Opinion
No. 11 Civ. 5584 (CM)
06-14-2013
JIA HU QIAN, Plaintiff, v. SIEW FOONG HUI A/K/A AMY HUI AND AMY'S RESTAURANT INC., ABC CORP., operating under the trade name "AMY'S RESTAURANT", Defendants.
DECISION AND ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
:
I. BACKGROUND
Plaintiff in this case is Jia Hu Qian, a former deliveryman employed by Defendants, Amy's Restaurant and its owner, Siew Foong Hui (a/k/a Amy Hui). He is seeking unpaid minimum wages, overtime compensation, and spread of hours wages pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. and the New York Labor Law (the "NYLL"), NYLL §§ 650 et seq.
On May 30, 2012, this Court denied Defendants' motion to dismiss for lack of subject matter jurisdiction, and, on November 29, 2012, the Defendants filed a motion for summary judgment against the Plaintiff. Defendants assert that Plaintiff is not entitled to sue under the FLSA's so-called "enterprise coverage," which provides coverage for an "employee[ ] who . . . is employed in an enterprise engaged in commerce or in the production of goods for commerce . . ." See 29 U.S.C. §§ 206, 207. Specifically, Defendants' motion for summary judgment alleges that the restaurant's annual revenue does not meet the $500,000.00 threshold required by § 203(s)(1)(A)(ii). (See Defs.' Aff. in support of Mot. for Summ. J. ¶ 3.)
A. Plaintiff's Contentions
There is no dispute that Defendants reported annual sales to the Internal Revenue Service ("IRS") of less than $500,000 for the relevant period of 2007-2011. The question instead centers on Defendants' unreported, actual sales, which Plaintiff contends exceeds $500,000. (See Pl.'s Decl. in Opp'n to Summ. J. ¶ 7.) The crux of Plaintiff's assertion is that Defendants are under stating the amount of sales paid with cash relative to the sales paid by credit card. Plaintiff contends that only 25% of sales are paid by credit card (see Pl.'s Decl. in Opp'n to Summ. J. ¶ 17) rather than the "vast majority," as claimed by Defendants (see Defs.' Aff. in support of Mot. for Summ. J. ¶ 12).
Plaintiff cites his experience as a deliveryman, as well as his familiarity with the business he gained by meeting twice a day with the other employees and the owner. (See Pl.'s Aff. in Opp'n to Summ J. ¶ 7.) During these daily meetings, employees and the owner of the restaurant would distribute credit card tips, which necessarily entails knowing the value of those tips. (Id.) He was also aware of the value of tips that he earned each day in cash. (Id.) As a result, Plaintiff suggests, he had adequate knowledge of the restaurant's sales to make the foregoing assertion. (See Pl.'s Decl. in Opp'n to Summ. J. ¶ 17.)
Additionally, Plaintiff claims that "the records submitted by the Defendants are self-serving and specifically tailored to convince the Court that the Restaurant does not earn more than $500,000 annually." (See Pl.'s Decl. in Opp'n to Summ. J. ¶ 9.) Plaintiff refers the Court to Defendants' Exhibit D. Contrary to Defendants' affidavit, which states that Exhibit D contains "daily sales receipts for the entire month of July 2012" (see Defs.' Aff in support of Mot. for Summ. J. ¶ 10), Plaintiff alleges the exhibit purposefully excludes all receipts prior to 3:45 pm and all receipts between July 3 - July 9 and July 16 - July 21 (see Pl.'s Decl. in Opp'n to Summ. J. ¶ 11). Plaintiff also claims that the receipts provided by Defendants amount to approximately $10,499 (see Pl.'s Decl. in Opp'n to Summ. J. ¶ 11) rather than $19,790, as asserted by Defendants (see Defs.' Aff. in support of Mot. for Summ. J. ¶ 11; see also Defs.' Exhibit D).
In sum, Plaintiff concludes that, when you account for the discrepancy in payment methods, Defendants are clearly in excess of the $500,000 threshold required by the FLSA. (See Pl.'s Decl. in Opp'n to Summ. J. ¶ 17.) He further argues that Defendants purposefully omitted receipts from the record in order to mislead the Court. (See Pl.'s Decl. in Opp'n to Summ. J. ¶ 9.) According to Plaintiff, it follows that the motion for summary judgment should be denied.
B. Defendants' Contentions
In support of the motion for summary judgment, Defendants refer the Court to the tax filings with the IRS, which indicate its total sales are less than $500,000 each year for the relevant period. (See Defs.' Aff. in support of Mot. for Summ. J. ¶ 7.) According to the Defendants' tax returns, in 2007, the restaurant's gross receipts totaled $128,928; in 2008 they were $183,632; in 2009 they were $195,474; in 2010 they were $222,527; in 2011 they were $204,099. (See Defs.' Ex. C.)
They also refer the Court to the restaurant's monthly bank deposits. In the month of January 2012, the value "deposits and other credits" to the account was $22,297; in February 2012 it was $18,418; in May 2012 it was $20,900; and in June 2012 it was $20,162. (See Defs.' Ex. H.) These figures are far lower than the monthly sales required to meet the $500,000 threshold - i.e., an average of $41,667 per month. Defendants assert that these values are strong evidence that the restaurant's sales are not under reported. (See Defs.' Aff. in support of Mot. for Summ. J. ¶ 18.)
Additionally, Defendants states that the "vast majority" of sales were by credit card, which is in sharp contrast to Plaintiff's assertion that only 25% of sales were by credit card. (See Defs.' Aff. in support of Mot. for Summ. J. ¶ 12.) According to Defendants, the gross sales in 2011 were $204,099 (see Defs.' Ex. C) and the sales paid by credit card were $155,334 (see Defs.' Ex. F.) It necessarily follows that the sales by cash were approximately $48,765 or 24% of total sales rather than 75% of total sales.
Defendants therefore rest the motion for summary judgment on the assertion that the tax filings are a true indicator of the restaurant's gross sales, which have fluctuated between $128,928 in 2007 and $222,527 in 2010. (See Defs.' Ex. C.) As further evidence, they provide four monthly bank deposits that do not exceed $22,297 per month. (See Defs.' Ex. H.) Because neither of these values suggest that the $500,000 threshold is met, Defendants seek summary judgment.
II. STANDARD OF REVIEW
Summary judgment is designed "to flush out those cases that are predestined to result in directed verdict." Lightfoot v. Union Carbide Corp., 110 F.3d 898, 907 (2d Cir. 1997); see also Mt. Hawley Ins. Co. v. Van Cortland Village LLC, 2011 WL 5834255 (S.D.N.Y. Nov. 18, 2011). Thus, a party is entitled to summary judgment when there is "no genuine issue as to any material fact" and the undisputed facts warrant judgment for the moving party as a matter of law. Fed. R. Civ. P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). On a motion for summary judgment, the court must view the record in the light most favorable to the nonmoving party and draw all reasonable inferences in its favor. Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The moving party has the initial burden of demonstrating the absence of a disputed issue of material fact. Celotex v. Catrett, 477 U.S. 317, 323 (1986). Once such a showing has been made, the nonmoving party must adduce specific facts demonstrating a genuine dispute over a material issue, requiring resolution by trial. The nonmovant "may not rely on conclusory allegations or unsubstantiated speculation," Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998), but must support the existence of an alleged dispute with specific citation to the record materials. Fed. R. Civ. P. 56(c). In other words, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. Rather, sufficient evidence must exist upon which a reasonable jury could return a verdict for the nonmoving party.
Moreover, identifying a "genuine" dispute is not necessarily enough to defeat the motion, because not every disputed factual issue is material in light of the substantive law that governs the case. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude summary judgment." Anderson, 477 U.S. at 248; see generally City of New York v. Philadelphia Indem. Ins. Co., 2010 WL 3069654, at *4-5 (S.D.N.Y. July 27, 2010).
In regards to the FLSA threshold specifically, Monterossa v Martinez Rest. Corp. makes it clear that "in order to survive summary judgment, Plaintiff[ ] need not prove that the Restaurant had gross income of more than $500,000; that would be their burden at trial. Plaintiff[ ] need only show that there is a material dispute of fact regarding the issue." 2012 WL 3890212, at *3 (S.D.N.Y. Sept.7, 2012).
III. DISCUSSION
In this case, the question is whether Plaintiff's allegation that Defendants are under reporting the restaurant's gross volume of sales and thereby avoiding FLSA coverage is a question of material fact suitable for a jury trial. I have concluded that it is. Plaintiff's affidavit makes it clear that he was in a position to obtain specific knowledge about the restaurant's sales, including the proportion of sales paid with cash and those paid by a credit card. (See Pl.'s Decl. in Opp'n to Summ. J. ¶ 17.) This knowledge speaks directly to Plaintiff's assertion that Defendants are purposefully under reporting the gross sales in order to "reduce their tax burden" and consequently avoid FLSA coverage. (See Pl.'s Decl. in Opp'n to Summ. J. ¶ 7.)
There is substantial precedent suggesting that tax returns are not dispositive and the veracity of those documents can be questioned by a Plaintiff. See, e.g., Monterossa v Martinez Rest. Corp., 2012 WL 3890212, at *3 (S.D.N.Y. Sept.7, 2012); Li v. Cheng, 2012 WL 1004852, at *5 (E.D.N.Y. Mar. 23, 2012). Furthermore, there is substantial precedent suggesting that factors other than tax returns are relevant in determining whether the $500,000 threshold is met. See, e.g., Boekemeier v. Fourth Universalist Soc'y in the City of New York, 86 F.Supp.2d 280, 282-83 (S.D.N.Y. 2000); Solis v. Cindy's Total Care, Inc., 2012 WL 28141, at *13 (S.D.N.Y. Jan.5, 2012); Francois v. Fried Green Tomatoes, 306 Fed.Appx. 443, 445 (11th Cir. 2008).
Taking Plaintiff's assertion as true, arguendo, it follows that if $12,944 accounts for only 25% of sales in any given month then cash accounts for approximately $38,833 of sales per month. When these cash and credit card sales are combined, the result is $51,778 in gross sales per month or a total of $621,337 gross sales per year. This is clearly more than the $500,000 threshold.
Moreover, Plaintiff alleges that all receipts prior to 3:45 pm and all receipts between July 3 - July 9 and July 16 - July 21 (see Pl.'s Decl. in Opp'n to Summ. J. ¶ 11) are not included in Exhibit D, despite Defendant's representations otherwise (see Defs.' Aff. in support of Mot. for Summ. J. ¶ 10). This Court has sampled four days of receipts and found none before 3:45 pm. Also, there are no receipts for the day indicated.
The failure of Defendants to submit a complete record, despite their representation otherwise, suggests to this Court that there are disputed issues concerning the completeness, and quite possible the veracity, of Defendants' financial data.
IV. CONCLUSION
For the foregoing reasons, Defendants' motion for summary judgment is DENIED. The Clerk is instructed to remove the motion at ECF No. 22 from the Court's list of open motions. The parties must file a pretrial order by July 12, 2013. The Court will call this case for trial on 48 hours notice at any time thereafter. Dated: June 14, 2013 New York, New York
/s/_________
United States District Judge