Zhao et al v. L & K Restaurant, Inc. et al
Filing
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MEMORANDUM OPINION AND ORDER: Defendants' Motion to Dismiss is DENIED. It is hereby ORDERED that this action shall be deemed to have commenced as a putative collective action on October 14, 2014. The Clerk of Court is respectfully directed to terminate the open motion at docket entry 13. (Signed by Judge Valerie E. Caproni on 4/21/2015) (spo)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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YING JIE ZHAO and JIAN JUN LI, on behalf of :
themselves and others similarly situated,
:
Plaintiffs, :
:
:
-against:
:
L & K RESTAURANT, INC. d/b/a ASIAN
:
WOK, XIAOHUA ZHU a/k/a KEN ZHU and
:
“JOHN” ZHU,
Defendants. :
------------------------------------------------------------ X
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 4/21/2015
14-CV-6103 (VEC)
MEMORANDUM
OPINION AND ORDER
VALERIE CAPRONI, United States District Judge:
Plaintiffs Ying Jie Zhao and Jian Jun Li bring this action on behalf of themselves and
others similarly situated (collectively, the “Plaintiffs”) against Defendants L & K Restaurant,
Inc. (“L & K”) d/b/a Asian Wok (“Asian Wok”), Xiaohua Zhu a/k/a Ken Zhu, and “John” Zhu
(collectively, the “Defendants”), alleging violations of the Fair Labor Standards Act, 29 U.S.C. §
201 et seq. (“FLSA”) and the New York Labor Law (“NYLL”). Defendants move to dismiss the
Complaint. For the following reasons, Defendants’ Motion to Dismiss is DENIED.
BACKGROUND1
Defendants are the owners and operators of Asian Wok, a Chinese restaurant in lower
Manhattan. Complaint (“Compl.”), Dkt. 1 ¶¶ 10, 12-18. Plaintiff Li worked as a delivery person
for Defendants from May 2012 until June 23, 2014. Id. ¶ 32. Plaintiff Zhao worked as a
delivery person for Defendants from May 2013 until April 2014. Id. ¶ 43. Plaintiffs’ duties
included preparing delivery containers and bags, and moving goods into the storage area. Id. ¶¶
28, 32, 43. Plaintiffs allege, inter alia, that Defendants failed to pay minimum wage, overtime
In addressing the sufficiency of the Complaint on a motion to dismiss, the Court “accept[s] as true all
factual allegations and draw[s] from them all reasonable inferences.” See Nielsen v. Rabin, 746 F.3d 58, 62 (2d Cir.
2014).
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and spread-of-hours compensation during the period in which they were employed. Id. ¶¶ 33,
41, 44, 50.
DISCUSSION
I.
Plaintiffs State a Plausible Claim on Which Relief Could Be Granted
Defendants move to dismiss Plaintiffs’ FLSA claims pursuant to Rule 12(b)(6), arguing
that Plaintiffs were not employed by an “enterprise” engaged in commerce as that term is defined
in the FLSA because the restaurant has never had more than $500,000.00 in gross volume of
sales or business. Defendants’ Memorandum of Law in Support of Motion to Dismiss (“Defs.’
Mem.”), Dkt. 16, at 10-11 (citing Affidavit of Xiaohua Zhu (“Zhu Aff.”), Dkt. 15, ¶ 14; Exs. A,
B).2
A. Standard of Review
“To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a complaint must allege
sufficient facts, taken as true, to state a plausible claim for relief.” Johnson v. Priceline.com,
Inc., 711 F.3d 271, 275 (2d Cir. 2013) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56
(2007)). Courts must “accept all allegations in the complaint as true and draw all inferences in
the non-moving party’s favor.” L.C. v. LeFrak Org., Inc., 987 F. Supp. 2d 391, 398 (S.D.N.Y.
2013) (quoting LaFaro v. New York Cardiothoracic Grp., PLLC, 570 F.3d 471, 475 (2d Cir.
2009)). Furthermore, courts are generally confined to “the four corners of the complaint” and
must “look only to the allegations contained therein.” Perez v. Westchester Foreign Autos, Inc.,
No. 11-CV-6091(ER), 2013 WL 749497, at *5 (S.D.N.Y. Feb. 28, 2013) (citing Roth v.
Jennings, 489 F.3d 499, 509 (2d Cir. 2007)). “‘[W]hen matters outside the pleadings are
The Memorandum of Law actually states that “New Gao” never had more than $500,000 in gross sales.
Defendants offer no explanation for their references to “New Gao,” a non-party. Counsel for Defendants are
reminded that they should carefully proofread all court documents prior to filing.
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presented in response to a 12(b)(6) motion,’ a district court must either ‘exclude the additional
material and decide the motion on the complaint alone’ or ‘convert the motion to one for
summary judgment under Fed. R. Civ. P. 56 and afford all parties the opportunity to present
supporting material.’” Friedl v. City of N.Y., 210 F.3d 79, 83 (2d Cir. 2000) (quoting Fonte v.
Bd. of Managers of Cont’l Towers Condo., 848 F.2d 24, 25 (2d Cir. 1988)). See also Fed. R.
Civ. P. 12(d).
B. Plaintiffs’ FLSA Claims Are Adequately Pled
The FLSA defines an “enterprise engaged in commerce” as a business that (1) has
employees “engaged in commerce 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 (2) has an annual gross revenue of at least
$500,000. 29 U.S.C. § 203(s)(1)(A)(i), (ii) (emphasis added).
Defendants argue that the second prong of this test cannot be met because Defendants’
proffered tax documents suggest that L & K, the business entity under which Asian Wok
operates, earned less than $500,000 in 2012 and 2013. Defs.’ Mem. at 10. In support of this
position, Defendants have provided the Court with the Affirmation of Defendants’ attorney, Jian
Hang, attaching “true and correct copies” of unsigned and incomplete “Federal Corporate Tax
Returns” for 2012 and 2013. Affirmation of Jian Hang (“Hang Aff.”), Dkt. 14, Ex. B (“2013
Tax Document”); Hang Aff., Ex. C (“2012 Tax Document”) (together the “Tax Documents”).
The Court declines to accept Defendants’ Tax Documents as conclusive evidence that
Defendants do not meet the $500,000 threshold required by the FLSA because (1) the tax returns
are neither signed nor complete and (2) neither Defendant Zhu nor the tax preparer have
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submitted an affirmation attesting to the authenticity or accuracy of the Tax Documents.3 See
Rocha v. Bakhter Afghan Halal Kababs, Inc., No. 13-CV-170 (MKB), 2014 WL 4536268, at *7
(E.D.N.Y. Sept. 15, 2014) (“The absence of a signature on the tax returns, combined with the
absence of an affidavit from the tax preparer or from the owner of the business verifying the
authenticity of the returns caution against presuming their authenticity.”); see also Monterossa v.
Martinez Rest. Corp., No. 11-CV-3689 (JMF), 2012 WL 3890212, at *4 (S.D.N.Y. Sept. 7,
2012) (“[T]here is good reason to be cautious in relying on Defendant’s tax returns because . . .
the submitted returns are unsigned and unaccompanied by a statement or affidavit of the tax
preparer.”). Moreover, Defendants wholly fail to respond Plaintiffs’ argument that the 2012 and
2013 Tax Documents reflect only $33,244 in wages and salaries for the year 2012, meaning that,
on average, the Restaurant’s seven full-time employees would only have been paid $8,026.88 for
the year, an implausibly small amount. See Amaya v. Superior Tile and Granite Corp., No. 10CV-4525 (PGG), 2012 WL 130425, at *4 (S.D.N.Y. Jan. 17, 2012) (finding defendant’s tax
returns showing wages and salaries ranging from $19,229 to $42,268 to be “entirely unreliable”
and “utterly inconsistent” with a business employing six to eight workers full-time).
Defendant Zhu, the owner of L & K, has submitted an affidavit stating that “[a]t no time
has [L & K’s] revenues or gross volume of sales ever exceeded $500,000.00.” Zhu Aff. ¶ 14.
Defendant Zhu’s self-serving and conclusory statement that the Restaurant has never earned
more than $500,000 in revenues or gross sales cannot, without more, defeat Plaintiff’s claim at
the pleading stage.
The Court gives no weight to Defense counsel’s statement that the documents are “true and current copies
of L & K Restaurant Inc.’s” Federal Corporate Tax Returns inasmuch as the documents submitted are obviously
incomplete. Hang Aff. ¶¶ 2, 3.
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Defendants’ challenge to the first prong of the “enterprise coverage” test under the FLSA
is equally meritless. “Under an ‘enterprise’ application, a plaintiff need not himself or herself be
involved in an activity which affects interstate commerce.” Archie v. Grand Cent. P’ship, Inc.,
997 F. Supp. 504, 528 (S.D.N.Y. 1998) (citation omitted). In fact, “[c]ourts have held that this
element is satisfied if employees ‘merely handled supplies or equipment that originated out-ofstate.’” Jones v. E. Brooklyn Sec. Servs. Corp., No. 11-CV1021 (JG) (SMG), 2012 WL
3235784, at *4 (E.D.N.Y. Aug. 7, 2012) (quoting Rodriguez v. Almighty Cleaning, Inc., 784 F.
Supp. 2d 114, 121 (E.D.N.Y. 2011)); see also Boutros v. JTC Painting & Decorating Corp., 989
F. Supp. 2d 281, 284-85 (S.D.N.Y. 2013) (finding that plaintiffs’ pleadings satisfactorily alleged
enterprise coverage under the FLSA by claiming that defendant’s employees used tools that
traveled in interstate commerce and that defendant’s annual revenues exceed $500,000).
Plaintiffs allege that, during the course of their employment, they handled materials such
as soda, dried noodles, forks, napkins, and sauces. Compl. ¶¶ 11, 28; see also Plaintiffs’
Memorandum of Law in Opposition to Defendants’ Motion to Dismiss (“Pls.’ Mem. Opp.”),
Dkt. 23, at 7-8. Even if the Court were to credit the self-serving affidavit of Defendant Zhu, the
Zhu Affidavit denies all sorts of interstate activity (e.g., it asserts L & K has only a New York
bank account; L & K targets only New York residents with its advertising; L & K owns no real
property outside of New York) but does not deny that materials used or foodstuffs sold by the
restaurant travelled in interstate commerce. Because Plaintiffs have satisfactorily alleged both
prongs of the “enterprise coverage” test, the Court declines to address Defendants’ argument that
Plaintiffs fail to meet the standard for “individual coverage.” Defs.’ Mem. at 10, 13.4
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Defendants further argue that because they have presented matters outside the pleading (i.e., the Tax
Documents), the Court should treat their 12(b)(6) motion as a motion for summary judgment. See Reply
Memorandum of Law in Support of Defendants’ Motion to Dismiss (“Defs.’ Reply Mem.”) at 6; see also Fed. R.
Civ. P. 12(d). Even if the Court were to consider Defendants’ Tax Documents and convert Defendant’s Motion to
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II.
Plaintiffs Have Properly Joined as Parties
Defendants argue that the Complaint should be dismissed because Plaintiffs failed to file
forms indicating their consent to sue in a collective action, as required under 29 U.S.C. § 216(b),
and therefore the Complaint “contains no parties [to] commence the action.” Defs.’ Mem. at 16.
Following the filing of Defendants’ Motion to Dismiss, on October 14, 2014, both Plaintiffs filed
written acknowledgments of their consent to become party plaintiffs in this action (the “Consent
Forms”). Dkts. 21-22. Plaintiffs’ Consent Forms are hand-dated August 5, 2014; Plaintiffs have
offered no explanation, whether in their Opposition to the Motion to Dismiss or otherwise, why
the Consent Forms were not filed along with Plaintiffs’ Complaint on August 5, 2014. Id.
Nonetheless, the Court declines to dismiss the Complaint, but instead finds that this action shall
be deemed to have been commenced for purposes of the Plaintiffs’ putative collective action
claims on October 14, 2014, the date on which Plaintiffs’ Consent Forms were filed. See
Mendez v. The Radec Corp., 260 F.R.D. 38, 52 (W.D.N.Y. 2009); see also Ketchum v. City of
Vallejo, No. S–05–1098, 2007 WL 4356137, at *2 (E.D. Cal. Dec.11, 2007) (named plaintiffs’
actions were commenced on the dates on which they filed declarations with the court expressly
indicating their intent to be plaintiffs in the action).
CONCLUSION
For the foregoing reasons, Defendants’ Motion to Dismiss is DENIED. It is hereby
ORDERED that this action shall be deemed to have commenced as a putative collective action
on October 14, 2014. The Clerk of Court is respectfully directed to terminate the open motion at
Dismiss into a motion for summary judgment, the motion would be denied because Defendants’ incomplete and
unsigned Tax Documents prove nothing.
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docket entry 13.
SO ORDERED.
__________________________
_
_________________________________
CAPRONI
N
VALERIE CAPRONI
United States District Judge
Date: April 21, 2015
New York, New York
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