Gomez Martinez et al v. Spice Place, Inc., et al
Filing
24
OPINION re: 11 MOTION to Dismiss the Amended Complaint filed by Spice Thai Hot & Cool LLC, Yongyut Limleartvate, Spice Avenue Inc., Spice West, Inc., Kitlen Management, Inc., Spice Corner 236 Inc., Bangkok Palace II, Inc., Kittigorn Lirtpanaruk, Sp ice City, Inc. For the reasons set forth above, the Amended Complaintis dismissed to the extent that it asserts claims seeking collective action or class action certification for any period of time prior to December 11, 2009. Leave to replead within twenty days is granted. (Signed by Judge Robert W. Sweet on 6/11/2013) (cd)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------x
JUAN CARLOS GOMEZ MARTINEZ, et al.,
Plaintiffs,
-against-
12 Civ. 503
OPINION
SPICE AVENUE INC., et al.,
Defendants.
------------------------------------------x
A P PEA RAN C E S:
Attorney for Plaintiffs
MICHAEL FAILLACE & ASSOCIATES, P.C.
60 East 42 nd Street, Suite 2020
New York, NY 10165
By: Michael A. Faillace
Attorney for Defendants
LAW OFFICE OF RICHARD E. SIGNORELLI
799 Broadway, Suite 539
New York, NY 10003
By:
Richard E. Signorelli, Esq.
Bryan Ha, Esq.
LIPMAN & PLESUR, LLP
500 North Broadway, Suite 105
Jericho, NY 11753
By:
Robert D. Lipman, Esq.
Sweet, D.J.
Defendants Spice Avenue Inc., Bangkok Palace II, Inc.,
Spice City, Inc., Spice West, Inc., Spice Thai Hot & Cool LLC,
Kitlen Management, Inc., Spice Corner 236 Inc., Kittigorn
Lirtpanaruk and Yongyut Limleartvate (collectively,
"Defendants") have moved to dismiss the Amended Complaint in
part pursuant to Rule 12(b) (6) of the Federal Rules of Civil
Procedure. For the reasons discussed below, the Amended
Complaint is dismissed to the extent it asserts claims seeking
collective action or class action certification for any period
of time prior to December 11, 2009.
Prior Proceedings
Plaintiffs filed the initial complaint in this action
on January 20, 2012. An Amended Complaint was filed on July 3,
2012 alleging that the corporate defendants are "seven
corporations that act in partnership with one another in the
operation and management of a chain of Thai restaurants in the
state of New York" (Amended Compl. 'l1 2), and that they are
allegedly "current and former employees of Defendants, primarily
employed as delivery workers." (Id. 'l1 56). It is further alleged
1
that, "[f]or at least six years prior to
action," De
s
ling of this
iled to pay them minimum and overtime
wages as required under the Fair Labor St
the New York
(" FLSA") ,
Law, and the spread of hours wage order of
the New York Commissioner of Labor.
PIa
Act
if
Id.
~~
12-13).
seek to bring this action "on behalf of
themselves, individually, and all other simila
y situated
employees and former employees of Defendants,lf
~~
and seek certification of
s action as a col
ct
14-15),
action
pursuant to the FLSA, 29 U.S.C. ยง 216(b), and as a class action
pursuant to Fed. R. Civ. P. 23 for the period from "on or after
rs before the filing of the complaint in
the date that is six
this case, January 2006, to entry of judgment in this case (the
'New York Class Period')." (Amended CompI.
~~
516, 13-14).
The instant action is substantively similar to
s District: Marlon Castro
actions previously filed
v.
ce Place
Inc.
et al.
07 CV 4657
ce Place
et al.
~~~~~~--~~~----~------~-------
Jose Castillo et al. v.
(RWS); Guillermo
08 CV 3887
et al.
(RWS); and
~~~~~==~~~~~.~~~--~----------~----~--------'
(RWS)
(collectively, "prior act
If).
et al.
08 CV 6811
Many of the defendants
in the prior actions are also named as defendants in the
action, including Spice Avenue, Inc., Bangkok Palace II,
2
Inc., Spice City, Inc., Spice West, Inc., Kitlen Management,
Inc., Kittigorn
rtpanaruk, and Yongyut
eartvate. The
aintiffs in each of the prior actions all
failed to pay them minimum and overtime
the FLSA and under New York law.
Amended Compl.
~~
that defendants
s as required under
(Castro Compl.
37, 43, 51; Castillo Compl.
~~
~~
4-5; Gonzalez
75, 81, 88,
108) .
aintiffs in each of
action and class action certification on
sought collect
behalf of t
actions also
elves and other simil
y-situated empl
s. The
Castro plaintiffs sought certification of a collective action
and a
ss action for the period from "on or after the
that is six
rs before the filing of the complaint in this
case, June 2001, to entry of judgment in this case (the 'New
York Class Period').Ff (Castro Compl.
the pla
~~
54, 6-7). In Gonza
s,
f sought collective action and class action
certification for "the period from April 30, 2002 to
date of
this complaint [i.e., May 1, 2008J.Ff (Gonzalez Amended Compl.
~
6). In Castillo
certif
the Plaintiffs sought collective action
ion for the period
July 30, 2005 through July 30,
2008 and class action certification for the period
2002 through July 30, 2008.
(Castillo Compl.
3
~~
66, 87.)
July 30,
At the time that the prior actions were pending, the
Office of the Attorney General of the State of New York ("OAG")
was conducting an investigation of the Defendants' alleged wage
law violations.
(Order Facilitating Settlement, p. 1). In
December 2009, "the OAG [] negotiated a settlement of its
investigation with defendants which serves the interests of
plaintiffs [] in the form of a document entitled 'Assurance of
Discontinuance'."
(Id.). The Assurance of Discontinuance was
fully executed on December 14, 2009.
In connection with the settlement of the OAG's
investigation, the parties also settled the Castro action and
the Gonzales action, and these actions were dismissed with
prejudice pursuant to stipulations of dismissal so-ordered by
the Court (collectively, "Dismissal Orders"). Each of the
Dismissal Orders contains a prohibition against the filing of
any collective or class action against any of the defendants for
alleged wage law violations, as follows:
Upon the full execution of the Assurance of
Discontinuance executed by Andrew M. Cuomo, Attorney
General of the State of New York, and the corporate
defendants herein, no class or collective action may
be brought against defendants for alleged wage-hour
violations for any time up to the date of this Order.
4
The order dismissing the Castro action is dated November
17, 2009. The order dismissing the Gonzales action is dated
December 11, 2009.
The instant motion, based in part on the
Dismissal Order, was heard and marked fully submitted on
January 23, 2013.
The Amended Complaint As A Collective Action Is Dismissed
The Dismissal Orders entered in the Castro and
Gonzales actions resolved those cases and banned collective and
class actions covering the same period of time covered by the
Defendants' settlement with the OAG of the wage-hour claims of
its employees. Concurrently with the Dismissal Orders, the
Defendants entered into a negotiated settlement with the OAG
pursuant to an Assurance of Discontinuance and paid the sum of
$650,000 as restitution for unpaid wages, overtime pay and other
compensation, to be distributed by the OAG to persons employed
by the Defendants during the period from "September 1, 1999
through the date of execution of this Assurance of
Discontinuance[.]" Each of the Dismissal Orders provided that,
"[u]pon the full execution of the Assurance of Discontinuance
... no class or collective action may be brought against
5
defendants for alleged wage-hour violations for any time up to
the date of this Order." The later of the two Dismissal Orders
is dated December 11, 2009.
The Assurance of Discontinuance together with the
Dismissal Orders established a framework for distributing funds
to employees with wage-hour claims against the Defendants
through December 11, 2009, in lieu of a class or collective
action. Essentially, the OAG would distribute the funds from the
defendants to all eligible employees to satisfy and secure the
release of their wage-hour claims, thereby obviating the need
for any class or collective action. Eligible employees who did
not receive a distribution from the OAG are not prohibited from
bringing individual wage-hour claims against the defendants.
They are free to bring such claims to recover any unpaid wages,
overtime pay and other compensation that may be owed them. Only
class and collective actions are prohibited.
The Plaintiffs acknowledge that this prohibition of
class and collective actions is "presumptively reasonable"
because the OAG's investigation (which culminated in the
Assurance of Discontinuance) was not limited to any particular
employees but rather "covered workers generally at the
Defendants' restaurants, and included a mechanism for
6
individuals deemed eligible by OAG to submit a claim and re
and receive payment from the settlement monies paid by t
s] to OAG." (Opp. Mem. Law, p. 3).
However, the Plaintiffs contend that they may assert
ss and col
ive action claims in this case because they
y ndid not receive adequate notice of the OAG
investi
they
aims procedure." (Id.). Without such notice,
and
of the prohibition against class and
aim,
col
act
would violate their due process rights.
(Id.
at 3-4).
If t
iffs did not receive adequate notice as
they claim, and did not rece
any distribution from the OAG,
they may seek recovery of any unpaid wages, overtime pay and
other compensation that t
wage-hour claims aga
t
y may be owed by bringing individual
t
3). Nothing in the Dismissal
Discontinuance prohibits
s.
De
rs or the Assurance of
from asserting individual wage-
hour claims in their compla
substantive rights have
(Def. Reply Memo, p.
ly, none of their
or compromised.
wa
Plaintiffs rely on
Alabama, 517 U.S. 793 (1996),
ral propos
7
ion that
"one is not bound by a judgment in personam in a 1
or to which
which he is not
signated as a
been made a
by service of process."
Richards, the
igation in
has not
(Opp. Mem., p. 4). In
abama Supreme Court applied the doct
judicata and rul
of res
that the petitioners' claims were barred by a
prior adjudication on the merits in an earlier litigation. See
Richards, 517 U.S. at 795-96. The Supreme Court revers
holding that "[b]ecause petitioners received neither notice of,
nor sufficient
entation in [the
or litigation], t
adjudication, as a matter of federal due process, may not bind
them and thus cannot
them from" asserting their claims. Id.
at 805.
Richards is inapposite here
contending that Plaint if
are barred
judicata from asserting
ir wage-hour c
Unli
in Richards,
se Defendants are not
the doctrine of res
ims in this action.
the petitioners were barred from
asserting their claims based on a prior adjudication, the
PIa
iffs here are free to assert all their claims (and have in
done so). The PI
if
in this case are represented by
the same counsel who represented the Plaintif
actions. Unlike in Richa
there is no cl
in the prior
here that
Plaintiffs were not "adequately represented" by the parties who
were present in the prior actions. See id. at 800-801. Nor is
8
re any claim that Plaintiffs' interests con
s of the parties who were present in t
ict with the
p
or actions.
e, 311 U.S.
See id. at 800-801 (noting that in Hansber
--------~---------
32. 42-43 (1940), the Supreme Court concluded "that because the
rests of those class members who had been a party to the
litigation were in conflict with
absent members who
were the defendants in the subsequent action,H the Defendants
could not be bound by the prior adjudicat
).
Since no monetary claims were waived under the
Dismissal Orders and Assurance of
scontinuance, no notice to
potential plaintiffs was requi
Wal-Mart Stores, Inc. v.
Dukes, 131 S.Ct. 2541, 2558-59 (2011)
under Fed. R. Civ. P. 23 (b) (2);
(notice is not required
Supreme Court has never held
that the lack of notice violates due process where the monetary
claims do not predominate).
The framework es
ished by the Assurance of
Discontinuance and Dismissal Orders in lieu of a class or
collective action was approved and so-ordered by the Court and
agreed upon by all parties including the Plaintiffs' counsel,
who also represented
iffs in the prior actions.
Defendants ente
the Assurance of Discontinuance and
agreed to settle the
or actions in reliance on the promise of
9
"finality and repose" with respect to class and collective
actions covering the same period covered by these agreements.
Such "finality and repose" was critical to the
reements. See
187 F. R. D. 453, 458
(N.D.N.Y. 1999)
("'Most importantly, a settlement produces
finality and repose upon whi
affairs.'")
(quoting
267, 616 N.Y.S.2d 424
Huls~v.
people can order their
A.B. Dick Co., 162 Misc.2d 263,
(N.Y. Sup. Ct. 1994));
a Foundations,
Inc. v. Ilgwu Nat. Retirement Fund, 902 F.2d 185, 190 (2nd Cir.
1990)
(noting the importance of "[t]he need
finality" in a
settlement agreement). As the Court of Appeals for the Second
Circuit has noted, "[c]ourts are wary of disturbing settlements,
because they represent compromise and conservation of judi
resources, two concepts
al
ghly regarded in American
jurisprudence." Anita Foundations, 902 F.2d at 190; see also
Hasbrouck
poli
187 F.R.D. at 458 (noting"
important public
of encouraging settlements") .
Pursuant to the Assurance of
sed complete
scontinuance, t
OAG
total control over the claims
rmine
distribution process; it had "absolute discretion to
eligibility of individuals and
distributed to individuals [], the t
identity of the recipients and
10
ific amounts to be
frames for
stribution,
manner of distribution,
provided, however, that money will be distributed only
those
individuals who submit claims to OAG within the time period
which may be required by OAG, and who complete and sign a
Release[.]U (Assurance of Discontinuance, p. 5 ,
2(a)).
Defendants were not involved in the claims distribution process.
If
Plaintiffs here believe that they are entitled to
distributions from t
OAG but did not submit claims because
they did not receive adequate notice, and they do not want to
continue to participate in this lawsuit,
to pursue
may be appropriate
matter with the OAG.
CONCLUSION
For the reasons set forth above, the Amended Complaint
is dismissed to the extent that
asserts claims seeking
lective action or class action certification
any period
prior to December 11, 2009. Leave to replead within
of t
twenty days is granted.
New York, NY
June
,2013
/1
. SWEET
U.S.D.J.
11
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