Hidalgo et al v. Ichiro Sushi, Inc. et al

Filing 132

MEMORANDUM OPINION & ORDER re: 119 CROSS MOTION to Dismiss the Complaint. filed by New Ichiro Sushi, Inc, 129 CROSS MOTION to Dismiss corrected and permitted leave to file the corrected Notice of Cross Motion by the Court' ;s 11/27/2017 Order, Dkt. 128. filed by New Ichiro Sushi, Inc. Accordingly, Defendant's motion is DENIED. This resolves Dkts. No. 119 and 129.3 Within fourteen days of the issuance of this Order, the parties are directed to file a joint status letter and to propose dates for a status conference. The parties should consult the Plaintiffs in the related case, Liv. Ichiro Sushi, Inc., No. 14-CV-10242, regarding proposed dates, as Plaintiffs in that case will also participate in the status conference. Counsel in this case are also ordered to meet and confer regarding settlement within fourteen days of this Order. (As further set forth in this Order.) (Signed by Judge Alison J. Nathan on 9/7/2018) (cf)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

Robert Hidalgo,
Plaintiff,
15-cv-00414 (AJN)

-vMEMORANDUM
OPINION & ORDER

New Ichiro Sushi, Inc.,
Defendant.

ALISON J. NATHAN, District Judge:
On November 10, 2017, Defendant New Ichiro Sushi, Inc. ("New Ichiro") filed a motion
for summary judgment to dismiss the complaint in this case. 1 Dkt. Nos. 119-120. On November
16, 2017, Plaintiff filed an opposition to Defendant's motion. Dkt. No. 125. And on November
24, 2017, Defendant submitted its reply to the opposition motion. Dkt. No. 186. For the
following reasons, Defendant's motion is denied.
I. Background

The Court assumes familiarity with the facts of this case, which are detailed in an earlier
Memorandum & Order denying Plaintiffs motion for partial summary judgment on the issue of
successor liability. 2 See Dkt. No. 116 at 9-17. Briefly, Plaintiff Robe1i Hidalgo was employed at
Ichiro Sushi, Inc. ("Ichiro"). See Dkt. No. 90 at if 3. Plaintiff swore in his affidavit that he was
not paid requisite minimum wage and overtime wages in violation of the Fair Labor and
Standards Act ("FLSA") and New York Labor Law ("NYLL"). Id at if 4. Ichiro was sold to

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Defendant filed a notice of a motion to dismiss. See Dkt. No. 119. However, Defendant's memorandum
of law in support of its motion is titled a "Cross Motion for Summary Judgment to Dismiss the Complaint." See
Dkt. No. 120. Given that Defendant has submitted exhibits, and its own statement of material facts, Dkt. No. 121,
pursuant to Local Civil Rule 56.1 ("Statements of Material Facts on Motion for Summary Judgment"), the Court
will treat Defendant's motion as a motion for summary judgment.
2
The facts in the earlier Memorandum & Order were taken from the parties' Rule 56.1 statements, and the
evidence each party submitted with its respective motion. See Dkt. No. 116 at 9.

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Juhang Wang, who had been a sushi chef at Ichiro. See Dkt. No 116 at 10-11. Wang reopened
the restaurant as New Ichiro. See id. Plaintiff seeks to retain his lost wages from New Ichiro,
under a theory of successor liability.
Defendant's initial cross-motion for summary judgment was stricken, because it was not
timely filed, and Defendant has a history of late filings in this case. See id at 1-8. However, at a
pretrial conference on November 3, 2017, the Court determined that for purposes of judicial
economy, and to understand the scope of a potential trial, it would reconsider Defendant's
motion. See Tr. of November 3, 2017 Pretrial Conf. at 9-10. Plaintiff consented to this request.
Id. at 9. Defendant was given an opportunity to revise its cross-motion and resubmit it. Id. at

11-12. On November 10, 2017, Defendant filed its revised motion. Dkt. No. 120. Plaintiff, in
his opposition brief, also incorporated by reference his initial arguments and accompanying
materials opposing Defendant's first motion. See Dkt. No. 125 at 1.
II. Standard for Summary Judgment

Summary judgment is appropriate when, after reviewing the parties' submissions in the
light most favorable to the non-moving party, "there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is
material if it "might affect the outcome of the suit under the governing law," and is genuinely in
dispute if "the evidence is such that a reasonable jury could return a verdict for the nonmoving
paiiy." Roe v. City of Waterbury, 542 F.3d 31, 35 (2d Cir. 2008) (quoting Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986)). In ruling on a motion for summary judgment, "all

ambiguities must be resolved and all inferences drawn in favor of the party against whom
summary judgment is sought." Gallo v. Prudential Residential Servs. Ltd., 22 F .3d 1219, 1223
(2d Cir. 1994).
In resolving cross-motions for summary judgment, "each party's motion must be
examined on its own merits, and in each case all reasonable inferences must be drawn against the
party whose motion is under consideration." Morales v. Quintel Entm 't, Inc., 249 F.3d 115, 121
(2d Cir. 2001) (citing Schv,;abenbauer v. Bd. of Educ., 667 F.2d 305, 314 (2d Cir. 1981)).

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III. Standard for Successor Liability
The Court has already determined that it will apply the substantial continuity test to
analyze successor liability in this case. See Dkt. No. 116 at 19. Under the substantial continuity
test, courts look to three factors to determine whether there is successor liability: "(1) whether
the new business has sufficient continuity in operations and work force of the previous business
to qualify as its successor; (2), whether there was notice to the successor-employer of its
predecessor's legal obligation; and (3), whether the predecessor is able to provide adequate relief
directly, such that it would be unfair to place that obligation on the successor." Id. at 22. The
degree of continuity is often turned into seven sub-factors, for a total of nine factors. See
Bautista v. Beyond Thai Kitchen, Inc., 2015 WL 5459737, at *5 (S.D.N.Y. Sept. 17,

2015) (listing the nine factors as: "( 1) whether the successor company had notice of the charge or
pending lawsuit prior to acquiring the business or assets of the predecessor; (2) the ability of the
predecessor to provide relief; (3) whether there has been a substantial continuity of business
operations; (4) whether the new employer uses the same plant; (5) whether he uses the same or
substantially the same work force; (6) whether he uses the same or substantially the same
supervisory personnel; (7) whether the same jobs exist under substantially the same working
conditions; (8) whether he uses the same machinery, equipment, and methods of production; and
(9) whether he produces the same product."). Notice can mean actual notice or constructive
notice. See Dkt. No. 116 at 23-28. Constructive notice is demonstrated by "the existence of
certain 'red flags' - such as a suspiciously good deal or other relevant facts - that would have put
a reasonable buyer on notice that it should have conducted further inquiries." Id. at 24.
The party advocating for successor liability bears the burden of proof.
Bautista, 2015 WL545973 7, at *5. However, the movant still has "the burden of showing that

there is no genuine issue of fact." Anderson, 477 U.S. at 256.
IV. Defendant's Motion
Defendant argues that summary judgment on Plaintiffs FLSA and NYLL claims is
appropriate because Plaintiff did not prove successor liability on summary judgment, and
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therefore, New Ichiro cannot be liable for any claims against Ichiro. See Dkt. No. 120. Further,
Defendant argues that it is undisputed that Plaintiff did not work for New Ichiro, and therefore,
the FLSA and NYLL claims, which relate to employment at Ichiro, must be dismissed. Id.
At this stage, Defendant is incorrect that Plaintiffs successor liability theory has failed.
Rather, the Court determined that "a reasonable jury could conclude that the Defendant had
neither actual nor constructive notice of the Plaintiffs alleged FLSA violations at Ichiro." Dkt.
No. 116 at 23 (emphasis added). The Court explained that "substantial questions of material fact
predominate over, at minimum, two central factors: the notice and continuity inquiries." Id. at
23. The Court stated that based on the record, the parties "dispute[ d] numerous questions of
fact." Id. at 9. Therefore, the Court denied Plaintiffs partial summary judgment motion that as
a matter of law, successor liability applied. See id. at 28. This meant that after Plaintiffs motion
was denied, the issue of successor liability could be decided by a trier of fact, or, Defendant had
the burden of showing that as a matter of law, successor liability should not apply. Defendant, in
its brief, does not sufficiently explain why, based on the record, summary judgment should be
granted in its favor.
First, Defendant does not explain why there are no questions of material fact on the
notice requirement. When addressing constructive notice, Defendant argues that the Court
already "found that 'no red flags existed that would suggest to Wang [the owner of New Ichiro]
and [sic] should further investigate.'" Dkt. No. 120 at 11. This is incorrect. The Court
explained in its earlier Memorandum & Opinion that when analyzing the constructive notice
factor, "a reasonable jury could find that no flags existed that would suggest to Wang that he
should further investigate." Dkt. No. 116 at 26 (emphasis added). A reasonable jury could also
find the opposite. Defendant quotes various points from the earlier Memorandum & Order to
bolster its argument-but all of the quotes contain the phrase "a reasonable jury could find."
See, e.g., Dkt. No. 120 at 11 ("A reasonable jury could find that Wang had worked at the

restaurant for over a year at the time of purchase, and that both he and his brother, in that time,
had been adequately compensated") (quoting Dkt. No. 116). This is not enough to show that, as

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a matter of law, Defendant had no constructive notice oflchiro 's potential labor violations. See
Anderson, 477 U.S. at 248 ("summary judgment will not lie if the dispute about a material fact is
'genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party"). Defendant's argument suggests that questions of material fact remain that
must be assessed at trial.
The Court's finding on the notice requirement is sufficient to deny summary judgment on
successor liability. See Xue Ming Wang v. Abumi Sushi Inc., 262 F. Supp. 3d 81, 95 (S.D.N.Y.
2017) (explaining that the notice requirement can be dispositive on the issue of successor
liability). Nevertheless, the Court will briefly address the continuity inquiry as well. Defendant,
when analyzing continuity of operations (Bautista factors three through nine), points only to
various factual points to explain why it is entitled to summary judgment on its claim. Dkt. No.
120 at 12-16. Defendant makes no comparisons to other cases to explain why successor liability
should not apply as a matter of law. See id. In fact, Defendant cites to no case law in this
section of its brief. See id. The Court explained in its earlier Memorandum & Order that
"numerous questions of material fact exist as to the precise degree of continuity between Ichiro
and New Ichiro." Dkt. No. 116 at 28. Defendant does not address why these facts are
immaterial, such that summary judgment should be granted in its favor. See Anderson, 477 U.S
at 248 ("the substantive law will identify which facts are material.").
Additionally, Defendant has previously represented to the Court that the issue of
successor liability is not ripe for adjudication at summary judgment. See Dkt. No. 85 ("With
respect to the Plaintiffs request to move for a summary judgment on the issue of successors'
liability, Defendant requests this Court to deny the request since the summary judgment is
premature and hinged on the credibility determination of the parties where the Court is not in a
position to decide the credibility issue in a motion for summary judgment."); Dkt. No. 102
("there is genuine issue [sic] to be tried with respect to the material facts in support of the
Plaintiffs motion for partial summary judgment on the issue of successor liability imposed upon
defendant New Ichiro Sushi, Inc."). These representations were made after discovery was
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completed-the same stage of litigation that the case is in now. See Dkt. No. 73. Defendant
does not explain why its position has changed. Even in the immediate motion, Defendant writes
that "a reasonable trier of fact could find that the defendant New Ichiro Sushi, Inc. had neither
actual nor constructive notice of any FLSA violations at its predecessor prior to the sale." Dkt.
No. 120 at 11. By suggesting that there are still issues for a trier of fact to decide, Defendant has
not met its burden at summary judgment.
IV. Conclusion
Accordingly, Defendant's motion is DENIED. This resolves Dkts. No. 119 and 129. 3
Within fourteen days of the issuance of this Order, the parties are directed to file a joint status
letter and to propose dates for a status conference. The parties should consult the Plaintiffs in the
related case, Liv. Ichiro Sushi, Inc., No. 14-CV-10242, regarding proposed dates, as Plaintiffs in
that case will also pat1icipate in the status conference. Counsel in this case are also ordered to
meet and confer regarding settlement within fourteen days of this Order.

SO ORDERED.
Dated: September
2018
New York, New York
United States District Judge

3

Defendant resubmitted its motion, with the Court's permission, to correct a citation. Dkt. No. 129.

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