19-517-cv

Vaughn v. Phoenix House New York, et al.

In the

United States Court of Appeals

for the Second Circuit

AUGUST TERM 2019

No. 19-517-cv

MARK VAUGHN,

Plaintiff-Appellant,

v.

PHOENIX HOUSE NEW YORK INC., PHOENIX HOUSE,

Defendants-Appellees,

TERRANCE WARING, HOUSE MANAGER OF PHOENIX HOUSE LONG

ISLAND CITY CAMPUS, ARTHUR WALLACE, SUBSTANCE ABUSE 

COUNSELOR, WILLIAM BROWN, HOUSE PROGRAMS OF NEW YORK,

THOMAS JASPER, CHAIRMAN OF PHOENIX HOUSE PROGRAMS OF NEW 

YORK, DENISE BUCKLEY, MANAGING DIRECTOR PHOENIX HOUSE L.I.C.,

HERMAN LAZADA, MANAGING DIRECTOR, PHOENIX HOUSE CAREER 

ACADEMY, HOWARD MEITINER,

Defendants.

On Appeal from the United States District Court

for the Southern District of New York
2

SUBMITTED: APRIL 1, 2020

DECIDED: APRIL 22, 2020

Before: KEARSE, WALKER, and CABRANES, Circuit Judges.

Plaintiff-Appellant Mark Vaughn appeals from a February 12, 

2019 judgment entered in the United States District Court for the 

Southern District of New York (Ronnie Abrams, Judge) dismissing his 

case against Defendant-Appellee Phoenix House New York Inc. under 

Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim 

upon which relief can be granted.

On de novo review, we conclude that Vaughn was not an 

employee of Phoenix House such that he can state a claim under the 

Fair Labor Standards Act, and that Vaughn’s arguments regarding his 

claim brought under 42 U.S.C. § 1983 are barred by a prior appeal, and 

thus AFFIRM the decision of the District Court. 

Mark Vaughn, pro se, Brooklyn, NY.

Marie D. Howick, Rachel G. Skaistis, and 

Justin Mungai, Cravath, Swaine & Moore 

LLP, New York, NY, for DefendantsAppellees.
3

JOSÉ A. CABRANES, Circuit Judge:

Plaintiff-Appellant Mark Vaughn (“Vaughn”)—proceeding pro 

se on appeal but counseled before the District Court—sued Phoenix 

House New York and Phoenix House Foundation (jointly, “Phoenix 

House”), a drug treatment facility, under 42 U.S.C. § 1983, the Fair 

Labor Standards Act (“FLSA”) and the New York Labor Law 

(“NYLL”), alleging that he was not paid for work he performed while 

a patient there. The District Court (Ronnie Abrams, Judge) dismissed 

Vaughn’s complaint. 

In an earlier appeal, we affirmed the dismissal of the Section

1983 claim because it was untimely, but vacated the dismissal of the 

FLSA and NYLL claims and remanded them to the District Court to 

consider whether Vaughn stated an FLSA claim in light of Glatt v. Fox 

Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2016).1 On remand, 

Vaughn was appointed pro bono counsel, who filed a third amended 

complaint (the “TAC”). The District Court dismissed the TAC, 

reasoning that Vaughn failed to allege sufficient facts to show that he 

was an employee within the meaning of the FLSA, and declined to 

exercise jurisdiction over Vaughn’s remaining NYLL claims. Vaughn 

appeals, again proceeding pro se. 

1 See Vaughn v. Phoenix House New York Inc., 722 F. App’x 4 (2d Cir. 2018) 

(summary order). Our summary order also dismissed Vaughn’s claims under the 

federal anti-peonage statute, 42 U.S.C. § 1994. 
4

Because we conclude that Vaughn was not an employee of 

Phoenix House within the meaning of the FLSA, we AFFIRM the 

February 12, 2019 judgment of the District Court. 

BACKGROUND 

I. Factual Background 

As set out in the TAC, in July 2009 Vaughn entered a program 

at the Phoenix House, a residential drug and alcohol treatment facility, 

pursuant to his state-court-approved agreement to participation in a 

rehabilitation program, in lieu of incarceration for existing criminal 

charges. Vaughn completed the inpatient phase of the program and 

then began an outpatient phase. In 2010, he violated a condition of his 

agreement and was reassigned to an inpatient program at Phoenix 

House beginning in February 2011. After Vaughn returned to Phoenix 

House, he attended a 30-day orientation period but then refused to 

complete work duties the program required of him. Vaughn alleged 

that the state court judge supervising his case told him that if he was 

removed from the Phoenix House program due to his non-compliance, 

he would go to jail.2 He began performing his work responsibilities at 

Phoenix House in April 2011, and continued to do so until January

2012.3

2 See TAC ¶¶ 36-37. 

3 See id. at ¶¶ 45-50. 
5

Vaughn alleges that during his stays at Phoenix House, he was 

required to labor 8 hours a day, 6 days a week.4 He states that,

although he complained about Phoenix House’s illegal work without 

any effect on Phoenix House’s conduct.

II. Procedural History 

Vaughn filed suit against Phoenix House on May 12, 2014. After 

Vaughn amended his complaint, Phoenix House moved to dismiss the 

complaint for failure to state a claim upon which relief can be granted, 

which the District Court granted on September 25, 2015, without 

prejudice to the filing of an amended complaint.5 Vaughn again 

amended his complaint, which the District Court again dismissed, this 

time with prejudice, on August 9, 2016.6

Vaughn appealed the dismissal on August 30, and by summary 

order we affirmed the District Court’s judgment with respect to 

Vaughn’s Section 1983 and 1994 claims, but vacated it with respect to 

Vaughn’s FLSA and NYLL claims.7 In remanding, we directed the 

District Court to determine whether Vaughn, as an unpaid worker in 

a rehabilitative program, qualifies as an “employee” under the FLSA 

4 See, e.g., id. at ¶¶ 32 and 45. 

5 See See Vaughn v. Phoenix House Programs of New York, No. 14-cv-3918 (RA), 

2015 WL 5671902, at *9 (S.D.N.Y. Sept. 25, 2015).

6 See Vaughn v. Phoenix House Programs of New York, No. 14-cv-3918 (RA), 

2016 WL 4223748, at *1 (S.D.N.Y. Aug. 9, 2016).

7 Vaughn, 722 F. App’x at 7. See note 1, ante. 
6

in light of our decision in Glatt v. Fox Searchlight Pictures, Inc.8 We also 

recommended that he be appointed pro bono counsel.9

Vaughn, accordingly represented by counsel, filed a third 

amended complaint on April 30, 2018 (the “TAC”). Following 

additional briefing, the District Court granted the motion of Phoenix 

House to dismiss the TAC on February 12, 2019, concluding that 

Vaughn’s “allegations do not make out a plausible claim that [he] was 

Phoenix House’s employee and thus entitled to wages under the 

FLSA” because “Vaughn was undoubtedly the primary beneficiary of 

his treatment at Phoenix House’s facilities.”10

Vaughn timely appealed. 

DISCUSSION

“We review de novo a district court’s dismissal of a complaint 

pursuant to Rule 12(b)(6), construing the complaint liberally, 

accepting all factual allegations in the complaint as true, and drawing 

all reasonable inferences in the plaintiff’s favor.”11 The complaint must 

plead “enough facts to state a claim to relief that is plausible on its 

8 Id. at 6. 

9 Id. at 7. 

10 Vaughn v. Phoenix House Found., Inc., No. 14-cv-3918 (RA), 2019 WL 568012, 

at *9 (S.D.N.Y. Feb. 12, 2019). 

11 Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). 
7

face.”12 Although a court must accept as true all the factual allegations 

in the complaint, that requirement is “inapplicable to legal 

conclusions.”13

I. Vaughn’s FLSA Claims

The District Court properly applied Glatt on remand in holding 

that Vaughn was not an employee of Phoenix House for the purposes 

of the FLSA.14

In Glatt, we addressed the question of whether an unpaid intern 

qualifies as an employee entitled to compensation under the FLSA,15

and we extend that analysis to the analogous circumstances presented 

in this case. Assessing the nature of the relationship between an intern 

and his employer, we concluded in Glatt that “the proper question is 

whether the intern or the employer is the primary beneficiary of the 

relationship.”16 The “primary beneficiary test” has “three salient 

features:” (1) its “focus[ ] on what the intern receives in exchange for 

his work,” (2) its “flexibility to [permit] examin[antion] of the 

economic reality” of the relationship, and (3) its acknowledgement 

12 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 

556 U.S. 662, 678 (2009). 

13 Iqbal, 556 U.S. at 678. 

14 “The FLSA unhelpfully defines ‘employee’ as an ‘individual employed by 

an employer.’” Glatt, 811 F.3d at 534 (quoting 29 U.S.C. § 203(e)(1)). 

15 See id. at 535. 

16 Id. at 536. 
8

that the intern-employer relationship is subject to unique 

considerations in light of the intern’s expected “educational or 

vocational benefits that are not necessarily expected with all forms of 

employment.”17 In performing this analysis, we ask the district courts

to evaluate a “non-exhaustive set of considerations,” which include: 

1. The extent to which the intern and the employer clearly 

understand that there is no expectation of compensation. 

Any promise of compensation, express or implied, 

suggests that the intern is an employee—and vice versa.

2. The extent to which the internship provides training 

that would be similar to that which would be given in an 

educational environment, including the clinical and other 

hands-on training provided by educational institutions. 

3. The extent to which the internship is tied to the intern’s 

formal education program by integrated coursework or 

the receipt of academic credit. 

4. The extent to which the internship accommodates the 

intern’s academic commitments by corresponding to the 

academic calendar. 

5. The extent to which the internship’s duration is limited 

to the period in which the internship provides the intern 

with beneficial learning. 

17 Id. 
9

6. The extent to which the intern’s work complements,

rather than displaces, the work of paid employees while 

providing significant educational benefits to the intern.

7. The extent to which the intern and the employer 

understand that the internship is conducted without 

entitlement to a paid job at the conclusion of the 

internship.18

We emphasized that “[n]o one factor is dispositive and every 

factor need not point in the same direction for the court to conclude 

that the intern is not an employee entitled to the minimum wage.”19

In carefully weighing each of these considerations in the context 

presented by Vaughn’s circumstances—in which he is not an intern, 

but a recipient of in-patient treatment in a court-approved

rehabilitation program—the District Court properly assumed that all 

of Vaughn’s allegations were true20 and correctly determined that 

Factors One, Five, and Seven weigh “strongly” against finding that 

Vaughn was an employee of Phoenix House; Factor Six weighs in 

18 Id. at 536–537. 

19 Id. at 537.

20 See Vaughn v. Phoenix House Foundation, Inc., 2019 WL 568012, at *1 n.1

(S.D.N.Y. Feb. 12, 2019) (noting that the “facts are taken from the TAC and are 

accepted as true for the purposes of this motion to dismiss”); see also Ashcroft v. Iqbal, 

556 U.S. 662, 678 (2009) (“To survive a motion to dismiss, a complaint must contain 

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible 

on its face.’” (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007))). 
10

Vaughn’s favor; and Factors Two, Three, and Four provide “mixed 

guidance.”21 As the District Court rightly noted, however, the 

importance of Factor Six in the context of this case differs from that of 

an unpaid intern.22 And Vaughn received significant benefits from 

staying at Phoenix House, in large part because he was permitted to 

receive rehabilitation treatment there in lieu of a jail sentence, and was 

“provided with food, a place to live, therapy, vocational training, and 

jobs that kept him busy and off drugs.”23 Inasmuch as we agree with

the District Court’s careful analysis of the Glatt factors in the context 

of Vaughn’s stay at Phoenix House, we cannot conclude that, in these 

circumstances, Vaughn was an employee of Phoenix House.

Accordingly, Vaughn cannot state a claim under the FLSA. 

Because the District Court properly dismissed Vaughn’s FLSA 

claims, the only claims over which it had original jurisdiction, it did 

not abuse its discretion by declining to exercise supplemental 

jurisdiction over his NYLL claims.24

21 Id. at *8. 

22 See id. (“In contrast to Phoenix House’s treatment facilities, which operate 

for the exclusive purpose of providing drug and alcohol addiction treatment ... 

places of employment that hire interns or vocational trainees most often operate for 

some purpose other than to provide training to their unpaid interns.” (internal 

citation and quotation marks omitted)). 

23 Id. 

24 See Kolari v. N.Y.-Presbyterian Hosp., 455 F.3d 118, 122 (2d Cir. 2006) (“A 

district court may decline to exercise supplemental jurisdiction if it has dismissed 
11

II. Vaughn’s Section 1983 Claim

In this appeal, Vaughn also seeks to renew his arguments 

regarding our prior affirmance of the District Court’s dismissal of his 

Section 1983 claim.25 Those efforts are barred by the law-of-the-case 

doctrine, which “commands that when a court has ruled on an issue, 

that decision should generally be adhered to by that court in 

subsequent stages in the same case unless cogent and compelling 

reasons militate otherwise.”26 Compelling reasons include “an 

intervening change in law, availability of new evidence, or the need to 

correct a clear error or prevent manifest injustice.”27 Previously, we 

concluded that Vaughn’s Section 1983 claim was untimely because the 

most recent state action alleged by Vaughn—the state court’s ordering 

his compliance with the rehabilitation program—took place in April 

2011, which was outside the three-year statute of limitations for 

Section 1983 claims.28 The law-of-the-case doctrine therefore applies 

here.

Vaughn offers no compelling reason to disturb our prior 

decision. He argues that he remained at Phoenix House after April 

all claims over which it has original jurisdiction.” (internal quotation marks 

omitted)). 

25 See Vaughn, 722 F. App’x at 6.

26 Johnson v. Holder, 564 F.3d 95, 99 (2d Cir. 2009) (internal quotation marks 

omitted). 

27 Id. at 99–100 (internal quotation marks omitted). 

28 Vaughn, 722 F. App’x at 6. 
12

2011 because a state court judge ordered him to do so, or else he would 

be required to serve his lawfully-imposed state term of imprisonment. 

But Vaughn cannot show that any state action occurred after April 

2011. The fact that Vaughn remained at Phoenix House is insufficient 

to state a Section 1983 claim because Phoenix House is a private entity 

that cannot be said to have engaged in state action. To state a Section

1983 claim against a private entity, the plaintiff must show that: (1) 

“the entity acts pursuant to the coercive power of the state or is 

controlled by the state”; (2) “the state provides significant 

encouragement to the entity,” and “the entity is [either] a willful 

participant in joint activity with the state or the entity’s functions are 

entwined with state policies”; or (3) “the entity has been delegated a 

public function by the state.”29 Vaughn cannot show that Phoenix 

House engaged in state action under any of these three theories.

A private actor is a willful participant in joint activity with the 

state under Section 1983 if the two “share some common goal to violate 

the plaintiff’s rights,” which Vaughn’s does not allege.30 Although the

state judge required Vaughn to stay at Phoenix House after April 2011 

and told him that he needed to complete the work requirements, 

Vaughn had agreed to participate in treatment at Phoenix House in 

lieu of being incarcerated. Because the program was ultimately 

voluntary, the fact that the state judge informed Vaughn of the 

29 Sybalski v. Indep. Grp. Home Living Program, Inc., 546 F.3d 255, 257 (2d Cir. 

2008) (internal quotation marks and alterations omitted). 

30 Betts v. Shearman, 751 F.3d 78, 85 (2d Cir. 2014). 
13

consequences of his decision not to work at Phoenix House does not 

make Phoenix House a state actor. Further, the fact that Phoenix House 

may be subject to regulation by the state31 is not alone sufficient to 

make it a state actor.32 And treatment and care of the chemically 

dependent, like care for the mentally ill and disabled (at issue in 

Sybalski),33 is not a function traditionally and exclusively reserved to 

the state.34 Therefore, the fact that Vaughn remained at Phoenix House 

after April 2011 does not make his Section 1983 claims timely. 

CONCLUSION

To summarize, we hold as follows:

1. A recipient of in-patient treatment in a court-ordered drug or 

alcohol rehabilitation program who performs work for, or on 

behalf of, the program during the course of treatment, as in 

the circumstances presented here, is not an employee of the 

program for the purposes of the FLSA;

31 At paragraphs 65–69 in the TAC, Vaughn alleges that various New York 

State authorities have investigated Phoenix House for regulatory violations and 

failure to provide proper care. 

32 See Sybalski, 546 F.3d at 258–59. 

33 See id. at 259–60 (concluding that the creation and maintenance of asylums 

and institutional care were not traditionally exclusively public functions). 

34 See Mele v. Hill Health Center, 609 F. Supp. 2d 248, 254, 257-58 (D. Conn. 

2009) (finding that “a federally funded program that provides transitional housing

... and behavioral health services for individuals with substance abuse and mental 

health problems” was not a state actor).
14

2. Vaughn’s attempt to relitigate our previous dismissal of his 

Section 1983 claim fails in light of our prior decision and the 

law-of-the-case doctrine. 

For the foregoing reasons, we AFFIRM the February 12, 2019 

judgment of the District Court.