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Garcia v. Village Red Restaurant Corp.

United States District Court, S.D. New York

May 8, 2017


          Louis Pechman, Esq. Vivianna Morales, Esq. Lillian M. Marquez, Esq. Pechman Law Group PLLC., Arthur H. Forman, Esq., John A. Mitchell, Esq. Mitchell & Incantalupo.



         The plaintiffs - Valente Garcia, Franklyn Perez, Delfino Tlacopilgo, Miguel Romero Lara, Miguel Botello Gonzaga, Jesus Delgado, Justino Garcia, and Luis Magafia - bring this Fair Labor Standards Act ("FLSA") and New York Labor Law ("NYLL") action against Village Red Restaurant Corp. ("Village Red"), Christine Serafis, and Nicholas Serafis. The plaintiffs allege that during their employment at Waverly Restaurant ("Waverly"), the defendants violated the FLSA's and NYLL's overtime, minimum wage, and tools- of-the-trade provisions; the plaintiffs also claim that the defendants' failure to provide spread-of-hours pay, wage notices, and wage statements violated the NYLL. The plaintiffs have moved for summary judgment on their claims, seeking damages, liquidated damages, prejudgment interest, attorneys' fees and costs, and post-judgment interest. The defendants have cross-moved for partial summary judgment, arguing that Ms. Serafis is not the plaintiffs' employer. For the reasons that follow, the defendants' motion is granted, and the plaintiffs' motion is granted in part and denied in part.


         Waverly is a twenty-four hour diner in Manhattan that provides both dine-in and delivery services. (Plaintiffs' Statement of Undisputed Facts (“Pl. 56.1 Statement”), ¶ 1). Waverly was first opened in 1979 or 1980 by Mr. Serafis, Gus Benetos, and John Siderakis. (Pl. 56.1 Statement, ¶ 18). Later, Mr. Siderakis bought out his partners; however, Mr. Serafis retained the right to purchase the restaurant and continued to manage and operate Waverly. (Pl. 56.1 Statement, ¶¶ 19-20). In 1993, Mr. Serafis transferred the purchase right to his daughter, Ms. Serafis, for “estate purposes”; some time later, she exercised this right. (Pl. 56.1 Statement, ¶¶ 21-23). There was some collaboration between Mr. Serafis and Ms. Serafis in the purchase of the restaurant, and Mr. Serafis told Ms. Serafis that “we buy this business and it's for you”; however, Mr. Serafis does not remember personally providing any money to buy the restaurant and stated that he “let my daughter buy the business instead of me.” (Pl. 56.1 Statement, ¶¶ 23-24; Defendants' Rule 56.1 Statement (“Def. 56.1 Statement”), ¶ 6; Plaintiffs' Rule 56.1 Counter Statement of Undisputed Material Facts, ¶¶ 5-6). After the purchase, she did not operate the restaurant but “gave [Mr. Serafis] permission” to continue to manage Waverly. (Pl. 56.1 Statement, ¶ 29).

         On January 15, 2003, Village Red was incorporated, and it has since owned and operated Waverly. (Pl. 56.1 Statement, ¶¶ 2-3). Ms. Serafis is the president and sole shareholder of Village Red. (Pl. 56.1 Statement, ¶¶ 7-9). The building where Waverly is located is owned by 135 Waverly Place LLC, and Ms. Serafis is the sole shareholder of that entity. (Pl. 56.1 Statement, ¶ 16). Mr. Serafis and Ms. Serafis have referred to Ms. Serafis as the “owner” of Waverly even though it is owned by Village Red. (Pl. 56.1 Statement, ¶¶ 10-11, 14-15).

         Ms. Serafis testified at her deposition that she gave Mr. Serafis complete authority to run the restaurant, and Mr. Serafis continues to hire and fire employees and set wages, schedules, policies, and pay practices. (Pl. 56.1 Statement, ¶¶ 29-35, 38). Mr. Serafis signs checks in Ms. Serafis' name using a stamp bearing her signature. (Pl. 56.1 Statement, ¶¶ 45-47, 52-54). Ms. Serafis received a yearly salary of around $60, 000.00 from Waverly during the period at issue. (Pl. 56.1 Statement, ¶¶ 66-70). Mr. Serafis “basically put everything he owns in [Ms. Serafis'] name”; she also owns Mr. Serafis' apartment. (Pl. 56.1 Statement, ¶¶ 27-28). Ms. Serafis lives in Greece and does not oversee the Waverly employees. (Def. 56.1 Statement, ¶¶ 18, 20).

         Prior to 2011 or 2012, there was no apparent system at Waverly for documenting employee work time or pay. (Pl. 56.1 Statement, ¶ 74). In 2011 or 2012, Mr. Serafis installed a time clock; however, the records created by the time clock were often not accurate because employees would forget to punch in or out, and the time clock had a mechanical problem. (Pl. 56.1 Statement, ¶¶ 74-77). In 2014 and 2015, Mr. Serafis and a manager began keeping accurate records of employee pay in the “Red Book.” (Pl. 56.1 Statement, ¶¶ 78-80, 84-85). The Red Book shows that the plaintiffs were paid weekly: generally, a daily salary was multiplied by how many days were worked in a week; the pay structure did not account for how many hours were worked in a day. (Pl. 56.1 Statement, ¶¶ 86, 88; Red Book, attached as Exh. S to Declaration of Louis Pechman dated Jan. 31, 2017).

         Starting in January 2012, another set of books was created, but these records were inaccurate and did not reflect what employees were paid or how they were paid. (Pl. 56.1 Statement, ¶¶ 99, 115-118, 120-122). It shows the plaintiffs being paid an hourly rate, an overtime rate, spread of hours, tip credit, meal credit, and overtime pay. (Pl. 56.1 Statement, ¶ 104). The plaintiffs assert, and the defendants do not appear to dispute, that there is no apparent legitimate reason for this second set of records and that the Red Book is the most accurate history of what the plaintiffs were paid. (Pl. 56.1 Statement, ¶¶ 103, 117; Defendants' Responses to Plaintiffs' Local Rule 56.1 Statement (“Def. 56.1 Counter Statement”), ¶¶ 74-126).

         The plaintiffs were waiters, servers, countermen, hosts, kitchen helpers, and deliverymen during the relevant period. (Pl. 56.1 Statement, ¶¶ 149, 165, 184, 199, 220, 239, 259). They usually worked more than sixty hours per week. (Pl. 56.1 Statement, ¶ 146). They were paid weekly in cash based on a daily rate rather than an hourly rate. (Pl. 56.1 Statement, ¶¶ 116, 138, 269). They were not provided wage statements or weekly paystubs during the period at issue. (Pl. 56.1 Statement, ¶¶ 271-272).

         On their motion for summary judgment, the plaintiffs contend that the defendants are their employers. They also argue that if Ms. Serafis is found not to be their employer, then the corporate veil should be pierced. The plaintiffs move on their FLSA and NYLL claims, stating that they were not paid overtime or minimum wages and that they were not compensated for purchasing tools-of-the-trade. The plaintiffs also contend that the defendants did not comply with the wage notice, wage statement, or spread-of-hours provisions in the NYLL. The plaintiffs seek compensatory damages, liquidated damages, prejudgment interest, attorneys' fees and costs, and post-judgment interest. On their motion for partial summary judgment, the defendants contend that Ms. Serafis was not the plaintiffs' employer under the FLSA or NYLL.


         A. Summary Judgment Standard

         Under Rule 56 of the Federal Rules of Civil Procedure, a court will “grant summary judgment if the movant shows that 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); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The moving party bears the initial burden of identifying “the absence of a genuine issue of material fact.” Celotex, 477 U.S. at 323. The opposing party then must come forward with specific materials establishing the existence of a genuine dispute. Id. at 324. Where the nonmoving party fails to make “a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial, ” summary judgment must be granted. Id. at 322-23. Where “the party opposing summary judgment bears the burden of proof at trial, summary judgment should be granted if the moving party can ‘point to an absence of evidence to support an essential element of the nonmoving party's claim.'” Gemmink v. Jay Peak Inc., 807 F.3d 46, 48 (2d Cir. 2015) (quoting Goenaga v. March of Dimes Birth Defects Foundation, 51 F.3d 14, 18 (2d Cir. 1995)).

         In assessing the record to determine whether there is a genuine issue of material fact, the court must resolve all ambiguities and draw all factual inferences in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Smith v., LLC, 839 F.3d 163, 166 (2d Cir. 2016). However, the court must inquire whether “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party, ” Anderson, 477 U.S. at 249, and summary judgment may be granted where the nonmovant's evidence is conclusory, speculative, or not significantly probative, id. at 249-50. When evaluating cross-motions for summary judgment, the court reviews each party's motion on its own merits, and draws all reasonable inferences against the party whose motion is under consideration. Morales v. Quintel Entertainment, Inc., 249 F.3d 115, 121 (2d Cir. 2001).

         B. The Defendants' Joint Liability as Employers

         The plaintiffs maintain that Village Red, Mr. Serafis, and Ms. Serafis were their employers under to the FLSA and NYLL and that the enterprise exceeded $500, 000.00 in annual gross volume of sales during the relevant period. (Memorandum of Law in Support of Plaintiffs' Motion for Summary Judgment (“Pl. Memo.”) at 1-2). There is no doubt that Village Red and Mr. Serafis were the plaintiffs' employers, and Village Red and Mr. Serafis readily admit to their employer status; the defendants also do not dispute the FLSA coverage allegation. (Defendants' Memorandum of Law in Support of Their Motion for Partial Summary Judgment Dismissing the Complaint Against Christine Serafis (“Def. Memo.”) at 7; Defendants' Memorandum of Law in Opposition to Plaintiffs' Motion for Summary Judgment (“Def. Opp. Memo.”) at 5; Def. 56.1 Counter Statement, ¶ 4). However, the defendants argue that Ms. Serafis was not an employer because she never participated in the operation of Waverly, maintaining that she is the president and sole shareholder of the corporate entities only for “estate tax purposes.” (Def. Memo. at 9).

         1. Legal Standard

         The statutory definition of “employer” sweeps broadly under the FLSA.[1]Barfield v. New York City Health & Hospitals Corp., 537 F.3d 132, 140 (2d Cir. 2008). An employer “includes any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). An employee is “any individual employed by an employer.” 29 U.S.C. § ...

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