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In Re Morgan Stanley Smith Barney LLC Wage and Hour Litigation

December 14, 2012


The opinion of the court was delivered by: William J. Martini, U.S.D.J.:


In this multidistrict litigation ("MDL") wage and hour case, Plaintiffs Jimmy Kuhn, Robert Gibson, Nick Pontilena, Gregg Vanasse, Howard Rosenblatt, and Denise Otten allege that Defendant Morgan Stanley Smith Barney ("Morgan Stanley") failed to pay overtime and impermissibly deducted money from their paychecks. Plaintiffs argue that Morgan Stanley violated state and federal law in four ways. First, Morgan Stanley failed to provide overtime to financial advisors who were paid on commission. Second, it made impermissible deductions from advisors' pay. Third, it compelled advisors to pay business expenses. And fourth, it charged advisors for losses that the advisors were allegedly responsible for. Plaintiffs bring one federal claim for overtime, four state claims for overtime, four state claims for impermissible wage deductions, and one state claim for failure to maintain records. Morgan Stanley seeks to dismiss one state overtime claim, all of the impermissible deduction claims, and the lone claim for failure to maintain records. There was no oral argument. Fed. R. Civ. P. 78(b). For the reasons set forth below, the motion to dismiss is GRANTED. The motion to strike the class and collective allegations is GRANTED in part and DENIED in part.


The named Plaintiffs in this case worked as financial advisors for Morgan Stanley, which paid them on commission. Am. Consolidated Compl. ("Complaint") ¶¶ 36, 28. Despite regularly working more than 40 hours per week, Plaintiffs did not receive overtime. Id. ¶¶ 38, 43. Plaintiffs had to pay their own overheard expenses, and they were not reimbursed for business-related meals. Id. ¶¶ 38, 40, 49.

In 2011, Plaintiffs filed five cases against Morgan Stanley in four different states: Connecticut, New Jersey, New York, and Rhode Island. After the Judicial Panel on Multidistrict Litigation transferred the cases to this Court for pre-trial purposes, Plaintiffs filed a consolidated class and collective action complaint ("the Complaint"). The Complaint asserts wage and hour claims under state law as well as the federal Fair Labor Standards Act ("FLSA").


Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, if the plaintiff fails to state a claim upon which relief can be granted. The moving party bears the burden of showing that no claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in the light most favorable to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975).

A complaint's factual allegations must be sufficient to raise a plaintiff's entitlement to relief above a speculative level, such that the entitlement is "plausible on its face." See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Umland v. PLANCO Fin. Serv., Inc., 542 F.3d 59, 64 (3d Cir. 2008). Claims have "facial plausibility when the plaintiff pleads factual content that allows a court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a 'probability requirement' . . . it asks for more than a sheer possibility." Id.

"In evaluating motions to dismiss, courts consider 'allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim.'" Banco Popular v. Ghandi, 184 N.J. 161 (2003) (citing Lum v. Bank of Am., 361 F.3d 217, 222 n.3 (3d Cir.), cert. denied, 543 U.S. 918, (2004)). This includes legislative history, see Territory of Alaska v. Am. Can Co., 358 U.S. 224, 226-27 (1959), which both parties ask this Court to consider. See Def.'s Request for Judicial Notice, Exs. C & D, ECF No. 19-2; Pl.'s Br. 34-35, ECF No. 26. As is made clear below, the Court reaches its decision without recourse to legislative history. Furthermore, Defendant asks the Court to take judicial notice of a motion to dismiss and an unpublished order from other cases. Request for Judicial Notice 1-3. The Court need not, and does not, rely on these materials in reaching its decision.

Federal Rule of Civil Procedure 12(f) provides that a court "may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." "The district court's decision whether to grant a motion to strike under Rule 12(f) is discretionary." Coles v. Carlini, No. 10-632, 2012 WL 1079446, at *15 (D.N.J. Mar. 29, 2012). When a Rule 12(f) motion "attack[s] the sufficiency of the allegations contained in a pleading, it is appropriate to convert that motion into one pursuant to Rule 12(b)(6)." Giles v. Phelan, Hallinan & Schmieg, L.L.P., No. 11-6239, 2012 WL 4506294, at *20 (D.N.J. Sept. 28, 2012) (internal citation and quotation omitted).


Plaintiffs filed a ten count Complaint. One count alleges failure to pay overtime under the FLSA (Count I). Four counts allege failure to pay overtime under state law: Count II (New York); Count IV (New Jersey); Count VII (Rhode Island); and Count IX (Connecticut). Four counts allege impermissible deduction from wages under state law: Count III (New York); Count V (New Jersey); Count VIII (Rhode Island); and Count X (Connecticut). A final count alleges a failure to maintain records under New Jersey law (Count VI).

Morgan Stanley does not move to dismiss the FLSA overtime claim (Count I). Instead, it moves to dismiss a single state law overtime claim, Count VII, which sounds in Rhode Island law, as well as the impermissible wage deduction claims (Counts III, V, VIII, and X), and the failure to maintain records claim (Count VI). The motion to dismiss these six counts is GRANTED. ...

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