Chang et al v. Wang et al

Filing 99

MEMORANDUM and ORDER: The motions 82 & 83 are granted in part and denied in part. The case will proceed to trial on (1) the overtime claims of all named and opt-in plaintiffs, (2) the wage notice claims of all plaintiffs other than those listed a bove, and (3) the defendants counterclaims other than theft. Given the difficulty of comprehensibly presenting all of those claims to a jury, the parties are directed to devote their best efforts towards a mutually agreeable resolution of the case. See attached decision for details. Ordered by Judge Frederic Block on 3/12/2018. (Innelli, Michael)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------------------x
SHANG SHING CHANG, JIE LI,
XIAOXI XIE, BIN YANG, LONG
CHEN, YA XU, YI MING MA, LU
YANG, individually and on behalf of all
other employees similarly situated,
Plaintiffs - Counter-Defendants,
-against-

MEMORANDUM AND ORDER
15-CV-4385 (FB) (ST)

KEVIN WANG, CLEAN AIR CAR
SERVICE & PARKING
CORPORATION, CLEAN AIR CAR
SERVICE & PARKING BRANCH ONE,
LLC, CLEAN AIR CAR SERVICE &
PARKING BRANCH TWO, LLC,
CLEAN AIR CAR SERVICE &
PARKING BRANCH 3, LLC, CLEAN
AIR CAR SERVICE & PARKING
BRANCH 5, LLC, CLEAN AIR CAR
SERVICE & PARKING BRANCH 6,
LLC, CLEAN AIR CAR SERVICE &
PARKING BRANCH 7, LLC, JOHN
DOE and JANE DOE 1-10,
Defendants - Counter-Claimants.
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Appearances:
For the Plaintiffs:
WILLIAM BROWN, ESQ.
Hang & Associates, PLLC
136-18 39th Avenue, Suite 1003
Flushing, New York 11354

For the Defendants:
MARC J. MONTE, ESQ.
MUZAMMIL JAMIL, ESQ.
Monte Wang & Associates, PLLC
130-30 31st Avenue, Suite 801
Flushing, New York 11354

BLOCK, Senior District Judge:
The plaintiffs in this wage and hour case allege that their employers—a group
of car services and a parking garage owned by defendant Kevin Wang—did not pay
them overtime premiums as required by the Fair Labor Standards Act (“FLSA”) and
the New York Labor Law (“NYLL”), and failed to provide wage notices as required
by the NYLL. Three of the plaintiffs—Shang Shing Chang, Jie Li and Duke
Lee—further claim that they were improperly classified as exempt employees not
entitled to overtime.
In addition to denying the plaintiffs’ allegations, the defendants have asserted
counterclaims for wage overpayments and theft. They have also asked the court to
decertify the collective action.
Both parties have moved for summary judgment pursuant to Federal Rule of
Civil Procedure 56. Taken collectively, the motions frame six questions:
I.

Defendants’ Motion
A.

Do the defendants’ time and pay records resolve the
plaintiffs’ overtime claims as a matter of law?

B.

Should the Court decertify the FLSA claims as a collective
action?

C.

Do documents provided by the defendants resolve the
plaintiffs’ wage notice claims as a matter of law?

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II.

Plaintiffs’ Motion
A.

Were Chang, Li and Lee exempt employees as a matter of
law?

B.

Are the defendants entitled to assert counterclaims for
overpayment of wages?

C.

Does the Court have subject-matter jurisdiction over the
defendants’ counterclaim for theft?

For the following reasons, the motions are granted in part and denied in part.1
I. Defendants’ Motion
A.

Overtime
“To establish liability under the FLSA on a claim for unpaid overtime, a

plaintiff must prove that he performed work for which he was not properly
compensated, and that the employer had actual or constructive knowledge of that
work.” Kuebel v. Black & Decker, Inc., 643 F.3d 352, 361 (2d Cir. 2011). Since the
FLSA requires employers to keep records of their employees’ wages and hours, see29

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The plaintiffs originally claimed that they did not receive the legal
minimum wage or spread-of-hours pay, and that the defendants engaged in unfair
business practices. They have conceded that the defendants are entitled to
summary judgment on those claims.
In addition, the plaintiffs claimed that they did not receive pay stubs. They
failed to respond to the defendants’ motion for summary judgment on that claim.
See Lipton v. County of Orange, 315 F. Supp. 2d 434, 446 (E.D.N.Y. 2004) (“This
Court may, and generally will, deem a claim abandoned when a plaintiff fails to
respond to a defendant's arguments that the claim should be dismissed.”).
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U.S.C. § 211(c), an employee can satisfy that burden by producing those records. See
Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946), superseded on other
grounds by 29 U.S.C. § 254(a). That approach works, however, only if “the employer
has kept proper and accurate records.” Id.
If, by contrast, the employer’s records are not accurate, “an employee need only
present ‘sufficient evidence to show the amount and extent of [the uncompensated
work] as a matter of just and reasonable inference.’” Kuebel, 643 F.3d at 362 (quoting,
with alteration, Anderson, 328 U.S. at 687). This burden is not high, and testimony
based on the employee’s own recollection is sufficient to defeat summary judgment.
See id. “A similar standard to Anderson is applied in deciding overtime claims under
New York law.” Berrios v. Nicholas Zito Racing Stable, Inc., 849 F. Supp. 2d 372,
380 (E.D.N.Y. 2012).
The defendants assert that the logs of their drivers and time-clock records of
their parking lot attendants are accurate, and that the plaintiffs must offer “evidence
over and above [their] mere recollection or conclusory allegations” to rebut that
assertion. Defs’. Mem. of L. 10. While the Court agrees that allegations (conclusory
or otherwise) cannot defeat summary judgment, Kuebel stands for the proposition that
a plaintiff’s testimony is sufficient, not only to support a “just and reasonable
inference” under Anderson, but also to raise an issue of fact regarding the accuracy
of the employer’s records.
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The plaintiff in Kuebel “averred that to the best of his memory, he worked more
than forty hours ‘just about every week,’ and ‘averaged from one to five hours of
uncompensated overtime every week.’” 643 F.3d at 356. These extra hours were not
included on his self-created timesheets “because his supervisors instructed him not to
record more than forty hours per week.” Id. The district court declined to apply
Anderson, but the Second Circuit reversed:
Kuebel has testified that it was [his employer], through its managers, that
caused the inaccuracies in his timesheets. While ultimately a factfinder
might or might not credit this testimony, that is a determination for trial,
not summary judgment. In sum, we hold that because Kuebel has
presented evidence indicating that his employer’s records are
inaccurate—and that although it was he who purposefully rendered them
inaccurate, he did so at his managers’ direction—the district court should
have afforded Kuebel the benefit of Anderson’s “just and reasonable
inference” standard.
Id. at 363. The circuit court noted that a contrary rule would allow an employer to
“unofficially pressure [its employees] not to record overtime, and then, when an
employee sues for unpaid overtime, assert that his claim fails because his timesheets
do not show any overtime.” Id.
The plaintiffs in this case have asserted, either in depositions or declarations,
that they worked somewhere between fifty and sixty hours per week, but received no
overtime payments.2 In response to the defendants’ claim that their records do not
2

Several plaintiffs were paid a fixed salary or daily wage regardless of the
number of hours worked. “Unless the contracting parties intend and understand
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show any unpaid overtime hours, they attest that they were required to record breaks
of thirty to sixty minutes even if they worked during that time. Under Kuebel, the
plaintiffs’ averments are sufficient to both trigger and satisfy Anderson’s “just and
reasonable inference” standard.
In addition, the employees who were drivers attest that their logs do not
accurately reflect total hours worked because only time spent transporting passengers
was recorded; at their employer’s direction, time spent waiting for passengers, driving
to assignments, and refueling was excluded. This, too, reveals a question of fact.
“[W]hether an employee’s expenditure of time is considered work under the FLSA
turns in part on whether that time is spent predominantly for the benefit of the
employer or the employee.” Singh v. City of New York, 524 F.3d 361, 368 (2d Cir.
2008). That inquiry requires an assessment of all the relevant circumstances—the
classic purview of a factfinder. See Reich v. S. New Eng. Telecomm. Corp., 121 F.3d
58, 64 (2d Cir. 1997) (“The determination of what constitutes work is necessarily
fact-bound .”).

the weekly salary to include overtime hours at the premium rate, courts do not
deem weekly salaries to include the overtime premium for workers regularly
logging overtime, but instead hold that weekly salary covers only the first 40
hours.” Giles v. City of New York, 41 F. Supp. 2d 308, 317 (S.D.N.Y. 1999) (citing
cases). Similarly, workers paid day rates are “entitled to extra half-time pay at
[their regular rate] for all hours worked in excess of 40 in the workweek.” 29
C.F.R. § 778.112.
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B.

Collective Action Decertification
The Court previously laid out the law regarding certification of a collective

action under the FLSA in its order authorizing notice to potential opt-in plaintiffs:
Certification of a collective action is a two-step process. “The first step
involves the court making an initial determination to send notice to
potential opt-in plaintiffs who may be ‘similarly situated’ to the named
plaintiffs with respect to whether a FLSA violation has occurred.” If the
Court makes such a determination, the potential plaintiffs must be given
notice of the action and an opportunity to opt in. Because the
determination is only preliminary and must necessarily be made early in
the proceedings, the first step imposes on the named plaintiff the
minimal burden of making a “modest factual showing” based on the
pleadings and affidavits.
Chang v. Clean Air Car Serv. & Parking Corp., 2016 WL 4487748, at *2 (E.D.N.Y.
Aug. 25, 2016) (quoting Myers v. Hertz Corp., 624 F.3d 537, 555 (2d Cir. 2010)).
Once the opt-in period is over and discovery is completed, the
court—usually at the defendant's instance—applies “a more heightened
scrutiny.” If the facts developed during discovery refute the step-one
determination, the court will decertify the collective action and only the
named plaintiffs’ claims will proceed, and opt-in plaintiffs can file a
separate action.
Id. (quoting Jacobs v. N.Y. Founding Hosp., 483 F. Supp. 2d 251, 265 (E.D.N.Y.
2007).
No facts developed during discovery refute the Court’s step-one determination
that the potential opt-in plaintiffs are similarly situated to the named plaintiffs. As
explained in the prior order, FLSA plaintiffs are similarly situated as long as they were
“victims of a common policy or plan that violated the law.” Id. (quoting Hoffman v.
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Sbarro, Inc., 982 F. Supp. 249, 261 (S.D.N.Y. 1997)). “[T]hey can be ‘similarly
situated despite distinctions in job title, function, or pay.’” Id. at *3 (quoting Jirak v.
Abbot Labs., 566 F. Supp. 2d 845, 849 (N.D. Ill. 2008)). As discussed in Part I of this
Memorandum and Order, discovery has yielded enough support for the plaintiffs’
claim that their employer had a common policy of requiring them not to log all time
worked to survive summary judgment.
C.

Wage Notices
Under New York’s Wage Theft Prevention Act, an employer must give his or

her employees written notice detailing “the rate or rates of pay and basis thereof,”
“allowances, if any, claimed as part of the minimum wage,” “the regular pay day
designated by the employer,” and the employer’s name, physical address, mailing
address and telephone number. N.Y. Lab. L. § 195(1)(a). The notice must be given
at the time of hire in both English and the employee’s primary language. See id.
The defendants argue that documents in the employment files of eight of the
nine named plaintiffs establish compliance with the notice requirement as a matter of
law. Since they have provided no evidence that plaintiff Ya Xu received the required
notice, her claim will go forward. For their part, plaintiffs Xiaoxi Xie and Lee
apparently do not dispute compliance; summary judgment will be granted on their
claims.
Two plaintiffs—Chang and Li—did not receive notice in the form provided to
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employers by the New York Department of Labor. A third—Bin Yang—received the
form, but not until four months after he was hired. The defendants respond that they
provided the required information at the time of hire in their written employment
agreements and employee handbooks. While the Court agrees that § 195(1)(a) does
not require a particular form of notice, the other documents do not, in fact, contain all
information required by the statute. In addition, they are in English, while Chang, Li
and Bin Yang attest that their primary language is Chinese. These deficiencies require
the Court to deny defendants’ motion for summary judgment with respect to those
plaintiffs.
With respect to the remaining three plaintiffs, the defendants have submitted
notices in the form provided by the Department of Labor, written in both English and
Chinese, and ostensibly signed by the plaintiffs at the time of hire. Those plaintiffs
attempt to dispute compliance in other ways.

At his deposition, Long Chen

acknowledged signing the form, but could not recall when he did so. Lu Yang did not
recall signing the form, but recognized his signature on it. “[N]ot recalling does not
create an issue of fact.” Costello v. St. Francis Hosp., 258 F. Supp. 2d 144, 156
(E.D.N.Y. 2003). While Yi Ming Ma flatly denies signing the form submitted by the
defendants, he does so in a declaration; at his deposition, he admitted signing. “[I]n
opposing summary judgment, a party who has testified to a given fact in his
deposition cannot create a triable issue merely by submitting his affidavit denying the
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fact.” Palazzo ex rel. Delmage v. Corio, 232 F.3d 38, 43 (2d Cir. 2000).
In sum, defendants’ motion is granted with respect to the wage notice claims
of Xie, Lee, Chen, Lu Yang and Ma. The motion is denied with respect to the wage
notice claims of the remaining plaintiffs.
II. Plaintiffs’ Motion
A.

Exempt Status
With respect to Chang, Li and Lee, the defendants invoke 29 U.S.C.

§ 213(a)(1), which exempts from FLSA’s overtime requirement “any employee
employed in a bona fide executive, administrative or professional capacity.” The
NYLL “applies the same exemptions as the FLSA.” See Reiseck v. Universal
Comm’ns of Miami, Inc., 591 F.3d 101, 105 (2d Cir. 2010). Those plaintiffs argue
that they do not fall within the exemption as a matter of law. See id. at 104 (“[T]he
employer invoking the exemption bears the burden of proving that its employees fall
within the exemption.”).
According to the Department of Labor’s regulations, an administrative
employee is an employee (1) who is paid a salary equivalent to $455 per week, (2)
“[w]hose primary duty is the performance of office or non-manual work directly
related to the management or general business operations of the employer or the
employer's customers,” and (3) “[w]hose primary duty includes the exercise of
discretion and independent judgment with respect to matters of significance.” 29
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C.F.R. § 541.200(a). Whether those criteria are satisfied is a mixed question of law
and fact: “The question of how the [employees] spent their working time . . . is a
question of fact. The question whether their particular activities excluded them from
the overtime benefits of the FLSA is a question of law[.]” Icicle Seafoods, Inc. v.
Worthington, 475 U.S. 709, 714 (1986).
The parties’ submissions reveal disputes of fact as to how Chang, Li and Lee
“spent their working time.” Chang was eventually promoted to “driver supervisor,”
a position which required him to train, test and supervise new drivers; however, he
attests that he also refueled and maintained vehicles, and served as a standby driver.
Li was eventually promoted to “garage supervisor,” in which role he performed some
administrative tasks; however, he attests that he spent most of his time parking
vehicles. Lee was eventually promoted to “branch supervisor,” and concedes that he
performed some office work; however, he attests that his primary duties continued to
involve parking cars and other manual work. Given these conflicting versions of the
actual work duties of these plaintiffs, the Court cannot resolve their exempt status as
a matter of law.
B.

Wage Overpayments
The defendants claim that drivers failed to accurately record their breaks and

therefore received pay for time they did not work. They seek to recover these claimed
overpayments under theories of fraud and unjust enrichment.
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As noted in connection with the overtime claims, whether the plaintiffs are
entitled to pay for what the defendants call “break” time presents a question of fact.
The plaintiffs nevertheless seek summary judgment based on the voluntary payment
doctrine. “That common-law doctrine bars recovery of payments voluntarily made
with full knowledge of the facts, and in the absence of fraud or mistake of material
fact or law.” Dillon v. U-A Columbia Cablevision of Westchester, Inc., 100 N.Y.2d
525, 526 (2003). The plaintiffs argue that the defendants had the requisite knowledge
because they were aware that drivers’ self-reported logs might be inaccurate, and
failed to implement a more reliable system, such as GPS tracking.
The plaintiffs fail to appreciate the effect of fraud on what might otherwise be
full knowledge of the facts. A person relying on a misstatement or material omission
does not have full knowledge. Thus, the voluntary payment doctrine does not apply
to claims “predicated on lack of full disclosure.” Spagnola v. Chubb Corp., 574 F.3d
64, 73 (2d Cir. 2009) (citing Samuel v. Time Warner, Inc., 809 N.Y.S.2d 408, 418
(Sup. Ct. N.Y. County 2005)). For example, the doctrine did not bar recovery for a
plaintiff who knew he was receiving slow Internet service because the defendant had
misrepresented the reason for the slow service. See Fink v. Time Warner Cable, 810
F. Supp. 2d 633, 649 (S.D.N.Y. 2011). Here, the defendants’ knowledge of the
limitations of a self-reporting system did not give the plaintiffs carte blanche to abuse
the system.
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The plaintiffs further argue that the defendants are barred from recovering
overpayments by New York Labor Law § 193(1)(c):
No employer shall make any deduction from the wages of an employee,
except deductions which . . . are related to recovery of an overpayment
of wages where such overpayment is due to a mathematical or other
clerical error by the employer.
By its terms, the statute bars deductions from wages. While that prohibition covers
things like garnishment, it “does not affect [a] counterclaim to recover the entire
amount of overpayment in a separate proceeding.” Hennessey v. Bd. of Educ., 642
N.Y.S.2d 958, 959 (2d Dep’t 1996). Accord Huntington Hosp. v. Huntington Hosp.
Nurses’ Ass’n, 302 F. Supp. 2d 34, 42-43 (E.D.N.Y. 2004) (citing Hennessey and
concluding that “[i]t would make little sense to prohibit completely an employer from
correcting salary overpayment errors.”).
C.

Theft
The defendants claim that plaintiff Long Chen pocketed money received from

a parking-lot customer and fabricated claims for reimbursement following his
termination. Their counterclaim for theft seeks to recover those amounts. The
plaintiffs argue that the Court lacks subject-matter jurisdiction over that counterclaim.
In a federal-question case, a district court has supplemental jurisdiction over all
claims that are “so related to [the claims within the court’s original jurisdiction] that
they form part of the same case or controversy under Article III of the United States
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Constitution.” 28 U.S.C. § 1367(a). That condition is satisfied when the claims all
“derive from a common nucleus of operative fact,” such that a party “would ordinarily
be expected to try them all in one judicial proceeding.” Valencia ex rel. Franco v. Lee,
316 F.3d 299, 305 (2d Cir.2003) (quoting, ultimately, United Mine Workers v. Gibbs,
383 U.S. 715, 725 (1966)).
The defendants attempt to tie their theft counterclaim to the plaintiff’s FLSA
claims with Chen’s representation during his deposition that he joined the lawsuit to
avenge what he thought was his wrongful termination:
A.

Well, I personally want to sue the company for the unreasonable
part.

Q.

What was the unreasonable part?

A.

About overtime. Also no reason for termination.

Dep. of Long Chen (Nov. 4, 2016) 104. There is—unsurprisingly—no authority for
the proposition that a party’s motivation creates a common nucleus of operative fact.
At most, Chen’s alleged theft and his overtime claims both related to his employment
with the defendants. As the Court has previously held, the employment relationship
is “insufficient to create a ‘common nucleus of operative fact’ where it is the sole fact
connecting plaintiff's federal overtime claim and the remaining state law claims.”
Rivera v. Ndola Pharmacy Corp., 497 F. Supp. 2d 381, 395 (E.D.N.Y. 2007).

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CONCLUSION
The defendants’ motion for summary judgment is granted with respect to the
wage notice claims of Xiaoxi Xie, Duke Lee, Long Chen, Lu Yang and Yi Ming Ma;
in all other respects, it is denied. The plaintiffs’ motion is granted with respect to the
defendant’s counterclaim against Chen for theft; in all other respects, it is denied.
Finally, the defendants’ motion to decertify the collective action is denied.
Accordingly, the case will proceed to trial on (1) the overtime claims of all
named and opt-in plaintiffs, (2) the wage notice claims of all plaintiffs other than those
listed above, and (3) the defendant’s counterclaims other than theft. Given the
difficulty of comprehensibly presenting all of those claims to a jury, the parties are
directed to devote their best efforts towards a mutually agreeable resolution of the
case.
SO ORDERED.
_/S/ Frederic Block_________
FREDERIC BLOCK
Senior United States District Judge
Brooklyn, New York
March 12, 2018

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