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Ke v. 85 Fourth Avenue Inc.

April 20, 2009

YONG F. KE, GUO W. LI, LI R. YOU, LI S. YOU, AND ZHI L. XIE, PLAINTIFFS,
v.
85 FOURTH AVENUE INC., HEONG G. CHIN A.K.A ROSIE CHIN, CHIN CHEOW CHIN A.K.A. PATRICK CHIN A.K.A. CHIN C. HEOW A.K.A CHIN C. CHEOW, HAPPY PALACE, INC. AND LINDA CHEN. DEFENDANTS.



The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge

MEMORANDUM AND ORDER

This is an action brought by former restaurant delivery workers at Rosie & Ting Noodles and Grill ("Rosie & Ting"). The plaintiffs allege that their former employers, defendants 85 Fourth Avenue, Inc., Rosie Chin, and Chin Cheow Chin (the "Rosie & Ting defendants"), failed to pay them the required minimum wage, overtime, and spread of hours compensation; failed to compensate them for costs incurred for required equipment; and misappropriated their tips, all in violation of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (the "FLSA"), and New York State Labor Law. In addition, Plaintiff Li R. You asserts claims for retaliatory discharge against a subsequent employer, Happy Palace, Inc. and Linda Chen, as well as against the Rosie & Ting defendants. The instant motions concern a number of discovery disputes between the plaintiffs and the Rosie & Ting defendants.

Background

Discovery in this case has been ongoing for over a year and is scheduled to conclude by May 29, 2009. (Order dated March 30, 2009). In January 2009, after receiving letters from both parties in connection with certain discovery disputes, I issued an order that is directly relevant to several of the issues now contested between the parties. In response to the plaintiffs' requests for the defendants' tax records, bank statements, and applications for credit lines, I ordered that the defendants produce all corporate bank statements; corporate tax returns in full; and the tax returns for Mr. and Mrs. Chin in redacted form, showing the source and amount of all income reported.*fn1 (1/26/09 Order, ¶¶ 2-3). I noted that the plaintiffs had demonstrated "a compelling need for [that] information to determine the extent of FLSA coverage." (1/26/09 Order, ¶ 3). Conversely, I found that the plaintiffs need not disclose their tax returns, ruling that the defendants failed to show a compelling need. (1/26/09 Order, ¶ 6).

Each party now moves to compel the production of certain documents pursuant to Rule 37 of the Federal Rules of Civil Procedure. Specifically, the plaintiffs seek production of (1) corporate income tax returns in full, without redactions of employee names; (2) Mr. and Mrs. Chin's personal state and local tax returns; and (3) statements of Mr. and Mrs. Chin's personal bank accounts and credit lines. (Memorandum of Law in Support of Plaintiffs' Motion to Compel the Production of Documents ("Pl. Memo.") at 8-9, 12). In addition, the plaintiffs contest the redactions on the defendants' personal federal income tax returns, claiming that they obscure the sources and amounts of the defendants' income. (Pl. Memo. at 10).

The defendants seek production of (1) documents relating to the plaintiffs' claim that the restaurant's sales exceeded $500,000;*fn2 (2) documents reflecting detailed computations of alleged damages; (3) the plaintiffs' tax returns; and (4) any "other documents that would evidence Plaintiffs' other income and/or employment" during the relevant time period, including documents requested in the Defendants' Second Request for the Production of Documents Nos. 2-11. (Reply Declaration of Samuel Chuang in Support of Motion to Compel Deposition of Plaintiffs and Production of Documents ("Chuang Reply Decl."), ¶¶ 10, 18, 20-25, 28-32; Declaration of Samuel Chuang in Support of Motion to Compel Production of Documents Pursuant to Fed. R. Civ. P. 37 & 34 ("Chuang Decl."), ¶¶ 13-14, 18-19, 34, 39).*fn3 The defendants also request additional time to depose each plaintiff, during which the plaintiff would be precluded from asserting the Fifth Amendment in response to questions concerning tax returns and would be directed to answer questions about any past criminal convictions. (Reply Memorandum of Law in Further Support of Defendants' Motion to Compel ("Def. Reply Memo.") at 7-10).

Discussion

A. Plaintiff's Motion to Compel Production of Documents

Each of the plaintiffs' three production requests was previously resolved by the January order. In no uncertain terms, that opinion ordered the defendants to produce federal, state and local corporate tax returns in full, without redactions of any kind. (1/26/09 Order, ¶ 3). Similarly, the defendants were previously ordered to produce federal, state and local tax returns for Mr. and Mrs. Chin. (1/26/09 Order, ¶ 3). The defendants neither appealed that decision nor sought reconsideration of it; their time to do so has now passed. See Fed. R. Civ. P. 72(a) (allowing 10 days for appeal of magistrate judge's non-dispositive decisions); Local Civil Rule 6.3 ("A notice of motion for reconsideration . . . of a court order determining a motion shall be served within ten (10) days after the entry of the court's determination . . . ."). Therefore, the defendants remain obligated to produce corporate tax returns without redactions of any kind and to produce Mr. and Mrs. Chin's state and local tax returns*fn4 with appropriate redactions. Failure to do so within two weeks of this decision will result in sanctions.

Conversely, although the plaintiffs requested statements of Mr. and Mrs. Chin's personal bank accounts and applications for credit lines "in tandem with Defendants' [individual] tax returns" (Reply Memorandum of Law in Support of Plaintiffs' Motion to Compel ("Pl. Reply. Memo") at 8; Letter of Anna Thea Bridge dated Dec. 5, 2008 ("Pl. 12/5/08 Letter"), attached as Exh. 2 to Yoon 3/24/09 Decl., at 6-8), I declined to order production of these documents. (1/26/09 Order, ¶ 4). As the plaintiffs neither appealed the January order nor sought reconsideration of it, they too have lost their opportunity to contest that decision. Accordingly, the defendants need not produce these documents.

Finally, the plaintiffs contend that the federal income tax returns produced for Mr. and Mrs. Chin are inappropriately redacted, thus obscuring the sources and amounts of the defendants' income. The defendants claim, however, that the redacted portions are "either personal information or items of deduction, loss, or credit" and affirm that "the source and amount of all income is revealed." (Declaration of Samuel Chuang dated March 24, 2009 ("Chuang Opp. Decl."), ¶¶ 28-30). To resolve this dispute, I reviewed, in camera, one of the tax returns in unredacted form. The redactions are proper; the source and amount of all income is revealed.

B. Defendants' Motion to Compel Production of Documents

1. Documents Concerning Rosie & Ting's Alleged Sales

The parties vehemently dispute whether Rosie & Ting collected more than $500,000 in annual gross sales, a prerequisite for the plaintiffs' FLSA claims. Asserting that the plaintiffs have "produced nothing to support [their] specious allegations" that Rosie & Ching grossed $500,000 or more in annual sales, the defendants demand any documents in the plaintiffs' possession that support this claim and, specifically, any Rosie & Ching sales receipts in the ...


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