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Pope v. Espeseth, Inc.

United States District Court, W.D. Wisconsin

January 11, 2017

ANDREW J. POPE and JOSHUA RAVE, Plaintiffs,
v.
ESPESETH, INC., FISH WINDOW CLEANING SERVICES, INC., and ANTHONY ESPESETH, Defendants.

          OPINION & ORDER

          JAMES D. PETERSON District Judge.

         Plaintiffs Andrew J. Pope and Joshua Rave are window cleaners who filed a proposed collective action alleging that their former employers paid them using a commission-based method of employee compensation that failed to pay them minimum wage and overtime pay, in violation of the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-19, and Wisconsin wage and hour laws. Dkt. 14. Plaintiffs name as defendants Espeseth, Inc., a franchisee of defendant Fish Window Cleaning Services, Inc., and Anthony Espeseth, the franchisee's owner. Plaintiffs allege that Espeseth, Inc., (the franchisee) and Fish (the franchisor) are joint employers of plaintiffs.

         Fish has moved for summary judgment that it is not plaintiffs' employer under the FLSA or Wisconsin wage and hour laws. Dkt. 53. Plaintiffs have filed three preliminary motions in an attempt to avoid summary judgment against them, which the court will deny. The court will grant Fish's summary judgment motion and dismiss Fish from the case. The court will also grant plaintiffs' motion for conditional certification of a class on its claims against the remaining defendants.

         PRELIMINARY MATTERS

         Plaintiffs move for leave to amend their complaint so that they may pursue an apparent agency theory of liability against Fish. Dkt. 78. In support of their motion, plaintiffs state that they attempted to plead a claim that Fish was their apparent employer, but failed to include allegations that plaintiffs reasonably relied upon Fish's representation that plaintiffs worked for Fish, an essential element of the apparent agency theory. They now wish to correct their error.

         The court need not determine which deadline for amendments controls-the December 22, 2015 deadline last ordered by the court, see Dkt. 10, or the May 31, 2016 deadline agreed to by the parties, see Dkt. 28, at 4-because both have long since passed. When a party seeks leave to amend its complaint after the court-imposed deadline for amending without the court's leave, this court analyses the motion under Federal Rule of Civil Procedure 15. Plaintiffs do not request the extension of any deadlines in the court's scheduling order, so Rule 16 does not apply.

         Under Rule 15, the court should freely give leave to amend when justice so requires. “[L]eave to amend need not be given if there is an apparent reason not to do so, such as ‘undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment.'” Payne v. Churchich, 161 F.3d 1030, 1036 (7th Cir. 1998) (alteration in original) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). Here, the issue is undue delay. Plaintiffs filed their motion to amend their complaint to include an additional theory of liability based on apparent agency the same day Fish's motion for summary judgment on the issue of joint employer liability was fully briefed, more than five months after the deadline for amending pleadings agreed to by the parties and more than 10 months after the deadline set by the court's scheduling order.

         Plaintiffs contend that they “attempted” to plead the apparent employer theory in their first amended complaint, but failed. The lack of bad faith would not excuse plaintiffs' delay in making the amendment. More important, it does not cure the prejudice that Fish would suffer were the court to allow the amendment. Under Rule 8, a complaint must contain “‘a short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to ‘give the defendant fair notice'” of the claim and its basis. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Plaintiffs' first amended complaint did not give Fish any notice that plaintiffs were pressing an apparent agency theory of liability. To allow them to amend their complaint now, five months after the agreed-upon deadline and when Fish's motion for summary judgment on the issue of its liability as an employer is fully briefed, would prejudice Fish and contradict the purpose of a complaint. Plaintiffs have not explained why they did not make the requested amendment much sooner, when Fish could have addressed the apparent agency theory on summary judgment. The court will deny plaintiffs' motion to amend their complaint.

         Plaintiffs also move the court to stay consideration of Fish's motion for summary judgment. Dkt. 90. Rule 56(d) allows the court to deny or defer consideration of a summary judgment motion when the “nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition.” Plaintiffs have the burden of showing why they “cannot adequately respond to the summary judgment motion without further discovery.” Sterk v. Redbox Automated Retail, LLC, 770 F.3d 618, 628 (7th Cir. 2014) (quoting Deere & Co. v. Ohio Gear, 462 F.3d 701. 706 (7th Cir. 2006)). The court has “broad discretion to deny” motions under Rule 56(d). Dewitt v. Corizon, Inc., 760 F.3d 654, 660 (7th Cir. 2014).

         Plaintiffs have not shown that relief under Rule 56(d) is necessary. Plaintiffs complain that Fish cited the declarations of three other franchisees, Dkt. 72; Dkt. 73; Dkt. 77, in its reply in support of its summary judgment motion, so plaintiffs ask for more time to conduct discovery concerning these franchisees. But the declarations in question are not relevant to the court's analysis of Fish's summary judgment motion, so the court will not delay consideration of that motion to allow the discovery that plaintiffs request.

         Finally, plaintiffs move for leave to file a sur-reply in opposition to Fish's motion for summary judgment. Dkt. 89. The court has previously explained to the parties that it “permits sur-replies only in rare, unusual situations.” Dkt. 33, at 11. Plaintiffs argue that they deserve the opportunity to address three arguments raised by Fish in its reply. First, plaintiffs wish to respond to Fish's argument based on the supplemental declaration of Angie Masters, Dkt. 86, submitted for the first time with Fish's reply. But the declaration is not relevant to the court's analysis of Fish's summary judgment motion, so a sur-reply to address the declaration is unnecessary. Second, plaintiffs wish to respond to Fish's arguments concerning plaintiffs' apparent agency theory. But because the court will deny plaintiffs' motion to amend their complaint to include this theory, it will not consider either party's arguments concerning this theory. Finally, plaintiffs wish to respond to Fish's argument that Fish is not plaintiffs' employer under the standard advanced in Kerl v. Dennis Rasmussen, Inc., 2004 WI 86, ¶ 43, 273 Wis.2d 106, 682 N.W.2d 328. Fish's argument, made in response to plaintiffs' assertion that Kerl is controlling, does not present the rare, unusual situation calling for a sur- reply. But regardless, as discussed below, the Kerl standard does not apply to plaintiffs' claims, so further argument about the application of Kerl is unnecessary. The court will deny plaintiffs' motion.

         UNDISPUTED FACTS

         The following facts, except where noted, are undisputed.

         Anthony Espeseth entered into a franchise agreement with Fish in 2004 to open a window cleaning business under the “Fish Window Cleaning” name. He renewed the agreement in 2014. Sometime after the renewal, Anthony Espeseth may have assigned his interest in the franchise agreement to his corporate entity, Espeseth, Inc. The parties dispute whether the assignment was fully executed, but for the purposes of Fish's summary judgment motion, whether Anthony Espeseth or Espeseth, Inc., was the franchisee does not matter, so, in this order, the court will refer simply to “Espeseth” as the franchisee.

         The franchise agreement governing the relationship between Espeseth and Fish states that Espeseth, as a franchisee, is “an independent business . . . solely responsible for control and management . . . including such matters as hiring and discharging [its] employees” and that Fish, as the franchisor, has “no power, responsibility or liability in respect to employee relations issues including hiring, discharge and discipline, and related matters.” Dkt. 56-5, at 12 and Dkt. 56-6, at 14. The franchise agreement requires Espeseth to “hire and supervise efficient, competent, and courteous persons . . . require [them] to work in clean uniforms approved by [Fish] . . . hire and supervise a satisfactory number of employees [and] execute non-disclosure and confidentiality agreements with [them].” Dkt. 56-5, at 14 and Dkt. 56-6, at 16. The franchise agreement makes clear that “[n]o employee of ...


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