ROBERT M. LEVY, Magistrate Judge.
Plaintiffs and defendants cross-move for summary judgment under FED. R. CIV. P. 56. This matter is before me on consent of the parties, pursuant to 28 U.S.C. § 636(c) (2009). Plaintiffs seek summary judgment declaring that: (1) plaintiffs' claims are covered by the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. §§ 201-219 (2006); (2) defendants Joseph Generoso ("Joseph"), Gian-Franco Generoso ("Gian-Franco"), and Royal Crown Antico Panificio, Inc. ("RCA") are liable as employers under the FLSA and the New York Labor Law (the "NYLL"), N.Y. LAB LAW §§650-665 (McKinney 2002); and (3) plaintiffs were employed under circumstances that violated the FLSA and NYLL and are entitled to damages. Plaintiffs also seek partial summary judgment against defendant Teresa Generoso ("Teresa"). In response, defendants have filed a cross-motion, seeking summary judgment on the issues of (1) defendants' liability as employers under the FLSA and the NYLL; and (2) defendants' liability for alleged violations of the FLSA and the NYLL. I heard oral argument on March 13, 2014. (
Plaintiffs Vicente Arteaga Berrezueta ("Berrezueta") and Azuncion Alejandro Ullaguari Asmal ("Asmal") commenced this action on August 21, 2012, alleging violations of the FLSA and the NYLL. (Complaint, dated Aug. 21, 2012; Amended Complaint, dated Sept. 25, 2012 ("Am. Compl.").) On December 16, 2013, the Honorable Frederic Block, United States District Judge, entered a default judgment against defendants Royal Crown Pastry Shop, Inc. ("Royal Crown I") and Frank Generoso ("Frank") (collectively, the "defaulting defendants") following their failure to appear in this action. (Order, dated Dec. 16, 2013.) On December 17, 2013, the Clerk of Court entered judgment against the defaulting defendants in the amount of $250,510.75. (Judgment, dated Dec. 17, 2013.) In September 2013, plaintiffs voluntarily dismissed their claims against Royal Crown Pastry Shop II, Inc. ("Royal Crown II"), Royal Crown Bakery, Inc. ("RCB"), Magnifico Catering, Inc. ("MCI"), and Paneantico Bakery Café, Inc. (Stipulation of Dismissal, dated Sept. 17, 2013.)
Plaintiff Asmal asserts that he was hired in 1994 to work as a baker at Royal Crown I, located at 6512 14th Avenue in Brooklyn, New York (the "6512 location") and worked there through August 6, 2011. (Plaintiffs' Rule 56.1 Statement, dated Jan. 10, 2014 ("Pls.' Rule 56.1"), ¶¶ 1, 18; Am. Compl. ¶ 9.) Plaintiff Berrezueta asserts that he was employed at the 6512 location from August 1, 2007 through August 1, 2011. (Pls.' Rule 56.1 ¶¶ 8-9.) Berrezueta's responsibilities included cleaning the premises and preparing baked goods for sales and deliveries. (
Royal Crown I was opened at the 6512 location in 1987. (Pls.' Rule 56.1 ¶¶ 18-19.) Joseph and Frank Generoso, who are brothers, each owned fifty percent (50%) of the business. (
Joseph and Frank signed an agreement, dated September 11, 2007 (the "September 11 agreement"), expressing their mutual desire to have Royal Crown II be owned solely by Joseph and Royal Crown I be owned solely by Frank. (Pls.' Rule 56.1 ¶¶ 58-59.) The agreement stated that, upon execution, Joseph was to transfer his shares in Royal Crown I to Frank, and that Frank was to transfer his shares in Royal Crown II to Joseph. (
Defendant Gian-Franco Generoso is Frank's son and Joseph's nephew. (Pls.' Rule 56.1 ¶ 22.) In August 2008, Gian-Franco opened RCA, a bakery at the 6512 location that operated from the same physical space as Royal Crown I. (Pls.' Rule 56.1 ¶¶ 21-22; Defs.' Resp. ¶ 21.) Gian-Franco disputes that plaintiffs were employed by RCA at any point. (Defs.' Resp. ¶ 21.)
Magnifico Catering, Inc. ("MCI") was a restaurant located at 6314 14th Avenue in Brooklyn, New York (the "6314 location"), next door to Royal Crown II. (Pls.' Rule 56.1 ¶ 39.) MCI did business from 2005 until on or about October 29, 2011. (
Both parties have fully briefed cross-motions for summary judgment. Summary judgment is appropriate only if the evidence shows that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). In determining whether a genuine issue of material fact exists, courts must "resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought."
"It is well-settled that "[o]n a motion for summary judgment, the court is not to weigh the evidence, or assess the credibility of the witnesses, or resolve issues of fact, but only to determine whether there are issues to be tried."
Employers are liable under the FLSA for minimum wages and overtime compensation "if an employee is either (1) employed by an enterprise engaged in commerce or in the production of goods for commerce, or (2) engaged in commerce or in the production of goods for commerce."
Plaintiffs seek summary judgment on the issue of FLSA enterprise coverage, asserting that plaintiffs worked in an enterprise comprised of: the 6512 location, and the affiliated entities Royal Crown I and RCA; the 6308 location, and the affiliated entities Royal Crown II and RCB; and MCI, at the 6314 location (collectively, the "Royal Crown entities"). (Plaintiffs' Memorandum in Support of Motion for Summary Judgment, dated Jan. 10, 2014 ("Pls.' Mem."), at 13-14.) Defendants maintain that the FLSA does not cover the Royal Crown entities as an enterprise. (Memorandum of Law in Support of Defendants' Motion for Summary Judgment, filed Jan. 10, 2014 ("Defs.' Mem."), at 8, annexed to Defendants' Motion for Summary Judgment, filed Jan. 10, 2014.)
The FLSA provides coverage for employees who are "`employed in an `enterprise' engaged in commerce or in the production of goods for commerce'" where (1) the employees "engaged in commerce or in the production of goods for commerce," or the employees "handled, sold, or otherwise worked on goods or materials that have been moved in or produced for commerce by any person" and (2) the enterprise had an annual gross volume of sales made or business done totaling at least $500,000.
An entity constitutes an "enterprise" under the FLSA where "the related activities [are] performed (either through unified operation or common control) by any person or persons . . . for a common business purpose . . . ." 29 U.S.C. § 203(r)(1) (2006). Courts use a three-part test to determine when an entity is an enterprise: "(1) the entity or entities must engage in related activities, (2) performed through unified operation or common control, (3) for a common business purpose."
Plaintiffs have demonstrated that the 6512 location and the 6308 location were engaged in the production of bread, at least some of which was delivered to New Jersey (Affidavit of Azuncion Asmal in Support of Motion for Default Judgment, sworn to Dec. 21, 2012 ("Asmal Def. Aff."), ¶ 2, annexed as Ex. A to Declaration of George N. Bauer, Esq. in Support of Plaintiffs' Motion for Summary Judgment, dated Jan. 10, 2014 ("Bauer Decl."); Affidavit of Patricio Berrezueta in Support of Motion for Default Judgment, sworn to Dec. 21, 2012 ("Berrezeuta Def. Aff."), ¶ 2, annexed as Ex. B to the Bauer Decl.; Deposition of Guiseppe "Joseph" Generoso, dated June 17, 2013 ("Joseph Dep."), at 346:14-347:3, annexed as Ex. N to the Bauer Decl.); employees of the businesses performed, among other tasks, baking and janitorial services; and employees regularly handled goods, including baking utensils and janitorial and cleaning supplies, that moved in interstate commerce (Pls.' Mem. at 16-17; Deposition of Patricio Berrezueta, dated July 25, 2013, at 7:20-21, 15:15-25, annexed as Ex. M to the Bauer Decl.).
Courts have regularly determined that "employees `handled, sold, or otherwise worked on goods or materials that have been moved in or produced for commerce' where the employer's business consumed products in the course of operation."
The FLSA covers entities with no less than $500,000 in annual gross volume of sales made or business done. 29 U.S.C. § 203(s)(1)(A)(ii). Plaintiffs assert that the combined gross annual sales of the Royal Crown entities exceeded $500,000 from 2007 to 2012. (Pls.' Rule 56.1 ¶¶ 47-54.) Defendants counter that the only single entity that exceeded $500,000 in annual gross sales was RCB, and that MCI, Royal Crown I, and Royal Crown II, either individually or jointly, did not exceed $500,000 in annual gross sales at any time between 2007 and 2012. (Defs.' Resp. ¶¶ 49-54.) Plaintiffs have submitted tax returns demonstrating that RCB had annual gross sales exceeding $500,000 for the period of 2007 to 2012. (RCB Tax Returns, annexed as Ex. Y to the Bauer Decl.) Plaintiffs also have submitted tax returns for RCA, which show that RCA's annual gross sales were less than $500,000 for the period from 2008 to 2010. (RCA Tax Returns, annexed as Ex. Z to the Bauer Decl.)
There appears to be no genuine dispute of material fact as to plaintiffs' assertion that the operations of the Royal Crown entities maintained a
"Enterprise coverage has been interpreted broadly" by courts.
"Common ownership standing alone does not bring unrelated activities within the scope of the same enterprise . . . . However, if it appears that there is a reasonable relationship of all the activities to a single business purpose a different conclusion might be warranted." 29 C.F.R. § 779.211. "In circumstances where different entities are involved, the critical inquiry is operational interdependence in fact. The provision of mutually supportive services to the substantial advantage of each entity are operationally interdependent and may be treated as a single enterprise under the Act."
I conclude that there are genuine disputes of material fact that preclude a grant of summary judgment as to whether the Royal Crown entities constitute a single enterprise under the FLSA. Plaintiffs argue that defendants operated the Royal Crown entities as a single enterprise. (Pls.' Mem. 13-16.) Specifically, they allege that the Royal Crown entities were all engaged in baking the same kind of Italian breads and pastries; that the entities occasionally shared ingredients at no cost; that the kitchen at the 6308 location was identical to the kitchen at the 6512 location in all material respects; and that the two locations baked and sold bread using the same recipes and baking techniques. (Pls.' Rule 56.1 ¶¶ 26, 33-34, 41, 43; Joseph Dep. at 121:3-25.) They have also provided evidence that the Royal Crown entities had a common association through their use of the "Royal Crown" name and signage; that Joseph has sought, on behalf of a company he owns, to trademark the Royal Crown name; and that "Royal Crown" became synonymous with a certain quality of baked goods. (Pls.' Rule 56.1 ¶¶ 24-26, 32, 42, 44-45; Joseph Dep. at 366:5-368:25; Deposition of Teresa Generoso, dated July 3, 2013 ("Teresa Dep."), at 36:15-25, 62:16-23; 64:3-65:12, annexed as Ex. O to the Bauer Decl.) Plaintiffs state that the Royal Crown entities used consolidated bookkeeping, and that Royal Crown I, Royal Crown II, RCA, and MCI used the same accountant, Stephen Calindo, to maintain corporate records and prepare tax returns for each entity. (RCB Second Supplemental Response to Interrogatories, Response No. 5, annexed as Ex. H to the Bauer Decl.; Teresa Dep. at 78:20-79:25; Deposition of Gian-Franco Generoso, dated July 15, 2013 ("Gian-Franco Dep."), at 38:21-39:25, annexed as Ex. P to the Bauer Decl.; Deposition of Concetta Generoso, dated May 30, 2013, at 40:6-41:18, annexed as Ex. Q to the Bauer Decl.)
However, defendants argue that the Royal Crown entities each operated independently, not for a common business purpose, and should not be treated as a single enterprise under the FLSA. (Defs.' Resp. ¶¶ 41-54; Defs.' Mem. at 8.) Defendants deny that the Royal Crown entities sought to benefit from a common association with the "Royal Crown" name; argue that plaintiffs mischaracterize personal opinions expressed in the deposition testimony of Teresa and Joseph; assert that the company for which Joseph sought the "Royal Crown" trademark is solely used to purchase ingredients for his business and is unrelated to the other Royal Crown entities; and have submitted records showing that a number of other, unrelated businesses in New York also use the name "Royal Crown." (Defs.' Resp. ¶¶ 25, 42, 44-45; N.Y. Dep't of State, Division of Corporations, annexed as Ex. D to Defs.' Resp.) They assert that Joseph ran Royal Crown II separately, and without any input from Frank or Royal Crown I; that Frank ran Royal Crown I separately and without any input from Joseph or Royal Crown II; and that the two businesses shared ingredients at no cost at most once or twice a year. (Defs.' Resp. ¶¶ 34-36; Joseph Dep., dated June 17, 2013 ("Joseph Def. Dep."), at 55:5-17, 65:14-66:12, 85:3-94:7, 96:11-15, annexed as Ex. C to Defs.' Resp.; Affidavit of Joseph Generoso in Support of Motion for Summary Judgment, sworn to Jan. 10, 2014, ¶¶ 5-6, 9.)
Defendants also state that Gian-Franco ran RCA separately and without any assistance from other defendants, and that Teresa ran MCI separately and independently from the other Royal Crown entities. (Teresa Dep. at 63:2-64:25, annexed as Ex. G to Defs.' Resp.; Gian-Franco Dep., dated July 15, 2013 ("Gian-Franco Def. Dep."), at 12:23-13:25, 38:2-6, annexed as Ex. B to Defs.' Resp.; Affidavit of Gian-Franco Generoso in Support of Motion for Summary Judgment, sworn to Jan. 10, 2014 ("Gian-Franco Aff."), ¶¶ 2-3, annexed to Defs.' Mem.; Affidavit of Teresa Generoso in Support of Motion for Summary Judgment, sworn to Jan. 10, 2014 ("Teresa Aff."), ¶¶ 2, 4-5, annexed to Defs.' Mem.; Teresa Generoso Supplemental Response to First Set of Interrogatories, dated June 11, 2013, Response Nos. 1, 2, 4, annexed as Ex. F to the Bauer Decl.) Defendants deny that all of the Royal Crown entities followed the same bookkeeping and wage payment practices, and assert that RCA did not use the same accountant as the other Royal Crown entities until 2011. (Defs.' Resp. ¶ 46; Gian-Franco Def. Dep. at 38:7-38:25.)
I conclude that the evidence presented by the parties demonstrates that there are disputed issues of material fact as to whether the Royal Crown entities were operationally interdependent and should be treated as a single enterprise under the FLSA. Therefore, plaintiffs' and defendants' motions for summary judgment as to FLSA enterprise coverage are denied.
Plaintiffs also seek summary judgment as to individual coverage under the FLSA. (Pls.' Mem. at 12.) The FLSA's individual coverage provision provides that any individual employee "engaged in commerce or in the production of goods for commerce" is covered by the FLSA, regardless of whether his or her employer is an enterprise. 29 U.S.C. §§ 206(a), 207(a)(1);
Individual employees are engaged in commerce when they perform "work involving or related to the movement of persons or things" between states. 29 C.F.R. § 779.103. A "substantial part" of the employee's work must be related to interstate commerce.
As discussed above, plaintiffs have established that the 1608 location sent goods through interstate commerce on at least one occasion. The parties agree that the restaurants to which the 1608 location and Royal Crown II sold and delivered goods included at least one restaurant that had a location in New Jersey. (Pls.' Rule 56.1 38; Defs.' Resp. ¶ 38; Joseph Dep. at 346:3-347:5.) Plaintiffs also assert that they personally prepared food such as bread for distribution and sale in New Jersey. (Asmal Def. Aff. ¶ 2; Berrezueta Def. Aff. ¶ 2.)
However, the present record does not sufficiently disclose the amount of work performed by plaintiffs on the items that were sent into interstate commerce. Thus, the court cannot assess whether such work constituted a substantial part of plaintiffs' activities. "Whether it was a substantial part of plaintiffs' activities will be one of the issues to be proved at trial."
Even if plaintiffs could establish FLSA coverage, to be held liable under the FLSA, a person must be an "employer," which the FLSA defines as including "any person acting directly or indirectly in the interest of an employer in relation to an employee."
Since the test is not "confined to a narrow legalistic definition," no one of these factors is dispositive.
It is undisputed that during a period that included at least September 2006 to September 11, 2007, Joseph owned fifty percent of Royal Crown I, the bakery where plaintiffs allege they were employed. (Joseph Dep. at 33:04-33:11, 127:08-127:19, 129:03-129:06; Agreement for Withdrawal of Joseph Generoso as Shareholder of Royal Crown Pastry Shop, Inc., dated Sept. 11, 2007, annexed as Ex. AA to the Bauer Decl.) As noted above, plaintiffs assert that Joseph remained a fifty percent owner of Royal Crown I, because the September 11 agreement was not executed, while defendants contend that it was fully executed. Plaintiffs assert that, as an owner of Royal Crown I, Joseph possessed the authority to hire and fire, control schedules and work conditions, and sign paychecks for the 6512 location's employees. (Pls.' Rule 56.1 ¶ 65; Joseph Dep. at 129:3-130:10, 169:19-23.)
Defendants claim that Joseph was not involved in Royal Crown I's employment of plaintiffs at the 6512 location. (Defendants' Statement of Material Facts ("Defs.' Rule 56.1"), included in Defs.' Mem., ¶ 6.) Joseph maintains that he never paid the employees at Royal Crown I, that he did not set employees' work schedules, that his brothers Frank and Anthony exercised actual managerial control over the employees at Royal Crown I, and that he saw plaintiff Asmal only two or three times during Asmal's entire employment. (
Applying these facts to the
Plaintiffs assert that RCA and Gian-Franco were employers of any and all employees of the 6512 location from August 2008 through August 2011, and that Gian-Franco also was responsible for all aspects of the RCA business at the 6512 location during that time. (Pls.' Rule 56.1 ¶ 65; RCA Supplemental Response to First Set of Interrogatories, dated June 11, 2013, Response No. 4, annexed as Ex. D to the Bauer Decl.) Defendants respond that, pursuant to Gian-Franco's deposition testimony, neither of the plaintiffs were employees of RCA or Gian-Franco during the years 2008 to 2011. (Gian-Franco Def. Dep. at 21:13-21:21.
Plaintiffs assert that Gian-Franco's deposition testimony is incredible and improbable, and that other evidence, including testimony from other defendants, is inconsistent with his testimony. (
However, at the summary judgment stage, the court "may not weigh the credibility of the evidence, regardless of whether that evidence is inherently implausible or in conflict with other, more trustworthy evidence."
Defendants seek summary judgment stating that Teresa Generoso was not an employer of plaintiffs. (Defs.' Mem. at 8; Defs.' Rule 56.1 ¶ 7.) Defendants state that Teresa Generoso did not have the power to hire or fire employees at Royal Crown I or the 6512 location, did not supervise or control their work, did not pay them, and was not responsible for keeping any employment records for Royal Crown I or the 6512 location. (Teresa Aff. ¶¶ 2-5; Teresa Dep. at 17:2-24, 61:6-64:8). They assert that Teresa's only contact with Royal Crown I was that she worked behind the counter on some occasions, but that she was otherwise occupied running MCI. (Teresa Dep. at 32:2-5, 78:2-12.)
However, plaintiffs assert that there is a genuine issue of material fact as to whether Teresa was plaintiffs' employer. (Plaintiffs' Opposition to Defendants' Motion for Summary Judgment, dated Jan. 31, 2014, at 10.) Plaintiffs have provided evidence that Teresa Generoso worked regularly at the 6512 location for certain periods of time every year, that she directed plaintiffs to prepare some of the food orders, and that she personally delivered pay to at least one of the plaintiffs. (
Plaintiffs also seek damages from defendants, arguing that Joseph, Gian-Franco, and RCA are jointly and severally liable for damages for alleged FLSA and NYLL violations. Since, as noted above, there are disputed issues of fact regarding whether any of these defendants were plaintiffs' employers, "the extent of liability, i.e., the damages, is a matter to be addressed on another day."
For the foregoing reasons, plaintiffs' and defendants' motions for summary judgment are denied.
SO ORDERED.
n.12 (S.D.N.Y. Mar. 30, 2007));