Gao v. Graceful Services, Inc. et al
Filing
84
OPINION AND ORDER re: 46 MOTION to Dismiss of all claims against Graceful II, filed by Graceful II Service Inc. The Court DISMISSES without prejudice Gao's ADEA claims for alleged violations before August 4, 2017 (under Count X). Gao may file a second amended complaint no later than November 8, 2019, developing her theory of liability under the ADEA based on a continuing violations theory. Graceful II's motion is DENIED as to all other claims (Counts I-IX). Accordingl y, the stay of discovery as to defendant Graceful II entered by the Court's May 1, 2019 Order (ECF No. 62) is LIFTED. All parties are ORDERED to appear for a status conference on Tuesday, November 12, 2019, at 10:00 a.m. in Courtroom 219, Thurgood Marshall Courthouse, 40 Foley Square, New York, New York. The Clerk of Court is respectfully directed to terminate the motion at ECF No. 46. (Signed by Magistrate Judge Sarah Netburn on 10/22/2019) (ras)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------X
10/22/2019
MEI YUE GAO,
18-CV-4005 (SN)
Plaintiff,
OPINION AND ORDER
-againstGRACEFUL SERVICES, INC., et al.,
Defendants.
------------------------------------------------------------X
SARAH NETBURN, United States Magistrate Judge.
Plaintiff Mei Yue Gao (“Gao”) sues her former employers Graceful Services, Inc.
(“Graceful I”) and Grace Macnow (“Macnow”), as well as Graceful II Service (“Graceful II”)
(collectively, “Defendants”). Gao alleges Defendants committed various labor law violations
under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq., and the New York
Labor Law (“NYLL”), N.Y. Lab. Law § 190 and § 200 et seq.; and discriminated against her in
violation of the New York State Human Rights Law (“NYSHRL”), N.Y. Exec. Law §§ 290 et
seq.; the New York City Human Rights Law (“NYCHRL”), N.Y.C. Admin. Code §§ 8-107 et
seq.; and the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621, et seq. See
ECF No. 34 (hereinafter “Compl.”).
Graceful II moves to dismiss the complaint under Federal Rules of Civil Procedure
12(b)(1) and 12(b)(6). ECF No. 46 (hereinafter “Def. Motion”). Graceful II argues that Gao does
not state a claim for Graceful II’s successor liability for alleged violations by Graceful I or
Macnow. See ECF No. 47 (hereinafter “Def. Mem.”) at 4-12. Graceful II also argues that the
ADEA claim is time-barred as to Graceful I, that the Court should decline supplemental
1
jurisdiction over the state and city discrimination claims, and that Gao does not state a claim for
relief under any discrimination law for Graceful II’s failure to hire her. 1 See Def. Motion.
For the following reasons, Graceful II’s motion to dismiss is DENIED in part and
GRANTED in part.
BACKGROUND
I.
Factual Allegations
The Court assumes the facts alleged by Gao in her pleadings to be true for the purposes
of deciding this motion to dismiss. See Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009). The Court
does not consider additional facts alleged by the plaintiff in her opposition that do not appear in
her pleadings. See Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993).
A. Gao’s Claims Against Graceful Services
Graceful I operated a spa known as “Graceful Services” located in Manhattan, New
York, from a date unknown until December 2017, when Graceful II formally acquired ownership
of and began operating the spa. Graceful I employed Gao as a massage therapist at the spa
beginning in 2012. Compl. ¶¶ 3, 14.
1. Allegations of Wage Violations
Gao worked at Graceful I from 2012 until her termination in 2017. Compl. ¶¶ 38, 55, 60.
When Gao agreed to begin work for Graceful I in 2012, Graceful I promised in writing to pay
1
Gao has withdrawn the portion of her ADEA claim alleging Graceful II improperly failed to hire her based on her
age. See Compl. ¶ 125; Pl. Opp. at 13. Without specific guidance from either party in its brief, the Court construes
Gao’s withdrawal of her direct ADEA claim against Graceful II to include a withdrawal of any and all claims
against Graceful II on a theory of successor liability for Graceful I’s alleged wrongful termination under either the
ADEA, the NYCHRL, or the NYSHRL, because of the intertwined nature of the those potential claims. See Compl.
¶¶ 113-14, 119-120, 125. However, as Gao clarifies in her opposition to this motion, she retains the claims for
failure to hire against Graceful II on a theory of successor liability under the NYSHRL and the NYCHRL. See Pl.
Opp. at 13.
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Gao $20.00 per hour for 20 hours of work per week. Id. ¶ 40. Gao alleges that throughout her
employment at Graceful I, however, she worked as many as 12 hours per day and 60 hours per
week performing massages and other cleaning and maintenance tasks at the spa. Id. ¶¶ 1-2.
Graceful I required Gao and other massage therapists employed by the company to arrive at the
spa between 9:00 and 11:00 a.m. and to work until 9:00 or 10:00 p.m. Id. ¶ 43. Gao claims that
she was not paid for (1) any work other than massages, such as cleaning, maintenance, and time
she was required to remain on the premises (which together totaled well over half of the hours
she worked); or (2) any work in excess of 40 hours per week. Id. ¶¶ 2, 45-47. Combined, this
resulted in Graceful I’s non-payment of approximately 35 to 40 hours of work each week over
the course of five years. Id. ¶¶ 38, 45, 55.
2. Allegations of Age Discrimination
Gao also claims that due to her age (62 years old at the time of her complaint),
supervisors at Graceful I regularly assigned her to perform fewer massages than her coworkers.
Compl. ¶ 3. Because she was paid only for the time performing massages, this discriminatory
assignment caused her to receive reduced wages. Id ¶ 3. When Gao raised this issue with
Macnow and requested additional massage assignments, Macnow told Gao not to complain
because Gao was “so old” she was “lucky to even have a job.” Id. ¶ 57. Gao also claims that near
the end of 2015, a manager named Nancy told Macnow “the company [had] to get rid of these
old people,” referring to Gao. Id. ¶ 58.
B.
Successor Liability as to Graceful II
Gao alleges that near the end of December 2017, Graceful I closed the business
temporarily before resuming substantially the same operations as “Graceful II” less than one
week later. Compl. ¶ 28. Upon Graceful II’s re-opening of the spa, Macnow, who had an
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ownership interest in Graceful II and continued hiring and firing authority, told Gao not to return
to work. Id. ¶ 60. Graceful II continued to operate the spa under the name “Graceful Services” at
same the location as the prior spa, 1095 2nd Avenue, Floor 2, New York, NY, 10002. Id. ¶ 29.
Graceful II offered the same products—massages, facials, body scrubs and waxing—as Graceful
I, using Graceful I’s furniture and products. Id. ¶¶ 26, 29. With the exception of Gao, Graceful II
employed the same individuals as Graceful I, including managers Sherry and Nancy, 2 and used
Graceful I’s online employee portal for employee management. Id. ¶¶ 31, 32, 33, 35. Graceful II
used the same website as Graceful I to promote its business to the public. Id. ¶ 34.
DISCUSSION
The complaint alleges: (1) minimum wage violations under the FLSA and the NYLL
(Counts I & IV); (2) overtime compensation violations under the FLSA and the NYLL (Counts
II & V); (3) unpaid promised wages under the NYLL (Count III); (4) spread-of-hours pay
violations under the NYLL (Count VI); (4) wage notice and wage statement violations under the
NYLL (Count VII); and (5) age discrimination violations under the NYSHRL, NYCHRL, and
ADEA (Counts VIII, IX, & X). Compl. ¶¶ 70–127.
Graceful II argues that the Court should dismiss Counts I through VII of the complaint as
Gao fails to state a claim for Graceful II’s successor liability vis-à-vis Graceful I. See Def.
Motion; Def. Mem. at 4-12. Graceful II also argues that the Court should dismiss Counts VIII
through X of the complaint because: (1) Gao’s ADEA claim is time-barred as applied to Gao’s
underlying allegations against Graceful I (2) the dismissal of Gao’s ADEA claim additionally
warrants dismissal of Gao’s supplemental state and city claims on jurisdictional grounds; and (3)
2
In the complaint, Gao refers to these two individuals by first name only.
4
Gao does not state a claim of discrimination based on Graceful II’s decision not to employ her.
Def. Mem. at 13.
I.
Rule 12(d)
As a threshold issue, Graceful II submits more than fifty pages of supplemental
information in support of its motion. ECF Nos. 48-49 (Affidavit of Meng Ling, Affirmation of
Ge Qu & Exhibits A-H). Rule 12(d) gives district courts two options when a party presents
matters outside the pleadings on a motion to dismiss under Rule 12(b)(6): a court may either (1)
exclude the additional material and decide the motion on the complaint alone; or (2) convert the
motion to one for summary judgment under Rule 56 and afford all parties the opportunity to
present supporting material. Fed. R. Civ. P. 12(d). The Court excludes Graceful II’s additional
material and rules on the motion without considering it.
II.
Legal Standard
In deciding a motion to dismiss pursuant to Rule 12(b)(6), a court must take “factual
allegations [in the complaint] to be true and draw[] all reasonable inferences in the plaintiff’s
favor.” Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009) (citation omitted). To state a legally
sufficient claim, a complaint must allege “enough facts to state a claim for relief that is plausible
on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007). “A claim has facial
plausibility when the plaintiff pleads 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) (citation omitted). But a pleading that only “offers ‘labels and conclusions’ or ‘a
formulaic recitation of the elements of a cause of action will not do.’” Id. (quoting Twombly,
550 U.S. at 555). If the plaintiff “ha[s] not nudged [his] claims across the line from conceivable
to plausible, [the] complaint must be dismissed.” Twombly, 550 U.S. at 570. Further,
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“complaints relying on the civil rights statutes are insufficient unless they contain some specific
allegations of fact indicating a deprivation of rights, instead of a litany of general conclusions
that shock but have no meaning.” Barr v. Abrams, 810 F.2d 358, 363 (2d Cir. 1987).
In determining the sufficiency of a complaint, the Court may consider “the factual
allegations in [the] . . . complaint, . . . documents attached to the complaint as an exhibit or
incorporated in it by reference, . . . matters of which judicial notice may be taken, [and]
documents either in plaintiffs’ possession or of which the plaintiffs had knowledge and relied on
in bringing suit.” Brass, 987 F.2d at 150.
III.
Successor Liability for Labor Claims
In its motion to dismiss, Graceful II argues there is no successor liability between
Graceful I and Graceful II and that therefore all claims against Graceful II that stem from acts or
omissions committed by Graceful I should be dismissed. Def. Mem. at 2. The Court of Appeals
for the Second Circuit has not established the proper test for successor liability in the FLSA
context. See Battino v. Cornelia Fifth Ave., LLC, 861 F. Supp. 2d 392, 400 (S.D.N.Y. 2012).
Federal courts sitting in New York therefore employ either a New York common law standard
(the “traditional test”) or a “substantial continuity” test in determining whether a defendant may
be held liable for a previous employer’s labor law violations. See Xue Ming Wang v. Abumi
Sushi, Inc., 262 F. Supp. 3d 81, 87-89 (S.D.N.Y. 2017). Because dismissal is not appropriate
under either standard, the Court need not decide which test applies to FLSA claims.
A. Traditional Test
Under New York law and traditional common law, “the purchaser of a corporation’s
assets does not, as a result of the purchase, ordinarily become liable for the seller’s debts.” Cargo
Partner AG v. Albatrans, Inc., 352 F.3d 41, 45 (2d Cir. 2003). A successor corporation may,
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however, be held liable for the obligations of its predecessor if any of the following conditions
are present: “(1) it expressly or impliedly assumed the predecessor’s tort liability, (2) there was a
consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere
continuation of the selling corporation, or (4) the transaction is entered into fraudulently to
escape such obligations.” New York v. Nat’l Serv. Indus., Inc. (“NSI”), 460 F.3d 201, 209 (2d.
Cir. 2006) (quoting Schumacher v. Richards Sheer Co., 59 N.Y.2d 239, 245 (1983)). As to the
first factor of the traditional test, Gao does not allege that Graceful II expressly or impliedly
assumed Graceful I’s tort liability. As to the fourth factor of the traditional test, Gao does not
allege that any ownership transaction involving Graceful II was entered into fraudulently to
escape liability. Gao does, however, plausibly state that it was Graceful II’s intent to continue
Graceful I’s operations amounting to a merger or mere continuation of the selling corporation.
Courts in this circuit have held that the “de facto merger” and “mere continuation”
exceptions—(2) and (3) above—are “so similar that they may be considered a single exception.”
Cargo Partner AG, 352 F.3d at 45 n.3 (citing cases); see also Battino, 861 F. Supp. 2d at 401
(applying the same four-factor test to the de facto merger and continuity of ownership claims
under the traditional test). To determine whether a mere continuation or a de facto merger has
occurred, courts consider the following factors: “(1) continuity of ownership; (2) cessation of
ordinary business and dissolution of the acquired corporation as soon as possible; (3) assumption
by the purchaser of the liabilities ordinarily necessary for the uninterrupted continuation of the
business of the acquired corporation; and (4) continuity of management, personnel, physical
location, assets and general business operation.” NSI, 460 F.3d at 209. These factors should be
“analyzed in a flexible manner that disregards mere questions of form and asks whether, in
substance, it was the intent of the successor to absorb and continue the operation of the
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predecessor.” Nettis v. Levitt, 241 F.3d 186, 194 (2d Cir. 2001), overruled on other grounds,
Slayton v. Am. Express Co., 460 F.3d 215 (2d Cir. 2006) (internal quotations omitted). While the
factors are not to be analyzed in a purely rigid manner, this Court has noted that “continuity of
ownership is the essence of a merger.” Franco v. Jubilee First Avenue Corp., No. 14-CV-07729
(SN), 2016 WL 4487788, at *8 (S.D.N.Y. Aug. 25, 2016) (quoting Cargo Partner AG, 352 F.3d
at 47). This continuity of ownership may, however, be imperfect, “as long as there is at least
partial commonality of ownership between the predecessor and successor organizations.” Id.
Regarding the first prong of the de facto merger test, Gao alleges there was continuity of
ownership between Graceful I and Graceful II as Macnow held a 100% ownership interest in
Graceful I as well as a continuing partial ownership interest (of an unspecified proportion) in
Graceful II. Compl. ¶¶ 17-18. See Franco, 2016 WL 4487788, at *8 (holding that an employer
who held 100% ownership interest in the predecessor business and a one-third interest in the
successor business satisfied the continuation of ownership prong of the de facto merger test).
Regarding the second prong of the de facto merger test, Gao suggests there was a cessation of
ordinary business and implies a dissolution of Graceful I quickly thereafter because Graceful I
closed merely “several days” before Graceful II opened for business using the same premises
(including many of Graceful I’s physical assets), with at least one continued owner (Macnow).
Compl. ¶¶ 28-29, 35. See NSI, 460 F.3d at 209 (noting that “cessation of ordinary business and
dissolution of the acquired corporation as soon as possible” are “hallmarks” of a de facto
merger). Gao does not allege Graceful II assumed Graceful I’s “liabilities ordinarily necessary
for the uninterrupted continuation of the business of the acquired corporation.” Gao does,
however, claim significant “continuity of management, personnel, physical location, assets and
general business operation” between Graceful I and Graceful II. Compl. ¶¶ 29-30, 34-35. Sherry
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and Nancy, former managers at Graceful I, became managers at Graceful II. Id. ¶ 32. Macnow
retained authority to hire, fire and perform managerial duties at Graceful II. Id. ¶ 33. Graceful II
also continued to employ several other massage therapists from Graceful I. Id. ¶¶ 30, 61.
Graceful II offers substantially the same services to the public as did Graceful I and utilizes the
same furniture and products as Graceful I. Id. ¶¶ 29, 35. Graceful II uses the same public website
and private online employee management portal as did Graceful I. Id. ¶ 34. Because the de facto
merger test requires continuity of general business operations, not complete identity or
uniformity in every material characteristic, Gao’s allegations tend to support a claim of successor
liability under the fourth factor. Franco, 2016 WL 4487788, at *9 (internal quotations omitted).
On balance, because Gao pleads sufficient facts alleging it was Graceful II’s intent to
absorb and continue the operations of Graceful I, Gao’s complaint plausibly establishes
successor liability under the traditional test.
B. Substantial Continuity Test
The substantial continuity test is more flexible than the traditional test and “focus[es] on
whether the new company has acquired substantial assets of its predecessor and continued,
without interruption or substantial change, the predecessor’s business operations.” Fall River
Dyeing & Finishing Corp. v. N.L.R.B., 482 U.S. 27, 43 (1987). The inquiry is “primarily factual
in nature” and based on the totality of circumstances. Id. Courts applying the substantial
continuity test generally look to nine factors:
(1) whether the successor company had notice of the charge or
pending lawsuit prior to acquiring the business or assets of the
predecessor; (2) the ability of the predecessor to provide relief; (3)
whether there has been a substantial continuity of business
operations; (4) whether the new employer uses the same plant; (5)
whether [it] uses the same or substantially the same work force; (6)
whether [it] uses the same or substantially the same working
conditions; (8) whether [it] uses the same machinery, equipment,
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and methods of production; and (9) whether [it] produces the same
product.
Franco, 2016 WL 4487788, at *9 (citing Bautista v. Beyond Thai Kitchen, Inc., 14-CV-4335
(LGS), 2015 WL 5459737, at *5 (S.D.N.Y. Sept. 17, 2015)). “No one factor is controlling, and it
is not necessary that each factor be met to find successor liability.” E.E.O.C. v. Barney Skanska
Const. Co., 99-CV-2001 (DC), 2000 WL 1617008, at *2 (S.D.N.Y. Oct. 27, 2000).
Graceful II’s argument regarding the substantial continuity test is twofold. First, Graceful
II argues that factors (1) and (2)—whether the successor company had notice of the claims and
whether the predecessor is able to provide the complainant relief—are “indispensable.” Def.
Mem. at 5. Second, Graceful II argues that Gao does not sufficiently plead facts establishing
either of these factors. Id. at 5-6. Because the Court finds that Gao sufficiently pleads facts
establishing factors (1) and (2) (among others), it need not determine whether those factors are
“indispensable.”
First, Graceful II could not have had notice at the time of the December 2017 transaction
that this lawsuit was pending because Gao filed the original complaint in May 2018. See ECF
No. 1. Nonetheless, courts in this district have held that “the purchaser need not have actual
notice of a pending lawsuit for purposes of the substantial continuity test if the purchaser had
knowledge of a violation of law that could give rise to a suit.” See Abumi Sushi Inc., 262 F.
Supp. 3d at 92. A corporate successor may therefore be liable for certain violations when it had
knowledge of its predecessor’s acts giving rise to the claims. See Battino, 861 F. Supp. 2d at 407
(holding that in the case of a complete failure to pay wages, successor’s prior knowledge of the
failure to pay wages alone was sufficient to put that successor on notice of potential liability).
The facts alleged in Gao’s complaint, including that Macnow was an owner of Graceful I
and a partial owner of Graceful II, supports an inference—drawn in Gao’s favor, as it must be at
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the motion to dismiss stage—that Graceful II had knowledge of the alleged wage and hour
violations prior to this suit’s filing. To begin, Gao states that Macnow employed Gao at Graceful
Services I between 2012 and 2017. Compl. ¶ 11. As the owner of Graceful I, Macnow had
certain managerial responsibilities, including hiring and firing. Id. ¶¶ 17, 64. Macnow had the
authority to set the terms of Gao’s employment and was responsible for determining the salary
paid to employees, including Gao. Id. ¶¶ 62-63. Gao further alleges that Macnow had an
ownership interest and managerial role regarding Graceful II. Id. ¶ 33. In other words, Gao’s
theory, as alleged in the complaint, is that Graceful II had actual knowledge of the wage and
hour violations because Macnow, a partial owner of Graceful II, was the same owner and
manager responsible for those violations against Gao during her employment at Graceful I.
Therefore, Gao plausibly states that Graceful II had notice of the claims raised in the Counts I to
VII of the complaint and the first prong of the substantial continuity test is satisfied.
Second, Graceful II disputes that Gao plausibly alleges Graceful I’s inability to provide
relief under the circumstances. Def. Mem. at 10. Gao claims “there is a question” as to Graceful
[I]’s ability to provide relief for [Gao’s] claims because the company has formally ceased
operations. Compl. ¶ 37. Further, the complaint raises a question as to whether the formal
business of Graceful I continues to exist. Id. ¶¶ 28-29. See Franco, 2016 WL 4487788, at *10
(finding the “ability of the predecessor to provide relief” factor satisfied where “the
[predecessor] company is no longer in operation” even if there is substantial evidence of
continuity of the predecessor’s business after its closure). For these reasons, the second prong of
the substantial continuity test is satisfied.
As to the remaining applicable factors, Gao alleges significant facts supporting
assignment of successor liability to Graceful II, as discussed above. See Compl. ¶¶ 29-32, 34-35.
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Graceful II does not challenge Gao’s allegations as to the remaining factors of the substantial
continuity test. See Def. Mem. at 4-10. Therefore, based on a totality of the circumstances
analysis, Gao plausibly alleges successor liability for Graceful II on Counts I-VII in the
complaint. See Franco, 2016 WL 4487788, at *10 (finding successor liability based on a totality
of the circumstances analysis under the substantial continuity test when only the first factor was
disputed, and all other factors supported substantial continuity of the predecessor business).
IV.
Age Discrimination
A. Statute of Limitations
As a threshold issue, Graceful II argues that Gao’s ADEA claim should be dismissed on
the ground that Gao failed to file a charge of discrimination against defendant Graceful I with the
Equal Employment Opportunity Commission (“EEOC”) within the 300-day limit prescribed by
the ADEA. Def. Mem. at 15. Because Graceful II’s only liability under the ADEA is successor
liability stemming from alleged acts by Graceful I, if Gao’s ADEA claim against Graceful I is
time-barred, it should be dismissed against Graceful II. Id. In so arguing, Graceful II limits Gao’s
claim that she received discriminatory massage assignments to a single incident occurring on a
date in the “second half of 2015” upon which Gao complained to Macnow about receiving fewer
appointments than her coworkers. Id. Measuring time from this date, Graceful II contends that
the applicable 300-day window within which Gao must have filed her claim with the EEOC
closed before Gao filed the complaint in May 2018. Id.
“The pleading requirements of the Federal Rules of Civil Procedure do not . . . compel a
litigant to anticipate potential affirmative defenses, such as the statute of limitations, and to
affirmatively plead facts in avoidance of such defenses.” Abbas v. Dixon, 480 F.3d 636, 640 (2d
Cir. 2007). Instead, “Rule 8 requires a plaintiff to provide only ‘a short and plain statement of the
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claim showing that the pleader is entitled to relief.’” Id. (quoting Fed. R. Civ. P. 8). In states
including New York, where a state agency has authority to address employment age
discrimination charges, the statute of limitations for filing with the EEOC is 300 days from the
date of the discriminatory conduct. See 29 U.S.C. § 626(d)(1)(B); Kassner v. Second Avenue
Delicatessen, 496 F.3d 229 (2d Cir. 2007) (describing the applicable 300-day statute of
limitations in New York for filing an age discrimination charge under the ADEA with the
EEOC).
The issues raised in this motion to dismiss are twofold. The first issue is whether Gao has
presented any facts indicating that she filed her charge with the EEOC within the requisite 300day deadline from the date of any discriminatory conduct by Graceful I. The second issue is
whether Gao plausibly alleges a “continuing violation” such that any claims of discriminatory
conduct occurring more than 300 days before Gao’s EEOC complaint are nonetheless timely
alleged by that complaint because they occurred as a continuous practice and policy of
discrimination.
i. Discrimination Within 300 Days Before Gao’s EEOC Complaint
Gao alleges that during her employment, she received fewer massage assignments
because of her age. Compl. ¶ 3, 54. Gao alleges that she complained to Macnow about this
practice in 2015. Id. She does not, however, allege specific dates on which Graceful I or Macnow
declined to assign her a particular massage because of her age. Drawing all inferences in favor of
Gao, the Court may infer that a pattern of assigning fewer massages to Gao continued well after
2015 based on both Macnow’s response to Gao’s inquiry and other language in the complaint.
Id. ¶¶ 3, 54, 57. For this reason, Gao plausibly claims that Graceful I discriminated against Gao
by assigning her fewer massages at some time after August 4, 2017. See Vega v. Hempstead
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Union Free Sch. Dist., 801 F.3d 72, 80 (2d Cir. 2015) (ruling that claims of disproportionate
work assigned on a discriminatory basis are not time-barred as long as they occur within the
statutory period, as “[e]ach incident of discrimination . . . constitutes a separate actionable
unlawful employment practice” (internal quotations omitted)). To the extent the complaint
alleges discriminatory acts after August 4, 2017, 3 the statute of limitations does not bar those
allegations. 4
ii. Continuing Violation
When a plaintiff experiences a “continuous practice and policy of discrimination, the
commencement of the statute of limitations period may be delayed until the last discriminatory
act in furtherance of it.” Gomes v. Avco Corp., 964 F.2d 1330, 1333 (2d Cir.1992) (internal
quotations omitted). By contrast, discrete incidents of discrimination that are not related to
discriminatory policies or mechanisms may not amount to a continuing violation. See, e.g.,
Lambert v. Genesee Hospital, 10 F.3d 46, 53 (2d Cir .1993), cert. denied, 511 U.S. 1052 (1994).
General allegations of an ongoing discriminatory policy do not suffice to invoke
the continuing violation doctrine where the “individual effects of the policy that give rise to the
claim are merely discrete acts.” Chin v. Port Auth. of New York & New Jersey, 685 F.3d 135,
157 (2d Cir. 2012).
Graceful II contends that any alleged discrimination in massage assignment did not
amount to a continuing violation providing exception to the general statute of limitations
requirements. Def Mem. at 16. Accordingly, Graceful II argues that any individual instances of
3
This date is 300 days prior to the original filing of the complaint with the EEOC: May 31, 2018. See Compl. ¶ 9.
4
Because the Court denies the motion to dismiss the ADEA claims, the Court also denies the motion to dismiss the
NYSHRL and NYCHRL claims, even to the extent those claims are based on allegations of discrimination occurring
before August 4, 2017, because the claims are so related as to serve the purposes of 28 U.S.C. § 1367(a).
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discrimination in massage assignment occurring before August 4, 2017, are barred by the statute
of limitations. Id. The Court interprets Gao’s response to these arguments to state that under
the continuing violation doctrine, her claims arising before August 4, 2017, are within the statute
of limitations period because they are part of a continuing practice and policy of discrimination,
and at least one of the discriminatory acts under that continuing practice and policy occurred
after August 4, 2017. See Pl. Opp. at 16.
As discussed above, Gao alleges a specific, recurring practice, permitted (indeed,
perpetuated by) Macnow. Based on the facts of the complaint, however, it is not plausible that
the isolated decisions whether to assign Gao a particular massage, when taken together,
amounted to a discriminatory policy or practice supporting a continuing violation. See Kassner v.
2nd Ave. Delicatessen Inc., 496 F.3d 229, 239 (2d Cir. 2007) (analyzing case-by-case
managerial decisions including assignment of less desirable hours or duties as individual
allegations for the purposes of determining the statute of limitations). Gao has conditionally
requested leave to amend the complaint in order to plead additional facts in support of her claim
of a continuing violation. For the reasons discussed immediately above, the Court grants this
request. See Fed. R. Civ. P. 15(a) (“Leave to amend a pleading should be freely granted “when
justice so requires.”). To the extent Gao claims age discrimination based on reduced massage
assignments before August 4, 2017, those claims are time-barred for the purposes of the ADEA
and dismissed without prejudice.
B. Successor Liability
The analysis in Part III supra regarding Graceful II’s successor liability for Gao’s labor
claims, Counts I-VII, applies to the issue of Graceful II’s liability for Gao’s discrimination
claims, Counts VIII-X. See Halpert v. Manhattan Apartments, Inc., No. 04-CV-1850 (RWS),
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2015 WL 456594, at *1 (S.D.N.Y. Feb. 3, 2015) (applying the “substantial continuity” test and
allowing post-judgment discovery against an alleged successor in interest on an ADEA claim).
With regard to the nine factors analyzed under the substantial continuity test, the analysis for
factors (2)-(9) above also applies to Gao’s discrimination claims. In terms of factor (1), whether
the successor company had notice of the charge or pending lawsuit before acquiring the business
or assets of the predecessor, Gao also plausibly alleges that Graceful II had actual notice of the
discrimination claims relevant to the first factor in the substantial continuity test. Gao claims that
she complained to Macnow directly about the unequal distribution of massages and that Macnow
not only dismissed Gao’s complaint, but told her she was lucky to even have a job because of her
age. Compl. ¶ 57. Additionally, a manager told Macnow directly to “get rid of these old people”
(referring to Gao). Id. ¶ 58. Here, as above, Gao plausibly alleges that Macnow, as part-owner of
Graceful II had actual knowledge of the potential claims against the predecessor business as one
of the actors responsible for the discriminatory acts alleged. Id. ¶ 33.
C. Failure to Hire
Graceful II argues that Gao does not allege sufficient facts to plausibly support that
Graceful II declined to hire Gao impermissibly on the basis of her age. See Def. Mem. at 17.
Specifically, Graceful II contests whether Gao’s complaint raises an “inference of age
discrimination.” Id. Although Gao withdraws her ADEA claim against Graceful II for failure to
hire, the NYSHRL and NYCHRL claims against Graceful II for failure to hire remain. Given
that Gao has withdrawn that element of her ADEA claim, the Court assumes that Graceful II’s
argument that Gao does not plausibly allege age discrimination based on Graceful II’s failure to
hire applies to Gao’s NYSHRL and NYCHRL claims.
16
At the pleadings stage of an employment discrimination case, “a plaintiff must allege that
the employer took adverse action against her at least in part for a discriminatory reason, and she
may do so by alleging facts that directly show discrimination or facts that indirectly show
discrimination by giving rise to a plausible inference of discrimination.” Vega, 801 F.3d at 87.
An inference of discrimination can arise from circumstances including (though not limited to),
“the employer’s . . . invidious comments about others in the employee’s protected group; . . .
more favorable treatment of employees not in the protected group; or the sequence of events
leading to the plaintiff’s discharge.” Littlejohn v. City of New York, 795 F.3d 297, 312 (2d Cir.
2015) (citation omitted).
As pleaded, Graceful II’s actions give rise to an inference of discrimination based on the
combination of Macnow’s alleged behavior as the owner of Graceful I and subsequent authority
to hire as a partial owner of Graceful II. Gao claims she was over 60 years old at the time of her
complaint and likely older than all other employees Graceful II hired. Compl. ¶ 53. Gao was
qualified to continue working as a massage therapist after approximately five years in
employment with Graceful I. Id. ¶ 11. For at least the first three years of Gao’s employment (and
perhaps longer), she had many repeat customers and received no performance complaints. Id. ¶
56. Despite these facts, Graceful II did not hire Gao. Id. ¶ 60. As discussed above, Gao states that
Macnow controlled personnel decisions for both Graceful I and Graceful II. Id. ¶ 61, 64. Gao
claims that Graceful I treated younger employees more favorably by assigning them more
income-generating work than Gao. Id. ¶ 57. Graceful I defended such discrimination by telling
Gao she should have been grateful to even have a job due to her age. Id. ¶ 57. Gao also heard a
manager counsel Macnow to “get rid of these old people,” similarly evincing invidious
comments about others in the employee’s protected group. Id. ¶ 58. Gao was subsequently the
17
only individual not re-hired by Macnow to continue working at Graceful II, again demonstrating
more favorable treatment of younger employees. Id. ¶ 61. Taken together, these allegations
plausibly support an inference of Graceful II’s discrimination against Gao based on her age
under New York state and city laws.
CONCLUSION
For these reasons, the Court DISMISSES without prejudice Gao’s ADEA claims for
alleged violations before August 4, 2017 (under Count X). Gao may file a second amended
complaint no later than November 8, 2019, developing her theory of liability under the ADEA
based on a continuing violations theory. Graceful II’s motion is DENIED as to all other claims
(Counts I-IX). Accordingly, the stay of discovery as to defendant Graceful II entered by the
Court’s May 1, 2019 Order (ECF No. 62) is LIFTED.
All parties are ORDERED to appear for a status conference on Tuesday, November 12,
2019, at 10:00 a.m. in Courtroom 219, Thurgood Marshall Courthouse, 40 Foley Square, New
York, New York.
The Clerk of Court is respectfully directed to terminate the motion at ECF No. 46.
SO ORDERED.
DATED:
October 21, 2019
New York, New York
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