Menaugh v. IR Labs DE, LLC — Class and Collective Action Complaint (S.D. Iowa, Document 1)
Summary
Class and Collective Action Complaint by Dakotah Menaugh against IR Labs DE, LLC in the United States District Court for the Southern District of Iowa, Central Division, Case 4:24-cv-00002-SHL-SBJ, Document 1, filed 01/02/24, under the WARN Act and the Fair Labor Standards Act on behalf of over one hundred other employees. Menaugh, a Tennessee resident, alleges that IR Labs, called Innovation Refunds, notified at least 157 employees on September 19, 2023 that they were terminated effective September 20, 2023, without sixty days' notice. She also alleges that it left milestone bonuses of $10,000 and $25,000 out of employees' regular rate of pay and so underpaid overtime. The complaint describes Innovation Refunds as a Des Moines firm built around the Employee Retention Credit that charged 25% of each refund.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 1 of 15
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF IOWA
CENTRAL DIVISION
DAKOTAH MENAUGH, on behalf of DOCKET NO. 4:24-cv-2
herself and others similarly situated,
Plaintiff,
CLASS AND COLLECTIVE ACTION
vs. COMPLAINT FOR VIOLATIONS OF
FEDERAL WARN ACT 29 U.S.C. § 2101,
IR LABS DE, LLC, ET SEQ. AND FAIR LABOR
STANDARDS ACT 29 U.S.C. § 201, ET
Defendant. SEQ.
COMES NOW, Plaintiff, Dakotah Menaugh, and files this Class and Collective Action
Complaint against Defendants IR Labs De, LLC, on her own behalf and on behalf of over one
hundred other employees, challenging Defendants’ violation of the federal Worker Adjustment
and Retraining Notification Act, 29 U.S.C. § 2101 et seq. (the “WARN Act”) and the Fair Labor
Standards Act, 29 U.S.C. § 201 et seq. (the “FLSA”).
PARTIES
1. Plaintiff, Dakotah Menaugh, is an adult resident of Tennessee. Plaintiff worked
for IR Labs DE, LLC prior to her termination on September 20, 2023.
2. Plaintiff brings this lawsuit as a Rule 23 class action on behalf of all affected
employees who were employed by IR Labs DE, LLC and were terminated on or about September
20, 2023.
3. Plaintiff likewise brings this lawsuit as a collective action pursuant to 29 U.S.C. §
216(b) on behalf of herself and all similarly situated employees who were or are employed by IR
Labs DE, LLC.
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 2 of 15
4. Defendant, IR Labs DE, LLC (“Innovation Refunds”) is a Limited Liability
Company formed under the laws of the State of Delaware. Innovation Refunds’ headquarters or
principal place of business is located in the State of Iowa. Innovation Refunds, can be served
with process by and through its agent, Cogency Global, Inc., 100 Court Avenue, Suite 201 Des
Moines, IA 50309.
JURISDICTION AND VENUE
5. This Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 1331,
1332 and 1367.
6. This Court has personal jurisdiction over Defendant, Innovation Refunds, because
Innovation Refunds is headquartered in this District and conducts substantial business operations
in the State of Iowa. Further, this Court may exercise personal jurisdiction over Innovation
Refunds because the personnel decisions giving rise to the layoffs that are the subject of this suit
were made by Innovation Refunds employees who work at the headquarters in Iowa.
FACTUAL ALLEGATIONS
The Early Stages and Growth of Innovation Refunds
7. Innovation Refunds is a “consulting” firm, headquartered in Des Moines, Iowa,
which was created for the purpose of capitalizing on the Employee Retention Credit.
8. Innovation Refunds ran aggressive, nationwide marketing campaigns across
multiple media forums to encourage small business owners to apply for the Employee Retention
Credit and hire Innovation Refunds to assist them with the process.
9. These marketing campaigns included celebrities such as Ty Burrell.
10. Mr. Burrell’s picture was featured on Innovation Refunds’ website:
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 3 of 15
11. Mr. Burrell is also featured in commercials that were recorded and ran on
television nationwide by Innovation Refunds.
12. Innovation Refunds’ marketing campaign was successful.
13. According to Innovation Refunds’ website, the company has processed over
20,000 Employee Retention Credit returns for their customers.
14. Upon information and belief, Innovation Refunds charged its customers 25% of
the total refund that was received by each customer.
15. Upon information and belief, the average refund received by Innovation Refunds’
customers was approximately $250,000.00.
16. Rob Domenico, Innovation Refunds’ former executive vice president of financial
partnerships, claims that Innovation Refunds has processed nearly $7 billion worth of claims for
their customers.
17. Twenty-five percent of $7 billion is a lot of money.
18. Upon information and belief, Innovation Refunds has generated in excess of $1
billion in revenue during the approximate three years it has been processing Employee Retention
Credit claims for its customers.
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 4 of 15
19. While Innovation Refunds was accelerating, the company hosted lavish parties for
its employees and its partner accounting and law firms.
20. For example, during one holiday party, Innovation Refunds hired a marching band
and interpretation artists and even filled the venue with Innovation Refunds-themed ice
sculptures.
The Logistics of How Innovation Refunds Earned Fees from the Employee Retention Credit
21. In order to obtain the Employee Retention Credit, business file amended payroll
tax forms – called 941-X – for each quarter the business is “eligible.”
22. Once this tax return is completed and filed with the Internal Revenue Service, it
took upwards of six months between the time of filing and when Innovation Refunds’ customers
received the refund.
23. As part of its contract with its customers, Innovation Refunds was not paid any
fees from the customers until the customers received the refund money from the Treasury.
24. Thus, Innovation Refunds had a significant lag time from when the work it
performed was completed and when it was paid for the services it provided.
25. By way of example, if Innovation Refunds ran a commercial on television in
January of 2023 and a prospective customer called Innovation Refunds or visited its website in
response, that customer would not receive any money until at least six months later.
26. Consequently, Innovation Refunds would not be paid any fees for its work until
approximately six months later.
27. From the date of its inception through the majority of 2023, Innovation Refunds
grew drastically.
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 5 of 15
28. Upon information and belief, at its peak, Innovation Refunds employed upwards
of one thousand (1000) employees.
29. Innovation Refunds knew that its primary service, marketing to small businesses
regarding the Employee Retention Credit, had a short shelf life.
30. Once the time period for businesses across the United States to amend their
quarterly payroll tax returns for 2020 and 2021 lapsed, Innovation Refunds would lose the
majority of its revenue.
31. Thus, Innovation Refunds employed a very aggressive growth and sales strategy
to encourage its employees to process as many applications for the Employee Retention Credit as
possible.
32. As one former employee explained Innovation Refunds’ approach, “[g]et as many
deals through the door and let the IRS decide who was qualified.”
33. Innovation Refunds set company-wide sales goals that were very high.
34. To meet these goals, Innovation Refunds pushed its employees to repeatedly call
any leads – whether new or old – and convince them to hire Innovation Refunds.
35. As part of this strategy, Innovation Refunds created a bonus system whereby it
agreed to provide all of its employees with bonuses so long as the company, as a whole,
processed a certain number of Employee Retention Credit returns.
36. For example, Innovation Refunds agreed to pay bonuses of $10,000.00 to every
employee once the company submitted Employee Retention Credit returns for 10,000 customers.
37. These bonus payments increased when Innovation Refunds reached a certain
amount of refunds processed.
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 6 of 15
38. The largest bonus promised to employees of Innovation Refunds was a
$100,000.00 bonus payment to all employees hired by March 31, 2023, if Innovation Refunds
closed 50,000 lifetime deals.
39. Innovation Refunds made two bonus payments to all of its employees for reaching
these certain thresholds. The first was for $10,000.00, and the second was for $25,000.00.
WARN Act Allegations
40. As of September 2023, Innovation Refunds employed upwards of 350 employees.
41. On September 19, 2023, Innovation Refunds notified at least 157 of its employees
that they were terminated effective September 20, 2023.
42. All 157 or more employees either worked at, reported to, were assigned work
from, or reported to the headquarters in Des Moines, Iowa.
43. All 157 or more employees’ “single site of employment” is properly considered to
be the headquarters in Des Moines.
44. Plaintiff was one of those 157 or more employees.
45. Plaintiff was assigned work from and reported to the headquarters in Des Moines,
Iowa.
46. The only notice Plaintiff was provided of her September 20, 2023, layoff was the
September 19, 2023 letter.
47. Plaintiff, and all other employees who laid off within the ninety days prior to
September 20, 2023, were not provided with sixty days’ worth of advance notice.
48. At all relevant times, Innovation Refunds employed 100 or more employees,
exclusive of part-time employees, (i.e., those employees who had worked few than 6 of the 12
months prior to the date notice was required to be given or who had worked fewer than an
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 7 of 15
average of 20 hours per week during the 90 day period prior to the date notice was required to be
given), or employed 100 or more employees who in the aggregate worked at least 4,000 hours
per week exclusive of hours of overtime within the United States.
49. Thus, Innovation Refunds is subject to the advance notice requirements as set
forth in 29 U.S.C. § 2102.
50. As such, Innovation Refunds’ failure to provide the requisite sixty days’ worth of
notice amounts to a violation of the federal Worker Adjustment and Retraining Notification Act,
29 U.S.C. § 2101 et seq. (the “WARN Act”).
FLSA Allegations
51. Innovation Refunds is a business enterprise that, upon information and belief,
generated in excess of $1 billion in revenue during an approximate three-year period.
52. Plaintiff and all other employees of Innovation Refunds frequently worked more
than forty (40) hours per week.
53. Innovation Refunds made two bonus payments to all its employees. The first was
for $10,000 and paid in approximately October of 2022. The second was for $25,000 and paid in
approximately January of 2023.
54. Each employee was entitled to the bonus so long as he or she was hired by a
certain date, and the company met the milestone goals set by management at Innovation
Refunds.
55. These bonuses were labeled as “milestone” payments on each employee’s
paystub.
56. These bonuses were promised to employees in order to induce the employees to
close more deals and remain employed at Innovation Refunds.
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 8 of 15
57. Moreover, these bonuses were used to entice employees to come and work for
Innovation Refunds.
58. From the time the bonus payments were announced through the date the second
bonus payment was made, Plaintiff worked overtime hours every week.
59. Because these bonuses were promised beforehand by Innovation Refunds
management, were tied to company specific goals, were used to recruit employees and retain
those who worked for Innovation refunds, the bonuses are nondiscretionary.
60. Innovation Refunds paid Plaintiff and all other employees overtime for their
weekly hours worked in addition to forty (40). However, Innovation Refunds failed to include
the employees’ nondiscretionary, performance-based pay into its calculation of each employee’s
“regular rate of pay” – as mandated by 29 U.S.C. § 207(e).
61. Once the milestone thresholds were met and the bonuses were paid, Innovation
Refunds was required to apportion the bonuses over the workweeks of the period that the
bonuses were earned.
62. Innovation Refunds did not apportion the bonuses over the weeks they were
earned, and thus, did not provide Plaintiff with the additional overtime compensation she is owed
for those weeks the bonus was earned.
63. By neglecting to include this amount of nondiscretionary, performance-based pay
into each employee’s “regular rate of pay,” Innovation Refunds implemented a continuous and
systematic process and procedure which deprived Plaintiff and all other non-exempt, hourly
wage employees of the overtime they are due pursuant to 29 U.S.C. § 207.
64. Innovation Refunds knew that – or acted with reckless disregard as to whether –
its refusal or failure to properly compensate Plaintiffs and the Collective Members for their
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 9 of 15
overtime work would violate the FLSA, and Innovation Refunds was aware of the FLSA’s
overtime compensation requirements.
CLASS ACTION ALLEGATIONS
65. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal
Rules of Civil Procedure on behalf of the following Class:
Nationwide Class
All employees of Innovation Refunds who suffered an employment loss within
the 90 days before September 20, 2023 and were not provided advance notice.
66. Numerosity – Fed R. Civ. P. 23(a)(1). The Class contains at least 157 individuals,
the joinder of which in one action would be impracticable. The exact number or identification of
the Class Members is presently unknown. The identity and number of the Class Members is
ascertainable and can be determined from the Defendant’s records.
67. Predominance of Common Questions - Fed R. Civ. P. 23(b)(3). The questions of
law and fact common to the Class predominate over questions affecting only individual Class
Members, and include, but are not limited to:
a. Whether the Class Members were employees of the Defendant;
b. Whether Defendant gave the requisite 60 days’ advanced written notice;
c. Whether Defendant can avail itself of any affirmative defenses;
d. Whether the proposed class has enough members for this class action to proceed;
e. Whether Defendant paid the Class Members 60 days’ wages and benefits as
required by the WARN Act.
68. Defendant engaged in a common course of conduct giving rise to the legal rights
sought to be enforced by Plaintiff individually and on behalf of the other members of the Class.
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 10 of 15
Individual questions, if any, are not prevalent in comparison to the common questions that
dominate this action.
69. Typicality – Fed R. Civ. P. 23(a)(3). Plaintiff’s claims are typical of those of the
members of the Class in that they are based on the same underlying facts, events, and
circumstances relating to Defendant’s conduct.
70. Adequacy – Fed R. Civ. P. 23(a)(4); 23(g)(1). Plaintiff will fairly and adequately
represent and protect the interests of the Class, has no interest incompatible with the interests of
the Class, and have retained counsel competent and experienced in such class action litigation.
71. Superiority – Fed. R. Civ. P. 23(b)(3). This case is best suited as a class action
because individual litigation of each Class Members’ claims would be impracticable and unduly
burdensome on the courts. Because of the size of each individual Class Members’ claim, no
Class Member could afford to seek legal redress for the wrongs identified in the Complaint. A
class action in this case presents fewer management problems and provides the benefits of single
adjudication, economies of scale, and comprehensive supervision by a single court.
COLLECTIVE ACTION ALLEGATIONS
72. Plaintiff brings this action pursuant to the Fair Labor Standards Act 29 U.S.C. §
201 et seq. on her own behalf and as representative of individuals similarly situated who are
former employees of Innovation Refunds.
73. Defendant Innovation Refunds subjected all of their hourly, nonexempt
employees, including Plaintiff and the Collective Members, to their policy of failing to property
calculate and pay the employees’ overtime wages.
74. At all relevant times, Plaintiffs and the Collective Members are and have been
similarly situated, have had substantially similar job requirements and pay provisions, and are
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 11 of 15
and have been subject to Innovation Refunds’ decision, policy, plan, and common program,
practices, procedures, protocols, routines, and rules of failing to pay Plaintiffs and the Collective
Members all overtime wages required by 29 U.S.C. § 207(a).
75. Plaintiffs’ claims stated in this Complaint are essentially the same as those of the
Collective Members. This action is properly maintained as a collective action because in all
pertinent aspects the employment relationship of individuals similarly situated to Plaintiff is
identical or substantially similar. Specifically, all non-exempt, hourly wage employees are
entitled to have any nondiscretionary bonuses included in their regular rate calculation.
Innovation Refunds systematically failed to apportion the bonuses payments made to all hourly,
non-exempt employees into their regular rate calculation – thereby depriving them of the
overtime compensation they are due.
76. The Collective Members perform or have performed the same or similar work as
Plaintiffs.
77. Innovation Refunds’ failure to pay overtime compensation required by the FLSA
results from generally applicable policies or practices and does not depend on the personal
circumstances of Plaintiffs or the Collective Members.
78. Although the exact amount of damages may vary among the Collective Members,
the damages for the Collective Members can be easily calculated by a simple formula. The
claims of all Collective Members arise from a common nucleus of facts. Liability is based on a
systematic course of wrongful conduct by Innovation Refunds that caused harm to all of the
Collective Members.
79. Innovation Refunds was aware or should have been aware that federal law
prohibited them from not paying their employees all overtime wages as required by the FLSA.
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 12 of 15
80. Innovation Refunds’ unlawful conduct has been widespread, repeated, and
consistent.
81. This action is properly brought and maintained as an opt-in collective action
pursuant to 29 U.S.C. § 216(b).
82. Upon information and belief, the individuals similarly situated to Plaintiff
contains more than one hundred (100) individuals. The exact number or identification of
similarly situated employees is presently unknown. The identity and number of the employees is
ascertainable and can be determined from Innovation Refunds’ records.
83. Notice can be provided to the Collective Members by First Class Mail to the last
address known to Innovation Refunds, via email at the last known email address known to
Innovation Refunds, and by text message to the last known telephone number known to
Innovation Refunds.
COUNT I – VIOLATION OF THE FEDERAL WARN ACT
84. Plaintiff, by this reference, adopts and re-asserts all allegations, averments, and
statements of fact contained in the preceding paragraphs of this Complaint.
85. Plaintiff and other affected employees who have worked for Innovation Refunds
are entitled to the rights, protections, and benefits provided under the federal WARN Act, 29
U.S.C. § 2101 et. seq.
86. Defendant is subject to the notice and back pay requirements of the federal
WARN Act because Innovation Refunds is a business enterprise that employed 100 or more
employees, excluding part-time employees, and/or, employed 100 or more employees who in the
aggregate work at least 4,000 hours per week (exclusive of overtime), as defined in the WARN
Act. 29 U.S.C. §§ 2101(1)(A) and(B).
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 13 of 15
87. Plaintiff, and all other similarly situated employees, were not provided any
advance notice of their job losses.
88. Defendant engaged in conducting a plant closing but has not provided affected
employees with the required notice, in violation of the federal WARN Act.
COUNT II – VIOLATION OF THE FAIR LABOR STANDARDS ACT
89. Plaintiff, by this reference, adopts and re-asserts all allegations, averments, and
statements of fact contained in the preceding paragraphs of this Complaint.
90. By failing to include Plaintiff and all other hourly, nonexempt employees’
nondiscretionary, performance-based pay into the calculation of each employee's “regular rate of
pay,” Innovation Refunds has failed to pay the required overtime compensation as mandated by
29 U.S.C. § 207.
91. Although at this stage, Plaintiff and the Collective Members are unable to state
the exact amount owed for all overtime wages that have not been paid, Plaintiffs and the
Collective Members believe that such information will become available during the course of
discovery. Furthermore, when an employer fails to keep complete and accurate time records,
employees may establish the hours worked by their testimony, and the burden of overcoming
such testimony shifts to the employer.
92. Innovation Refunds knew that – or acted with reckless disregard as to whether –
its refusal or failure to properly compensate Plaintiffs and the Collective Members for their
overtime work would violate the FLSA.
93. Innovation Refunds was aware of the FLSA’s overtime compensation
requirements.
94. As such, Innovation Refunds’ conduct constitutes a willful violation of the FLSA.
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 14 of 15
95. As a result of Innovation Refunds’ failure or refusal to pay Plaintiffs and the
Collective Members the overtime compensation deserved, Innovation Refunds violated 29
U.S.C. § 207(a). Plaintiffs and the Collective Members are therefore entitled to compensation of
the overtime compensation shortfall to be proven at trial, plus an additional equal amount as
liquidated damages, together with interest, reasonable attorney’s fees, and costs.
JURY DEMAND
96. Plaintiff requests a trial by jury on these claims.
WHEREFORE, PREMISES CONSIDERED, Plaintiff requests this Court enter the
following relief:
a. Declare and find that the Defendants have violated the federal WARN Act, 29
U.S.C. § 2101 et seq.;
b. Declare and find that the Defendants have violated the FLSA, 29 U.S.C. § 201 et
seq.;
c. Certify this case as a class action;
d. Certify this case as a collective action;
e. Award compensatory damages and penalties, in an amount according to proof;
f. Award liquidated damages;
g. Award pre- and post-judgment interest;
h. Award reasonable attorneys’ fees, costs, and expenses; and
i. Award any and all additional relief the Court may deem appropriate.
Case 4:24-cv-00002-SHL-SBJ Document 1 Filed 01/02/24 Page 15 of 15
_______________________________________
TIMM W. REID AT0006547
REID LAW FIRM, P.L.L.C.
100 Court Avenue, Suite 315
Des Moines, Iowa, 50309
Telephone: (515) 381-9842
Facsimile: (515) 219-8746
Email: timm@treidlawfirm.com
ATTORNEY FOR PLAINTIFF
File and source
- File
- gov.uscourts.iasd.86141.1.0.pdf
- Size
- 293,393 bytes
- SHA-256
- 4d8b6088453a52b48833cd1efc1bcb033eeddcd50423cb454572c6ceb7a8894b
- Our copy
- gov.uscourts.iasd.86141.1.0.pdf
- Original
- storage.courtlistener.com