## Facts

- Dennis Edwards owned a Milwaukee taxicab; a dispatch/referral cooperative referred passengers to the cab, with other terms of that relationship not alleged.
- Edwards leased the cab to Parashu Giri, who subleased some driving time to Thomas Edward Chapman so the cab could operate much of the day.
- Chapman kept fares and tips, paid rent to Giri, and retained the difference; Chapman alleged no payments to or from the dispatch/referral cooperative.
- Chapman sued under the Fair Labor Standards Act (FLSA), asserting he was an “employee” of the dispatch/referral cooperative despite the lease and sublease structure.
- Chapman alleged that after he complained about not receiving minimum wage, the cooperative’s president told Giri that Chapman was “fired,” meaning Chapman would not receive dispatched passengers, and Giri then terminated the sublease.
- Chapman claimed the alleged “firing” violated the FLSA anti-retaliation provision, 29 U.S.C. § 215(a)(3).

## Issues

1. Whether a complaint must plead facts addressing each factor from multi-factor “economic realities” tests used to distinguish FLSA employees from independent contractors.
2. Whether the pleaded facts plausibly alleged an FLSA employment relationship between Chapman and the dispatch/referral cooperative sufficient to support an FLSA retaliation claim.

## Decision

- The Seventh Circuit held the district court used an incorrect pleading approach by requiring Chapman to plead detailed facts corresponding to each factor in multi-factor employee/contractor analyses.
- The court nevertheless affirmed dismissal with prejudice because Chapman’s own allegations made an employment relationship with the cooperative implausible.
- Because Chapman did not plausibly allege he was an employee of the cooperative, his FLSA retaliation theory failed as a matter of plausibility under Rule 8 and Twombly/Iqbal.

## Legal Principles

- Federal pleading under Rule 8 requires a short and plain statement showing a plausible entitlement to relief; it does not require pleading evidentiary detail or covering every consideration in judicial multi-factor tests.
- Multi-factor “economic realities” frameworks (including those used to evaluate FLSA employee status) guide the substantive inquiry and later-stage proof; they are not standalone pleading elements.
- Where the pleaded facts show no direct economic relationship or direct dealings with the asserted employer, and depict only an indirect role (such as referring customers), an alleged FLSA employment relationship may be implausible at the motion-to-dismiss stage.
- An FLSA retaliation claim under 29 U.S.C. § 215(a)(3) depends on a plausible employment relationship with the defendant alleged to have retaliated.

## Conclusion

The Seventh Circuit clarified that plaintiffs need not plead every factor from employee-status multi-factor tests, but it affirmed dismissal with prejudice because the complaint’s lease/sublease structure and lack of direct economic ties to the dispatch/referral cooperative did not plausibly establish an FLSA employment relationship supporting retaliation liability.


Chapman v. Yellow Cab Coop., 875 F.3d 846 (7th Cir. 2017)