Lundy v. Catholic Health System of Long Island Inc.

12-1453-cv
Lundy v. Catholic Health System of Long Island Inc.
UNITED STATES COURT OF APPEALS 1
2
FOR THE SECOND CIRCUIT 3
4
August Term, 2012 5
6
7
(Argued: October 25, 2012 Decided: March 1, 2013) 8
9
Docket No. 12-1453 10
11
- - - - - - - - - - - - - - - - - - - -x 12
13
DENNIS LUNDY, on behalf of themselves and all other 14
employees similarly situated, PATRICIA WOLMAN, KELLY 15
IWASIUK, 16
17
Plaintiffs-Appellants, 18
19
DAISY RICKS, on behalf of herself and all other employees 20
similarly situated, 21
22
Plaintiff, 23
24
- v.- 25
26
CATHOLIC HEALTH SYSTEM OF LONG ISLAND INCORPORATED, DBA 27
Catholic Health Services of Long Island, GOOD SAMARITAN 28
HOSPITAL MEDICAL CENTER, MERCY MEDICAL CENTER, NEW ISLAND 29
HOSPITAL, AKA St. Joseph Hospital, ST. CATHERINE OF SIENA 30
MEDICAL CENTER, ST. CHARLES HOSPITAL AND REHABILITATION 31
CENTER, ST. FRANCIS HOSPITAL, Roslyn, New York, OUR LADY OF 32
CONSOLATION GERIATRIC CARE CENTER, NURSING SISTERS HOME 33
CARE, DBA Catholic Care Home, JAMES HARDEN, 34
35
Defendants-Appellees, 36
37
LONG ISLAND HEALTH NETWORK, INCORPORATED, BROOKHAVEN 38
MEMORIAL HOSPITAL MEDICAL CENTER INCORPORATED, AKA 39
Brookhaven Memorial Hospital Medical Center, JOHN T. MATHER 40
MEMORIAL HOSPITAL OF PORT JEFFERSON, NEW YORK, INCORPORATED, 41
AKA John T. Mather Memorial Hospital, SOUTH NASSAU 42
COMMUNITIES HOSPITAL, WINTHROP-UNIVERSITY HOSPITAL, TERRY 43
HARGADON, BRIAN CURRIE, KATHLEEN MASIULIS, 44
45
Defendants. 46
47
- - - - - - - - - - - - - - - - - - - -x 48

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Before: JACOBS, Chief Judge, WALKER, Circuit 1
Judge, and O’CONNOR, Associate Justice 2
(retired).*
3
Plaintiffs, on behalf of a purported class of similarly 4
situated employees, appeal from the orders of the District 5
Court for the Eastern District of New York (Seybert, J.), 6
dismissing their claims under the Fair Labor Standards Act, 7
the Racketeer Influenced and Corrupt Organizations Act, and 8
New York Labor Law. For the following reasons, the judgment 9
is affirmed in part, and in part vacated and remanded. 10
11
MICHAEL J. LINGLE, Thomas & 12
Solomon LLP, Rochester, New York 13
(J. Nelson Thomas, Guy A. Talia, 14
Jessica L. Witenko, on the 15
brief), for Appellants. 16
17
JAMES E. MCGRATH, III, Putney, 18
Twombly, Hall & Hirson LLP, New 19
York, New York (Daniel F. 20
Murphy, Jr., Michael T. McGrath, 21
Randi B. Feldheim, Adriana S. 22
Kosovych, Putney, Twombly, Hall 23
& Hirson LLP, New York, New 24
York, on the brief; Stephen J. 25
Jones, Todd R. Shinaman, Joseph 26
A. Carello, Nixon Peabody LLP, 27
Rochester, New York, on the 28
brief), for Appellees. 29
30
31
32
* The Honorable Sandra Day O’Connor, Associate Justice
(retired) of the United States Supreme Court, sitting by
designation.
2

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DENNIS JACOBS, Chief Judge: 1
Plaintiffs, a respiratory therapist and two nurses, 2
allege that the Catholic Health System of Long Island Inc., 3
a collection of hospitals, healthcare providers, and related 4
entities (collectively, “CHS”), failed to compensate them 5
adequately for time worked during meal breaks, before and 6
after scheduled shifts, and during required training 7
sessions. They sued on behalf of a purported class of 8
similarly situated employees (collectively, “the 9
Plaintiffs”) and take this appeal from orders of the United 10
States District Court for the Eastern District of New York 11
(Seybert, J.), dismissing the claims asserted under the Fair 12
Labor Standards Act (“FLSA”), the Racketeer Influenced and 13
Corrupt Organizations Act (“RICO”), and the New York Labor 14
Law (“NYLL”). 15
We affirm the dismissal of the FLSA and RICO claims for 16
failure to state a claim. We also affirm the dismissal of 17
Plaintiffs’ NYLL overtime claims, which have the same 18
deficiencies as the FLSA overtime claims. However, because 19
the district court did not explain why Plaintiffs’ NYLL gap- 20
time claims were dismissed with prejudice, we vacate that 21
aspect of the judgment and remand for further consideration 22
of the NYLL gap-time claims. 23
3

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BACKGROUND 1
The original complaint, alleging violations of FLSA and 2
RICO, was filed in March 2010 by Daisy Ricks, a healthcare 3
employee, on behalf of similarly situated employees, against 4
the Long Island Health Network, Inc., Catholic Health 5
Services of Long Island, and various related entities.1 The 6
First Amended Complaint, filed in June 2010, substituted 7
Dennis Lundy, Patricia Wolman, and Kelly Iwasiuk as lead 8
plaintiffs, dropped some defendants, and added claims under 9
NYLL and state common law. The twelve causes of action 10
pleaded were FLSA, RICO, NYLL, implied contract, express 11
contract, implied covenants, quantum meruit, unjust 12
enrichment, fraud, negligent misrepresentation, conversion, 13
and estoppel. This case is one of many similar class 14
1 The complicated facts and procedural history of this
case are recounted in detail in five orders issued by the
district court. See Mem. & Order, Wolman v. Catholic Health
System of Long Island, Inc., No. 10-CV-1326 (E.D.N.Y. Dec.
30, 2010) (Special App. 1-19); Mem. & Order, Wolman v.
Catholic Health System of Long Island, Inc., No. 10-CV-1326
(E.D.N.Y. May 5, 2011) (Special App. 20-32); Mem. & Order,
Wolman v. Catholic Health System of Long Island, Inc., No.
10-CV-1326 (E.D.N.Y. May 24, 2011) (Special App. 33-37);
Mem. & Order, Wolman v. Catholic Health System of Long
Island, Inc., No. 10-CV-1326 (E.D.N.Y. Feb. 16, 2012)
(Special App. 38-74); Mem. & Order, Wolman v. Catholic
Health System of Long Island, Inc., No. 10-CV-1326 (E.D.N.Y.
Mar. 12, 2012) (Special App. 75-77). We recount only those
that bear on the resolution of this appeal.
4

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actions brought by the same law firm, Thomas & Solomon LLP, 1
against numerous healthcare entities in the region. A dozen 2
of them are currently on appeal before this Court. 2
3
The FLSA claims focused on alleged unpaid overtime. In 4
relevant part, FLSA’s overtime provision states that “no 5
employer shall employ any of his employees . . . for a 6
workweek longer than forty hours unless such employee 7
receives compensation for his employment in excess of the 8
hours above specified at a rate not less than one and 9
one-half times the regular rate at which he is employed.” 10
29 U.S.C. § 207(a)(1). 3
11
It is alleged that CHS used an automatic timekeeping 12
system that deducted time from paychecks for meals and other 13
breaks even though employees frequently were required to 14
2 See Yarus v. N.Y.C. Health & Hosps. Corp., No. 11-
710; Megginson v. Westchester Cnty. Health Care Corp., No.
11-713; Megginson v. Westchester Med. Ctr., No. 12-4084;
Alamu v. Bronx-Lebanon Hosp. Ctr., No. 11-728; Alamu v.
Bronx-Lebanon Hosp. Ctr., No. 12-4085; Nakahata v. N.Y.-
Presbyterian HealthCare Sys., No. 11-734; Nakahata v. N.Y.
Presbyterian HealthCare Sys., No. 12-4128; Hinterberger v.
Catholic Health Sys., No. 12-630; Hinterberger v. Catholic
Health Sys., No. 12-918; Gordon v. Kaleida Health, No. 12-
654; Gordon v. Kaleida Health, No. 12-670; Lundy v. Catholic
Health Sys. of Long Island Inc., No. 12-1453.
3 In addition to FLSA’s overtime provisions, Section
206 of FLSA requires that employers pay a minimum wage.
Plaintiffs have not brought minimum wage claims in this
case.
5

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work through their breaks, and that CHS failed to pay for 1
time spent working before and after scheduled shifts, and 2
for time spent attending training programs. 4
3
The procedural history of this case was prolonged by 4
four attempts to amend the complaint, and various orders 5
dismissing the claims, as recounted below. 6
A Second Amended Complaint, filed in August 2010, 7
replaced some of the defendants that had been sued in error. 8
On motion, the district court dismissed most of the claims, 9
without prejudice. The FLSA overtime claims were dismissed 10
for failure to approximate the number of uncompensated 11
overtime hours. The FLSA claim for “gap-time” pay (i.e., 12
for unpaid hours below the 40-hour overtime threshold) was 13
dismissed--with prejudice--on the ground that FLSA does not 14
permit gap-time claims when the employment contract 15
explicitly provides compensation for gap time worked. The 16
RICO claims were dismissed--with prejudice--for insufficient 17
allegations of any pattern of racketeering activity. Once 18
the federal claims were dismissed, the state law claims were 19
dismissed without prejudice. 20
4 Since Plaintiffs were not subject to a collective
bargaining agreement while they were employed by CHS, the
Labor Management Relations Act is not at issue in this case.
6

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The district court granted leave to replead the FLSA 1
overtime claims that were dismissed without prejudice, but 2
cautioned that any future complaint “should contain 3
significantly more factual detail concerning who the named 4
Plaintiffs are, where they worked, in what capacity they 5
worked, the types of schedules they typically or 6
periodically worked, and any collective bargaining 7
agreements they may have been subject to.” Special App. 18. 8
The district court said that it would “not be impressed if 9
the Third Amended Complaint prattle[d] on for another 217 10
paragraphs, solely for the sake of repeating various 11
conclusory allegations many times over.” Id. at 19. 12
The Third Amended Complaint, filed in January 2011, was 13
largely identical to the Second (with the addition of 14
approximately ten paragraphs). When CHS moved to dismiss, 15
the court issued an order sua sponte urging supplemental 16
briefing and a more definite statement. Observing that 17
Plaintiffs had again failed to achieve sufficient 18
specificity, the court added: 19
[T]he Court does not believe that it would serve 20
anyone’s interest to enter another dismissal without 21
prejudice, which would be followed almost assuredly by 22
another amended complaint and then a full round of Rule 23
12(b)(6) briefing. Instead, the Court considers it 24
more appropriate to sua sponte direct Plaintiffs to 25
7

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file a more definite statement, which it will then use 1
to judge the sufficiency of the [Third Amended 2
Complaint]. 3
4
Special App. 26. The court expressed concern with the 5
vagueness of the pleading, directed Plaintiffs to stop 6
“hiding the ball,” id. at 27, and listed specific 7
information needed for a more definite statement. 8
Plaintiffs failed to issue a more definite statement 9
and instead filed a Fourth Amended Complaint (hereinafter, 10
“the Complaint”) in May 2011. The RICO and estoppel claims 11
were dropped, and the remaining causes of action were 12
pleaded as before, supplemented with some more facts. 13
CHS’s renewed motion to dismiss was largely granted in 14
February 2012, on the following grounds: 15
1. Plaintiffs insufficiently pled the requisite 16
employer-employee relationship as to each named 17
defendant, because Lundy, Wolman, and Iwasiuk worked 18
only at Good Samaritan Hospital, and because the 19
“economic realities” of the relationships among 20
defendants did not constitute a single employment 21
organization. The FLSA claims against all defendants 22
other than Good Samaritan were dismissed with 23
8

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prejudice.5
1
2. The FLSA claims against Defendant James Harden 2
(the CEO, President, and Director of CHS) were 3
dismissed with prejudice because the economic reality 4
of his relationship with Lundy, Wolman, and Iwasiuk did 5
not amount to an employer-employee relationship. 6
3. As to the claim that the automatic timekeeping 7
deductions allegedly violated FLSA as applied to 8
Plaintiffs (even though they were not per se illegal), 9
the Plaintiffs failed to show that they were personally 10
denied overtime by this system. 11
4. As to their FLSA overtime allegations against 12
Good Samaritan, Plaintiffs were required to plead that 13
they worked (1) compensable hours (2) in excess of 40 14
hours per week, and (3) that CHS knew that Plaintiffs 15
were working overtime. Only some of the categories of 16
purportedly unpaid work--meal breaks, time before and 17
after scheduled shifts, and training--constituted 18
“compensable” hours. 19
5 The court also rejected arguments that all of the
named defendants operated as a single enterprise, or that
they were all liable under theories of agency and alter-ego.
Even though the district court dismissed the FLSA claims
against CHS, we use the term “CHS” in this opinion to refer
to Defendants generally.
9

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Work during meal breaks is compensable under FLSA 1
if “predominantly” for the employer’s benefit. Special 2
App. 62. Although Plaintiffs alleged that their meal 3
breaks were “typically” missed or interrupted, the 4
Complaint “is void of any facts regarding the nature 5
and frequency of these interruptions during the 6
relevant time period or how often meal breaks were 7
missed altogether as opposed to just interrupted.” 8
Id. at 63. Absent such specificity, there is no claim 9
for compensable time. 10
Time spent working before and after scheduled 11
shifts is compensable if it is “integral and 12
indispensable” to performance of the job and not de 13
minimis. Id. at 64. Vague assertions that Wolman and 14
Iwasiuk spent fifteen to thirty minutes before their 15
shifts “preparing” their assignments did not state a 16
claim for compensable time. Id. at 64-65. On the 17
other hand, Lundy’s allegation--that he had to arrive 18
early to receive his assignment from the nurse working 19
the prior shift and leave late to hand off assignments 20
to the nurse taking over--could be compensable. 21
Time spent at training is not compensable if it is 22
outside regular hours, if attendance is voluntary, if 23
10

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the training is not directly related to the job, and if 1
the employee does not perform productive work during 2
the training. See id. at 66. Wolman and Lundy’s 3
allegations regarding monthly, mandatory staff meetings 4
stated claims for compensable time. (Iwasiuk made no 5
allegation of uncompensated trainings.) 6
5. The potentially valid allegations of 7
compensable time nevertheless did not allege that the 8
compensable time exceeded 40 hours, as required for a 9
FLSA overtime claim. Wolman and Iwasiuk’s sparse 10
allegations could not support a claim for time in 11
excess of 40 hours. And Plaintiffs conceded that Lundy 12
never actually worked more than 40 hours in one week. 13
The FLSA claims against Good Samaritan were therefore 14
dismissed without prejudice. 15
6. Once the federal claims were dismissed, 16
discretion was exercised against taking jurisdiction 17
over the state law claims, thereby also dismissing them 18
without prejudice. 19
Having done all this, the district court granted Plaintiffs 20
limited leave to file a further complaint alleging only 21
those claims that had been dismissed without prejudice, and 22
again gave specific guidance as to the “contours” of such a 23
complaint. Special App. 70-72. 24
11

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In response to Plaintiffs’ inquiry, the district court 1
issued another order a month later, clarifying the scope of 2
the February 2012 order dismissing the Complaint. The court 3
explained that it dismissed all claims against all 4
defendants, except Good Samaritan, and that the FLSA and 5
NYLL claims were dismissed with prejudice, while the 6
remaining state law claims were not. See id. at 76. 7
Plaintiffs mercifully elected to forgo another amended 8
complaint, and instead filed their Notice of Appeal on April 9
11, 2012, indicating their intent to appeal the district 10
court’s December 2010 Order dismissing the Second Amended 11
Complaint, the May 2011 sua sponte Order requesting 12
supplemental briefing, the February 2012 Order dismissing 13
the Fourth Amended Complaint, and the March 2012 Order 14
clarifying the scope of the dismissal. 15
16
DISCUSSION 17
On appeal, Plaintiffs challenge the dismissal of [1] 18
the overtime claims under FLSA; [2] the gap-time claims 19
under FLSA (and NYLL); [3] the NYLL claims with prejudice; 20
and [4] the RICO claims. 21
22
12

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I 1
We review de novo dismissal of a complaint for failure 2
to state a claim upon which relief can be granted, 3
“accepting all factual allegations in the complaint as true, 4
and drawing all reasonable inferences in the plaintiff’s 5
favor.” Holmes v. Grubman, 568 F.3d 329, 335 (2d Cir. 2009) 6
(internal quotation marks omitted). “To survive a motion to 7
dismiss, a complaint must contain sufficient factual matter, 8
accepted as true, to state a claim to relief that is 9
plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 10
678 (2009) (internal quotation marks omitted). 11
Nevertheless, “the tenet that a court must accept as 12
true all of the allegations contained in a complaint is 13
inapplicable to legal conclusions.” Id. “Threadbare 14
recitals of the elements of a cause of action, supported by 15
mere conclusory statements, do not suffice.” Id. Pleadings 16
that “are no more than conclusions . . . are not entitled to 17
the assumption of truth.” Id. at 679. 18
19
II 20
As to the overtime claims under FLSA, Plaintiffs argue 21
that they sufficiently alleged [i] compensable work that was 22
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unpaid, [ii] uncompensated work in excess of 40 hours in a 1
given week, and [iii] status as “employees” of all the 2
Defendants. Although the district court held Plaintiffs’ 3
complaint lacking on all three grounds, we affirm on the 4
second ground--the failure to allege uncompensated work in 5
excess of 40 hours in a given week--because it entirely 6
disposes of the FLSA overtime claims. 7
Section 207(a)(1) of FLSA requires that, “for a 8
workweek longer than forty hours,” an employee who works “in 9
excess of” forty hours shall be compensated for that excess 10
work “at a rate not less than one and one-half times the 11
regular rate at which he is employed” (i.e., time and a 12
half). 29 U.S.C. § 207(a)(1). 6 So, to survive a motion to 13
dismiss, Plaintiffs must allege sufficient factual matter to 14
state a plausible claim that they worked compensable 15
6 In its entirety, Section 207(a)(1) provides:
Except as otherwise provided in this section, no
employer shall employ any of his employees who in any
workweek is engaged in commerce or in the production of
goods for commerce, or is employed in an enterprise
engaged in commerce or in the production of goods for
commerce, for a workweek longer than forty hours unless
such employee receives compensation for his employment
in excess of the hours above specified at a rate not
less than one and one-half times the regular rate at
which he is employed.
Id.
14

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overtime in a workweek longer than 40 hours. Under Federal 1
Rule of Civil Procedure 8(a)(2), a “plausible” claim 2
contains “factual content that allows the court to draw the 3
reasonable inference that the defendant is liable for the 4
misconduct alleged.” Iqbal, 556 U.S. at 678; see also Bell 5
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (“Factual 6
allegations must be enough to raise a right to relief above 7
the speculative level . . . on the assumption that all the 8
allegations in the complaint are true (even if doubtful in 9
fact).” (internal citation omitted)). 10
We have not previously considered the degree of 11
specificity needed to state an overtime claim under FLSA. 12
Federal courts have diverged somewhat on the question. See 13
Butler v. DirectSat USA, LLC, 800 F. Supp. 2d 662, 667 (D. 14
Md. 2011) (recognizing that “courts across the country have 15
expressed differing views as to the level of factual detail 16
necessary to plead a claim for overtime compensation under 17
FLSA”). Within this Circuit, some courts have required an 18
approximation of the total uncompensated hours worked during 19
a given workweek in excess of 40 hours. See, e.g., Nichols 20
v. Mahoney, 608 F. Supp. 2d 526, 547 (S.D.N.Y. 2009); Zhong 21
v. August August Corp., 498 F. Supp. 2d 625, 628 (S.D.N.Y. 22
15

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2007). Courts elsewhere have done without an estimate of 1
overtime, and deemed sufficient an allegation that plaintiff 2
worked some amount in excess of 40 hours without 3
compensation. See, e.g., Butler, 800 F. Supp. 2d at 668 4
(collecting cases). 5
We conclude that in order to state a plausible FLSA 6
overtime claim, a plaintiff must sufficiently allege 40 7
hours of work in a given workweek as well as some 8
uncompensated time in excess of the 40 hours. See 29 U.S.C. 9
§ 207(a)(1) (requiring that, “for a workweek longer than 10
forty hours,” an employee who works “in excess of” forty 11
hours shall be compensated time and a half for the excess 12
hours). 13
Determining whether a plausible claim has been pled is 14
“a context-specific task that requires the reviewing court 15
to draw on its judicial experience and common sense.” 7
16
Iqbal, 556 U.S. at 679. Reviewing Plaintiffs’ allegations, 17
as the district court thoroughly did, we find no plausible 18
claim that FLSA was violated, because Plaintiffs have not 19
alleged a single workweek in which they worked at least 40 20
7 Under 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.
16

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hours and also worked uncompensated time in excess of 40 1
hours. 2
1. Wolman was “typically” scheduled to work three 3
shifts per week, totaling 37.5 hours. J.A. 1797. She 4
“occasionally” worked an additional 12.5-hour shift or 5
worked a slightly longer shift, id., but how occasionally or 6
how long, she does not say; nor does she say that she was 7
denied overtime pay in any such particular week. She 8
alleges three types of uncompensated work: (1) 30-minute 9
meal breaks which were “typically” missed or interrupted; 10
(2) uncompensated time before and after her scheduled 11
shifts, “typically” resulting in an additional 15 minutes 12
per shift; and (3) trainings “such as” a monthly staff 13
meeting, “typically” lasting 30 minutes, and respiratory 14
therapy training consisting of, “on average,” 10 hours per 15
year. Id. 16
She has not alleged that she ever completely missed all 17
three meal breaks in a week, or that she also worked a full 18
15 minutes of uncompensated time around every shift; but 19
even if she did, she would have alleged a total 39 hours and 20
45 minutes worked. A monthly 30-minute staff meeting, an 21
installment of the ten yearly hours of training, or an 22
17

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additional or longer shift could theoretically put her over 1
the 40-hour mark in one or another unspecified week (or 2
weeks); but her allegations supply nothing but low-octane 3
fuel for speculation, not the plausible claim that is 4
required. 5
2. Iwasiuk “typically” worked four shifts per week, 6
totaling 30 hours. J.A. 1799. She claims that 7
“approximately twice a month,” she worked “five to six 8
shifts” instead of four shifts, totaling between 37.5 and 45 9
hours. Id. Like Wolman, Iwasiuk does not allege that she 10
was denied overtime pay in a week where she worked these 11
additional shifts. By way of uncompensated work, she 12
alleges that her 30-minute meal breaks were “typically” 13
missed or interrupted and that she worked uncompensated time 14
before her scheduled shifts, “typically” 30 minutes, and 15
after her scheduled shifts, “often” an additional two hours. 16
Id. Maybe she missed all of her meal breaks, and always 17
worked an additional 30 minutes before and two hours after 18
her shifts, and maybe some of these labors were performed in 19
a week when she worked more than her four shifts. But this 20
invited speculation does not amount to a plausible claim 21
under FLSA. 22
18

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3. Lundy worked between 22.5 and 30 hours per week, 1
J.A. 1800, and Plaintiffs conceded below--and do not dispute 2
on appeal--that he never worked over 40 hours in any given 3
week. 4
We therefore affirm the dismissal of Plaintiffs’ FLSA 5
overtime claims. We need not consider alternative grounds 6
that were conscientiously explored by the district court, 7
such as the lack of an employer-employee relationship 8
between the named Plaintiffs and many of the Defendants, and 9
the insufficient allegations that additional minutes, such 10
as meal breaks, were “compensable” as a matter of law. 11
12
III 13
A gap-time claim is one in which an employee has not 14
worked 40 hours in a given week but seeks recovery of unpaid 15
time worked, or in which an employee has worked over 40 16
hours in a given week but seeks recovery for unpaid work 17
under 40 hours. An employee who has not worked overtime has 18
no claim under FLSA for hours worked below the 40-hour 19
overtime threshold, unless the average hourly wage falls 20
below the federal minimum wage. See United States v. 21
Klinghoffer Bros. Realty Corp., 285 F.2d 487, 494 (2d Cir. 22
19

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1960) (denying petitions for rehearing); Monahan v. Cnty. of 1
Chesterfield, 95 F.3d 1263, 1280 (4th Cir. 1996) 2
(“Logically, in pay periods without overtime, there can be 3
no violation of section 207 which regulates overtime 4
payment.”). 5
Notwithstanding that Plaintiffs have failed to 6
sufficiently allege any week in which they worked 7
uncompensated time in excess of 40 hours, Plaintiffs invoke 8
FLSA to seek gap-time wages for weeks in which they claim to 9
have worked over 40 hours. The viability of such a claim 10
has not yet been settled in this Circuit, but we now hold 11
that FLSA does not provide for a gap-time claim even when an 12
employee has worked overtime. 13
As the district court explained, the text of FLSA 14
requires only payment of minimum wages and overtime wages. 15
See 29 U.S.C. §§ 201-19. It simply does not consider or 16
afford a recovery for gap-time hours. Our reasoning in 17
Klinghoffer confirms this view: “[T]he agreement to work 18
certain additional hours for nothing was in essence an 19
agreement to accept a reduction in pay. So long as the 20
reduced rate still exceeds [the minimum wage], an agreement 21
to accept reduced pay is valid . . . .” 285 F.2d at 494. 22
20

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Plaintiffs here have not alleged that they were paid below 1
minimum wage. 2
So long as an employee is being paid the minimum wage 3
or more, FLSA does not provide recourse for unpaid hours 4
below the 40-hour threshold, even if the employee also works 5
overtime hours the same week. See id. In this way federal 6
law supplements the hourly employment arrangement with 7
features that may not be guaranteed by state laws, without 8
creating a federal remedy for all wage disputes--of which 9
the garden variety would be for payment of hours worked in a 10
40-hour work week. For such claims there seems to be no 11
lack of a state remedy, including a basic contract action. 12
See, e.g., Point IV (discussing the New York Labor Law). 13
As the district court observed, some courts may allow 14
such claims to a limited extent. Special App. 13 (citing 15
Monahan, 95 F.3d at 1279, and other cases). Among them is 16
the Fourth Circuit in Monahan, which relied on interpretive 17
guidance provided by the Department of Labor. See 29 C.F.R. 18
§§ 778.315, .317, .322. “Unlike regulations,” however, 19
“interpretations are not binding and do not have the force 20
of law.” Freeman v. Nat’l Broad. Co., 80 F.3d 78, 83 (2d 21
Cir. 1996) (analyzing deference owed to Department of Labor 22
21

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interpretation of FLSA). “Thus, although they are entitled 1
to some deference, the weight accorded a particular 2
interpretation under the FLSA depends upon ‘the thoroughness 3
evident in its consideration, the validity of its reasoning, 4
its consistency with earlier and later pronouncements, and 5
all those factors which give it power to persuade.’” Id. 6
(quoting Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)). 7
The interpretive guidance on which Monahan relied, 8
insofar as it might be read to recognize gap-time claims 9
under FLSA, is owed deference only to the extent it is 10
persuasive: it is not. 8
11
12
8 The district court identified deficiencies in the
Fourth Circuit’s view and expressed “serious concerns” about
allowing gap-time claims under FLSA. Special App. 15. One
judge within the Fourth Circuit has acknowledged the force
of the competing view:
While I follow the direction of Monahan and the
Department of Labor regulations in this opinion, I note
that one could, in the alternative, take the approach
that compensation for FLSA overtime hours is the sole
recovery available under the FLSA maximum hour
provision. This approach would leave the contractual
interpretation and determination of straight time
compensation to state courts, which are better
positioned to address these issues.
Koelker v. Mayor & City Council of Cumberland, 599 F. Supp.
2d 624, 635 n.11 (D. Md. 2009) (Motz, J.) (emphasis in
original).
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Section 778.315 of the guidance, which considers the 1
FLSA requirement for time-and-a-half pay, offers the 2
following clarification: “This extra compensation for the 3
excess hours of overtime work under the Act cannot be said 4
to have been paid to an employee unless all the straight 5
time compensation due him for the nonovertime hours under 6
his contract (express or implied) . . . has been paid.” 29 7
C.F.R. § 778.315. This interpretation suggests that an 8
employer could violate FLSA by failing to compensate an 9
employee for gap time worked when the employee also works 10
overtime; but the Department of Labor provides no statutory 11
support or reasoned explanation for this interpretation. 9
12
The Department of Labor adds, also without explanation, 13
that “[a]n agreement not to compensate employees for certain 14
nonovertime hours stands on no better footing since it would 15
have the same effect of diminishing the employee’s total 16
overtime compensation.” 29 C.F.R. § 778.317. This guidance 17
seems to rely on nothing more than other (unreasoned) 18
9 Section 778.322 appears to merely build from this
flawed interpretation: “ [O]vertime compensation cannot be
said to have been paid until all straight time compensation
due the employee under the statute or his employment
contract has been paid.” 29 C.F.R. § 778.322. Again, the
Department of Labor’s interpretation is not grounded in the
statute and provides no reasoned explanation for this
conclusion.
23

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guidance, and directly conflicts with Klinghoffer, which 1
ruled that such an agreement would not violate the limited 2
protections of the FLSA. 285 F.2d at 494. 3
Accordingly, we therefore affirm the dismissal of 4
Plaintiffs’ FLSA gap-time claims. 10
5
6
IV 7
The claims under the NYLL were dismissed with 8
prejudice. Plaintiffs argue that the district court lacked 9
jurisdiction to dismiss Plaintiffs’ NYLL claims because it 10
declined to exercise supplemental jurisdiction once it 11
dismissed the federal claims. 12
In the welter of amended complaints, motions to 13
dismiss, and orders that rule and clarify, the record is 14
somewhat confusing on this point. The state law claims were 15
considered generally in the February 2012 order, in which 16
10 Even if we were to assume that an employee who has
worked overtime may also seek gap-time pay under FLSA, such
a claim would not be viable if the employment agreement
provided that the employee would be compensated for all non-
overtime hours worked. See Monahan, 95 F.3d at 1272. Here,
Plaintiffs allege “binding, express oral contracts” that
include an “explicit promise to compensate Plaintiffs and
Class Members for ‘all hours worked.’” J.A. 1819. Of
course in that event a contractual remedy may be available;
but the district court dismissed the breach of contract
claims and Plaintiffs have not appealed on that ground.
24

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the district court “decline[d] to exercise supplemental 1
jurisdiction over Plaintiff’s state law claims,” thereby 2
dismissing them without prejudice. Special App. 69. But at 3
the same time, the district court stated that Plaintiffs’ 4
FLSA and NYLL claims are examined under the same legal 5
standards, and that the analysis dismissing Plaintiffs’ FLSA 6
claims “applies with equal force to Plaintiffs’ NYLL 7
claims.” Id. at 47 n.4; see also id. at 61 n.8. In 8
response to Plaintiffs’ motion for partial reconsideration 9
and clarification, the March 2012 order explained that the 10
“NYLL claims against these Defendants were dismissed WITH 11
PREJUDICE.” Id. at 76. 12
The exercise of supplemental jurisdiction is within the 13
sound discretion of the district court. See Carnegie-Mellon 14
Univ. v. Cohill, 484 U.S. 343, 349-50 (1988). Courts 15
“consider and weigh in each case, and at every stage of the 16
litigation, the values of judicial economy, convenience, 17
fairness, and comity in order to decide whether to exercise” 18
supplemental jurisdiction. Id. at 350. Once all federal 19
claims have been dismissed, the balance of factors will 20
“usual[ly]” point toward a declination. Id. at 350 n.7. 21
22
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“We review the district court’s decision for abuse of 1
discretion, and depending on the precise circumstances of a 2
case, have variously approved and disapproved the exercise 3
of supplemental jurisdiction where all federal-law claims 4
have been dismissed.” Kolari v. N.Y.-Presbyterian Hosp., 5
455 F.3d 118, 122 (2d Cir. 2006) (internal citations 6
omitted). The dismissal of state law claims has been upheld 7
after dismissal of the federal claims, particularly where 8
the state law claim implicated federal interests such as 9
preemption, or where the dismissal of the federal claims was 10
late in the litigation, or where the state law claims 11
involved only settled principles rather than novel issues. 12
Valencia ex rel. Franco v. Lee, 316 F.3d 299, 305-06 (2d 13
Cir. 2003). And we have upheld the exercise of supplemental 14
jurisdiction in situations when as here the “state law 15
claims are analytically identical” to federal claims. Benn 16
v. City of New York, 482 F. App’x 637, 639 (2d Cir. 2012); 17
see also Petrosino v. Bell Atl., 385 F.3d 210, 220 n.11 (2d 18
Cir. 2004). 19
In dismissing the NYLL claims with prejudice, the 20
district court relied on the fact that the same standard 21
applied to the FLSA and NYLL claims. That exercise of 22
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supplemental jurisdiction was entirely consistent with this 1
Court’s precedent. 11 Reviewing the district court’s 2
determination for an abuse of discretion, we largely affirm 3
the district court’s dismissal of the NYLL claims with 4
prejudice. 5
However, Plaintiffs point out that the district court 6
order was arguably inconsistent in dismissing Plaintiffs’ 7
NYLL claims with prejudice notwithstanding its observation 8
that Plaintiffs may have a valid gap-time claim under NYLL. 9
According to the district court: “the NYLL does 10
recognize Gap Time Claims and provides for full recovery of 11
all unpaid straight-time wages owed.” Special App. 61 n.9 12
(internal quotations and citations omitted). “Thus, to the 13
extent that the . . . Plaintiffs have adequately pled that 14
they worked compensable time for which they were not 15
properly paid, Plaintiffs have a statutory right under the 16
NYLL to recover straight-time wages for those hours.” Id. 17
11 In any event, the district court’s dismissal of
Plaintiffs’ NYLL claims was proper under the Cohill factors:
judicial economy, convenience, fairness, and comity. See
484 U.S. at 350. Judicial economy and convenience are
served by dismissing Plaintiffs’ NYLL claims with prejudice.
And considering that Plaintiffs amended their complaint at
least four times with express guidance from the district
court, they cannot argue now that it is unfair to dismiss
their inadequately pleaded NYLL claims.
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This observation appears consistent with NYLL, which 1
provides that “[i]f any employee is paid by his or her 2
employer less than the wage to which he or she is 3
entitled . . . he or she shall recover in a civil action the 4
amount of any such underpayments . . . .” NYLL § 663(1) 5
(emphasis added). 6
We express no view as to the merits of NYLL gap-time 7
claims, or as to the adequacy of Plaintiffs’ pleading. But 8
because New York law may recognize Plaintiffs’ NYLL gap-time 9
claims, the district court erred in dismissing them with 10
prejudice based solely on its dismissal of Plaintiffs’ FLSA 11
claims. We therefore affirm the dismissal of Plaintiffs’ 12
NYLL overtime claims, but vacate the dismissal of 13
Plaintiffs’ NYLL gap-time claims and remand for further 14
consideration in that narrow respect. 15
16
V 17
Finally, Plaintiffs challenge the dismissal of their 18
RICO claims, which alleged that CHS used the mails to 19
defraud Plaintiffs by sending them their payroll checks. 20
The district court dismissed the RICO claims, holding that 21
Plaintiffs had not alleged any pattern of racketeering 22
activity. 23
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To establish a civil RICO claim, a plaintiff must 1
allege “(1) conduct, (2) of an enterprise, (3) through a 2
pattern (4) of racketeering activity,” as well as “injury to 3
business or property as a result of the RICO violation.” 4
Anatian v. Coutts Bank (Switz.) Ltd., 193 F.3d 85, 88 (2d 5
Cir. 1999) (internal quotation marks omitted). The pattern 6
of racketeering activity must consist of two or more 7
predicate acts of racketeering. 18 U.S.C. § 1961(5). 8
The Third Amended Complaint cites the mailing of 9
“misleading payroll checks” to show mail fraud as a RICO 10
predicate act, J.A. 1779, on the theory that the mailings 11
“deliberately concealed from its employees that they did not 12
receive compensation for all compensable work that they 13
performed and misled them into believing that they were 14
being paid properly.” Id. at 1764-65; see also id. at 1765- 15
67 (describing the mailing of checks). 12
16
“To prove a violation of the mail fraud statute, 17
plaintiffs must establish the existence of a fraudulent 18
scheme and a mailing in furtherance of the scheme.” 19
12 Federal courts are properly wary of transforming
any civil FLSA violation into a RICO case. See, e.g.,
Vandermark v. City of New York, 615 F. Supp. 2d 196, 209-10
(S.D.N.Y. 2009) (Scheindlin, J.) (“Racketeering is far more
than simple illegality. Alleged civil violations of the
FLSA do not amount to racketeering.”).
29

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McLaughlin v. Anderson, 962 F.2d 187, 190-91 (2d Cir. 1992). 1
On a motion to dismiss a RICO claim, Plaintiffs’ allegations 2
must also satisfy the requirement that, “[i]n alleging fraud 3
or mistake, a party must state with particularity the 4
circumstances constituting fraud or mistake.” Fed. R. Civ. 5
P. 9(b); see McLaughlin, 962 F.2d at 191. So Plaintiffs 6
must plead the alleged mail fraud with particularity, and 7
establish that the mailings were in furtherance of a 8
fraudulent scheme. Id. Plaintiffs’ allegations fail on 9
both accounts. 10
As to particularity, the “complaint must adequately 11
specify the statements it claims were false or misleading, 12
give particulars as to the respect in which plaintiff 13
contends the statements were fraudulent, state when and 14
where the statements were made, and identify those 15
responsible for the statements.” Cosmas v. Hassett, 886 16
F.2d 8, 11 (2d Cir. 1989). Plaintiffs here have not alleged 17
what any particular Defendant did to advance the RICO 18
scheme. Nor have they otherwise pled particular details 19
regarding the alleged fraudulent mailings. Bare-bones 20
allegations do not satisfy Rule 9(b). 21
22
30

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Almost more fundamentally, Plaintiffs have not 1
established that the mailings were “in furtherance” of any 2
fraudulent scheme. As the district court observed, the 3
mailing of pay stubs cannot further the fraudulent scheme 4
because the pay stubs would have revealed (not concealed) 5
that Plaintiffs were not being paid for all of their alleged 6
compensable overtime. See Special App. 16-17. Mailings 7
that thus “increase[] the probability that [the mailer] 8
would be detected and apprehended” do not constitute mail 9
fraud. United States v. Maze, 414 U.S. 395, 403 (1974); see 10
also Cavallaro v. UMass Mem’l Health Care Inc., No. 11
09-40152, 2010 WL 3609535, at *3 (D. Mass. July 2, 2010) 12
(examining very similar claim of mail fraud based on 13
paychecks and ruling that the mailings “made the scheme’s 14
discovery more likely”). We therefore affirm the dismissal 15
of Plaintiffs’ RICO claims. 16
17
CONCLUSION 18
For the foregoing reasons, we affirm the dismissal of 19
Plaintiffs’ claims under FLSA, their NYLL overtime claims, 20
and their RICO claims, but we vacate the dismissal with 21
prejudice of Plaintiffs’ gap-time claims under the NYLL, and 22
remand for further consideration in that limited respect. 23
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