Gao v. Yellowstone Transportation, Inc. et al

Filing 36

MEMORANDUM AND ORDER denying 30 Motion to Dismiss for Failure to State a Claim. For the reasons stated herein, Defendants' motion to dismiss Plaintiffs' overtime and minimum wage claims brought pursuant to the FLSA and the NYLL is denied in its entirety. The parties are directed to contact the assigned Magistrate Judge forthwith to begin discovery. (Ordered by Judge Leonard D. Wexler on 2/15/2017.) (Fagan, Linda)

FILED
IN CLERK'S OFFICE
U.S. DISTRICT COURT E. D. N.Y.

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

-----------------------------------------------------------)(
)(!DONG GAO, DESHENG ZHANG, BIN LI,
YANG WANG and HONGJUN HOU, on behalf of
themselves and others similarly situated,

*

FEB 1 5 2017

*

LONG ISLAND OFFICE

MEMORANDUM AND ORDER

cv 15-7439

Plaintiffs,
-against-

(Wexler, J.)

YELLOWSTONE TRANSPORTATION, INC. d/b/a
Yes Car Services; YES CAR SERVICES, INC. d/b/a
Yes Car Services; APRIL 2012
TRANSPORTATION, INC. d/b/a Yes Car Services;
TONY LAW, and JOHN 01-05 DOE's,
Defendants.

-----------------------------------------------------------)(
APPEARANCES:
TROY LAW, PLLC
BY: JOHN TROY, ESQ.
KIBUM BYUN, ESQ.
Attorneys for Plaintiffs
41-25 Kissena Boulevard, Suite 119
Flushing, New York 11355
)(UE & ASSOCIATES, P.C.
BY: BENJAMIN B. )(UE, ESQ.
KEVIN K. YAM, ESQ.
Attorneys for Defendants
Yellowstone Transportation, Inc.
Yes Car Services, Inc., and
April2012 Transportation, Inc.
1001 Avenue of the Americas
11th Floor
New York, New York 10018

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WEXLER, District Judge:
Before the Court is the Defendants' motion to dismiss Plaintiffs' First Amended
Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiffs oppose the motion.
For the following reasons, Defendants motion is denied in its entirety.

BACKGROUND
Plaintiffs, Xidong Gao ("Gao"), Desheng Zhang ("Zhang"), Bin Li ("Li"), Yang Wang
("Wang"), and Hongjun Hou ("Hou") (collectively, "Plaintiffs"), are all former employees of
Defendants Yellowstone Transportation, Inc., Yes Car Services, Inc., and April2012
Transportation, Inc., all doing business as Yes Car Services ("Yes" or "Defendants"), and their
owner/operator, Defendant Tony Law ("Law"). Yes is a car service and Plaintiffs are all current
or former drivers for the company.
Gao was employed by Yes from approximately August 2013 to October 2013. (Am.
Compl.

~

43.) Gao regularly worked twelve hours per day, six days per week for a total of

seventy-two hours each workweek. (Id.

~

46.) On average, Gao drove approximately one

hundred and fifty to two hundred miles per day. (ld.

~

47.)

Zhang began his employment for Yes on or about January 1, 2014 and is still currently a
driver for Yes to date. (ld.

~

70.) Zhang regularly works thirteen and a half hours per day, six

days per week, totaling eighty-one hours each workweek. (Id.
one hundred and fifty to two hundred miles each day. (Id.

~

~

73.) Zhang drives an average of

74.)

Li began his employment for Yes on or about August 1, 2014 and continues to drive for
Yes to date. (Id.

~

104.) Li regularly works ten and a half hours per day, six days per week, and,
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every two week, Li works seven days per week, averaging sixty-eight and a quarter hours each
week. (ld. ,-r,-r 107-09.) On average, Li drives one hundred and fifty to two hundred miles each
day. (ld. ,-r 110.)
Yang began his employment for Yes on or about December 11, 2012 and is still currently
a driver for Yes to date. (Id. ,-r 141.) Yang regularly worked twelve and a half hours per day, six
days per week, and, every three weeks, Yang works seven days per week, averaging
approximately seventy-nine hours per week.

iliL. ,-r,-r 144-46.) Yang drives an average of one

hundred and fifty to two hundred miles each day. (Id. ,-r 147.)
Hou began his employment with Yes on or about May 23,2013 and continues to drive for
Yes to date. (Id. ,-r 179.) Hou regularly works twelve hours each day, seven days per week, for a
total of eighty-four hours per week. (Id. ,-r 183.) On average, Hou drives one hundred and fifty to
two hundred miles each day.

iliL. ,-r 184.)

Defendants controlled Plaintiffs' work through dispatch orders, sending them to specified
clients. (Id. ,-r,-r 48, 75, 111, 148, 185.) Plaintiffs were required to work solely and exclusively for
Yes and were monitored through the radio dispatcher. (ld. ,-r,-r 49, 76, 112, 149, 186.) If caught
working for another car service other than Yes, Plaintiffs would be disciplined and terminated.
(Id. ,-r,-r 50, 77, 113, 150, 187.)
As a precondition for employment, Plaintiff Gao was required to incorporate a company
in his own name and to pay two hundred and seventy-five dollars every half month to Yes as a
semi-weekly radio deposit. (ld. ,-r,-r 52, 54-55.) In addition to this deposit, Defendants also
deducted one dollar for each ride from Gao's wages. (Id. ,-r 55.)
As preconditions for their employment, Plaintiffs Zhang, Li, Wang and Hou were
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required to incorporate companies in their own names and to use the newly incorporated
companies to open business checking accounts at Chase Manhattan Bank. (Id.

~~

78-79, 114-15,

151-52,188-89.) Zhang, Li, Wang and Hou were also required to pay radio initiating costs that
ranged from one thousand six hundred to two thousand dollars, as well as weekly radio deposits
ranging from one hundred and fifty-five to one hundred and eighty dollars, and thirty-five dollars
per month for Yes's telephone services. 1 (.lit~~ 80,83-84, 116, 120-21, 153, 156-57, 190. 19394.) In addition, Yes deducted one dollar for each ride from Zhang's, Li's, Wang's and Hou's
wages. (Id.

~~

85, 122, 158, 195.)

Defendants also required Plaintiffs to shoulder Defendants' business expenses, including
obtaining their own out-of-pocket and unreimbursed automobile insurance. (Id.

~~56,

87, 124,

160, 197.) Defendants failed to obtain proper authorization for the foregoing deductions, as
required by law.

(.lit~~

57, 88, 125, 161, 198.) In addition, Plaintiffs were required to pay for

their automobiles, their maintenance and operation, parts and supplies. (Id.

~~58,

199.) Defendants did not compensate or reimburse Plaintiffs for these costs. (Id.

89, 126, 162,

~~59,

90, 127,

162, 199.) Plaintiffs were also required to maintain their cars in clean condition at all times. (I d.
~~

60, 91, 128, 164, 201.) Plaintiffs were not reimbursed for any expenses related to keeping

their cars clean. (Id.

~~

62, 93, 130, 166, 203.)

Plaintiffs commenced the within action on January 5, 2016 and amended their Complaint,
as of right, on January 14, 2016. The Amended Complaint alleges violations of the Fair Labor
Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and the New York Labor Law ("NYLL"), as

1

Plaintiff Li was also required to pay two hundred dollars to Yes as a telephone initiating
cost. (Id. ~ 117.) He appears to be the only plaintiff required to make this payment.
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well as Defendants' filing of a fraudulent tax return, breach of implied contract and violation of
Section 349 of the New York General Business Law.
Defendants now move to dismiss Plaintiffs' minimum wage and overtime claims under
both the FLSA and the NYLL, pursuant to Federal Rule of Civil Procedure 12(b)(6), on the
grounds that Plaintiffs are independent contractors, not employees, and are therefore exempt
from both the FLSA and the NYLL. Plaintiffs oppose Defendants' motion on all grounds.

DISCUSSION
I.

Legal Standard
"To survive a motion to dismiss [pursuant to Rule 12(b)(6)], a complaint must contain

sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."'
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Cow. v. Twombly, 550 U.S. 544,
570 (2007)). "Facial plausibility" is achieved when the "the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). As a general rule, the court
is required to accept as true all of the allegations contained in the complaint, see Iqbal, 556 U.S.
at 678; Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 237 (2d Cir. 2007), and to "draw[]
all reasonable inferences in the plaintiffs favor." Troni, 2010 U.S. Dist. LEXIS 79670, at *5
(quoting In re NYSE Specialists Sec. Litig., 503 F.3d 89, 95 (2d Cir. 2007)).
However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements ... are not entitled to the assumption oftruth." Iqbal, 556 U.S. at 678-79
(citation omitted); see also Twombly, 555 U.S. at 555 (stating that the Court is "not bound to
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accept as true a legal conclusion couched as a factual allegation"). "While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations," which
state a claim for relief. Iqbal, 556 U.S. at 679. A complaint that "tenders 'naked assertion[s]'
devoid of 'further factual enhancement"' will not suffice. Iqbal, 556 U.S. at 678 (quoting
Twombly, 555 U.S. at 557).

II.

The FLSA and NYLL Claims
Plaintiffs allege that Defendants improperly classified them as independent contractors

when, in reality, they were or are employees and, therefore, subject to the protections of the
FLSA and the NYLL. By their motion, Defendants argue that Plaintiffs fails to allege sufficient
facts to establish the existence of an employment relationship between any of the Plaintiffs and
Defendants.
The FLSA defines the term "employee" as "any individual employed by an employer, and
the term "employ" to include "to suffer or permit work." 29 U.S.C. § 203(e)(1), 203(g). While
this definition is broad, the "overarching concern" in determining whether an employer-employee
relationship exists under the FLSA "is whether the alleged employer possessed the power to
control the workers in question with an eye to the 'economic reality' presented by the facts of
each case." Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999) (citation
omitted).
Known as the "economic reality test," courts consider the following relevant factors in
determining whether an individual is an "employee" or an independent contractor for purposes of
the FLSA: (1) the degree of control exercised over the workers; (2) the worker's opportunity for
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profit or loss; (3) the degree of skill and independent initiative required to perform the work; (4)
the permanence or duration of the working relationship; and (5) whether the work is integral to
the employer's business." Brock v. Superior Care. Inc., 840 F.2d 1054, 1058-59 (2d Cir. 1988)
(citations omitted). "Even if a putative employer does not exercise "formal control" over a
worker, the court must assess whether the entity nevertheless exercised "functional control" over
the worker. Barfield v. N.Y. City Health & Hosps. Cor,p., 537 F.3d 132, 143 (2d Cir. 2008). No
one factor is dispositive; rather, the economic reality test is based on a "totality of the
circumstances." Brock, 840 F.2d at 1059.
Here, accepting the factual allegations pleaded in Plaintiffs' Amended Complaint as true,
as the Court must at this stage of the litigation, the Court finds that Plaintiffs have adequately
pleaded that they were or are employees of Defendants. Defendants attempt to undermine
Plaintiffs' allegations by offering "Independent Contractor Services Agreements," purportedly
signed by each of the Plaintiffs. However, it would be premature to consider such documents at
this juncture, given that the parties have not even had their initial appearance before the assigned
Magistrate Judge yet and no discovery has been conducted whatsoever thus far. Dismissing the
action on the grounds that Plaintiffs are independent contractors at this stage of the litigation
would be inappropriate. Accordingly, Defendants' motion to dismiss the overtime and minimum
wage claims brought pursuant to the FLSA and the NYLL is denied.

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CONCLUSION
For the foregoing reasons, Defendants' motion to dismiss Plaintiffs' overtime and
minimum wage claims brought pursuant to the FLSA and the NYLL is denied in its entirety. The
parties are directed to contact the assigned Magistrate Judge forthwith to begin discovery.

SO ORDERED:
Dated: Central Islip, New York
February 15_, 2017

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LEONARD D. WEXLER
United States District Judge

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