Zhang et al v. East Garden 1st Ave Inc. et al
Filing
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OPINION & ORDER re: 33 FIRST LETTER MOTION to Compel Defendant East Garden 1st Ave Inc. to Produce addressed to Magistrate Judge Sarah Netburn from Rui Ma, Esq. dated March 1, 2019, filed by Guangli Zhang, on behalf of all other em ployees similarly situated, Guangli Zhang. Within fourteen (14) days of this Order, Defendants are directed to search for and produce: (1) complete copies of East Garden's 2017 and 2018 Federal Tax Return Documents, including the tax returns and any supporting and attached documents; and (2) the Business Documents, including any records of receipts, sales, credit card sales receipts, bank account statements, and bank slips concerning Defendants' gross volume of sales in 2017 and 201 8. Defendants may redact privacy-related information from the tax returns, but nothing else. In their opposition papers, Defendants assert that East Garden "may not have carefully maintained elaborate business records" and that "there is no certainty that the records sought by plaintiff still exist." Def's Br., at 2. Accordingly, Defendants are directed, if necessary, to request responsive documents from East Garden's banks and accountant. See In re NTL, Inc. Sec. Litig., 244 F.R.D. 179, 195 (S.D.N.Y. 2007) ("[D]ocuments are considered to be under a party's control when that party has the right, authority, or practical ability to obtain the documents from a nonparty to the action.") (internal ci tations omitted); De Vos v. Lee, No. 07-CV-804 (JBW) (RLM), 2008 WL 2946010, at *1 6 (E.D.N.Y. July 29, 2008) ("[D]ocuments in the possession of a party's accountant are deemed within that party's control for purposes of Rule 34 discovery.") (collecting cases).The Clerk of the Court is respectfully directed to terminate the motion at ECF No. 33. (Signed by Magistrate Judge Sarah Netburn on 03/19/2019) (ras)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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3/19/2019
GUANGLI ZHANG,
Plaintiff,
18-CV-5755 (ALC)(SN)
OPINION & ORDER
-againstEAST GARDEN 1ST AVE INC., et al.,
Defendants.
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SARAH NETBURN, United States Magistrate Judge:
On March 1, 2019, Plaintiff filed a motion to compel Defendants to produce documents.
For the reasons set forth below, the motion to compel is largely GRANTED.
BACKGROUND
Plaintiff commenced this action on June 25, 2018. ECF No. 1. He alleges violations of
the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”). Id. at 1.
On November 2, 2018, Defendants requested leave to file a motion for summary
judgement. ECF No. 20. Defendants claimed that Defendant East Garden 1st Ave Inc. (“East
Garden”) did not qualify as an “enterprise engaged in commerce” under the FLSA. Id. They
argued that East Garden had less than $500,000 in annual sales and therefore was not an
“employer” under federal law. Id.; see 29 U.S.C. § 203(s)(1)(A)(ii). The Honorable Andrew L.
Carter, Jr., denied Defendants’ request and directed the parties to resume discovery. ECF No. 24.
As part of their initial disclosures, Defendants produced the first page of East Garden’s
2017 federal tax return. ECF No. 33, Plaintiff’s Motion (“Pl’s Br.”), Exhibit 1. The tax return
indicates that East Garden’s annual “gross receipts or sales” was $254,566; the remaining line
items, however, have been redacted. Id. In addition, Defendants also produced the first page of
East Garden’s quarterly sales and use tax returns from New York. The returns show East
Garden’s quarterly sales from March 1, 2017, through August 31, 2018. Id.
LEGAL STANDARD
Under Rule 26 of the Federal Rules of Civil Procedure, “[p]arties may obtain discovery
regarding any nonprivileged matter that is relevant to any party’s claim or defense and
proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). A party may serve on any other
party a request to produce documents within the scope of Rule 26. Id. at 34(a). The responding
party must produce documents sought in each request or state an objection to the request,
including the reasons. Pegoraro v. Marrero, 281 F.R.D. 122, 132 (S.D.N.Y. 2012) (citing Fed R.
Civ. P. 34(b)(2)). If the responding party fails to produce documents, the party seeking discovery
may move for an order compelling an answer, designation, production, or inspection. Fed. R.
Civ. P. 37(a)(3)(B).
DISCUSSION
Plaintiff seeks two sets of documents in his motion to compel. Specifically, Plaintiff
requests: (1) all supporting and attached documents to East Garden’s 2016, 2017, and 2018
federal tax returns (“Federal Tax Return Documents”); and (2) any records of receipts, sales,
credit card sales receipts, bank account statements, and bank slips concerning East Garden’s
gross volume of sales in 2017 and 2018 (“Business Documents”). Pl’s Br., at 1. Plaintiff also
requests that Defendants produce clean copies of East Garden’s tax returns with redaction only
of privacy-related information. Id. The Court addresses these issues in turn.
First, Defendants must produce complete copies of East Garden’s Federal Tax Return
Documents. These documents are relevant because they provide insight as to whether East
Garden satisfied the FLSA’s annual sales requirement. See Junmin Shen v. Number One Fresco
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Tortillas, Inc., No. 16-CV-2015 (RWL), 2018 WL 6712771, at *7 (S.D.N.Y. Nov. 26, 2018)
(considering a defendant’s tax returns in this context); Monterossa v. Martinez Restaurant Corp.,
No. 11-CV-3689 (JMF), 2012 WL 3890212, at *3–4 (S.D.N.Y. Sept. 7, 2012) (same).
Defendants seem to admit this fact but argue in response that they should be able to redact large
portions of East Garden’s returns. See ECF No. 34, Defendant’s Opposition (“Def’s Br.”), at 1–
2. This argument is unavailing. Defendants offer no justification for their redactions, and courts
routinely scrutinize information on an employer’s tax returns other than gross receipts to
determine the returns’ reliability. See, e.g., Junmin Shen, 2018 WL 6712771, at *7 (considering
“compensation of officers” and “salaries and wages”); Rocha v. Bakhter Afghan Halal Kababs,
Inc., 44 F. Supp. 3d 337, 348–49 (E.D.N.Y. 2014) (considering “salaries and wages” and “rent”).
For this reason, Defendants must produce a complete copy of East Garden’s 2017 Federal Tax
Return Documents, and if or when it exists, a complete copy of East Garden’s 2018 Federal Tax
Return Documents. This production should include any “supporting and attached documents” to
East Garden’s returns. That said, because Plaintiff does not allege that he worked at the
restaurant during the 2016 tax year, Defendants are not required to produce East Garden’s 2016
Federal Tax Return Documents. See ECF No. 1, Complaint, at ¶ 9. In producing these
documents, Defendants may redact only privacy-related information.
Second, Defendants must produce any records of receipts, sales, credit card sales receipts,
bank account statements, and bank slips concerning Defendants’ gross volume of sales in 2017
and 2018. Like East Garden’s Federal Tax Return Documents, these Business Documents are
relevant in determining whether East Garden has satisfied the FLSA’s annual sales requirement.
See Jia Hu Qian v. Siew Foong Hui, No. 11-CV-5584 (CM), 2013 WL 3009389, at *3 (S.D.N.Y.
June 14, 2013) (“[T]ax returns are not dispositive, and the veracity of those documents can be
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questioned by a Plaintiff.”). Because Plaintiff’s request is limited to a two-year period and
narrowly tailored to Defendants’ “gross volume of sales,” the request does not impose an undue
burden on Defendants. As a result, Defendants must produce these documents.
CONCLUSION
Within fourteen (14) days of this Order, Defendants are directed to search for and
produce: (1) complete copies of East Garden’s 2017 and 2018 Federal Tax Return Documents,
including the tax returns and any supporting and attached documents; and (2) the Business
Documents, including any records of receipts, sales, credit card sales receipts, bank account
statements, and bank slips concerning Defendants’ gross volume of sales in 2017 and 2018.
Defendants may redact privacy-related information from the tax returns, but nothing else.
In their opposition papers, Defendants assert that East Garden “may not have carefully
maintained elaborate business records” and that “there is no certainty that the records sought by
plaintiff still exist.” Def’s Br., at 2. Accordingly, Defendants are directed, if necessary, to request
responsive documents from East Garden’s banks and accountant. See In re NTL, Inc. Sec. Litig.,
244 F.R.D. 179, 195 (S.D.N.Y. 2007) (“[D]ocuments are considered to be under a party’s control
when that party has the right, authority, or practical ability to obtain the documents from a
nonparty to the action.”) (internal citations omitted); De Vos v. Lee, No. 07-CV-804 (JBW)
(RLM), 2008 WL 2946010, at *1 6 (E.D.N.Y. July 29, 2008) (“[D]ocuments in the possession of
a party’s accountant are deemed within that party’s control for purposes of Rule 34 discovery.”)
(collecting cases).
The Clerk of the Court is respectfully directed to terminate the motion at ECF No. 33.
SO ORDERED.
DATED:
March 19, 2019
New York, New York
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