Chen v. Matsu Fusion Restaurant Inc et al
OPINION AND ORDER re: 166 MOTION for Summary Judgment . filed by Hiuyin Lam, 145 MOTION for Summary Judgment . filed by J & J Asian Bistro Inc., Motions terminated: 166 MOTION for Summary Judgment . file d by Hiuyin Lam, 145 MOTION for Summary Judgment . filed by J & J Asian Bistro Inc. The Court GRANTS the summary judgment motions of J&J and Lam and dismissed all of Plaintiffs' claims against each of them. Unless and until the C ourt orders otherwise, the parties shall submit a proposed joint pretrial order and associated materials (in accordance with Section 5 of the Court's Individual Rules and Practices in Civil Cases, available at https://www.nysd.uscourts.gov/hon-j esse-mfurman) within thirty days of the date of this Opinion and Order. The parties should be prepared to begin trial as soon as two weeks thereafter. In the meantime, the Court is firmly of the view that the parties should try once again to settle t his case without the need for trial. To that end, the Court directs the parties to confer immediately about the prospect of settlement and about conducting another settlement conference. If the parties agree that a settlement conference would be appr opriate, they should promptly advise the Court and, if needed, seek an appropriate referral and extension of the pretrial deadlines. The Clerk of Court is directed to terminate J&J Asian Bistro Inc. and Hiuyin Lam (also known as Wendy Lam) as Defendants and to terminate ECF Nos. 145 and 166. SO ORDERED., (J & J Asian Bistro Inc and Hiuyin Lam terminated.) (Signed by Judge Jesse M. Furman on 7/29/22) (yv)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
GUANGFU CHEN, et al.,
MATSU FUSION RESTAURANT INC., et al.,
OPINION AND ORDER
JESSE M. FURMAN, United States District Judge:
Plaintiffs Guangfu Chen (“Chen”) and Peizheng Fan (“Fan”), former restaurant
deliverymen, bring wage-and-hour claims against Matsu Fusion Restaurant Inc. (“Matsu
Fusion”), J&J Asian Bistro Inc. (“J&J”), Apex Japanese Restaurant Inc. (“Apex”), Yi Chang
Chen (also known as Gary Chen), and Hiuyin Lam (also known as Wendy Lam) pursuant to the
Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq.; and New York Labor Law
(“NYLL”), N.Y. Labor Law § 650 et seq. ECF No. 118 (“SAC”). Two Defendants — J&J and
Wendy Lam — separately move, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for
summary judgment on the ground that they were not Plaintiffs’ employers within the meaning of
either the FLSA or the NYLL. See ECF Nos. 145, 145-6 (“J&J Mem.”), 166, 170. The Court
agrees and thus grants both motions for summary judgment.
The following background, taken from admissible materials submitted in connection with
the pending motions, is undisputed unless otherwise noted.
Chen and Fan both worked as deliverymen at a restaurant called Matsu Japanese Fusion,
located at 411 East 70th Street in Manhattan. See SAC ¶¶ 7-8. Chen was employed from March
2015 to at least March 2019; Fan was employed from August 2015 to July 2017. See ECF No.
158-8 (“Pls.’ J&J 56.1 Stmt.”), ¶¶ 7, 11. Until March 2019, the restaurant was owned and
operated by either Matsu Fusion or Apex, both of which were owned by Gary Chen (“Gary”).
See ECF No. 180-6 (“Pls.’ Lam 56.1 Stmt.”), ¶¶ 6-10; ECF No. 168 (“Gary Aff.”), ¶ 6. Lam,
Gary’s wife, worked at the restaurant as well, although — as discussed below — her duties and
responsibilities are somewhat disputed. See Pls.’ Lam 56.1 Stmt. ¶¶ 12-41.
J&J is a New York corporation that was established on February 8, 2019. See Pls.’ J&J
56.1 Stmt. ¶ 1. J&J and Matsu Fusion have never had any common owners, shareholders,
officers, or directors. See id. ¶ 3. On March 21, 2019, J&J paid $145,000 for all of the assets of
Matsu Fusion, including the lease for 411 East 70th Street. See id. ¶ 2. On April 1, 2019, J&J
began to operate the restaurant located at that address. See id. ¶ 4.
STANDARD OF REVIEW
Summary judgment is appropriate when the admissible evidence in the record
demonstrates that there is “no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A dispute over an issue of material fact
qualifies as “genuine” if the “evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus, to defeat a
motion for summary judgment, the nonmoving party must advance more than a “scintilla of
evidence,” Anderson, 477 U.S. at 252, and demonstrate more than “some metaphysical doubt as
to the material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986). In ruling on a motion for summary judgment, all evidence must be viewed “in the light
most favorable to the non-moving party,” Overton v. N.Y. State Div. of Military & Naval Affairs,
373 F.3d 83, 89 (2d Cir. 2004), and a court must “resolve all ambiguities and draw all
permissible factual inferences in favor of the party against whom summary judgment is sought,”
Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc., 391 F.3d 77, 83 (2d Cir. 2004).
The Court begins with J&J’s motion. J&J argues that it did not exist until February 2019
and did not own or operate the restaurant until late March or early April 2019, after Chen’s and
Fan’s employment at the restaurant had ended. See J&J Mem. 2-7. It follows, J&J argues, that it
was not either Plaintiff’s “employer” within the meaning of the FLSA or NYLL. See id.
In response to J&J’s motion, Plaintiffs make two arguments. The first is to dispute the
end date of Chen’s employment. See ECF No. 159 (“Pls.’ J&J Opp’n”), at 6-7. Chen maintains
that he merely took a leave of absence from the restaurant on March 12, 2019, and that his
employment continued until some time in May 2019, when he sought and was denied leave to
return to work. See id. But whether or not that is true is besides the point, as there is no
evidence in the record that he was ever employed — before or after March 12, 2019 — by J&J.
At most, Chen’s argument may suggest that he technically remained an employee of Matsu
Fusion beyond March 2019; it provides no basis to conclude that J&J was ever his employer.
In the alternative, Plaintiffs argue that J&J is liable on a successor liability theory. See id.
at 7. But that argument fails for two reasons. First, although “[s]uccessor liability is not a
separate cause of action[,] . . . a plaintiff must actually plead allegations of successor liability in
the complaint.” Payamps v. M & M Convenience Deli & Grocery Corp., No. 16-CV-4895
(LDH) (SJB), 2019 WL 8381264, at *10 (E.D.N.Y. Dec. 9, 2019) (cleaned up). Here, the
Second Amended Complaint does nothing of the sort, merely alleging in conclusory fashion that
all of the entity Defendants, including J&J, are “joint employers of Plaintiff [sic] and constitute
an enterprise.” SAC ¶ 44. It follows that Plaintiffs fail even to state a plausible claim of
successor liability against J&J. See, e.g., Lin v. Toyo Food, Inc., No. 12-CV-7392 (KMK), 2016
WL 4502040, at *6 (S.D.N.Y. Aug. 26, 2016) (denying leave to amend because the proposed
amended complaint did not plausibly allege successor liability); Jalili v. Xanboo Inc., No. 11CV-1200, 2011 WL 4336690 (DLC), at *4 (S.D.N.Y. Sept. 15, 2011) (dismissing a successor
liability claim where the plaintiff “fail[ed] to allege facts sufficient to give rise to an inference of
‘continuity of ownership’ between [the relevant entities]”); Sgaliordich v. Lloyd’s Asset Mgmt.,
No. 10-CV-3669 (ERK), 2011 WL 441705, at *7 (E.D.N.Y. Feb. 8, 2011) (granting a motion to
dismiss where “the complaint ha[d] alleged nothing about the relationship between [the two
relevant entities] or how [one entity] ‘became’ [the other]” and thus “fail[ed] to state a claim for
successor liability that [was] plausible on its face”).
Second, and in any event, any successor liability claim against J&J would fail for want of
evidence. Courts in this Circuit have applied two different tests to determine successor liability
in the wage-and-hour context: the traditional New York common law test and the “substantial
continuity” test. See Rotthoff v. New York State Catholic Health Plan, No. 19-CV-4027 (AMD)
(CLP), 2020 WL 5763862, at *6 (E.D.N.Y. Sept. 28, 2020) (citing cases). Under the former,
which certainly applies to claims under the NYLL and may apply to claims under the FLSA, a
successor corporation can be found liable only if “(1) [the successor] 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., 460 F.3d 201, 209 (2d Cir. 2006) (citation omitted). The latter test “is more
lenient and calls for considering nine factors,” of which the first two — “whether the successor
company had notice of the charge” and “the ability of the predecessor to provide relief” — are
“considered . . . to be indispensable.” Rotthoff, 2020 WL 5763862, at *6-7 (cleaned up); accord
Xue Ming Wang v. Abumi Sushi Inc., 262 F. Supp. 3d 81, 89 (S.D.N.Y. 2017).
In this case, the Court need not decide which test applies because Plaintiffs’ claim, such
as it is, would fail under either. First, with respect to the common law test, Plaintiffs do not
allege, and there is no evidence to support, that J&J assumed its predecessor’s tort liability or
that the transaction was a fraud to escape such liability. The remaining two exceptions — the
“de facto merger” and “mere continuation” exceptions — are “so similar that they may be
considered a single exception.” Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41, 45 n.3 (2d
Cir. 2003). In either event, however, a plaintiff must prove “continuity of ownership.” Cano v.
Sushi Chain, Inc., No. 19-CV-3509 (DG) (LB), 2021 WL 8316279, at *4 (E.D.N.Y. Nov. 22,
2021); accord Marte v. Wesbury Mini Mart, Inc., No. 16-CV-53 (SJF)(ARL), 2017 WL 9485667
at *8 (E.D.N.Y. Jan. 18, 2017) (“[W]here ownership actually changes hands, there can be no
finding of the de facto merger (or mere continuation) exception.”); Xue Ming Wang, 262 F.
Supp. 3d at 87 (“Because ‘continuity of ownership is the essence of a merger,’ . . . the exception
‘cannot apply in its absence.’” (quoting Priestly v. Headminder, Inc., 647 F.3d 497, 505-06 (2d
Cir. 2011)). Here, Plaintiffs do not even allege continuity of ownership. See Pls.’ J&J Opp’n 7.
That is for good reason as there is no dispute that J&J and its predecessors never had any
common owners, shareholders, officers, or directors. See Pls.’ J&J 56.1 Stmt. ¶ 3.
Second, Plaintiffs fail to satisfy either of the two “indispensable” factors of the
substantial continuity test. With respect to notice, Plaintiffs assert in their memorandum of law
that the parties “dispute whether Mei Fong Chen,” also known as Joyce, “was a manager at
Matsu Fusion and whether as a manager and supervisor at Matsu Fusion, had notice of Matsu
Fusion’s potentially unlawful pay practices.” Pls.’ J&J Opp’n 7 (citation omitted). But the
evidence on which Plaintiffs rely to make that assertion — their own depositions — does not
actually back it up. To the contrary, it confirms that neither Plaintiff “ever” told Joyce about his
intention to bring this lawsuit or about the claims asserted in this lawsuit prior to September
2019. See ECF No. 180-2 (“Chen Dep.”), at 96; ECF No. 180-3 (“Fan Dep.”), at 14-15. 1 With
respect to the ability of J&J’s predecessor to provide relief, Plaintiffs assert in their
memorandum of law that Matsu Fusion “is no longer doing business and is unable to provide
relief,” Pls.’ J&J Opp’n 7, but they cite no evidence whatsoever to support that assertion.
Moreover, even if true, the sale and dissolution of Matsu Fusion does not, without more,
establish that it is unable to provide relief. See, e.g., Xue Ming Wang, 262 F. Supp. 3d at 95-96.
In light of Plaintiffs’ failure to satisfy either of the first two “indispensable” factors, they cannot
establish successor liability under the substantial continuity test either. See id. at 91-96 (granting
summary judgment to a defendant in similar circumstances).
In sum, Plaintiffs fail to allege, let alone support, a successor liability claim against J&J.
It follows that J&J is entitled to summary judgment on all of Plaintiffs’ claims against it.
Making matters worse, the other primary evidence on which Plaintiffs rely in opposing
J&J’s summary judgment motion is the deposition they took of J&J pursuant to Rule 30(b)(6) of
the Federal Rules of Civil Procedure. But that deposition was taken in violation of Rules 28(a),
(c), 30(b)(5)(A)-(C), and 30(f) of the Federal Rules of Civil Procedure. Cf. ECF No. 138
(stipulation in which Plaintiffs concede that “[t]he purported videotaped, non-stenographic
depositions taken . . . of Defendants Gary Chen and Wendy Lam . . . were conducted in violation
of Fed. R. Civ. P. 30(b)(5)(A)-(C) and Fed. R. Civ. P. 28(c)”). In any event, the deposition of
J&J would make no difference to the Court’s analysis or conclusion.
Lam is also entitled to summary judgment, albeit for different reasons. To be an
“employer” under the FLSA and NYLL, a person must “possess control over a company’s actual
operations in a manner that relates to a plaintiff’s employment.” Irizarry v. Catsimatidis, 722
F.3d 99, 109 (2d Cir. 2013) (internal quotation marks omitted); see also Camara v. Kenner, No.
16-CV-7078 (JGK), 2018 WL 1596195, at *7 (S.D.N.Y. Mar. 29, 2018) (noting that courts apply
the same standards to the NYLL). “[T]his does not mean that the individual ‘employer’ must be
responsible for managing plaintiff employees — or, indeed, that he or she must have directly
come into contact with the plaintiffs, their workplaces, or their schedules.” Irizarry, 722 F.3d at
110. Instead, the inquiry is a flexible one whose “overarching concern” is whether, under the
totality of the circumstances, “the alleged employer possessed the power to control the workers
in question.” Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999).
In the Second Circuit, four “nonexclusive and overlapping” factors — known as the
Carter factors — guide that flexible inquiry. Irizarry, 722 F.3d at 105, 110. These factors are:
“whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised
and controlled employee work schedules or conditions of employment, (3) determined the rate
and method of payment, and (4) maintained employment records.” Carter v. Dutchess Cmty.
Coll., 735 F.2d 8, 12 (2d Cir. 1984) (internal quotation marks omitted). “Because Carter defines
employment more narrowly than FLSA requires,” satisfying all of these factors is not necessary
to establish “employer” status. See Greenawalt v. AT&T Mobility LLC, 642 F. App’x 36, 37 (2d
Cir. 2016) (summary order). Moreover, “[n]o one factor is dispositive and the inquiry into an
employment relationship is fact intensive.” Coley v. Vannguard Urban Imp. Ass’n, Inc., No. 12CV-5565 (PKC), 2014 WL 4793825, at *3 (E.D.N.Y. Sept. 24, 2014).
Applying the Carter factors to the admissible evidence in the record, the Court concludes
that no reasonable factfinder could find that Lam was an “employer” within the meaning of the
FLSA and NYLL. For starters, Plaintiffs concede that Lam never determined their rate and
method of payment; signed paychecks, distributed pay, or possessed such authority; or
supervised or controlled employee schedules or conditions of employment. See Pls.’ Lam 56.1
Stmt. ¶¶ 29-30, 37-39. Instead, Plaintiffs rely primarily on affidavits they submitted in response
to the motion for summary judgment in which they allege that Lam was intimately involved in
management of the restaurant, including acting as bookkeeper; reviewing point-of-sale records
and tip reports; supervising when her husband, Gary, was away; responding to customer
complaints; and arranging delivery orders. See ECF No. 180-4 (“Chen Aff.”), ¶¶ 9-17; ECF No.
18-5, ¶¶ 7-21. Chen further alleges that, in late December 2015, Lam was involved in firing an
employee named Xu Zhen Wang (also known as Angela); and that another employee, Ah Cai,
told him that Lam had offered Ah Cai a raise. Chen Aff. ¶¶ 19-30.
Lam does not dispute that this evidence, if admissible, would be sufficient to defeat her
motion for summary judgment. But she argues that it should be disregarded under the “sham
affidavit” doctrine. See ECF No. 185, at 1-5. That doctrine provides that “a party may not create
an issue of fact by submitting an affidavit in opposition to a summary judgment motion that, by
omission or addition, contradicts the affiant’s previous deposition testimony.” Crawford v.
Franklin Credit Mgmt. Corp., 758 F.3d 473, 482 (2d Cir. 2014) (quoting Hayes v. N.Y.C. Dep’t
of Corr., 84 F.3d 614, 619 (2d Cir. 1996)). “Courts in the Second Circuit are particularly
reluctant to credit affidavit testimony that alleges critical, obviously material facts that were not
mentioned at deposition, noting that such circumstances strongly suggest a sham affidavit.”
Golden v. Merrill Lynch & Co., No. 06-CV-2970 (RWS), 2007 WL 4299443, at *9 (S.D.N.Y.
Dec. 6, 2007). Put differently, “factual issues created solely by an affidavit crafted to oppose a
summary judgment motion are not ‘genuine’ issues for trial.” Hayes, 84 F.3d at 619. Thus,
“statements in an affidavit filed in response to a summary judgment motion [do] not create
material factual disputes where none existed without such affidavit.” Id.
Plaintiffs’ affidavits plainly qualify as sham affidavits. 2 Indeed, they diverge wildly from
Plaintiffs’ prior deposition testimony. When pressed to identify Lam’s job responsibilities at his
deposition, for example, Chen mentioned almost nothing that appears in his affidavit; he testified
only that Lam answered phones to take orders, took walk-in customer orders, entered online
orders into a point-of-sale system, and packed orders. Chen Dep. 87. For his part, Fan did not
even mention Lam during his deposition, let alone identify her as his “boss,” despite repeated
inquiries about who his boss had been. Fan Dep. 14, 25. Moreover, both Plaintiffs testified at
length about their tip income and handling of tips generally, but neither mentioned that Lam ever
asked them to return tips or was involved with handling tips generally. Chen Dep. 72-73; Fan
Dep. 27-33. Fan, again, did not even mention Lam. And Chen expressly testified that the
restaurant’s employees “divided [tips] at night” and that tip earnings rose and fell based on
volume of business, not according to Lam. Chen Dep. 72-73. In short, therefore, the factual
issues created solely by Plaintiffs’ affidavits “are not ‘genuine’ issues for trial.” Hayes, 84 F.3d
at 619; see also, e.g., Kim v. DK Cosms., No. 19-CV-9079 (JMF), 2022 WL 540675, at *3
(S.D.N.Y. Feb. 23, 2022) (disregarding an affidavit pursuant to the sham affidavit doctrine).
In the absence of the new allegations in their affidavits, Plaintiffs are left with virtually
nothing pertinent to the Carter factors. In particular, only two relevant facts appear in the
record: Chen’s testimony that Lam had the “final say” when Gary was not present, see Chen
On top of that, Chen’s allegations regarding Ah Cai’s statements are rank hearsay.
Dep. 46-47, and that, in late December 2015, he witnessed Lam fire Angela, see id. at 53-60.
Even taking these allegations together, however, no reasonable factfinder could find, by a
“totality of the circumstances,” that Lam was Plaintiffs’ employer within the meaning of the
FLSA and the NYLL. Beng Khoon Loo v. I.M.E. Rest., Inc., No. 17-CV-2558 (ARR) (RER),
2018 WL 4119234, at *7 (E.D.N.Y. Aug. 29, 2018) (granting summary judgment to a defendant
despite evidence that was arguably sufficient to satisfy one Carter factor); accord Hong v. Quest
Int’l Limousine, Inc., No. 19-CV-04336 (SN), 2021 WL 2188149, at *6-7 (S.D.N.Y. May 28,
2021); Kaplan v. Wings of Hope Residence, Inc., No. 2:18-CV-2972 (ADS) (AKT), 2020 WL
616630, at *8 (E.D.N.Y. Feb. 7, 2020). Moreover, the general rule that a court may not weigh
credibility on summary judgment aside, there is arguably a basis even to disregard the more
concrete of these allegations: Chen’s testimony about Angela’s firing. After all, Chen’s claim
that he witnessed Lam fire Angela in late December 2015 is flatly incompatible with his
testimony and the undisputed fact that he was on medical leave and hospitalized from December
10, 2015, until May 3, 2016. See Chen Dep. 66; Pls.’ Lam 56.1 Stmt. ¶¶ 43-44; see Jeffreys v.
City of New York, 426 F.3d 549, 555 (2d Cir. 2005) (holding that summary judgment may be
entered against a plaintiff where there is “nothing in the record to support plaintiff's allegations
other than plaintiff's own contradictory and incomplete testimony” and the district court, “even
after drawing all inferences in the light most favorable to the plaintiff, determine[s] that no
reasonable person could believe [the plaintiff's] testimony” (internal quotation marks omitted)).
In short, no reasonable factfinder could conclude that Lam was Plaintiffs’ employer
under either the FLSA or the NYLL. Accordingly, she too is entitled to summary judgment.
For the foregoing reasons, the Court GRANTS the summary judgment motions of J&J
and Lam and dismissed all of Plaintiffs’ claims against each of them.
Unless and until the Court orders otherwise, the parties shall submit a proposed joint
pretrial order and associated materials (in accordance with Section 5 of the Court’s Individual
Rules and Practices in Civil Cases, available at https://www.nysd.uscourts.gov/hon-jesse-mfurman) within thirty days of the date of this Opinion and Order. The parties should be
prepared to begin trial as soon as two weeks thereafter. In the meantime, the Court is firmly of
the view that the parties should try once again to settle this case without the need for trial. To
that end, the Court directs the parties to confer immediately about the prospect of settlement
and about conducting another settlement conference. If the parties agree that a settlement
conference would be appropriate, they should promptly advise the Court and, if needed, seek an
appropriate referral and extension of the pretrial deadlines.
The Clerk of Court is directed to terminate J&J Asian Bistro Inc. and Hiuyin Lam (also
known as Wendy Lam) as Defendants and to terminate ECF Nos. 145 and 166.
Dated: July 29, 2022
New York, New York
JESSE M. FURMAN
United States District Judge
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