Camargo Perez et al v. 117 Avenue of the Americas Food Corp. et al
Filing
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OPINION AND ORDER re: 33 MOTION to Amend/Correct 1 Complaint, . filed by Gustavo Jimenez, Ignacio Camargo Perez. For the foregoing reasons, the motion to amend is hereby GRANTED. The proposed amended complaint at Docket Number 34-2 is hereby deemed the operative complaint in this action. The Clerk of Court is directed to close the motion at Docket Number 33. (As further set forth in this Order) (Signed by Judge J. Paul Oetken on 9/27/2016) (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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IGNACIO CAMARGO PEREZ, individually and :
on behalf of others similarly situated,
:
:
Plaintiff,
:
:
-v:
:
117 AVENUE OF THE AMERICAS FOOD
:
CORP., et al.,
:
:
Defendants. :
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15-CV-8151 (JPO)
OPINION AND ORDER
J. PAUL OETKEN, District Judge:
On October 15, 2015, Plaintiff Ignacio Camargo Perez (“Camargo”) filed a putative class
action against Defendants 117 Avenue of the Americas Food Corp., d/b/a Kool Bloo, Mohamad
Chalan, Tarik Fallous, and Ghassan Fallous (collectively the “Original Defendants”), alleging
violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and New York
Labor Law (“NYLL”), Art. 19 § 650 et seq. (See Dkt. No. 1.) On August 2, 2016, Camargo
filed this motion to amend the complaint. (Dkt. No. 33.) For the reasons that follow, the motion
is granted.
I.
Background
Plaintiff Camargo filed a putative class action on October 15, 2015, alleging that the
Original Defendants violated the FLSA and NYLL. Camargo avers that he “regularly worked
above 40 hours per week” for pay below minimum wage and without overtime at the 117
Avenue of the Americas location of Kool Bloo, a restaurant. (Dkt. No. 35 at 2; Dkt. No. 1 ¶ 2.)
Camargo also contends that the Original Defendants violated NYLL’s wage statement
requirement and its notice and recordkeeping provision. (Id. ¶¶ 106-11.)
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Three weeks after Camargo initiated the suit, on October 26, 2015, Gustavo Jimenez
consented to join the action as a party plaintiff. (Dkt. No. 16.) Jimenez, like Camargo, worked
at the 117 Avenue of the Americas location of Kool Bloo, as well as three other locations—719
2nd Avenue Food Corp., 221 E. 23rd Street Take-Out Food Corp., and 188 Avenue A Take-Out
Food Corp. (collectively the “Additional Defendants”). Defendants Tarik Fallous and Ghassan
Fallous allegedly owned and operated the Kool Bloo locations where Jimenez and Camargo
worked. 1 (Dkt. No. 35 at 2.)
The instant motion seeks to amend the operative complaint in this case to: (1) add
Gustavo Jiminez (together, with Camargo, “Plaintiffs”) as a named plaintiff; (2) correct
allegations contained in the initial complaint in light of discovery; and (3) include as defendants
the Additional Defendants. (Dkt. No. 35 at 2.) Defendants oppose the motion as untimely or, in
the alternative, as futile with respect to two of the Additional Defendants—719 2nd Avenue
Food Corp. and 221 E. 23rd Street Take-Out Food Corp.—because they “are no longer in
business” and were not in business when the initial complaint was filed. (Dkt. No. 38 at 3.)
Defendants do not raise the futility argument with respect to 188 Avenue A Take-Out Food
Corp.
II.
Discussion
Under the Federal Rules of Civil Procedure, courts “should freely give leave [to amend]
when justice so requires.” Fed. R. Civ. P. 15(a)(2). “A district court has broad discretion in
determining whether to grant leave to amend . . . .” Gurary v. Winehouse, 235 F.3d 792, 801 (2d
Cir. 2000). A motion to amend “should not be denied unless there is evidence of undue delay,
1
Camargo no longer contends that Mohamad Chalan owned or operated any Kool
Bloo locations at issue. (Dkt. No. 28.)
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bad faith, undue prejudice to the non-movant, or futility.” Milanese v. Rust-Oleum Corp., 244
F.3d 104, 110 (2d Cir. 2001) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
Where “the plaintiff also seeks to add an additional defendant, Rule 21 of the Federal
Rules of Civil Procedure permits such joinder ‘at any time, on just terms.’” Agerbrink v. Model
Serv. LLC, 155 F. Supp. 3d 448, 452 (S.D.N.Y. 2016) (quoting Fed. R. Civ. P. 21) (citing City of
Syracuse v. Onondaga Cty., 464 F.3d 297, 308 (2d Cir. 2006)). Thus, “[i]n practice, the standard
for deciding whether to permit joinder under Rule 21 is ‘the same standard of liberality afforded
to motions to amend pleadings under Rule 15.’” Id. (quoting Rush v. Artuz, No. 00 Civ. 3436,
2001 WL 1313465, at *5 (S.D.N.Y. Oct. 26, 2001)).
A. Delay
“Mere delay . . . absent a showing of bad faith or undue prejudice, does not ordinarily
provide a basis for the district court to deny the right to amend.” Ruotolo v. City of New York,
514 F.3d 184, 191 (2d Cir. 2008) (quoting State Teachers Ret. Bd. v. Fluor Corp., 654 F.2d 843,
856 (2d Cir. 1981)). But where, as here, a plaintiff moves to amend after a scheduling order has
been entered (see Dkt. No. 27), Rule 15’s lenient standard “must be balanced against the
requirement under Rule 16(b) that the Court’s scheduling order ‘shall not be modified except
upon a showing of good cause.’” Grochowski v. Phoenix Const., 318 F.3d 80, 86 (2d Cir. 2003)
(quoting Fed. R. Civ. P. 16(b)). “A finding of good cause depends on the diligence of the
moving party.” Id.
The “good cause” standard is met where the proposed amendment rests on information
that the party did not know (or there is no reason to believe the party should have known) before
the deadline. See, e.g., Permatex, Inc. v. Loctite Corp., No. 03 Civ. 943, 2004 WL 1354253, at
*3 (S.D.N.Y. June 17, 2004). Here, Plaintiffs provide a reason for the delay: They “learn[ed] of
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the correct identities of . . . Additional Defendants” and facts warranting corrections to the
complaint only during discovery. (Dkt. No. 35 at 4.) Their argument is supported by the timing
of the instant motion, which was filed less than two weeks after Defendants handed over their
responses to interrogatories. (Dkt. No. 38 at 4.)
Defendants do not appear to contest the reasonableness of the instant motion with respect
to the additional facts gleaned during discovery and the additional plaintiff, Jiminez, who was
added by consent after the complaint was filed. (Dkt. No. 38 at 4 (“The request to amend the
Complaint to conform the factual allegations pled . . . to the facts developed in discovery is
markedly different than the request . . . to add additional corporate defendants.”).)
Defendants contest the timeliness of the instant motion specifically with respect to the
Additional Defendants’ identities, suggesting that Plaintiffs’ explanation is insufficient. (Dkt.
No. 38 at 3.) Jiminez, they argue, “did not ‘discover’ that he worked at more than one ‘Kool
Bloo’ location as a result of discovery.” (Id.) But Plaintiffs appear to make a different point:
namely, that they first learned the corporate identities and ownership of various Kool Bloo
locations from Defendants’ disclosures. (Dkt. No. 34 ¶ 8.) This more subtle point is evinced by
the frequent alterations of the phrase “Defendant Corporation” to “Defendant corporations” in
the proposed amendments. (See, e.g., Dkt. No. 34-3 ¶¶ 3, 32, 33, 35-36, 39, 44.) Plaintiffs’
representation that they learned new facts—including the corporate identities and ownership of
the Additional Defendants—is a sufficient explanation to amend ten months after the case was
initiated. (Dkt. No. 1; Dkt. No. 27; Dkt. No. 34.)
Defendants do not make out a case that Plaintiffs have acted in bad faith. Nor do
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Defendants argue they will be unfairly prejudiced by the proposed amendment. 2 Denial of
Plaintiffs’ motion is therefore not warranted on the basis of undue delay.
B.
Futility
In the alternative, Defendants argue that the proposed amendment is futile with respect to
adding 719 2nd Avenue Food Corp. and 221 E. 23rd Street Take-Out Food Corp. as defendants
because “these corporations are no longer in business, and ceased doing business prior to the
filing of the Complaint.” (Dkt. No. 38 at 4.)
Courts evaluate a proposed amended complaint challenged on futility grounds under the
Rule 12(b)(6) standard for a motion to dismiss for failure to state a claim. Lucente v. Int’l Bus.
Mach. Corp., 310 F.3d 243, 258 (2d Cir. 2010). Thus, to survive a motion to amend challenged
on futility grounds, the proposed amended complaint must plead “factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
The proposed amended complaint alleges facts sufficient to state a claim against the
Additional Defendants, including 719 2nd Avenue Food Corp. and 221 E. 23rd Street Take-Out
Food Corp. (See Dkt. No. 34-2 ¶¶ 70-92.) Defendants do not argue to the contrary.
Rather, Defendants contend that Plaintiffs’ claims should not go forward against 719 2nd
Avenue Food Corp. and 221 E. 23rd Street Take-Out Food Corp. because the former is no longer
in business and is currently in the “process of wind up, with outstanding tax liability issues to be
2
Any such representation would be unavailing. Discovery is ongoing, and various
pretrial deadlines are still outstanding. (See Dkt. No. 43; Dkt. No. 27.) In the absence of any
significant hardship, simple “[a]llegations that an amendment will require the expenditure of
additional time, effort, or money do not constitute ‘undue prejudice.’” A.V. by Versace, Inc. v.
Gianni Versace S.p.A., 87 F. Supp. 2d 281, 299 (S.D.N.Y. 2000) (quoting Block v. First Blood
Assocs., 988 F.2d 344, 351 (2d Cir. 1993)).
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resolved, before the corporation is formally dissolved,” and the latter was formally dissolved as
of June 15, 2015. (Dkt. No. 38 at 4.) To make their case, Defendants marshal affidavits from
Tarik Fallous and Ghassan Fallous (Dkt. No. 40; Dkt. No. 41) and a page from the “NYS
Department of State” database (Dkt. No. 41-1).
When considering a motion to amend—as in a 12(b)(6) posture—a court must “accept all
well-pleaded allegations in the complaint as true and draw all reasonable inferences in the
plaintiff’s favor.” Chabad Lubavitch of Litchfield Cty., Inc. v. Litchfield Historic Dist. Comm’n,
768 F.3d 183, 191 (2d Cir. 2014) (internal quotation marks and brackets omitted); see Steele v.
Paypal, Inc., No. 05 Civ. 1720, 2006 WL 3612852, at *1 (E.D.N.Y. Dec. 11, 2006). A court
may not “rel[y] on a matter outside the pleadings: specifically, defendants’ factual contention.”
Friedl v. City of New York, 210 F.3d 79, 84 (2d Cir. 2000). Thus, at this stage, the Court may
not consider Defendants’ submission that some Additional Defendants may lack the capacity to
be sued because of their alleged dissolution.
Setting aside Defendants’ factual contentions, Plaintiffs allege that “719 2nd Avenue
Food Corp is or was a corporation organized and existing under the laws of the State of New
York” and that “221 E. 23rd Street Take-Out Food Corp is or was a corporation organized and
existing under the laws of the State of New York.” (Dkt. No. 34-2 ¶¶ 25, 27.)
Even if the Court were to understand from Plaintiffs’ use of the present and past tenses
that these Additional Defendants may no longer be in business, Plaintiffs have still pleaded
enough to bring in these Additional Defendants at this stage. Rule 17(b) of the Federal Rules of
Civil Procedure states that a corporation’s “capacity to sue or be sued is determined . . . by the
law under which it was organized.” The same goes for dissolved corporations. See Regal
Custom Clothiers, Ltd. v. Mohan's Custom Tailors, Inc., No. 96 Civ. 6320, 1997 WL 370595, at
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*2 (S.D.N.Y. July 1, 1997); 6A Wright & Miller, Fed. Prac. & Proc. § 1563 (2016). New York
law—under which these Additional Defendants were allegedly organized—provides that a
dissolved corporation may be sued provided that the suit can be deemed part of its winding up
process. See Sec. Pac. Nat’l Bank v. Evans, 31 A.D.3d 278 (1st Dep’t 2006). This Court’s duty
to “draw all reasonable inferences in the plaintiff’s favor,” Chabad Lubavitch of Litchfield Cnty.,
Inc., 768 F.3d at 191, therefore dictates that Plaintiffs heave pleaded enough about these
Additional Defendants’ corporate status for their claims to proceed. (Defendants are, of course,
free to contest any individual defendant’s amenability to suit at subsequent stages of litigation.)
Efficiency considerations also guide the Court here. Plaintiffs represent that if they are
unable to amend the complaint in the instant action, they will simply file a separate suit against
the Additional Defendants. (Dkt. No. 35 at 6.) Given the counterfactual scenario of multiple
suits against overlapping sets of defendants (which may ultimately be consolidated as related),
efficiency concerns counsel in favor of allowing Plaintiffs to amend to add the Additional
Defendants.
III.
Conclusion
For the foregoing reasons, the motion to amend is hereby GRANTED. The proposed
amended complaint at Docket Number 34-2 is hereby deemed the operative complaint in this
action.
The Clerk of Court is directed to close the motion at Docket Number 33.
SO ORDERED.
Dated: September 27, 2016
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge
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