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Keawsri v. Ramen-Ya Inc.

United States District Court, S.D. New York

January 2, 2018




         Plaintiffs, five servers who formerly worked at a pair of ramen restaurants, allege a series of labor violations under federal and state law. Defendants have moved to dismiss the claims as insufficiently pled, while the Plaintiffs seek conditional certification as a collective. The parties also contest what should be included in the notice and order regarding prospective plaintiffs if the Court grants Plaintiffs' motion. For the reasons stated below, Defendants' motion to dismiss is denied, and Plaintiffs' motion for collective certification is granted.

         I. BACKGROUND

         According to the Complaint, Plaintiffs are former servers at two jointly-operated cash-only restaurants, owned by different corporate entities but doing business together under the name “Ramen-Ya.” First Amended Complaint (“FAC”) [Dkt. 34] ¶¶ 10, 13, 18, 40-41, 51-55. Defendant Miho Maki served as a manager for both locations on behalf of the corporate owners; Ms. Maki determined compensation arrangements and work assignments. Id. ¶¶ 19-20, 44-45, 63-66. Plaintiffs allege that Defendant Masahiko Negita is the actual or beneficial owner of one of the restaurants through Ramen-Ya Inc. (“RYI”) and that he managed RYI's affairs jointly with Maki. Id. ¶¶ 11, 21, 46. Negita allegedly regularly visited the location owned by RYI, held meetings with Maki, and took control of cash from the cash registers at the restaurant. Id. ¶ 47. Plaintiffs allege that on any given day they were scheduled to work at one or both restaurants. Id. ¶¶ 63-66.

         Plaintiffs allege that Maki informed them when they were hired that they would be paid solely from tips, with a 20% deduction to pay the kitchen workers and a deduction for whatever food and drink they consumed during the shift. FAC ¶¶ 67, 69-70. They further allege that Maki actually deducted more than 20% and used the tip money to cover cash register shortages. Id. ¶ 68. Plaintiffs allege that Negita knew or approved of this compensation arrangement. Id. ¶ 71. Additionally, Plaintiffs allege that their employers sought to conceal the improper compensation arrangements by providing four of the named Plaintiffs falsified payroll checks for a portion of the tip earnings described above, with the remainder of their tip earnings being paid in cash. Id. ¶¶ 79-84. One of the named Plaintiffs received only the cash tips; she did not receive a falsified paycheck. Id. ¶ 87. Plaintiffs allege that they sometimes worked in excess of forty hours per week without receiving overtime pay, and that, on some days, they worked more than ten hours without receiving spread-of-hours compensation as required by the New York Labor Law (“NYLL”). Id. ¶¶ 97-98, 101-02.

         Plaintiffs allege various violations of federal and state labor laws, including failure to pay minimum wages, failure to provide pay-rate notices, failure to establish tip sharing and pooling arrangements, failure to maintain accurate and complete records, failure to provide complete and accurate wage statements, and failure to pay overtime and spread-of-hours compensation. FAC ¶¶ 74-78, 85-86, 88-89, 98, 102.


         Defendants Negita and RYI move to dismiss the Complaint.[1] See Defendants' Partial Motion to Dismiss Plaintiffs' Amended Complaint (“MTD”) [Dkt. 81]. Negita argues that the FAC's allegations are boilerplate and insufficiently specific, and thus fail to state a claim against him. MTD at 6-9; Reply Memorandum in Support of Defendants' Partial Motion to Dismiss Plaintiffs' Amended Complaint (“MTD Reply”) [Dkt. 126] at 1-4. RYI contends that the FAC insufficiently alleges joint operation of the two restaurants, and, in effect, that the FAC fails to tie Maki's conduct to the corporate entity that employed her, thus failing to state a claim. MTD at 9-12; MTD Reply at 4-5.[2]

         To survive a motion to dismiss under Rule 12(b)(6), “a complaint must allege sufficient facts, taken as true, to state a plausible claim for relief.” Johnson v., Inc., 711 F.3d 271, 275 (2d Cir. 2013) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). “Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we ‘are not bound to accept as true a legal conclusion couched as a factual allegation.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “[T]o survive a motion under Rule 12(b)(6), a complaint does not need to contain detailed or elaborate factual allegations, but only allegations sufficient to raise an entitlement to relief above the speculative level.” Keiler v. Harlequin Enters., Ltd., 751 F.3d 64, 70 (2d Cir. 2014) (citation omitted). When considering a Rule 12(b)(6) motion to dismiss, the Court accepts all factual allegations in the pleadings as true and draws all reasonable inferences in the light most favorable to the plaintiff. See Gibbons v. Malone, 703 F.3d 595, 599 (2d Cir. 2013) (citation omitted).

         To be liable under the Fair Labor Standards Act (“FLSA”), one must be an “employer, ” which is broadly defined as “any person acting directly or indirectly in the interest of an employer in relation to an employee . . . .” 29 U.S.C. § 203(d). To limit the broad language of the statute, which “taken literally would support liability against any agent or employee with supervisory power over [other] employees, ” Diaz v. Consortium for Worker Educ., Inc., No. 10 CIV. 01848 (LAP), 2010 WL 3910280, at *2 (S.D.N.Y. Sept. 28, 2010) (internal quotation marks omitted), courts have examined “whether the alleged employer possessed the power to control the workers in question . . . with an eye to the ‘economic reality' presented by the facts of each case.” Herman v. RSR Security Services Ltd., 172 F.3d 132, 139 (2d Cir. 1999) (citations omitted), holding modified on other grounds by Zheng v. Liberty Apparel Co. Inc., 355 F.3d 61 (2d Cir. 2003). In particular, courts consider: “whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.” Id. (internal quotation marks and citations omitted).[3] No single factor is dispositive, and courts view these factors in the context of the “totality of circumstances.” Id. (citation omitted).

         A. The Complaint Sufficiently Alleges a Claim Against Negita

         “For an individual to be an ‘employer, ' . . . there must be more than just evidence that the individual is an owner or officer of a company . . . .” Salomon v. Adderly Indus., Inc., 960 F.Supp.2d 502, 509 (S.D.N.Y. 2013) (citation omitted). Instead, the “individual defendant must possess control over a company's actual operations in a manner that relates to a plaintiff's employment.” Id. (citation omitted).

         Plaintiffs' FAC includes a variety of allegations against Defendant Negita. He allegedly is an actual or beneficial owner of RYI, which operates one of the restaurants, and exercised authority to create and enforce personnel decisions on behalf of RYI. FAC ¶¶ 10, 11, 21. He allegedly managed the affairs of RYI jointly with Maki, including determining the compensation arrangements. Id. ¶ 46. And, more specifically, the FAC alleges that he visited his restaurant on a regular basis, held meetings with Maki, and took money from the cash registers. Id. ¶ 47. Negita allegedly “had knowledge of, approved of, and/or required Maki to establish and maintain [the] method of compensating Plaintiffs, and acting through Maki, established and maintained the same method of compensation for all servers employed by Defendants for RYI.” Id. ¶ 71.

         Defendant is correct that boilerplate allegations that simply recite the elements of the economic reality test are insufficient to state a claim. See, e.g., Tracy v. NVR, Inc., 667 F.Supp.2d 244, 247 (W.D.N.Y. 2009) (“[M]ere boilerplate allegations that an individual meets the various prongs of the economic reality test . . . without any supporting details-essentially ‘a formulaic recitation of the elements of a cause of action'-are insufficient to raise plaintiffs' right to relief ‘above a speculative level' with respect to that individual's liability as an employer under the FLSA.”) (citing Twombly, 550 U.S. at 555). Several of the allegations against Negita are also made verbatim against other Defendants, and some appear to track the elements of the economic reality test. See, e.g., FAC ¶¶ 20-23, 71-72.

         The Complaint, however, also contains specifics that adequately, albeit barely, support a claim at this stage of litigation, namely that Negita manages the restaurant jointly with Maki, and that he visits the restaurant regularly, holds meetings with Maki, and takes money from the registers. FAC ¶¶ 46-47. The Complaint does not repeat these allegations as to the other Defendants. Courts in this Circuit have recognized that such additional facts are sufficient to defeat a motion to dismiss. See, e.g., Leal v. Masonry Services, Inc., No. 12CY588 (DLI)(VVP), 2013 WL 550668, at *2-3 (E.D.N.Y. Feb. 12, 2013) (denying a motion to dismiss where, in addition to alleging the bare elements of the economic reality test, the plaintiff alleged that the individual defendants were “owners, principal shareholders, and directors” of the corporate defendants; they “made major personnel decisions and dominated day-to-day operations” and that the plaintiff worked at their direction). Defendants attempt to obscure the relationships amongst them, arguing that Maki, the alleged manager, is a purported owner, and Negita, the alleged owner-manager, was merely exercising bookkeeping duties in visiting to the restaurant and in removing money from ...

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