The opinion of the court was delivered by: Nicholas G. Garaufis, United States District Judge.
In this Fair Labor Standards Act ("FLSA") case, Plaintiffs Hui Lin, Pin Yun Zhang, Wen Ming Lin, Huang Chen, Ai Yi Lin, and Yu Jiao Lin ("Plaintiffs") allege that they were deprived of a minimum wage and overtime pay while working in a garment factory, and ultimately discharged from their employment in retaliation for pursuing their rights to this compensation. (Docket Entry #9, Amended Complaint ("Am. Compl.").) In connection with their retaliatory discharge claim, Plaintiffs moved for immediate injunctive relief reinstating each of them to their former positions. (See Docket Entry #16, Order to Show Cause.)
On January 7, 2009, the court denied Plaintiffs' motion for a temporary restraining order ("TRO") reinstating them to their prior employment, but scheduled a hearing to consider a preliminary injunction. (Id.) The court issued a limited TRO prohibiting Defendants Great Rose Fashion, Inc., Silver Fashion, Inc., Great Wall Corp., Ping Nen Lin, Xiao Yan Lin, and Fang Zhen ("Defendants") from engaging in any future retaliatory conduct, including the closing or suspension of operations of Defendants' businesses located at 47-23 36th Street, 47-22 36th Street, and/or 47-27 36th Street, Long Island City, New York, to the extent they were in operation at the opening of business on January 7, 2009. (Id.) The court further enjoined the Defendants from removing any equipment allegedly owned by Defendant Silver Fashion, Inc. from the premises of its current location, or entering into a contract of sale or otherwise disposing of such equipment, absent further order from the court. (See id.; Docket Entry #20, Order dated January 20, 2009 (extending TRO pending decision of the court on further injunctive relief).)
The court held an evidentiary hearing on January 13 and 15, 2009 (the "Hearing") in order to evaluate Plaintiffs' Motion for a Preliminary Injunction, and sought post-hearing briefing by the parties. (See Docket Entry #20 (setting briefing schedule); Docket Entry #24, Plaintiffs' Post-Hearing Memorandum in Support ("Pl. Post-Hearing Mot.")). Defendants opposed the Plaintiffs' Motion, and cross-moved to dismiss on the ground that Plaintiffs lack standing to sue under the FLSA. (Docket Entry #29, Defendants' Post-Hearing Memorandum in Opposition ("Def. Post-Hearing Opp.").)
For the reasons set forth below, Defendants' Motion to Dismiss the action for lack of standing is DENIED. Plaintiffs' Motion for a Preliminary Injunction seeking reinstatement is also DENIED.
Plaintiffs worked in a garment factory located at 47-27 36th Street in Long Island City, New York (the "Factory"), from approximately November 2005 until January 5, 2009. (Tr. 31, 33, 78-79.) Plaintiffs Huang Chen, Ai Yi Lin, Hui Lin, Wen Ming Lin, and Pin Yun Zhang served as "packers" at the Factory (the "Packer Plaintiffs"); Plaintiff Yu Jiao Lin served as a "thread cutter." (Tr. 70-71, 79.) Defendants Ping Nen Lin ("Mr. Lin") and Xiao Yan Lin ("Mrs. Lin") are a married couple (collectively, "the Lins"). The Lins owned and managed the Factory through some combination of the defendant corporations -- Great Rose Fashion, Inc. ("Great Rose"), Silver Fashion, Inc. ("Silver Fashion"), and Great Wall Corporation ("Great Wall") (collectively, the "Defendant Corporations") -- each of which was located in the same building at 47-27 36th Street, Long Island City, and owned, operated, and controlled by either the Lins or Mrs. Lin's parents, who reside in China. (Tr. 158-59, 104, 191, 237, 241-42, 251.) Through one or more of these entities, Defendant Fang Zhen was employed by the Lins to oversee "quality control" at the Factory. (Tr. 179.)
Plaintiffs filed this action on November 25, 2008, claiming they were deprived of a minimum wage and overtime pay in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-219, and New York Labor Law while working at the Factory. (Docket Entry #1, Complaint ("Compl.")) The Lins were served on December 17, 2008, and Fang Zhen was served the next day. (Tr. 84-85, 90-91; Docket Entries #2-7, Executed Summons.) Plaintiffs allege that immediately following receipt of the complaint, Defendants engaged in a series of adverse employment actions, such as reducing Plaintiffs' hours, altering their form of payment, and harassing Plaintiffs and other workers about the suit. (Am. Compl. ¶¶ 50-58.) The pattern allegedly culminated in the dismissal of Plaintiffs from their jobs on January 5, 2009. (Id. ¶ 54.) Plaintiffs amended their complaint to include retaliation claims under 29 U.S.C. § 215(a)(3) and New York Labor Law § 215, and moved the court for a temporary restraining order (TRO) seeking reinstatement on the basis of these retaliation claims. (See id. ¶¶ 91-100; Order to Show Cause.)
Defendants claim that Plaintiffs were dismissed solely because economic conditions forced the Factory to go out of business. (Def. Post-Hearing Opp. 1; Tr. 219.) Plaintiffs assert that this is a pretext for Defendants' retaliatory actions and that the Factory remains in operation. Further, Defendants argue that Plaintiffs lack standing under the FLSA and New York Labor Law because they served as "independent contractors" rather than employees of the Factory, and therefore are not entitled to the protections provided by those statutes. Defendants also argue that none of the named Defendants is subject to liability because they do not qualify as the "employers" of these Plaintiffs under the FLSA and New York Labor Law.
The following findings of fact are drawn from the evidence presented at the Hearing. The court prefaces its findings with a few comments about these unusual proceedings. All of the witnesses testified through the aid of court-certified Chinese language interpreters, retained by counsel. Three of the Plaintiffs speak only the Fujianese dialect; the remaining three plaintiffs speak both Fujianese and Mandarin. (Tr. 10.) The Defendants are Mandarin speakers. (Tr. 10.) Despite competent interpretation, the Hearing was plagued with obstacles that went beyond the challenges of translation and cross-cultural understanding. Some witnesses obstructed the process by providing evasive and dishonest testimony, an issue discussed further below. Other witnesses were not adequately prepared for testimony by their counsel. Inexperienced and unprepared counsel often faltered through unfocused and inappropriate questioning, for example, failing to lay basic foundations for evidence or follow rudimentary courtroom procedure, neglecting to elicit factual detail, and aggressively leading witnesses on direct examination.*fn1 The court frequently intervened to examine witnesses and clarify witness testimony in order to maintain the integrity of the proceedings. The court's role, however, is limited to the administration of justice, and does not extend to performing the functions of counsel for any party. As a result of these difficulties, some factual issues could not be resolved at the Hearing. These circumstances are noted in the findings set forth below where necessary.
A. Defendants' Corporate Structure
The Factory was located on the second floor of a brick building at 47-27 36th Street, Long Island City (the "36th Street Building"). (Tr. 104.) Various companies owned by Defendants and their relatives operate from the 36th Street Building. The exterior is marked "Great Wall Corporation." (Tr. 25-26; Pl. Ex. 1.) The building is owned by a company called "JDA Realty," which in turn is owned by Mrs. Lin. (Tr. 170.) JDA Realty rents the building to Great Wall. (Tr. 170.) Mrs. Lin's husband is the sole owner of Great Wall. (Tr. 158, 164, 181.) The parties have not specified the amount of rent, if any, that Mr. Lin's company pays to his wife's company.
Great Wall maintains a warehouse on the first floor of the 36th Street Building, and offices on the third floor. (Tr. 177, 179, 181.) Great Wall is a wholesale garment company, which contracts with third-party manufacturers in the United States and China for goods to be resold to retailers. (Tr. 158.) Until the end of 2008, Great Wall sublet part of the second floor of the building to another entity, Silver Fashion, at a purported rate of $18,000 a month. (Tr. 159, 170.) Silver Fashion was a garment manufacturing company, owned in absentia by Mrs. Lin's parents, who live in China. (Tr. 159, 241-42, 251.) Great Wall and Silver Fashion are the 36th Street Building's only occupants. (Tr. 179.) In effect, Mr. Lin rented the building from his wife and sublet part of it back to her parents.
The space ostensibly rented to Silver Fashion constituted the Factory. The remainder of the second floor was occupied by Great Wall's "cutting room." (Tr. 178.) Some paper boxes provide the only physical separation between the Great Wall "cutting room" and Silver Fashion's Factory. (Tr. 178.) Since Silver Fashion went out of business on December 31, 2008, it is unclear whether the space has been rented to a new tenant. (See Tr. 182.) The second floor Factory space has never been rented out to anyone other than Mr. Lin, Mrs. Lin, and Mrs. Lin's parents, or companies controlled by them. (Tr. 170-171.)
Silver Fashion was not merely a commercial tenant; the business operations of Silver Fashion were closely interwoven with those of Great Wall. Great Wall was a customer of Silver Fashion, which supplied garments made in its Factory to Great Wall for sale. (Tr. 171-172.) In fact, Great Wall was Silver Fashion's only customer. (Tr. 253.) Silver Fashion existed for the singular purpose of manufacturing garments for Great Wall.
Silver Fashion was itself the successor to an earlier company, Great Rose Fashion, Inc. ("Great Rose"), which in turn succeeded a company known as Spring Fashion ("Spring Fashion"). (Tr. 241-47.) Spring Fashion was allegedly closed and re-opened under the auspices of Great Rose pursuant to the advice of an accountant. (Tr. 244.) Mrs. Lin closed Great Rose and re-opened the business as Silver Fashion around June or July 2008 at the purported request of her parents. (Tr. 249, 251.) These companies were virtually identical: they were under the same ownership (Mrs. Lin's parents) and management (Mrs. Lin), engaged in the same business, used the same equipment, maintained the same staff, and operated out of the same location -- the second floor of the 36th Street Building. (Tr. 241-53.) The only difference was the company's official name. All of these companies manufactured goods for sale to a sole client: Great Wall. (Tr. 242, 253.)
Defendants argue that Great Wall is an entirely separate business from the Factory. (Def. Post-Hearing Opp. 10-13.) They claim that the Factory was solely the enterprise of Silver Fashion and related predecessor entities exclusively owned by Mrs. Lin's parents, who are not parties to this suit. (Id. 8-19.) They emphasize that Mr. Lin is the sole owner of Great Wall, but is not an owner, officer, or employee of any of the other Defendant Corporations. (Tr. 158.) Each of the individual Defendants insisted that they worked purely for Great Wall and denied control over the Factory. These contentions quickly unraveled in the course of the Hearing.
Mrs. Lin testified that she works for Great Wall. (Tr. 237.) Mrs. Lin denied that she was employed by Silver Fashion, conceding only that she "takes care of [her] parents' garment factory for them." (Tr. 240.) Mrs. Lin contributes "design and development" work for Great Wall. (Tr. 238.) In this capacity, she assesses and modifies the design of sample garments, and makes her own samples based upon garments that she finds in department stores. (Tr. 239.) Mrs. Lin did not explain where the garments that she custom-designed for Great Wall were manufactured.
Fang Zhen's testimony regarding the Defendants' corporate structure appeared evasive and rehearsed. Fang Zhen identified herself as "a friend of Mrs. Lin" and testified that she was employed by Great Wall. (Tr. 104, 116.) She identified Mr. Lin as her boss. (Tr. 131.) She noted that she also served as a "supervisor" and "quality control person" in the Factory "downstairs." (Tr. 104; 107.) Fang Zhen has worked at other factories owned by Great Wall over the years; at one point, the company owned "six to seven factories." (Tr. 104.) Fang Zhen testified that Great Wall has maintained one factory for the past two years.*fn2 (Tr. 104.) She denied working for any other company, but stated alternately that "I only work for Mrs. Lin, I only help Mrs. Lin." (Tr. 107-108.)
Fang Zhen could not identify which corporation issued her paychecks at first, but later stated that Mr. Lin paid her wages. (Tr. 108, 132.) She said she had only learned of Silver Fashion in the summer of 2008, and had never heard of Great Rose Fashion or Spring Fashion. (Tr. 107-108.) However, she claimed "I realized that our company and the factory, there's distinction between the two" because the second floor Factory was rented out to Silver Fashion. (Tr. 108-09.) Fang Zhen later elaborated that "Great Wall Corporation subcontracted the garments to Silver Fashions to manufacture" and that, as part of her duties at Great Wall, she "occasionally went downstairs to check the quality of those garments." (Tr. 132.)
When asked whether Mrs. Lin worked for both Great Wall and Silver Fashion, Fang Zhen responded: "Yes, I know that Mrs. Lin helped her parents." (Tr. 108.) Throughout her testimony, Fang Zhen repeated her refrain: "I only helped Mrs. Lin." (Tr. 117, 131.) She claimed not to know what work Mrs. Lin did at the company, but that Mrs. Lin "occasionally helped her parents run this factory." (Tr. 117, 130.)
Mr. Lin's credibility was repeatedly impeached at the Hearing as he described the nature of his business, Great Wall, and its relationship to the other Defendant Corporations. A few examples are highlighted below.
Plaintiffs confronted Mr. Lin with information published on Great Wall's website. (Tr. 165; Pl. Ex. 4.) Mr. Lin testified that Great Wall employed only 22 people, although the website stated that the company had 120 employees. (Tr. 165.) Confronted with the discrepancy, Mr. Lin denied that Great Wall had ever employed that many workers and stated that he had misrepresented the figure on the website as an "advertisement" for the company. (Tr. 165.) The website further stated that "Great Wall owns and operates four sewing factories in Long Island City." (Tr. 166.) Mr. Lin declared that this was untrue, and that he had posted this misrepresentation on the website "[b]ecause of the website was only a tool as an advertisement for the company and I listed those factories who processed my garments as my own." (Tr. 167.) This line of questioning offered only three possible conclusions: that Mr. Lin had affirmatively misrepresented his business operations in the past, that he lied at the Hearing in an attempt to insulate himself from liability, or that he has engaged in multiple acts of deceit and dishonesty.
Later in his testimony, Mr. Lin claimed that while Great Wall was Silver Fashion's only customer, Silver Fashion supplied only 3-4% of Great Wall's inventory. (Tr. 172.) Mr. Lin asserted that the remainder of his inventory was manufactured by other factories, and mostly imported from China. (Tr. 173.) When questioned directly and extensively by the court, Mr. Lin could not identify a single supplier to his wholesale business other than Silver Fashion. (Tr. 182-187 (Q: "Do you know any of the names of these companies?" A: "I'm not very familiar with that.").) He alleged that he received invoices from a variety of supplier companies, and personally signed the checks to pay these invoices, but that he did not know the identities of the payees. (Tr. 186-87.) In effect, Mr. Lin testified that he was the sole owner and officer of a wholesale company, whose entire business consisted of purchasing goods from manufacturers and reselling those goods, but that he did not know the name or location of any of these alleged suppliers or any persons affiliated with them.
At sidebar, the court told counsel that Mr. Lin had lied to the court. (Tr. 188 ("You got a client who is lying to the court as far as I'm concerned . . . . There is no possibility that this individual who runs a company which he owns himself doesn't know the companies with which he's doing business, particularly when he signs the checks that go out before they go out."), 190 ("He said he takes the invoices, he signs the checks, and he doesn't know any of the payees to whom he sends the money in a small business that he's been in for four years. It's not credible, sir."). The court concluded that "his testimony . . . deserves absolutely no consideration based on the fact that he can't tell me a single company with which he does business." (Tr. 189.) Consistent with this determination issued at the Hearing, Mr. Lin's testimony as to the separation of his business from the Factory allegedly maintained by Silver Fashion is not entitled to any weight in this decision. Mr. Lin's incredible testimony only adds to the mounting evidence of Defendants' deceptive business and employment practices.
B. Plaintiffs' Employment Relationship with the Factory
Plaintiffs Yu Jiao Lin and Wen Ming Lin identified the 36th Street Building as their place of employment over the past three years, but neither knew the name of the company that had employed them.*fn3 (Tr. 31, 95.) They explained that the Factory contains different "departments" for sewing, packing, and perhaps other operations, and that the sewing department was located in the back. (Tr. 48-49.) Wen Ming Lin testified that he understood the Factory to be the enterprise of a single company, and that the same individuals -- including Mrs. Lin and Fang Zhen -- oversaw all of the departments. (Tr. 49.)
Plaintiff Wen Ming Lin testified that he was hired to work at the Factory by Fang Zhen and "the Boss Lady," whom he identified in the courtroom as Mrs. Lin. (Tr. 31.) Wen Ming Lin testified that he never hired anyone to work at the Factory. (Tr. 35-36.) At some point in time, Mrs. Lin told him she needed additional workers and asked him to find people to fill the positions. (Tr. 52-53.) He made some phone calls and brought in three or four candidates for Mrs. Lin to consider. (Tr. 53.)
Plaintiff Yu Jiao Lin testified that she was referred by a friend who no longer works at the Factory, and Fang Zhen and the "Boss Lady" interviewed her for her position as a "thread cutter." (Tr. 78-79.) Yu Jiao Lin testified that only Mrs. Lin and Fang Zhen had the ability to hire and fire workers, and set wages. (Tr. 80-81.)
At first, Fang Zhen testified that she and Mrs. Lin interviewed the Plaintiffs for their positions at the Factory, but upon objection to the translation of the verb "interview" from defense counsel and restatement of the question, she stated that she did not conduct any interviews. (Tr. 110.) Mrs. Lin denied hiring the Plaintiffs. (Tr. 228.)
According to Wen Ming Lin, Mrs. Lin gave orders to Fang Zhen, who then managed the workers. (Tr. 33.) Schedules and other directives were passed down through this chain of command. (Tr. 33-34.) Wen Ming Lin testified that he never set anyone's schedule, and never told other employees what work to do there. (Tr. 35-36.) Plaintiff Yu Jiao Lin also testified that Fang Zhen supervised her, checked her work, managed her wages, and disciplined her. (Tr. 79-80.)
Fang Zhen denied supervising any of the Plaintiffs. (Tr. 112-113.) Instead, she claimed that a "Hispanic" man named Jose Ismael supervised the Plaintiffs. (Tr. 112-116.) She admitted that this alleged supervisor did not speak Mandarin or any other language that the Plaintiffs could understand, and stated that she "would do some translation." (Tr. 113.) She repeatedly described the Plaintiffs as "subcontracting for Mrs. Lin," but failed to describe the functions of these work relationships at the Factory in practical terms. (Tr. 121.)
Mrs. Lin claimed that Silver Fashion had only twenty employees, categorizing the remainder of the Factory's workers as "contractors." (Tr. 218.) The twenty alleged "employees" were never identified by name and none testified at the Hearing. If a worker arrived late and required ...