CHEN v. DIANA ORIENTAL NAILS LLC et al

Filing 54

OPINION. Signed by Judge Joseph H. Rodriguez on 11/27/2017. (dmr)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
HUA ZHU CHEN,

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Plaintiff,
v.
DIANA’S ORIENTAL NAILS, LLC AND
DIANA TRAM,
Defendants.

Hon. Joseph H. Rodriguez
Civil Action No. 15-5037
OPINION

This matter comes before the court on Motion of Defendants Diana’s Oriental
Nails and Diana Tram for summary judgment pursuant to Fed. R. Civ. P. 56. The Court
has considered the written submissions of the parties as well as the arguments advanced
at the hearing on November 14, 2017. For the reasons stated on the record that day, as
well as those that follow, Defendants’ motion is granted.
I.

Background

Plaintiff Hua Zhu Chen filed a six count Complaint alleging violations of the Fair
Labor Standards Act for failure to pay minimum wages, failure to pay overtime wages
and improper diversion of tips, pursuant to 29 U.S.C. §§206 (a), 203 (d), and 216 (b).
Chen also alleges similar violations of the New Jersey Labor Laws pursuant to 34:1156a1(h). Defendant moves for summary judgment only as to the federal claims as plead
in Count I, II, and VI, on grounds that Chen is not entitled to the protections of the
FLSA because the nail salon did not generate gross volume of $500,000.00 annually
and/or because Plaintiff and Defendants did not engage in interstate commerce.

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II.

Summary Judgment Standard

“Summary judgment is proper if there is no genuine issue of material fact and if,
viewing the facts in the light most favorable to the non-moving party, the moving party
is entitled to judgment as a matter of law.” Pearson v. Component Tech. Corp., 247 F.3d
471, 482 n.1 (3d Cir. 2001) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986));
accord Fed. R. Civ. P. 56 (a). Thus, the Court will enter summary judgment in favor of a
movant who shows that it is entitled to judgment as a matter of law, and supports the
showing that there is no genuine dispute as to any material fact by “citing to particular
parts of materials in the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations . . . admissions, interrogatory
answers, or other materials.” Fed. R. Civ. P. 56 (c)(1)(A).
An issue is “genuine” if supported by evidence such that a reasonable jury could
return a verdict in the nonmoving party’s favor. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). A fact is “material” if, under the governing substantive law, a
dispute about the fact might affect the outcome of the suit. Id. In determining whether a
genuine issue of material fact exists, the court must view the facts and all reasonable
inferences drawn from those facts in the light most favorable to the nonmoving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Initially, the moving party has the burden of demonstrating the absence of a genuine
issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the
moving party has met this burden, the nonmoving party must identify, by affidavits or
otherwise, specific facts showing that there is a genuine issue for trial. Id.; Maidenbaum
v. Bally’s Park Place, Inc., 870 F. Supp. 1254, 1258 (D.N.J. 1994). Thus, to withstand a
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properly supported motion for summary judgment, the nonmoving party must identify
specific facts and affirmative evidence that contradict those offered by the moving party.
Andersen, 477 U.S. at 256-57. “A nonmoving party may not ‘rest upon mere allegations,
general denials or . . . vague statements . . . .’” Trap Rock Indus., Inc. v. Local 825, Int’l
Union of Operating Eng’rs, 982 F.2d 884, 890 (3d Cir. 1992) (quoting Quiroga v.
Hasbro, Inc., 934 F.2d 497, 500 (3d Cir. 1991)). Indeed,
the plain language of Rule 56(c) mandates the entry of summary judgment,
after adequate time for discovery and upon motion, against a party who fails
to make a showing sufficient to establish the existence of an element
essential to that party’s case, and on which that party will bear the burden
of proof at trial.
Celotex, 477 U.S. at 322. That is, the movant can support the assertion that a fact cannot
be genuinely disputed by showing that “an adverse party cannot produce admissible
evidence to support the [alleged dispute of] fact.” Fed. R. Civ. P. 56(c)(1)(B); accord Fed.
R. Civ. P. 56(c)(2).
III.

Analysis

The FLSA regulates, inter alia, wages, hours, and overtime compensation and
provides both individual and enterprise coverage. Genarie v. PRD Mgmt., No. 04–2082,
2006 WL 436733, at *5 (D.N.J. Feb.17, 2006). During oral argument, Plaintiff conceded
that the type of coverage at issue here is enterprise coverage. Enterprise coverage
protects employees who are “employed in an enterprise engaged in commerce or the
production of goods for commerce.” Genarie, 2006 WL 436733, at *5. As a threshhold
matter, enterprise coverage applies to employers that “[have an] annual volume of sales
made or business [that] is not less than $500,000.” 29 U.S.C. § 203(s) (1) (A)(i)-(ii);

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Juan Su v. Guang Yang Li, No. CIV.A. 10-5268 MLC, 2011 WL 3329882, at *1–2 (D.N.J.
Aug. 1, 2011).
Defendants submit an Affidavit of Defendant Diana Tram, the relevant tax returns of
Diana’s Oriental Nails, and a Certification from the tax return preparer Kenny Pham in
support of its position that the annual gross revenue of the nail salon fails to meet the
$500,000.00 threshhold for enterprise coverage. The record reflects that the nail
salon’s gross revenue for the tax years 2012, 2013, 2014, and 2015 barely exceeded
$100,000.00 during Plaintiff’s employment.
Plaintiff fails to identify any evidence in the record to call the veracity of the tax
returns into question. Plaintiff relies solely on her declaration which assumes wages
based upon hours allegedly worked by all of the alleged employees, none of which were
deposed or offered affidavits. In addition, in her brief in opposition, Plaintiff makes
calculations based on her projections of all of the employees earned wages and other
salon expenses without citing to any support in the record or authority. Finally, Plaintiff
attacks the tax returns as false and argues that a tax return is insufficient proof on
summary judgment in an FLSA case. Plaintiff’s argument miss the mark.
In order to survive summary judgment, Plaintiff must demonstrate a material
dispute of fact regarding whether the nail salon had an annual gross income of more
than $500,000. Despite having exchanged discovery, which includes Defendants’
payroll ledger, Plaintiff did not depose any of the employees she alleges worked at the
salon or Kenny Pham, who prepared Defendants’ tax returns. Without citing to any
support in the record, Plaintiff baldly states in her brief that “Defendants’ tax returns are
unreliable, insufficient and do not tend to support the argument that Defendant made
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less than $500,000.00.” Pl. Opp. Brief, p. 8. Plaintiff also claims that the redacted
versions of the tax returns submitted in support of the motion are insufficient and that
there is no proof that these returns were actually filed.
Counsel for Plaintiff conceded at oral argument that the redacted versions of the tax
returns submitted in support of the motion for summary judgment are identical to the
unredacted versions exchanged during discovery and that the redactions have no impact
on the total numbers relevant to the Court’s considerations on this motion. In addition,
counsel acknowledged that Kenny Pham was not deposed and, therefore, Plaintiff
cannot challenge his certification, which states that the Schedule C’s are true and
accurate copies of the versions filed by him with the State of New Jersey and the United
States Treasury. Kenny Pham Cert., ¶3. Finally, because Plaintiff neither identified nor
deposed any of her co-workers, her unsupported statements regarding the amount of
hours worked is insufficient on summary judgment to create a genuine issue of material
fact.
Plaintiff cites to Monterossa v. Martinez Rest. Corp., No. 11 CIV. 3689 JMF, 2012 WL
3890212, at *3 (S.D.N.Y. Sept. 7, 2012) for the proposition that Plaintiff’s own words are
sufficient to call the veracity of the tax returns into question. In Monterossa, the
plaintiff demonstrated that the defendant restaurant's tax returns were inconsistent
with defendants' own records which indicated that defendants paid significantly more in
wages than the restaurant claimed on its tax returns. Id. As a result, the court denied
summary judgment, even though the restaurant’s tax returns did not show a gross
annual income that vaulted the threshold amount, because the defendants' own records
strongly suggested that it had sufficient gross annual income to qualify for coverage
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under the FLSA. Monterossa v. Martinez Rest. Corp., No. 11 CIV. 3689 JMF, 2012 WL
3890212, at *3 (S.D.N.Y. Sept. 7, 2012). Here, Plaintiff’s assertions and speculation ask
the Court to extrapolate generalized figures and hours without the benefit of any
documentation or testimony from her co-workers. In addition, even though Plaintiff’s
counsel stated during oral argument that Defendants’ payroll ledger was produced,
there was no attempt made in this motion to identify any inconsistencies or marshal any
evidence to undermine the veracity of the ledger or tax return. Instead, Plaintiff simply
states that the financial submissions are untrustworthy and clearly false.
While the Court agrees that cash, or predominantly cash, businesses may insulate
themselves from FLSA claims with clever book-keeping and that such practices frustrate
a plaintiff’s attempt to marshal evidence in support of a claim, summary judgment
requires more than “mere allegations, general denials or . . . vague statements . . . .”
Trap Rock Indus., Inc., 982 F.2d at 890 (citation omitted). As the non-moving party,
Plaintiff must identify some evidence beyond her own speculation to create a genuine
issue of material fact. Here, counsel acknowledged that no depositions were taken of
the other employees or the tax preparer. In addition, although not required, Plaintiff
could have submitted her own tax return to show a discrepancy in the amount of hours
she worked versus the amount of time Defendants recorded. The payroll ledger was not
challenged or used to highlight any inference of inaccuracy. As a result, the Court is left
with unchallenged evidence tending to show that the business does not “[have an]
annual volume of sales made or business [that] is not less than $500,000.” 29 U.S.C. §
203(s) (1) (A)(i)-(ii) to be amenable to suit under the FLSA. Summary judgment is
granted in favor of Defendants as to Counts I, II, and VI.

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IV.

Conclusion

For the reasons set forth above, summary judgment is granted in favor of Defendants
as to Counts I, II, and VI. The decision of whether to exercise supplemental jurisdiction
over Plaintiff’s remaining state law claims is left to the Court's discretion as “pendent
jurisdiction is a doctrine of discretion, not of plaintiff's right.” United Mine Workers of
Am. v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). Because this Court
has dismissed Plaintiff's federal claims, the Court declines to exercise jurisdiction over
Plaintiff's remaining state law claims. Section 1367(c)(3) provides:
The district courts may decline to exercise supplemental jurisdiction over a
claim under subsection (a) if ... the district court has dismissed all claims
over which it has original jurisdiction.
See 28 U.S.C. § 1367 (c) (3). Other courts faced with similar situations have followed
this procedure. See, e.g., McGrain v. City of Philadelphia, 2006 WL 2668651, at *7
(E.D.Pa. Sept. 15, 2006) (declining to exercise jurisdiction over state law claims
pursuant to 28 U.S.C. § 1367 (c) (3) when all federal claims have been dismissed); and
Cunningham v. Lenape Regional High Dist. Bd. of Educ., 492 F.Supp.2d 439, 451
(D.N.J. 2007) (same).
As a result, Plaintiff's remaining state law claims are hereby dismissed.

Dated: November 27, 2017
s/ Joseph H. Rodriguez
Hon. Joseph H. Rodriguez,
UNITED STATES DISTRICT JUDGE

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