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Chen v. Gypsophila Nail & Spa Inc.

United States District Court, S.D. New York

June 2, 2015

SHU LAN CHEN, individually and on behalf of all other employees similarly situated, Plaintiff,
v.
GYPSOPHILA NAIL & SPA INC.,

OPINION AND ORDER

J. PAUL OETKEN, District Judge.

Plaintiff Shu Lan Chen ("Plaintiff") brings this putative collective and class action against Gypsophila Nail & Spa Inc. ("Gypsophila"); "Sherry W" Doe (whose last name is unknown); and several other unidentified defendants designated as John Does and Jane Does #1-10 (collectively, "Defendants"). Plaintiff asserts claims for violations of federal and state wage and hour laws. Defendants now move to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. For the reasons that follow, Defendants' motion is denied.

I. Discussion

The thrust of Defendants' argument is that Plaintiff's claims under the federal Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., are subject to dismissal on jurisdictional grounds because Plaintiff has not demonstrated that the FLSA's statutory coverage applies to Defendants. Defendants further contend that, because the FLSA claims fail, there is no claim over which the Court has original jurisdiction, and the state law claims under the New York Labor Law ("NYLL") should be dismissed for lack of subject matter jurisdiction.

A. FLSA Claims

The FLSA's minimum wage and overtime requirements provide coverage to employees who "in any workweek [are] engaged in commerce or in the production of goods for commerce, or [are] employed in an enterprise engaged in commerce or in the production of goods for commerce." 29 U.S.C. §§ 206(a), 207(a)(1). "Thus, an employer is subject to both the minimum wage and overtime provisions of the FLSA if either (1) [its] employees are engaged in commerce' or (2) the employer is an enterprise engaged in commerce.'" Jia Hu Qian v. Siew Foong Hui, No. 11 Civ. 5584 (CM), 2012 WL 1948820, at *1 (S.D.N.Y. May 30, 2012). "These two distinct types of coverage are termed individual coverage' and enterprise coverage, ' respectively." Id.

For purposes of the FLSA, "commerce" is defined as "trade, commerce, transportation, transmission, or communication among several States or between any State and any place outside thereof." 29 U.S.C. § 203(b). As relevant here, "enterprise engaged in commerce or in the production of goods for commerce, " for purposes of enterprise coverage, includes any enterprise that:

(i) has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person; and
(ii) is an enterprise whose annual gross volume of sales made or business done is not less than $500, 000 (exclusive of excise taxes at the retail level that are separately stated).

29 U.S.C. § 203(s)(1)(A).

Initially, the Court concludes that the question whether "enterprise coverage" applies is an element of the FLSA cause of action, and is not jurisdictional. See Rocha v. Bakhter Afghan Halal Kababs, Inc., 44 F.Supp. 3d 337, 343-44 (E.D.N.Y. 2014) (reviewing case law and concluding that "whether Plaintiffs can establish [FLSA] coverage is an element of Plaintiffs' claim and is not determinative of the Court's jurisdiction"); Chang Mei Lin v. Yeh's Bakery, Inc., No. 12 Civ. 2146 (JG), 2013 WL 867436, at *2 (E.D.N.Y. Mar. 7, 2013); Jia Hu Qian, 2012 WL 1948820, at *2; Benitez v. F&V Car Wash, Inc., No. 11 Civ. 1857 (DLI) (SMG), 2012 WL 1414879, at *1-2 (E.D.N.Y. Apr. 24, 2012) (holding that "the question of whether a defendant qualifies as an enterprise under the FLSA is not a jurisdictional issue, but an element that a plaintiff must establish in order to prove liability, " and reminding counsel of their obligations under Rule 11); Velez v. Vassallo, 203 F.Supp.2d 312, 330 (S.D.N.Y. 2002) (holding that the showing of enterprise coverage is "simply an element of the cause of action").[1]

"While Plaintiff will have to ultimately prove that Defendants grossed more than $500, 000 in annual sales in order to be successful on [her] FLSA claims, the Court has jurisdiction over Plaintiff's FLSA claims irrespective of whether Plaintiff can ultimately prevail on the merits." Jia Hu Qian, 2012 WL 1948820, at *3 (internal brackets and quotation marks omitted). Accordingly, because jurisdiction is not implicated, the Court construes the motion to dismiss the FLSA claims as a Rule 12(b)(6) motion for failure to state a claim.

Defendants argue that the complaint fails to plead that either enterprise or individual coverage applies here. (Dkt. No. 6 ("Def. Br.") at 5.) The Court disagrees. Because the complaint sufficiently pleads FLSA enterprise coverage, it is unnecessary to reach the question of individual coverage.

First, Defendants contend that Plaintiff has failed to meet the prong of the enterprise coverage requirement regarding whether the enterprise has an "annual gross volume of sales made or business done" of "not less than $500, 000." Defendants' opening brief makes numerous factual assertions that conflict with the complaint, including that Gypsophila "did not have an annual gross volume of at least $500, 000, 000 [sic] in sales made or business done." Rather, Defendants assert, Gypsophila had "annual ...


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