Nieto v. Village Red Restaurant Corp. et al

Filing 36

MEMORANDUM AND ORDER granting in part and denying in part 28 Motion to Dismiss. For the reasons stated above, Ms. Serafis' and Waverly Realty's motion to dismiss (Docket no. 28) is granted in part and denied in part. The Clerk of Court shall terminate Waverly Realty from this action. SO ORDERED. (Party 135 Waverly Realty LLC terminated.) (Signed by Magistrate Judge James C. Francis on 10/6/2017) Copies Transmitted this Date By Chambers. (anc) Modified on 10/10/2017 (anc).

partial summary judgment, finding that Ms. Serafis – the sole
shareholder and president of Village Red -- was not the Garcia
plaintiffs’ employer and not liable under the FLSA or the NYLL
because she exercised no control over the enterprise.

No. 15 Civ.

6292, 2017 WL 1906861, at *1, *4 (S.D.N.Y. May 8, 2017).

In this

action, Ms. Serafis and Waverly Realty have moved to dismiss,
arguing that Garcia precludes the plaintiff’s claims against Ms.
Serafis and that the plaintiff has not alleged facts sufficient to
demonstrate that Ms. Serafis and Waverly Realty2 were Mr. Nieto’s
employers.

For the reasons that follow, the defendants’ motion is

granted in part and denied in part.
Res Judicata
Ms. Serafis argues that the doctrine of res judicata bars the
plaintiff from bringing a claim against her because Garcia held
that she was not the Garcia plaintiffs’ employer.

(Memorandum of

Law in Support of Motion to Dismiss by Defendants 135 Waverly
Realty LLC and Christine Serafis (“Def. Memo.”) at 5-7).

“[R]es

judicata, or claim preclusion, applies in later litigation if an
earlier decision was (1) a final judgment on the merits, (2) by a
court of competent jurisdiction, (3) in a case involving the same
parties or their privies, and (4) involving the same cause of

Ms. Serafis “owns” Waverly Realty, which in turn owns the
restaurant’s building and adjoined residences. (Complaint, ¶¶ 12,
21).
2
2

action.”

Hecht v. United Collection Bureau, Inc., 691 F.3d 218,

221-22 (2d Cir. 2012) (quoting In re Adelphia Recovery Trust, 634
F.3d 678, 694 (2d Cir. 2011)).
The plaintiff argues that my previous determination in Garcia
was not “a final judgment on the merits” because the Garcia summary
judgment decision only partially resolved the case.

(Plaintiff’s

Memorandum of Law in Opposition to Defendant’s Motion to Dismiss
(“Pl.

Memo”)

at

4-6).

A

partial

summary

judgment

may

have

preclusive effect if a final judgment is entered pursuant to Rule
54(b).

Bell v. Taylor, 827 F.3d 699, 707-08 (7th Cir. 2016); 18

James Wm. Moore et al., Moore’s Federal Practice ¶ 131.30(2)(b) &
nn.44, 47, & 47.1 (3d ed. 2017); Restatement (Second) of Judgments
§ 13 cmt. e (Am. Law Inst. 1982); see also Fed. R. Civ. P. 54(b)
(“When an action presents more than one claim for relief . . . or
when multiple parties are involved, the court may direct entry of
a final judgment as to one or more, but fewer than all, claims or
parties only if the court expressly determines that there is no
just reason for delay.

Otherwise, any order or other decision,

however designated, that adjudicates fewer than all the claims or
the rights and liabilities of fewer than all the parties does not
end the action as to any of the claims or parties and may be
revised at any time before the entry of a judgment adjudicating
all the claims and all the parties’ rights and liabilities.”).
3

However, if final judgment has not been entered, then a partial
summary judgment generally does not have preclusive effects.

See

Warner Bros. Inc. v. American Broadcasting Companies, Inc., 720
F.2d 231, 245 n.11 (2d Cir. 1983) (“The ‘subject to revision’
language of Rule 54(b) underscores that a grant of partial summary
judgment on one of several claims does not have res judicata effect
prior to the entry of an appealable judgment.”); Acha v. Beame,
570 F.2d 57, 62-63 (2d Cir. 1978) (“It follows that where, as in
the instant case, a partial summary judgment is rendered with
respect to only part of the relief sought by the appellants, and
where consideration of further relief is specifically reserved,
judgment is neither ‘final’ nor on an entire ‘claim. . . .’

Where

a judgment is not ‘final,’ within the terms of 28 U.S.C. § 1291,
and hence not certifiable under Rule 54(b), it has no res judicata
effect.”).

Because my decision only partially resolved the claims

in Garcia and was not entered as a final judgment, res judicata
does not apply.
Even

if

the

judgment

were

final,

the

parties

are

not

sufficiently aligned to enforce the Garcia decision against Mr.
Nieto.

“As a general rule, ‘a litigant is not bound by a judgment

to which [he] was not a party’ because a nonparty ‘generally has
not had a “full and fair opportunity to litigate” the claims and
issues settled in that suit.’”

Yan Won Liao v. Holder, 691 F.
4

Supp. 2d 344, 352-53 (E.D.N.Y. 2010) (quoting Taylor v. Sturgell,
553

U.S.

880,

892,

898

(2008)).

There

are

six

recognized

exceptions to the rule against nonparty preclusion:
(1) “a person who agrees to be bound by the determination
of issues in an action between others [will be] bound in
accordance with the terms of his agreement;”
(2) there is a “pre-existing substantive legal
relationship [] between the person to be bound and a
party to the judgment;”
(3) a party was “adequately represented by someone with
the same interests who was a party to the suit;”
(4) a party “assumed control over the litigation in which
that judgment was rendered;”
(5) a party who is bound by a judgment attempts to “avoid
its preclusive force by relitigating through a proxy;”
and
(6) a “special statutory scheme may expressly foreclose
successive litigation by nonlitigants . . . if the scheme
is otherwise consistent with due process.”
Id. at 353 (alterations in original) (quoting Taylor, 553 U.S. at
894-95).

The defendants have not suggested that any of these

exceptions apply. The only apparent relationship between Mr. Nieto
and the Garcia plaintiffs is that the same law firm represents
them and that the plaintiffs in both cases worked at the Waverly.
That

relationship

is

insufficient

exceptions to nonparty preclusion.3

to

establish

one

of

the

See Taylor, 553 U.S. at 894

Collateral estoppel, often referred to as issue preclusion,
would not apply for the same reasons.
See Taylor, 553 U.S. at
892.
5
3

(“[A]

nonparty

may

be

bound

by

a

judgment

because

she

was

‘adequately represented by someone with the same interests who
[wa]s a party’ to the suit.

Representative suits with preclusive

effect on nonparties include properly conducted class actions, and
suits brought by trustees, guardians, and other fiduciaries.”
(second

alteration

in

original)

(citations

omitted)

(quoting

Richards v. Jefferson County, 517 U.S. 793, 798 (1996))); South
Central Bell Telephone Co. v. Alabama, 526 U.S. 160, 168 (1999)
(holding that plaintiffs’ awareness of earlier similar litigation
and retaining lawyer from that litigation did not create “special
representational relationship”).

Therefore, res judicata does not

apply.
Employment Relationship
The defendants argue that the plaintiff has not pled facts
sufficient to establish that Waverly Realty and Ms. Serafis are
Mr. Nieto’s employers.
To survive a motion to dismiss under Rule 12(b)(6) of the
Federal

Rules

of

Civil

Procedure,

“a

complaint

must

contain

sufficient factual matter . . . to ‘state a claim to relief that
is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)).
dismiss

The court’s charge in ruling on a 12(b)(6) motion to
“is

merely

to

assess

the
6

legal

feasibility

of

the

complaint, not to assay the weight of the evidence which might be
offered in support thereof.”

GVA Market Neutral Master Ltd. v.

Veras Capital Partners Offshore Fund, Ltd., 580 F. Supp. 2d 321,
327 (S.D.N.Y. 2008) (quoting Eternity Global Master Fund Ltd. v.
Morgan Guaranty Trust Co. of New York, 375 F.3d 168, 176 (2d Cir.
2004)).

The court must construe the complaint in the light most

favorable to the plaintiff, “taking its factual allegations to be
true and drawing all reasonable inferences in the plaintiff’s
favor.”

Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009).

The statutory definition of “employer” under the FLSA sweeps
broadly.

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. §

203(g).
“[T]he

determination

of

whether

an

employer-employee

relationship exists for purposes of the FLSA should be grounded in
‘economic reality rather than technical concepts,’ . . . determined
by

reference

circumstances

not
of

to
the

‘isolated
whole

factors

activity.’”

but

rather

Saleem

v.

upon

the

Corporate

Transportation Group, Ltd., 854 F.3d 131, 140 (2d Cir. 2017)
7

(second alteration in original) (quoting Barfield, 537 F.3d at
141).

The Second Circuit has recognized 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.”

Irizarry v. Catsimatidis, 722 F.3d 99, 105 (2d Cir. 2013)

(quoting Barfield, 537 F.3d at 143).

These include: (1) the power

to hire and fire, (2) the ability to supervise and control employee
schedules or conditions of employment, (3) the authority to decide
rates and methods of payment, and (4) the maintenance of employment
records.

Carter v. Dutchess Community College, 735 F.2d 8, 12 (2d

Cir. 1984).

These factors are sufficient but not necessary to

establish employment status.
“While
employees

a
to

putative
be

Barfield, 537 F.3d at 142-43.

employer

liable

under

need
the

not

FLSA,

directly
some

control

‘individual

involvement’ in a company is generally required: an individual
defendant must at least exercise ‘operational control’ over the
employee’s employment.”

Garcia, 2017 WL 1906861, at *4 (quoting

Irizarry, 722 F.3d at 106, 109).

“It is appropriate . . . to

require some degree of individual involvement in a company in a
manner that affects employment-related factors such as workplace
conditions and operations, personnel, or compensation -- even if
this

appears

to

establish

a

higher
8

threshold

for

individual

liability than for corporate ‘employer’ status.”

Irizarry, 722

F.3d at 109.
A.

Waverly Realty

Mr. Nieto’s allegations as to Waverly Realty are conclusory.
For instance, he alleges that Village Red and Waverly Realty “were
a single and joint employer of Plaintiff with a high degree of
interrelated
business

and

unified

purpose,

operations,

interrelated

common

business

control,

goals,

and

common
common

ownership and management.” (Complaint, ¶ 16). The only allegation
with any substance that he makes is that “on days when Nieto worked
for Waverly Restaurant, he was required to perform services for
135

Waverly

Realty

LLC,

including

sweeping

and

building’s hallways and cleaning trash receptacles.”
¶ 20).

cleaning

the

(Complaint,

However, this allegation is also nonspecific; it does not

indicate who “required” him to clean the building, and it does not
indicate whether he was cleaning an area rented and controlled by
Village Red or controlled only by Waverly Realty.

There are no

allegations that Waverly Realty had the power to hire or fire, set
wages, maintain employment records, control his schedule, or set
his conditions of employment.

Therefore, the plaintiff has not

alleged sufficient facts to show that Waverly Realty is a joint
employer.

See Iqbal, 556 U.S. at 678; Chen v. Domino’s Pizza,

9

Inc., Civ. A. No. 09-107, 2009 WL 3379946, at *4-5 (D.N.J. Oct.
16, 2009).
The plaintiff argues in the alternative that Waverly Realty
can

be

treated

as

enterprise” test.

an

employer

under

(Pl. Memo. at 7-8).

the

“single

integrated

That test is used to assess

“whether a group of distinct but closely affiliated entities should
be treated as a single employer for FLSA purposes.”

Juarez v. 449

Restaurant, Inc., 29 F. Supp. 3d 363, 367 (S.D.N.Y. 2014); see
Arculeo v. On-Site Sales & Marketing, LLC, 425 F.3d 193, 198 (2d
Cir. 2005) (“A ‘single employer’ situation exists ‘where two
nominally

separate

entities

are

actually

part

of

a

single

integrated enterprise . . . .’” (alteration in original) (quoting
Clinton’s Ditch Cooperative Co. v. NLRB, 778 F.2d 132, 137 (2d
Cir. 1985))).
parent

and

“In such circumstances, of which examples may be

wholly-owned

subsidiary

corporations,

or

separate

corporations under common ownership and management, the nominally
distinct entities can be deemed to constitute a single enterprise.”
Arculeo, 425 F.3d at 198.

“Under this standard, courts consider

(1) interrelation of operations, (2) centralized control of labor
relations, (3) common management, and (4) common ownership or
financial control.”

Juarez, 29 F. Supp. 3d at 367.

The plaintiff’s allegations that Waverly Realty and Village
Red have “a high degree of interrelated and unified operations,
10

common control, common business purpose, interrelated business
goals, and common ownership and management” (Complaint, ¶ 16) are
too vague and conclusory to assess the interrelatedness of the
entities.

Mr. Nieto further alleges that Mr. Serafis and Mr.

Captan are managers of both entities and that Ms. Serafis owns and
is

the

president

of

both

(Complaint, ¶¶ 18, 21).

Village

Red

and

Waverly

Realty.

These allegations, while showing some

common management and ownership, demonstrate nothing about how the
two companies are integrated or operated as one entity.

The

plaintiff’s allegations simply do not provide enough detail to
infer that there was a single, integrated enterprise.

Therefore,

the plaintiff does not benefit from this theory.
B.

Ms. Serafis

The

plaintiff

alleges

the

following

facts

regarding

Serafis:
(1)

Defendant Christine Serafis is President of Village
Red Restaurant Corp. and the sole shareholder and
owner of 135 Waverly Realty LLC, and is sued
individually in her capacity as an owner, officer,
and/or agent of Village Red Restaurant Corp. and
135 Waverly Realty LLC.

(2)

Nicholas Serafis gave ownership of Village Red
Restaurant
Corp.
to
Christine
Serafis,
his
daughter, for estate tax purposes.

(3)

Although Christine Serafis receives an annual
salary from Village Red Restaurant Corp., she does
not hold annual meetings, keep minutes, or observe
any other corporate formalities as sole shareholder
of Village Red Restaurant Corp.
11

Ms.

(4)

Christine Serafis exercises sufficient control over
the Waverly Defendants’ operations to be considered
Nieto’s employer under the FLSA and NYLL.

(5)

Christine Serafis had the authority to hire and
fire employees of the Waverly Defendants and to set
wages.

(6)

Christine
Serafis
established
and
exercised
authority
regarding
the
managerial
and
administrative practices of the Waverly Defendants.

(7)

Christine Serafis hired Nicholas Serafis to manage
Waverly Restaurant.

(8)

Christine Serafis’s signature appears on paychecks
issued to Nieto from Village Red Restaurant Corp.

(9)

[T]hroughout Nieto’s employment, he [asked for and
received] at least six letters of employment [and]
income verification [from the Waverly].
Each
letter is on Waverly Restaurant letterhead with
Christine
Serafis’s
signature
and
title
as
President. Christine Serafis is also the contact
person in said letters if the recipient required
further information.

(Complaint, ¶¶ 21-29).

These allegations, though thin, are more

detailed than the allegations against Waverly Realty and are
sufficient to state claim.4

For purposes of adjudicating the motion to dismiss Mr.
Nieto’s claims against Ms. Serafis, I must, of course, accept the
allegations of the complaint as true and disregard the evidence or
lack of evidence regarding her status submitted in connection with
the motion for partial summary judgment in Garcia. This does not,
however, rule out a later award of sanctions under Rule 11 if
counsel did not conduct a reasonable investigation of the facts
before asserting the claims against Ms. Serafis in this case.
12
4