Abrigo v. El Gauchito V, Inc. et al
MEMORANDUM AND ORDER granting in part and denying in part 36 Motion to Compel; denying without prejudice 37 Response in Opposition and Cross-Motion. For the reasons stated in the attached Memorandum and Order, plaintiff's motion to compel is granted in part, and defendants' cross-motion is denied without prejudice. Ordered by Magistrate Judge Roanne L. Mann on 6/25/2015. (Williams, Jennifer)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
EL GAUCHITO V, INC., et al.,
ROANNE L. MANN, UNITED STATES MAGISTRATE JUDGE:
For the third time in four weeks, plaintiff Ariel Abrigo (“plaintiff”) moves this Court to
compel defendants to comply with their discovery obligations. See [Third] Motion to Compel
(June 17, 2015) (“Pl. Mot.”), Electronic Case Filing Docket Entry (“DE”) #36; see also
Motion to Compel (May 24, 2015), DE #32; Second Motion to Compel (June 3, 2015), DE
#34. Defendants cross-move for a stay of discovery and permission to file a motion to dismiss
or, alternatively, a motion for summary judgment. See Response in Opposition and Cross
Motion (June 18, 2015) (“Def. Opp.”), DE #37. For the reasons explained herein, plaintiff’s
motion is granted in part and denied in part, and defendants’ motion is denied without
prejudice as premature.
PLAINTIFF’S MOTION TO COMPEL
Request for Admissions
On May 28, 2015, plaintiff served defendants with a Request for Admission, pursuant
to Rule 36 of the Federal Rules of Civil Procedure. Plaintiff’s request sought three admissions
concerning the interstate nature of the credit card transactions that took place at defendants’
restaurant, where plaintiff worked as a waiter. See Pl. Mot. at 1-2; see also Request for
Admission, DE #36-1.1 Defendants responded that they did not have sufficient knowledge to
either admit or deny the truth of those facts. See generally Defendants’ Response to Plaintiff’s
Notice to Admit Truth of Facts (“Def. R. 36 Resp.”), DE #36-2. Plaintiff challenges
defendants’ response as inadequate under Rule 36 and requests that this Court deem those facts
to be admitted. See Pl. Mot. at 2-3.
Rule 36 provides that an “answering party may assert lack of knowledge or information
as a reason for failing to admit or deny only if the party states that it has made reasonable
inquiry and that the information it knows or can readily obtain is insufficient to enable it to
admit or deny.” Fed. R. Civ. P. 36(a)(4) (emphasis added). Plaintiff argues, without citing
case law, that the “reasonable inquiry” standard requires defendants to call JP Morgan Chase
(“Chase”) and ask where its credit card servers were located. See Pl. Mot. at 2. Indeed,
plaintiff’s counsel claims he was able to do so himself. See id. at 1 (explaining that “Dan” in
Chase’s merchant bank unit confirmed to plaintiff’s counsel that Chase’s servers were located
in New Hampshire and Florida).
What constitutes a “reasonable inquiry” under Rule 36 depends on the facts of each
case. See T. Rowe Price Small-Cap Fund, Inc. v. Oppenheimer & Co, Inc., 174 F.R.D. 38,
43 (S.D.N.Y. 1997). Nevertheless, the “reasonable inquiry” requirement generally does not
extend to inquiries directed to third parties. See id.; see also Gaul v. Chrysler Fin. Servs.
For example, Request No. 1 asked defendants to admit that “[t]he vendor used by Defendant
El Gauchito V, Inc. to process credit card transactions maintains its servers outside the state of
New York.” See Request for Admission at 1.
Ams. LLC, No. 1:13-CV-433 (TJM/RFT), 2014 WL 1513843, at *7 (N.D.N.Y. Apr. 16,
2014) (although the inquiry may require “venturing beyond the parties to the litigation, and
include, under certain limited circumstances, non-parties,” it “surely” did not include
Defendants’ response suggests that no inquiry was made concerning these matters. See
generally Def. R. 36 Resp. At this point, it is unclear whether there is a sufficiently close
relationship between non-party Chase and defendants as to require defendants to make
reasonable inquiries regarding the location of Chase servers. Cf. Koumantaros v. City of
Univ. of N.Y., No. 03 Civ. 10170 (GEL) (DFE), 2005 WL 2249751, at *2 (S.D.N.Y. Sept.
15, 2005) (where defendant’s employees “could easily” reach out to non-parties with whom
those employees worked closely to determine how the non-parties self-identify racially,
defendant did not satisfy “reasonable inquiry” standard). For example, it may be that Chase
provides merchant customers like defendants with a particular contact with whom defendants
regularly communicate regarding credit card issues.
Without factual support establishing the nature of the relationship between Chase and
defendants, the Court will not now require defendants to make such inquiries concerning the
credit card servers or deem the facts to be admitted.2 Nevertheless, defendants’ response as it
The fact that plaintiff’s counsel was able to obtain this information, which may be crucial to
plaintiff’s ability to establish individual coverage under the Fair Labor Standards Act
(“FLSA”), see infra pp. 5-6, does not alter this Court’s conclusion that plaintiff has proffered
insufficient facts to establish that defendants should be required to make similar efforts to
obtain information from a source that does not appear to be within defendants’ control. “Rule
36 is not a discovery device.” T. Rowe Price Small-Cap Fund, 174 F.R.D. at 42. Until fact
discovery closes on July 15, plaintiff remains free to subpoena or obtain an affidavit from
Chase or to depose defendants in order to assess their relationship with Chase. Or defendants
stands now is insufficient, in that the answers do not acknowledge or address the reasonable
inquiry standard. Therefore, defendants must serve an amended response that complies with
Rule 36 no later than June 30, 2015.3
Violation of the 6/10/15 Order
On June 10, 2015, this Court held a telephone conference on plaintiff’s second motion
to compel (the “6/10/15 Order”). See Minute Entry (June 10, 2015), DE #35. At the
conclusion of the hearing, the Court directed defendants, inter alia, to supplement their
responses to Interrogatory Nos. 2 and 4 by June 15, 2015. See id. at 1-2. In particular,
defendants were obligated to supplement Interrogatory No. 2 by specifying “plaintiff’s regular
work schedule (i.e., what days he worked and which hours) and his period of employment.”
See id. at 2. With respect to Interrogatory No. 4, the Court required defendants to provide job
title and earnings information for each employee during the years 2012, 2013 and 2014. See
id. The Court also directed defendant to produce for deposition, at plaintiff’s option, the
accountant who prepared a document referred to as the History Report. See id.
In plaintiff’s reply to his motion to compel, plaintiff asserts for the first time that
defendants violated the 6/10/15 Order by (1) failing to supplement Interrogatory Nos. 2 and
No. 4; and (2) declining to make the accountant available for a deposition without a formal
may voluntarily reach out to Chase to see whether the information sought is indeed “readily
To the extent that defendants claim not to understand what “transmission” refers to in
plaintiff’s Request No. 3 (“Such transmission makes use of interstate telephone lines, data
lines, or other facilities of interstate commerce.”), plaintiff, at his option, may serve an
amended Request No. 3 no later than June 26, 2015. Defendants’ response to this amended
request should be included in their June 30, 2015 amended responses.
notice of deposition. See Letter in Response (June 19, 2015), DE #39. Although the Court
gave defendants an opportunity to respond to these newly raised discovery issues, defendants
chose not to address them.4
Defendants are directed to, by July 2, 2015, supplement their responses to
Interrogatory Nos. 2 and 4 and, by July 7, 2015, to produce for deposition defendants’
accountant, with or without a formal notice of deposition. Defendants are hereby warned that
failure to comply with this order will likely result in sanctions, including, but not limited to,
issue preclusion. See generally Fed. R. Civ. P. 37(b).
Defendants cross-move for (1) permission to file a motion to dismiss and/or summary
judgment and (2) for a stay of discovery, pending the outcome of any dispositive motion. See
Def. Opp. at 3-5.
To bring a FLSA claim, a plaintiff must have been (1) “engaged in commerce or in the
production of goods for commerce [i.e. individual coverage],” or (2) “employed in an
enterprise engaged in commerce or in the production of goods for commerce [i.e., enterprise
coverage].” See Jacobs v. N.Y. Foundling Hosp., 588 F.3d 93, 96 (2d Cir. 2009) (citing 29
U.S.C. § 207(a)(1)) (bracketed language added). Defendants seek to dismiss plaintiff’s FLSA
claim on the basis that plaintiff has failed to allege and/or create an issue of material fact that
the corporate defendant, El Gauchito V, Inc., is a covered enterprise under the FLSA or that
To be sure, defendants filed a sur-reply, but that sur-reply wholly ignored plaintiff’s
allegations concerning defendants’ failure to comply with the 6/10/15 Order. See
[Defendants’] Reply in Support (June 23, 2015) (“Def. Sur-Reply”), DE #41.
plaintiff is a covered individual. See Def. Opp. at 3-5.
The Court denies defendants’ cross-motion without prejudice as premature. With
respect to enterprise coverage, as plaintiff notes, the outstanding discovery owed by defendants
pursuant to the 6/10/15 Order was specifically demanded in order to challenge defendants’
suggestion that they fail to meet the threshold $500,000 in gross volume of sales necessary to
establish enterprise coverage. See Pl. Reply at 1; see also 29 U.S.C. § 203(s). Defendants’
belated submission of an unsworn statement by defendants’ accountant -- to the effect that
defendants’ corporate tax return (on which defendants so heavily rely) contains a material
error, but that defendants do not meet the $500,000 threshold -- only serves to highlight the
fact that the accountant should have been produced for a deposition, as mandated by the
6/10/15 Order. See [Defendants’] Reply in Support (June 24, 2015), DE #42.
As for individual coverage, plaintiff is currently pursuing fact discovery concerning the
interstate nature of defendants’ credit card transactions, which could potentially create a
genuine issue of material fact as to whether plaintiffs are entitled to individual coverage under
the FLSA. See, e.g., Kim v. Kum Gang, Inc., No. 12 Civ. 6344 (MHD), 2015 WL 2222438,
at *22 n.48 (S.D.N.Y. Mar. 19, 2015) (where plaintiff waiters, as part of their job, were
required to regularly process credit-card payments for guests, they were likely to satisfy the
FLSA standard for individual coverage); Owusu v. Corona Tire Shop, Inc., No. 09-CV-3744
(NGG) (JO), 2010 WL 4791629 at *2-3 (E.D.N.Y. Nov. 17, 2010) (finding an issue of
material fact as to whether the extent of an auto mechanic’s use of a credit card machine was a
“substantial part” of his employment, such that the mechanic would be covered as an
individual under the FLSA).5
Therefore, the Court denies without prejudice defendants’ motion for permission to file
a dispositive motion.6 Discovery is not stayed.
For the reasons set forth above, the Court denies in part and grants in part plaintiff’s
motion to compel. The Court declines to deem admitted the facts contained in plaintiff’s
Request for Admission, but directs defendant to serve an amended response that complies with
Rule 36 no later than June 30, 2015. The Court further directs defendants, on pain of
sanctions, to, by July 2, 2015, supplement their responses to Interrogatory Nos. 2 and 4 and,
by July 7, 2015, to produce for deposition defendants’ accountant, with or without a formal
notice of deposition.
In their sur-reply, defendants argue that the use of credit cards is insufficient to establish
individual coverage. See Def. Sur-Reply at 2. The Court is unpersuaded. First, defendants
rely almost exclusively on out-of-circuit case law to support their argument. See id. Second,
in inviting defendants to respond to plaintiff’s most recent submission, the Court authorized
defendants to address new issues in that filing (namely, defendants’ non-compliance with the
6/10/15 Order), and the issue of individual coverage vis-à-vis credit card use had been raised
for the first time in plaintiff’s original motion. See Pl. Mot. at 1. In any event, the cases cited
by defendants are distinguishable. See Thorne v. All Restoration Servs., Inc., 448 F.3d 1264,
1267 (11th Cir. 2006) (testimony that the credit card bills plaintiff received for in-state
purchases were mailed from out-of-state was insufficient to create a genuine issue of material
fact as to individual coverage); Kitchings v. Florida United Methodist Children’s Home, Inc.,
393 F.Supp.2d 1282, 1292 (M.D. Fla. 2005 ) (no issue of fact as to individual FLSA
coverage, where plaintiffs offered conclusory allegations, but no evidence, to establish that
houseparents of children’s home used credit cards in their employment, and defendant offered
affidavit that credit card purchases were “sporadic at best”).
To the extent defendants purport to seek permission to file a motion to dismiss based on the
pleading’s conclusory or speculative allegations, a brief glance at the second amended
complaint shows this argument to be dubious. See, e.g., [Second] Amended Complaint (May
15, 2015) ¶¶ 18-20a, DE #30.
Defendants’ cross-motion for a stay of discovery and permission to file a dispositive
motion is denied without prejudice as premature.
Brooklyn, New York
June 25, 2015
Roanne L. Mann
ROANNE L. MANN
UNITED STATES MAGISTRATE JUDGE
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