Cao et al v. East Market Restaurant, Inc. et al
Filing
45
OPINION AND ORDER re: 36 MOTION for Partial Summary Judgment . filed by Sky Wong, Sai Qin Chen, Xiu Rong Tong, Zeng Can Lu, Ai Qin Guo, Wai Fong Cheong, Xiu Hua Xu. Accordingly, for all the foregoing reasons, I grant plaintiffs' ; motion to the extent that they claim defendants were not entitled to take advantage of the tip credit. Plaintiff's motion is denied in all other respects. The Clerk of the Court is directed to mark Docket Item 36 as closed. (As further set forth in this Order) (Signed by Magistrate Judge Henry B. Pitman on 9/30/2015) Copies Sent By Chambers. (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------X
SAI QIN CHEN, et al.,
:
13 Civ. 3902 (HBP)
Plaintiffs,
-against-
:
:
EAST MARKET RESTAURANT, INC.,
et al.,
OPINION
AND ORDER
:
:
Defendants.
:
-----------------------------------X
PITMAN, United States Magistrate Judge:
I.
Introduction
Plaintiffs Sai Qin Chen, Wai Fong Cheong, Ai Qin Guo,
Zeng Can Lu, Xiu Rong Tong, Sky Wong and Xiu Hua Xu commenced
this action against their current or former employer, East Market
Restaurant, Inc. ("East Market"), and its shareholders Jimmy
Cheng, Guo Ping Zheng, Zheng Jiang Zheng and Zheng Xiang Zheng to
recover for alleged wage and records violations under the Fair
Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., and New
York Labor Law ("Labor Law"), N.Y. Lab. Law §§ 190 et seq., §§
650 et seq. (Amended Complaint, dated June 9, 2014 (Docket Item
32) ("Am. Compl.")).
By notice of motion dated August 29, 2014
(Docket Item 36), plaintiffs move for partial summary judgment
pursuant to Federal Rule of Civil Procedure 56.
The parties have
consented to my exercising plenary jurisdiction pursuant to 28
U.S.C. § 636(c).
For the following reasons, plaintiffs' motion is
granted to the extent plaintiffs claim defendants were not
entitled to take advantage of the tip credit.
Plaintiff's motion
is denied in all other respects.
II.
Facts
This action arises out of plaintiffs' employment at
East Market, a restaurant in New York City (Am. Compl. ¶¶ 1, 8).
Plaintiffs were employed variously as bussers, waitresses and
waiters and captains (Am. Compl. ¶ 2).
Plaintiffs all assert
claims under the FLSA and the Labor Law (Am. Compl. ¶¶ 3, 28-30).
Specifically, plaintiffs contend that they were not paid the
minimum wage required by law because defendants improperly took
the tip credit1 (Am. Compl. ¶¶ 3, 28).
Plaintiffs argue that
defendants were ineligible for the tip credit because they failed
to notify plaintiffs of their intent to take the tip credit, as
1
If certain conditions are met, the FLSA and the Labor Law
permit an employer to pay an employee an hourly wage below the
minimum wage so long as the reduced hourly wage and the
employee's tips equal or exceed the minimum wage. See generally
Shahriar v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d 234,
239-40 (2d Cir. 2011); Salinas v. Starjem Rest. Corp., 13 Civ.
2992 (AT), 2015 WL 4757618 at *15 (S.D.N.Y. Aug. 12, 2015)
(Torres, D.J.).
2
required by both the FLSA and the Labor Law (Am. Compl. ¶ 28).
In addition, plaintiffs contend that defendants failed to maintain the pay records required by the Labor Law (Am. Comp. ¶¶ 2930).
III. Analysis
A.
Legal Standards
1.
Summary Judgment
The standards applicable to a motion for summary
judgment are well-settled and require only brief review.
Summary judgment may be granted only where there is no
genuine issue as to any material fact and the moving
party . . . is entitled to a judgment as a matter of
law. Fed.R.Civ.P. 56(c). In ruling on a motion for
summary judgment, a court must resolve all ambiguities
and draw all factual inferences in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
To grant the motion, the court must determine that
there is no genuine issue of material fact to be tried.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106
S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine factual
issue derives from the "evidence [being] such that a
reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct.
2505. The nonmoving party cannot defeat summary judgment by "simply show[ing] that there is some metaphysical doubt as to the material facts," Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586,
106 S.Ct. 1348, 89 L.Ed.2d 538 (1986), or by a factual
argument based on "conjecture or surmise," Bryant v.
Maffucci, 923 F.2d 979, 982 (2d Cir. 1991). The Supreme Court teaches that "all that is required [from a
3
nonmoving party] is that sufficient evidence supporting
the claimed factual dispute be shown to require a jury
or judge to resolve the parties' differing versions of
the truth at trial." First Nat'l Bank of Ariz. v.
Cities Serv. Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575,
20 L.Ed.2d 569 (1968); see also Hunt v. Cromartie, 526
U.S. 541, 552, 119 S.Ct. 1545, 143 L.Ed.2d 731 (1999).
It is a settled rule that "[c]redibility assessments,
choices between conflicting versions of the events, and
the weighing of evidence are matters for the jury, not
for the court on a motion for summary judgment."
Fischl v. Armitage, 128 F.3d 50, 55 (2d Cir. 1997).
McClellan v. Smith, 439 F.3d 137, 144 (2d Cir. 2006); accord Hill
v. Curcione, 657 F.3d 116, 124 (2d Cir. 2011); Jeffreys v. City
of New York, 426 F.3d 549, 553-54 (2d Cir. 2005); Powell v. Nat'l
Bd. of Med. Exam'rs, 364 F.3d 79, 84 (2d Cir. 2004).
"Material facts are those which 'might affect the
outcome of the suit under the governing law,' and a dispute is
'genuine' if 'the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.'"
Coppola v. Bear
Stearns & Co., 499 F.3d 144, 148 (2d Cir. 2007), quoting Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); accord McCarthy
v. Dun & Bradstreet Corp., 482 F.3d 184, 202 (2d Cir. 2007).
"'[I]n ruling on a motion for summary judgment, a judge must ask
himself not whether he thinks the evidence unmistakably favors
one side or the other but whether a fair-minded jury could return
a verdict for the [non-movant] on the evidence presented[.]'"
Cine SK8, Inc. v. Town of Henrietta, 507 F.3d 778, 788 (2d Cir.
4
2007) (second alteration in original), quoting Readco, Inc. v.
Marine Midland Bank, 81 F.3d 295, 298 (2d Cir. 1996).
Entry of summary judgment is appropriate "against a
party who fails to make a showing sufficient to establish the
existence of an element essential to that party's case, and on
which that party will bear the burden of proof at trial."
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
"In such a
situation, there can be 'no genuine issue as to any material
fact,' since a complete failure of proof concerning an essential
element of the nonmoving party's case necessarily renders all
other facts immaterial."
Celotex Corp. v. Catrett, supra, 477
U.S. at 322-23, citing Fed.R.Civ.P. 56.
A court cannot make credibility determinations or weigh
the evidence in ruling on a motion for summary judgment.
[T]he court must draw all reasonable inferences in
favor of the nonmoving party, and it may not make
credibility determinations or weigh the evidence.
Lytle v. Household Mfg., Inc., 494 U.S. 545, 554–555,
110 S.Ct. 1331, 108 L.Ed.2d 504 (1990); Liberty Lobby,
Inc., supra, at 254, 106 S.Ct. 2505; Continental Ore
Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 696,
n.6, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962). "Credibility
determinations, the weighing of the evidence, and the
drawing of legitimate inferences from the facts are
jury functions, not those of a judge." Liberty Lobby,
supra, at 255, 106 S.Ct. 2505. Thus, although the
court should review the record as a whole, it must
disregard all evidence favorable to the moving party
that the jury is not required to believe. See Wright &
Miller 299. That is, the court should give credence to
the evidence favoring the nonmovant as well as that
5
"evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that
that evidence comes from disinterested witnesses."
Id., at 300, 106 S.Ct. 2505.
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150–51
(2000); accord In re Dana Corp., 574 F.3d 129, 152 (2d Cir.
2009); Tolbert v. Queens College, 242 F.3d 58, 70 (2d Cir. 2001).
2.
The FLSA and
the Labor Law
When an employer moves for summary judgment in a case
alleging violation of the FLSA,
[and its] records are inaccurate or inadequate, 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," [Anderson v.
Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946)].
See, e.g., Von Friewalde v. Boeing Aerospace Operations, Inc., 339 Fed. Appx. 448, 455, 460 (5th Cir.
2009); Brown v. Family Dollar Stores of Ind., LP, 534
F.3d 593, 594-98 (7th Cir. 2008); Allen v. Bd. of Pub.
Educ. for Bibb Cnty., 495 F.3d 1306, 1315-18 (11th Cir.
2007); Magnoni v. Smith & Laquercia, LLP, 661 F. Supp.
2d 412, 417-18 (S.D.N.Y. 2009). Consistent with Anderson, an employee's burden in this regard is not high.
See 328 U.S. at 687, 66 S.Ct. 1187 (remedial purpose of
FLSA militates against making employee's burden an
"impossible hurdle"). It is well settled among the
district courts of this Circuit, and we agree, that it
is possible for a plaintiff to meet this burden through
estimates based on his own recollection. See, e.g.,
Canela-Rodriguez v. Milbank Real Estate, No. 09 Civ.
6588 (JSR), 2010 WL 3701309, at *2, 2010 U.S. Dist.
LEXIS 98884, at *5 (S.D.N.Y. Sept. 20, 2010); Rivera v.
Ndola Pharmacy Corp., 497 F. Supp. 2d 381, 388
(E.D.N.Y. 2007); Magnoni, 661 F. Supp. 2d at 417-18.
6
Kuebel v. Black & Decker Inc., 643 F.3d 352, 362 (2d Cir. 2011)
(second alteration in original); accord McNamara v. Associated
Press, 40 F. Supp. 3d 345, 353 (S.D.N.Y. 2014) (Pitman, M.J.);
Gunawan v. Sake Sushi Rest., 897 F. Supp. 2d 76, 84 (E.D.N.Y.
2012); see also Jiao v. Shi Ya Chen, 03 Civ. 0165 (DF), 2007 WL
4944767 at *3 (S.D.N.Y. Mar. 30, 2007) (Freeman, M.J.) ("Like the
FLSA, 'in the absence of adequate records,' New York law also
'places the burden on the employer to show the employee was
properly compensated.'"), quoting Yang v. ACBL Corp., 427 F.
Supp. 2d 327, 337 n.15 (S.D.N.Y. 2005) (Sand, D.J.) and citing
N.Y. Lab. Law § 196-a.
B.
Analysis of
Plaintiffs' Arguments
1.
Defendants' Failure to
Follow Local Rule 56.1
As a threshold matter, plaintiffs argue that "the Court
should deem [their Local Rule 56.1] Statement to be admitted in
its entirety" due to defendants' failure to submit a
counter-statement of material facts pursuant to Local Rule 56.1
(Reply Memorandum of Law, dated (Docket Item ) ("Pls.' Reply"),
at 1).
Defendants' "failure to comply with Local Rule 56.1 is
grounds for deeming admitted the facts contained in defendants'
7
Rule 56.1 statement" and granting defendants' motion.
Taylor v.
Local 32E Serv. Emps. Int'l, Union, 286 F. Supp. 2d 246, 248 n.1
(S.D.N.Y. 2003) (Conner, D.J.), aff'd, 118 F. App'x 526 (2d Cir.
2004) (summary order); Watt v. N.Y. Botanical Garden, 98 Civ.
1095 (BSJ), 2000 WL 193626 at *1 n.1 (S.D.N.Y. Feb. 16, 2000)
(Jones, D.J.).
"A district court[, however,] has broad discre-
tion to determine whether to overlook a party's failure to comply
with local court rules," and, thus, "may . . . opt to conduct an
assiduous review of the record" even when a party has not complied with Rule 56.1.
Holtz v. Rockefeller & Co., 258 F.3d 62,
73 (2d Cir. 2001) (internal quotation marks omitted).
Considering that defendants are represented by counsel,
their failure to file a counter-statement under Local Rule 56.1
is inexplicable.
However, given the strong preference in this
Circuit for resolving cases on the merits, see e.g., Pecarsky v.
Galaxiworld.com Ltd., 249 F.3d 167, 172 (2d Cir. 2001); Jamison
v. Fischer, 11 Civ. 4697 (RJS), 2012 WL 4767173 at *6 (S.D.N.Y.
Sept. 27, 2012) (Sullivan, D.J.), I shall overlook defendants'
failure to serve an opposing Rule 56.1 statement and shall review
the record independently.
See Am. Med. Ass'n v. United
HealthCare Corp., 00 Civ. 2800 (LMM), 2007 WL 1771498 at *3
(S.D.N.Y. June 18, 2007) (McKenna, D.J.) (conducting review of
the record "to fill . . . gaps" resulting from plaintiffs'
8
failure to file a 56.1 counter-statement in response to defendants' 56.1 statement); Citibank N.A. v. Outdoor Resorts of Am.,
Inc., 91 Civ. 1407 (MBM), 1992 WL 162926 at *4 (S.D.N.Y. June 29,
1992) (Mukasey, D.J.) (declining to grant summary judgment based
on non-moving party's failure to submit a Rule 56.1 statement).
2.
Defendants' Records
Plaintiffs first seek summary judgment on their Labor
Law claims with respect to the number of hours worked and wages
paid (Plaintiffs' Memorandum of Law in Support of Plaintiffs'
Partial Motion for Summary Judgment, dated August 29, 2014
(Docket Item 37) ("Pls.' Mem.") at 2-3).
Plaintiffs argue that I
should grant this portion of their motion because East Market did
not keep complete or accurate records of plaintiffs' hours and
wages (Pls.' Mem. at 3).
Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680
(1946), teaches that a plaintiff can sustain his burden of proof
as to hours worked and wages paid based on recollection alone.
See also Kuebel v. Black & Decker Inc., supra, 643 F.3d at 362
("[I]t is possible for a plaintiff to meet this burden through
estimates based on his own recollection.").
The plaintiff's
recollection does not, however, conclusively establish the hours
9
worked and wages paid.2
The fact finder remains free to believe
or disbelieve the plaintiff.
Plaintiffs have submitted check stubs and payroll
records kept by defendants (Declaration of Carmela Huang in
Support of Plaintiffs' Motion for Partial Summary Judgment, dated
August 29, 2014 (Docket Item 41) ("Huang Decl.") Exs. N, O, P),
but plaintiffs contend that these records are incomplete for Sai
Qin Chen, Wai Fong Cheong, Ai Qin Guo, Zeng Can Lu, Xiu Rong Tong
and Sky Wong, and nonexistent for Xiu Hua Xu (Pls.' Mem. at 3).
Plaintiffs also dispute the rate of pay shown on the paystubs
from 2007 (Pls.' Mem. at 3).
In response, defendants argue in
their brief that they did keep complete records, citing to the
testimony of Louis Miu, Defendants' Fed.R.Civ.P. 30(b)(6) witness
(Defs.' Mem. at 4; see also Declaration of Traci M. Strickland in
2
The single case cited by plaintiffs for this proposition,
Ho v. Sim Enter., Inc., 11 Civ. 2855 (PKC), 2014 WL 1998237 at
*14-*16 (S.D.N.Y. May 14, 2014) (Castel, D.J.) (Pls.' Mem. at 3),
is a decision issued after a bench trial, and the judge was,
therefore, free to make credibility findings and to resolve
disputes in the evidence. I cannot engage in such factinding in
resolving a motion for summary judgment. C.R. Klewin v. Flagship
Properties, Inc., 955 F.2d 5, 7 (2d Cir. 1992). I further note
that plaintiffs' own statements as to their hours worked and
compensation are internally inconsistent. See e.g., (Deposition
of Sai Quin Chen, annexed as Ex. A to Huang Decl., at 10, 24
(stating that she was paid five hundred to eight hundred dollars
per week and worked twenty to fifty hours per week); Affidavit of
Sai Quin Chen, annexed as Ex. B to Huang Decl., ¶¶ 6-7 (stating
that she made $4.60 per hour and later $4.65 per hour and worked
from twenty to forty hours per week)).
10
Opposition to Plaintiffs' Motion for Summary Judgment, dated
September 22, 2014 (Docket Item 43) ("Strickland Decl.") Ex. B at
61 (stating that he did not have any reason to believe that the
information on the pay stubs for any of the tipped employees was
inaccurate)).
Whether plaintiffs' testimony or defendants'
records should be credited is a question of fact.
Accordingly, I find that there are questions of fact as
to the hours plaintiffs worked and the wages they were paid.
I,
therefore, deny plaintiffs' motion for summary judgment on this
issue.
3.
Tip Credit and
the Minimum Wage
Plaintiffs next seek summary judgment on the issue of
whether defendants were eligible to take advantage of the tip
credit.
Plaintiffs argue that defendants were not eligible to
take the tip credit because they did not notify plaintiffs with
each weekly pay statement that the tip credit was being taken and
did not keep weekly payroll records, showing the credits being
taken, for at least six years (Pls.' Mem. at 4-5).
Defendants
contend that they are eligible for the tip credit because they
verbally informed plaintiffs that they considered tip income as
part of the minimum wage (Defendants' Opposition to Plaintiffs'
11
Motion for Summary Judgment, dated September 22, 2014 (Docket
Item 40) ("Defs.' Mem.") at 3).3
"New York state law allows employers to credit a portion of an employee's tips and the costs of meals as
allowances against the minimum wage requirement when
certain preconditions are met."• Padilla v. Manlapaz,
643 F. Supp. 2d 302, 309 (E.D.N.Y. 2009). Under the
regulations in force during the events of this lawsuit,
"[f]irst, the employer [was] required to 'furnish to
each employee a statement with every payment of wages
listing . . . allowances . . . claimed as part of the
minimum wage. . . .'"• Id. at 309-10 (quoting N.Y.
Comp. Codes R. Regs. tit. 12, § 137-2.2). "Second, the
employer must 'maintain and preserve for not less than
six years weekly payroll records which shall show for
each employee . . . allowances . . . claimed as part of
the minimum wage. . . .'"• Id. at 310 (quoting N.Y.
Comp. Codes R. Regs. tit. 12, § 137-2.1).
Copantitla v. Fiskardo Estiatorio, Inc., 788 F. Supp. 2d 253,
290-91 (S.D.N.Y. 2011) (Holwell, D.J.); accord Cuzco v. F & J
Steaks 37th St. LLC, 13 Civ. 1859 (PAC), 2014 WL 2210615 at *2
(S.D.N.Y. May 28, 2014) (Crotty, D.J.); Monterossa v. Martinez
Rest. Corp., 11 Civ. 3689 (JMF), 2012 WL 3890212 at *4 (S.D.N.Y.
Sept. 7, 2012) (Furman, D.J.).
But see Yong Kui Chen v. Wai Yin
Chan, No. 12-1845, 2015 WL 4032693 at *3 (2d Cir. July 2, 2015)
(summary order) (noting that some courts have not imposed a
notice requirement for the tip credit under the Labor Law prior
to January 1, 2011); Yan v. 520 Asian Rest. Corp., 13 Civ. 2417
3
Because defendants' opposition brief is not serially
paginated, I use the page numbers assigned by the Court's ECF
system.
12
(KNF), 2014 WL 7177259 at *10 (S.D.N.Y. Dec. 17, 2014) (Fox,
M.J.) (no notice requirement for tip credit under the Labor Law
prior to January 1, 2011); Jin v. Pac. Buffet House, Inc., CV-06579, 2009 WL 2601995 at *4 (E.D.N.Y. Aug. 24, 2009) (same).
Here, while check stubs do list hourly pay, deductions
and tip income, the check stubs do not show "allowances claimed
as part of the minimum wage" (see Huang Decl., Ex. P).
Some of
the payroll records maintained by defendants show a different
hourly wage than the check stubs, a wage significantly higher
than the minimum wage, and do not state whether any of that wage
was comprised of tips (see Huang Decl., Exs. N, O).
Other
payroll records show an hourly wage and list a tip amount separately.
It is not clear whether the plaintiffs claim they
received the check stubs or copies of the payroll records or both
(see Pls.' Mem. at 5, citing Plaintiffs' Rule 56.1 Statement ¶
35).
These records are insufficient for an employer to
receive the tip credit under the Labor Law prior to January 1,
2011.
Salinas v. Starjem Rest. Corp., supra, 13 Civ. 2992 (AT);
2015 WL 4757618 at *15
Copantitla v. Fiskardo Estiatorio, Inc.,
supra, 788 F. Supp. 2d at 290-91 ("Both the pay statements and
the payroll records show only that plaintiffs earned tip-related
income; they do not record that any of the tip income was claimed
13
as part of the minimum wage."); accord Cuzco v. F & J Steaks 37th
St. LLC, supra, 2014 WL 2210615 at *3 (citing cases).
But see
Hicks v. T.L. Cannon Corp., 35 F. Supp. 3d 329, 343-45 (W.D.N.Y.
2014) (denying summary judgment on tip credit eligibility when,
"[b]ased on the parties' stipulations for purposes of Plaintiffs'
motion for partial summary judgment, there is no dispute that the
employees received pay equal to the required minimum wage; each
paycheck listed, among other things, the hours worked, rate of
pay, tips earned, and tip makeup pay; the employees knew the
amount of the tip credits taken against the minimum wage with
each paycheck; and the employees were not confused about the
manner in which the employer took the tip credit.").
Verbal
notice does not meet the prerequisites of the Labor Law prior to
January 1, 2011.
Accordingly, I grant plaintiffs' motion for summary
judgment on the issue of whether defendants were entitled under
the Labor Law to take the tip credit for the period prior to
January 1, 2011.
4.
Minimum Wage
Plaintiffs next argue that summary judgment should be
granted in their favor as to defendants' failure to pay the
minimum wage under the Labor Law prior to January 1, 2011 (Pls.'
14
Mem. at 4).
I cannot resolve this on the record before me.
As
discussed above, issues of fact remain as to what each plaintiff
was paid.
For example, as plaintiffs note, some records reflect
a regular hourly rate of pay that significantly exceeded the
minimum wage (Pls.' Mem. at 4, 4 n.2).
Plaintiffs dismiss these
records as "inaccurate" and "false" (Pls.' Mem. at 4, 4 n.2), but
these inconsistencies in the record give rise to questions of
fact that I cannot resolve at this time.
Accordingly, I deny plaintiffs' motion for summary
judgment as to defendants' alleged failure to pay the minimum
wage.
5.
Liquidated Damages
Plaintiffs next argue that they are entitled to liquidated damages and prejudgment interest for defendants' failure to
pay minimum wage (Pls.' Mem. at 6).
As discussed above, I do not
decide here whether defendants have failed to pay plaintiffs the
minimum wage under the Labor Law.
As a result, I cannot decide
whether plaintiffs are entitled to liquidated damages and prejudgment interest.
Accordingly, I deny plaintiffs' motion for summary
judgment on these issues.
15
6.
Joint and Several Liability
Finally, plaintiffs contend that the individual defendants are jointly and severally liable for "all violations"
(Pls.' Mem. at 9).
Specifically, plaintiffs contend that Jimmy
Cheng, Guo Ping Zheng, Zheng Jiang Zheng and Zheng Xiang Zheng
are employers within the meaning of the Labor Law and the FLSA
(Pls.' Mem. at 10).4
In order to be jointly and severally liable, defendants
must be "employers" within the meaning of the Labor Law and the
FLSA.
[The Labor Law]'s broad definition of an employer
includes "any person . . . employing any individual in
any occupation, industry, trade, business or service or
any individual . . . acting as employer."• Irizarry v.
Catsimatidis, 722 F.3d 99, 118 (2d Cir. 2013) (citing
NYLL § 190(3)). Courts look to a four-factor "economic
reality" test to determine whether this definition has
been met -- namely whether the alleged employer "(1)
had the power to hire and fire the employees; (2)
supervised and controlled employee work schedules or
conditions of employment; (3) determined the rate and
method of payment; (4) and maintained employment records."• Lauria v. Heffernan, 607 F. Supp. 2d 403, 409
(E.D.N.Y. 2009).
4
Although defendants have not responded to this argument, I
cannot grant a motion for summary judgment on default and must
independently determine if plaintiffs are entitled to judgment as
a matter of law. Vermont Teddy Bear Co. v. 1-800 Beargram Co.,
373 F.3d 241, 244 (2d Cir. 2004) ("Even when a motion for summary
judgment is unopposed, the district court is not relieved of its
duty to decide whether the movant is entitled to judgment as a
matter of law.").
16
Karic v. Major Auto. Cos., 992 F. Supp. 2d 196, 203 (E.D.N.Y.
2014); Carter v. Dutchess Cmty. Coll., 735 F.2d 8, 12 (2d Cir.
1984).
"These factors are not exclusive, and the plaintiff need
not satisfy all of them to demonstrate that a particular defendant is an employer."
Kim v. Kum Gang, Inc., 12 Civ. 6344 (MHD),
2015 WL 2222438 at *39 (S.D.N.Y. Mar. 19, 2015) (Dolinger, M.J.),
citing Zheng v. Liberty Apparel Co., 355 F.3d 61, 71–72 (2d Cir.
2003).
The evidence concerning the extent of the individual
defendants' authority over the employees is in conflict.
A
stipulation into which the parties entered in July 2014 provides
that:
(1) from 2007 through 2009 an unidentified financial
officer managed income and expenses, (2) a general manager
handled the restaurant's "day to day" operations, (3) hiring and
firing was subject to the approval of one of the individual
defendants, Guo Ping Zheng, and (4) after March 1, 2008, hiring
and firing decisions were subject to the approval of all of the
individual defendants.
Although probative, the facts to which
the parties have stipulated do not, as a matter of law, conclusively establish the four factors relevant to determining whether
a person is an employer and do not, therefore, warrant the
granting of summary judgment on this issue.
17
The deposition testimony cited by plaintiffs in support
of this aspect of their motion is probative, but not dispositive.
The individual defendants testified that, acting collectively at
shareholder meetings, they make hiring and firing decisions, some
scheduling decisions and some wage decisions.
The deposition
testimony states that these decisions are made by a majority vote
of the individual defendants as shareholders.
The deposition
testimony does not suggest that any shareholder can make any of
these decisions unilaterally nor does the record connect the vote
of any individual defendant to any of the illegal employment
practices that plaintiffs allege.
The cases in this Circuit dealing with individual
liability under the FLSA and the Labor Law ordinarily involve
allegations that an individual had unilateral control over the
material aspects of the conditions of employment and was, therefore, an employer within the meaning of the FLSA and the Labor
Law.
E.g. Irizarry v. Catsimatidis, 722 F.3d 99 (2d Cir. 2012);
Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132 (2d Cir. 1999);
Inclan v. New York Hospitality Group, Inc., 12 Civ. 4498 (NRB),
2015 WL 1399599 (S.D.N.Y. Mar 26, 2015) (Buchwald, D.J.); Kim v.
Kum Gang, Inc., supra, 2015 WL 2222438.
This case is distin-
guishable because it does not appear that any individual defen-
18
dant had such power although all the individual defendants had
such power collectively.
An additional complication is that plaintiffs have not
offered any evidence connecting the conduct of any individual
defendant to one of the employment practices in issue, i.e.,
whether a particular defendant voted for or against any of the
challenged employment practices.
See Baystate Alternative
Staffing, Inc. v. Herman, 163 F.3d 668, 678 (1st Cir. 1998)
(factors relevant to personal liability under the FLSA include
defendant's "personal
responsibility for making decisions about
the conduct of the business that contributed to the violations of
the Act").
It is difficult to see what policy would be furthered
by imposing personal liability on a shareholder who, as a dissenting voice, voted against the practices plaintiffs challenge.
The parties have not briefed this issue, and my own
research has not disclosed any case in which the power to hire
and fire and to set wages and schedules was held by a group of
individuals collectively.
In light of the absence of evidence connecting any
individual defendant to the employment practices in issue and the
failure of the parties to address in their memoranda of law
whether individuals can be personally liable under the FLSA and
the Labor Law when they are part of a group that can control the
19
employment relationship, this aspect of plaintiffs' motion is
also denied.
IV.
Conclusion
Accordingly, for all the foregoing reasons, I grant
plaintiffs' motion to the extent that they claim defendants were
not entitled to take advantage of the tip credit.
motion is denied in all other respects.
Plaintiff's
The Clerk of the Court
is directed to mark Docket Item 36 as closed.
Dated:
New York, New York
September 30, 2015
SO ORDERED
H~f;;:;;z /~
United States Magistrate Judge
Copies transmitted to:
Carmela Huang, Esq.
David A. Colodny, Esq.
Urban Justice Center
16th Floor
123 William Street
New York, New York 10038
Stuart L. Lichten, Esq.
Lichten & Bright, P.C.
17th Floor
475 Park Avenue
New York, New York 10016
20
Traci M. Strickland, Esq.
Avelino Nitkewicz LLP
225 Broadway
New York, New York 10007
21
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