Zhang et al v. Wen Mei Inc. et al

Filing 216

ORDER ADOPTING REPORT AND RECOMMENDATIONS: Judge Lockes R&R (Docket Entry 212) is ADOPTED in its entirety. The motion to dismiss (Docket Entry 199) is GRANTED IN PART and DENIED IN PART. Specifically, the Clerk of the Court is directed to TERMINATE J ie Zhang a/k/a Jimmy Zhang as a plaintiff in this action. Plaintiffsremaining claims will proceed. Plaintiffs motion to certify (Docket Entry 198) is GRANTED as to the modified class: All individuals who were employed or are currently employed by Def endants in any tipped or nontipped non-exempt positions during the six years immediately preceding the initiation of this action up to the date of this decision. Plaintiffs Liu, Lin, and Hseih are appointed as class representatives, and Troy Law PLLC is appointed as class counsel. Additionally, within thirty (30) days of this date of this Memorandum and Order, Plaintiffs shall file a motion for approval of a proposed class notice addressing the issues set forth in Judge Lockes R&R.. Ordered by Judge Joanna Seybert on 2/14/2018. (Bollbach, Jean)

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 SENG CHENG, and 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, XIANG
RONG CHEN a/k/a KEVIN CHEN,
CAI FEN CHEN, FENNY JAPANESE AND
CHINESE RESTAURANT, INC. d/b/a
HUNAN DYNASTY, CINDY CHEN, LUQI XIE,
BAIFENG CHEN a/k/a ANDY CHEN, and
CHEN’S CHINESE RESTAURANT, INC., as
assignee of Hunan Dynasty,
Defendants.
---------------------------------------X
APPEARANCES
For Plaintiffs:
Jonathan Deperio Hernandez, Esq.
Kibum Byun, Esq.
John Troy, Esq.
Troy Law, PLLC
41-25 Kissena Boulevard, Suite 119
Flushing, NY 11355
For Defendants:
Wen Mei Inc. d/b/a Hunan
Dynasty, Hunan Dynasty
at Levittown, Inc. d/b/a
Hunan Dynasty, Xiang Rong
Chen a/k/a Kevin Chen,
Cindy Chen, Baifeng Chen
a/k/a Andy Chen, and Chen’s
Chinese Restaurant, Inc.
as assignee of Hunan Dynasty

Carolyn Shields, Esq.
Ying Liu, Esq.
Liu & Shields LLP

41-60 Main Street, Suite 208A
Flushing, NY 11355
For Defendants Cai Fen
Chen, Fenny Japanese and
Chinese Restaurant Inc.
d/b/a Hunan Dynasty, and
Luqi Xie

William Yeung, Esq.
Law Office of Yeung & Wang PLLC
39-01 Main Street, Suite 509
Flushing, NY 11354

SEYBERT, District Judge:
Pending before the Court are: (1) 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 (“Plaintiffs”)
motion to certify a class action (Cert. Mot., Docket Entry 198),
(2) Defendants Wen Mei Inc. d/b/a Hunan Dynasty, Hunan Dynasty at
Levittown, Inc. d/b/a Hunan Dynasty, Xiang Rong Chen a/k/a Kevin
Chen, Cindy Chen, Baifeng Chen a/k/a Andy Chen, and Chen’s Chinese
Restaurant, Inc.’s (the “Moving Defendants”) motion to dismiss the
Third

Amended

Complaint

pursuant

to

Federal

Rules

of

Civil

Procedure 12(b)(1), 12(b)(6), and 25(a)(1) (Defs.’ Mot., Docket
Entry 199), and (3) Magistrate Judge Steven I. Locke’s Report and
Recommendation (“R&R”) recommending that this Court grant the
motion to dismiss in part and deny it in part and grant the motion
to certify as modified.

(R&R, Docket Entry 212, at 2-3.)

On

January 11, 2018, the Moving Defendants filed objections to the
R&R, (Defs.’ Obj., Docket Entry 213), and Plaintiffs responded to
the objections on January 23, 2018, (Pls.’ Resp., Docket Entry

2

214). For the following reasons, the Moving Defendants’ objections
are OVERRULED, and the Court ADOPTS Judge Locke’s R&R in its
entirety.
BACKGROUND
I.

Factual and Procedural History
Plaintiffs, on behalf of themselves and others similarly

situated, commenced this action on March 12, 2014. (Compl., Docket
Entry 1.)

After several amendments, Plaintiffs filed a Third

Amended Complaint (“TAC”) on December 22, 2016, alleging claims
for unpaid overtime and minimum wages pursuant to the Fair Labor
Standards Act (“FLSA”) and New York Labor Law (“NYLL”), unpaid
spread of hours pay pursuant to NYLL, and violations of NYLL’s
notice requirements.

(TAC, Docket Entry 173, ¶¶ 50-87.)

The TAC

added claims against Chen’s Chinese Restaurant, Inc. (“Chen’s”),
Baifeng Chen a/k/a Andy Chen (“Andy Chen”), and Luqi Xie.
17-19, 32-34.)

(TAC ¶¶

Plaintiffs allege that Hunan Dynasty at Levittown,

Inc. d/b/a Hunan Dynasty (“Hunan Dynasty”), Wen Mei, Inc. d/b/a
Hunan Dynasty (“Wen Mei”), Fenny Japanese and Chinese Restaurant
d/b/a Hunan Dynasty (“Fenny”), and Chen’s are “a single and joint
employer

with

a

high

degree

of

interrelated

and

unified

operations, . . . common management, centralized control of labor
relations,

common

ownership,

common

control,

common

business

purpose, and interrelated business goals,” controlled by Xiang
Rong Chen a/k/a Kevin Chen and “employ substantially the same
3

waiters, deliverymen, and kitchen staff with substantially the
same work shifts and pay conditions.”

(TAC ¶¶ 21, 24, 29.)

On March 20, 2017, Plaintiffs moved to certify the NYLL
claims

as

a

class

action

Procedure 23 (“Rule 23”).

pursuant

to

Federal

Rule

of

Civil

The next day, the Moving Defendants

filed a motion to dismiss the TAC.

Both motions were referred to

Judge Locke for an R&R on whether the motions should be granted.
(Referral Order, Docket Entry 210.)

On December 28, 2017, Judge

Locke issued his R&R.
II.

The R&R
A.

The Motion to Dismiss
First, Judge Locke addressed whether the TAC should be

dismissed based on a lack of subject matter jurisdiction under
Rule

12(b)(1)

because

successor liability.1

the

TAC

failed

(R&R at 19-20.)

to

sufficiently

allege

In a detailed analysis,

Judge Locke explained that the allegations in the TAC satisfied
the relevant tests for imposing successor liability.
23.)

(R&R at 20-

Specifically, he found that the allegations were sufficient

because “they support the conclusion that Chen’s continued the
business of Fenny, including utilizing the same workers, and that

As an initial matter, Judge Locke addressed whether the motion
to dismiss was barred by the law of the case doctrine since he
rejected identical arguments made by the Moving Defendants in
opposition to Plaintiffs’ motion for leave to file the TAC. He
concluded that it was not barred and proceeded to analyze the
merits. (R&R at 17-18.)
1

4

Chen’s

acquired

the

assets . . . of

Fenny.”

(R&R

at

21.)

Additionally, he found that because Plaintiffs adequately pled
successor liability, the fact that “no named Plaintiff worked at
Fenny or Chen’s does not entitle Defendants to dismissal.”
at 22.)

(R&R

In other words, Judge Locke concluded that Plaintiffs had

standing

to

pursue

claims

against

Chen’s

because

Plaintiffs

sufficiently alleged claims against Hunan Dynasty, Wen Mei, and
Fenny, and Chen’s is an alleged successor of those entities.2
at

21-23.)

As

to

Andy

Chen,

Judge

Locke

found

(R&R

Plaintiffs’

allegations to be sufficient to state a claim for individual
liability.

(R&R at 23-25.)

As such, Judge Locke recommended that

the Court deny the motion to dismiss on this ground.
Second, Judge Locke discussed the Rule 12(b)(6) branch
of the motion dismiss, which sought dismissal on statute of
limitations grounds.

(R&R at 25.)

He found that the claims in

the TAC related back to the claims in the Complaint under Federal
Rule of Civil Procedure 15(c)(1)(C).

(R&R at 25-29.)

Moreover,

he concluded that the NYLL and FLSA minimum wage claims were
timely.

(R&R at 29-34.)

As a result, he recommended that the

Court deny the portion of the motion seeking dismissal under
12(b)(6).

(R&R at 34.)

Plaintiffs have also alleged that Chen’s is a joint employer
with Fenny. (R&R at 6 (Table).)
2

5

Third, he determined that because Plaintiff Jie Zhang
a/k/a Jimmy Zhang (“Zhang”) had died, and no motion to substitute
was filed, Plaintiff Zhang should be terminated as a party to this
action under Federal Rule of Civil Procedure 25(a)(1).

(R&R at

34-35.)
B.

The Class Certification Motion for NYLL Claims
Judge Locke began by considering Plaintiffs’ proposed

class definition and found that because it constituted a “failsafe” class, the class definition should be modified as follows:
“‘All individuals who were employed or are currently employed by
Defendants in any tipped or non-tipped non-exempt positions during
the six years immediately preceding the initiation of this action
up to the date of this decision.’”

(R&R at 37.)

After reviewing

the applicable requirements under Rule 23, Judge Locke recommended
that the class be certified pursuant to Rule 23(a) and (b)(3).
(R&R at 38-48.)

He also recommended that (1) Plaintiffs Liu, Lin,

and Hsieh be appointed class representatives (R&R at 43); (2) Troy
Law PLLC be appointed class counsel (R&R 49); and (3) Plaintiffs
“be granted leave to file a motion for approval of a proposed class
notice, which inter alia, addresses the production of employee
contact

information,

distribution

of

the

scheduling
proposed

of

notice,

the
and

publication
a

deadline for putative class members (R&R 50).”

6

proposed

and

opt-out

DISCUSSION
I.

Legal Standard
“When evaluating the report and recommendation of a

magistrate judge, the district court may adopt those portions of
the report to which no objections have been made and which are not
facially erroneous.”

Walker v. Vaughan, 216 F. Supp. 2d 290, 291

(S.D.N.Y. 2002) (citation omitted).

A party may serve and file

specific, written objections to a magistrate judge’s report and
recommendation within fourteen days of being served with the
recommended disposition.
receiving

any

timely

See FED. R. CIV. P. 72(b)(2).

objections

to

the

magistrate

Upon
judge’s

recommendation, the district court “may accept, reject, or modify,
in whole or in part, the findings or recommendations made by the
magistrate judge.”
P. 72(b)(3).
must

point

28 U.S.C. § 636(b)(1)(C); see also FED. R. CIV.

A party that objects to a report and recommendation
out

the

specific

portions

of

recommendation to which they are objecting.

the

report

and

See Barratt v. Joie,

No. 96-CV-0324, 2002 WL 335014, at *1 (S.D.N.Y. Mar. 4, 2002).
When a party raises an objection to a magistrate judge’s
report, the Court must conduct a de novo review of any contested
sections of the report.

See Pizarro v. Bartlett, 776 F. Supp.

815, 817 (S.D.N.Y. 1991).
conclusory
original

or

general

arguments,

However, where a party “makes only

objections,
the

Court
7

or

simply

reviews

reiterates

the

Report

his
and

Recommendation only for clear error.”

Walker, 216 F. Supp. 2d at

291 (internal quotation marks and citation omitted).
II.

The Moving Defendants’ Objections
A. Subject Matter Jurisdiction
The Moving Defendants object to Judge Locke’s standing

analysis.

(See Defs.’ Obj. at 2.)

Specifically, they contend

that the R&R “analyze[d] whether the Third Amended Complaint states
a

claim

for

successor

liability

before

determining

the

jurisdictional issue” and failed to consider whether there is at
least one Plaintiff that can assert a claim against each Defendant.
(Defs.’ Obj. at 2.)

Moreover, they maintain that “[d]eciding that

the TAC states a claim for successor liability . . . before
deciding

the

Article

III

jurisdictional

issue

bootstraps

[P]laintiff[s’] FLSA claims onto the successor liability claims.”
(Defs.’ Obj. at 2.)

Finally, the Moving Defendants argue that

Judge Locke should have determined the standing issue before
analyzing the merits of the claims under Rule 12(b)(6).

(Defs.’

Obj. at 2-3.)
Plaintiffs respond that Judge Locke did analyze subject
matter

jurisdiction

and

determined

that

the

allegations

successor liability were sufficient to confer standing.
Resp. at 1-3.)

of

(Pls.’

Additionally, they point out that the Moving

Defendants fail to explain why standing is lacking.
at 3.)
8

(Pls.’ Resp.

Article

III

of

the

Constitution

“restricts

courts to the resolution of cases and controversies.”

federal

Carter v.

HealthPort Techs., LLC, 822 F.3d 47, 56 (2d Cir. 2016) (quoting
Davis v. Fed. Election Comm’n, 554 U.S. 724, 732-33, 128 S. Ct.
2759, 2768, 171 L. Ed. 2d. 737 (2008)).

The standing doctrine is

“perhaps the most important of the case-or-controversy doctrines.”
Gilmore v. Ally Fin. Inc., No. 15-CV-6240, 2017 WL 1476596, at *4
(E.D.N.Y. Apr. 24, 2017) (internal quotation marks and citation
omitted).

To demonstrate standing, the plaintiff must show that:

he “(1) suffered an injury in fact, (2) that is fairly traceable
to the challenged conduct of the defendant, and (3) that is likely
to be redressed by a favorable judicial decision.”

Spokeo, Inc.

v. Robins, --- U.S. ----, 136 S. Ct. 1540, 1547, 194 L. Ed. 2d 635
(2016) (citation omitted).
This objection borders on frivolous.

In their motion to

dismiss, the Moving Defendants argued that Plaintiffs did not
having standing to pursue their claims against the new defendants,
including Chen’s, for example, because none of the Plaintiffs ever
worked for Chen’s.

(Defs.’ Br., Docket Entry 199-1, at 2-3.)

In

the R&R, Judge Locke analyzed whether Plaintiffs’ allegations of
successor liability were sufficient to confer standing to assert
a claim against Chen’s.

Specifically, he considered Plaintiffs’

allegations that Chen’s is a successor to Plaintiffs’ employer,
Hunan Dynasty, and a joint employer with another successor entity,
9

Fenny.

Judge Locke found that the allegations stated a claim for

successor liability, and as a result, he recommended denial of the
motion to dismiss based on lack of standing.

(R&R at 21-23.)

Thus, the Moving Defendants’ contention that Judge Locke failed to
address standing is baseless.
Additionally, the Moving Defendants fail to explain why
in their view, Plaintiffs do not have standing to assert their
FLSA and NYLL claims.

Plaintiffs, who were employed by Hunan

Dynasty, allege that Hunan Dynasty and its successor entities-Wen Mei, Fenny, and Chen’s--failed to pay minimum wage, overtime,
and spread of hours pay, and violated NYLL’s notice requirements.
(TAC ¶¶ 50-87; see also R&R at 4 (Table), 6 (Table).)

They have

clearly alleged that they suffered an injury-in-fact--loss of
earnings--that can be traced to the Moving Defendants’ alleged
conduct and could be remedied by a decision of the Court.

See

Spokeo, --- U.S. ----, 136 S. Ct. at 1547, 194 L. Ed. 2d 635.
Notably,

Judge

Locke

addressed

a

nearly

identical

standing

argument as it related to the minimum wage claims in his decision
on Plaintiffs’ motion to amend, writing that “[a]s employees of
the corporate entities, the named Plaintiffs have standing to
assert claims against Hunan Dynasty and Wen Mei . . . . [and]
although the named Plaintiffs did not work for either Fenny or
Chen’s, they are potentially liable as successors.
Defendants’ standing argument fails.”
10

As such,

See Zhang v. Wen Mei, Inc.,

No. 14-CV-1647, 2016 WL 7391997, at *7 (E.D.N.Y. Dec. 21, 2016).
Not satisfied with that explanation, the Moving Defendants raised
the same argument in their motion to dismiss and again in the
objections pending before this Court.

The argument continues to

be meritless.
Therefore, Plaintiffs have satisfied the requirements
of Article III standing, and this objection is OVERRULED.
B. Personal Jurisdiction
The

Moving

Defendants

also

aver

that

“personal

jurisdiction, similarly a constitutional issue, must be determined
before

addressing

enterprise.”

whether

there

(Defs.’ Obj. at 4.)

is

a

single

integrated

Plaintiffs respond that the

Moving Defendants did not move to dismiss on this ground and should
not be permitted to raise it at this juncture. (Pls.’ Resp. at 3.)
The Court agrees with Plaintiffs.

The Moving Defendants did not

raise personal jurisdiction in their motion and have not identified
any reason why the Court does not have personal jurisdiction over
the

Moving

Defendants.

Thus,

this

objection

is

similarly

OVERRULED.
CONCLUSION
Having overruled the Moving Defendants’ objections to
the contested portions of the R&R, the Court has reviewed the
remaining portions of the R&R and finds them to be thorough, wellreasoned, and free of clear error.
11

Therefore, Judge Locke’s R&R

(Docket Entry 212) is ADOPTED in its entirety.

The motion to

dismiss (Docket Entry 199) is GRANTED IN PART and DENIED IN PART.
Specifically, the Clerk of the Court is directed to TERMINATE Jie
Zhang a/k/a Jimmy Zhang as a plaintiff in this action. Plaintiffs’
remaining claims will proceed.
Plaintiffs’ motion to certify (Docket Entry 198) is
GRANTED as to the modified class: All individuals who were employed
or are currently employed by Defendants in any tipped or nontipped

non-exempt

positions

during

the

six

years

immediately

preceding the initiation of this action up to the date of this
decision.

Plaintiffs Liu, Lin, and Hseih are appointed as class

representatives, and Troy Law PLLC is appointed as class counsel.
Additionally,

within

thirty

(30)

days

of

this

date

of

this

Memorandum and Order, Plaintiffs shall file a motion for approval
of a proposed class notice addressing the issues set forth in Judge
Locke’s R&R.

SO ORDERED.

/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:

February
14 , 2018
Central Islip, New York

12