Heard et al v. Aashu L.L.C. et al

Filing 126

MEMORANDUM AND ORDER granting in part and denying in part 103 Plaintiffs' Motion for Partial Summary Judgment; granting 121 Motion for Leave to Respond to Plaintiffs' Reply.(Signed by Judge Nancy F Atlas) Parties notified.(TDR, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BETTY HEARD, et al.,
Plaintiffs,
v.
AASHU L.L.C., et al.,
Defendants.

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January 13, 2017
David J. Bradley, Clerk

CIVIL ACTION NO. H-15-2261

MEMORANDUM AND ORDER
This Fair Labor Standards Act (“FLSA”) case is before the Court on the Motion
for Partial Summary Judgment (“Motion”) [Doc. # 103] filed by Plaintiffs Betty
Heard, Stanley Griggs, Daisy Sanchez, and Maria Basa. Defendants Aashu L.L.C.
(“Aashu”), Asif Ali (“Asif”), Aamir Ali (“Aamir”), ABZZ Corporation (“ABZZ”),
and Zulfiqar Ali (“Zulfiqar”) filed an early Response [Doc. # 110] and Defendants
Aashu and Asif later filed a Supplemental Response [Doc. # 116] within the deadline
to respond. Plaintiffs’ filed a Reply [Doc. # 117], Aashu and Asif filed a Response
to Plaintiff’s Reply1 [Doc. # 122], and Plaintiffs filed a Supplemental Reply [Doc.
# 123]. Having reviewed the record and applicable legal authorities, the Court grants
Plaintiffs’ Motion regarding the existence of enterprise coverage under the FLSA as

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Defendants Aashu and Asif filed a Motion for Leave to Respond to Plaintiff’s Reply
[Doc. # 121], to which no opposition was filed. The Court grants the Motion for
Leave to Respond.

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to Defendant Aashu in 2014 and 2015, grants Plaintiffs’ Motion regarding Plaintiffs’
status as employees of Aashu and Asif Ali, denies Plaintiffs’ Motion regarding an
employer/employee relationship between Plaintiffs and Aamir Ali, ABZZ
Corporation, and/or Zulfiqar Ali, denies Plaintiffs’ Motion regarding whether they
worked overtime hours, and denies Plaintiffs’ Motion regarding willfulness and
Defendants’ good faith defense.
I.

BACKGROUND
In October 2012, Avalon Cleaners began operating a dry cleaning business in

Katy, Texas. Defendant Aashu owns and operates Avalon Cleaners, and Asif Ali is
the sole owner of Aashu. In March 2015, Aashu acquired Century Cleaners from
Defendant ABZZ Corporation, which was owned by Defendant Zulfiqar. ABZZ
Corporation ceased to exist at that time, and Zulfiqar became an employee of Aashu,
working as a “spotter.”
Plaintiffs were employed by Avalon Cleaners in different capacities. Plaintiff
Heard began her employment as a silk presser with Avalon Cleaners in May 2013.
Plaintiff Griggs began working at Avalon Cleaners in August 2014 as a “spotcleaner,” but his job duties soon included sorting garments, dry cleaning, wet-washing
laundry, operating the store’s boiler, and opening the store and deactivating the
security alarm. Plaintiff Sanchez began working for Avalon Cleaners as a shirt

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presser in July 2014. Plaintiff Maria Basa began working for Avalon Cleaners as a
pants presser in October 2014.
Plaintiffs allege that they each worked at Avalon Cleaners more than forty (40)
hours per week. Plaintiffs filed this FLSA lawsuit, alleging that Defendants failed to
pay them overtime wages for the hours they worked in excess of 40 per week. After
the close of discovery, Plaintiffs filed their Motion for Partial Summary Judgment.
The Motion has been fully briefed and is now ripe for decision.
II.

SUMMARY JUDGMENT STANDARD
Rule 56 of the Federal Rules of Civil Procedure mandates the entry of summary

judgment against a party who fails to make a sufficient showing of the existence of
an element essential to the party’s case for which that party will bear the burden at
trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Little v. Liquid Air Corp.,
37 F.3d 1069, 1075 (5th Cir. 1994) (en banc); see also Baton Rouge Oil and Chem.
Workers Union v. ExxonMobil Corp., 289 F.3d 373, 375 (5th Cir. 2002). In deciding
a motion for summary judgment, the Court must determine whether the movant has
shown “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); see also Celotex
Corp., 477 U.S. at 322-23; Rodgers v. United States, 843 F.3d 181, 190 (5th Cir.
2016); Weaver v. CCA Indus., Inc., 529 F.3d 335, 339 (5th Cir. 2008).

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Where the movant bears the burden of proof at trial on the issues at hand, as is
the case here, it “bears the initial responsibility of demonstrating the absence of a
genuine issue of material fact with respect to those issues.” Transamerica Ins. Co. v.
Avenell, 66 F.3d 715, 718 (5th Cir. 1995); see also Brandon v. Sage Corp., 808 F.3d
266, 269-70 (5th Cir. 2015); Lincoln Gen. Ins. Co. v. Reyna, 401 F.3d 347, 349 (5th
Cir. 2005). If the moving party fails to meet its initial burden, the motion for
summary judgment must be denied, regardless of the non-movant’s response.
ExxonMobil Corp., 289 F.3d at 375.
If the moving party meets its initial burden, the non-movant must go beyond the
pleadings and designate specific facts showing that there is a genuine issue of material
fact for trial. Brandon, 808 F.3d at 270; Littlefield v. Forney Indep. Sch. Dist., 268
F.3d 275, 282 (5th Cir. 2001). “A fact issue is ‘material’ if its resolution could affect
the outcome of the action.” Hemphill v. State Farm Mut. Auto. Ins. Co., 805 F.3d 535,
538 (5th Cir. 2015); DIRECT TV Inc. v. Robson, 420 F.3d 532, 536 (5th Cir. 2006).
Summary judgment “will not lie . . . 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); Hyatt v. Thomas, 843 F.3d 172, 177 (5th Cir. 2016).
In deciding whether a genuine and material fact issue has been created, the facts
and inferences to be drawn from them must be reviewed in the light most favorable

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to the nonmoving party. See Heinsohn v. Carabin & Shaw, P.C., 832 F.3d 224, 234
(5th Cir. 2016). However, factual controversies are resolved in favor of the nonmovant “only when there is an actual controversy, that is, when both parties have
submitted evidence of contradictory facts.” Salazar-Limon v. City of Houston, 826
F.3d 272, 277 (5th Cir. 2016) (quoting Little, 37 F.3d at 1075). The non-movant’s
burden is not met by mere reliance on the allegations or denials in the non-movant’s
pleadings. See Diamond Offshore Co. v. A&B Builders, Inc., 302 F.3d 531, 545 n.13
(5th Cir. 2002) (noting that unsworn pleadings do not constitute proper summary
judgment evidence); Bistany v. Reliance Standard Life Ins. Co., 55 F. Supp. 3d 956,
961 (S.D. Tex. 2014). Likewise, “unsubstantiated or conclusory assertions that a fact
issue exists” do not meet this burden. Morris v. Covan World Wide Moving, Inc., 144
F.3d 377, 380 (5th Cir. 1998).
III.

ANALYSIS
A.

Enterprise Coverage

Under the FLSA, an employee who is employed in an enterprise engaged in
commerce or in the production of goods for commerce (“enterprise coverage”) must
receive overtime compensation for hours worked in excess of forty hours per week.
See 29 U.S.C. § 207(a)(2)(C). An employer is subject to enterprise coverage under
the FLSA if it (1) “has employees engaged in commerce or in the production of goods

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for commerce, or . . . has employees handling, selling, or otherwise working on goods
or materials that have been moved in or produced for commerce by any person” (the
“handling” requirement) and (2) has at least $500,000 of “annual gross volume of
sales made or business done.” See 29 U.S.C. § 203(s)(1)(A); Polycarpe v. E&S
Landscaping Serv., Inc., 616 F.3d 1217, 1220 (11th Cir. 2010); Landeros v. Fu King,
Inc., 12 F. Supp. 2d 1020, 1023 (S.D. Tex. 2014). Defendants do not contest that the
“handling” requirement for enterprise coverage is satisfied in this case.
It is undisputed that Aashu had at least $500,000 in annual gross sales in 2015.
As for 2014, Plaintiffs have presented evidence from Aashu’s internal accounting
records that the annual gross sales exceeded $500,000. Aashu has presented its tax
return for 2014, which reflects annual gross sales below $500,000. Aashu explains
that a portion of the annual gross sales reflected in the accounting records represents
an “environmental fee” that Aashu collects from each customer. Aashu has failed to
identify the legal basis for its collection of an “environmental fee.” Aashu has also
failed to cite any legal authority for its position that an “environmental fee” can
properly be deducted from the annual gross sales for purposes of FLSA enterprise
coverage, and this Court is aware of none. As a result, the uncontroverted evidence
in Aashu’s internal accounting records demonstrates that its total annual gross sales

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in 2015, including the “environmental fee,” exceeded $500,000. Plaintiffs are entitled
to summary judgment that there is FLSA enterprise coverage for Aashu.
B.

Employee/Employer Relationship

Plaintiffs seek summary judgment that an employer-employee relationship
existed between Plaintiffs and “at the very least, Defendants Aashu LLC, Asif Ali, and
Aamir Ali.”2 See Motion, p. 8. Defendants Aashu and Asif Ali do not dispute that
they qualify as Plaintiffs’ employers for purposes of the FLSA. Plaintiffs have not
presented any evidence to indicate that ABZZ and/or Zulfiqar Ali qualify as Plaintiffs’
employer. The parties disagree regarding whether Aamir Ali was one of Plaintiffs’
employers.
An “employer” under the FLSA includes “any person acting directly or
indirectly in the interest of an employer in relation to an employee.” 29 U.S.C.
§ 203(d). The Fifth Circuit uses the “economic reality” test to determine employer
status. See Gray v. Powers, 673 F.3d 352, 354-55 (5th Cir. 2012) (citing Williams v.
Henagan, 595 F.3d 610, 620 (5th Cir. 2010); Watson v. Graves, 909 F.2d 1549, 1553
(5th Cir. 1990)). To determine whether an individual or entity is a plaintiff’s

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Plaintiffs also seek summary judgment that Griggs and Basa were employees at
Avalon Cleaners and not independent contractors. Defendants do not assert in this
case that Griggs and Basa were independent contractors. See, e.g., Response, p. 6
(including Griggs and Basa in list of employees); Deposition of Asif Ali, Exh. C to
Motion, pp. 235-36.

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employer, the Court considers “whether the alleged employer: (1) possessed 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.” Gray, 673 F.3d at 355 (quoting Williams, 595 F.3d
at 620). Where, as here, Plaintiffs assert that they had more than one employer, the
Court “must apply the economic realities test to each individual or entity alleged to
be an employer and each must satisfy the four part test.” Id. (quoting Watson, 909
F.2d at 1556).
Plaintiffs rely on Aashu’s answer to an interrogatory in which they asked for
the name of each individual who “possessed authority to take the following actions
on behalf of Aashu LLC and/or Avalon Cleaners . . ..” See Interrogatory No. 2,
Exh. B to Motion. The interrogatory lists twelve activities. Aashu responded to
Interrogatory No. 2 by simply listing the names “Asif Ali” and “Aamir Ali.”
In opposition to summary judgment, Defendants have presented the sworn
deposition testimony of Asif Ali, in which he stated under oath that Aamir Ali does
not make any pay decisions on behalf of Aashu. See Asif Ali Depo., Exh. A to
Response, p. 20. Asif testified that Aamir is a manager who “looks over everything
basically. Makes sure that the quality is good. Makes sure that, if there’s any
customer complaints, we take care of that. Makes sure all the orders, makes sure

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there’s no missing garments and stuff like that. Take care of the – We also do our
routes, a lot of pickups and deliveries. So he takes care of that.” See id. at 21.
Defendants have also presented the Affidavit of Aamir Ali, in which he repeatedly
states under oath that he is “just an employee” of Aashu and that he is not “involved
in managing the employees” of Aashu. See Aff. of Aamir Ali, Exh. C to Response.
Plaintiffs argue that the Court should disregard Asif Ali’s deposition testimony
and Aamir Ali’s Affidavit because they contradict, without explanation, the answer
to Interrogatory No. 2. The Court is not persuaded that the evidence is inconsistent.
Interrogatory No. 2 requests the name of any individual who had authority to engage
in certain activity on Aashu’s behalf, followed by a list of twelve actions. The
Interrogatory is unclear whether it asks for the names of individuals who have
authority to take all twelve actions, or those individuals who have authority to take
any of the twelve actions. One of the actions listed is “train or instruct the employees
on how to perform their work.” See Interrogatory No. 2(e). If Interrogatory No. 2 is
construed as seeking the identity of any individual who has authority to perform any
of the listed activities, the inclusion of Aamir Ali in the Response to Interrogatory No.
2 would be correct and consistent with the deposition testimony that he “makes sure
that the quality is good” and that he takes care of “pickups and deliveries.” The
answer to Interrogatory No. 2 does not preclude consideration of Defendants’

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evidence and does not demonstrate as a matter of law that Aamir Ali qualified as
Plaintiffs’ employer.

Plaintiffs’ Motion regarding the existence of an

employer/employee relationship between Plaintiffs and Aamir Ali is denied.
C.

Overtime Hours Worked by Plaintiffs

Plaintiffs seek summary judgment that they worked the alleged number of hours
per week and that Defendants’ failure to pay them overtime wages was a violation of
the FLSA. In this case, it is undisputed that neither Plaintiffs nor Defendants
maintained records of the hours Plaintiffs worked. Therefore, Plaintiffs’ initial burden
is to produce “some evidence to show the amount and extent” of the hours worked as
a matter of “just and reasonable inference.” See Anderson v. Mt. Clemens Pottery Co.,
328 U.S. 680, 687-88 (1946) (superseded on other grounds by 29 U.S.C. § 254(a));
Beliz v. W.H. McLeod & Sons Packing Co., 765 F.2d 1317, 1330 (5th Cir. 1985); Ali
v. RZS Invs., Inc., 2015 WL 12533093, *2 (S.D. Tex. June 3, 2015). Martinez v.
Global Fin. Servs., L.L.C., 2008 WL 65169, *2 (S.D. Tex. Jan. 4, 2008). The burden
then shifts to the employer to “come forward with evidence of the precise amount of
work performed or with evidence to negative the reasonableness of the inference to
be drawn from the employee’s evidence.” Ali, 2015 WL 12533093 at *2 (quoting Von
Friewalde v. Boeing Aerospace Operations, Inc., 339 F. App’x 448, 455 (5th Cir.
2009)); see also Beliz, 765 F.2d at 1330.

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Plaintiffs testified under oath during deposition regarding the hours they
worked each week. Heard testified that she regularly worked ten to twelve hours per
day, six days per week. Griggs testified that he regularly began working at 7:00 a.m.
and left work each day between 3:00 p.m. and 5:00 p.m. Sanchez testified that she
worked ten to twelve hours per day, six days per week. Basa testified that she worked
fifty-five to seventy hours per week. This testimony satisfies Plaintiffs’ initial burden
to produce evidence that raises a just and reasonable inference as to the number of
hours they worked per week.
Defendants, however, have presented evidence that challenges Plaintiffs’
testimony. Defendants have presented deposition testimony from Asif Ali that none
of the Plaintiffs worked more than forty hours per week and that, indeed, they were
permitted to and often did leave early if they finished their work for the day.
Defendants have also presented sworn affidavits and deposition testimony from other
employees at Avalon Cleaners who worked with Plaintiffs. These employees,
including Francisco Javier Torres, Rachael Lopez, Veronica Barroso Hernandez, and
Semma Charolia, have stated under oath that Plaintiffs did not work more than forty
hours per week. All four employees have stated under oath that Heard regularly
worked from 7:00 a.m. until 1:00 or 1:30 p.m. Hernandez and Charolia stated under
oath that Griggs usually left work between 11:30 a.m. and noon. Charolia stated

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under oath that Sanchez typically worked from 7:30 a.m. until 1:30 p.m. This
evidence raises a genuine issue of material fact regarding whether Plaintiffs worked
more than forty hours per week and, as a result, summary judgment on this issue is
denied.
D.

Willfulness and Good Faith

Plaintiffs seek summary judgment that Defendants’ violation of the FLSA was
willful and not in good faith.3 Because there are genuine issues of material fact
regarding whether any Defendant violated the FLSA in this case, Plaintiffs are not
entitled to summary judgment on these issues.
IV.

CONCLUSION AND ORDER
The uncontroverted evidence in the record demonstrates that there is enterprise

coverage as to Defendant Aashu for both 2014 and 2015. There is no dispute that
there existed an employee/employer relationship between Plaintiffs and Defendants
Aashu and Asif Ali, but fact issues preclude summary judgment regarding whether
Defendant Aamir Ali qualified as Plaintiffs’ employer for FLSA purposes. The
parties have presented evidence that raises a genuine issue of material fact regarding
3

Additionally, Plaintiffs seek summary judgment on Defendants’ affirmative defenses
of “failure to state a claim,” failure to “meet the necessary requirements for class
certification,” waiver, laches, estoppel, ratification, acquiescence, unclean hands,
“failure to mitigate damages,” and requirement to arbitrate dispute. Defendants have
not opposed Plaintiffs’ Motion on these affirmative defenses or otherwise pursued
them and, therefore, they are deemed abandoned.

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whether Plaintiffs worked overtime hours and, as a result, Plaintiffs’ Motion on this
issue is denied. Absent a finding that Defendants violated the FLSA, the Court does
not grant summary judgment that any violation was willful and not in good faith.
Accordingly, it is hereby
ORDERED that Plaintiffs’ Motion for Partial Summary Judgment [Doc. # 103]
is GRANTED in part and DENIED in part as set forth herein. It is further
ORDERED that Defendants Aashu and Asif Ali’s Motion for Leave to
Respond to Plaintiffs’ Reply [Doc. # 121] is GRANTED. It is further
ORDERED that the parties’ Joint Pretrial Order remains due February 16,
2017, and docket call remains scheduled for February 27, 2017.
SIGNED at Houston, Texas, this 13th day of January, 2017.

NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE

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