Zhang et al v. Wen Mei Inc. et al

Filing 14

MEMORANDUM & ORDER granting in part and denying in part 10 Motion to Dismiss for Lack of Jurisdiction; granting 11 Motion for Leave to File Amended Complaint; Defendants' motion to dismiss is GRANTED IN PART and DENIED IN PART. It is DENI ED insofar as Defendants assert that the Court lacks subject matter jurisdiction or that the Court should decline supplemental jurisdiction, but GRANTED insofar as Defendants assert a failure to state a claim. In addition, however, Plaintiffs' cross-motion to amend is also GRANTED. The Clerk of the Court is directed to docket the PAC at Docket Entry 11-1 as the Amended Complaint. So Ordered by Judge Joanna Seybert on 10/27/2014. C/ECF (Valle, Christine)

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------X JIE ZHANG a/k/a JIMMY ZHANG, XIU QIN LIN, RU HAO LIU a/k/a JASON LIU, HSIA SHENG CHENG, CHIEN WEN HSIEH a/k/a KEVIN HSIEH, on behalf of themselves and others similarly situated, Plaintiffs, MEMORANDUM & ORDER 14-CV-1647(JS)(SIL) -againstWEN MEI INC. d/b/a HUNAN DYNASTY, HUNAN DYNASTY AT LEVITTOWN, INC. d/b/a HUNAN DYNASTY, and XIANG RONG CHEN a/k/a KEVIN CHEN, Defendants. ----------------------------------------X APPEARANCES For Plaintiffs: John Troy, Esq. Troy & Associates, PLLC 41-25 Kissena Blvd., Suite 119 Flushing, NY 11355 For Defendants: Ying Liu, Esq. Liu & Shields LLP 41-60 Main Street, Suite 208A Flushing, NY 11355 SEYBERT, District Judge: Currently pending before the Court is: (1) defendants Wen Mei Inc., d/b/a Hunan Dynasty; Hunan Dynasty at Levittown, Inc., d/b/a Hunan Dynasty; and Xiang (“Kevin”) Rong Chen’s (collectively “Defendants”) motion to dismiss the Complaint, and (2) plaintiffs Jie Zhang a/k/a Jimmy Zhang, Xiu Qin Lin, Ru Hao Liu a/k/a Jason Liu, Hsia Sheng Cheng, and Chien Wen Hsieh a/k/a Kevin Hsieh’s (collectively “Plaintiffs”) cross-motion to amend the Complaint1. For the following reasons, Defendants’ motion to dismiss is GRANTED IN PART and DENIED IN PART and Plaintiffs’ motion to amend is GRANTED. BACKGROUND2 Plaintiffs commenced this putative collective and class action on March 12, 2014 against Defendants pursuant to the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”); the New York Minimum Wage Act, N.Y. Stat. § 650 et seq.; and New York Labor Law (“NYLL”). Plaintiffs are former employees of Defendants who worked as waiters and a “non-tipped packer assistant” at Hunan Dynasty restaurant during various periods. (Compl. ¶¶ 8-15.) Plaintiffs allege that they were paid “a cash payment of $400 every semi-month, regardless of hours worked.” (Compl. ¶ 7.) According in to Plaintiffs, they regularly worked excess of forty hours per week, but did not receive overtime compensation or spread-of-hours pay. (Compl. ¶¶ 35-37, 41, 46.) Plaintiffs also claim that Defendants “willfully failed to keep records required by the FLSA” and “did not provide Plaintiffs and the Although Plaintiffs docketed their submission solely as an opposition to Defendants’ motion, the Court has deemed it a cross-motion to amend. 1 The following facts are taken from Plaintiff’s Complaint and are presumed to be true for purposes of Defendants’ motion pursuant to Rule 12(b)(6). 2 2 members of the Class with the notices required by N.Y. Lab. Law § 195.” (Compl. ¶¶ 36, 49.) DISCUSSION Defendants now move to dismiss for lack of subject matter jurisdiction and failure to state a claim. have cross-moved to amend the Complaint. address the Defendants’ applicable motion legal and Plaintiffs The Court will first standards before Plaintiffs’ turning cross-motion to more specifically. I. Legal Standards A. Rule 12(b)(1) Standard “A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). resolving a motion jurisdiction, materials questions. to the Court beyond the dismiss may for lack consider pleadings to of subject affidavits resolve In matter and other jurisdictional See Morrison v. Nat’l Australia Bank, Ltd., 547 F.3d 167, 170 (2d Cir. 2008). The Court must accept as true the factual allegations contained in the complaint, but it will not draw argumentative inferences in favor of Plaintiffs because subject matter jurisdiction must be shown affirmatively. See id.; Atlanta Mut. Ins. Co. v. Balfour Maclaine Int’l Ltd., 968 3 F.2d 196, 198 (2d Cir. 1992); Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998). “A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.” Makarova, 201 F.3d at 113. B. Rule 12(b)(6)Standard In Court deciding applies a Rule 12(b)(6) “plausibility “[t]wo working principles.” motions standard,” to which dismiss, is guided the by Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); accord Harris v. Mills, 572 F.3d 66, 71-72 (2d Cir. 2009). Court must accept “inapplicable all to allegations legal as First, although the true, conclusions;” this thus, “tenet” is “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” accord Harris, 572 F.3d at 72. Iqbal, 556 U.S. at 678; Second, only complaints that state a “plausible claim for relief” can survive a Rule 12(b)(6) motion to dismiss. Iqbal, 556 U.S. at 679. Determining whether a complaint does so is “a context-specific task that requires the reviewing common sense.” court to draw on its judicial experience and Id.; accord Harris, 572 F.3d at 72. C. Rule 15 Standard Courts should grant leave to amend “when justice so requires.” FED. R. CIV. P. 15(a)(2). 4 Leave to amend should be granted unless there is evidence of undue delay, bad faith, undue prejudice to the non-movant, or futility. Rust–Oleum Corp., 244 F.3d 104, 110 (2d See Milanese v. Cir. 2001). To determine whether an amended claim is futile, courts analyze whether the proposed pleading would withstand a motion dismiss under Federal Rule of Civil Procedure 12(b)(6). to See Dougherty v. Town of N. Hempstead Bd. of Zoning Appeal, 282 F.3d 83, 88 (2d Cir. 2002). II. Subject Matter Jurisdiction Defendants move to dismiss the Complaint, asserting that Plaintiffs allege only that Defendants had an annual gross volume of sales in excess of $500,000, but do not allege other jurisdictional requirements pursuant to the FLSA. In response, Plaintiffs have filed a cross-motion to amend the Complaint, seeking to add particular allegations. The Court disagrees with Defendants that this is a jurisdictional issue. The FLSA provides coverage for “employees who in any workweek [are] engaged in commerce or in the production of goods for commerce, or [are] employed in an enterprise engaged in commerce or the production of goods for commerce.” § 207(a)(1). provisions 29 U.S.C. Thus, an employer is only subject to the FLSA’s if either: (1) its employees are “engaged in commerce” (known as “individual coverage”) or (2) the employer is an “enterprise engaged in commerce” (known as “enterprise 5 coverage”). Id. and § 207(a)(2); see also Padilla v. Manlapaz, 643 F. Supp. 2d 298, 299-300 (E.D.N.Y. 2009). Here, it appears that Plaintiffs are attempting to plead enterprise coverage. Enterprise coverage under the FLSA applies if the employer: (i) has employees engaged in commerce3 or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person; and (ii) is an enterprise whose annual gross volume of sales made or business done is not less than $500,000. 29 U.S.C. Plaintiffs sales. alleged § 203(s)(1)(A). have alleged Defendants $500,000 in do annual not dispute gross that volume of Rather, they argue that Plaintiffs have not sufficiently the first prong of enterprise coverage. In fact, Defendants further assert a “factual” challenge, relying upon the declaration of defendant Xiang Rong Chen, to demonstrate that no employees engaged in interstate commerce or in the production of goods for interstate commerce and did not handle, “Commerce” is defined as “trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.” 29 U.S.C. § 203(b). 3 6 sell, or work on goods or materials moved in or produced for (See Defs.’ Br. to Dismiss, Docket Entry 10, at 104.) commerce. Notwithstanding Defendants’ arguments, however, Plaintiffs’ purported failure does not deprive this Court of subject matter jurisdiction. See Jia Hu Qian v. Siew Foong Hui, No. 11-CV-5584, 2012 WL 1948820, at *2 (S.D.N.Y. May 30, 2012); Velez v. Vassallo, 203 F. Supp. 2d 312, 332 (S.D.N.Y. 2002). Rather, enterprise coverage is an element of an FLSA claim. See Jian Long Li v. Li Qin Zhao, --- F. Supp. 2d ----, 2014 WL 3887860, at *3 (E.D.N.Y. Aug. 8, 2014); Velez, 203 F. Supp. 2d at 332. Accordingly, to the extent that Defendants’ motion seeks dismissal for lack of subject matter jurisdiction, it is DENIED. this Likewise, to the extent that Defendants assert that Court should decline supplemental jurisdiction over the state law claims because the Court lacks jurisdiction, this is also DENIED. III. Failure to State a Claim Defendants raise the same arguments regarding lack of enterprise claim. coverage The Court under agrees the rubric that the of failure original to state a Complaint--which essentially alleges only annual gross volume sales (Compl. ¶ 5)- The page numbers for Defs.’ Br. to Dismiss refer to those provided by the Electronic Case Filing System. 4 7 -is insufficient. any allegations The original Complaint is wholly deficient of regarding interstate commerce. Accordingly, Defendants’ motion to dismiss in this regard is GRANTED. However, Proposed Amended alleges, inter Plaintiffs’ Complaint alia, that opposition (“PAC,” defendant Docket Wen also includes Entry Mei, 11-1) Inc. a which “has had employees engaged in commerce or in the production of goods for commerce, and handle, sell or otherwise work on goods or material that have been moved in or produced for commerce by any person . . . .” (PAC ¶ 5.) Notably, the PAC does not contain any additional factual allegations in this regard.5 Nonetheless, the Court can infer from the nature of the business that Defendants have employees who engage in handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce. v. Cardrona, Inc., No. 09-CV-4311, 2014 WL See Klimchak 3778964, at *5 (E.D.N.Y. July 31, 2014) (“[S]everal courts in this district have inferred FLSA enterprise coverage based on the nature of the defendant employer’s business, notwithstanding similar pleading deficiencies.” (collecting cases)); Gomez v. El Rancho Oddly, Plaintiffs provide a declaration from plaintiff Xiu Qin Lin asserting that she served and handled goods that moved in interstate commerce, including chopsticks, soy sauce, wasabi, fish, thai rice, and imported beers. (Lin Decl., Pls.’ Opp. Br., Docket Entry 11, Ex. B ¶¶ 7-10.) It is unclear why Plaintiffs did not include such factual allegations in their PAC. 5 8 de Andres Carne de Tres Inc., No. 12-CV-1264, 2014 WL 1310296, at *3 (E.D.N.Y. Mar. 11, 2014) (inferring that defendants engaged in interstate commerce where the plaintiff alleged “that the defendants operated a restaurant, Andres Carne, which served Columbian cuisine and made gross sales of at least $500,000”), adopted by 2014 WL 1310299 (E.D.N.Y. Mar. 31, 2014); but see Gunawan v. Sake Sushi Rest., 897 F. Supp. 2d 76, 85-86 (E.D.N.Y. 2012) (declining to infer interstate commerce from a general description of the business). Where, as here, employees handle foods and cooking materials, there is enough to show the first prong of enterprise coverage, despite Defendants’ assertion that Plaintiffs’ contact with such goods was only (Defs.’ Reply Br., Docket Entry 12, at 2-66.) “incidental.” See Rodriguez v. Almighty Cleaning, Inc., 784 F. Supp. 2d 114, 121 (E.D.N.Y. 2011) (“Because even local business activities fall within the reach of the FLSA when an enterprise employs workers who handle goods or interstate handled materials commerce, supplies (internal especially or quotation so given that the have test is equipment marks moved that and met if been produced Plaintiffs originated citation Plaintiffs’ or merely out-of-state.” omitted)). allegations in This regarding gross volume of sales, which Defendants do not dispute. is annual See As Defendants did not provide pagination for their reply brief, the Court refers to the page numbers provided by the Electronic Case Filing System. 6 9 Shim v. Millennium Grp., No. 08-CV-4022, 2009 WL 211367, at *3 (E.D.N.Y. Jan. 28, 2009) (“[W]hile plaintiffs’ complaint does not explicitly enterprise that allege engaged ‘virtually in every that the corporate defendants commerce, courts interstate enterprise in the nation are have doing an noted the requisite dollar volume of business is covered by the FLSA.’” (quoting Archie v. Grand Cent. P’ship, Inc., 997 F. Supp. 504, 530 (S.D.N.Y. 1998) (emphasis omitted)). Accordingly, Plaintiffs’ proposed amendments would not be futile and are sufficient--albeit ever-so-slightly--to allege enterprise coverage pursuant to the FLSA. As such, Plaintiffs’ cross-motion to amend is GRANTED. [BOTTOM OF PAGE INTENTIONALLY LEFT BLANK] 10 CONCLUSION Defendants’ motion to dismiss is GRANTED IN PART and DENIED IN PART. It is DENIED insofar as Defendants assert that the Court lacks subject matter jurisdiction or that the Court should decline supplemental jurisdiction, but GRANTED insofar as Defendants assert a failure to state a claim. In addition, however, Plaintiffs’ cross-motion to amend is also GRANTED. The Clerk of the Court is directed to docket the PAC at Docket Entry 11-1 as the Amended Complaint. SO ORDERED. /s/ JOANNA SEYBERT______ Joanna Seybert, U.S.D.J. Dated: October 27 , 2014 Central Islip, New York 11

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