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Matthew Roach, Melissa Longo, Garrett Titchen, and Christina Apple v. T.L. Cannon Corp.

August 24, 2012

MATTHEW ROACH, MELISSA LONGO, GARRETT TITCHEN, AND CHRISTINA APPLE, PLAINTIFFS,
v.
T.L. CANNON CORP., D/B/A APPLEBEE'S, T.L. CANNON MANAGEMENT CORP., TLC WEST, LLC, TLC CENTRAL, LLC, TLC UTICA, LLC, TLC EAST, LLC, TLC NORTH, LLC, DAVID A. STEIN, MATTHEW J. FAIRBAIRN, AND JOHN A. PERRY,
DEFENDANTS.



The opinion of the court was delivered by: Thomas J. McAVOY, Senior United States District Judge

DECISION & ORDER

I. INTRODUCTION

The plaintiffs in this action, all former employees of the defendants, have commenced this action, styled as a Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and New York State Labor Law collective and class action, against the operators of approximately fifty-three Applebee's Neighborhood Grill and Bar Restaurants ("Applebee's") throughout New York State. In their complaint Plaintiffs allege the existence of systemic policies and practices in place at defendants' restaurants resulting in violations of various provisions of the New York State Labor Law and the FLSA. This action has been preliminarily certified as a collective action for purposes of Plaintiffs' claims under the FLSA, limited to one Applebee's location. The motion for broader FLSA collective action certification, and for Rule 23 class certification with regard to their claims under the New York Labor Law, however, was denied without prejudice.

Defendants have now moved for summary judgment pursuant to Fed. R. Civ. P. 56 seeking judgment in their favor on certain claims pertaining to the named Plaintiffs. See Mot. dkt. # 66. Plaintiffs opposed the motion, dkt. # 72, and Defendants replied. dkt. # 73. Since the submission of the summary judgment motion, Plaintiffs moved for leave to file a second amended complaint, dkt. # 90, and filed a motion for class certification pursuant to Rule 23 and for conditional certification pursuant to the Fair Labor Standards Act. See dkt. # 91. The motion to amend was granted by Magistrate Judge Peebles on the consent of Defendants. See 8/15/12 Text Ord. The Second Amended Complaint does not add new claims, see dkt. # 90-1, p. 1,*fn1 and the motion for class certification is currently outstanding. See 8/15/12 Text Order (granting parties' request to adjourn motion to the 9/28/12 motion calendar). This Decision and Order will be limited to the arguments presented in the motion addressed to certain claims by the named Plaintiffs.*fn2

II. BACKGROUND

The majority of the material facts on this motion are not disputed, see Plaintiffs' Response to Defendants' Local Rule 7.1(a)(3) Statement, Doc. # 72-2, and such facts will be discussed where relevant below.

III. STANDARD OF REVIEW

On a motion for summary judgment the Court must construe the properly disputed facts in the light most favorable to the non-moving party, see Scott v. Harris, 127 S. Ct. 1769, 1776 (2007), and may grant summary judgment where "there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see O'Hara v. National Union Fire Ins. Co. of Pittsburgh, PA, 642 F.3d 110, 116 (2d Cir. 2011).

IV. DISCUSSION

a. Spread of Hours Claims

The first dispute concerns application of New York's former restaurant industry "spread of hours" provision,*fn3 12 N.Y.C.R.R. § 137--1.7. See Shahriar v. Smith & Wollensky Restaurant Group, Inc., 659 F.3d 234, 242 n. 4 (2d Cir. 2011).*fn4 Section § 137--1.7 appeared in New York's Compilation of Codes, Rules and Regulations in the subpart of Chapter 12 addressed to minimum wages in the restaurant industry. It provided: "On each day in which the spread of hours exceeds 10, an employee shall receive one hour's pay at the basic minimum hourly wage rate before allowances, in addition to the minimum wages otherwise required in this Part." 12 N.Y.C.R.R. § 137--1.7 (2010); see Shahriar, 659 F.3d at 241-42 (Section 137--1.7 "required employers to pay servers an extra hour's pay at the regular minimum wage for each day they work more than ten hours.").

Defendants contend that § 137--1.7 applied only to employees earning at the minimum wage; Plaintiffs contend that § 137--1.7 applied to all non-exempt employees regardless of pay rate. There is no controlling authority on this issue, and case law has varied as to its interpretation of this regulation.

Plaintiffs argue that the Court should follow the reasoning of Doo Nam Yang v. ACBL Corp., 427 F. Supp.2d 327 (S.D.N.Y. 2005), and the cases that have cited Yang. In Yang, the District Court chose not to defer to an April 12, 2006 New York State Department of Labor Opinion Letter that interpreted 12 N.Y.C.R.R. § 142--2.4, an analogous provision to § 137--1.7.*fn5 The Opinion Letter stated that "the 'spread of hours' regulation does not require all employees to be paid for an additional hour, but merely that the total wages paid be equal to or greater than the total due for all hours worked at the minimum wage plus one additional hour at the minimum wage." NY DOL April 12, 2006 Opinion Letter. The Yang Court, noting that it was not bound by the New York State Department of Labor's interpretation, chose to interpret § 142--2.4 itself and held that the regulation was applicable to all hourly paid employees regardless of whether they made more than the minimum wage. Yang, 427 F. Supp.2d at 339-40.

As Defendants point out, however, a majority of the cases since Yang have disagreed as to both the holding that the plain language of the statute did not limit its applicability to minimum wage workers, Chan v. Triple 8 Palace, Inc., No. 03--CV--6048, 2006 WL 851749, at *21 (S.D.N.Y. March 30, 2006) (holding that because section 142--2.4 explicitly provides for an additional wage only "in addition to the minimum wage" required under New York law, "[i]t is therefore to be expected that the provision will not affect workers whose total weekly compensation is already sufficiently above the minimum rate") (emphasis in original), and the court's decision not to grant deference to the Department of Labor opinion letter, Seenaraine v. Securitas Security Services USA, Inc., 37 A.D.3d 700, 701--02, 830 N.Y.S.2d 728, 729 (2d Dep't 2007) ("[T]he Department of Labor's interpretation of the regulation is neither unreasonable nor irrational, nor is it in conflict with the plain meaning of the promulgated language. Thus, it is entitled to deference."). See also Almeida v. Aguinaga, 500 F. Supp.2d 366, 370 (S.D.N.Y. 2007) ("The 'exception' perceived by the Yang court is illusory: no group of well-paid workers is carved out from getting more 'minimum' pay, because the spread-of-hours provision is properly limited to enhancing the compensation of those receiving only the minimum required by law."); Espinosa v. Delgado Travel Agency, No. 05--CV--6917, 2007 WL 656271, at *1--2 (S.D.N.Y. March 2, 2007) ("By its plain language, section 142--2.4(a) only provides supplemental wages to workers who are paid the minimum wage required under New York law. It does not ensure additional compensation to employees whose wages sufficiently exceed that floor."); Jenkins v. Hanac, Inc., 493 F. Supp.2d 556, 558 (E.D.N.Y. 2007)(citing the statutory interpretation in Chan and the rationale for deferring to the Department of Labor from Seenaraine in concurring with the court in Espinosa that "the regulation does not ensure additional compensation to employees whose wages sufficiently exceed the minimum wage floor") (internal quotations and ...


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