Keawsri et al v. Ramen-ya Inc. et al

Filing 367

MEMORANDUM OPINION & ORDER re: 310 FIRST LETTER MOTION for Leave to File supplemental documents in support of Motion for Attachment [DE 273] addressed to Judge Valerie E. Caproni from Florence Rostami dated September 26, 2019. filed by Wanwisa Nakwirot, Parada Mongkolkajit, Parichat Kongtuk, Natcha Natatpisit, Pimparat Ketchatrot, Siwapon Topon, Ornrat Keawsri, Takayuki Sekiya, Thanatharn kulaptip, Sachina Nagae, Thiratham Raksuk, Tanon Leechot, 273 FIRST MOTION for Attachment of properties of Defendants Negita and Kobayashi pursuant to Fe.R.C.P. 6201(1). filed by Wanwisa Nakwirot, Parada Mongkolkajit, Parichat Kongtuk, Natcha Natatpisit, Pimparat Ketchatrot, Siwapon Topon, Thanatharn kulaptip , Takayuki Sekiya, Ornrat Keawsri, Sachina Nagae, Thiratham Raksuk, Tanon Leechot, 327 FIRST MOTION to Add Party(ies) Ornrat Keawsri, Sachina Nagae, Takayuki Sekiya, Siwapon Topon, Pimparat Ketchatrot, Thirantham Ratsuk, Parichat Kongtuk , Tanon Leechot, Thanatharn Kulaptip, Wanwisa Nakwirot, Natcha Natatpisit, and Parada Mongkolkajit MOTION for Leave to File Third Amended Complaint . filed by Wanwisa Nakwirot, Parada Mongkolkajit, Parichat Kongtuk, Natcha Natatpisit, Pimparat Ketchatrot, Siwapon Topon, Thanatharn kulaptip, Takayuki Sekiya, Ornrat Keawsri, Sachina Nagae, Thiratham Raksuk, Tanon Leechot. For the reasons stated above, Plaintiffs' motion to file a TAC is GRANTED IN PART and DENIED IN PA RT. Plaintiffs are directed to file the PTAC without the proposed eighth and ninth claims within fourteen (14) days of this Order, and the motion for an order of attachment is DENIED. Defendants' response to the TAC is governed by Rule 15. Th e parties are directed to appear for a telephonic status conference on September 15, 2020 at 4:00 pm; dial-in [phone], access code 1582687. Parties should submit a joint status letter seven (7) days before, or by September 8, 2020. The Clerk of Court is directed to close ECF 273, ECF 310, and ECF 327. SO ORDERED. (Telephone Conference set for 9/15/2020 at 04:00 PM before Magistrate Judge Ona T. Wang.) (Signed by Magistrate Judge Ona T. Wang on 8/6/2020) (rro)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------------x
:
ORNRAT KEAWSRI, et al.,
:
:
Plaintiffs,
:
:
-against:
RAMEN-YA INC., et al.,
:
:
Defendants.
:

17-CV-2406 (LJL) (OTW)
MEMORANDUM OPINION
& ORDER

-------------------------------------------------------------x
ONA T. WANG, United States Magistrate Judge:
Before the Court are two motions by Plaintiffs: (1) a motion for leave to amend the
complaint and file a Third Amended Complaint (ECF 327, see ECF 328-1 for Proposed Third
Amended Complaint (“PTAC”)); and (2) a motion for an order of attachment against Defendants
Masahiko Negita and Toshihito Kobayashi (ECF 273). Both motions are opposed. 1 For the
reasons stated below:
•

the motion for leave to file a Third Amended Complaint is GRANTED IN PART to the
extent it adds Yasuko Negita as a defendant and DENIED IN PART to the extent it adds
additional claims; Plaintiffs are directed to file the PTAC without the proposed Eighth
and Ninth claims within fourteen (14) days of this Order, i.e. by August 19, 2020; and

•

(2) the motion for an order of attachment is DENIED. 2

Defendants Y&S, Kenji Kora, and Toshihito Kobayashi are represented by Howard C. Chun, Esq. Defendants RYI,
Miho Maki, and Masahiko Negita (collectively, the “RYI Defendants”) are represented by Vikrant Pawar, Esq.
Defendants Y&S, Kora, and Kobayashi did not oppose the motion for leave to amend.
1

Plaintiffs did not file a letter seeking a pre-motion conference before filing these motions. The Court could deny
both these motions to failure to comply with the Court’s Individual Practices. Going forward, if any party files a
motion without complying with the Court’s Individual Practices as well as those of the District Court, the motion
will be denied.

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I.

Background & Procedural History
This action is a Fair Labor Standards Act (“FLSA”) action with related New York State

Labor Law (“NYLL”) claims. Plaintiffs are former employees of Ramen-Ya Inc. (“RYI”) and Y&S
International Corp. d/b/a Ramen-Ya (“Y&S”), which “have operated and continued to operate
restaurants as a single or joint employer under the trade name Ramen-Ya.” (ECF 182 SAC ¶ 1).
Defendants Kobayashi and Kora are purportedly the owners and managers of Y&S. Id.
Defendant Maki is purportedly “responsible for the management and operation of Ramen-Ya.”
Id. Defendant Negita (“Mr. Negita”) is purportedly an actual or beneficial owner and manager
of RYI. (ECF 182 SAC ¶ 19). Defendant Nakanishi was dismissed from the action pursuant to
settlement. (SAC at 1). The District Court (Caproni, J.) denied Defendant’s motion to dismiss the
amended complaint and granted Plaintiffs’ motion for collective certification. (ECF 130).
Plaintiffs filed a Second Amended Complaint, adding additional servers in September 2018. (ECF
182). The action was referred to this Court for general pretrial supervision in December 2018.
(ECF 197). 3 On February 4, 2020, this case was reassigned to the Hon. Lewis J. Liman.
The procedural history of discovery in this action is tortuous. A review of the docket
reveals a plethora of discovery disputes. As relevant to the instant motions, Plaintiffs first
received in May 2019 the RYI and Y&S tax returns showing both that there were payments from
RYI and Y&S to Yasuko Negita (“Ms. Negita”), Mr. Negita’s spouse, and Ms. Negita was an

Courts in this circuit generally treat motions to amend as non-dispositive pre-trial motions. See, e.g., Kilcullen v.
New York State Dep’t of Transp., 55 F. App’x 583, 584 (2d Cir. 2003) (referring to motion to amend as a nondispositive matter that may be referred to a magistrate judge for decision pursuant to 28 U.S.C. ¶ 636(b)(1)A));
Marsh v. Sheriff of Cayuga Cty, 36 F. App’x 10 (2d Cir. 2002) (“[T]he magistrate judge acted within his authority in
denying this motion to amend the complaint”); Lyondell-Citgo Refining, L.P. v. Petroleos De Venezuela, S.A., No. 02cv-795 (CMB), 2005 WL 883485 (S.D.N.Y. Apr. 14, 2005) (reviewing magistrate’s decision on motion to amend
under clearly erroneous standard).
3

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owner of RYI. (ECF 340; see also ECF 295 (“Per RYI’s tax records . . . , Ms. Negita was and, upon
information and belief, is the sole owner and president of RYI.”). Plaintiffs then subpoenaed
Ms. Negita for documents and testimony in June 2019. (ECF 257 and 343 citing ECF 295-3, 2951). Ms. Negita did not produce documents by the return date and failed to show for her
deposition twice. (ECF 295, 343). Plaintiffs eventually moved to compel Ms. Negita’s compliance
with the document and deposition subpoenas. The Court ordered on August 6, 2019 that
Ms. Negita’s deposition take place on August 28, 2019 (she was not deposed until November
13, 2019). (ECF 279). Soon after that, Plaintiffs deposed Defendants Kora and Maki (on
September 20, 2019 and October 7 & 8, 2019, respectively), who both testified regarding
Ms. Negita’s role at the restaurants.
Plaintiffs moved to attach the properties of Defendants Negita and Kobayashi in August
2019 on the grounds “that Defendants do not appear to have sufficient assets in New York to
satisfy the judgment that may be entered against them, and there is a substantial concern that
Defendants may not honor a judgment for Plaintiffs in this action.” (ECF 273, 274, 275, and
310). Part of Plaintiffs’ argument rested on the allegation that Mr. Negita was improperly
transferring assets to Ms. Negita. (ECF 275).
Plaintiffs later moved to amend the complaint to add Ms. Negita as a defendant, and to
add two claims – an eighth claim for violation of New York Debtor and Creditor Law (“DCL”)
§ 273-A and a ninth claim for violation of DCL § 276. (ECF 328-2). The PTAC also adds Ms. Negita
to the existing FLSA and NYLL claims.

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II.

Motion for Leave to Amend the Complaint
The PTAC claims that RYI and Y&S have been paying “substantial amounts of money,

disguised as salary” to Ms. Negita, who “did not perform any services for RYI or for Y&S for
which she would be entitled to receiving [sic] compensation throughout the years 2014 through
2018, and thereafter.” (ECF 328-2 PTAC ¶¶ 149, 164). The reason for the payments to
Ms. Negita, according to Defendant Kora, was that “although Ms. Negita was not performing
any work for either entity, the compensation paid to her was needed to balance hiring
[undocumented] immigrants in connection with reporting taxes,” and Plaintiffs claim that
“Ms. Negita and [Mr.] Negita manipulated the payments made to Ms. Negita by RYI and Y&S for
improper purposes, to limit the assets of RYI and Y&S to be available for payment to Plaintiffs
and other employees, and to evade their legal obligations to Plaintiffs in this lawsuit.” (ECF 3282 PTAC ¶¶ 165, 171; see also PTAC ¶ 176). The PTAC further details the amounts paid to
Ms. Negita and adds additional allegations of financial discrepancies in RYI’s and Y&S’s books.
(ECF 328-2 PTAC ¶¶ 158-160, 166-70, 172, 174).
Plaintiffs argue that they moved to add Ms. Negita and the additional claims as soon as
they obtained the facts in discovery to do so. (ECF 328). The RYI Defendants oppose, arguing
that the amendments are untimely, unduly prejudicial, and futile. (ECF 340).
Rule 15 of the Federal Rules of Civil Procedure provides that courts should “freely give
leave [to amend a pleading] when justice so requires.” Fed. R. Civ. P 15(a)(2). Applying that
standard, the Second Circuit “has held that a Rule 15(a) motion should be denied only for such
reasons as undue delay, bad faith, futility of the amendment, and perhaps most important, the
resulting prejudice to the opposing party.” Aetna Cas. & Sur. Co. v. Aniero Concrete Co., 404
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F.3d 566, 603 (2d Cir. 2005) (per curiam) (internal quotation marks omitted). Rule 16(b)(4) of
the Federal Rules of Civil Procedure also requires “good cause” for an amendment once a
scheduling order is in place and the time for amendment has passed. Holmes v. Grubman, 568
F.3d 329, 334-35 (2d Cir. 2009). The “primary consideration” under Rule 16(b)’s requirement of
“good cause” is whether the moving party can demonstrate diligence. Kassner v. 2nd Ave.
Delicatessen Inc., 496 F.3d 229, 244 (2d Cir. 2007).
A. There is No Undue Delay in Amending
Delay, without a showing of bad faith or undue prejudice, does not alone provide a basis
for a district court to deny the right to amend. See Agerbrink v. Model Service LLC, 155 F. Supp.
3d 448, 452 (S.D.N.Y. 2016) (quoting State Teachers Retirement Bd. V. Fluor Corp., 654 F.2d 843,
856 (2d Cir. 1981)). The RYI Defendants assert that Plaintiffs could have brought the claims
against Ms. Negita earlier, (ECF 340 at 5-6), but for the reasons below, I find that Plaintiffs
timely moved to amend the complaint after obtaining evidence to support adding Ms. Negita.
First, Plaintiffs initially sought discovery regarding Ms. Negita in mid-2019, because tax
documents produced in May 2019 showed “substantial payments” made to Ms. Negita. (See
ECF 257 affidavit of service of subpoena served on Ms. Negita; ECF 290 (June 19, 2020 Tr.
15:11-20)).
Second, Ms. Negita (and Defendants) did not timely respond to Plaintiffs’ discovery
demands. (See ECF 279, 303, 323). The Court had to order Ms. Negita’s deposition. (ECF 323).

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Plaintiffs did not depose Ms. Negita until November 13, 2019, fourteen days after Plaintiffs filed
the motion for leave to amend adding Ms. Negita as a defendant. (ECF 343-5). 4
Lastly, as no party disputes, Ms. Negita did not frequent the restaurants during working
hours, making it unlikely that Plaintiffs would have known to add her as a defendant originally.
Accordingly, the RYI Defendants have not demonstrated any bad faith on the part of
Plaintiffs.
B. The Amendments Do Not Prejudice Defendants
“In deciding whether [undue] prejudice exists, courts evaluate whether the
amendments would ‘(i) require the opponent to expend significant additional resources to
conduct discovery and prepare for trial; (ii) significantly delay the resolution of the dispute; or
(iii) prevent the plaintiff from bringing a timely action in another jurisdiction.” Agerbrink, 155
F. Supp. 3d at 454 (quoting Monahan v. New York City Dept’ of Corrections, 214 F.3d 275, 284
(2d Cir. 2000)). “Courts also consider the particular procedural posture of the case.” Id. (citing
Ruotolo v. City of New York, 514 F.3d 184, 192 (2d Cir. 2008)).
None of the RYI Defendants’ arguments meet the threshold for undue prejudice to the
existing Defendants. (ECF 340 at 6). Regarding prejudice to Ms. Negita, the RYI Defendants
argue that because she is represented by the same law firm that represents the current-RYI
Defendants, there are conflicts of interest. This argument fails. First, if conflicts of interest exist
between Ms. Negita and the current RYI Defendants, the onus would be on RYI Defendants’
counsel to properly advise Ms. Negita, during their representation of her for discovery, that

In support of their bad faith argument, the RYI Defendants argue incorrectly that Plaintiffs waited until after
Ms. Negita’s deposition to add her as a defendant, but motion was filed on October 30, 2019 and Ms. Negita was
not deposed until November 13, 2019. (ECF 240).
4

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they represented the Defendants and that their primary duty is to the Defendants. See N.Y.
Rules of Prof’l Conduct Rule 1.7, Rule 1.18 (2017). Second, if there are conflicts of interests in
RYI Defendants’ counsel representing both Ms. Negita and the existing RYI Defendants in the
litigation, it is counsel’s duty to withdraw from one or both representations. See id. The Negitas’
choice of counsel – whether or not it was fully informed – cannot be used to foreclose Plaintiffs’
decision to implead a defendant.
The RYI Defendants also argue that the amendment would further prejudice Ms. Negita
because discovery, at the time of filing, was about to close. Ms. Negita was deposed on
November 13, 2019, and Plaintiffs do not argue that they seek additional discovery from
Ms. Negita. Discovery closed on July 13, 2020. (ECF 366). The argument is moot.
C. Futility
The party opposing a motion to amend bears the burden of establishing that
amendment would be futile. See, e.g., Ouedraogo v. A-1 Int’l Courier Serv., Inc., No. 12-CV-5651
(AJN), 2013 WL 3466810, at *6 (S.D.N.Y. July 8, 2013). An amendment is not “futile” if it could
withstand a motion to dismiss under Rule 12(b)(6). See, e.g., Anderson News, L.L.C. v. Am.
Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012); Agerbink, 155 F. Supp. 38 at 456. Put differently, a
proposed claim is futile if, accepting the facts alleged by the party seeking amendment as true
and construing them in the light most favorable to that party, it does not “plausibly give rise to
an entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).
The RYI Defendants argue that the Eighth and Ninth Causes of Action against the Negitas
for violations of DCL § 273 and § 276, respectively, should be rejected on the grounds that
amendment would be futile. The RYI Defendants do not argue that adding Ms. Negita to the
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FLSA and NYLL causes of actions (claims one through seven) would be futile. 5 The DCL claims,
however, would likely be dismissed in a Rule 12(b)(6) motion, making amendment futile.
Accordingly, the motion for leave to amend is granted in part and denied in part.
i. New York Debtor and Creditor Law § 273, transfer or obligation
voidable as to present or future creditor
To survive a Rule 12(b)(6) motion and the futility threshold, Plaintiffs must plead facts
that suggest “if a conveyance is made without fair consideration and the transferor is a debtor
who is insolvent or will be rendered insolvent by the transfer, the conveyance is deemed
constructively fraudulent.” Amusement Industry, Inc. v. Midland Ave. Assoc., LLC, 820 F. Supp.
2d 510, 526 (S.D.N.Y. 2011) (quoting Capital Distributions Servs. Ltd. v. Ducor Express Airlines,
Inc., 440 F. Supp. 2d 195, 203 (E.D.N.Y. 2006)). Claims under DCL § 273 are governed by Rule
8(a) and do not require pleading with particularity, i.e. a showing of intent. See Ray v. Ray, No.
18-cv-7035 (GBD), 2019 WL 1649981, at *6 (S.D.N.Y. Mar. 28, 2019) (citing Picard v. Cohman

Because the RYI Defendants do not argue the FLSA and NYLL claims are futile as alleged against Ms. Negita, I will
only briefly discuss summarize the allegations against her. In short, Plaintiffs allege that Ms. Negita is an
“employer” because she
5

had the discretionary authority to create and enforce personnel decisions on behalf of RYI and
Y&S, operating as Ramen-Ya, and did exercise such authority, including but not limited to: hiring
and terminating employees, setting wages, authorizing issuance of wages, maintaining employee
records, and otherwise controlling the terms and conditions of employment for all Plaintiff and
other employees of RYI and Y&S. (ECF 328-2 PTAC ¶ 35).
Additionally, Plaintiffs allege that “[o]n a regular basis during the [p]eriod pertinent to this action, Ms. Negita
visited Ramen-Ya . . ., held meetings with Maki, discussed employment matters including employment wages, and
took control of the funds in the cash registers and tips of that restaurant several times a week.” (ECF 328-2 PTAC
¶ 65; see also ¶¶ 66, 157, 163 (additional allegations of Ms. Negita’s duties)). Plaintiffs further allege that
Ms. Negita devised the compensation method by which the Plaintiffs were denied wages and tips. (ECF 328-2 PTAC
¶¶ 99-106).

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Sec. Corp. (In re Bernard L. Madoff Inv. Sec. LLC), No. 11-misc-337 (TPG), 2012 WL 5511952, at
*3 (S.D.N.Y. Nov. 14, 2012)).
Plaintiffs fail to plead that there was a conveyance made without fair consideration. For
precisely the reason that their FLSA and NYLL claims state a claim, the DCL § 273 claim fails (and
Plaintiffs do not plead the claims in the alternative): Ms. Negita is an employer. Plaintiffs claim
that “[Mr.] Negita and Ms. Negita conveyed substantial sums of money disguised as
remuneration from RYI and from Y&S to Ms. Negita which were not legitimate wage payments
since Ms. Negita did not render any services for the wages she received.” (ECF 328-2 PTAC
¶ 248). These allegations, however, conflict with Plaintiffs’ allegations that Ms. Negita is a
manager and made personnel decisions, such as the amount of compensation, for the
employees of the restaurants. See, e.g., ECF 328-2 PTAC ¶ 65 (Ms. Negita “discussed
employment matters including employment wages, and took control of the funds in the cash
registers and tips”), ¶¶ 99-106 (allegations that Ms. Negita determined the server’s
compensation and deducted from the compensations). Plaintiffs have not pleaded facts
showing that there was no fair consideration for the services that Ms. Negita, the owner of RYI
and a manager of the restaurants, allegedly provided. Accordingly, Plaintiffs do not plead the
required elements of a DCL § 273 claim, which requires “a conveyance [ ] made without fair
consideration.” 6 See Amusement Industry, 820 F. Supp. 2d at 526; cf. Liu v. Chan, No. 18-cv5044 (KAM) (SJB), 2020 WL 978857, at *12 (E.D.N.Y. Feb. 28, 2020) (upholding a DCL 273 claim
where plaintiff alleged a post-litigation transfer of assets by defendants).

Both Plaintiffs and Defendants use evidence gathered in discovery to support their arguments. Because a Rule
12(b)(6) motion is limited to the complaint, the Court did not consider that evidence.

6

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Plaintiffs also do not allege any facts that establish RYI and Y&S are insolvent, i.e. unable
to pay debts, or were rendered insolvent by the transfers to Ms. Negita. See Kim v. Yoo, 776 F.
App’x 16, 22 (2d Cir. 2019) (“DCL § 271, which defines insolvency for the purposes of DCL § 273,
sets forth an objective standard: ‘A person is insolvent when the present fair salable value of his
assets is less than the amount that will be required to pay his probable liability on existing debts
as they become absolute and matured.’”). Plaintiffs state that “[u]pon information and belief,
the payments made to Ms. Negita by RYI and Y&S for each year between 2014 and 2017 was
close to or equal to the amount of retained cash for each entity at the end of each year” and
“Ms. Negita and her husband emptied the coffers of RYI and Y&S of all available cash.” (ECF 328
PTAC ¶¶ 174, 176). However, Plaintiffs do not plead any facts that RYI and Y&S would be unable
to pay their liabilities on debts due or would be unable to pay because of the cash transfer(s).
See Amusement Industry, 820 F. Supp. 2d at 526 (debtor needs to either be insolvent or
rendered insolvent by the transfer).
ii. New York Debtor and Creditor Law § 276, conveyance made with intent
to defraud
DCL § 276 requires that defendants had “actual intent, as distinguished from intent
presumed in law, to hinder, delay, or default either present or future creditors.” See Sullivan v.
Kodsi, 373 F. Supp. 3d 302, 306 (S.D.N.Y. 2005); see also Qingdao, 2020 WL 1435218, at *10
(granting motion to dismiss DCL § 276 claim against most defendants for failure to state a
claim). Rule 9(b)’s heightened particularity standards requires that the “complaint must specify
the ‘particulars’ of the alleged fraud—including, for example, the time, place, particular
individuals involved, and specific conduct at issue. Sullivan, 373 F. Supp. 2d at 306 (citing United
Feature Syndicate, Inc. v. Miller Features Syndicate, Inc., 216 F. Supp. 2d 198, 221 (S.D.N.Y.
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2002)). Claims under DCL § 276 are governed by Rule 9(b) and require pleading with
particularity. See Qingdao Tangbo Garments Co., Ltd. v. PRG Nouveau, LLC, 2020 WL 1435218,
at *3 (S.D.N.Y. Mar. 24, 2020) (“[Plaintiff’s] claim of fraudulent transfer under section 276 of the
New York Debtor and Creditor Law … must be pleaded with the particularity required of Rule
9(b).”) (internal citations omitted); Sullivan v. Kodsi, 373 F. Supp. 2d 302, 306 (S.D.N.Y. 2005)
(denying motion to dismiss DLC § 276 claim). Due to the difficulty of proving actual intent to
hinder, delay, or defraud creditors, plaintiffs may rely on “badges of fraud,” or “circumstances
so commonly associated with fraudulent transfers that their presence gives rise to an inference
of intent.” Qingdao, 2020 WL 1435218, at *4 (denying motion to dismiss DLC § 276 to all
defendants for whom plaintiff identified badges of fraud) (citing Wall St. Assoc. v. Brodsky, 257
A.D.2d 526, 529 (1st Dep’t 1999)). Badges of fraud include, inter alia, “a close relationship
between the parties to the alleged fraudulent transaction; a questionable transfer not in the
usual course of business; inadequacy of the consideration; . . . and retention of control of the
property by the transferor after the conveyance.” In re Sharp Int’l Corp., 403 F.3d 43, 56 (2d Cir.
2005) (citing Wall St. Ass. v. Brodsky, 257 A.D.2d 526, 529 (1st Dep’t 1999)).
Plaintiffs’ proposed DCL § 276 claim, which has a higher pleading standard, fails for the
same reasons their § 273 claim fails.7 Plaintiffs cannot have their proverbial cake and eat it too:
allege FLSA and NYLL claims against Ms. Negita, claiming she is an employer and made
employment decisions, but also claim that she did not provide fair consideration for her
compensation. Courts that have upheld a DCL claim in conjunction with an FLSA claim have all

The New York Legislature enacted the Uniform Voidable Transactions Act Amendments in 2019 (“UVTA”) and
repealed Article 10 (§§ 270-281) of New York’s DCL. The UVTA governs acts after April 4, 2020, and do not apply to
alleged acts herein.

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required pleading more than plaintiffs’ belief that a purported employer was provided
compensation beyond what the plaintiffs claim is fair. See e.g., Liu, 20202 WL 978857, at *2
(defendant transferred “all [his] assets” to specifically avoid judgment in the instant action);
Kim v. Yoo, 311 F. Supp. 3d 598, 602 (S.D.N.Y. 2018) (FLSA judgment debtor transferred real
property interests to family members). Accordingly, Plaintiffs have not pleaded fraud or badges
of fraud.
III.

Motion for Attachment
Rule 64 of the Federal Rules of Civil Procedure provides that the remedy of attachment

is governed by state law.8 The relevant New York statute is CPLR Section 6212, which states
that to be successful on a motion for attachment, a plaintiff must demonstrate “[1] that there is
a cause of action, [2] that it is probable that the plaintiff will succeed on the merits, [3] that one
or more grounds for attachment provided in Section 6201 exist, and [4] that the amount
demanded from the defendant exceeds all counterclaims known to the plaintiff.” See In re
Amaranth Nat. Gas Comm. Litig., 711 F. Supp. 2d 301, 305 (S.D.N.Y. 2010) (citing CPLR
§ 6212(a)). Plaintiffs argue that CPLR 6201(1), which states “the defendant is a nondomiciliary
residing without the state, or is a foreign corporation not qualified to do business in the state,”
applies.
Because attachment is a harsh remedy, Plaintiffs’ burden of proving a right to
attachment is high and construed against those seeking attachment. Further, attachment is
discretionary to the trial court. See id.; DLJ Mortg., 594 F. Supp. 2d at 319 (denying attachment

Rule 72(a) governs any objections. See Eviner v. Eng, No. 13-cv-6940 (ERK), 2015 WL 4461022, at *1 (E.D.N.Y.
2015).

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because plaintiffs failed to demonstrate the probability of success on the underlying claims);
Musket Corp. v. PDVSA Petroleo, S.A., 512 F. Supp. 2d 155, 160 (S.D.N.Y. 2007) (same).
However, “where a statutory ground for attachment exists and both need and likelihood of
success are established, [a district court's] discretion does not permit denial of the remedy for
some other reason, at least absent extraordinary circumstances and perhaps [not] even then.”
In re Amaranth Natural Gas Commodities Litig., 711 F. Supp. 2d at 305-06 (alterations in
original).
For the reasons stated below, Plaintiffs’ motion is denied at this time because Plaintiffs
have not shown that one or more grounds for attachment in CPLR 6201 exist. Because the
requirements for attachment are conjunctive, I need not analyze whether Plaintiffs are likely to
succeed on the merits.
A. Plaintiffs Have Not Shown the Need for “Drastic Action” Under CPLR 6201(1)
Where a nonresident has consented to jurisdiction, an attachment brought under CPLR
6201(1) “should issue only upon a showing that drastic action is required” such as an
“additional showing that something, whether it is a defendant’s financial position or past and
present conduct, poses a real risk of enforcement of a future judgment.” Amaranth, 711 F.
Supp. 2d at 306. Plaintiffs bear the burden of showing that there is reason to believe that
Defendant will not satisfy any judgment entered against them. See Strategic Growth Int’l Inc. v.
RemoteMDx Inc., No. 06-cv-3915, 2008 WL 4179235, at *7 (S.D.N.Y. Sept. 10, 2008).
It is undisputed that Mr. Negita and Kobayashi are non-New York residents who have
consented to New York jurisdiction. Therefore, Plaintiffs must make an “additional showing that
something, whether it is a defendant’s financial position or past and present conduct, poses a
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real risk of enforcement of a future judgment.” Amaranth, 711 F. Supp. 2d at 306. Plaintiffs
argue, in conclusory fashion, that there is a “significant risk” that Defendants will not be able to
satisfy a judgment absent attachment. (ECF 375 at 6-8). Plaintiffs argue that any assets
Mr. Negita and Kobayashi have to satisfy the judgment are located outside New York. (ECF 275
at 7). Plaintiffs further argue that the assets of the remaining defendants “are uncertain.” (ECF
275 at 7). They cite that the corporate defendants, RYI and Y&S, lease their premises and
“presumably” have limited assets other than kitchen equipment. (ECF 275 at 7). Additionally,
these restaurants collectively have annual gross revenues of “at most $1.2 million per year” and
“taxable income of no more than $35,000” each. (ECF 275 at 7; ECF 274 at ¶ 67). The remaining
individual defendants, Maki and Kora, Plaintiffs argue, have “no significant assets” in New York.
(ECF 275 at 7; ECF 274 at ¶¶ 68-69).
Plaintiffs have not shown that Defendants cannot satisfy a judgment against them. 9 See
In re Amaranth, 711 F. Supp 2d at 305 (“Plaintiffs’ burden of proving the right to an attachment
is high” and “construed strictly against those who seek to involve the remedy.”) (internal
quotations omitted). Ms. Rostami’s Declaration (ECF 274) states only that she performed a
“diligent search” without elaboration as to what steps Plaintiffs took to confirm certain facts.
E.g. “Based on a diligent search, Plaintiffs have not been able to discover any assets held by
Defendant Maki [and Kora] within the State of New York.” (ECF 274 at ¶¶ 68-69).
Most importantly, since filing the motion for an order of attachment, Plaintiff filed their
motion for leave to amend the complaint, which has been granted-in part, adding Ms. Negita to

If Plaintiffs’ arguments are to be credited, then all FLSA actions involving small restaurants would require an order
of attachment.

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Case 1:17-cv-02406-LJL-OTW Document 367 Filed 08/05/20 Page 15 of 15

the action. Ms. Negita could also have assets (which Plaintiffs have not analyzed) that could be
used to satisfy a judgment. Plaintiffs’ argument that Defendants have been transferring assets
to Ms. Negita to frustrate a judgment is moot now that she will be a party to the suit.
Because Plaintiffs have not shown that one or more grounds for attachment under
CPLR 6201 exist, I deny the motion for an order of attachment.
IV.

Conclusion
For the reasons stated above, Plaintiffs’ motion to file a TAC is GRANTED IN PART and

DENIED IN PART. Plaintiffs are directed to file the PTAC without the proposed eighth and ninth
claims within fourteen (14) days of this Order, and the motion for an order of attachment is
DENIED. Defendants’ response to the TAC is governed by Rule 15.
The parties are directed to appear for a telephonic status conference on September 15,
2020 at 4:00 pm; dial-in [phone], access code 1582687. Parties should submit a joint
status letter seven (7) days before, or by September 8, 2020.
The Clerk of Court is directed to close ECF 273, ECF 310, and ECF 327.

SO ORDERED.

s/ Ona T. Wang
Ona T. Wang
United States Magistrate Judge

Dated: August 5, 2019
New York, New York

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