Hernandez v. Habana Room, Inc.

Full title: GONZALO HERNANDEZ, on behalf of himself and all other persons similarly…

Court: UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

Date published: Feb 9, 2012

11 Civ. 1264 (RMB) (JCF) (S.D.N.Y. Feb. 9, 2012)

Opinion

11 Civ. 1264 (RMB) (JCF)

02-09-2012

GONZALO HERNANDEZ, on behalf of himself and all other persons similarly situated, Plaintiff, v. HABANA ROOM, INC., LEXINGTON HOTEL, LLC and JOHN DOES #1-10, Defendants.

Copies mailed this date: David Stein, Esq. Michael S. Samuel, Esq. Samuel & Stein 38 West 32nd Street, Suite 1110 New York, New York 10001 Ambrose W. Wotorson, Jr., Esq. Law Offices of Ambrose Wotorson, PC 26 Court Street, Suite 1811 Brooklyn, New York 11242

JAMES C. FRANCIS IV UNITED STATES MAGISTRATE JUDGE

(ECF)

MEMORANDUM AND ORDER

JAMES C. FRANCIS IV UNITED STATES MAGISTRATE JUDGE

This case involves claims by the plaintiff, Gonzalo Hernandez, that he was denied overtime and spread of hours pay by his employers, Habana Room, Inc. ("Habana Room") and Lexington Hotel LLC ("Lexington Hotel"), in violation of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (the "FLSA") and New York Labor Law. Mr. Hernandez now moves pursuant to Rule 15 of the Federal Rules of Civil Procedure to amend his Complaint to name as defendants the individual owners and operators of Habana Room: Sergio Montolio, Elvis Nunez, Alison Pattenden, and Carlos Saint-Hillaire. For the reasons that follow, the motion is granted.

Background

At the time that the plaintiff filed the Complaint in this action in February 2011, he named ten "John Doe" defendants, whom he identified as

the owners, officers, directors, and/or managing agents of defendants Habana Room and Lexington Hotel, whose identities are unknown at this time, who participated in the day-to-day operations of defendants, who have the power to hire and fire employees, set wages and schedules, and retain their records, and who constitute "employers" pursuant to the FLSA, New York Labor Law, and federal and state implementing regulations.

(Complaint, ¶ 13). Habana Room answered the Complaint on August 2, 2011, and the plaintiff served discovery requests on that defendant on August 8, 2011. (Declaration of David Stein dated Jan. 18, 2012 ("Stein Decl."), ¶¶ 3, 5).

Pursuant to the case management order, the deadline to amend pleadings and join additional parties was October 1, 2011, and all discovery was to be completed by November 21, 2011. (Case Management Plan dated July 20, 2011). However, Habana Room was dilatory in responding to the plaintiff's discovery requests, and it was not until October 21, 2011 -- after much prodding -- that Habana Room produced substantive responses. (Stein Decl., ¶¶ 6-20). Among the plaintiff's discovery requests was an interrogatory that asked the defendant to

[i]dentify all persons who have participated in the operation or management of Habana Room, Inc., during the relevant time period, including the dates of such participation, and their responsibilities (including, but not limited to, hiring and firing, setting and/or changing wages, distributing wages, setting and/or changing work schedules, directing and assigning types of work, or maintaining employment records.

(Plaintiff's First Set of Interrogatories to Defendant Habana Room, Inc., attached as part of Exh. I to Stein Decl., Interrogatory no. 2). After asserting objections, the defendant responded by stating only that "defendant names Sergio Montolio, Elvis Nunez, Alison Pattenden, and Carlos Saint-Hillaire as owners." (Defendant Habana Room, Inc.'s Verified Responses to Plaintiff's First Set of Interrogatories and Document Requests, attached as part of Exh. I to Stein Decl., Interrogatory Response no. 2).

Shortly thereafter, plaintiff's counsel raised a number of discovery disputes with the Court and submitted a letter requesting permission to amend the Complaint to provide the identities of the defendants previously named as "John Does." Pursuant to my direction, the plaintiff then filed the motion that is now pending. Habana Room opposes the motion on the ground that the individual defendants may not be held liable under the FLSA or New York Labor Law based solely on their ownership interest in the defendant corporation.

Discussion

A motion to amend is generally governed by Rule 15(a) of the Federal Rules of Civil Procedure, which states that "[t]he court should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2). Notwithstanding the liberality of the general rule, "it is within the sound discretion of the court whether to grant leave to amend." John Hancock Mutual Life Insurance Co. v. Amerford International Corp., 22 F.3d 458, 462 (2d Cir. 1994); accord In re Alcon Shareholder Litigation, 719 F. Supp. 2d 280, 281 (S.D.N.Y. 2010). Regarding the use of this discretion, the Supreme Court has stated:

In the absence of any apparent or declared reason -- such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. -- the leave sought should . . . be freely given.

Foman v. Davis, 371 U.S. 178, 182 (1962) (internal quotation marks omitted).

Where, as here, a proposed amendment adds new parties, the propriety of amendment is governed by Rule 21 of the Federal Rules of Civil Procedure. Momentum Luggage & Leisure Bags v. Jansport, Inc., No. 00 Civ. 7909, 2001 WL 58000, at *1-2 (S.D.N.Y. Jan. 23, 2001). That Rule states that a party may be added to an action "at any time, on just terms." Fed. R. Civ. P. 21. In deciding whether to permit joinder, courts apply the "same standard of liberality afforded to motions to amend pleadings under Rule 15." Soler v. G & U, Inc., 86 F.R.D. 524, 528 (S.D.N.Y. 1980) (quoting Fair Housing Development Fund Corp. v. Burke, 55 F.R.D. 414, 419 (E.D.N.Y. 1972)); accord Cortlandt v. Westchester County, No. 07 Civ. 1783, 2007 WL 3238674, at *4 (S.D.N.Y. Oct. 31, 2007); Momentum Luggage, 2001 WL 58000, at *2. Thus, joinder will be permitted absent undue delay, bad faith, prejudice, or futility.

Here, there is no indication of bad faith on the part of the plaintiff, and Habana Room has not suggested that it would be prejudiced by amendment of the pleadings. To be sure, the plaintiff first sought relief after the deadline to amend or to join parties had passed, but he did so promptly after receiving the necessary information that he had long sought in discovery. The defendant's only substantive objection, then, is that the proposed amendment is futile because the plaintiff has not adequately pled his claims as against the individual defendants.

Joinder may be denied as futile if the proposed pleading would not withstand a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Oneida Indian Nation of New York v. City of Sherrill, 337 F.3d 139, 168 (2d Cir. 2003), rev'd on other grounds, 544 U.S. 197 (2005). To overcome objections of futility, the moving party must merely show that it has "at least colorable grounds for relief." Ryder Energy Distribution Corp. v. Merrill Lynch Commodities Inc., 748 F.2d 774, 783 (2d Cir. 1984) (internal quotation marks and citation omitted); accord Gilmore v. Gilmore, No. 09 Civ. 6230, 2010 WL 4910211, at *2 (S.D.N.Y. Nov. 15, 2010).

As when considering a motion under Rule 12(b)(6), a court evaluating the futility of an amendment to a complaint must accept all factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Erickson v. Pardus, 551 U.S. 89, 93-94 (2007) (per curiam); Freedom Holdings, Inc. v. Spitzer, 357 F.3d 205, 216 (2d Cir. 2004). A complaint need not contain detailed factual allegations, but it must contain more than mere "'labels and conclusions' or a 'formulaic recitation of the elements of a cause of action.'" Ashcroft v. Iqbal, ___ U.S. ___, ___, 129 S. Ct. 1937, 1949-50 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007)).

Because determinations of futility on a motion for leave to amend are subject to the same standards as motions under Rule 12(b)(6), "[f]utility is generally adjudicated without resort to any outside evidence." Wingate v. Gives, No. 05 Civ. 1872, 2009 WL 424359, at *5 (S.D.N.Y. Feb. 13, 2009) (citing Nettis v. Levitt, 241 F.3d 186, 194 n.4 (2d Cir. 2001)); accord Cecilio v. Kang, No. 02 Civ. 10010, 2004 WL 2035336, at *17 (S.D.N.Y. Sept. 14, 2004) ("Normally, a motion for leave to amend is adjudicated without resort to any outside evidence."), report and recommendation adopted, 2004 WL 2158007 (S.D.N.Y. Sept. 27, 2004).

In this case, the defendant's futility argument fails. While it is true that merely having an ownership interest in the employer entity is insufficient to establish individual FLSA liability, Bravo v. Eastpoint International, Inc., No. 99 Civ. 9474, 2001 WL 314622, at *2 (S.D.N.Y. March 30, 2001), the proposed Amended Complaint asserts far more than that. It alleges that the individual defendants "have all participated in the management and operations" of Habana Room and that "they each have the power to hire and fire employees, set wages and schedules, and retain their records on behalf of Habana Room." ([Proposed Amended] Complaint, attached as Exh. K to Stein Decl., ¶ 13). These allegations are plainly sufficient to state a claim for individual liability. See Rodriguez v. Almighty Cleaning, Inc., 784 F. Supp. 2d 114, 128 (E.D.N.Y. 2011) (holding owner liable on default based on allegations in complaint that he "had authority over personnel decisions, authority over payroll decisions, and authority to hire and fire employees"); Shin Won Kang v. Inno Asset Development, LLC, No. 08 CV 4848, 2011 WL 1674554, at *6 (E.D.N.Y. Jan. 28, 2011) (holding individual defendant liable on default based on allegation that he owned and managed employer corporation). Whether the plaintiff will ultimately be able to prove these allegations and establish that the individual defendants here had sufficient operational control to be considered "employers" under the FLSA and New York Labor Law is a matter to be determined on summary judgment or at trial.

Conclusion

The plaintiff's motion to amend the Complaint (Docket no. 19) is granted. By February 15, 2012, the plaintiff shall serve and file an Amended Complaint that conforms to the draft pleading submitted with the motion papers.

SO ORDERED.

/s/_________

JAMES C. FRANCIS IV

UNITED STATES MAGISTRATE JUDGE Dated: New York, New York

February 9, 2012 Copies mailed this date: David Stein, Esq.
Michael S. Samuel, Esq.
Samuel & Stein
38 West 32nd Street, Suite 1110
New York, New York 10001 Ambrose W. Wotorson, Jr., Esq.
Law Offices of Ambrose Wotorson, PC
26 Court Street, Suite 1811
Brooklyn, New York 11242