UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_________________________________________
)
MICHAEL MOLOCK, et al., )
)
Plaintiffs, )
)
v. ) Case No. 16-cv-02483 (APM)
)
WHOLE FOODS MARKET, INC., et al., )
)
Defendants. )
_________________________________________ )
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
Plaintiffs Michael Molock, Randal Kuczor, Carl Bowens, Jose Fuentes, Christopher
Milner, Jon Pace, and Sarah Strickland (collectively, “Plaintiffs”) are current and former
employees of Whole Foods grocery stores in the District of Columbia, Georgia, Maryland, North
Carolina, Oklahoma, and Virginia. On behalf of a putative class of similarly-situated past and
present employees of Whole Foods, they bring this action against Defendants Whole Foods
Market, Inc. (“WFMI”), and Whole Foods Market Group, Inc. (“WFM Group”), to recover all
wages and damages owed to them as a result of the allegedly unlawful manner in which Whole
Foods conducted its “Gainsharing” program, a bonus program designed to incentivize individual
Whole Foods grocery store departments to operate under budget by sharing cost savings with
employees. 1
Before the court is Defendants’ Motion to Dismiss Plaintiffs’ Second Amended Class
Action Complaint. For the reasons herein, the court grants in part and denies in part Defendants’
Motion to Dismiss.
1
This case is substantially related to two other matters pending before this court. See Bartolo v. Whole Foods Market
Group, Inc., Case No. 17-cv-01453-APM; Vasquez v. Whole Foods Market, Inc., Case No. 17-cv-00112-APM.
II. BACKGROUND
A. Factual Background
Each of the seven named Plaintiffs in this action are or were employed in Whole Foods
grocery stores throughout the United States. Second Am. Compl., ECF No. 28 [hereinafter 2d
Am. Compl.], ¶¶ 32–99. Beginning in 1986 and throughout Plaintiffs’ employment, Whole
Foods stores nationwide used a profit-sharing program—what Whole Foods referred to as its
“Gainsharing” program—to incentivize department productivity and revenue. Id. ¶ 15. Under
the program, as part of the employee compensation package, Whole Foods awarded bonuses to
employees whose departments performed under budget by automatically distributing the surplus
savings among the employees in that department. Id. During the hiring and orientation process
for new Whole Foods stores employees, Defendants provided Plaintiffs with information about the
Gainsharing program. See id. ¶ 16 (Benefits Orientation Training illustrations). Plaintiffs assert
that Whole Foods store managers, department team leaders, and human resources employees
provided each of them with materials explaining Gainsharing bonuses and expressly represented
during their interviews and throughout their employment that mandatory Gainsharing bonuses
were part of the employee compensation package. See id. ¶¶ 32–99. Plaintiffs also assert that
throughout their employment, Defendants posted Gainsharing reports listing guaranteed wages for
employees to view each month, at least once a month. See id. Plaintiffs relied on these
representations to accept offers of employment, and once employed, to work to increase the
productivity of their departments in order to create a surplus. See id.
Once Plaintiffs accepted employment and became Team Members—thereby vesting in the
Gainsharing program—they worked to create a surplus in their departments and therefore were
entitled to Gainsharing bonuses. See id. However, each Plaintiff alleges that he or she was
2
denied these bonuses throughout his or her entire employment at Whole Foods stores, because
Defendants intentionally manipulated and undermined the Gainsharing program in two ways:
(1) by imposing a nationwide scheme of “shifting” labor costs, and (2) by establishing “Fast
Teams.” Id. ¶¶ 18–25. Under the practice of “shifting” labor costs, if a department came in over
budget, Defendants instructed store leadership to “shift” the labor costs of that department to a
department that had a budget surplus. Id. ¶¶ 18–31. Payroll/Benefits Specialists at each Whole
Foods grocery store then effectuated labor cost shifting by manually altering employee time
records otherwise automatically recorded in a Kronos computer system and then submitting the
manipulated records to WFMI corporate headquarters for payroll processing. Id. ¶ 20. As a
result of this practice, the Gainsharing bonuses owed to employees of departments that performed
under budget—including Plaintiffs—were reduced by the costs unlawfully “shifted” to those
departments. Id. ¶¶ 24–25. The decision to “shift” labor costs was authorized, made, and ratified
at the executive level by Defendants in order to steal bonuses earned by employees nationwide and
pad company profits. Id. ¶ 21. Additionally, the use of “Fast Teams” allowed employees to float
from one department to another, purportedly to help departments out as needed. Id. ¶ 22.
According to Plaintiffs, however, Defendants used Fast Teams to shift labor costs among
departments without properly accounting for their work, thereby failing to administer and pay the
appropriate bonuses required by the Gainsharing program. Id.
Defendants admitted to misconduct publicly, but claimed that manipulation of the
Gainsharing program was an isolated problem, not one that plagued stores nationwide. In public
statements, Defendants asserted that the malfeasance occurred in only nine of the 457 Whole Foods
stores and was perpetrated by nine store managers who “engaged in a policy infraction that allowed
the managers to benefit from a profit-sharing program at the expense of store employees.” Defs.’
3
Mot. to Dismiss Second Am. Compl., ECF No. 30 [hereinafter Defs.’ Mot.], Ex. A-1, ECF No.
30-3 [hereinafter AP Article]; see 2d Am. Compl. ¶¶ 26, 29; Pls.’ Mem. in Opp’n to Defs.’ Mot.,
ECF No. 32 [hereinafter Pls.’ Opp’n], Ex., ECF No. 32-4 [hereinafter Washington Post Article].
Defendants terminated those nine store managers.
Plaintiffs Molock, Kuczor, Milner, Bowens, Pace, and Fuentes each were employed in at
least one of the nine Whole Foods grocery stores in which Defendants have admitted that
employees were deprived of earned Gainsharing bonuses. 2d Am. Compl. ¶ 26. Defendants
subsequently sent Whole Foods executives to the nine stores, where they spoke to store
employees—including Plaintiffs—and admitted to misconduct related to the Gainsharing program.
Plaintiffs claim that Defendants attempted to pay small sums to employees at these nine stores to
“buy peace.” Id. ¶¶ 27–28.
B. Class Action Allegations
Plaintiffs seek to bring this case on behalf of themselves and all other employees of Whole
Foods who were employed by Whole Foods in the District of Columbia, Georgia, Maryland, North
Carolina, Oklahoma, Virginia, and throughout the country. Id. ¶ 100. They seek to define the
putative class as “past and present employees of Whole Foods who were not paid wages owed to
them under the Gainsharing program.” Id. ¶ 101. Plaintiffs propose to include within the class
the following subclasses:
a. Past and present employees of Whole Foods who were
employed in the District of Columbia and did not receive all
earned wages at least twice during each calendar month on
regular paydays in violation of the District of Columbia Wage
Payment and Collection Law.
b. Past employees of Whole Foods who were employed in the
District of Columbia and were not paid all earned wages within
7 days after resignation or termination.
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c. Past and present employees of Whole Foods who were
employed in the State of Maryland and did not receive all earned
wages at least once in every 2 weeks or twice in each month on
regular paydays, in violation of MD Code, Labor and
Employment, § 3-502.
d. Past employees of Whole Foods who were employed in the State
of Maryland and were not paid all earned wages for work that
the employee performed before the termination of employment,
on or before the employee’s next anticipated payday, in violation
of MD Code, Labor and Employment, § 3-505.
e. Past and present employees of Whole Foods who were
employed in the State of Maryland and were not at the time of
their hiring provided full and accurate notice of their rates of
pay, in violation of MD Code, Labor and Employment, § 3-504.
f. Past and present employees of Whole Foods who were
employed in the State of Oklahoma and did not receive all
earned wages at least twice each calendar month on regular
paydays designated in advance by the employer, in violation of
40 Okl. St. § 165.2.
g. Past employees of Whole Foods who were employed in the State
of Oklahoma and were not paid all earned wages, less offsets
and less any amount over which a bona fide disagreement exists,
at the employee’s next anticipated payday, in violation of 40
Okl. St. § 165.3.
Id. ¶ 101(a)–(g).
C. Procedural Background
Plaintiffs filed this action on December 20, 2016. See Compl., ECF No. 1. After
Plaintiffs amended their original Complaint, Defendants moved for dismissal, and the court heard
oral argument on Defendants’ motion on May 19, 2017. See Defs.’ Mot. to Dismiss Am. Compl.,
ECF No. 15. Before the court ruled, Plaintiffs moved for leave to file a Second Amended
Complaint, and over Defendants’ objection, the court granted leave to amend. See Mem. Op. &
Order, ECF No. 27.
5
Now on the third iteration of the Complaint, Plaintiffs assert the following
claims: (1) breach of contract and breach of the duty of good faith and fair dealing (Count I);
(2) unjust enrichment (Count II); (3) failure to pay wages upon discharge in violation of D.C. Code
§ 32-1303 (Count III); (4) failure to pay wages in violation of D.C. Code § 32-1302 (Count IV);
(5) failure to maintain accurate employment records in violation of D.C. Code § 32-1008 (Count
V); (6) failure to pay wages upon discharge in violation of Md. Code § 3-504 (Count VI);
(7) failure to pay wages in violation of Md. Code § 3-502 (Count VII); (8) failure to inform of
wages in violation of Md. Code § 3-504 (Count VIII); (9) failure to pay wages upon discharge in
violation of Okla. Stat. tit. 40, § 165.3 (Count IX); (10) failure to pay wages in violation of Okla.
Stat. tit. 40, § 165.2 (Count X); and (11) fraud (Count XI). 2d Am. Compl. ¶¶ 107–70.
Defendants moved to dismiss the Second Amended Complaint in its entirety on July 21,
2017, pursuant to Rules 12(b)(1), 12(b)(2), and 12(b)(6) of the Federal Rules of Civil Procedure.
Defs.’ Mot. Specifically, Defendants contend that: (1) all claims against WFMI and portions of
the claims against WFM Group should be dismissed for lack of personal jurisdiction pursuant to
Rule 12(b)(2); (2) all claims, including the nationwide class claims, should be dismissed for lack
of Article III standing pursuant to Rule 12(b)(1); and (3) all claims should be dismissed for failure
to state a claim pursuant to Rule 12(b)(6). Defs.’ Mot., Defs.’ Mem. of Points & Auth. in Supp.
of Defs.’ Mot., ECF No. 30-1 [hereinafter Defs.’ Mem.], at 6. Plaintiffs opposed Defendants’
Motion. See Pls.’ Opp’n.
Defendants’ motion is now ripe for consideration.
III. LEGAL STANDARD
Upon a motion to dismiss under Rule 12(b)(2), the plaintiff bears the burden of establishing
a factual basis for personal jurisdiction. Crane v. N.Y. Zoological Soc., 894 F.2d 454, 456 (D.C.
6
Cir. 1990). A plaintiff can survive a motion to dismiss if she makes a “prima facie” showing of
personal jurisdiction. Edmond v. U.S. Postal Serv. Gen. Counsel, 949 F.2d 415, 424 (D.C. Cir.
1991). “[T]o establish a prima facie case, plaintiffs are not limited to evidence that meets the
standards of admissibility required by the district court. Rather, they may rest their argument on
their pleadings, bolstered by such affidavits and other written materials as they can otherwise
obtain.” Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005). The court resolves all factual
discrepancies in the record in favor of the plaintiff. See Crane, 894 F.2d at 456.
Under Rule 12(b)(1), the plaintiff bears the burden of establishing that the court has
subject-matter jurisdiction. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). In deciding
a Rule 12(b)(1) motion, the court “may consider materials outside the pleadings,” but “must still
accept all of the factual allegations in the complaint as true.” Jerome Stevens Pharm., Inc. v. Food
& Drug Admin., 402 F.3d 1249, 1253–54 (D.C. Cir. 2005) (citation and alteration omitted).
“Because subject-matter jurisdiction focuses on the court’s power to hear the plaintiff’s claim, a
Rule 12(b)(1) motion imposes on the court an affirmative obligation to ensure that it is acting
within the scope of its jurisdictional authority.” Grand Lodge of Fraternal Order of Police v.
Ashcroft, 185 F. Supp. 2d 9, 13 (D.D.C. 2001). As such, “‘the plaintiff’s factual allegations in
the complaint will bear closer scrutiny in resolving a 12(b)(1) motion’ than in resolving a 12(b)(6)
motion for failure to state a claim.” Id. (quoting 5A Charles A. Wright & Arthur R. Miller, Fed.
Prac. & Proc. Civ. 2d § 1350).
When evaluating a motion under Rule 12(b)(6), the court “construe[s] the complaint ‘in
favor of the plaintiff, who must be granted the benefit of all inferences that can be derived from
the facts alleged.’” Hettinga v. United States, 677 F.3d 471, 476 (D.C. Cir. 2012) (quoting
Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979)). The court need not accept as true,
7
however, “a legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To survive a motion
to dismiss, the complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Id. (quoting Twombly, 550 U.S. at 570). A claim is
plausible on its face “when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id.
IV. DISCUSSION
A. Rule 12(b)(2) Personal Jurisdiction
The court begins by determining whether it can exercise personal jurisdiction over WFMI
and WFM Group. E.g., Forras v. Rauf, 812 F.3d 1102, 1105 (D.C. Cir. 2016); see Williams v.
Romarm, SA, 756 F.3d 777, 781 n.1 (D.C. Cir. 2014) (approving district court’s decision to address
personal jurisdiction before deciding whether it had subject matter jurisdiction). Personal
jurisdiction takes two forms: (1) “general or all-purpose jurisdiction” or (2) “specific or case-linked
jurisdiction.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011). The
court need not address general jurisdiction here because Plaintiffs only contend that the court has
specific jurisdiction over Defendants. See Pls.’ Opp’n at 5, 12 (asserting that Plaintiffs have
established “specific personal jurisdiction” over WFMI and WFM Group). Specific jurisdiction
is case-specific. “In contrast to general, all-purpose jurisdiction, specific jurisdiction is confined
to adjudication of issues deriving from, or connected with, the very controversy that establishes
jurisdiction.” Goodyear, 564 U.S. at 919 (citation omitted). Stated differently, specific
jurisdiction exists if a claim is related to or arises out of the non-resident defendant’s contacts with
the forum. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984).
8
A plaintiff seeking to establish specific jurisdiction over a non-resident defendant must
make two showings. She must “establish that specific jurisdiction comports with the forum’s
long-arm statute, D.C. Code § 13-423(a), and does not violate due process.” FC Inv. Group LC
v. IFX Markets, Ltd., 529 F.3d 1087, 1094–95 (D.C. Cir. 2008). As pertinent to this case, the
District of Columbia’s long-arm statute provides that specific jurisdiction exists if the claim against
the non-resident defendant arises from the defendant’s:
(1) transacting any business in the District of Columbia;
(2) contracting to supply services in the District of Columbia;
(3) causing tortious injury in the District of Columbia by an act or
omission in the District of Columbia;
(4) causing tortious injury in the District of Columbia by an act or
omission outside the District of Columbia if the defendant regularly
does or solicits business, engages in any other persistent course of
conduct, or derives substantial revenue from goods used or
consumed, or services rendered, in the District of Columbia; [or]
(5) having an interest in, using, or possessing real property in the
District of Columbia[.]
D.C. Code § 13-423(a)(1)–(5). Even if a plaintiff satisfies one of these prongs, due process
supplies a “constitutional check” and “sets the outer boundary” for the court’s jurisdiction.
Crane, 814 F.2d at 762. Whether due process is satisfied depends on weighing “the facts of each
case . . . against notions of fairness, reasonableness and substantial justice.” Shoppers Food
Warehouse v. Moreno, 746 A.2d 320, 329 (D.C. 2000). Thus, the propriety of subjecting a
defendant to a court’s jurisdiction is a case-specific inquiry.
1. The Impact of Bristol-Myers Squibb Co. v. Superior Court of California,
San Francisco County
The court starts the personal jurisdiction inquiry with the Supreme Court’s recent decision
in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 137 S. Ct.
1773 (2017). Defendants assert that application of this case mandates that the court cannot
exercise personal jurisdiction over the claims of Plaintiffs Bowens and Strickland or the claims of
9
absent putative class members outside of the District of Columbia. The court discusses each
contention in turn.
a. Plaintiffs Bowens and Strickland
In Bristol–Myers, “[a] group of plaintiffs—consisting of 86 California residents and 592
residents from 33 other States” brought a mass tort action in California state court arising from
injuries allegedly caused by a drug manufactured by Bristol–Myers Squibb. 137 S. Ct. at 1777–
78. 2 Incorporated in Delaware and headquartered in New York, Bristol–Myers Squibb
challenged the California state court’s exercise of specific jurisdiction over the company as to the
claims of the non-resident plaintiffs, none of whom asserted any injury from the drug in California
or any other connection to the state. Id. at 1777–80, 1782. The Court agreed with Bristol–Myers
Squibb that the California state court’s exercise of personal jurisdiction over the company as to
those claims brought by the non-resident plaintiffs violated the Due Process Clause of the
Fourteenth Amendment. Applying “settled principles regarding specific jurisdiction,” the
Supreme Court explained that the California state court’s exercise of specific jurisdiction as to the
non-residents’ claims was unconstitutional because there was no “connection between the forum
and the [non-residents’] specific claims.” Id. at 1781. For instance, the non-resident plaintiffs
had not shown that they were prescribed or had purchased or had ingested the drug in California.
Id. Nor were any of the non-resident plaintiffs injured by the drug in California. Id. In short,
the Supreme Court reasoned, the non-resident plaintiffs’ claims did not comport with due process
because none involved any activity or occurrence that took place in California. Id. The Court
also rejected the argument that the similarity of the residents’ and non-residents’ claims obviated
2
The court discussed Bristol-Myers at length in its Memorandum Opinion and Order in Vasquez v. Whole Foods
Market, Inc., and incorporates its analysis of that case here. See Vasquez v. Whole Foods Market, Inc., No. 17-cv-
00112, 2018 WL 810232, at *7–*8 (D.D.C. Feb. 9, 2018).
10
the due process infirmity. As the Court explained, “[t]he mere fact that other plaintiffs were
prescribed, obtained, and ingested [the drug] in California—and allegedly sustained the same
injuries as did the nonresidents—does not allow the State to assert specific jurisdiction over the
nonresidents' claims.” Id. Accordingly, the Court held that the non-resident plaintiffs’ claims
could not be heard in California state court.
Applying Bristol-Myers and “settled principles regarding specific jurisdiction” is fatal to
the claims of named plaintiffs Bowens and Strickland. See 137 S. Ct. at 1781. Of Plaintiffs,
Bowens and Strickland are the only ones who fail to allege any activity or occurrence taking place
in the District of Columbia in connection with their individual claims. See 2d Am. Compl. ¶¶ 7,
11, 50–58, 92–99. Bowens is a Maryland resident who has worked only in Whole Foods grocery
stores in Virginia, and Strickland is an Oklahoma resident who has worked only in Whole Foods
grocery stores in Oklahoma. See id. By contrast, Molock, Kuczor, and Pace allege that they
reside, or continuously worked for Whole Foods grocery stores, in the District of Columbia. See
id. ¶¶ 5–6, 10, 32–49, 85–91. And Plaintiffs Fuentes and Milner likewise allege that they worked
for Whole Foods grocery stores in the District, but have also worked in other Whole Foods
locations. See 2d Am. Compl. ¶¶ 8–9, 59–69, 70–84. 3 Thus, unlike the injuries alleged by the
other Plaintiffs, the injuries alleged by Bowens and Strickland do not “arise out of or relate to”
Defendants’ contacts with the forum of the District of Columbia. Moreover, as in Bristol-Myers,
the “mere fact” that the other five Plaintiffs in this action either resided or were employed with
Whole Foods in the District of Columbia—and “allegedly sustained the same injuries” as Bowens
and Strickland—does not confer specific jurisdiction over their claims. Bristol-Myers, 137 S. Ct.
3
The court rejects Defendants’ unsupported assertion that it may exercise specific jurisdiction only as to the specific
time periods that Fuentes and Milner worked for Whole Foods grocery stores within the District of Columbia. See
Defs.’ Mem. at 13.
11
at 1780. Accordingly, because Bowens’s and Strickland’s claims, like those of the non-resident
plaintiffs in Bristol-Myers, arise from conduct outside the forum where they seek to bring suit, this
court cannot exercise specific jurisdiction as to their claims. Id.
Plaintiffs protest that Bristol-Myers has no effect on the exercise of specific jurisdiction
over the claims of Bowens and Strickland because Bristol-Myers’s holding—centered on the
Fourteenth Amendment—should not apply to a federal court’s jurisdictional reach, an analysis
governed by the Due Process Clause of the Fifth Amendment. See Pls.’ Opp’n at 14. True, as
Plaintiffs point out, the Supreme Court in Bristol-Myers left open the question “whether the Fifth
Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal
court.” Bristol-Myers, 137 S. Ct. at 1784 (citing Omni Capital Int’l, Ltd. v. Rudolf Wolff & Co.,
484 U.S. 97, 102 n.5 (1987)). Indeed, the Court has never squarely addressed the issue raised in
Omni Capital as to whether “a federal court could exercise personal jurisdiction, consistent with
the Fifth Amendment, based on an aggregation of the defendant’s contacts with the Nation as a
whole, rather than on its contacts with the State in which the federal court sits.” 484 U.S. 102 n.5.
But Plaintiffs’ argument for limiting Bristol-Myers to state courts “buckles under the
weight of precedent.” Livnat v. Palestinian Auth., 851 F.3d 45, 54–55 (D.C. Cir. 2017). As the
D.C. Circuit recently explained, “both the Supreme Court and this court have applied Fourteenth
Amendment personal-jurisdiction standards in Fifth Amendment cases.” Id. Moreover, courts
that have addressed this issue post-Bristol-Myers have rejected the constitutional distinction that
Plaintiffs make, see Defs.’ Reply to Pls.’ Opp’n, ECF No. 33 [hereinafter Defs.’ Reply], at 4
(collecting cases), particularly where, as here, the federal court sits in diversity and assesses state
law claims, e.g., Fitzhenry-Russell v. Dr. Pepper Snapple Grp., Inc., No. 17-cv-00564, 2017 WL
4224723, at *4 (N.D. Cal. Sept. 22, 2017) (“[F]ederal courts routinely apply the specific
12
jurisdiction analysis to defendants in cases that are before them solely on the basis of diversity.”).
And while Plaintiffs note that concerns of forum shopping are not at play in the Fifth Amendment
context in the same way as in state courts, the personal jurisdiction inquiry is not centered solely
on such concerns. Instead, “[a] vital purpose of personal-jurisdiction standards is to ensure[]
fairness to the defendant,” and “[i]n federal and state courts alike, defendants should face suit only
under fair circumstances.” Livnat, 851 F.3d at 55 (internal quotation marks omitted). Here,
fairness to Defendants counsels against exercising personal jurisdiction over the claims of Bowens
and Strickland, which simply have nothing to do with this forum. Accordingly, the claims of
Bowens and Strickland against Defendants are dismissed for lack of specific personal jurisdiction.
Having concluded that Bristol-Myers requires dismissal of the claims of Plaintiffs Bowens
and Strickland, the court considers whether it has jurisdiction over the putative class members who
are non-forum residents.
b. Putative Class Members Outside of the District of Columbia
Defendants next assert that, as with Bowens and Strickland, Bristol-Myers requires
dismissal of the claims of nonresident putative class members from this action. Plaintiffs
disagree, arguing that Bristol-Myers, a mass tort action, should not extend to class actions like the
instant matter because it “would effectively eviscerate all multi-state class actions and the purpose
of [Fed. R. Civ. P.] 23.” 4 Pls.’ Opp’n at 13. In this instance, the court agrees with Plaintiffs and
concludes that Bristol-Myers does not apply to class actions. In so holding, the court is persuaded
by the analysis of the few courts that have squarely addressed the issue. In concluding that
Bristol-Myers was inapplicable in the class action context, those courts focused their analysis on
4
In her dissent, Justice Sotomayor observed that the majority in Bristol-Myers “does not confront the question whether
its opinion here would also apply to a class action in which a plaintiff injured in the forum State seeks to represent a
nationwide class of plaintiffs, not all of whom were injured there.” Bristol-Myers, 137 S. Ct. at 1789 n.4 (Sotomayor,
J., dissenting).
13
the material distinctions between a class action and a mass tort action. See, e.g., Sanchez v.
Launch Tech. Workforce Sols., LLC, No. 17-cv-1904, 2018 WL 942963, at *1 (N.D. Ga. Feb. 14,
2018); Fitzhenry–Russell, 2017 WL 4224723, at *5; In re Chinese–Manufactured Drywall Prods.
Liability Litig., 2017 WL 5971622, at *12–14 (E.D. La. Nov. 30, 2017). As those cases explain,
in a mass tort action, each plaintiff is a real party in interest to the complaints; by contrast, in a
putative class action, “one or more plaintiffs seek to represent the rest of the similarly situated
plaintiffs, and the ‘named plaintiffs’ are the only plaintiffs actually named in the complaint.”
Fitzhenry-Russell, 2017 WL 4224723, at *5 (citing Fed. R. Civ. P. 23); see Gen. Tel. Co. of the
Sw. v. Falcon, 457 U.S. 147, 155 (1982) (“The class-action device was designed as an exception
to the usual rule that litigation is conducted by and on behalf of the individual named parties only.”)
(internal quotation marks omitted). Additionally, unlike a mass tort action, “for a case to qualify
for class action treatment, it needs to meet the additional due process standards for class
certification under Rule 23—numerosity, commonality, typicality, adequacy of representation,
predominance and superiority.” In re Chinese-Manufactured Drywall, 2017 WL 5971622, at
*14. These additional elements of a class action supply due process safeguards not applicable in
the mass tort context. In light of these key distinctions, and because Defendants have not
presented persuasive authority to the contrary, the court joins the other courts that have concluded
that Bristol-Myers does not require a court to assess personal jurisdiction with regard to all non-
resident putative class members. The court therefore denies Defendants’ motion to dismiss the
complaint as to non-resident putative class members for lack of personal jurisdiction.
2. Long-Arm Jurisdiction over WFMI
The court turns to consider whether it can exercise long-arm jurisdiction over WFMI.
WFMI is a Texas corporation with its principal place of business in Austin, Texas. Defs.’ Mot.,
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Ex. B, ECF No. 30-4 [hereinafter Yost Decl.], ¶ 2. According to a declaration submitted by
Patricia D. Yost, the Global Tax Director for the “administrative arm” of the Whole Foods Market
family of companies, “WFMI is . . . a holding company that owns shares of other operating
companies, which in turn own and operate the individual Whole Foods market stores.” Id. ¶ 4.
Yost attests that WFMI does not own or operate any store in the District of Columbia; nor does it
conduct or transact any business in any state other than Texas. Id. ¶ 6. Yost further states that
WFMI does not operate, manage, or control the operation of any store’s payroll or the Kronos
computer system used to track and manage payroll. Id. ¶ 8. WFMI also does not, according to
Yost, set policies for Whole Foods stores and does not regulate or assure uniformity of policies in
the stores. Id. ¶ 9.
To counter these assertions, Plaintiffs submit that this court has personal jurisdiction over
WFMI for two reasons: first, because Plaintiffs’ claims arise out of WFMI’s operation of Whole
Foods grocery stores in the District of Columbia; and second, because WFMI is the alter ego of
WFM Group. In support of their first theory, Plaintiffs point to three pieces of evidence that they
assert establishes WFMI’s ownership and operation of stores in the District. First, they offer
WFMI’s Form 10-K filing with the Securities and Exchange Commission for the fiscal year ending
September 2016, which states that, “As of September 25, 2016, we operated 456 stores: 436 stores
in 42 U.S. states and the District of Columbia,” and identifies four such stores in the District. Pls.’
Opp’n, Ex. 1, ECF No. 32-2 [hereinafter 10-K filing], at 14 (emphasis added). Second, Plaintiffs
point to a comment made by WFMI CEO John Mackey in a news article referring to Whole Foods
stores as “our” stores, as well as additional statement by Mackey that “we operated . . . 276 stores
. . . with locations in 37 states and the District of Columbia, Canada, and the U.K.” in a 2007 Letter
to Stakeholders. See Washington Post Article; Pls.’ Opp’n, Ex. 2, ECF No. 32-3 (emphasis
15
added). And third, Plaintiffs offer the Complaint and Answer filed in FTC v. Whole Foods
Market, Inc., 07–cv–1021–PLF (D.D.C.), an antitrust enforcement action brought by the Federal
Trade Commission (“FTC”) to enjoin the merger of Whole Foods and another grocery chain,
wherein WFMI admitted in its Answer that “Whole Foods transacts business in the District of
Columbia.” See Pls.’ Opp’n, Ex. 5, ECF No. 32-6; Pls.’ Opp’n, Ex. 6, ECF No. 32-7.
This court already has addressed and rejected a similar request to exercise long-arm
jurisdiction over WFMI in a related case, and incorporates that analysis here. See Vasquez, 2018
WL 810232, at *7–8. There too, relying on the same evidence, the plaintiffs in Vasquez asserted
that personal jurisdiction was warranted over WFMI because it purportedly owned and operated
Whole Foods grocery stores in the District. Id.5 As was true in Vasquez, Plaintiffs in this case
have not offered a sufficient factual basis upon which this court can exercise personal jurisdiction
over WFMI.
Additionally, Plaintiffs’ assertion that the court can exercise jurisdiction over WFMI
because it is the “alter ego” of WFM Group fails for the same reason that argument failed in
Vasquez: Plaintiffs have not alleged sufficient facts to make out a plausible claim of alter ego
liability. See id. *7 n.4. The only difference between this case and Vasquez is that Plaintiffs here
offer some argument to support their alter-ego assertion, whereas in Vasquez the plaintiffs buried
that contention in a footnote. Compare Pls.’ Opp’n at 9–12, with Vasquez, 2018 WL 810232, at
*7 n.4. That, of course, is a distinction without a difference. For the same reasons stated in
Vasquez, Plaintiffs’ contention that WFMI is an alter ego of WFM Group is wholly insufficient on
the present complaint. See Khatib v. Alliance Bankshares Corp., 846 F. Supp. 2d 18, 31–33
5
Indeed, the only new piece of evidence offered by Plaintiffs to substantiate its argument that WFMI owns and
operates stores in the District are the public statements of CEO John Mackey. But Mackey’s ambiguous references
to “we” and “ours” when discussing the Whole Foods family of companies—like the “we” in WFMI’s 10-K filings—
does not advance Plaintiffs’ argument.
16
(D.D.C. 2012).
To salvage their jurisdictional claims against WFMI, Plaintiffs ask for the opportunity to
conduct jurisdictional discovery “in order to investigate the relationship between [WFMI] and
[WFM Group].” Pls.’ Opp’n at 11. Plaintiffs contend that such discovery would allow them “to
determine [WFMI’s] contacts with the District,” to “establish the ‘unity of interest’ between
[WFMI] and [WFM Group] for purposes of the alter-ego analysis,” and “to determine the actual
ownership of the Whole Foods stores” in the District. Id. at 12. The court finds that
jurisdictional discovery as to WFMI is unwarranted because Plaintiffs have not demonstrated “that
[they] can supplement [their] jurisdictional allegations through discovery.” GTE New Media
Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1351 (D.C. Cir. 2000). “Although discovery
should be granted freely, it can be denied when the plaintiff has failed to present facts that could
establish jurisdiction.” App Dynamic ehf v. Vignisson, 87 F. Supp. 3d 322, 329 (D.D.C. 2015)
(citation omitted). In other words, “‘[m]ere conjecture or speculation’ that discovery could lead
to personal jurisdiction is insufficient for a court to permit it.” Id. (quoting FC Inv. Grp. v. IFX
Markets, Ltd., 529 F.3d 1087, 1094 (D.C. Cir. 2008)). Here, beyond general statements that
merely confirm that WFMI and WFM Group are part of the same corporate family, see Pl.’s Opp’n
at 11–12, Plaintiffs have not presented facts that could establish that WFMI is in fact anything but
a holding company that has no contacts with the District. “Where there is no showing of how
jurisdictional discovery would help plaintiff discover anything new, ‘it [is] inappropriate to subject
[defendants] to the burden and expense of discovery.’” Id. (quoting Atlantigas Corp. v.
Nisource, 290 F. Supp. 2d 34, 53 (D.D.C. 2003)). Plaintiffs’ unsupported request for
jurisdictional discovery is therefore denied.
* * *
17
Before moving on, the court recaps the results of the personal jurisdiction inquiry. The
claims of Plaintiffs Bowens and Strickland are dismissed for lack of personal jurisdiction.
Furthermore, Plaintiffs did not meet their burden of showing pertinent facts to make out a prima
facie case of personal jurisdiction against WFMI; thus, all claims against WFMI are dismissed
without prejudice for lack of personal jurisdiction. And, finally, Plaintiffs failed to show that
jurisdictional discovery as to WFMI is warranted.
The court turns now to consider whether Plaintiffs have standing to bring their claims
against WFM Group either in an individual or representative capacity.
B. Rule 12(b)(1) Subject Matter Jurisdiction
1. Standing of Named Plaintiffs
According to Defendants, Plaintiffs lack Article III standing to pursue the claims in their
Second Amended Complaint because the allegations contained therein are simply too conjectural
to establish that Plaintiffs were entitled to any Gainsharing bonuses and, therefore, suffered any
injury. Defs.’ Mem. at 21. In their view, to accept Plaintiffs’ claim that they were entitled to
Gainsharing bonuses requires the court to apply “impermissible inferences” and speculation. See
id. The court disagrees: Plaintiffs have plausibly alleged that they earned Gainsharing bonuses
and were denied them because of Defendants’ manipulation of the Gainsharing program. E.g.,
2d Am. Compl. ¶ 24.
“[E]ach element [of Article III standing] must be supported in the same way as any other
matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence
required at the successive stages of the litigation.” Lujan, 504 U.S. at 561. At the pleading stage,
Article III requires no more than “general factual allegations of injury resulting from the
defendant’s conduct” because on a motion to dismiss, the court “presume[s] that general
18
allegations embrace those specific facts that are necessary to support the claim.” Id. (internal
citation omitted). Here, Plaintiffs have satisfied this standard by alleging that: (1) once employed
at Whole Foods and vested in the Gainsharing program, each of them “worked hard to increase
the productivity of [his or her] department in order to maximize its surplus,” e.g., 2d Am. Compl.
¶ 39; (2) on a monthly basis, at least, Whole Foods posted or circulated Gainsharing reports that
listed employees’ guaranteed wages, e.g., id. ¶¶ 38, 55, 67; (3) corporate officials admitted to the
practice of shifting labor costs at some of their stores that resulted in the non-payment of earned
bonuses, e.g., id. ¶¶ 40, 56; (4) the practice of shifting labor costs was a nationwide practice, e.g.,
id. ¶¶ 29–31; (5) store managers at some of their stores were terminated for manipulation of the
Gainsharing program, e.g., id. ¶¶ 41, 57, 66; and (6) Whole Foods offered to compensate some
Plaintiffs to “buy peace,” e.g., id. ¶¶ 42, 58. These allegations, viewed in the light most favorable
to Plaintiffs, give rise to the plausible inference that Plaintiffs earned Gainsharing bonuses, but did
not receive them because of Defendants’ misconduct and thus suffered an injury-in-fact to support
Article III standing. Cf. Carpenters Indus. Council v. Zinke, 854 F.3d 1, 5 (D.C. Cir. 2017) (“A
dollar of economic harm is still an injury-in-fact for standing purposes.”).
2. Standing on Behalf of Putative Class Members
The court also rejects Defendants’ argument that Plaintiffs cannot pursue claims on behalf
of putative class members from states in which Plaintiffs do not reside or suffered no injury.
Ordinarily, “[o]utside the class-action context, ‘a plaintiff must demonstrate standing for each
claim he seeks to press.’” In re McCormick & Co., Inc., 217 F. Supp. 3d 124, 143 (D.D.C. 2016)
(quoting DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006)). For class actions, however,
“the Supreme Court’s cases show ‘tension’ about ‘whether a named plaintiff’s ability to represent
unnamed class members with somewhat different claims is appropriately addressed under the
19
rubric of standing or adequacy.” Id. (internal alterations omitted) (quoting Gratz v. Bollinger, 539
U.S. 244, 263 n.15 (2003)). In light of this “tension,” courts—including this District Court—are
divided in their treatment of class actions in which named plaintiffs seek to represent classes
asserting state-law claims in states where the named plaintiffs do not reside or were not injured.
See id. Some courts require that named plaintiffs establish standing for every claim raised on
behalf of the class and therefore dismiss claims arising under the states’ laws where the named
plaintiffs do not reside or were not injured before reaching class certification. E.g., In re G-Fees
Antitrust Litig., 584 F.Supp.2d 26, 36 (D.D.C. 2008) (“[A] case or controversy requires a specific,
identified plaintiff who can establish a personal injury under the claim asserted.”). By contrast,
other courts permit related claims under other states’ laws to proceed to Rule 23 class certification,
provided that there is a named plaintiff with standing to raise one claim. E.g., McCormick, 217
F. Supp. 3d at 143.
The court joins the latter category of courts. “It is more logical to consider named
plaintiffs’ ability to raise other state-law claims as a question of commonality, typicality, and
adequacy under Rule 23, rather than a question of standing.” Id. at 144; see 1 Newberg on Class
Actions § 2:6 (5th ed. 2017) (“[W]hen a class plaintiff shows individual standing, the court should
proceed to Rule 23 criteria to determine whether, and to what extent, the plaintiff may serve in a
representative capacity on behalf of the class.”). This is because, as the court in McCormick
explained, “standing analysis cannot address whether one plaintiff should be able to bring claims
on behalf of others” in the class action context. 217 F. Supp. 3d at 144. In other words,
Defendants’ focus on standing to assert that Plaintiffs cannot represent putative class members
from other states is misplaced: the standing inquiry pertains to whether a court has been presented
with a real “case or controversy,” and does not require analysis of residency or the location of an
20
injury. Instead, such considerations are appropriately resolved at the class certification stage,
which is “designed precisely to address concerns about the relationship between the class
representative and the class.” 1 Newberg on Class Actions § 2:6 (5th ed. 2017). In short,
“standing is the wrong conceptual framework for [Defendants’] purpose.” Dragoslavic v. Ace
Hardware Corp., 274 F. Supp. 3d 578, 586 (E.D. Tex. 2017). The court therefore denies
Defendants’ motion to dismiss the claims of putative class members. 6
C. Sufficiency of Pleading 7
Having resolved the jurisdictional matters raised by Defendants in their motion, the court
moves to the sufficiency of Plaintiffs’ Second Amended Complaint, addressing each count in turn.
1. Breach of Contract and Breach of the Duty of Good Faith and Fair Dealing
(Count I)
Count I of Plaintiffs’ Second Amended Complaint advances related claims of breach of
contract and breach of the implied duty of good faith and fair dealing arising from the non-payment
of bonuses allegedly owed under the Gainsharing program. “To prevail on a claim of breach of
contract, a party must establish (1) a valid contract between the parties; (2) an obligation or duty
arising out of the contract; (3) a breach of that duty; and (4) damages caused by breach.” Francis
v. Rehman, 110 A.3d 615, 620 (D.C. 2015); see also Daisley v. Riggs Bank, N.A., 372 F. Supp. 2d
61, 70 (D.D.C. 2005) (“Notwithstanding an at-will employment agreement, an employee and
employer may still contract regarding other terms, such as bonuses or stock options.”).
6
The court defers ruling on Defendants’ request to limit the scope of Plaintiff’s Complaint to the 27 states where it
alleges WFM Group operates until the class certification stage. See Defs.’ Mem. at 25 n.10.
7
In this round of briefing, the parties do not discuss the substantive law of the jurisdictions in which Plaintiffs’
common law claims arise. Thus, as do the parties, the court limits its analysis of those claims under the law of the
District of Columbia, reserving analysis under the laws of other jurisdictions for a later stage. In future briefing, to
the extent the parties ask the court to decide matters on the basis of several states’ laws, the parties are to squarely
address whether there are material variations in state law.
21
“However, to state a claim for breach of contract so as to survive a Rule 12(b)(6) motion to dismiss,
it is enough for the plaintiff to describe the terms of the alleged contract and the nature of the
defendant’s breach.” Francis, 110 A.3d at 620 (emphasis added).
At this stage, Plaintiffs have alleged all they need to survive Defendants’ motion: a
description of “the terms of the alleged contract and the nature of the defendant’s breach.” Id.;
see also Daisley, 372 F. Supp. 2d at 70–71 (denying motion to dismiss plaintiffs’ breach-of-
contract claim, where plaintiff plausibly alleged that he and his employer orally modified an offer
letter to entitle plaintiff to an annual bonus of up to 100% of his base salary, an annual salary
increase, and an initial allocation of stock options “if defined performance objectives were met”;
that he satisfied those objectives; and that his employer breached the oral agreement). Plaintiffs
allege that Defendants entered into an oral contract with Plaintiffs by promising to provide each
Plaintiff with a compensation package that included automatic bonus payments under the
Gainsharing program in addition to a base salary and benefits, in consideration for Plaintiffs’ labor.
2d Am. Compl. ¶ 108. Plaintiffs assert that they performed their end of the bargain by working
hard to create a surplus in each of their departments, but that Defendants breached the agreement
by “cooking the books” to undermine the Gainsharing program and deprive Plaintiffs of their
earned bonuses. Id. ¶¶ 109–10; Pls.’ Opp’n at 22. These allegations adequately make out a
breach-of-contract claim at the motion-to-dismiss stage.
Defendants urge the court to conclude otherwise, asserting that, as alleged, Plaintiffs’
breach-of-contract claim fails because Plaintiffs have not shown that they reached an agreement
about the material terms of the Gainsharing program at the time they entered into the oral contracts
of employment. Specifically, Defendants point out that Plaintiffs did not learn about the specifics
of the Gainsharing program, including the predetermined goals their departments needed to
22
achieve to create a surplus, until after they began working for Whole Foods stores, thus belying
Plaintiffs’ claim that the parties orally agreed to all material details. In support of this argument,
Defendants rely on Steven R. Perles, P.C. v. Kagy, 473 F.3d 1244 (D.C. Cir. 2007), in which the
D.C. Circuit reversed the district court’s finding following a bench trial that a junior attorney and
her employer entered into an enforceable oral contract entitling her to one-third share of the fee
awarded to the firm in each case. Id. at 1246. The D.C. Circuit held that the junior attorney
could not establish the existence of an enforceable oral contract because the evidence established
that she and her employer never reached any agreement with regard to two “material terms”:
(1) how long the junior attorney needed to work on the case to obtain her share of the fee, and
(2) the kind of work she would have to do. Id. at 1253. Absent agreement by both parties
regarding these material terms, the court held, no enforceable contract could exist. Id. at 1252.
But Kagy’s reasoning—centered on resolving whether the junior attorney could prevail on
her breach-of-contract claim—is not controlling at this stage. As Plaintiffs point out, the analysis
employed in Kagy does not govern whether Plaintiffs’ breach-of-contract claim survives a motion
to dismiss; rather, whether a valid, enforceable oral contract was actually formed between the
parties is an inquiry to be considered at summary judgment. See Francis, 110 A.3d at 625 (finding
error in trial court’s dismissal of breach-of-contract claim at motion-to-dismiss stage and
concluding that “before the [trial] court could find that no valid contract was formed between the
parties, it was obligated to treat [defendants’] motion as a motion for summary judgment and to
afford [plaintiffs] an opportunity to come forward with affidavits, documentation, or other
23
evidence to establish precisely what work appellants negotiated to perform and performed”
(internal quotation marks and alterations omitted)). Thus, Kagy does not help Defendants.
Likewise, Defendants’ citation to Barros v. GEICO, Inc., is inapposite. There, the court
dismissed a plaintiff’s conclusory breach-of-contract claim against an insurer because the
complaint was “devoid of any facts indicating that a contract between [the insurer and plaintiff]
set[] forth a duty that [the insured] ha[d] failed to perform.” 79 F. Supp. 3d 32, 36 (D.D.C. 2015).
In Defendants’ view, the allegations in this case are, like those in Barros, too vague and
unsubstantiated to identify a duty that Defendants were required to—but failed to—perform.
Although Barros was decided on a motion to dismiss, its similarity to the instant case ends there.
The plaintiff in Barros did not allege any facts identifying a duty that the insurer failed to perform,
and even “concede[d] that [the insurer] ha[d] no duty to pay a claim” under the contract absent
circumstances not present in the case. Id. at 38. Here, by contrast, Plaintiffs’ allegations are not
“legal conclusion[s] couched as factual allegation[s]” that are not entitled to an assumption of truth
at this stage. Mountain States Legal Found. v. Bush, 306 F.3d 1132, 1137 (D.C. Cir. 2002).
Rather, Plaintiffs have plausibly alleged that Defendants owed them a duty of payment of
Gainsharing bonuses upon the creation of a surplus in their departments and that Defendants
reneged on their promises to pay. Such allegations are “an appropriate formulation of a claim for
breach of contract,” and the court accordingly denies Defendants’ motion to dismiss the breach-
of-contract claim. See Ames v. HSBC Bank USA, N.A., No. 06-2039, 2007 WL 1404443, at *3
(D.D.C. May 11, 2007) (denying motion to dismiss claim for breach of contract where plaintiff
alleged that she was offered various incentives in consideration for her acceptance of a vice
24
president position and relocation to the District of Columbia and that her employer failed to tender
compensation once she performed).
Having concluded that Plaintiffs have stated a claim for breach of contract, the court also
denies Defendants’ motion to dismiss Plaintiffs’ claim for breach of the implied covenant of good
faith and fair dealing. To state such a claim, “a plaintiff must allege either bad faith or conduct
that is arbitrary and capricious.” Abdelrhman v. Ackerman, 76 A.3d 883, 891–92 (D.C. 2013).
“If a party ‘evades the spirit of the contract, willfully renders imperfect performance, or interferes
with performance by the other party, he or she may be liable for breach of the implied covenant of
good faith and fair dealing.’” Sundberg v. TTR Realty, LLC, 109 A.3d 1123, 1133 (D.C. 2015)
(quoting Paul v. Howard Univ., 754 A.2d 297, 310 (D.C. 2000)). Here, Plaintiffs have
sufficiently alleged that Defendants “evade[d] the spirit” and “willfully render[ed] imperfect
performance” of the oral contract for automatic payment of Gainsharing bonuses by engaging in a
nationwide manipulation of the program. See id. Accordingly, Plaintiffs’ breach of the duty of
good faith and fair dealing claim survives Defendants’ motion.
2. Unjust Enrichment (Count II)
Count II of the Second Amended Complaint asserts a claim of unjust enrichment. “Unjust
enrichment occurs when: (1) the plaintiff conferred a benefit on the defendant; (2) the defendant
retains the benefit; and (3) under the circumstances, the defendant’s retention of the benefit is
unjust.” Smith v. Rubicon Advisors, LLC, 254 F. Supp. 3d 245, 249 (D.D.C. 2017). For the same
reasons the court found Plaintiffs’ contractual claims sufficiently pleaded, the court finds that
Plaintiffs have sufficiently alleged a claim for unjust enrichment. After conferring a benefit on
Defendants—namely, the surplus created by their labor in their respective departments—
Defendants unjustly and wrongfully retained the surplus for their own benefit in contravention of
25
the Gainsharing program. That allegation is sufficient to state a claim for unjust enrichment.
Defendants’ arguments to the contrary are unpersuasive and controverted by Plaintiffs’ allegations,
and the court therefore denies Defendants’ motion to dismiss Plaintiffs’ unjust enrichment claim.
Defendants alternatively request dismissal of Plaintiffs’ claim as duplicative of Plaintiffs’
breach-of-contract claim. It is true that, “[i]n general, a plaintiff cannot maintain an unjust
enrichment claim concerning an aspect of the parties’ relationship that was governed by a
contract.” Rubicon Advisors, LLC, 254 F. Supp. 3d at 249. However, at this stage, Plaintiffs
may pursue an unjust enrichment claim as an alternative theory of liability, even if they ultimately
cannot recover under both claims. See id. (“A party may state as many separate claims or defenses
it has, regardless of consistency.” (quoting Fed. R. Civ. P. 8(d)(3))). The court therefore declines
to dismiss Plaintiffs’ alternative theory of unjust enrichment.
3. State Wage Law Claims (Counts III through X)
Counts III, IV, VI, VII, VII, IX, and X of Plaintiffs’ Second Amended Complaint allege
that Defendants violated state wage laws—specifically, the District of Columbia’s Wage Payment
and Collection Law (“DCWPCL”), D.C. Code §§ 32-1301 et seq.; Maryland’s Wage Payment and
Collection Law (“MWPCL”), Md. Code Lab. & Empl. §§ 3-501 et seq.; and the Oklahoma
Protection of Labor Act, Okla. Stat. tit. 40, §§ 165.1 et seq.—when they failed to pay certain
Plaintiffs the bonuses they earned under the Gainsharing program in the manner required by the
statutes, both during their employment and after their employment ended.
At the outset, the court grants Defendants’ Motion to Dismiss as to Counts IX and X.
These claims arise under Oklahoma Protection of Labor Act and pertain to allegations of Plaintiff
Strickland, on behalf of herself and all others similarly situated in the Oklahoma subclass. See 2d
Am. Compl. ¶¶ 151–62. As discussed above, supra Part IV.A, the court cannot exercise personal
26
jurisdiction over the claims of Plaintiff Strickland. The court therefore must dismiss Counts IX
and X without prejudice.
As to the remaining claims arising under the DCWPCL and MWPCL, Defendants contend
that these claims should be dismissed because Plaintiffs have not shown that the team-based
Gainsharing bonuses constitute “wages” within the meaning of these statutes, and therefore fail to
state a claim. Defs.’ Mem. at 5, 34. According to Defendants, because the Gainsharing bonuses
are not based on an individual employee’s performance, any such bonuses cannot constitute a
covered “wage.” The court disagrees.
The DCWPCL establishes requirements “regarding how and when employers must pay
their employees’ wages [and] it establishes a framework for recovery against an employer who
violates its provisions.” Driscoll v. George Wash. Univ., 938 F. Supp. 2d 19, 22–23 (D.D.C.
2013). The MWPCL likewise sets out the terms by which an employer must pay wages to its
employees and enables an employee to bring an action against an employer who violates those
terms. See generally Md. Code Lab. & Empl. §§ 3-501 et seq. To state a claim under either
statute, Plaintiffs must show that the monies claimed satisfy the statutory definition of a “wage.”
Under the DCWPCL, “wages” mean “all monetary compensation after lawful deductions, owed
by an employer for labor or services rendered, whether the amount is determined on a time, task,
piece, commission, or other basis of calculation.” D.C. Code § 32-1301(3). Under the MWPCL,
a “wage” means “all compensation that is due to an employee for employment.” Md. Code Lab.
& Empl. § 3-501(c)(1). As relevant here, both statutes define “wage” to include a “bonus.” See
D.C. Code § 32-1301(3)(A); Md. Code. Lab. & Empl. § 3-501(c)(2)(i).
In support of their argument that the Gainsharing bonuses are not “wages” within the
meaning of these statutes, Defendants cite to two cases: Dorsey v. Jacobson Holman, PLLC, 756
27
F. Supp. 2d 30 (D.D.C. 2010), and Skripchenko v. VIRxSYS Corp., No. 13-0004, 2014 WL
4826788 (D. Md. Sept. 26, 2014). Defendants’ reliance on these cases, however, is unavailing.
In Dorsey, the plaintiff sought recovery under the DCWPCL for her employer’s failure to pay a
year-end bonus. 756 F. Supp. 2d at 36–37. Her employer, however, argued that because her
yearly discretionary bonus was not guaranteed compensation, it was not a “wage.” Id. In
granting summary judgment in favor of her employer, the court observed that the plaintiff failed
to “identify the criteria for bonuses, whether there was any written document of the policy, who
decided bonus amounts, or other important aspects of the policy.” Id. at 36. In light of the
statutory definition of a “wage,” D.C. Code § 32-1301(3), the court concluded that the plaintiff’s
discretionary year-end bonus could not constitute a wage because it was not “owed” but rather
“given only by leave of the employer.” Id. (emphasis added).
Quite unlike the year-end bonus in Dorsey, which was awarded to employees only “by
leave of the employer,” 756 F. Supp. 2d at 36, Plaintiffs in this case have sufficiently alleged that
payment of a Gainsharing bonus was not subject to any employer discretion, but rather automatic
and mandatory upon satisfaction of the condition that the department in which Plaintiffs were
employed obtained a surplus. 2d Am. Compl. ¶ 15 (alleging that the “Gainsharing program
distributes automatic (non-discretionary) bonuses” to qualifying employees); cf. Rothberg v. Xerox
Corp., No. 12-617, 2016 WL 10953882, at *15–19 (D.D.C. Feb. 3, 2016) (citing Dorsey and
granting summary judgment in favor of employer on plaintiff’s claim that employer violated
DCWPCL by failing to pay incentive commissions where such payment was “subject to a
significant degree of management discretion” and plaintiff “did not satisfy the condition to be
entitled to the commission”). That critical distinction makes Dorsey inapplicable.
28
Defendants’ reliance on Skripchenko is similarly misplaced. In that case, the district court
denied summary judgment to the plaintiff-employees on their MWPCL claim for unpaid “retention
bonuses” because there was a genuine issue of fact as to whether the employees were entitled to
the bonus such that it constituted a “wage” under the MWPCL. 2014 WL 4826788, at *5–6.
Reasoning that a “bonus” is only a “wage” if it was “promised as a term of employment as
compensation for the employees’ services and [was] not dependent on conditions other than the
employees’ efforts,” the court declined to grant summary judgment to the employees in light of an
affidavit from the employer asserting that such retention bonuses were “contingent upon the
financial performance of the company.” Id. at *3, *6 (citing Medex v. McCabe, 811 A.3d 297,
302–03 (Md. 2002)). But this case is not like Skripchenko. As alleged by Plaintiffs, the
Gainsharing program and bonuses were presented as part and parcel of the employee compensation
package at Whole Foods grocery stores and, critically, Gainsharing bonuses were not contingent
on the discretion of the employer, but on the satisfaction of conditions under the program.
Skripchenko therefore is distinguishable from the facts of this case.
In any event, Skripchenko cannot bear the weight Defendants place upon it. Defendants
assert that Skripchenko compels the conclusion that “bonuses” constitute “wages” under the
MWPCL only if such bonuses are “renumeration for individual efforts and achievements solely
within an individual’s control.” Defs.’ Reply at 18. But Defendants neglect to cite relevant
Maryland Court of Appeals cases interpreting Section 3-505 of the MWPCL to apply “when wages
have been promised as part of the compensation for the employment arrangement and all
conditions agreed to in advance for earning those wages have been satisfied.” Catalyst Health
Sols., Inc. v. Magill, 995 A.2d 960, 969 (Md. 2010); see also Whiting-Turner Contracting Co. v.
Fitzpatrick, 783 A.2d 667, 672–73 (Md. 2001) (“Once a bonus . . . has been promised as a part of
29
the compensation for service, the employee would be entitled to its enforcement as wages” under
the MWPCL). In other words, under the MWPCL, the relevant inquiry is not—as Defendants
suggest—whether the bonus to be awarded is attributable solely to the individual efforts of an
employee, but rather whether the bonus is “owed,” or has been promised, to the employee subject
to certain pre-conditions that must be fulfilled.
In sum, the court concludes that Plaintiffs have, at this stage, sufficiently shown that the
Gainsharing bonuses are “wages” within the meaning of the DCWPCL and MWPCL.
Defendants’ Motion as to Counts III, IV, VI, VII, and VIII is therefore denied. 8
4. Fraud (Count XI)
Count XI of the Second Amended Complaint asserts a fraud claim based on false
representations Defendants made to Plaintiffs, during their employment interviews and throughout
their employment, that Plaintiffs would be paid mandatory Gainsharing bonuses while employed
at Whole Foods stores. 2d Am. Compl. ¶ 164. Plaintiffs allege that Defendants knew that these
representations were false, in light of Defendants’ nationwide practice of labor cost shifting, and
further that Defendants made these misrepresentations to fraudulently induce Plaintiffs to accept
employment and continue working with Defendants. Id. ¶¶ 164–66. Plaintiffs aver that they
relied on these misrepresentations and consequently turned down other employment opportunities,
accepted employment with Defendants, and continued to work for Defendants. Id. ¶ 167.
8
Count V of Plaintiffs’ Second Amended Complaint, brought pursuant to the record-keeping provision of the D.C.
Minimum Wage Revision Act, D.C. Code § 32-1008, likewise survives Defendants’ Motion to Dismiss. Even
assuming that Plaintiffs can bring a private cause of action pursuant to this provision, any recovery for Defendants’
falsification of Gainsharing program records would be duplicative of any recovery available under the DCWPCL.
The court therefore declines to engage in an unnecessary analysis of whether the Act provides a private cause of action
at this juncture. In any event, proof of a violation of the Act’s record-keeping requirement potentially will “lighten”
Plaintiffs’ burden to prove the amount of wages owed to them as a result of Defendants’ purported violations of the
DCWPCL. E.g., Guevara v. Ischia, Inc., 47 F. Supp. 3d 23, 28 (D.D.C. 2014) (assessing impact of employer’s
failure to maintain records under D.C. Code § 32-1008 and the Fair Labor Standards Act, 29 U.S.C. § 211(c), on
employee’s burden to prove damages); Ventura v. Bebo Foods, Inc., 738 F. Supp. 2d 1, 6–7 (D.D.C. 2010) (same).
30
Defendants do not attack the individual elements of Plaintiffs’ fraud claim but instead seek
to dismiss Plaintiffs’ fraud claim as improperly duplicative of Plaintiffs’ breach-of-contract claim,
asserting that Plaintiffs have merely repackaged the allegations sustaining their contract claim as
fraud allegations. To that end, Defendants note that “[i]n the field of fraud . . . there is a general
reluctance to allow a claim of fraud to proceed when the fraud contemplated by the plaintiff does
not seem to be extraneous to the contract, but rather on the performance of the contract itself.”
Regency Commc’ns, Inc. v. Cleartel Commc’ns Inc., 160 F. Supp. 2d 36, 41 (D.D.C. 2001); see
Plesha v. Ferguson, 725 F. Supp. 2d 106, 113 (D.D.C. 2010) (“District of Columbia law requires
that the factual basis for a fraud claim be separate from any breach-of-contract claim that may be
asserted.”). In other words, in Defendants’ view, because Plaintiffs’ fraud claim arises out of the
same representations about the Gainsharing program that animate their breach-of-contract claim,
those representations cannot provide the basis for an actionable tort.
In the District of Columbia, conduct that occurs during the course of a contract dispute may
support a separate fraud claim “when there are facts separable from the terms of the contract” and
“when there is a duty independent of that arising out of the contract itself, so that an action for
breach of contract would reach none of the damages suffered by the tort.” Choharis v. State Farm
Fire & Cas. Co., 961 A.2d 1080, 1089 (D.C. 2008). Thus, to maintain a fraud claim, “the injury
to the plaintiff must be an independent injury over and above the mere disappointment of plaintiff’s
hope to receive his contracted-for benefit.” Id.
The court agrees in part with Defendants that Plaintiffs have impermissibly repurposed
some—but not all—allegations that are duplicative of their breach-of-contract claim.
Specifically, Plaintiffs’ allegations pertaining to Defendants’ misrepresentations regarding
automatic payment under the Gainsharing program throughout their employment merely reiterate
31
Plaintiffs’ disappointment in not receiving the benefits bargained for in their oral contract with
Defendants. Because the alleged withholding of such promised bonuses is “the specific behavior
the contract required” of Defendants, such allegations cannot be considered “extraneous to the
contract.” Regency Commc’ns, Inc., 160 F. Supp. 2d at 41–42. Accordingly, to the extent that
Plaintiffs seek to premise their fraud claim on Defendants’ violations of the terms and conditions
of the oral contract the parties entered into for automatic payments under the Gainsharing program,
those allegations are duplicative of the breach-of-contract claim and cannot provide the basis for
an independent tort. See Jacobson v. Hofgard, 168 F. Supp. 3d 187, 199 (D.D.C. 2016) (rejecting
the plaintiffs’ attempt to rely on statements arising from contract negotiations to support a fraud
claim “[b]ecause those issues directly involve the terms and conditions of the [contract]”).
The remaining allegations supporting Plaintiffs’ fraud claims, however, are sufficient to
state a claim because they are “based on the misrepresentations that [Plaintiffs] claim [D]efendants
made with knowledge of their falsity and with the specific purpose of misleading [Plaintiffs] into
taking the job.” Dooley v. Metro. Jewish Health Sys., No. 02-4640, 2003 WL 22171876, at *10
(E.D.N.Y. July 30, 2003). These misrepresentations preceded the formation of the oral contract
and, as Plaintiffs allege, induced them to accept employment with Defendants. “Because of these
fraudulent misrepresentations and omissions, Plaintiffs did not face mere contractual
disappointment—they entered into a contract . . . that they would not have otherwise.” Jacobson,
168 F. Supp. 3d at 200. The injuries arising from the alleged fraud in the inducement are thus
sufficiently independent from the injuries stemming from Defendants’ alleged failure to pay
Gainsharing bonuses as promised in the oral contract. See id. Accordingly, the court denies
Defendants’ motion to dismiss Count XI of the Second Amended Complaint. 9
9
Because the court concludes that Plaintiffs have stated a claim for fraud in the inducement, it need not address
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V. CONCLUSION AND ORDER
For the foregoing reasons, Defendants’ Motion to Dismiss Plaintiffs’ Second Amended
Class Action Complaint is granted in part and denied in part, as follows:
1. All claims of Plaintiffs Bowens and Strickland are dismissed without prejudice for
lack of personal jurisdiction.
2. All claims against WFMI are dismissed without prejudice for lack of personal
jurisdiction.
3. Counts IX and X are dismissed without prejudice.
4. Counts I, II, III, IV, V, VI, VII, VIII, and XI may proceed against Defendant WFM
Group.
Dated: March 15, 2018 Amit P. Mehta
United States District Judge
Plaintiffs’ alternative argument that the punitive damages they seek are “special damages” that state a claim for fraud.
See Pls.’ Opp’n at 38.
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Molock v. Whole Foods Market, Inc.
Combined Opinion