Alvarado v. Five Town Car Wash Inc. et al
MEMORANDUM AND ORDER: Plaintiff's motion for summary judgment is denied. Ordered by Judge Raymond J. Dearie on 9/19/2014. (Chee, Alvin)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
LEONZO JOAQUIN CONSTANZA
MEMORANDUM AND ORDER
13 CV 1672 (RJD) (JO)
FIVE TOWNS CAR WASH, INC., et al.,
DEARIE, District Judge.
Plaintiff Leonzo Joaquin Constanza Alvarado moves for partial summary judgment
against defendants Five Towns Car Wash, Inc. ("Five Towns") and William Brown on the issue
of whether defendants could properly avail themselves of the so-called tip credit under the Fair
Labor Standards Act of 193 8 ("FLSA") and an analogous provision of the New York Labor Law
("NYLL"). See 29 U.S.C. § 203(m); N.Y. Lab. Law§ 196-d; See generally Shahriar v. Smith &
Wollensky Rest. Grp., Inc., 659 F.3d 234, 239-40 (2d Cir. 2011) (explaining conditions under
which an employer may apply the tip credit to employee wages under the FLSA); Barenboim v.
Starbucks Corp., 21N.Y.3d460, 469-73 (2013) (explaining application of the tip credit under
the NYLL). The Court heard argument on the motion on September 18, 2014. Jury selection is
set to begin on September 22nd. We will be correspondingly brief.
In determining whether a genuine issue of material fact precludes summary judgment, we
view the evidence in the light most favorable to the non-moving parties. Esmilla v.
Cosmopolitan Club, 936 F. Supp. 2d 229, 237 (S.D.N.Y. 2013) (citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986)). Moreover, we draw all reasonable inferences and
resolve all ambiguities in favor of the non-moving parties. Callari v. Blackman Plumbing
Supply, Inc., 988 F. Supp. 2d 261, 275 (E.D.N.Y. 2013) (citing Anderson, 477 U.S. at 247-48).
Properly applied, that indulgent standard precludes summary judgment here. Alvarado has done
an admirable job drawing out certain inconsistencies between Brown's testimony, his own
testimony, and the testimony offered by three employees whom Alvarado claims improperly
shared tips: Luciano Alfaro, Herman Heeraman ("Terry"), and Sahil Sood. But genuine - in
some instances, closely contested - disputes of material fact remain.
In principle, the Court can sometimes settle the economic reality test on a motion for
summary judgment, because the ultimate question of whether a supervisor acts as an employer
when sharing tips is a question of law. Cf. Zheng v. Liberty Apparel Co. Inc., 355 F.3d 61, 76
(2d Cir. 2003) (economic reality test presents a mixed question of law and fact in which
historical facts underlie the weight afforded to each factor, which in tum drives the ultimate
conclusion of law). But we cannot say that either Alfaro, Terry, or Sood acted with the degree of
authority and control required to impute their sharing in tips to Brown and Five Towns, at least
not based on the historical facts that are undisputed, such as the fact that all three supervised
other employees to ensure they washed and detailed the cars properly. The Court does not make
too much of the fact that Sood evidently prepared payroll forms, given that his role appears to
have required little more than inputting hours and calculating wages based on the rate set by
Brown. See Widjaja v. Kang Yue USA Com., 2011 WL 4460642, at *4 (E.D.N.Y. Sep. 26,
2011) ("[F]actors governing the determination include ... analyzing payroll and [other]
costs[.]") (emphasis added). Similarly, the fact that Terry drew a salary, although an important
factor, is insufficient standing alone to establish his status as an employer. See Ayres v. 127
Rest. Corp., 12 F. Supp. 2d 305, 308 (S.D.N.Y. 1998) (concluding that manager became
employer for purposes of tip credit not only because he began drawing salary, but because he
"gained 'full authority' to suspend or terminate employees ... made hiring decisions ... [and]
assumed greater responsibility for the restaurant's budget.")
We might conclude that Alfaro, Terry, or Sood acted as Alvarado's employer for
purposes of the tip credit if Alvarado had conclusively dispelled any genuine dispute of fact on
whether any one of those three supervisors had durable power to hire and fire. See Widjaja,
2011 WL 4460642, at *4 ("The most significant factor in determining whether a person is an
'employer' is the power to hire, fire, or discipline other employees."). But, although Alvarado
has identified some equivocation by Brown with respect to Terry, he has not yet made that
showing. Not in light of the following extended testimony from Brown:
Besides you, did anyone else ever fire anyone at the car wash?
It's possible Terry might have let somebody go, but it would likely be me.
Other than Terry, anyone else fire anyone that you know?
Not that I'm aware of.
What about hiring? Do you know if anyone other than you hired anyone at the car
Terry might have hired somebody, but he would call me up and get my okay.
Did Terry ever hire somebody without calling you first?
No, not that I'm aware of.
(Brown Dep. 23, filed at Brown Deel. Ex. C, ECF No. 39-3). Whatever Terry's role in hiring and
firing employees (his exact role remains unclear), this testimony indicates that Brown made the
final decision. 1
Likewise, we cannot conclude that either Alfaro, Terry, or Sood were employees who did
not "customarily and regularly" receive tips. 29 U.S.C. § 203(m); See generally Chan v. Triple 8
Palace, Inc., 2006 WL 851749, at *14 (S.D.N.Y. Mar. 30, 2006) (explaining that the employer
cannot apply the tip credit if the employer shares in the tips or if an employee who does not
Gelber Constanza's testimony does not persuade the Court otherwise. To grant the motion in
reliance on that testimony we would likewise have to resolve the ambiguities surrounding Gelber
Constanza's resignation, rehire, and eventual termination in Alvarado's favor, not in favor of
customarily receive tips participates in the tip pool). In determining whether an employee
customarily and regularly receives tips, the Court "focus[ es] on whether the employee in
question is 'part of an occupation that customarily and regularly receives tips,' or whether they
have more than 'de minimis' interaction with customers as a part of their employment." See
Garcia v. La Revise Assocs. LLC, 2011WL135009, at *5 (S.D.N.Y. Jan. 13, 2011) (quoting
Kilgore v. Outback Steakhouses of Florida, Inc., 160 F.3d 294, 301 (6th Cir. 1998)). The record
includes ample evidence from which a reasonable fact-finder could infer that Alfaro, Terry, and
even Sood (who described himself as a "back manager") all had more than de minimis
interaction with customers - participating in the washing and detail work, vacuuming and
scrubbing, driving cars from the customer drop-off point to the washing area, and so forth.
Indeed, Sood flatly stated that it was his job to, among other things, "mak[ e] sure the customer is
very satisfied in the front like they were in the back." (Sood Dep. 16, ECF No. 41-3). From that
we can readily infer that he also interacted with those same customers when "vacuum[ing] the
cars," "dr[iving] up the cars," and "scrubb[ing] the tires." (Sood Dep. 51, filed as Brown Deel.
Ex. F, ECF No. 39-6). After all, the simplest way for Sood to ensure that the customer was
satisfied with his work and that of his co-workers would be to ask the customer directly.
The Court also cannot determine with certainty that Brown failed to properly notify
Alvarado that he would apply the tip credit to his wages. 29 U.S.C. § 203(m). The papers
obliquely raise the interesting question of just how much explication is required before the
employer can be said to have "informed" the employee. See Id. Generally, however:
"[e]mployers do not have to 'explain' the tip credit to employees ... it is enough to 'inform'
them ofit." Chan, 2006 WL 851749, at *14 (quoting Kilgore, 160 F.3d at 298). On this point,
Alvarado has again done well to pull together testimony from the various depositions to dispute
Brown's pointed statement that he "told them that the minimum wage is $7.25, we pay $6.25,
and we're allowed to take a tip credit, and that brings you up to the minimum wage." (Brown
Dep. 71). But ultimately Alvarado has raised the dispute, not resolved it, especially when we
take into account the wage statements provided to Alvarado and the New York State Department
of Labor informational posters displayed in the car wash. 2
Finally, we cannot grant summary judgment in favor of Alvarado on the issue of whether
defendants improperly applied the tip credit under the NYLL. N.Y. Lab. Law§ 196-d. Granted,
the test set forth in Barenboim, 21 N. Y.3d at 469-73 exhibits subtle differences from the tests
applied under the FLSA. In our view, however, there is little functional difference between the
federal and state tipping provisions as applied to this motion. As the Court of Appeals
[A]n employee whose personal service to patrons is a principal or regular part of
his or her duties may participate in an employer-mandated tip-allocation
arrangement under Labor Law § 196-d, even if that employee possesses limited
supervisory responsibilities. But an employee granted meaningful authority or
control over subordinates can no longer be considered similar to waiters and
busboys within the meaning of section 196-d and, consequently, is not eligible to
participate in a tip pool.
Id. at 473. The first part of this rule resembles the FLSA's test for whether an employee
"customarily and regularly receives" tips, though it does require more than a de minimis showing
of customer interaction. The second part - "meaningful authority or control over subordinates" resembles the economic reality test, hinging as it does on various factors indicating managerial
power, see Id. at 473, although arguably requiring a lesser showing of authority than the FLSA.
See Megason v. Starjem Rest. Corp., 2014 WL 113711, at *6 (S.D.N.Y. Jan. 13, 2014). We
need not parse the distinctions here, because Alvarado's motion under the NYLL falls short for
Of course, the veracity of those wage statements is very much in dispute in this litigation, but
on the present motion we are obliged to view them as truthful and accurate.
much the same reasons as under the FLSA. Specifically, for the reasons the Court explained
supra pp. 2-3, we do not think Alvarado has yet shown that Alfaro, Terry, or Sood crossed the
"line" established by the Court of Appeals between "supervisory responsibility" and "meaningful
or significant authority." Barenboim, 21 N.Y.3d at 472-73. And, for the reasons we explained
supra pp. 3-4, there is evidence indicating that all three employees provided "personal service to
patrons" on a regular basis. Id. at 473. The motion is denied.
/s/ Judge Raymond J. Dearie
Dated: Brooklyn, New York
September 19, 2014
United States District Judge
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