Management-side lawyers like myself like to joke that a former employee can sometimes sue any employer for any reason at any time.
It’s not true, of course, but at times it feels like there is no limit to the creativity of lawyers filing claims against employers.
One such tactic was recently rejected by the federal court in Connecticut.
In the complaint, the employee alleges that the employer failed to pay mandatory prevailing wages on public works projects and failed to pay him overtime. While he alleged a violation of the Fair Labor Standards Act, he also alleged a violation of the Connecticut Unfair Trade Practices Act (CUTPA).
CUTPA, as noted by the federal court, is a remedial statute that states that no person shall engage in “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”
The court in Matysiak v. Spectrum Services Co. (download here) rejected the CUTPA claim here saying that the claims arise from the employer-employee relationship and thus fall outside the scope of the statute.
In the case at bar, allegations that Defendants”repeatedly certif[ied] that prevailing wages were being paid to all employees on public works projects [while they] instead retain[ed] the prevailing wage premiums as profit” could certainly suggest damages to competitors through undercutting, as well as to taxpayers and other individuals, and could conceivably be found to fall within the above-enumerated requirements of the Cigarette Rule. However, Defendants’ alleged practice of misreporting wages in bids for public works projects, which the Court takes as true for the purposes of adjudicating this Partial Motion to Dismiss, did not injure or cause damage to Plaintiff. Rather, Plaintiff’s alleged injury and damages stem from what Plaintiff describes as a lack of proper wage and salary payments, a strictly employment-related matter which underlay any wage misreporting in public works projects bids rather than resulted therefrom. Simply put, then, Defendants’ fraud and misrepresentation as described in the Complaint did not cause or result in Plaintiff’s damages.
For employers facing lawsuits, it is not enough to simply deny the allegations of a lawsuit. Rather, there may be legal reasons why the claims may fail. Motions to dismiss like the one made in this case are still difficult to prevail on, but where there is legal justification for dismissing them, they still may be worthwhile.
A side note: Following the court’s ruling, the employer has since denied the remaining allegations overall and has filed a counterclaim against the employee. The employer’s claim? That it paid the employee $20,000 in “full and final settlement of his claims”. The employer, however, alleges that this was merely an “oral contract.” Employers should continue to get these types of agreements in writing.