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Jin v. Shanghai Original, Inc.

United States District Court, E.D. New York

April 2, 2018

Jianmin Jin and Chunyou Xie, on behalf of themselves and other similarly situated, Plaintiffs,
v.
Shanghai Original, Inc.; East Brother Corp.; Always Good Brothers, Inc.; Shanghai City Corp.; Shanghai Duplicate Corp.; Kiu Sang Si a/k/a Joseph Si; Mimi Si; Yiu Fai Fong; Tun Yee Lam; and Solomon C Liou, Defendants.

          OPINION & ORDER

          ALLYNE R. ROSS, UNITED STATES DISTRICT JUDGE.

         The two named plaintiffs, along with nine opt-in plaintiffs, bring claims under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL) for violations of state and federal minimum wage and overtime laws by Joe's Shanghai restaurant, which has locations in Midtown Manhattan, Chinatown, and Flushing, Queens. The named plaintiffs both worked at the Flushing location, while the opt-in plaintiffs-with one exception-worked in Midtown or Chinatown. The defendants have moved to decertify the FLSA collective action conditionally certified by Magistrate Judge Orenstein as to workers at the Midtown and Flushing (but not Chinatown) locations of Joe's Shanghai. The plaintiffs, in turn, have filed a motion for final certification of this FLSA collective action, as well as for certification of a NYLL class action.

         Because the record developed in discovery shows that there was no common unlawful employment policy or practice shared by the Midtown and Flushing locations, the defendants' motion for decertification of the collective action is granted and the plaintiffs' cross-motion for final certification is denied. For substantially similar reasons, the plaintiffs' motion for class certification is denied as to the Midtown location, but granted as to the Flushing location.

         BACKGROUND

         A. Joe's Shanghai restaurant

         Although they share a single name and website, the three locations of Joe's Shanghai are now independently owned and managed. The website was created when Kiu Sang Si owned a part of all three restaurants, and has not been changed since for reasons of economy. Tun Yee Lam Decl. ¶ 18, ECF No. 98 (“Lam Decl.”); Kiu Sang Si Decl. ¶ 20, ECF No. 99 (“Si Decl.”). Si created the menu for Joe's Shanghai; although each location has its own chef, the menus for all three locations are “more or less the same.” Kiu Sang Si Dep. 36, 45-46, ECF No. 102-4 (“Si Dep.”)

         The Flushing location was originally owned and operated by Shanghai Original, Inc. Lam Decl. ¶ 2. Since 2013, however, this location has been owned and operated by East Brother Corp. Id. ¶¶ 1, 6. The Chinatown location is owned and operated by Shanghai Duplicate Corp, and the Midtown location is owned and operated by Shanghai City Corp. Si Decl. ¶¶ 8, 13. The Chinatown and Midtown locations do not share management or an employment policy with the Flushing location. Id. ¶¶ 11, 14.

         Kiu Sang Si owns half of the shares of both the Chinatown and Midtown locations. Id. ¶¶ 8- 9, 13-14. In 2013, Si sold his shares in the Flushing location to Tun Yee Lam, who owns East Brother Corp. with Yiu Fai Fong. Si Dep. 40; Lam Decl. ¶ 6. Neither Lam nor Fong own or are involved in managing the Chinatown or Midtown locations. Si Decl. ¶¶ 8-9, 13-14. Si, who was once the head chef at the Flushing location, is no longer involved with running that location, although he still occasionally stops by the restaurant. Lam Decl. ¶ 6; Tun Yee Lam Dep. 14, 24, ECF No. 102-5 (“Lam Dep.”). At the Flushing location, Fong is in charge of hiring, firing, determining work schedules, and setting the rate of pay for dining room workers and the present head chef, Gui Bing Shi, is in charge of these tasks for kitchen workers. Lam Decl. ¶ 7.[1]

         Since 2011, the Midtown location has been managed by William Ko. William Ko Decl. ¶ 3, ECF No. 97 (“Ko Decl.”). From 2009 to 2011, Ko was the assistant manager. Id. As manager, Ko ensures that all employees were paid at least the minimum wage plus overtime. Id. ¶ 4. Ko requires employees to punch a time card before they start work, when they finish work, and when they take breaks or come back from breaks. Id. He also keeps “payroll records for each employee showing the No. of regular hours worked each week, the No. of overtime hours worked, the employee's regular hourly rate, overtime hourly rate, regular pay, overtime pay and total pay earned and received each week or bi-weekly.” Id. Each employee is required to sign these payroll records at the time that they receive their pay. Id. The Midtown location has kept a copy of these payroll records for each of the eight opt-in plaintiffs who worked there. See Id. ¶ 7-14 & Exs. C, E, G, I, K, L, N & P. From 2009 to 2015, employees at the Midtown location were given unpaid breaks of varying lengths-since November 2015, some breaks have been paid. Decl. of William Ko in Opp'n ¶¶ 5-13, ECF No. 109 (“Ko Decl. II”). In 2012, Ko instituted a policy that employees who were required to work during unpaid breaks could apply to receive additional pay for this work. Id. ¶ 8. He denied that there was a “policy or practice” of “requiring employees to perform work without pay” or “requiring employees to work during their break time.” Id. ¶ 15.

         The managers of the Flushing location claimed that it was also the Flushing location's policy to pay all workers-including the named plaintiffs-in accordance with applicable minimum wage and overtime laws. Decl. of Yiu Fai Fong in Opp'n ¶ 4, ECF No. 106 (“Fong Decl.”); Decl. of Gui Bing Shi in Opp'n ¶ 4, ECF No. 107 (“Shi Decl.”). The Flushing location's payroll records, however, have been “inadvertently . . . lost.” Fong Decl. ¶ 4. Since at least 2013, employees at the Flushing location have been given paid meal breaks and are not required to work during these breaks. Decl. of Tun Yee Lam in Opp'n ¶ 3, ECF No. 104 (“Lam Decl. II”).

         B. The plaintiffs

         Named plaintiff Chunyou Xie worked at Joe's Shanghai in Flushing as a chef from November 15, 2014, to January 31, 2016. Compl. ¶ 56, ECF No. 1. Named plaintiff Jianmin Jin was a kitchen worker at Joe's Shanghai in Flushing from September 10, 2014, to May 1, 2015, and then again from August 19, 2016, to August 29, 2016. Id. ¶¶ 48-49. Both men alleged that they were paid flat weekly or monthly rates that were less than that required by state and federal labor laws given the No. of hours that they worked. Specifically, Jin claimed that he was paid a flat rate of $470 per week for about 58 hours of work, while Xie claimed that he was paid a flat rate of $2000 a month for either 58 or 72 hours a week of work. See Id. ¶¶ 51, 53, 57, 58, 60.[2]

         Jin testified consistently with this at a deposition, stating that he worked at the Flushing location from September 2014 to May 2015, that he worked more than 11 hours a day, five-and-a-half days a week, and that he was paid $470 a week. Jianmin Jin Dep. 16, 18, ECF No. 96-1. Xie failed to show up for a deposition on multiple occasions. As a sanction, Judge Orenstein precluded Xie's testimony from the plaintiff's case-in-chief. Sept. 25, 2017 Status Conf. Mins., ECF No. 76.

         Over the course of this litigation, nine plaintiffs opted in to the collective action: Huer Huang, Hui Zhen Huang, Lian Qin Lu, Juan Li, Guo Chang Su, Hui Qiu Chen, Xin He, Jian Ying Lin, and Hihua Zhai (who worked under the name Bin Xu). Of these nine opt-in plaintiffs, only one of them- Xin He-worked at the Flushing location. Xin He worked at the Flushing, Midtown, and Chinatown locations of Joe's Shanghai at various times. Opt-in plaintiff Hui Qiu Chen worked at both the Chinatown and Midtown locations, while Jian Ying Lin worked at the Chinatown location only. The other six opt-in plaintiffs worked solely at the Midtown location.[3]

         At his deposition, Xin He testified that he first worked at the Midtown location of Joe's Shanghai from December 2008 until October 2011. Xin He Dep. 22, 25, ECF No. 96-15. He was paid $2400 a month, then $2600 a month for 11 hours a day of work. Id. at 25-26. He did not punch a time card, or sign any record of the hours he had worked. Id. at 26-27. He then worked at the Chinatown location from October 2013 until July 2015, when he was transferred to the Flushing location. Id. at 34-35, 45, 48. He worked at the Flushing location as a cook from July 2015 to April 2016, earning first $3, 000 and then $3, 200 a month. Id. at 56. He was working 64.25 hours per week. Id. at 56-58. This time, he would punch a time card when he started and left for the day, but not when he went on break, and he would sign a payroll record every month. Id. at 57-58. Then, in May 2016, he was given a $200 a month raise to move to the Midtown location, where he worked until he was fired in August 2016. Id. at 60, 63, 65. His Midtown payroll records, which he acknowledged signing, showed that he worked 50-55 hours a week, with a base pay rate of $13.30 an hour and an overtime rate of $19.95 an hour. Id. at 105-07, 110-12. He stated that these records showed his correct pay and hours other than omitting four and one-half hours of overtime for the three times that he stayed late to close the Midtown location. Id. at 107-09.

         Six of the seven other opt-in plaintiffs who worked at the Midtown location testified that, since at least 2013, (1) they were paid at least the legal minimum wage plus overtime, (2) they had to punch time cards, (3) they signed payroll records every time they were paid, (4) they received notices of pay rate and pay day, and (5) the payroll records kept by the Midtown location were accurate. Huer Huang Dep. 22, 39-42, ECF No. 96-2; Hui Zhen Huang Dep. 23-30, ECF No. 96-4; Lian Qin Lu Dep. 22-24, ECF No. 96-6; Juan Li Dep. 35-38, 46-47, ECF No. 96-8; Guo Chang Su Dep. 29-38, ECF No. 96-10; Hui Qiu Chen Dep. 32-33, 35, 41-48, ECF No. 96-13.[4] The sole labor law violation mentioned by these Midtown workers in their deposition testimony was that they were sometimes required to do unpaid labor during their breaks. See Huer Huang Dep. 34, 39; Hui Zhen Huang Dep. 30-32; Lian Qin Lu Dep. 26-27; Guo Chang Su Dep. 39-41. Most significantly, Lu stated that she was sometimes required to wrap wontons for the entire length of the break between lunch and dinner; she was not paid for this time, but was given a one-dollar increase in her regular hourly pay as compensation. Lian Qin Lu Dep. 26-27; Decl. of Lian Qu Lu in Supp. of Final Certification of Collective and Class Action ¶¶ 6-11, ECF No. 102-1.

         The exception to this rule was Huihua Zhai, who worked as a delivery person at the Midtown location from November 25, 2013, to February 24, 2015. Decl. of Haihua Zhai in Opp'n to Defs.' Mot. to Decertify Collective Action ¶ 3, ECF No. 108-4 (“Zhai Decl.”). Like the Flushing workers, Zhai alleged that he was paid a flat rate that was less than he was due under minimum wage and overtime laws: He was paid a flat rate of $200 a week, or $5 a hour (assuming a forty-hour work week). Id. ¶¶ 4, 16. (His notice of pay rate and pay day mentions a tip credit of $3 a hour, which would bring him up to a rate of $8 an hour. See Decl. of John Troy in Opp'n to Defs.' Mot. to Decertify Collective Action, Ex. 2, ECF No. 108-2; Ko Decl. II, Ex. Q at 5, ECF No. 109-1.) But although Zhai alleged that he sometimes worked more than forty hours a week or performed non-tipped labor, he was never paid more than $200 a week. Zhai Decl. ¶¶ 4, 16-18; see also Ko Decl. II, Ex. Q at 2-4, ECF No. 109-1 (payroll records showing Zhai was paid for forty hours at $5 an hour every week).

         C. Procedural history

         Xie and Jin brought a putative collective and class action on behalf of workers at all three locations of Joe's Shanghai restaurant alleging, inter alia: (1) violations of state and federal minimum wage laws, Compl. ¶¶ 73-81; (2) violations of the state and federal requirement to pay overtime compensation for hours in excess of forty per week, Id. ¶¶ 82-94; (3) violations of the NYLL's requirement to provide spread-of hours pay (an extra hour's pay at minimum wage for each day where a worker's end time was over ten hours after their start time), Id. ¶¶ 95-97; (4) violations of the NYLL's requirement to provide meal periods, Id. ¶¶ 98-102; (5) violations of the NYLL's requirement to keep payroll records, Id. ¶¶ 103-07; (6) violations of the NYLL's requirement to provide written notice of workers' pay rate at the time of hire, Id. ¶¶ 108-12; and (7) violations of the NYLL's requirement to provide detailed paystub information, Id. ¶¶ 113-116.

         The plaintiffs moved three times to certify a collective action at the three locations of Joe's Shanghai. Magistrate Judge Orenstein initially granted conditional certification as to the Flushing and Midtown locations, but not the Chinatown location. June 7, 2017 Status Conf. Mins., ECF No. 47. The parties agreed that the FLSA statute of limitations would be tolled as of the date that the plaintiffs moved for conditional certification: April 7, 2017. July 7, 2017 Status Conf. Mins., ECF No. 50. Notice of this action was disseminated to all individuals who had been employees of the Midtown and Flushing locations at any point since April 7, 2014. See July 12, 2017 Order (approving proposed notice); Proposed Notice, ECF No. 51. This notice states: “[y]ou may be owed payment if you worked for Joe's Shanghai [in Flushing or Midtown] and were not paid at least the minimum wage for all hours worked. You may also be owed payment if you worked for Joe's Shanghai for more than forty (40) hours per week and you were not paid overtime.” Proposed Notice 2, ECF No. 51. No. mention is made of any of the other claims detailed in the complaint. See id.

         The plaintiffs then moved twice to expand the conditional certification to Chinatown. See Mot. for Pre-Mot. Conf. to Expand Conditional Certification, ECF No. 53; Mot. to Certify FLSA Collective Action Defendants' China Town Location, ECF No. 71. Both times, Judge Orenstein denied this application. Aug. 21, 2017 Status Conf. Mins., ECF No. 62; Sept. 25, 2017 Status Conf. Mins., ECF No. 76. Judge Orenstein also denied plaintiffs' request to amend their complaint to include workers at Joe's Shanghai in Chinatown as named plaintiffs. See Mot. for Extension of Time to Amend Complaint, ECF No. 64; Sept. 25, 2017 Status Conf. Mins., ECF No. 76. Following the denial of plaintiffs' requests to expand the collective action and amend the complaint, plaintiffs' counsel filed a class action in state court alleging labor law violations on behalf of three workers at the Chinatown location-all of them opt-in plaintiffs in this action-Jian Ying Lin, Hui Qiu Chen, and Xin He. See CPLR § 904 Class Action Compl., ECF No. 88-1.

         After the close of discovery, the plaintiffs moved for final certification of the collective action and certification of a class action. Mot. to Certify FLSA Collective Action and Rule 23 Class Action, ECF No. 100 (“Pls.' Mot.”). The defendants filed a cross-motion seeking to decertify the collective action. See Mot. to Decertify Collective Action, ECF No. 94 (“Defs.' Mot.”).

         DISCUSSION

         I. The collective action will be decertified because none of the opt-in plaintiffs are similarly situated to the named plaintiffs.

         A. Legal Standard

         The FLSA requires employers to pay workers a minimum wage of $7.25 an hour as well as overtime of “one and one-half times the[ir] regular rate” for each hour worked in excess of forty hours in a week. 29 U.S.C. §§ 206(a)(1), 207(a)(2). In the case of tipped employees, “[t]he FLSA permits employers to take a tip credit up to 50% of the minimum wage except that the credit ‘may not exceed the value of the tips actually received by the employee.'” Shahriar v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d 234, 239-40 (2d Cir. 2011) (quoting 29 U.S.C. § 203(m)). The FLSA has a two-year statute of limitations-three years if a violation is willful. 29 U.S.C. § 255(a).

         To enforce their rights under the FLSA, workers can bring their claims as collective actions. See 29 U.S.C. § 216(b). Unlike with class actions under Federal Rule of Civil Procedure 23, plaintiffs must affirmatively give their written consent to join a collective action. Id. The standards for certifying a collective action are accordingly more lenient, since there is no concern with protecting the due process rights of absent class members who did not choose to join in the litigation. 1 McLaughlin on Class Actions § 2:16 & n.12 (14th Ed. 2017) (collecting cases). While courts often use terms derived from class actions to discuss collective actions, “Rule 23 actions are fundamentally different from collective actions under the FLSA.” Genesis Healthcare Corp v. Symczyk, 569 U.S. 66, 74 (2013); see also Myers v. Hertz Corp., 624 F.3d 537, 555 n.10 (2d Cir. 2010).

         In order to join a collective action, opt-in plaintiffs must be “similarly situated” to the named plaintiffs. 29 U.S.C. § 216(b). While the term “similarly situated” is not defined by statute, it is a significantly lower bar than that required for class certification under Rule 23. Indeed, the question of whether opt-in plaintiffs are similarly situated “is quite distinct from the question [of] whether plaintiffs have satisfied the much higher threshold of demonstrating that common questions of law and fact will ‘predominate' for Rule 23 purposes.” Myers, 624 F.3d at 556.

         Courts in the Second Circuit typically take a two-step approach to certifying collective actions. See Id. at 554-55 (approving of, but not requiring, such a two-step approach). “The first step involves the court making an initial determination to send notice to potential opt-in plaintiffs who may be ‘similarly situated' to the named plaintiffs with respect to whether a FLSA violation has occurred.” Id. at 555 (citations omitted). District courts “may send this notice after plaintiffs make a ‘modest factual showing' that they and potential opt-in plaintiffs ‘together were victims of a common policy or plan that violated the law.'” Id. (quoting Hoffmann v. Sbarro, Inc., 982 F.Supp. 249, 261 (S.D.N.Y. 1997)). Then, at the second step, “the district court will, on a fuller record, determine whether . . . the plaintiffs who have opted in are in fact ‘similarly situated' to the named plaintiffs. The [collective] action may be ‘de-certified' if the record reveals that they are not, and the opt-in plaintiffs' claims may be dismissed without prejudice.” Id. (citations omitted).

         At this second stage, a district court “must apply heightened scrutiny in determining whether Plaintiffs are similarly situated for the purposes of the FLSA.” DeSilva v. North Shore-Long Island Jewish Health Sys., Inc., 27 F.Supp.3d 313, 319 (E.D.N.Y. 2014). Although the Second Circuit has not yet provided a set of criteria for courts to consider at this stage, district courts typically look at the following factors: “(1) disparate factual and employment settings of the individual plaintiffs; (2) defenses available to defendants which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.” Id. at 320 (quoting Laroque v. Domino's Pizza, LLC, 557 F.Supp.2d 346, 352 (E.D.N.Y. 2008)); accord, e.g., Scott v. Chipotle Mexican Grill, Inc., 12-CV-8333, 2017 WL 1287512, at *8 (S.D.N.Y. Mar. 29, 2017); Zivali v. AT&T Mobility, LLC, 784 F.Supp.2d 456, 460 (S.D.N.Y. 2011) (adopting these same criteria at the conditional certification stage).

         B. The Midtown opt-in plaintiffs are not similarly situated to the named plaintiffs because the Midtown and Flushing locations had separate management, ownership, and employment policies.

         District courts in the Second Circuit “have regularly found named plaintiffs to be similarly situated to employees at locations where they did not work, provided that the plaintiffs demonstrate that they were all subject to the same allegedly unlawful policy or practice.” Hamadou v. Hess Corp., 915 F.Supp.2d 651, 662 (S.D.N.Y. 2013) (emphasis added) (citing Rosario v. Valentine Ave. Disc. Store, Co., 828 F.Supp.2d 508, 516-17 (E.D.N.Y. 2011)). But even at the preliminary stage of conditional certification, where the burden of proof is quite low, “courts consider whether the plaintiffs have made an adequate factual showing to support an inference that such a uniform policy or practice exists, and whether the locations share common ownership or management.” Id. (collecting cases). Where plaintiffs cannot make this showing, a court should not certify a collective action. See Trinidad v. Pret A Manger USA, 982 F.Supp.2d 545, 557-60 (S.D.N.Y. 2013).

         In this case, the factual record developed by discovery shows that there is no uniform employment policy or practice across the Midtown and Flushing locations, and that these locations do not share common ownership or management.[5] Indeed, the FLSA claims of the Midtown opt-in plaintiffs are entirely distinct from the claims of the named Flushing plaintiffs. Workers at the Flushing location alleged that they were paid a flat rate that was less than minimum wage plus overtime, while workers at the Midtown location acknowledged that they were paid minimum wage and overtime, but claimed that they did some unpaid labor during meal breaks. The plaintiffs therefore cannot even meet the showing required to certify a conditional collective action, let alone satisfy the more demanding showing required at the stage of final certification.

         The two named plaintiffs alleged that they were paid an illegally low flat rate while working at the Flushing location. Compl. ¶¶ 51, 53, 57, 58, 60. One of the named plaintiffs did not appear for his deposition, but the other testified consistently at his deposition. Jianmin Jin Dep. 16, 18. Further, although the defendants claim that they paid the Flushing employees at least minimum wage and overtime, they have lost the payroll records that would prove this. Fong Decl. ¶ 4.

         In contrast, all of the Midtown plaintiffs besides Xin He and Huihua Zhai explicitly acknowledged during their depositions that they were paid at least the minimum wage and overtime since at least 2012 or 2013.[6]See Huer Huang Dep. 39; Hui Zhen Huang Dep. 30; Lian Qin Lu Dep. 23-24; Juan Li Dep. 35-38; Guo Chang Su Dep. 38; Hui Qiu Chen Dep. 41-48. This is documented in payroll records, and confirmed by the affidavit of the Midtown manager. Ko Decl. ¶ 4, 7-14 & Exs. C, E, G, I, K, L, N & P. Rather than claiming that they were paid an illegally low flat rate, the Midtown opt-in plaintiffs testified that they are owed money for unpaid labor they performed during their meal breaks. See Huer Huang Dep. 34, 39; Hui Zhen Huang Dep. 30-32; Lian Qin Lu Dep. 26-27; Guo Chang Su Dep. 39-41. And not all ...


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