Garcia et al v. Village Red Restaurant Corp., et al
MEMORANDUM AND ORDER granting 35 Motion for Partial Summary Judgment; granting in part and denying in part 46 Motion for Summary Judgment; denying 65 Letter Motion for Oral Argument. For the reasons stated above, the defendants' motion for summary judgment (Docket no. 35) is granted, and the plaintiffs' motion for summary judgment (Docket no. 46) is granted with respect to Village Red's and Mr. Serafis' liability, denied with respect to Ms. Serafis' liability, and denied without prejudice to the wage claims. The plaintiffs' supplemental summary judgment papers shall be submitted by May 31, 2017. The defendants shall respond by June 14, 2017. The plaintiffs shall reply by June 21, 2017. The parties need not resubmit material already on the docket. If the plaintiffs choose not to renew their motion, then the pretrial order shall be submitted by May 31, 2017. SO ORDERED. (Signed by Magistrate Judge James C. Francis on 5/8/2017) Copies Transmitted this Date By Chambers. (anc)
damages, prejudgment interest, attorneys’ fees and costs, and
partial summary judgment, arguing that Ms. Serafis is not the
plaintiffs’ employer. For the reasons that follow, the defendants’
motion is granted, and the plaintiffs’ motion is granted in part
and denied in part.
Waverly is a twenty-four hour diner in Manhattan that provides
both dine-in and delivery services.
(Plaintiffs’ Statement of
Undisputed Facts (“Pl. 56.1 Statement”), ¶ 1).
Waverly was first
opened in 1979 or 1980 by Mr. Serafis, Gus Benetos, and John
(Pl. 56.1 Statement, ¶ 18).
Later, Mr. Siderakis
bought out his partners; however, Mr. Serafis retained the right
to purchase the restaurant and continued to manage and operate
(Pl. 56.1 Statement, ¶¶ 19-20).
In 1993, Mr. Serafis
transferred the purchase right to his daughter, Ms. Serafis, for
“estate purposes”; some time later, she exercised this right. (Pl.
56.1 Statement, ¶¶ 21-23).
There was some collaboration between
Mr. Serafis and Ms. Serafis in the purchase of the restaurant, and
Mr. Serafis told Ms. Serafis that “we buy this business and it’s
providing any money to buy the restaurant and stated that he “let
my daughter buy the business instead of me.”
(Pl. 56.1 Statement,
¶¶ 23-24; Defendants’ Rule 56.1 Statement (“Def. 56.1 Statement”),
¶ 6; Plaintiffs’ Rule 56.1 Counter Statement of Undisputed Material
Facts, ¶¶ 5-6).
After the purchase, she did not operate the
restaurant but “gave [Mr. Serafis] permission” to continue to
(Pl. 56.1 Statement, ¶ 29).
On January 15, 2003, Village Red was incorporated, and it has
since owned and operated Waverly.
(Pl. 56.1 Statement, ¶¶ 2-3).
Ms. Serafis is the president and sole shareholder of Village Red.
(Pl. 56.1 Statement, ¶¶ 7-9).
The building where Waverly is
located is owned by 135 Waverly Place LLC, and Ms. Serafis is the
sole shareholder of that entity.
(Pl. 56.1 Statement, ¶ 16).
Serafis and Ms. Serafis have referred to Ms. Serafis as the “owner”
of Waverly even though it is owned by Village Red.
Statement, ¶¶ 10-11, 14-15).
Ms. Serafis testified at her deposition that she gave Mr.
Serafis complete authority to run the restaurant, and Mr. Serafis
continues to hire and fire employees and set wages, schedules,
policies, and pay practices.
(Pl. 56.1 Statement, ¶¶ 29-35, 38).
Mr. Serafis signs checks in Ms. Serafis’ name using a stamp bearing
her signature. (Pl. 56.1 Statement, ¶¶ 45-47, 52-54). Ms. Serafis
received a yearly salary of around $60,000.00 from Waverly during
the period at issue.
(Pl. 56.1 Statement, ¶¶ 66-70).
“basically put everything he owns in [Ms. Serafis’] name”; she
also owns Mr. Serafis’ apartment.
(Pl. 56.1 Statement, ¶¶ 27-28).
Ms. Serafis lives in Greece and does not oversee the Waverly
(Def. 56.1 Statement, ¶¶ 18, 20).
Prior to 2011 or 2012, there was no apparent system at Waverly
for documenting employee work time or pay.
(Pl. 56.1 Statement,
In 2011 or 2012, Mr. Serafis installed a time clock;
however, the records created by the time clock were often not
accurate because employees would forget to punch in or out, and
the time clock had a mechanical problem.
(Pl. 56.1 Statement, ¶¶
In 2014 and 2015, Mr. Serafis and a manager began keeping
accurate records of employee pay in the “Red Book.”
multiplied by how many days were worked in a week; the pay
structure did not account for how many hours were worked in a day.
(Pl. 56.1 Statement, ¶¶ 86, 88; Red Book, attached as Exh. S to
Declaration of Louis Pechman dated Jan. 31, 2017).
Starting in January 2012, another set of books was created,
employees were paid or how they were paid.
¶¶ 99, 115-118, 120-122).
(Pl. 56.1 Statement,
It shows the plaintiffs being paid an
hourly rate, an overtime rate, spread of hours, tip credit, meal
credit, and overtime pay.
(Pl. 56.1 Statement, ¶ 104).
plaintiffs assert, and the defendants do not appear to dispute,
that there is no apparent legitimate reason for this second set of
records and that the Red Book is the most accurate history of what
the plaintiffs were paid.
(Pl. 56.1 Statement, ¶¶ 103, 117;
Defendants’ Responses to Plaintiffs’ Local Rule 56.1 Statement
(“Def. 56.1 Counter Statement”), ¶¶ 74-126).
kitchen helpers, and deliverymen during the relevant period.
56.1 Statement, ¶¶ 149, 165, 184, 199, 220, 239, 259).
Statement, ¶ 146).
They were paid weekly in cash based on a daily
rate rather than an hourly rate.
(Pl. 56.1 Statement, ¶¶ 116,
They were not provided wage statements or weekly
paystubs during the period at issue.
(Pl. 56.1 Statement, ¶¶ 271-
On their motion for summary judgment, the plaintiffs contend
that the defendants are their employers.
They also argue that if
Ms. Serafis is found not to be their employer, then the corporate
veil should be pierced.
The plaintiffs move on their FLSA and
NYLL claims, stating that they were not paid overtime or minimum
wages and that they were not compensated for purchasing tools-ofthe-trade.
The plaintiffs also contend that the defendants did
not comply with the wage notice, wage statement, or spread-ofhours provisions in the NYLL.
The plaintiffs seek compensatory
damages, liquidated damages, prejudgment interest, attorneys’ fees
and costs, and post-judgment interest. On their motion for partial
summary judgment, the defendants contend that Ms. Serafis was not
the plaintiffs’ employer under the FLSA or NYLL.
Summary Judgment Standard
Under Rule 56 of the Federal Rules of Civil Procedure, a court
will “grant summary judgment if the movant shows that there is no
genuine issue as to any material fact and the movant is entitled
to judgment as a matter of law.”
Fed. R. Civ. P. 56(a); accord
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
party bears the initial burden of identifying “the absence of a
genuine issue of material fact.”
Celotex, 477 U.S. at 323.
opposing party then must come forward with specific materials
establishing the existence of a genuine dispute.
Id. at 324.
Where the nonmoving party 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,” summary judgment must be granted.
Id. at 322-23.
“the party opposing summary judgment bears the burden of proof at
trial, summary judgment should be granted if the moving party can
‘point to an absence of evidence to support an essential element
of the nonmoving party’s claim.’”
Gemmink v. Jay Peak Inc., 807
F.3d 46, 48 (2d Cir. 2015) (quoting Goenaga v. March of Dimes Birth
Defects Foundation, 51 F.3d 14, 18 (2d Cir. 1995)).
In assessing the record to determine whether there is a
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
255 (1986); Smith v. Barnesandnoble.com, LLC, 839 F.3d 163, 166
(2d Cir. 2016).
However, the court must inquire whether “there is
sufficient evidence favoring the nonmoving party for a jury to
return a verdict for that party,” Anderson, 477 U.S. at 249, and
summary judgment may be granted where the nonmovant’s evidence is
conclusory, speculative, or not significantly probative, id. at
When evaluating cross-motions for summary judgment, the
court reviews each party’s motion on its own merits, and draws all
reasonable inferences against the party whose motion is under
Morales v. Quintel Entertainment, Inc., 249 F.3d
115, 121 (2d Cir. 2001).
The Defendants’ Joint Liability as Employers
The plaintiffs maintain that Village Red, Mr. Serafis, and
Ms. Serafis were their employers under to the FLSA and NYLL and
that the enterprise exceeded $500,000.00 in annual gross volume of
sales during the relevant period.
(Memorandum of Law in Support
of Plaintiffs’ Motion for Summary Judgment (“Pl. Memo.”) at 1-2).
There is no doubt that Village Red and Mr. Serafis were the
plaintiffs’ employers, and Village Red and Mr. Serafis readily
admit to their employer status; the defendants also do not dispute
the FLSA coverage allegation.
(Defendants’ Memorandum of Law in
Support of Their Motion for Partial Summary Judgment Dismissing
the Complaint Against Christine Serafis (“Def. Memo.”) at 7;
Defendants’ Memorandum of Law in Opposition to Plaintiffs’ Motion
for Summary Judgment (“Def. Opp. Memo.”) at 5; Def. 56.1 Counter
Statement, ¶ 4).
However, the defendants argue that Ms. Serafis
was not an employer because she never participated in the operation
(Def. Memo. at 9).
The statutory definition of “employer” sweeps broadly under
the FLSA. 1
Barfield v. New York City Health & Hospitals Corp.,
537 F.3d 132, 140 (2d Cir. 2008).
An employer “includes any person
acting directly or indirectly in the interest of an employer in
relation to an employee.”
29 U.S.C. § 203(d).
“any individual employed by an employer.”
An employee is
29 U.S.C. § 203(e)(1).
To “employ” means “to suffer or permit to work.”
29 U.S.C. §
The FLSA employee-employer canon also applies to claims
brought under the NYLL: “[D]istrict courts in this Circuit have
consistently interpreted the definition of ‘employer’ under the
New York Labor Law coextensively with the definition used by the
FLSA.” Inclan v. New York Hospitality Group, Inc., 95 F. Supp. 3d
490, 511 (S.D.N.Y. 2015) (quoting Ho v. Sim Enterprises Inc., No.
11 Civ. 2855, 2014 WL 1998237, at *10 (S.D.N.Y. May 24, 2014)).
relationship exists for purposes of the FLSA should be grounded in
‘economic reality rather than technical concepts,’ . . . determined
circumstances of the whole activity . . . .’”
Saleem v. Corporate
Transportation Group, Ltd., __ F.3d __, __, 2017 WL 1337227, at *5
(2d Cir. 2017) (quoting Barfield, 537 F.3d at 141).
Circuit has established a “‘nonexclusive and overlapping set of
factors’ to ensure that the economic realities test mandated by
the Supreme Court is sufficiently comprehensive and flexible to
give proper effect to the broad language of the FLSA.”
v. Catsimatidis, 722 F.3d 99, 105 (2d Cir. 2013) (quoting Barfield,
537 F.3d at 143).
These include the four factors identified in
Carter v. Dutchess Community College, 735 F.2d 8 (2d Cir. 1984):
(1) the power to hire and fire the employees, (2) the ability to
supervise and control employee work schedules or conditions of
employment, (3) the authority to determine the rate and method of
payment, and (4) the maintenance of employment records.
These factors are sufficient but not necessary to establish
Barfield, 537 F.3d at 142.
With this guidance
in mind, I turn to whether Ms. Serafis is an employer under the
The defendants assert that there is no evidence showing that
Ms. Serafis controlled the terms of the plaintiffs’ employment and
that she therefore is not their employer.
(Def. Memo. at 9-12).
The plaintiffs reply that Ms. Serafis was their employer because
she is the president and sole shareholder of Village Red, and they
assert that Ms. Serafis’ consenting to Mr. Serafis’ management of
the restaurant constituted operational control of Waverly.
Memo. at 20-21).
Ms. Serafis is the president and sole shareholder of Village
technically had the authority to hire and fire, set wages and
Statement, ¶ 5; Def. 56.1 Counter Statement, ¶ 5).
She and Mr.
Serafis have both referred to her as “the owner” of Waverly even
though it is owned by Village Red.
(Pl. 56.1 Statement, ¶¶ 8-11,
There is some evidence that Ms. Serafis gave Mr. Serafis
“full permission to run the Waverly” and to use the stamp with her
occasionally visits the restaurant, and one of the plaintiffs
observed that she went into the restaurant’s office two or three
(Pl. 56.1 Statement, ¶ 207).
Ms. Serafis receives a yearly
salary of around $60,000.00 from Waverly.
(Pl. 56.1 Statement, ¶¶
The plaintiffs argue that these facts establish -- or, in
the alternative, create a dispute of material fact -- that Ms.
Serafis is an employer.
While a putative employer need not directly control
involvement” in a company is generally required: an individual
defendant must at least exercise “operational control” over the
Irizarry, 722 F.3d at 106-09; see also
Herman v. RSR Security Services Ltd., 172 F.3d 132, 140 (2d Cir.
appropriate . . . to require some degree of individual involvement
in a company in a manner that affects employment-related factors
threshold for individual liability than for corporate ‘employer’
Irizarry, 722 F.3d at 109.
The plaintiffs have provided no facts showing that Ms. Serafis
indirectly influenced the employees’ terms of employment.
is no evidence that she instructed Mr. Serafis how to run the
restaurant. (Def. 56.1 Statement, ¶¶ 21-22). There is no evidence
that Ms. Serafis’ consenting to Mr. Serafis’ continued operation
of Waverly changed the plaintiffs’ employment conditions.
apparent that she did not influence the employees’ wages, work
hours, or conditions, nor did she affect who was hired or fired.
The plaintiffs’ evidence only shows that Ms. Serafis is the sole
shareholder and president of Village Red and that she has executed
agreements to ensure that Mr. Serafis could continue to operate
The evidence that the plaintiffs have offered is
therefore insufficient to show a dispute of material fact as to
whether Ms. Serafis was the plaintiffs’ employer.
v. Fiskardo Estiatorio, Inc., 788 F. Supp. 2d 253, 309-11 (S.D.N.Y.
2011) (“As to [the defendant’s] status as sole shareholder and
President of Fiskardo, the courts that have addressed the question
of whether stock ownership or a position as corporate officer in
and of themselves make an individual an employer under the FLSA
have answered the question in the negative.”).
The plaintiffs argue in the alternative that because Ms.
Serafis signed a power of attorney naming Mr. Serafis her agent,
Mr. Serafis’ employment status is therefore imputed to Ms. Serafis.
(Pl. Memo. at 24 (citing Heine v. Newman, 856 F. Supp. 190, 195
(S.D.N.Y. 1994) (“Ashley, as Heine’s attorney-in-fact alter-ego,
stood in the shoes of Heine . . . .”))).
But there is no legal
reason why this document would impute Mr. Serafis’ legal liability
under the FLSA to Ms. Serafis.
In their final attempt, the plaintiffs argue that Ms. Serafis
should be held liable as a matter of public policy:
The fraud Defendants perpetrated [by putting Village Red
solely under Ms. Serafis’ name] distinguishes this case
from the next, and compels the conclusion that Christine
Serafis must be held individually responsible for the
legislative purpose of the FLSA. . . .
individual liability on Christine Serafis would create
a dangerous precedent for other employers seeking to
shield their personal assets and would be contrary to
the underlying purposes of the FLSA.
(Pl. Memo. at 25-27).
The plaintiffs cite no case law in support
of this proposition, nor do they indicate any legal basis for
finding that the conveyance of the business was fraudulent.
The defendants point to an abundance of evidence showing that
Ms. Serafis’ involvement with the restaurant does not satisfy the
economic realities test.
She has never operated the restaurant,
made personnel decisions, received financial or employee reports,
hired or fired employees, scheduled hours, supervised work, or
(Def. 56.1 Statement, ¶¶ 18-19, 23-28).
Serafis does not ask her permission before signing checks in her
name, and it appears that he signs checks using her name only
because Ms. Serafis’ “signature is required to be endorsed on the
checks by the bank because only her name is on corporate stock.”
(Def. 56.1 Statement, ¶¶ 37, 39).
The defendants have demonstrated that there is a lack of
Conversely, the plaintiffs have not carried their burden of showing
Therefore, the defendants’ motion for summary judgment is granted,
and the plaintiffs’ motion on that issue is denied.
Piercing the Corporate Veil and Alter Ego Liability
The plaintiffs argue for the first time in this motion that
Village Red is the alter ego of Ms. Serafis and that the corporate
veil should be pierced pursuant to federal common law.
The defendants respond that this remedy is barred
because it was not raised earlier in the action.
(Def. Opp. Memo.
Additionally, they argue that New York law on veil
piercing should be applied and that the plaintiffs cannot meet its
more stringent requirements.
(Def. Opp. Memo. at 17-18).
Timeliness of Plaintiffs’ Alter Ego Claim
sufficiently pled in the complaint or at least raised formally
early in an action.
See De Jesus v. Sears, Roebuck & Co., 87 F.3d
65, 69-70 (2d Cir. 1996) (affirming Rule 12(b)(6) dismissal of
veil piercing claim); Scarbrough v. Perez, 870 F.2d 1079, 1083-84
(6th Cir. 1989) (holding that district court did not err when it
complaint); Luyster v. Textron, Inc., No. 06 Civ. 4166, 2007 WL
1792505, at *2-3 (S.D.N.Y. June 18, 2007) (dismissing veil piercing
allegation that was not pled in original complaint and requiring
plaintiff to amend complaint to pursue it); EED Holdings v. Palmer
Johnson Acquisition Corp., 387 F. Supp. 2d 265, 274 (S.D.N.Y. 2004)
pleading requirements imposed by [Federal Rule of Civil Procedure]
8(a) . . . .”); Rolls-Royce Motor Cars, Inc. v. Schudroff, 929 F.
Supp. 117, 122 (S.D.N.Y. 1996) (veil piercing claim subject to
pleading requirements of Rule 8(a)); Stockmar v. Warrec Co., 844
F. Supp. 103, 106 (D. Conn. 1994) (requiring alter ego liability
to be pled in complaint).
The New York standard on this issue is
Even though the New York Court of Appeals does
not consider veil piercing to be a freestanding action, see Morris
v. New York State Department of Taxation and Finance, 82 N.Y.2d
135, 141, 603 N.Y.S.2d 807, 810 (1993) (veil piercing is equitable
in nature and “an attempt of a third party to pierce the corporate
veil does not constitute a cause of action independent of that
against the corporation; rather it is an assertion of facts and
circumstances which will persuade the court to impose the corporate
obligation on its owners”), it appears to require that veil piecing
be pled in the complaint, see East Hampton Union Free School
District v. Sandpebble Builders, Inc., 16 N.Y.3d 775, 776, 919
N.Y.S.2d 496, 497 (2011) (“In order for a plaintiff to state a
viable claim against a shareholder of a corporation in his or her
individual capacity for actions purportedly taken on behalf of the
corporation, plaintiff must allege facts that, if proved, indicate
that the shareholder exercised complete domination and control
over the corporation and ‘abused the privilege of doing business
Walkovszky v. Carlton, 18 N.Y.2d 414, 420, 276 N.Y.S.2d 585, 590
failed to adequately plead veil piercing).
The plaintiffs’ complaint does not plead alter ego liability,
nor does it suggest that the corporate veil should be pierced or
allege facts from which it could be inferred that the corporate
form has been disregarded.
Indeed, there appears to be no reason
that the defendants would have been on notice of the plaintiffs’
veil piercing theory earlier in this case.
For these reasons
alone, the plaintiffs’ veil piercing theory may be rejected.
Nevertheless, I will also address this claim on the merits.
Federal Claims and Alter Ego Liability
If a claim involves a federal statute and that statute demands
national uniformity, then the federal common law of veil piercing
See United States v. Peters, 732 F.3d 93, 103 n.4 (2d
Cir. 2013) (“[B]ecause this case arises under federal question
jurisdiction and involves a federal statute that ‘demands national
uniformity,’ federal common law, not New York State law, presumably
controls the question of whether the corporate veil should be
2000))); Burberry Ltd. v. Horowitz, 534 F. App’x 41, 46 & n.1 (2d
Cir. 2013) (acknowledging that federal common law of veil piercing
applied to action brought in trademark infringement action that
Engineers, 210 F.3d at 26 (“If the federal statute in question
determinative rules of decision.”); Massachusetts Laborers’ Health
and Welfare Fund v. Starret Paving Corp., 845 F.2d 23, 27 (1st
Cir. 1988) (federal common law of veil piercing applied to ERISA
claim); Niagara Mohawk Power Corp. v. Bankers Trust Co. of Albany,
N.A., 791 F.2d 242, 245 n.1 (2d Cir. 1986) (stating that federal
common law on veil piercing would apply to claim brought under
federal statutes); Burke v. Hamilton Equipment Installers, Inc.,
No. 02 CV 519, 2006 WL 3831380, at *10 (W.D.N.Y. Oct. 16, 2006)
(federal common law of veil piercing applied to ERISA claims);
Goldberg v. Colonial Metal Spinning and Stamping Co., No. 92 Civ.
3721, 1993 WL 361672, at *5 (S.D.N.Y. Sept. 14, 1993) (same); but
see Capmark Financial Group Inc. v. Goldman Sachs Credit Partners
L.P., 491 B.R. 335, 348-49 (S.D.N.Y. 2013) (suggesting that state
law on veil piercing generally applies to cases arising under
This is particularly salient for federal labor law
See Brotherhood of Locomotive Engineers, 210 F.3d at 26
(“National uniformity is essential in the interpretation of labor
Federal courts have fashioned a body of federal common law
relations are essential to interstate commerce.”).
“[I]n determining whether to disregard the corporate form,
[the court] must consider the importance of the use of that form
in the federal statutory scheme, an inquiry that generally gives
less deference to the corporate form than does the strict alter
ego doctrine of state law.” Lowen v. Tower Asset Management, Inc.,
829 F.2d 1209, 1220 (2d Cir. 1987) (citation omitted). In deciding
whether federal law or state law should apply to veil piercing,
the Supreme Court’s discussion in United States v. Kimbell Foods,
Inc., 440 U.S. 715 (1979), is helpful:
Controversies directly affecting the operations of
federal programs, although governed by federal law, do
not inevitably require resort to uniform federal rules.
Whether to adopt state law or to fashion a nationwide
federal rule is a matter of judicial policy “dependent
upon a variety of considerations always relevant to the
nature of the specific governmental interests and to the
effects upon them of applying state law.” Undoubtedly,
federal programs that “by their nature are and must be
uniform in character throughout the Nation” necessitate
formulation of controlling federal rules. Conversely,
when there is little need for a nationally uniform body
of law, state law may be incorporated as the federal
rule of decision.
Apart from considerations of
uniformity, we must also determine whether application
of state law would frustrate specific objectives of the
federal programs. If so, we must fashion special rules
solicitous of those federal interests.
choice-of-law inquiry must consider the extent to which
application of a federal rule would disrupt commercial
relationships predicated on state law.
quoting United States v. Standard Oil Co., 332 U.S. 301, 310
(1947); and then quoting United States v. Yazell, 382 U.S. 341,
In light of this authority, federal common law
should be applied to veil piercing allegations brought under the
Otherwise, companies operating in multiple states would be
subject to different legal principles, and employees could obtain
certain relief in some states but not others, a situation at odds
with the nationwide policies underlying the FLSA.
There are two circumstances where an individual may be held
liable for a corporation’s liabilities under federal common law.
First, an individual’s total domination and control of a subject
corporation such that she is conducting her own personal business
rather than corporate business is sufficient to impose alter ego
liability. Southern New England Telephone Co. v. Global NAPs Inc.,
624 F.3d 123, 139 (2d Cir. 2010); Williamson v. Recovery Ltd.
Partnership, 542 F.3d 43, 53 (2d Cir. 2008); Thomson-CSF, S.A. v.
American Arbitration Association, 64 F.3d 773, 777 (2d Cir. 1995);
Lowen, 829 F.2d at 1221; see also First National City Bank v. Banco
Para El Comercio Exterior de Cuba, 462 U.S. 611, 628-29 (1983)
(“In discussing the legal status of private corporations, courts
incorporated entity . . . is not to be regarded as legally separate
from its owners in all circumstances.
Thus, where a corporate
relationship of principal and agent is created, we have held that
one may be held liable for the actions of the other.” (emphasis
omitted) (footnotes omitted)).
Alternatively, the corporate form
may be disregarded if the individual used the corporate entity to
perpetrate a fraud or injustice.
Williamson, 542 F.3d at 53;
Golden Horn Shipping Co. v. Volans Shipping Co., No. 14 Civ. 2168,
2014 WL 5778535, at *2 (S.D.N.Y. Nov. 6, 2014); British Marine PLC
v. Aavanti Shipping & Chartering Ltd., No. 13 CV 839, 2013 WL
6092821, at *5 (E.D.N.Y. Nov. 19, 2013); see also First National
City Bank, 462 U.S. at 629 (“In addition, our cases have long
recognized ‘the broader equitable principle that the doctrine of
corporate entity, recognized generally and for most purposes, will
not be regarded when to do so would work fraud or injustice.’”
(quoting Taylor v. Standard Gas Co., 306 U.S. 307, 322 (1939))).
In determining whether to pierce the corporate veil, courts
consider a number of factors, such as:
(1) disregard of corporate formalities; (2) inadequate
capitalization; (3) intermingling of funds; (4) overlap
in ownership, officers, directors, and personnel; (5)
common office space, address and telephone numbers of
corporate entities; (6) the degree of discretion shown
by the allegedly dominated corporation; (7) whether the
dealings between the entities are at arms’ length; (8)
whether the corporations are treated as independent
profit centers; (9) payment or guarantee of the
corporation’s debts by the dominating entity, and (10)
intermingling of property between the entities.
Freeman v. Complex Computing Co., 119 F.3d 1044, 1053 (2d Cir.
1997); see also Burberry, 534 F. App’x at 46 (stating that these
factors are generally considered in veil piercing cases); ThomsonCSF, 64 F.3d at 778 (same); Budisukma Permai SDN BHD v. N.M.K.
Products & Agencies Lanka (Private) Ltd., 606 F. Supp. 2d 391, 399
(S.D.N.Y. 2009) (using this standard in veil piercing federal
common law analysis). These factors are not exclusive, and “courts
have considered additional factors as well.
Instead of a firm
rule, the general principle guiding courts in determining whether
to pierce the corporate veil ‘has been that liability is imposed
when doing so would achieve an equitable result.’”
542 F.3d at 53 (citation omitted) (quoting William Wrigley Jr. Co.
v. Waters, 890 F.2d 594, 601 (2d Cir. 1989)); see also Brotherhood
of Locomotive Engineers, 210 F.3d at 26 (alter ego liability “is
founded only on the broad principle that ‘a corporate entity may
be disregarded in the interests of public convenience, fairness
and equity.’” (quoting Town of Brookline v. Gorsuch, 667 F.2d 215,
221 (1st Cir. 1981))).
This structure is appropriate here given
the FLSA’s broad remedial purposes.
See Irizarry, 722 F.3d at
110; see also Tlacoapa v. Carregal, 386 F. Supp. 2d 362, 366
(S.D.N.Y. 2005) (holding in FLSA and NYLL action that corporation
was individual’s alter ego when individual completely dominated
State Law Claims and Alter Ego Liability
Because supplemental jurisdiction is exercised over the state law
claims, I apply New York choice of law rules to decide which law
governs alter ego liability.
See Rogers v. Grimaldi, 875 F.2d
994, 1002 (2d Cir. 1989); Long Beach Road Holdings, LLC v. Foremost
Insurance Co., 75 F. Supp. 3d 575, 586 (E.D.N.Y. 2015).
York, the law of the state of incorporation governs this inquiry,
Fletcher v. Atex, Inc., 68 F.3d 1451, 1456 (2d Cir. 1995), and
Village Red was incorporated in New York.
To pierce the corporate veil under New York law, a party must
establish two prongs: “(i) that the owner exercised complete
domination over the corporation with respect to the transaction at
issue; and (ii) that such domination was used to commit a fraud or
wrong that injured the party seeking to pierce the corporate veil.”
Broadridge Securities Processing Solutions, LLC v. Khashoggi, 507
F. App’x 57, 57 (2d Cir. 2013) (quoting American Fuel Corp. v.
Utah Energy Development Co., 122 F.3d 130, 134 (2d Cir. 1997)).
The ten Freeman factors referenced above are also relevant to this
See In re Vebeliunas, 332 F.3d 85, 90 n.3 (2d Cir. 2003).
The plaintiffs have not satisfied their burden under either
federal or state law.
Christine Serafis admitted that she observes no
formalities -- she, the sole shareholder and officer of
Village Red Restaurant, holds no elections or meetings,
keeps no corporate records, and has no officer duties.
Second, Christine Serafis receives a “salary” for no
work performed, which is evidence of her personal use of
(Pl. Memo at 30 (citations omitted)).
While corporate formalities
may not have been observed, there is no evidence that Ms. Serafis
controlled the corporation or exerted any decision-making power
over it, other than to allow Mr. Serafis to operate it.
there evidence of commingling of funds; while Ms. Serafis receives
a “salary” and has asked for and received a higher salary (Pl.
56.1, ¶¶ 66-70), Mr. Serafis controls the accounts (Affidavit of
Christine Serafis dated Jan. 17, 2017, ¶ 14).
Additionally, the plaintiffs have not carried their burden on
the fraud or injustice elements of the federal and New York tests.
They first argue that “Christine Serafis utilized the corporate
form to perpetrate . . . a fraud upon taxing authorities, wherein
she could avoid estate taxes.”
(Pl. Memo. at 30).
plaintiffs provide no evidence indicating that she has avoided or
intends to avoid estate taxes.
The plaintiffs also argue that use
of the corporate form is a fraud “upon Plaintiffs” because it
limits “the financial resources accessible to them in recuperating
Defendants’ fraud upon Plaintiffs is also apparent
in Defendants’ use of false payroll records that they required
Plaintiffs to sign.”
(Pl. Memo. at 30).
Yet the defendants’ use
of the corporate form to limit liability is not, by itself,
The plaintiffs’ motion for alter ego liability is
Wage Claims, Liquidated Damages, and Interest
support of their wage-and-hour claims.
However, they have not
computed the total damages that they are requesting, nor have they
Additionally, while the plaintiffs partially rely on the Red Book
to demonstrate the defendants’ pay practices, the names in the
copy of the Red Book filed by the plaintiffs are illegible.
Summary judgment is therefore denied without prejudice to the
calculations and submitting a legible copy of the Red Book.
Fed. R. Civ. P. 56(e) (“If a party fails to properly support an
assertion of fact . . . the court may:  give an opportunity to
properly support or address the fact . . . [or] issue any other
If the plaintiffs choose to supplement their motion, they
must provide a detailed itemization of the damages each plaintiff
is owed, including totals for each claim and a showing of how they
arrived at that sum.
At minimum, it should detail how much an
employee should have been paid in a pay period, how much he or she
was actually paid, and how much he or she is owed for that pay
The plaintiffs’ analysis ought to be clearly related to
each plaintiff’s own declaration, the Red Book, and other records
the plaintiffs believe to be accurate.
The plaintiffs should also
calculate liquidated damages and prejudgment interest.
Attorneys’ Fees and Costs
The plaintiffs have moved for attorneys’ fees and costs but
provide no supporting documentation.
This request is thus denied
Should the plaintiffs choose to supplement their
application, they shall provide detailed timesheets, the hourly
rates requested, and affidavits supporting those rates.
For the reasons stated above, the defendants’ motion for
summary judgment (Docket no. 35) is granted, and the plaintiffs’
motion for summary judgment (Docket no. 46) is granted with respect
to Village Red’s and Mr. Serafis’ liability, denied with respect
to Ms. Serafis’ liability, and denied without prejudice with
respect to the wage claims. 2
The plaintiffs’ supplemental summary judgment papers shall be
submitted by May 31, 2017.
The defendants shall respond by June
The plaintiffs shall reply by June 21, 2017.
parties need not resubmit material already on the docket.
plaintiffs choose not to renew their motion, then the pretrial
order shall be submitted by May 31, 2017.
Defendants’ application for oral argument on these motions
(Docket no. 65) is also denied.
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