUENTES, JR., SHELDON ORTSMAN,
24
25                  Defendants-Appellees,
26
27   SELENA GRIFFIN-MAHON,
28
29                  Defendant.*
30
31    - - - - - - - - - - - - - - - - - - - -x
32
33
34        Before:   LOHIER, Circuit Judge, POGUE, Judge




          *
            The Clerk of the Court is directed to amend the official
     caption as shown above.

            Donald C. Pogue, Chief Judge of the United States Court
     of International Trade, sitting by designation. Debra A.
     Livingston, Circuit Judge, recused herself before oral argument.
     The two remaining members of the panel, who are in agreement,
     have decided this case in accordance with Second Circuit
     Internal Operating Procedure E(b).
                                     3
1        Plaintiffs-Appellants in four related cases appeal from a

2    single order of the United States District Court for the

3    Southern District of New York (Crotty, J.) dismissing their

4    claims that Defendants-Appellees violated the Fair Labor

5    Standards Act, New York Labor Law, Racketeer Influenced and

6    Corrupt Organizations Act, and New York common law.   For the

7    following reasons, the judgment is affirmed in part, vacated in

8    part, and remanded.

 9                                 MICHAEL J. LINGLE (Guy A. Talia,
10                                 J. Nelson Thomas, on the brief),
11                                 Thomas & Solomon LLP, Rochester,
12                                 New York, for Appellants.
13
14                                 JAMES S. FRANK (Kenneth W. DiGia,
15                                 Kenneth J. Kelly, on the brief),
16                                 Epstein Becker & Green, P.C., New
17                                 York, New York, (Terence K.
18                                 McLaughlin, Willkie Farr &
19                                 Gallagher LLP, New York, New York,
20                                 on the brief), for Appellees New
21                                 York-Presbyterian Healthcare
22                                 System, Inc., et al.
23
24                                 VICTORIA SCALZO, Assistant
25                                 Corporation Counsel of the City of
26                                 New York, New York, New York
27                                 (Kristin M. Helmers, Blanche
28                                 Greenfield, on the brief), for
29                                 Michael A. Cardozo, Corporation
30                                 Counsel of the City of New York,
31                                 for Appellees New York City Health
32                                 and Hospitals Corporation, et al.
33
34                                 LEONARD M. ROSENBERG and SALVATORE
35                                 PUCCIO (Lauren M. Levine, on the
36                                 brief), Garfunkel Wild, P.C.,
37                                 Great Neck, New York, for
38                                 Appellees Westchester County
39                                 Healthcare Corp., et al.

                                     4
1
2                                  NANCY V. WRIGHT (Ricki E. Roer,
3                                  Scott R. Abraham, on the brief),
4                                  Wilson Elser Moskowitz Edelman &
5                                  Dicker LLP, New York, New York,
6                                  for Appellee Bronx-Lebanon
7                                  Hospital Center, Inc., et al.
8
9    POGUE, Judge:

10       This is an appeal from an order by the United States

11   District Court for the Southern District of New York dismissing

12   the complaint in each of four cases: Nakahata v. New York-

13   Presbyterian Healthcare System, Inc., No. 10 Civ. 2661; Yarus v.

14   New York City Health and Hospitals Corp., No. 10 Civ. 2662;

15   Megginson v. Westchester Medical Center, No. 10 Civ. 2683; and

16   Alamu v. The Bronx-Lebanon Hospital Center, Inc., No. 10 Civ.

17   3247. Nakahata v. New York-Presbyterian Healthcare Sys., Inc.,

18   2011 WL 321186 (S.D.N.Y. Jan. 28, 2011) (“Nakahata I”).

19   Plaintiffs — current and former healthcare employees — allege

20   that the Defendants — healthcare systems, hospitals, corporate

21   heads, and affiliated entities — violated the Fair Labor

22   Standards Act (“FLSA”), New York Labor Law (“NYLL”), Racketeer

23   Influenced and Corrupt Organizations Act (“RICO”), and New York

24   common law by failing to compensate Plaintiffs for work

25   performed during meal breaks, before and after scheduled shifts,

26   and during required training sessions.   The District Court

27   dismissed the four complaints in their entirety for failing to



                                     5
1    state a claim pursuant to Federal Rule of Civil Procedure

2    12(b)(6).

3         We affirm in part the District Court’s decision and remand

4    in part.    We affirm the dismissal, with prejudice, of the FLSA

5    gap-time, RICO, and certain common law claims.     We also affirm

6    the dismissal of the FLSA and NYLL overtime claims, but we

7    remand these claims with leave to replead.    We reserve judgment

8    on the dismissal of the NYLL gap-time claims and remand for

9    reconsideration.    Finally, we vacate the dismissal of certain

10   common law claims and remand with leave to replead.

11

12                                BACKGROUND

13        The four cases before us on appeal are but a few among many

14   such actions brought by a single law firm, Thomas & Solomon LLP,

15   and premised on a stock set of allegations concerning

16   underpayment in the healthcare industry.     This is the second

17   decision of this Court addressing these allegations, following

18   the recent opinion in Lundy v. Catholic Health System of Long

19   Island Inc., 711 F.3d 106 (2d Cir. 2013).     Several related cases

20   remain pending before this Court.1


          1
            See Hinterberger v. Catholic Health Sys., Inc., No. 12-
     0630; Hinterberger v. Catholic Health Sys., Inc., No. 12-0918;
     Gordon v. Kaleida Health, No. 12-0654; Gordon v. Kaleida Health,
     12-0670; Nakahata v. New York-Presbyterian Healthcare Sys.,
     Inc., No. 12-4128; Megginson v. Westchester Med. Ctr., No. 12-
     4084; Alamu v. The Bronx-Lebanon Hosp. Ctr., No. 12-4085.
                                       6
1         The parties are healthcare workers, on behalf of a putative

2    class, and their alleged employers.   The named Plaintiffs,

3    identified only as “employees” or “employees of the defendants,”

4    are Masahiro Nakahata and Diana Gardocki, Nakahata 2d Am. Compl.

5    ¶ 62; Patricia Megginson, Megginson Am. Compl. ¶ 61; Olusola

6    Alamu and Jacqueline Cooper-Davis, Alamu Am. Compl. ¶ 64; and

7    Jonathan Yarus and Mohamed Ali, Yarus Am. Compl. ¶ 52.

8    Plaintiffs filed their suits as putative collective and class

9    actions on behalf of “those employees of defendants who were

10   suffered or permitted to work by defendants and not paid their

11   regular or statutorily required rate of pay for all hours

12   worked.” Alamu Am. Compl. ¶ 65; Megginson Am. Compl. ¶ 62;

13   Nakahata 2d Am. Compl. ¶ 63; Yarus Am. Compl. ¶ 53.     The

14   Defendants named in the complaints include corporate healthcare

15   systems, individual hospitals in those systems, persons in

16   corporate leadership roles, and affiliated healthcare

17   facilities.2


          2
            Named Defendants include (1) The Bronx-Lebanon Hospital
     Center, The Bronx-Lebanon Hospital Center-Fulton Division, The
     Bronx-Lebanon Hospital Center-Concourse Division, Miguel A.
     Fuentes, Jr. (President and CEO of Bronx-Lebanon Hospital
     Center), and Sheldon Ortsman (former Vice President of the Human
     Resources Division of Bronx-Lebanon Hospital Center), Alamu Am.
     Compl. ¶¶ 18, 40, 52; (2) Westchester Medical Center,
     Westchester County Health Care Corporation, Maria Fareri
     Children’s Hospital at Westchester Medical Center, Michael D.
     Israel (President and CEO of Westchester Medical Center), and
     Paul S. Hochenberg (Senior Vice President of Human Resources for
     Westchester Medical Center), Megginson Am. Compl. ¶¶ 18, 41, 51;
                                     7
1         Plaintiffs allege that it is Defendants’ policy not to pay

2    employees for all hours worked, including some overtime hours.

3    In particular, Plaintiffs allege: (1) Defendants have a policy

4    of automatically deducting time for meal breaks from employees’

5    paychecks despite consistently requiring employees to work

6    during meal breaks; (2) employees engage in work activities both

7    before and after their shift without compensation; and (3)

8    Defendants require employees to attend training sessions for

9    which they are not compensated.   Based on these allegations,

10   Plaintiffs seek to recover unpaid compensation pursuant to the

11   FLSA, NYLL,3 and New York common law.   Plaintiffs further allege



     (3) New York-Presbyterian Healthcare System, Inc., The New York
     and Presbyterian Hospital, Herbert Pardes (President and CEO of
     New York-Presbyterian Healthcare System), and Wayne Osten
     (Senior Vice President and Director for New York-Presbyterian
     Healthcare System), Nakahata 2d Am. Compl. ¶¶ 18, 41, 51; and
     (4) New York City Health and Hospitals Corporation, Bellevue
     Hospital Center, Kings County Hospital Center, Jacobi Medical
     Center, Elmhurst Hospital Center, Harlem Hospital Center,
     Metropolitan Hospital Center, Lincoln Medical and Mental Health
     Center, North Central Bronx Hospital, Coney Island Hospital,
     Woodhull Medical and Mental Health Center, Queens Hospital
     Center, and Alan D. Aviles (President and CEO of New York City
     Health and Hospitals Corporation), Yarus Am. Compl. ¶¶ 18, 39.
          Plaintiffs’ complaints also include extensive lists of
     affiliated healthcare facilities that Plaintiffs allege are
     under the operational control of the named Defendants. See Alamu
     Am. Compl. ¶¶ 19–20; Megginson Am. Compl. ¶¶ 19–20; Nakahata 2d
     Am. Compl. ¶¶ 19–20; Yarus Am. Compl. ¶¶ 19–20. These lists
     comprise several dozen entities and do not require reproduction
     in full.
          3
            Plaintiffs in Yarus v. New York City Health and Hospitals
     Corp., No. 11-0710, withdrew their NYLL claims prior to the
     District Court’s decision. Pls.’ Mem. L. Opp’n Defs.’ Mot.
                                       8
1    that their paychecks were misleading and part of a fraudulent

2    scheme to hide the underpayment in violation of RICO and New

3    York common law.

4          Defendants moved the District Court to dismiss the

5    complaint in each case for failure to state a claim.      The

6    District Court, observing that all four complaints “contain[ed]

7    strikingly similar allegations and deficiencies,” Nakahata I,

8    2011 WL 321186 at *1, issued a single opinion dismissing each

9    complaint in its entirety and terminating all four cases. Id. at

10   *7.   The District Court permitted Plaintiffs to file new actions

11   repleading the FLSA and NYLL claims, but it did not permit

12   refiling of the RICO and common law claims. Id. at *6–7.

13   Plaintiffs both appealed the District Court’s decision and filed

14   new actions alleging claims pursuant to the FLSA and NYLL.

15

16                   JURISDICTION & STANDARD OF REVIEW

17         The District Court had original jurisdiction over

18   Plaintiffs’ FLSA and RICO claims pursuant to 28 U.S.C. § 1331

19   (2006). See 29 U.S.C. § 216(b) (2006) (creating a civil right of

20   action for violation of the FLSA); 18 U.S.C. § 1964(c) (2006)

21   (creating a civil right of action for violation of RICO).       The

22   District Court had supplemental jurisdiction over the NYLL and


     Dismiss at 1 n.1, Nakahata I, 2011 WL 321186 (No. 10 Civ. 2662),
     ECF No. 96. Therefore, our decision with regard to the NYLL
     claims does not apply to the Plaintiffs in Yarus.
                                      9
1    common law claims pursuant to 28 U.S.C. § 1367.    We have

2    jurisdiction over the appeal pursuant to 28 U.S.C. § 1291.

3           We review a dismissal for failure to state a claim de novo.

4    Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009).    When reviewing

5    the sufficiency of the complaint, we take all factual

6    allegations as true and draw all reasonable inferences in the

7    plaintiff’s favor. Id.

8           A well-pled complaint “must contain sufficient factual

9    matter, accepted as true, to ‘state a claim to relief that is

10   plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678

11   (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

12   (2007)); see also Harris, 572 F.3d at 71–72.    To be plausible,

13   the complaint need not show a probability of plaintiff’s

14   success, but it must evidence more than a mere possibility of a

15   right to relief. Iqbal, 556 U.S. at 678; Twombly, 550 U.S. at

16   556.    Determining plausibility is a context specific endeavor,

17   see Starr v. Sony BMG Music Entm’t, 592 F.3d 314, 328–29 (2d

18   Cir. 2010) (Newman, J., concurring), that requires the court to

19   draw upon its experience and common sense, Iqbal, 556 U.S. at

20   679.

21          Allegations of fraud are subject to a heightened pleading

22   standard.    When alleging fraud, “a party must state with

23   particularity the circumstances constituting fraud,” Fed. R.

24   Civ. P. 9(b), which we have repeatedly held requires the

                                      10
1    plaintiff to “(1) specify the statements that the plaintiff

2    contends were fraudulent, (2) identify the speaker, (3) state

3    where and when the statements were made, and (4) explain why the

4    statements were fraudulent.” Mills v. Polar Molecular Corp., 12

5    F.3d 1170, 1175 (2d Cir. 1993) (citing Cosmas v. Hassett, 886

6    F.2d 8, 11 (2d Cir. 1989)); see also Anatian v. Coutts Bank

7    (Switz.) Ltd., 193 F.3d 85, 88 (2d Cir. 1999).   In addition, the

8    plaintiff must “allege facts that give rise to a strong

9    inference of fraudulent intent.” First Capital Asset Mgmt., Inc.

10   v. Satinwood, Inc., 385 F.3d 159, 179 (2d Cir. 2004) (citation

11   omitted).

12

13                              DISCUSSION

14       On appeal, Plaintiffs challenge the dismissal of the FLSA

15   and NYLL claims, dismissal of the common law claims, dismissal

16   of the RICO claims, and the determination that there was no

17   basis for a collective or class action.   Plaintiffs have also

18   requested assignment of a new district court judge on remand.

19   Before discussing these challenges, however, we address

20   Plaintiffs’ argument that the District Court improperly denied

21   leave to amend the complaints.

22

23

24

                                      11
1                                     I

2        We review a district court’s denial of leave to amend for

3    abuse of discretion. See Anatian, 193 F.3d at 89.    As a general

4    principle, district courts should freely grant a plaintiff leave

5    to amend the complaint. Kleinman v. Elan Corp., 706 F.3d 145,

6    156 (2d Cir. 2013).    Nonetheless, “we will not deem it an abuse

7    of the district court’s discretion to order a case closed when

8    leave to amend has not been sought.” Anatian, 193 F.3d at 89

9    (quoting Campaniello Imps., Ltd. v. Saporiti Italia, S.p.A., 117

10   F.3d 655, 664-65 n.3 (2d Cir. 1997)) (internal quotation marks

11   omitted).    Nor will we upset a decision denying leave to amend

12   if the denial was harmless error. See In re “Agent Orange” Prod.

13   Liability Litig., 517 F.3d 76, 104 (2d Cir. 2008).

14       While we will not upset a denial of leave to amend where

15   the plaintiff failed to seek such leave, the record in this case

16   indicates that Plaintiffs were not provided an opportunity to

17   seek leave to amend in response to the District Court’s order of

18   dismissal.   The District Court ordered the cases terminated with

19   no indication that final judgment should await a motion for

20   leave to amend. See Nakahata I, 2011 WL 321186, at *7.    The

21   clerk of the court entered final judgment the next business day

22   after the opinion was issued. Judgment, Special App. to Nakahata

23   Pls.’ Br. 15.   Absent an opportunity to seek leave to amend,



                                      12
1    Plaintiffs cannot be held accountable for failing to make the

2    necessary motion.

3         Nor can we deem this error harmless.   The District Court

4    did permit Plaintiffs to refile their FLSA and NYLL claims in a

5    new action, which obviated much – but not all – of the prejudice

6    Plaintiffs experienced from the denial of leave to amend.    The

7    option to file a new action preserved the FLSA and NYLL claims

8    that remained timely on the date the new action was filed, but

9    Plaintiffs lost the opportunity to pursue claims that became

10   time-barred pursuant to the statute of limitations4 in the

11   interim between the filing of the original complaints and the

12   filing of the new complaints.   The cause of action for FLSA and

13   NYLL claims accrues on the next regular payday following the

14   work period when services are rendered. 29 C.F.R. § 790.21(b)

15   (2012) (last revision 1947 Supp.); see also Rigopoulos v.

16   Kervan, 140 F.2d 506, 507 (2d Cir. 1943); McMahon v. State, 19

17   N.Y.S.2d 639, 642 (N.Y. Ct. Cl. 1940).   Because each paycheck

18   represents a potential cause of action, it is likely that the

19   statute of limitations expired on some causes of action in the

20   period between the filing of the original complaints and the

21   filing of the new complaints; therefore, some causes of action

          4
            The limitations period for the FLSA is two years or, if
     the violation was willful, three years. 29 U.S.C. § 255(a)
     (2006). The limitations period for the NYLL is six years. N.Y.
     Lab. Law § 663(3) (McKinney 2002).


                                     13
1    became time-barred upon termination of the original complaints.

2    In other words, every two, three, or six year anniversary of

3    payment – depending on the statute of limitations applicable –

4    that fell within the period between filing of the original

5    complaints and filing of the new complaints was the occasion of

6    a lost cause of action.5   Because Plaintiffs were prejudiced

7    through lost causes of action resulting from the termination of

8    the original complaints, we hold that the District Court abused

9    its discretion in not permitting Plaintiffs to file an amended

10   complaint.6


          5
            This assumes that Plaintiffs were employed by Defendants
     prior to the statute of limitations period, a fact which is not
     pled in the complaints. This is a serious deficiency in the
     complaints, but, as discussed above, Plaintiffs should be
     provided the opportunity to amend lest they be time-barred from
     pursuing legitimate claims.
          6
            Plaintiffs did pursue those FLSA and NYLL claims that were
     not time-barred by filing new actions in the Southern District
     of New York: Nakahata v. New York-Presbyterian Healthcare
     System, Inc., No. 11 Civ. 6658; Megginson v. Westchester Medical
     Center, No. 11 Civ. 6657; Alamu v. The Bronx-Lebanon Hospital
     Center, No. 11 Civ. 6366; and Ali v. New York City Health and
     Hospitals Corp., 11 Civ. 6393.
          The District Court again dismissed three of these actions,
     Nakahata, Megginson, and Alamu, for failure to state a claim,
     Nakahata v. New York-Presbyterian Healthcare Sys., Inc., 2012 WL
     3886555 (S.D.N.Y. Sept. 6, 2012) (“Nakahata II”), and the
     Nakahata II decision is currently before this Court on appeal in
     Nakahata v. New York-Presbyterian Healthcare System, Inc., No.
     12-4128; Megginson v. Westchester Medical Center, No. 12-4084;
     and Alamu v. The Bronx-Lebanon Hospital Center, No. 12-4085.
     The complaints filed in the cases heard collectively as Nakahata
     II are more detailed than those filed in the cases heard
     collectively as Nakahata I, and those more detailed allegations
     may address some of the deficiencies discussed below. Because
                                     14
1                                      II

2        Plaintiffs allege twelve claims in their complaints, but

3    the heart of their case is the allegation that Defendants failed

4    to compensate them appropriately for all hours worked in

5    violation of the FLSA and NYLL.    Plaintiffs allege broadly that

6    “Plaintiffs and Class members regularly worked hours both under

7    and in excess of forty per week and were not paid for all of

8    those hours.” Alamu Am. Compl. ¶ 148; Megginson Am. Compl.

9    ¶ 145; Nakahata 2d Am. Compl. ¶ 146; Yarus Am. Compl. ¶ 136.

10   Plaintiffs’ allegation that Defendants did not compensate them

11   for hours worked in excess of forty per week alleges an overtime

12   claim, whereas their allegation that Defendants did not

13   compensate them for hours worked under forty per week alleges a

14   gap-time claim.




     the more detailed complaints will be tested by this Court in its
     review of Nakahata II, the District Court may appropriately stay
     proceedings in this case on remand, pending the outcome of our
     decision in Nakahata II.
          The fourth action filed in response to Nakahata I, Ali,
     remains pending before the District Court. That case was filed
     by one, but not both, of the named plaintiffs in Yarus. In this
     regard, Plaintiff Ali is in a position similar to that of the
     plaintiffs in the three cases discussed above. Plaintiff Yarus
     has no second case pending either in the District Court or
     before this Court, but his claims have been preserved through
     appeal. As a result, on remand the time period for which causes
     of action are available may be different for Plaintiffs Ali and
     Yarus because Plaintiff Ali has pursued some causes of action in
     a separate case, whereas Plaintiff Yarus has not.


                                       15
1         The District Court dismissed both the FLSA and NYLL claims

2    for lack of sufficient factual allegations.   In particular, the

3    District Court found three categories of facts lacking: (1) when

4    unpaid wages were earned and the number of hours worked without

5    compensation; (2) specific facts of employment including dates

6    of employment, pay, and positions; and (3) the entity that

7    directly employed the Plaintiffs. Nakahata I, 2011 WL 321186,

8    at *4.   Although the overtime and gap-time claims were dismissed

9    on the same grounds, we will discuss the claims separately.

10        The FLSA mandates that an employee engaged in interstate

11   commerce be compensated at a rate of no less than one and one-

12   half times the regular rate of pay for any hours worked in

13   excess of forty per week,7 29 U.S.C. § 207(a) (2006); the NYLL

14   adopts this same standard, N.Y. Comp. Codes R. & Regs. tit. 12,

15   § 142-2.2 (2011) (incorporating the FLSA definition of overtime

16   into the NYLL).   As noted in the recent decision, Lundy v.

17   Catholic Health System of Long Island Inc., 711 F.3d 106, 114

18   (2d Cir. 2013), “to survive a motion to dismiss [an FLSA

19   overtime claim], Plaintiffs must allege sufficient factual

20   matter to state a plausible claim that they worked compensable

21   overtime in a workweek longer than 40 hours.”


          7
            The FLSA also permits employers and employees in the
     healthcare field to agree that overtime will be calculated on
     the basis of eighty hours worked over two weeks instead of forty
     hours worked over one week. 29 U.S.C. § 207(j) (2006).
                                     16
1         Prior to the decision in Lundy, we had not considered the

2    degree of specificity necessary to state an FLSA overtime claim

3    – an issue that has divided courts around the country, see

4    Butler v. DirectSat USA, LLC, 800 F. Supp. 2d 662, 667–68 (D.

5    Md. 2011) (discussing the varying levels of specificity required

6    in different jurisdictions).   After reviewing the disparate case

7    law on this question, Lundy “conclude[d] that in order to state

8    a plausible FLSA overtime claim, a plaintiff must sufficiently

9    allege 40 hours of work in a given workweek as well as some

10   uncompensated time in excess of the 40 hours.” Lundy, 711 F.3d

11   at 114.

12        Lundy was an appeal from an Eastern District of New York

13   decision dismissing essentially the same allegations presented

14   in this case.8   The plaintiffs in Lundy filed several amended

15   complaints in the district court; therefore, the claims were

16   pled with greater factual specificity than the complaints now

17   before us.   In particular, the Lundy complaint pled the number

18   of hours the plaintiffs were typically scheduled to work in a

19   week. See id. at 114–15.   Given the number of hours worked in a

20   typical week and the alleged time worked without pay, Lundy

          8
            Some of the claims raised in this case were not raised in
     Lundy, as will be discussed in detail below; however, the core
     claims of both cases – FLSA, NYLL, and RICO claims premised on
     unpaid hours worked during lunch breaks, before and after
     shifts, and at required trainings – are the same. Lundy, 711 at
     113.


                                     17
1   concluded that the plaintiffs could not plausibly allege work in

2   excess of 40 hours in any given week;9 therefore, Lundy affirmed

3   the district court’s dismissal.

4        The complaints currently before us contain no similar

5   specificity.10   Plaintiffs have merely alleged that they were not

6   paid for overtime hours worked.    These allegations – that

7   Plaintiffs were not compensated for work performed during meal

8   breaks, before and after shifts, or during required trainings –

         9
           For example, one of the Lundy plaintiffs alleged that she
    was typically scheduled to work 37.5 hours per week over three
    shifts with an additional 12.5 hour shift on occasion. She
    further alleged that she typically worked through her 30 minute
    meal break, worked an additional 15 minutes before or after her
    scheduled shift, and was required to attend monthly staff
    training of 30 minutes and an additional respiratory therapy
    training totaling 10 hours per year. Assuming she missed a meal
    and worked an additional 15 minutes every shift, the Lundy court
    deduced that she had alleged a total of only 39 hours and 45
    minutes per week of work. Therefore, she had failed to allege
    work in excess of 40 hours in any given week. Id. at 114–15.
         10
           Although the complaints currently before us clearly do
    not meet the Lundy standard, we should note that the standard
    employed by the District Court in this case was more demanding
    than that employed in Lundy. Compare Nakahata I, 2011 WL 321186,
    at *4 (“At a minimum, [the complaint] must set forth the
    approximate number of unpaid regular and overtime hours
    allegedly worked.”), with Lundy, 711 F.3d at 114 (“[A] plaintiff
    must sufficiently allege 40 hours of work in a given workweek as
    well as some uncompensated time in excess of the 40 hours.”).
         While the standard we reaffirm today does not require an
    approximate number of overtime hours, we reiterate that
    determining whether a claim is plausible is “a context-specific
    task that requires the reviewing court to draw on its judicial
    experience and common sense,” Lundy, 711 F.3d at 114 (quoting
    Iqbal, 556 U.S. at 679), and that “[u]nder a case-specific
    approach, some courts may find that an approximation of overtime
    hours worked may help draw a plaintiff’s claim closer to
    plausibility,” id. at 114 n.7.
                                      18
1    raise the possibility that Plaintiffs were undercompensated in

2    violation of the FLSA and NYLL; however, absent any allegation

3    that Plaintiffs were scheduled to work forty hours in a given

4    week, these allegations do not state a plausible claim for such

5    relief.   To plead a plausible FLSA overtime claim, plaintiffs

6    must provide sufficient detail about the length and frequency of

7    their unpaid work to support a reasonable inference that they

8    worked more than forty hours in a given week.    For these

9    reasons, the District Court properly dismissed the FLSA and NYLL

10   overtime claims.

11       Because we hold that the Plaintiffs failed to plead

12   sufficient facts to make it plausible that they worked

13   uncompensated hours in excess of 40 in a given week, we need not

14   decide whether the District Court’s other bases for dismissal

15   were proper.     Nonetheless, because we will remand this claim for

16   amended pleadings, we note that Plaintiffs’ actual and direct

17   employer is an essential element of notice pleading under these

18   circumstances.    What aspects of Plaintiffs’ position, pay, or

19   dates of employment are necessary to state a plausible claim for

20   relief consistent with this decision and Lundy is a case-

21   specific inquiry for the trial court. Iqbal, 556 U.S. at 679.

22   As the District Court noted, however, generalized allegations

23   that may prove false at trial are not necessarily the basis for



                                       19
1    dismissal at the pleadings stage. See Nakahata I, 2011 WL

2    321186, at *4 n.11.

3        While Plaintiffs’ overtime claims fail for the reasons

4    discussed above, their allegations can also be read to state a

5    gap-time claim.   Gap-time claims are those “in which an employee

6    has not worked 40 hours in a given week but seeks recovery of

7    unpaid time worked, or in which an employee has worked over 40

8    hours in a given week but seeks recovery for unpaid work under

9    40 hours.” Lundy, 711 F.3d at 115.

10       As discussed in Lundy, the FLSA does not provide a cause of

11   action for unpaid gap time. Id. at 116–17.   The FLSA statute

12   requires payment of minimum wages and overtime wages only, see

13   29 U.S.C. §§ 201–19 (2006); therefore, the FLSA is unavailing

14   where wages do not fall below the statutory minimum and hours do

15   not rise above the overtime threshold. Lundy, 711 F.3d at 115.

16   The FLSA is unavailing even when an employee works over 40 hours

17   per week and claims gap-time wages for those hours worked under

18   40 per week, unless the wages fall below the minimum threshold.

19   This is because the statutory language simply does not

20   contemplate a claim for wages other than minimum or overtime

21   wages. Id. at 116–17.   For this reason, we affirm the District

22   Court’s dismissal with prejudice of any gap-time claims made

23   pursuant to the FLSA.



                                     20
1           Plaintiffs may, however, have a gap-time claim pursuant to

2    the NYLL.   Lundy acknowledged, without deciding, that a gap-time

3    claim would be consistent with the language of NYLL § 663(1),

4    which states that “[i]f any employee is paid by his or her

5    employer less than the wage to which he or she is entitled . . .

6    he or she shall recover in a civil action the amount of any such

7    underpayments . . . .” N.Y. Lab. Law § 663(1) (McKinney Supp.

8    2012), as amended by Wage Theft Prevention Act, ch. 564, § 16,

9    2010 N.Y. Sess. Laws 1446, 1457 (McKinney); Lundy, 711 F.3d at

10   118.   Lundy remanded the NYLL gap-time claim because, while the

11   District Court had acknowledged the possibility of such a claim,

12   it inconsistently dismissed all of the NYLL claims with

13   prejudice. Lundy, 711 F.3d at 118.

14          In this case, the District Court dismissed the gap-time

15   claims on the same basis as the overtime claims without

16   acknowledging the separate standard for a gap-time claim.

17   Unlike an overtime claim, a gap-time claim requires no predicate

18   showing of minimum hours worked; rather, an allegation of hours

19   worked without compensation may give rise to a gap-time claim.

20   Nonetheless, in the first instance it is for the trial court to

21   decide whether the allegations in the complaints are plausible.

22   Because the District Court did not consider the NYLL gap-time

23   claims separately from the overtime claims, and because

24   Plaintiffs will have an opportunity to amend their pleadings, we

                                      21
1    remand the NYLL gap-time claims to the District Court to

2    consider in light of any amended pleadings.

3

4                                   III

5         In addition to their FLSA and NYLL claims, Plaintiffs

6    allege nine common law claims.11    The District Court dismissed

7    the common law clams with prejudice on the grounds that they

8    were preempted by collective bargaining agreements and on the

9    basis of pleading deficiencies unique to each claim.12    We

10   address these arguments in turn.

11        The District Court dismissed the common law claims as

12   preempted by applicable collective bargaining agreements

13   (“CBAs”) and § 301 of the Labor Management Relations Act

14   (“LMRA”), 29 U.S.C. § 185 (2006). Nakahata I, 2011 WL 321186, at

15   *2, *6.   No CBAs were pled or attached to the complaints;

16   rather, the Defendants attached the CBAs, or relevant portions

17   thereof, to their motions to dismiss.


          11
            Plaintiffs allege (1) breach of an implied oral contract,
     (2) breach of an express oral contract, (3) breach of an implied
     covenant of good faith and fair dealing, (4) quantum meruit,
     (5) unjust enrichment/restitution, (6) fraud, (7) negligent
     misrepresentation, (8) conversion, and (9) estoppel. Nakahata I,
     2011 WL 321186, at *1 n.3.
          12
            The parties also addressed FLSA preemption of the common
     law claims in their briefs; however, FLSA preemption was only
     given cursory treatment in the District Court’s opinion and was
     not essential to the disposition. Therefore, we do not address
     FLSA preemption.
                                        22
1        We do not consider matters outside the pleadings in

2    deciding a motion to dismiss for failure to state a claim.

3    Global Network Commc’ns, Inc. v. City of New York, 458 F.3d 150,

4    154-55 (2d Cir. 2006).   Rather, where matter outside the

5    pleadings is offered and not excluded by the trial court, the

6    motion to dismiss should be converted to a motion for summary

7    judgment. Fed. R. Civ. P. 12(d) (“If, on a motion under Rule

8    12(b)(6) or 12(c), matters outside the pleadings are presented

9    to and not excluded by the court, the motion must be treated as

10   one for summary judgment under Rule 56.”).   “As indicated by the

11   word ‘shall,’ the conversion of a Rule 12(b)(6) motion into one

12   for summary judgment under Rule 56 when the court considers

13   matters outside the pleadings is strictly enforce[d] and

14   mandatory.” Global Network Commc’ns, 458 F.3d at 155 (citations

15   omitted) (internal quotation marks omitted).   Because the CBAs

16   at issue here were submitted with Defendants’ motions to

17   dismiss, and not excluded from consideration, the District Court

18   could have decided these issues pursuant to the summary judgment

19   standard of Rule 56, but it did not.   We cannot affirm the

20   dismissal on the basis of LMRA preemption pursuant to Rule

21   12(b)(6) because such dismissal was premised on matter outside

22   of the pleadings, and was, therefore, inappropriate. Id.

23       Nor do we agree with the District Court that Plaintiffs

24   were responsible for pleading the CBAs in the complaints.     The

                                     23
1    plaintiff is master of the complaint and may assert state law

2    causes of action that are independent of the CBA. See

3    Caterpillar Inc. v. Williams, 482 U.S. 386, 394–95 (1987).     It

4    is a defendant’s responsibility to raise preemption by the CBA

5    as a defense, but, as discussed above, a motion addressed to the

6    adequacy of the pleadings is not necessarily the proper place

7    for preemption to be decided. Cf. Drake v. Lab. Corp. of Am.

8    Holdings, 458 F.3d 48, 66 (2d Cir. 2006) (“For those claims for

9    which preemption cannot be easily determined from the pleadings,

10   our standard of review requires us to affirm the district

11   court’s decision to deny the defendant-appellants’ motion to

12   dismiss, with the understanding that the claims may ultimately

13   prove to be preempted at a later stage of the litigation.”)

14   (emphasis added) (citation omitted) (internal quotation marks

15   omitted).13


          13
            The District Court cited I. Meyer Pincus & Assocs. v.
     Oppenheimer & Co., 936 F.2d 759 (2d Cir. 1991), for the
     proposition that the CBAs should be considered because they are
     integral to the issues raised in the complaint. Nakahata I, 2011
     WL 321186, at *1 n.5. In Pincus, we held that where the
     plaintiff’s claims were grounded solely in the language of a
     prospectus, the prospectus was integral to the complaint and
     would be considered in deciding a motion to dismiss despite not
     having been attached to the complaint. Pincus, 936 F.2d at 762.
     To do otherwise would have “create[d] a rule permitting a
     plaintiff to evade a properly argued motion to dismiss simply
     because plaintiff has chosen not to attach the prospectus to the
     complaint or to incorporate it by reference.” Id.
          Pincus, however, is distinguishable from this case. Unlike
     the complaint in Pincus, the complaints currently before us do
     not ground their claims in the CBAs. Nor, is it Plaintiffs’
                                    24
1        The District Court also identified deficiencies unique to

2    each common law claim.    Some of the deficiencies may be

3    corrected through amended pleading.    We remand Plaintiffs’

4    claims for breach of express and implied oral contracts, quantum

5    meruit, and unjust enrichment for reconsideration in light of

6    any amended pleading.    The District Court’s dismissal of those

7    claims relied on the existence of a collective bargaining

8    agreement, which was not included with the pleadings and could

9    not be considered on a motion to dismiss.    The claim for breach

10   of an implied covenant of good faith and fair dealing was

11   properly dismissed insofar as it duplicates the breach of

12   contract claims, see Harris v. Provident Life and Accident Ins.

13   Co., 310 F.3d 73, 80 (2d Cir. 2002); however, if Plaintiffs can

14   state such a claim on a basis independent of the breach of

15   contract claims, they may do so in the amended pleading.

16       Plaintiffs’ other common law claims are unavailing on the

17   facts of this case, and the dismissal with prejudice is

18   affirmed.   We affirm the District Court’s dismissal with

19   prejudice of the fraud and negligent misrepresentation claims

20   premised on the mailing of paychecks for the same reasons

21   discussed below regarding the RICO claims.    Dismissal of the


     responsibility to plead the CBAs. In short, the CBAs are not
     integral to the complaint in the same way that the prospectus in
     Pincus was integral; rather, the CBAs have been raised as an
     affirmative defense and can properly be considered on a motion
     for summary judgment.
                                      25
1    conversion claim with prejudice is affirmed because Plaintiffs

2    never had ownership, possession, or control of the wages in

3    question prior to the alleged conversion. See ESI, Inc. v.

4    Coastal Power Prod. Co., 995 F. Supp. 419, 433 (S.D.N.Y. 1998)

5    (recognizing that New York law requires prior ownership,

6    possession, or control to assert a claim for conversion).

7    Regarding estoppel, Plaintiffs assert that Defendants should be

8    estopped from asserting a statute of limitations defense.     It is

9    not entirely clear whether such a claim may be made in the

10   complaint or must be asserted in response to a statute of

11   limitations defense under New York law,14 but we need not resolve

12   this issue.   The Plaintiffs may raise equitable estoppel in

13   response to a statute of limitations defense on remand;

14   therefore, they have suffered no prejudice in this regard, and

15   the dismissal was harmless error if error at all.

16        Therefore, the District Court’s dismissal of the common law

17   claims with prejudice is affirmed in part and vacated in part.

18   Those claims that Plaintiffs may replead are remanded to the

19   District Court.

          14
            Compare Tierney v. Omnicom Grp. Inc., No. 06 Civ. 14302,
     2007 WL 2012412, at *10 (S.D.N.Y. July 11, 2007) (dismissing a
     claim for estoppel because the court understood estoppel to be
     an affirmative defense not a cause of action), with Forman v.
     Guardian Life Ins. Co. of Am., 901 N.Y.S.2d 906 (Table), 2009 WL
     3790200, at *5 (N.Y. Sup. Ct. Sept. 25, 2009) (recognizing an
     equitable estoppel claim but relying on New York Appellate
     Division cases that discuss equitable estoppel as an affirmative
     defense).
                                     26
1                                      IV

2        In addition to the claims for unpaid wages, Plaintiffs

3    allege that the Defendants committed mail fraud in violation of

4    RICO.   Plaintiffs allege that their paychecks, delivered through

5    the U.S. mail, misleadingly purported to pay Plaintiffs for all

6    hours worked.   Plaintiffs further allege that the purportedly

7    complete paychecks concealed a scheme by Defendants to

8    undercompensate the Plaintiffs.

9        RICO makes it unlawful “for any person employed by or

10   associated with any enterprise . . . to conduct or participate,

11   directly or indirectly, in the conduct of such enterprise’s

12   affairs through a pattern of racketeering activity . . . .” 18

13   U.S.C. § 1962(c) (2006); First Capital Asset Mgmt., Inc. v.

14   Satinwood, Inc., 385 F.3d 159, 173 (2d Cir. 2004).   Mail fraud,

15   pursuant to 18 U.S.C. § 1341, is among the activities defined as

16   racketeering. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 482

17   n.3 (1985) (quoting 18 U.S.C. § 1961(1) (1982 ed., Supp. III)).

18       The District Court dismissed the RICO claims because the

19   paychecks did not perpetuate a fraud; rather, they disclosed any

20   alleged underpayment. Nakahata I, 2011 WL 321186, at *5.    Lundy

21   endorsed this reasoning, holding that the “mailing of pay stubs

22   cannot further the fraudulent scheme because the pay stubs would

23   have revealed (not concealed) that Plaintiffs were not being

24   paid for all of their alleged compensable overtime.” Lundy, 711

                                       27
1    F.3d at 119.    Thus, the District Court properly dismissed the

2    RICO claims, and, because the claims cannot be pled on these

3    facts, they were properly dismissed with prejudice.

4

5                                      V

6        Finally, Plaintiffs challenge the District Court’s

7    conclusion that there is no basis for a collective or class

8    action and request that the case be remanded to a new judge.

9    Neither argument has merit.     First, the District Court dismissed

10   the Megginson, Alamu, and Yarus Plaintiffs’ motions to certify

11   the collective and class actions as moot following dismissal of

12   the complaints in their entirety, which was not error. Nakahata

13   I, 2011 WL 321186, at *7.     Furthermore, Plaintiffs may renew

14   their motions for certification on remand, so there was no

15   prejudice.     Second, Plaintiffs’ have failed to show any lack of

16   impartiality on the part of the District Court, and we find no

17   reason to believe that the District Court will be unable to

18   effectuate the remand order; therefore, the request for remand

19   to a new judge is denied. Cf. Shcherbakovskiy v. Da Capo Al

20   Fine, Ltd., 490 F.3d 130, 142 (2d Cir. 2007) (reassigning a case

21   on remand where the trial judge “rendered a visceral judgment on

22   appellant’s personal credibility, namely that his denial of

23   control was ‘nonsense,’ ‘drivel,’ a ‘fraud,’ and a ‘lie’”).

24

                                       28
1                                CONCLUSION

2        Consistent with the foregoing opinion, the District Court’s

3    dismissal with prejudice of the FLSA gap-time, conversion,

4    estoppel, fraud, negligent misrepresentation, and RICO claims is

5    AFFIRMED.   We REMAND the FLSA and NYLL overtime claims, the NYLL

6    gap-time claims, the breach of express and implied oral contract

7    claims, the breach of an implied covenant of good faith and fair

8    dealing claims, the quantum meruit claims, and the unjust

9    enrichment claims for amended pleading.     Therefore, we VACATE

10   the order terminating the case and REMAND for further

11   proceedings consistent with this opinion.




                                     29
