United States District Court, S.D. New York
GLORIA BENAVIDES, and FANNY YIN-FANG LIN on behalf of themselves, FLSA Collective Plaintiffs and the Class, Plaintiffs,
SERENITY SPA NY INC., et ano., Defendants.
MEMORANDUM OPINION AND ORDER
L. COTT UNITED STATES MAGISTRATE JUDGE.
Gloria Benavides and Fanny Yin-Fang Lin bring this putative
class action against defendants Serenity Spa NY Inc. and Yu
Qun Dai (together, "Defendants") alleging
violations of the Fair Labor Standards Act ("FLSA")
and New York Labor Law ("NYLL"). Plaintiffs move
for class certification as to their NYLL claims and for
summary judgment as to their FLSA and NYLL claims. Defendants
oppose both motions. For the reasons set forth below,
Plaintiffs' motion for class certification is granted,
but their motion for summary judgment is denied without
November 20, 2015, Benavides commenced this action against
Defendants, on behalf of herself and other similarly situated
employees. Complaint, dated Nov. 20, 2015, Dkt, No. 1. The
parties consented to my jurisdiction on February 18, 2016.
Reference Order, dated Feb. 18, 2016, Dkt. No. 17. Benavides
then filed an Amended Complaint on May 11, 2016. First
Amended Complaint, dated May 11, 2016 ("Am.
Compl."), Dkt. No. 35.
Amended Complaint, Benavides alleged that Defendants had been
knowingly and willfully operating their business according to
policies that violate the FLSA and NYLL. Id.
¶¶ 35-39. Specifically, she contended that
Defendants failed to compensate employees consistent with the
minimum wage and overtime provisions of the FLSA and NYLL.
Id. ¶¶ 45-46, 55-56. She further alleged
that Defendants violated NYLL's spread-of-hours
provisions, failed to provide employees wage-and-hour notices
as required by NYLL § 195(1), and failed to provide
proper wage statements as required by NYLL § 195(3).
Id. ¶¶ 57-59. Additionally, Benavides
claimed that she had been subject to a racially hostile work
environment in violation of New York State and City Human
Rights Laws, as Hispanic employees were spoken to
"harshly" and expected to "do the dirty or
rough work" that Chinese employees were not required to
do. Id. ¶¶ 28, 62, 67. Defendants
answered the Amended Complaint on May 25, 2016. Answer, dated
May 25, 2016, Dkt. No. 40.
subsequently moved for conditional collective certification
on May 31, 2016, Motion to Certify Class, dated May 31, 2016,
Dkt. No. 41, which Defendants opposed. Defendants'
Memorandum of Law in Opposition to Plaintiffs Motion for
Conditional Class Certification, dated June 14, 2016, Dkt.
No. 45. The Court granted the motion in part and denied it in
part. Benavides u. Serenity Spa NY Inc., 166
F.Supp.3d 474, 477 (S.D.N.Y. 2016). Specifically, the Court
conditionally certified the collective action, and authorized
notice and consent forms to be issued to all non-exempt
employees who worked at Serenity Spa NY within three years of
the date of the complaint. Id. at 483, 485. The
Court also permitted Benavides to revise the proposed notice
so that it could be sent to all non-exempt employees who
worked at Serenity Spa NY within six years of the date of the
complaint. Id. at 485-86. Although the Court did not
approve her first revised notice and consent form, Order,
dated Aug. 16, 2016, Dkt. No. 62, on August 19, 2016, the
Court approved Benavides' second revised notice and
consent form. Order, dated Aug. 19, 2016, Dkt. No. 65.
August 31, 2016, Benavides moved for class certification
under Rule 23 for the NYLL claims. Motion for Class
Certification, dated Aug. 31, 2016, Dkt. No. 71. On the same
day, she moved for summary judgment as to the FLSA and NYLL
claims. Motion for Summary Judgment, dated Aug. 31, 2016,
Dkt. No. 75. Prior to Defendants filing a response to these
motions, Benavides also moved to compel Defendants to produce
the social security numbers of potential opt-in plaintiffs,
because Defendants had failed to produce mailing addresses
for 36 of the 52 potential plaintiffs. Letter Motion, dated
Sept. 26, 2016 ("Pl. Mot."), Dkt. No. 79.
Defendants consented to the production the social security
numbers, Letter Motion, dated Sept. 27, 2016, Dkt. No. 80,
and the Court directed Defendants to produce the information
no later than October 5, 2016. Order, dated Sept. 28, 2016
("Sept. Order"), Dkt. No. 81.
October 7, 2016, Defendants filed their opposition to
Benavides' motions. Defendants' Memorandum of Law in
Opposition to Plaintiffs Motion for Class Certification and
Summary Judgment, dated Oct. 7, 2016 ("Opp. Mem."),
Dkt. No. 87. Defendants argue that Benavides cannot meet all
the requirements under Rule 23 to certify a class action, and
that there are genuine disputes of material fact precluding
summary judgment. Id. at 2. As part of their
opposition papers, Defendants attached, inter alia,
five declarations from current Serenity Spa NY employees.
Opp. Mem. Exs. I-M (together "Empl. Decs.").
replied to Defendants' opposition on October 31, 2016,
and, in addition to addressing Defendants' arguments
opposing the motion, objected to the use of declarations from
current Serenity Spa NY employees. Reply Memorandum of Law in
Support of Plaintiffs Motion for Class Certification and
Summary Judgment, dated Oct. 31, 2016 ("Reply"),
Dkt. No. 92, at 1-4. Additionally, on November 2, 2016,
Benavides wrote to the Court to request that the employee
declarations be stricken from the record, or disregarded
until the employees had been deposed. Letter, dated Nov. 2,
2016 ("Pl. Nov. Letter"), Dkt. No. 93. In their own
letter to the Court, Defendants objected to the request and
provided additional arguments as to why the declarations
should be accepted. Letter, dated Nov. 8, 2016 ("Def.
Nov. Letter"), Dkt. No. 94.
on November 28, 2016, Benavides filed Fanny Yin-Fang
Lin's consent to become a party plaintiff, Consent, dated
Nov. 8, 2016 ("Consent"), Dkt. No. 95, accompanied
by a declaration from Lin in support of the motion for class
certification and summary judgment. Declaration of Fanny
Yin-Fang Lin, dated Nov. 23, 2016 ("Lin Decl."),
Dkt. No. 96. On December 5, 2016, Defendants wrote to request
that the Court disregard Lin's declaration, as it had
been filed after the briefing schedule for the motions had
expired. Letter, dated Dec. 5, 2016, Dkt. No.
Statement of Facts
Spa NY is a spa located at 1397 Third Avenue in Manhattan,
and is operated by individual defendant Yu Qun Dai through
corporate defendant Serenity Spa NY, Inc. Am. Compl. ¶
7. Serenity Spa NY, Inc. is incorporated under the laws of
New York, and Dai has been its sole shareholder and senior
executive at all relevant times. Id. ¶¶
7-8; Defendants' Rule 56.1 Counter-statement, dated Oct.
7, 2016 ("Def. R. 56.1"), Dkt. No. 89, ¶ 2. In
that role, she was at the spa every day. Am. Compl. ¶ 8;
Def. R. 56.1 ¶ 10.
undisputed that Dai exercised control over the employment
terms and conditions of Serenity Spa NY employees. More
specifically, Dai had the power to hire and fire Serenity Spa
NY employees, and to set their work schedules. Id.
She maintained employment records and set the payroll
policies (though Defendants note that she relied on her
accounting company's professional advice). Def. R. 56.1
¶¶ 7-8. Additionally, although Plaintiffs contend
that Dai also had the authority to determine the
employees' compensation, Defendants clarify that she was
able to determine their hourly rate of pay and the percentage
of the commission that they would receive for each beauty
service, but not the total amount of commission. Id.
was employed at Serenity Spa NY during two distinct periods
of employment, though the precise dates are unclear. Am.
Compl. ¶ 23. The first period began at some point
between November and January 2012, and ended in January 2013.
Def. R. 56.1 ¶ 12. The second period began in either
August or September 2014, and ended in or about August 2015.
Id. ¶ 13. The parties agree that while
Benavides was employed at Serenity Spa NY she worked as a
nail technician (a.k.a. manicurist), Am. Compl. ¶ 23,
but disagree as to whether she was employed as a massage
therapist and waxer as well, as Defendants maintain that she
could "also perform other type[s] of beauty services
such as massage and waxing, " but was only
employed as a nail technician. Def. R. 56.1 ¶
is no dispute that Benavides' work schedule lasted
approximately 10 hours each day. Def. R. 56.1 ¶¶
14, 16. However, Defendants contend that Benevides was
regularly given a meal break about 40 to 45 minutes each day
and was also free to take as many snack breaks as she wanted
and for as long as she wanted. Id. Thus, Defendants
contend that because she was given as many snack breaks as
she wanted, as well as a meal break, Benevides' total
break time amounted to about two hours each day, resulting in
an eight-hour work day and no overtime. Id.
was paid in cash with no wage statements. Am. Compl. ¶
26. At least five Serenity Spa NY employees were paid
"off the books" (meaning "in cash without any
wage statements"), and though some were paid "on
the books, " Defendants implemented the same policies
for "on the books" and "off the books"
employees, including paying all non-exempt employees on an
hourly basis. Def. R. 56.1 ¶¶ 20-22. What that
hourly rate of pay was, however, is in dispute. Benavides
states that all hourly employees were paid $5.45 to $5.65 per
hour for 2009 to 2013; $5.65 in 2014; and $5.65 to $7.50 in
2015. Id. ¶¶ 23-25. Defendants dispute
these numbers, and point to a selection of payroll reports
showing that employees were paid at rates ranging from $5.65
per hour to $12.50 per hour at various times between 2014 and
2015. Id. (citing Opp. Mem. Exs. D-F).
is also disagreement about Benavides' rate of pay during
her 2012-13 term of employment. Benavides contends that she
was paid at a rate of $7.00 per hour, while Defendants argue
that she was paid $7.50 per hour. Id. ¶ 17. The
parties agree that she was paid $7.50 per hour when she
worked at the spa from 2014 to 2015. Id. ¶ 18.
maintain that it was customary at the outset of employment to
provide oral notice to their employees that Defendants would
be taking a tip credit and that the employees could therefore
keep all of their tips. Id. ¶¶ 28, 34.
However, Benavides alleges that she and other employees never
received notice that Defendants would take a tip credit, that
the employees were entitled to retain all their tips, or that
the tip credit taken by Defendants could not exceed the value
of the tips the employees actually received. Am. Compl.
¶ 30. Nonetheless, the parties agree that, prior to
August 2015, Defendants did not provide any written
wage-and-hour notices to their employees, including
Benavides. Def. R. 56.1 ¶¶ 29-31. The written
wage-and-hour notices that Defendants have provided for
employees since August 2015 state that "Yun Qun
Dai" and "Serenity Spa NY" are the employers,
and do not specify the exact amount of tip credit allowance
claimed as part of the employees' hourly pay rate.
Id. ¶¶ 32-33. The notices either leave the
amount of the tip credit blank, state "N/A, " state
an incorrect amount, or provide a range of numbers that are
incorrect. Id. ¶ 33.
those employees who did receive wage statements, they were
issued under the name "Serenity Spa NY, Inc., "
though the statements did not state the phone number for
Defendants, or the amount of tip credit allowance that was
claimed for the relevant time period. Id.
¶¶ 35, 37-38. The parties disagree as to whether
the wage statements accurately reflect the actual hours
worked by employees, as Plaintiffs contend that the numbers
are rounded to the nearest whole number, while Defendants
argue that the numbers are accurate, and if there is
deviation due to rounding, it is in the employees' favor
by rounding the hours up. Id. ¶ 36.
argue that Defendants did not keep any record of the amount
of tip credit allowance they claimed for each employee in any
given pay period. Id. ¶ 40. However, Defendants
counter that the amount of tip credit they took can be
deduced by calculating the difference between the prevailing
minimum wage and the lower rate that employees were paid.
Id. Plaintiffs allege that all non-exempt
employees were paid the regular hourly rate for hours worked
more than 40 hours in the week, instead of receiving time and
one-half for overtime pay. Id. ¶ 41. Defendants
do not directly dispute this assertion, but argue that
"almost all" employees did not work overtime, so
the time and one-half rate of pay did not apply. Id.
Defendants acknowledge that they did not consult an attorney
regarding compliance with wage-and-hour regulations until
August 2015, id. ¶ 42, and did not use a punch
clock system to record the employees' hours. Id.
Declarations Submitted by Defendants
their response to Plaintiffs' motions, Defendants
included declarations from five current Serenity Spa NY
employees: Adriana Polo, Rosa Naula, Li Wei Li, Qi Hong Xia,
and Yin Ming Mei. With slight variations in substance and
wording, the declarations all state that the employees did
not work overtime, were free to take breaks and did so
throughout the day, and to the extent they overlapped with
Benavides, they did not see her taking overtime. Id.
Each employee states that there was a poster in Serenity Spa
NY that informed them of the basics of minimum wage law and
overtime, and, with minimal variation, that Dai "told me
that I can keep all my tips and explained to me some details
about why my hourly compensation will be lower than the
normal minimum wage." See, e.g., Opp. Mem. Ex.
I, ¶¶ 12-13. Further, they maintain that they in
fact kept their tips, in addition to receiving daily
commission. Id. ¶ 11.
The Court Declines to Consider the Declarations from the Five
object to Defendants' reliance on the five employee
declarations, and argue that they should be stricken from the
record, or at least disregarded until Plaintiffs can depose
the declarants. Reply at 1. Plaintiffs contend that the
statements are of '"limited evidentiary
value'" because it is not evident that the employees
knew that their testimony could adversely affect their
recovery or that they had a right to seek independent
counsel, as Defendants' counsel did not represent them.
Id. (quoting Amador v. Morgan Stanley & Co.
LLC, No. 11-CV-4326 (RJS), 2013 WL 494020, at *8
(S.D.N.Y. Feb. 7, 2013)). Plaintiffs also point to the lack
of Spanish translations for allegedly Spanish-speaking
employees. Id. at 3.
respond that, although such declarations may be rejected in
the context of a motion for conditional certification of a
collective action, that is so because a plaintiff is only
required to meet a "very modest showing, " which
does not apply in the context of class certification or
summary judgment, where there are no requirements that a
plaintiff have the opportunity to depose the declarants. Def.
Nov. Letter at 2-3. Additionally, Defendants maintain that the
employees would have been informed of their rights through
the court-approved notice that was sent out after
Plaintiffs' collective action motion was granted.
Id. at 2.
Court declines to consider these declarations for three
reasons: (1) Defendants have not demonstrated that the
employees were on notice of their rights; (2) the weight of
authority is against the use of the declarations; and (3)
their content is of negligible evidentiary value.
First, on September 26, 2016, Plaintiffs moved to
compel Defendants to produce the social security numbers for
some of the potential opt-in plaintiffs because Defendants
had not provided their addresses, and wrote that, "[a]s
a result, we have not been able to mail the court- approved
notice of this action to potential plaintiffs." Pl. Mot.
at 1. The Court ordered Defendants to produce the information
to Plaintiffs by October 5, 2016. Sept. Order. Thus, from the
plain language of Plaintiffs' letter-motion, none of the
notices had been sent out at the end of September, making it
extremely unlikely that the employee declarants had received
any notice of their rights in advance of making the
declarations on October 7, 2016. See Empl. Decs,
(all dated October 7, 2016). Defendants' speculation
about when Plaintiffs' counsel would have sent out the
notices is thus unavailing in light of the time frame in
which the notices were mailed. Additionally, the simplest way
for Defendants to have demonstrated that the employee
declarants were aware of their rights would have been for the
employees to attest as much in their declarations-or even to
state that they had received the court-approved notice. But
the employees did not do so, and Defendants cannot now
benefit from an assumption that the employees were aware of
their rights, and understood how their statements could
adversely impact them.
by analogy, declarations submitted by employers of current
employees are regularly disregarded in the context of
conditional certification of a collective action, both
because of the chance for coercion by the employer, but also
because the evidentiary burden is relatively low. See
Amador, 2013 WL 494020, at *8 ("statements gathered
by an employer from its current employees are of limited
evidentiary value in the FLSA context because of the
potential for coercion"); Ravenell v. Avis Budget
Car Rental, LLC, No. 08-CV-2113 (SLT) (ALC), 2010 WL
2921508, at *5 (E.D.N.Y. July 19, 2010) ("the employee
declarations submitted by [defendant] 'should be
discounted at this stage' because Plaintiffs have not yet
been able to depose the employees who signed them")
(quoting Francis v. A & E Stores,Inc.,
No. 06-CV-1638, 2008 WL 4619858, at *3 (S.D.N.Y. Oct. 16,
2008)); Damassiav. Duane Reade, Inc., No.
04-CV-8819 (GEL), 2006 WL 2853971, at *7 (S.D.N.Y. Oct. 5,
2006) ("Given that the Court must be 'lenient'
in deciding whether plaintiff has met its 'minimal'
burden at this ...