Aflalo v. Cantor Fitzgerald, L.P.

Citation: 298 F. Supp. 3d 688Docket: 16–CV–9380 (VSB)

Court: District Court, S.D. Illinois; March 30, 2018; Federal District Court

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Plaintiff Karen Aflalo has filed a lawsuit against Defendants Cantor Fitzgerald, L.P., Cantor Fitzgerald Securities, Inc., BGC Partners, Inc., GFInet, Inc., and GFI Group, Inc., alleging retaliation for her internal complaints regarding the misclassification of employees as exempt from overtime, in violation of the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). The court, presided over by Judge Vernon S. Broderick, has granted Defendants' motion to dismiss Aflalo's FLSA claim, determining she did not engage in "protected activity" necessary to establish a prima facie case. Consequently, the court declined to exercise supplemental jurisdiction over her NYLL claim, leading to its dismissal without prejudice, allowing Aflalo to refile in state court.

Aflalo's employment history began at GFI in March 2002, and she continued until February 2015, when she transitioned to BGC or Cantor Fitzgerald following an acquisition. In her role, she was a senior human resources employee responsible for various HR functions and worked closely with senior HR personnel at Cantor Fitzgerald. Additionally, on July 6, 2015, a class action lawsuit (Puente Action) was filed against Cantor Fitzgerald, alleging systemic misclassification of employees as exempt from overtime and related violations of FLSA and NYLL, including coercion to waive overtime rights and inadequate record-keeping.

Plaintiff investigated employee classifications for overtime at GFI and Cantor Fitzgerald, focusing on whether employees were classified as exempt or non-exempt. Initially, Plaintiff informed Pennay that GFI's helpdesk employees had been misclassified as exempt but were corrected to non-exempt following an FLSA audit with Epstein Becker Green. While working with Aiken, Plaintiff began examining Cantor Fitzgerald's classifications in the Operations/Accounting department and identified misclassifications in the Accounts Payable, Accounts Receivable, and Junior Accountant departments. She raised these issues with Aiken, who was dismissive and indicated that changes were unlikely. Plaintiff proposed solutions based on her experience with GFI's classifications and mentioned her collaboration with GFI's legal department to hire FLSA experts for audits. Pennay acknowledged Plaintiff's expertise and indicated reliance on her to help classify employees correctly, stating that Cantor Fitzgerald's CEO had tasked her with resolving the classification issues urgently.

Despite these efforts, Cantor Fitzgerald resisted implementing changes. In October 2015, Aiken discussed reclassifying a Junior GFI Accountant from non-exempt to exempt due to complaints from the Finance Manager about overtime. Plaintiff advised Aiken that the employee should remain classified as non-exempt and recommended he consult Pennay and Dreste before proceeding.

Aiken expressed confidence that management would agree to reclassify an employee as exempt. Subsequently, Plaintiff raised concerns to Pennay about employee classification but received no follow-up. In February 2016, Plaintiff was instructed to terminate two GFI Operations employees, Sujit Chakravarty and Kevin Mullen, citing a "reduction in force" rather than overtime issues, despite the managers' surprise at their overtime eligibility. Plaintiff clarified that similarly situated employees at GFI were entitled to overtime, yet both employees were terminated, and Cantor Fitzgerald began interviewing replacements immediately. Alarmed, Plaintiff discussed her concerns with Aiken, who indicated that such practices were customary at Cantor. Despite repeatedly voicing her concerns about Cantor Fitzgerald's classification system to supervisors, Aiken opted not to address these issues. Plaintiff alleges that her opposition to the classification system led to retaliation and her eventual termination. Notably, she did not receive a promised 2015 bonus, and on March 17, 2016, she was informed by Dreste and Pennay that her position was being eliminated due to budget cuts. They assured her she would receive the bonus and instructed her to transition her responsibilities to Dyanne Rosado, who was subsequently promoted. The promotion resulted in inefficiencies, as Rosado could not manage all her new responsibilities, forcing the company to hire an additional recruiter. GFI managers were reportedly unaware of issues regarding Plaintiff's termination, which was not formally labeled as a reduction in force. The procedural history includes Plaintiff filing a complaint, with Defendants notifying her of an anticipated motion to dismiss, which was filed on May 8, 2017, followed by Plaintiff's opposition and Defendants' reply in mid-2017.

A complaint must include sufficient factual matter to establish a plausible claim for relief to survive a motion to dismiss under Rule 12(b)(6). The factual content must allow the court to draw a reasonable inference of the defendant's liability, requiring more than a mere possibility of unlawful action. The plausibility standard considers the overall factual picture, the specific elements of the cause of action, and any alternative explanations that may undermine the plaintiff’s claims. Courts must accept well-pleaded facts as true and favor the plaintiff in reasonable inferences, but legal conclusions are not assumed true.

Under the Fair Labor Standards Act (FLSA), employers are prohibited from retaliating against employees for filing complaints related to wage and hour standards. Retaliation claims follow a three-step burden-shifting framework. Initially, the employee must establish a prima facie case by showing involvement in protected activity known to the employer, an adverse employment action, and a causal link between the two. If successful, the burden shifts to the employer to provide a legitimate reason for the action, after which the employee must demonstrate that this reason is a pretext for retaliation. The definition of "protected activity" has evolved, as established in Greathouse v. JHS Security Inc., allowing for oral complaints to count as protected activity if sufficiently clear and detailed for a reasonable employer to recognize as a claim for rights protected by the FLSA.

Oral complaints can suffice for retaliation claims under the FLSA, but a plaintiff must assert rights protected by the statute to demonstrate engagement in protected activity. No court in this Circuit has clarified if an employee who reports FLSA violations as part of their job engages in protected activity. In McKenzie v. Renberg's Inc., the Tenth Circuit ruled that employees are not shielded from retaliation unless they assert adverse rights against the employer. The plaintiff in McKenzie was deemed not to be engaging in protected activity since she was merely fulfilling her job duties without lodging a personal complaint. Similarly, in Rodriguez v. Ready Pac Produce, it was held that to engage in protected activity, an employee must step outside their representative role and either file a claim or assist others in asserting FLSA rights.

In the current case, the plaintiff claims retaliation following several internal complaints to Cantor Fitzgerald about employee classification issues, asserting that her complaints were clear and understood as FLSA rights assertions. However, the defendants argue that she was merely performing her job responsibilities. The court agrees with the defendants, stating that the plaintiff has not plausibly alleged engagement in protected activity. As a human resources professional, her role involved investigating and reporting on compliance with FLSA and NYLL, and her discussions regarding misclassifications were part of her job duties rather than personal complaints or claims.

Pennay and Aiken, human resource professionals at Cantor Fitzgerald, were involved with the Plaintiff concerning potential violations of the Fair Labor Standards Act (FLSA). The Plaintiff's actions, which included investigating these violations, were deemed part of her job responsibilities and did not constitute adverse actions against the company or support any claims under the FLSA. The Complaint lacked evidence that the Plaintiff actively assisted other employees in asserting FLSA or New York Labor Law (NYLL) claims or engaged in activities that could be perceived as advocating for rights under the FLSA. The Puente Action, which highlighted employee classification issues, had already been initiated before the Plaintiff began her investigation, and she only reported potential violations to her superiors after this action had commenced.

When asked to terminate two employees for excessive overtime, the Plaintiff discussed classification discrepancies with their managers but did not terminate their employment herself. The Plaintiff's disagreement with her superiors' decisions did not equate to obstructing the terminations. There are no allegations suggesting she helped the employees file FLSA claims or reported violations to the Department of Labor. Consequently, her conduct did not amount to "protected activity," which is necessary for establishing a prima facie case of retaliation under the FLSA.

As a result, the motion to dismiss the Plaintiff's FLSA claims was granted. Additionally, the court indicated that it may decline to exercise supplemental jurisdiction over the remaining state-law claims (NYLL) after dismissing the federal claims, as is typical when federal claims are eliminated early in litigation.

Under Section 215(1)(a) of New York Labor Law (NYLL), employers are prohibited from discharging or retaliating against employees who complain about violations of the NYLL. The NYLL's protections against retaliatory termination are broader than those provided by the Fair Labor Standards Act (FLSA). Following the dismissal of the Plaintiff's FLSA claim, the only remaining claim is for retaliation under the NYLL, which falls under the court's supplemental jurisdiction. However, due to the broader language of the NYLL and other factors, the court declines to exercise supplemental jurisdiction over this claim, resulting in its dismissal without prejudice, allowing the Plaintiff to refile in state court.

The court grants the Defendants' motion to dismiss the entire Complaint, as the Plaintiff did not establish a prima facie case of retaliation under the FLSA. The Clerk of Court is instructed to enter judgment for the Defendants and close the case. The factual summary is based on the Plaintiff's complaint filed on January 12, 2017, which is assumed true for the motion but does not imply any findings of fact. The Defendants reference cases from various circuits regarding the "manager rule," arguing that a manager addressing wage and hour issues does not provide fair notice under the FLSA, while the Plaintiff contends she was not a manager but a rank-and-file employee asserting her rights.

The relevant inquiry focuses on whether an employee's job responsibilities and actions related to the Fair Labor Standards Act (FLSA) sufficiently notify the employer of a claim for protection under the statute. The plaintiff asserts that these actions support a retaliation claim, arguing that the FLSA's retaliation provision is broadly interpreted, similar to the expansive protections under Title VII against discrimination and retaliation. The plaintiff cites *Littlejohn v. City of New York*, where the Second Circuit determined that a manager’s communication of belief regarding employer discrimination constitutes protected opposition, regardless of job responsibilities. The court emphasized that even employees tasked with investigating discrimination can engage in protected activity when they support colleagues asserting their rights or criticize discriminatory practices. However, this reasoning does not apply to the FLSA context, as Title VII's specific opposition clause, which protects employees opposing unlawful practices, is not included in the FLSA's retaliation provisions.