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Hussain v. Burton and Doyle of Great Neck LLC

United States District Court, E.D. New York

March 30, 2018

ASHRAF HUSSAIN, on behalf of himself and all others similarly situated, Plaintiff,


          STEVEN I. LOCKE, United States Magistrate Judge

         By way of Complaint dated October 9, 2014, Plaintiff Ashraf Hussain (“Hussain” or “Plaintiff”) commenced this wage and hour action on behalf of himself and all others similarly situated (collectively, “Plaintiffs”) against Defendants 661 Northern Blvd, LLC, d/b/a Burton & Doyle Steakhouse, Burton and Doyle of Great Neck LLC (“Burton and Doyle LLC”), Mario Sbarro, Joseph Zangri (“Zangri”), and Bert E. Brodsky, alleging violations of the Fair Labor Standard Act (“FLSA”), 29 U.S.C. § 201 et seq., and the New York Labor Law (“NYLL”), N.Y. Lab. Law § 190 et seq.[1] See Docket Entry (“DE”) [1]. Plaintiffs later filed an Amended Complaint on November 17, 2015, which named as defendants only Burton and Doyle LLC, Mario Sbarro (“Sbarro”), and Gennaro Sbarro (“Gennaro”) (collectively, “Defendants”). See DE [83]. Presently before the Court is Sbarro's motion for summary judgment pursuant to Fed.R.Civ.P. 56 seeking dismissal of all claims asserted against him on the basis that he was not Plaintiffs' “employer” under the FLSA and the NYLL.[2] See DEs [107], [101]. For the reasons set forth herein, the Court denies Sbarro's motion for summary judgment.

         I. Factual Background

         The following facts are taken from court filings; the parties' respective Local Rule 56.1 statements; and any admissible deposition testimony, declarations, and exhibits. Unless otherwise noted, the facts set forth herein are not in dispute.

         Plaintiffs were employed as waitstaff at Burton & Doyle Steakhouse (“Burton and Doyle” or the “Restaurant”)-a restaurant owned by Burton and Doyle LLC once located at 661 Northern Boulevard in Great Neck, New York-on or after October 9, 2011. See Mario Sbarro's Statement of Undisputed Facts Pursuant to Local Rule 56.1 (“Def.'s 56.1”), DE [101-13], ¶ 1; DE [50]; Electronic Order dated May 19, 2015. Hussain, the collective action representative, worked as a server at Burton and Doyle from January 2013 through July 2014. See Def.'s 56.1 ¶ 2. Plaintiff Donald Bartunek (“Bartunek”), one of the 28 opt-in Plaintiffs, was a waiter at the Restaurant.[3] See Id. ¶ 35.

         Burton and Doyle LLC is wholly owned by Mario Sbarro LLC, see Pechman Decl., Ex. 8, and the Mario Sbarro (2006) Long Term Trust (the “Trust”) is the sole member of Mario Sbarro LLC, see Declaration of Stuart M. Steinberg in Support of Motion by Mario Sbarro for Summary Judgment (“Steinberg Decl.”), DE [109], Ex. L. Mario Sbarro LLC was incorporated on June 29, 2006, and the Trust was established by Sbarro, as Settlor, on the following day, June 30, 2006. See Pl.'s 56.1 ¶ 127; Def.'s 56.1 ¶ 117. Blue Ridge Bank and Trust Co. (“Blue Ridge”) is the Independent Trustee of the Trust. See Id. ¶ 116.

         Mario Sbarro LLC's Amended and Restated Operating Agreement dated June 30, 2006 (the “Operating Agreement”) identifies Mario Sbarro as the company's sole member. See Pechman Decl., Ex. 1. Under the terms of the Operating Agreement, the sole member has “authority to take any and all actions on behalf of the [c]ompany, including without limitation to authorize, consent to[, ] and otherwise effectuate the [c]ompany's intended business activities, and all lawful activities the [c]ompany may engage [sic] approved by the [sole] [m]emeber.” Id. § 1(a). The Operating Agreement further provides that Sbarro “shall serve as Managing Director and Manager of [Mario Sbarro LLC] with full authority to act on behalf of the [c]ompany in all business matters and other matters as he, in his sole discretion, deems to be in the best interests of the [c]ompany, ” and as “Administrative Officer of the [c]ompany with authority to sign such certificates, documents[, ] and instruments as may be necessary for tax purposes on behalf of the [c]ompany to qualify the [c]ompany to conduct business activities in any jurisdiction, to provide licenses, permits and approvals as may be necessary for the conduct of the [c]ompany's activities . . . .” Id. §§ 2(a), (b). Moreover, the Operating Agreement states that Sbarro shall hold these positions “until his . . . death or until he . . . shall resign . . . .” Id. § 2.

         The Trust identifies Joseph Sbarro as the “Manager” with sole authority to vote any equity interests held or acquired by the Trust. See Pechman Decl., Ex. 15 at 19-20. However, the Trust's terms also give Mario Sbarro the authority “to remove any Manager from time to time and/or to designate additional and/or successor Managers (other than the Settlor).” Id. at 22.

         Before the Restaurant opened, Sbarro, Inc.-an entity of which Sbarro at one time served as the chief executive officer-operated a restaurant named Salute also located at 661 Northern Boulevard.[4] See Def.'s 56.1 ¶¶ 52, 53; Pechman Decl., Ex. 2, 18:21-19:9. According to Sbarro's deposition testimony, Sbarro, Inc. was the sole owner of Salute. See Declaration of Laurie Sayevich Horz in Support of Motion by Mario Sbarro for Summary Judgment (“Horz Decl.”), DE [101], Ex. D, 15:25-16:7. Sbarro further testified that, when Salute “wasn't doing well, ” he and his partners “thought that perhaps a steakhouse might be better.” Pechman Decl., Ex. 2, 20:5-9. As a result, in approximately 1998, Salute was “transition[ed]” from Salute to Burton and Doyle. Id., 19:24-20:4. At or around that time, Sbarro was involved in the decision to add a sushi bar to the Restaurant. See Plaintiffs' Rule 56.1 Counter-Statement of Undisputed Material Facts (“Pl.'s 56.1”), DE [108-17], ¶ 126. On April 7, 1999, a New York State Liquor License for Burton and Doyle was issued to Sbarro as “Principal” and remained active until June 30, 2015. See Horz Decl., Ex. J; Pl.'s 56.1 ¶ 125. Following the “transition” from Salute to Burton and Doyle, Sbarro, Inc. owned 40% of the Restaurant, and Anthony Scotto Company and Sal Moscato owned the remaining 60%. Pechman Decl., Ex. 2, 16:3-10, 21:10-22:6. Sometime thereafter, “the family” sold Sbarro, Inc. and ownership of the Restaurant “went to [Sbarro's] brother, Anthony, who later decided to sell[]” “these assets” to the Trust. Id., Ex. 2, 16:22-17:10. It appears that this sale of assets was effectuated through a Member Share Purchase Agreement dated June 29, 2008, pursuant to which all shares of Burton and Doyle LLC were transferred to Mario Sbarro LLC. See Pechman Decl., Ex. 8.

         In 2009, Sbarro asked Gennaro to serve as General Manager at the Restaurant in an effort to improve its operations. See Pl.'s 56.1 ¶ 134. The two discussed the amount of time and compensation involved in taking on the position and agreed that Gennaro's compensation would be contingent on whether the Restaurant became profitable. See Id. ¶¶ 135, 136. They did not, however, “go into specifics” about Gennaro's responsibilities as General Manager. See Id. ¶ 137. According to Sbarro's testimony, after Gennaro assumed the General Manager role, he would “occasionally . . . ask [Sbarro] a question” about the Restaurant's operations. Pechman Decl., Ex. 2, 38:3-11. In addition, Sbarro “would go there once in a while, ” approximately every one to two months, as a “guest.” Id., 38:11-12; Pl.'s 56.1 ¶ 139; Def.'s 56.1 ¶ 68. In connection with such visits, Sbarro would tell Gennaro if he was “happy” or “unhappy” about the Restaurant's food quality, sanitation, and cleanliness. See id., 38:11-17. During his deposition, Gennaro confirmed that he spoke with Sbarro about how the Restaurant was doing. See Pechman Decl., Ex. 3, 17:2-6; Pl.'s 56.1 ¶ 142. For example, on one occasion Gennaro told Sbarro that the Restaurant was struggling but that it had prospects. See Pl.'s 56.1 ¶ 143. Sbarro was also aware that the Restaurant was never profitable. See Id. ¶ 145.

         Hussain and Bartunek each encountered Sbarro at the Restaurant on several occasions. It is undisputed that, at Sbarro's request, Gennaro directed Hussain to fix the curtains in the Restaurant “to make sure th[e] place looked a little more bright.” Pechman Decl., Ex. 4, 163:16-24; Pl.'s 56.1 ¶ 160. Further, Hussain twice observed Sbarro “go[ing] to the office in the basement” of the Restaurant. Pechman Decl., Ex. 4, 168:14-169:4. A number of times, Bartunek waited on Sbarro when he dined at the Restaurant. Pl.'s 56.1 ¶ 140. According to Bartunek, Sbarro would never receive a bill for his meals. Pechman Decl., Ex. 5, 142:14-19. Additionally, Bartunek observed Sbarro “walking around pointing things out” at the Restaurant before his shift. Pl.'s 56.1 ¶ 156. Bartunek also testified that Sbarro was present in the Restaurant during employee meetings that took place before the employees' shifts. Pechman Decl., Ex. 5, 130:7-131:24, 127:16-21; Pl.'s 56.1 ¶ 164. If employees complained to a manager about a work-related issue, the manager informed them that he would speak to the owner of the restaurant. See Pl.'s 56.1 ¶ 166. Both Hussain and Bartunek understood Sbarro to be the owner of the Restaurant. See Pechman Decl., Ex. 4, 172:18-22; Pechman Decl., Ex. 5, 140:5-14.

         In or around 2014, Sbarro's daughter Carmela Merendino (“Merendino”), who was handling accounts payable at the time, reported to Sbarro that the Restaurant was running in arrears and was getting worse each month. See Pl.'s 56.1 ¶ 170; Pechman Decl., Ex. 2, 26:20-25. As a result, Sbarro informed Frank Montgomery (“Montgomery”), the attorney for the Trust, that it was a good idea to sell the Restaurant because it was not profitable. See Pl.'s 56.1 ¶ 171. Sbarro had multiple conversations with Merendino regarding the Burton and Doyle's financial condition and the potential sale of the business. See Id. ¶ 172. It is thus undisputed that Sbarro knew the business was not doing well. See Id. ¶ 173. Consequently, Sbarro negotiated the sale of the Restaurant to Zangri with the assistance of broker Charles Navarro of Breslin Realty for $2.5 million. See Id. ¶ 177. Sbarro never discussed the sale with Gennaro, nor was Gennaro otherwise involved in the sale. See Id. ¶ 167, 174. Rather, Gennaro was given 36 hours' notice by Merendino that the Restaurant had been sold and that they had to do an inventory and close up. See Id. ¶ 167. On June 27, 2014, Newsday published an article regarding the sale that identified Sbarro as the owner and operator of Burton and Doyle. See Pechman Decl., Ex. 11. Breslin Realty then issued a press release on July 14, 2014, which also suggested that the Restaurant had been owned and operated by Sbarro. See id., Ex. 10.

         II. Summary Judgment Standard

         Pursuant to Fed.R.Civ.P. 56, a “court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The movant bears the burden of establishing that there are no issues of material fact such that summary judgment is appropriate. See Huminski v. Corsones, 396 F.3d 53, 69 (2d Cir. 2004). In deciding a motion for summary judgment, the court “is not to weigh the evidence but is instead required to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments.” Amnesty Am. v. Town of West Hartford, 361 F.3d 113, 122 (2d Cir. 2004); see also Anderson v. Liberty Lobby, Inc., ...

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