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Valle v. Gordon Chen'S Kitchen LLC

United States District Court, S.D. New York

June 5, 2017

ALEJANDRO VALLE, Plaintiffs,
v.
GORDON CHEN'S KITCHEN LLC et al., Defendants.

          OPINION AND ORDER

          GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE.

         Plaintiffs Alejandro Valle and Edgar Cid[1] brought this action against Gordon Chen's Kitchen, LLC, Mac-War Restaurant Corporation, and Allan Wartski (collectively, “defendants”) to recover unpaid wages and other damages arising out of defendants' alleged violations of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”), and the New York Labor Law, N.Y. Labor Law § 1 et seq. (“NYLL”). The Court held a bench trial on November 3, 2016, and has considered the parties' submissions.[2] This Opinion and Order contains the findings of fact and conclusions of law required by Federal Rule of Civil Procedure 52(a)(1).

         I. BACKGROUND

         In brief, plaintiffs contend that they worked for defendants' restaurant as delivery workers and were not properly paid under federal and state labor laws. They contend that defendants improperly used a “tip credit” to calculate plaintiffs' hourly wage instead of paying them at minimum wage; that the hourly overtime rate paid by defendants was too low; that plaintiffs worked more hours than were reflected on defendants' records; that defendants failed to provide plaintiffs with the notices required by the NYLL; and that defendants failed to pay them “spread of hours” pay as required by the NYLL. Pls. Pre-trial Mem. at 7-12, 15.

         The Court has subject matter jurisdiction over plaintiffs' federal claims under 28 U.S.C. § 1331 and supplemental jurisdiction over their state law claims under 28 U.S.C. § 1367(a).

         II. FACTS

         A. Undisputed Facts

         Gordon Chen's Kitchen LLC operates and controls a Japanese restaurant called “Hakata Grill” at 232 East 53rd Street in New York, New York. (Cid: Tr. 8; Garzon: Tr. 60).[3] Mac-War Restaurant Corporation previously did business as Hakata Grill at 230 West 48th Street in New York, but ceased operations on December 14, 2008. (Cid: Tr. 29; Garzon: Tr. 60-61). Allan Wartski is the managing member of Gordon Chen's Kitchen LLC, was the president of Mac-War Restaurant Corporation, and has been doing business through these entities as “Hakata” for over 30 years. (Wartski: Tr. 111-112). Hakata hired Cid in September 2008, and Valle in October 2010, to make deliveries of food orders. (Cid: Tr. 8; Valle: Tr. 37-38). Cid worked under the name “Balverde ‘Daniel' Lopez.” (Cid: Tr. 33; Garzon: Tr. 77). Both plaintiffs stopped working at Hakata in 2014. (Cid: Tr. 8; Valle: Tr. 37).

         B. Trial Testimony

         1. Edgar Cid

         Cid testified that before October 2011 he worked Monday to Saturday, 10:30 a.m. to 4:00 p.m. and 6:00 p.m. to 10:30 p.m. (Cid: Tr. 9-10). He said that he began working only five days a week after October 2011, when the restaurant began closing on Saturdays. (Cid: Tr. 11-13).[4]Cid testified that, when he started working at Hakata, he did not have to record when he came to work and when he left. (Cid: Tr. 14). That changed in 2012, at which point he had to punch numbers into a computer system to enter and to leave. (Cid: Tr. 14-15). Cid said that this was “just for a month.” (Cid: Tr. 14).

         Cid testified that he was told he was paid $4.65 per hour when he first started at Hakata. (Cid: Tr. 15-16). He was not paid any supplementary pay if he worked more than 40 hours in a week. (Cid: Tr. 16). His pay increased to $5 per hour beginning in October 2010, then to $5.65 “approximately from 2012 to 2014.” (Id.). He received tips, but was never told how those tips would affect his compensation from the restaurant. (Cid: Tr. 17).

         Cid testified that he was paid by check each week, which came with a slip of paper that Cid “never paid very much attention to.” (Cid: Tr. 29-30). The slip of paper could have included his number of hours worked, his hourly rate, and notations of tips and what was withheld from wages. (Cid: Tr. 31). He said that the check covered 40 hours of work, but he was regularly paid in cash for an extra 10 hours of work per week not listed on these slips of paper. (Cid: Tr. 33-34). He testified that the extra time was paid “in a different check written, payable to a different person, and then that person would cash the check and pay [him] cash, but at the regular hours.” (Cid: Tr. 33). He said that he was paid either in cash or by check at the regular hourly rate for all 50 hours. (Cid: Tr. 33-34).

         Cid testified that he made approximately 22 deliveries per day. (Cid: Tr. 20). When he was not making deliveries, he performed other activities, such as purchasing and organizing food items, cleaning, and preparing soy sauce and ginger dressing. (Cid: Tr. 17-18). He spent a half-hour preparing soy sauce every day, washed utensils for half an hour per day, cleaned the floor for half an hour per day, prepared ginger sauce two times a week for a half-hour, and stocked soda for 15 minutes once per week. (Cid: Tr. 18-19).

         2. Alejandro Valle

         Valle testified that his starting schedule was from 10:30 a.m. to 2:00 p.m., then 4:00 p.m. to 10:30 p.m., five days per week. (Valle: Tr. 38-39). His schedule changed in 2012, when he started working from 9:30 a.m. to 2:00 p.m. and from 4:00 p.m. to 10:30 p.m. (Valle: Tr. 39). At first, he did not have to record the time he came to work in the morning and left in the evening. (Valle: Tr. 38-39). “[F]or two months” in 2012, however, he had to put his arrival and departure times into a computer system. (Valle: Tr. 40).

         Valle was told he would be paid $4.65 per hour when he first started, which was paid by check. (Valle: Tr. 40-41). He received checks for 40 hours of work, both delivery and nondelivery. (Valle: Tr. 50-51). He also received additional money that was “changed” for him by a coworker. (Id.). He did not remember if anything was attached to the check. (Valle: Tr. 52). His pay increased to $5 per hour in January 2011, then to $5.65 per hour in October 2012. (Valle: Tr. 41-42). He also received tips, but was never told how receiving those tips would affect his wages. (Valle: Tr. 42).

         Valle made between 18 and 25 deliveries each day. (Valle: Tr. 46-47). When he was not making deliveries, he prepared salad every day for 30-40 minutes, cleaned the floor for about 45 minutes, prepared delivery bags for about 20 minutes, put deliveries from suppliers away about twice a week for about 20 minutes, and twice a week washed dishes for 30 minutes or more. (Valle: Tr. 44-45). Additionally, in 2014, Valle bought soda twice a week for a half-hour, made ginger dressing twice a week for a half-hour, and made soy sauce every day for 20-25 minutes. (Valle: Tr. 46).

         3. Pedro Garzon

         Garzon testified that he is a manager at Gordon Chen's Kitchen, and had worked there and at Mac-War Restaurant for 22 years, becoming the manager in 2004. (Garzon: Tr. 60-61). His most “important” job is to keep the records and hours for the restaurant's employees, including recording the time they come in and the time they leave work. (Garzon: Tr. 61-62). He remembered Valle and Cid (whom he knew as Daniel Lopez) from when they worked there, and he gave them their work assignments beginning in January 2010. (Garzon: Tr. 62-64). He was on the premises at all times when plaintiffs were there, and neither one was there for more than 10 hours a day. (Garzon: Tr. 64-65, 67). Also, plaintiffs would normally leave in the middle of the day, then return. (Garzon: Tr. 93-94).

         Garzon described the method by which Hakata kept track of work hours from 2008 to 2014. Originally there was only a time clock that required a “punch in” and “punch out” using a card. (Garzon: Tr. 92). Garzon was responsible for maintaining the system, which indicated the date and time, with places on the punch cards for four time entries per day, five days per week. (Garzon: Tr. 92-94). Garzon would take these cards and record the hours listed, rounding up to the nearest 15-minute increment, to calculate the number of hours each employee worked.

         (Garzon: Tr. 94-98). The total hours for each employee was then transferred to the payroll department. (Garzon: Tr. 98-99). The restaurant switched from this system to a computerized POS system he set up in 2013. (Garzon: Tr. 62, 66). He testified that every time there was overtime he would memorialize it and put it into the payment system. (Garzon: Tr. 84-86). This overtime would be paid at “time and a half.” (Garzon: Tr. 81). The time cards were kept for about four years but were lost during a move. (Garzon: Tr. 99).

         Garzon testified that the delivery workers were always paid their weekly wages by check. (Garzon: Tr. 67, 73). The checks were attached to a “stub” that would show the number of hours worked and the tips each employee had been paid. (Garzon: Tr. 76). Garzon would also distribute tips to the delivery workers daily, in cash, after pooling the tips from every delivery worker. (Garzon: Tr. 67-68). The delivery workers would keep cash tips customers gave them - apparently without being recorded in their wage statements. (See Garzon: Tr. 69). Most of the tips were on credit cards, however. (Id.). Garzon would run a report each day that would tell him credit card tips from the previous day, then divide that total by the number of delivery workers who worked and pay each one their share in cash. (Garzon: Tr. 67-68, 71-72). Garzon would receive a check from Wartski each week, made out to “cash, ” which he would redeem and use to distribute tips on a daily basis. (See id.).

         The tips paid in this manner were reflected on the pay stubs. (Garzon: Tr. 73). Garzon admitted that he does not know what a “tip credit” is, and that he did not provide the delivery workers with a written notice about what it means to take a tip credit. (Garzon: Tr. 89).

         Garzon testified that, in addition to delivering food, delivery workers would also make soy sauce, make salad, make fruit salad, prepare delivery bags with utensils, napkins, and chopsticks, wash utensils, wash the floor, help put away delivery containers, buy soda, take out garbage, and make ginger sauce. (Garzon: Tr. 101-05). He estimated that Cid and Valle spent an average of one hour and 15 minutes per day doing these tasks. (Garzon: Tr. 106).

         4. Allan Wartski

         Wartski testified that he consulted with “professionals” concerning his payroll obligations, attempting to learn when pay rates changed, and that he was familiar with “tip rate” and “non-tip rate.” (Wartski: Tr. 112). He claimed, concerning “the integrity of recordkeeping, ” that he gave instructions “[t]o do everything according to how we are supposed to, ” meaning that all employees had to “punch in” and “punch out” each day. (Wartski: Tr. 112).

         Wartski said that he has never told Garzon to lie or “put in improper records, ” and instructed him to “keep a time clock, record it on the sheet, and get it over to the payroll company, ” all of which was done to his satisfaction. (Wartski: Tr. 113). He very rarely reviewed the paychecks Garzon issued to the delivery workers. (Wartski: Tr. 113-14). On cross-examination, Wartski testified that he could fire Garzon, or make any other change he wanted to the business dealings of Hakata. (Wartski: Tr. 115-16).

         C. Pay Statements and Payroll Registers

         Plaintiffs entered into evidence defendants' trial exhibits A through H (Tr. 53-54), which were copies of weekly pay statements issued to “Lopez” (a.k.a Cid) from 2009 to 2011, weekly pay statements issued to Valle from 2010 to 2011, and weekly payroll registers maintained by defendants referencing payments to Valle and Lopez from 2012 to 2014, Exs. A-H. The pay statements generally show the number of hours plaintiffs worked, their hourly rates, the tips they reportedly received, the number of any overtime hours worked, and an hourly overtime rate one and one-half times their base rate. See Exs. A-E. The payroll registers contain the same information. See Exs. F-H.

         These records indicate that plaintiffs were paid at a rate of $4.60 per hour from 2009 to May 2010, $4.65 per hour from May 2010 to January 2011, $5 per hour from January 2011 to December 2011, and $5.65 per hour for the remainder of their employment.[5]See, e.g., Balverde Lopez Pay Stub, dated Jan. 2, 2009, Ex. A ($4.60 per hour); Balverde Lopez Pay Stub, dated May 28, 2010, Ex. B (same); Balverde Lopez Pay Stub, dated June 4, 2010, Ex. B ($4.65 per hour); Alejandro Valle Pay Stub, dated Dec. 31, 2010, Ex. D (same); Alejandro Valle Pay Stub, dated Jan. 6, 2011, Ex. E ($5 per hour); Alejandro Valle Pay Stub, dated Dec. 30, 2011, Ex. E (same); Payroll Registers, Exs. F-H ...


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