UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
____________________________________ X
JUAN ALONSO et al., on behalf of
themselves and others similarly
situated,
Plaintiffs,
UNCLE
-against-
JACK'S STEAKHOUSE, INC., et al.
08
ME
Civ.
MORAND
7813
UM &
(DAB)
ORDER
Defendants.
------------------------------------X
DEBORAH A. BATTS, United States District Judge
In this action, originally filed on September 5, 2008,
Plaintiffs allege that Defendants violated the Fair Labor
Standards Act (UFLSA"), 29 U.S.C. §§ 201, et seq., and the New
York Labor Law (uNYLL"). Specifically, Plaintiffs allege that
Defendants: 1) failed to pay an overtime wage premium as required
by FLSA and NYLLi 2) failed to pay a uspread of hours" premium as
required by NYLLi 3) misappropriated gratuities in violation of
NYLLi 4) required Plaintiffs to purchase and care for their own
uniforms in violation of NYLLi and 5) retaliated against
Plaintiffs in violation of FLSA and NYLL. (See Am. Compl. ~~ 96
127.) Plaintiffs also claim that Defendants failed to pay
minimum wage. (Am. Compl. ~~ 72-80. 1 ) Now before the Court are
lSee Alonso v. Uncle Jack's Steakhouse, Inc., 648 F. Supp.
2d 484,487 (S.D.N.Y. 2009) (UWhile Defendants are correct that
Plaintiff do not plead the failure to pay a minimum wage as a
separate count in their Amended Complaint, the factual
allegations in the Amended Complaint and Affirmation clearly
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the following motions: Plaintiffs' Motion for Partial Summary
Judgment; Plaintiffs' Motion to Certify a NYLL Class Action under
Fed. R. Civ. P. 23; Defendants' Motion to Decertify the FLSA
Collective Action; and Defendant Borysowski's Motion for Summary
Judgment. For the reasons stated herein, Plaintiffs' Motion for
Partial Summary Judgment is DENIEDi Plaintiffs' Motion to Certify
a NYLL Class Action is GRANTED; Defendants' Motion to Decertify
the FLSA Collective Action is DENIED, and Defendant Borysowski's
Motion for Summary Judgment is DENIED.
I. BACKGROUND
Except where noted, the following facts are undisputed.
At all relevant times, Defendant Uncle Jack's Steakhouse,
Inc. (UUncle Jack's 34th Street") has been a New York corporation
that owns and operates a restaurant at 440 Ninth Avenue, New
York, New York. (Pls.' 56.1 Stmt., ~ 1.) Defendant Uncle Jack's
Steakhouse Midtown, Inc. (UUncle Jack's Midtown") has been a
corporation that owns and operates a restaurant at 44 West 56th
Street, New York, New York. (Id., ~ 2.) Defendant Uncle Jack's
plead sufficient facts to make out such a claim. Accordingly,
the Court may order Plaintiffs to further amend their Complaint
under Fed. R. Civ. P[.] 10(b) ... , it nevertheless finds that
Plaintiffs' allegations were sufficient to place Defendants on
notice of their claims related to their alleged failure to pay
the minimum wage under the FLSA.").
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of Bayside, Inc. ("Uncle Jack's Bayside") has been a New York
corporation that owns and operates a restaurant at 39-40 Bell
Boulevard in Bayside, New York. (Id., ~ 3.)
Defendant William Degel was at all relevant times the Chief
Executive Officer of Uncle Jack's 34th Street, Uncle Jack's
Midtown, and Uncle Jack's Bayside. (PIs.' 56.1 Stmt., ~ 4.)
Degel owns 100 percent of the stock of Uncle Jack's 34th Street
and Uncle Jack's Bayside and 75 percent of the stock of Uncle
Jack's Midtown. (PIs.' 56.1 Stmt., ~ 5.) As he testified at his
deposition, Mr. Degel's duties involved growing the company,
finding new locations, marketing, advertising, signing checks,
purchasing, quality control, and hiring high-level employees,
such as chefs, sous chefs, and managers. (Rooney Decl., Ex. 3,
Degel Depo. Tr., 15:9-16:25.)
Defendant Thomas Carpenter is Director of Operations and
assists Defendant Degel in running the three restaurants. (PIs.'
5 6 . 1 Stmt ., ~ 7.) Mr. Carpenter's duties include hiring
management, maintaining quality controls, repairing and
maintaining the three restaurants, and promotion and marketing.
(Rooney Decl., Ex. 2, Carpenter Depo. Tr., 7:10-13.) Mr.
Carpenter also reviewed payroll before processing. (Rooney
Decl., Ex. 3, Degel Depo. Tr., 32:4-9.)
Defendant Dennis Borysowski served as the general manager of
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Uncle Jack's 34th Street at one point, and then at Uncle Jack's
Midtown. (Id., 33:6-8; Rooney Decl. Ex. 6, Carpenter Depo. Tr.,
13:18-25.)
All three restaurants operated on the basis of a "tip pool,"
in which all tipped employees shared. (Pls.' 56.1 Stmt., ~ 25.)
The restaurants used a points system, under which the captains,
waiters, and busboys all got a certain percentage of the pool.
(Rooney Decl., Ex. 7, Corcoran Depo. Tr., 40:2-12.)
For pre-booked parties, the restaurants would impose a
service charge of 25 percent, and that service charge was
contained in the contract for the party. (Pls.' 56.1 Stmt., ~
27; Defs.' 56.1 Stmt., ~ 27.) Store managers received 5 percent
of the service charge. (P 1 s .' 56. 1 Stmt ., ~ 2 8; De f s .' 5 6 . 1
Stmt., ~ 28; Rooney Ex. 2, Carpenter Depo. Tr., 37:13-20.) When
party planners were used, they would receive 5 percent of the
service charge. (Pls.' 56.1 Stmt., ~ 29; Defs.' 56.1 Stmt., ~
29.) According to a party contract for a party at Uncle Jack's
Midtown, the restaurant did not charge sales tax on the 25
percent service charge. (Rooney Decl., Ex. 3, Degel Depo. Tr.,
Ex. 4.) In at least one instance, the customer check given to
the customer to pay the bill said that the 25 percent charge was
a "gratuity." ( P 1 s . I 5 6 . 1 Stmt ., ~ 3 5 . )
The restaurants deducted 3 percent from tipped employees'
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credit card tips for the purported reason of offsetting credit
card processing fees. {PIs.' 56.1 Stmt., ~ 36.}
At his deposition, Mr. Degel testified that the restaurants
did not schedule overtime. (Rooney Decl., Ex. 3, Degel Depo.
Tr., 101:13-15.) From Defendants' Time Reports, Plaintiffs have
identified numerous instances of tipped employees working more
than forty hours in a week without receiving overtime pay.
(Rooney Decl., Ex. 14.) Defendants contend that the Time Reports
summarized by Plaintiffs do not account for the many instances
when restaurants were required to make adjustments to account for
Plaintiffs' failures to clock in and clock out properly. {Defs. I
56.1 Stmt., ~ 45.)
Plaintiffs claim that the restaurants paid no spread of
hours payor uniform allowances. (PIs .' 5 6 . 1 Stmt ., ~ 5 0 . )
Defendants contend that no spread of hours payor uniform
allowances were required, since Plaintiffs earned more than
minimum wage. (Defs.' 56.1 Stmt., ~ 50.)
II. DISCUSSION
A. Defendants' Motion to Decertify the FLSA Collective Action
"FLSA 'collective actions,' as they are known, are intended to
facilitate a resolution in a single proceeding of claims stemming
from common issues of law and fact, and to lower the costs of
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individual actions by pooling claims and resources. I' Pefani s v.
Westway Diner, Inc., No. 08 civ. 002 (DLC) , 2010 WL 3564426, at
*3 (S.D.N.Y. Sept. 7, 2010) {citing Hoffman-La Roche Inc. v~
Sperling, 493 U.S. 165, 170-71 (1989». After determining that
other employees may be usimi1ar1y situated" to the named
plaintiff or plaintiffs, the District Court may authorize notice
that informs potential plaintiffs of the existence of the action
and instructs them on the steps they must take to opt in to the
lawsuit. Id. In contrast to class actions under Rule 23,
plaintiffs must opt in to participate in a FLSA collective
action.
At that initial stage, plaintiffs need only satisfy Uthe
minimal burden of showing that the similarly situated requirement
is met." Torres v. Gristede'S Operating Corp., No. 04 civ. 3316,
2006 WL 2819730, at *7 (S.D.N.Y. Sept. 29, 2006). With the
benefit of discovery, the District Court revisits the question of
whether the usimilarly situated" requirement is met. Id. While
the standard is higher at this second stage, uthe 'similarly
situated' requirement of 29 U.S.C. ss 216(b} is considerably less
stringent that the requirement of Fed. R. Civ. P. 23(b} {3} that
common questions 'predominate.'" Rodolico v. Unisys Corp., 199
F.R.D. 468, 481 {E.D.N.Y. 2001} (citation and internal quotations
omitted) .
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On July 24, 2009, this Court granted Plaintiffs' Motion for
Conditional Certification of a FLSA Collective Action. See
Alonso v. Uncle Jack's Steahouse, 648 F. Supp. 2d 484, 488-89
(S.D.N.Y. 2009). Since that time, fifty-two current or former
employees of the restaurants have filed Consents to Sue pursuant
to FLSA.
Defendants argue that decertification is appropriate because
individualized proof would be required as to each Plaintiff's
claim for overtime wages, given that Defendants believe there are
many instances where Plaintiffs failed to clock in or out
properly. Furthermore, they argue that individualized proof
would be necessary on each minimum wage claim, as Plaintiffs
would have to testify as to which contract parties they worked
and how long those parties lasted. Finally, Defendants argue
that Plaintiffs are not similarly situated due to differences in
job titles, store locations, managers, and schedule.
The existence of individual differences in number of hours
worked or diligence in the use of the timekeeping system will not
warrant decertification, as long as Plaintiffs show they are
subject to a "single decision, policy, or plan." Ayers v. SGS
Control Servs., Inc., No. 03 Civ. 9077, 2007 WL 646326, at *5
(S.D.N.Y. Feb. 27, 2007). In Ayers, as here, defendants argued
that decertification was appropriate where the plaintiffs worked
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under different managers and had different individual timekeeping
practices, such that individual inquiries into hours worked would
have to be conducted. Ayers, 2007 WL 646326, at *5. Rejecting
that argument, the Court noted that Plaintiffs challenged a
company-wide policy, rather than individualized instances of
failure to pay overtime.
As in Ayers, Plaintiffs here challenge what they allege are
company-wide policies to alter time records to avoid paying
overtime. (See, e.g., Rooney Decl. Ex. 7, Corcoran Dep. Tr.,
89:8-23; Rooney Decl., Ex. 9, Overton Dep. Tr., 67:8-69:10.)
They also challenge company-wide policies on contract parties and
credit card interchange fees. While the extent, existence, and
lawfulness of these company-wide policies are issues for the
finder of fact at trial, they are issues that are subject to
generalized proof. Those issues outweigh Defendants' concerns
about Plaintiffs' varying job titles, locations, and work
schedules. See Pefanis, 2010 WL 3564426, at *4 (UAny individual
differences in job duties, work schedules, and pay rates do not
alter the conclusion that [plaintiffs] are similarly situated.").
Defendants' Motion to Decertify the FLSA Collective Action is
therefore DENIED.
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B. Plaintiffs' Motion for Class certification
Plaintiffs here seek certification of a class pursuant to
Rule 23 of the Federal Rules of civil Procedure, consisting of
"all current and former captains, waiters, runners, bussers and
bartenders who worked for Uncle Jack's Steakhouse, Inc., Uncle
Jack's Bayside, Inc., Uncle Jack's Steakhouse Midtown, Inc.,
William Degel, Thomas Carpenter and Dennis Borysowski predating
six years from the filing of this action on September 5, 2008."
(PIs.' Mem. L. Cert., p. 1.) For many of the same reasons that
decertification of the FLSA collective action is inappropriate,
certification of a class action under Fed. R. Civ. P. 23 for
Plaintiffs' NYLL claims is appropriate.
As an initial matter, Defendants' arguments that this Court
should decline to exercise supplemental jurisdiction over
Plaintiffs' state law claims are not compelling. Contrary to
Defendants' assertions, the differences between State and Federal
law on the "tip credit" are not so profound as to require a
separate trial for each claim. Nor are the issues of the State
uniform cleaning law and spread-of-hours law so significant that
they would predominate over the Federal law issues at trial. Nor
is the issue of the impact of the tip credit law on the spread
of-hours and uniform cleaning laws sufficiently novel, as at
least one court in this District has recognized that the laws may
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be read together. See Chan v. Sung Yue Tung Corp., No. 03 Civ.
6048, 2007 WL 313483, at *22 (S.D.N.Y. Feb. 1, 2007). This Court
will therefore address the Rule 23 factors for certification of a
class action.
Rule 23 provides that a court should certify a class where,
as here, plaintiffs satisfy the four prerequisites of Rule 23(a)
and one of the three prerequisites of Rule 23(b). In re IPO Sec.
Litig., 471 F.3d 24, 41 (2d Cir. 2006)
Rule 23(a) (1) requires a potential class to be "so numerous
that joinder of all members is impracticable." A presumption
that joinder is impracticable arises where the prospective class
consists of forty members or more. Robidoux v. Celani, 987 F.2d
931, 936 (2d Cir. 1993)i Iglesias-Mendoza v. La Belle Farm, Inc.,
239 F.R.D. 363, 370 (S.D.N.Y. 2007). Here, fifty-two Plaintiffs
have opted into the FLSA collective action, and hundreds of
additional tipped employees worked at the three Uncle Jack's
restaurants during the class period. Accordingly, the class is
sufficiently numerous to warrant class certification.
Furthermore, as noted above in the discussion of Defendants'
Motion to Decertify the FLSA Collective Action, there are
"questions of law or fact common to the class," as required by
Rule 23(a) (2). Defendants' timekeeping practices and deductions
from the tip pool present issues of fact and law that are common
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to the class. Even though there may be sub-classes of employees,
such as the employees who were allegedly paid no cash wage,
presenting distinct legal and factual issues, the common issues
of Defendants' timekeeping and tip pool policies predominate, and
the commonality requirement is satisfied. See Shabazz v. Morgan
Funding Corp., 269 F.R.D. 245, 250 (S.D.N.Y. 2010) (finding the
commonality requirement satisfied even though sub-classes of
employees presented different legal and factual questions).
Likewise, the typicality requirement of Rule 23(a) (3) is
satisfied. The claims of the named Plaintiffs are typical of the
class, in that named Plaintiffs, like all class members, were
tipped employees of Defendants in the relevant time period, and
sustained similar damages from Defendants' alleged unlawful
practices. (See, e.g., Arias Aff., ~~ 2-28; Naranjo Aff., ~~ 2
22; Ortiz Aff., ~~ 2-11.)
Rule 23(a) (4) is satisfied, as there is no reason to
conclude that the representative Plaintiffs have interests that
are in any way antagonistic to the class, and Class Counsel,
Fugazy and Rooney, has experience in handling complex class
actions similar to the present action. (See generally, Rooney
Aff.) Defendants' argument that it would be unfair to include in
the class action the several putative class members who have
affirmed that they were not subject to illegal practices is
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illogical, as they may opt out if they do not wish to
participate.
Furthermore, Rule 23(b) (3) is satisfied, as (1) common
issues of law and fact predominate over individual claims; and
(2) a class action is superior to other means of adjudicating the
action. Here, although individual inquiries may be necessary as
to the amount of hours worked for purposes of the overtime claim,
all other aspects of this case are subject to generalized proof
and applicable to the class as a whole. The issues of liability
are uniform for the class, and predominate over the
individualized inquiries into damages that might eventually be
necessary if liability is proven. Finally, a class action is
superior to other available methods, given that the NYLL claims
are nearly identical to the FLSA claims, which will be tried
collectively in this Court. Given that the issues are so closely
related, resolving the NYLL claims in this forum has significant
advantages to the alternative, which would be to allow hundreds
of individual claims to go forward in state court.
Accordingly, Plaintiffs' Motion to Certify a Class under
Fed. R. civ. P. 23 is GRANTED and Fugazy and Rooney LLP is
appointed Class Counsel. Plaintiffs shall submit a Proposed
Notice and Proposed Plan for Providing Notice to Class Members
within 30 days of the date of this Order.
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C. Plaintiffs' Motion for Summary Judgment
A district court will grant summary judgment only when there
is "no genuine dispute as to any material fact," and the moving
party is entitled to judgment as a matter of law. Fed. R. civ.
P. 56(a); see also Hermes Int'l v. Lederer de Paris Fifth Ave.,
Inc., 219 F.3d 104, 107 (2d Cir. 2000). Genuine disputes of
material fact cannot be created by mere conclusory allegations;
summary judgment is appropriate only when, "after drawing all
reasonable inferences in favor of a non-movant, no reasonable
trier of fact could find in favor of that party." Heublein v.
United States, 996 F. 2d 1455, 1461 (2d Cir. 1993) (citing
Matsushita Elec. Industr. Co. v. zenith Radio Corp., 475 U.S.
574, 587-88 (1986».
In assessing when summary judgment should be granted, "there
must be more than a 'scintilla of evidence' in the non-movant's
favor; there must be evidence upon which a fact-finder could
reasonably find for the non-movant." Id. (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 252 (1986». While a court
must always "resolv[e] ambiguities and draw [ ] reasonable
inferences against the moving party," Knight v. U.S. Fire Ins.
Co., 804 F.2d 9, 11 (2d Cir. 1986) (citing Anderson, 477 U.S. at
252), the non-movant may not rely upon "mere speculation or
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conjecture as to the true nature of the facts to overcome a
motion for summary judgment." Id. at 12. Instead, when the moving
party has documented particular facts in the record, "the
opposing party must 'set forth specific facts showing that there
is a genuine issue for trial. II' Williams v. Smith, 781 F.2d 319,
323 (2d Cir. 1986). Establishing such facts requires going beyond
the allegations of the pleadings, as the moment has arrived "'to
put up or shut up.'" Weinstock v. Columbia Univ., 224 F.3d 33,
41 (2d Cir. 2000) (citation omitted) .
A court faced with cross-motions for summary judgment need
not "grant judgment as a matter of law for one side or the
other," but "'must evaluate each party's motion on its own
merits, taking care in each instance to draw all reasonable
inferences against the party whose motion is under
consideration.'" Heublein, Inc. v. United States, 996 F.2d 1455,
1461 (2d Cir. 1993) (quoting Schwabenbauer v. Bd. of Educ. of
Olean, 667 F.2d 305, 313-14 (2d Cir. 1981»
It is manifestly evident from the record in this case that
summary judgment is not appropriate. Genuine disputes of
material fact exist in at least the following areas: whether
and how much overtime each Plaintiff worked without premium
compensation; whether Defendants altered time records to avoid
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paying overtime; whether the 25 percent service charge on
contract parties was a gratuity; whether Defendants were entitled
to deduct 3 percent from credit card tips to reimburse them for
the credit card interchange fee; whether Defendants were required
to pay a uniform cleaning allowance; and whether the individual
Defendants are "employers" within the meaning of FLSA and NYLL.
Plaintiff's Motion for Partial Summary Judgment is accordingly
DENIED.
D. Defendant Borysowski's Motion for Summary Judgment
Defendant Borysowski cross-moves for summary judgment,
claiming that he is not an "employer" for purposes of FLSA.
UThe FLSA broadly defines 'employer' to include 'any person
acting directly or indirectly in the interest of an employer in
relation to an employee . Shim v. Millennium Group, 2010"
U.S. Dist. LEXIS 6407, at *2-3, (S.D.N.Y. 2010) (quoting 29
U.S.C. §203(d». UBecause this definition 'offers little
guidance on whether a given individual is or is not an employer,'
the Second Circuit has held that 'the overarching concern is
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." Shim, at *3 n.2 (quoting
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Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir. 1999)
(citations omitted». "Under the 'economic reality' test, the
relevant factors include whether the alleged employer (1) had the
power to hire and fire 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." Herman, 172 F.3d at 139.
Pointing to his own deposition testimony and limited
excerpts from the deposition testimony of Mr. Carpenter,
Borysowski contends that Mr. Degel and Mr. Carpenter exercised
complete control over the operations of the three restaurants,
and that only they had management authority. Deposition
testimony from Plaintiffs and from Mr. Degel and Mr. Carpenter
directly contradict these assertions. (See, e.g., Rooney Aff.
Ex. B, Degel Dep. 186:15-17, 196:10-16.) Accordingly, there is a
genuine dispute of material fact as to whether Borysowski was an
"employer" within the definition of FLSA, and his Motion for
Summary Judgment must be DENIED.
III. CONCLUSION
Defendants' Motion to Decertify the FLSA Collective Action
(Docket #138) is DENIED.
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Plaintiffs' Motion to Certify a Rule 23 Class Action (Docket
#133) is GRANTED and Fugazy and Rooney are appointed Class
Counsel. Plaintiffs shall submit a Proposed Notice and Proposed
Plan for Providing Notice to Class Members within 30 days of the
date of this Order.
Plaintiffs' Motion for Partial Summary Judgment (Docket
#116) is DENIED.
Defendant Borysowski's Motion for Summary Judgment (Docket
#154) is DENIED.
Proposed Requests to Charge and Proposed Voir Dire shall be
submitted by December 2, 2011. A Joint Pre-trial Statement
("JPTS") shall by submitted by December 2, 2011. The JPTS shall
conform to the Court's Individual Practices and Supplemental
Trial Procedure Rules. Memoranda of Law addressing those issues
raised in the JPTS shall be submited by December 2, 2011.
Responses to the Memoranda shall be submitted by December 16,
2011. There shall be no replies.
SO ORDERED.
Dated: New York, New York
September ~ I , 2011
Deborah A. Batts
United States District Judge
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