Van Duser v. Tozzer Ltd.

Background

The plaintiffs worked as bartenders, servers, barbacks, and a coat check attendant at several Manhattan bars. They alleged that the defendants jointly owned, operated, and managed those bars. The amended complaint asserted claims under the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL) for retained tips, unpaid wages, unpaid required training, unpaid pre- and post-shift work, unpaid overtime-related hours, delayed pay, inaccurate wage statements, and missing time-of-hire notices.

The defendants moved to dismiss the amended complaint under Rule 12. At this stage, the court accepted the complaint’s factual allegations as true and asked whether they plausibly stated legal claims.

FLSA tip-retention claim

The court held that the FLSA creates a cause of action for an employer’s unlawful retention of employee tips. Section 203(m)(2)(B), added in 2018, prohibits employers from keeping employees’ tips for any purpose, including allowing managers or supervisors to keep them. The court rejected the defendants’ argument that employees could not sue under this provision.

The court also found that the plaintiffs provided enough factual detail to plausibly allege that defendants retained tips. The complaint described tip-pooling requirements, managers taking tips, tips not being distributed to workers, and incomplete payment of credit-card tips. The court said the plaintiffs did not need to plead the exact amount of tips withheld or the precise distribution method at this stage.

Minimum-wage claim

The defendants argued that the plaintiffs’ unpaid minimum-wage claim was an impermissible “gap-time” claim. A gap-time claim seeks payment for unpaid hours when the employee’s average hourly pay remains above the minimum wage, and the FLSA generally does not provide a claim for that type of unpaid time.

The court concluded that the plaintiffs were instead alleging actual minimum-wage violations. They alleged that required training was unpaid, making their effective pay for those training workweeks zero, and that unpaid pre- and post-shift work could reduce their hourly pay below the federal minimum wage. The court found that the plaintiffs alleged approximate training hours and, for one plaintiff, total hours, approximate dates, and an hourly rate below the minimum wage. Mathematical precision was not required in the complaint.

Willfulness

The defendants argued that the plaintiffs had not plausibly alleged willful FLSA violations. Willfulness matters because it can extend the FLSA limitations period from two years to three years. The court found the allegations “thin” but sufficient at the pleading stage. The complaint alleged obvious violations, operation of numerous bars for many years, misreported hours, multiple paychecks that allegedly made lawful-pay calculations difficult, and complaints by several plaintiffs to management about unpaid work.

Jonathan Toubin’s alleged employer status

The court also held that the plaintiffs plausibly alleged that Jonathan Toubin was their employer under the FLSA. The complaint stated that Toubin instructed employees, attended staff meetings, discussed how to operate the bars, and directed at least one plaintiff to perform workplace tasks. Those allegations were enough to warrant discovery, even though the complaint also contained some boilerplate allegations. The court rejected the argument that Toubin’s career as a DJ, record producer, musician, and writer made it implausible that he could also have been an employer.

NYLL claims, supplemental jurisdiction, and standing

The court retained supplemental jurisdiction, meaning federal court authority to hear related state-law claims, over the NYLL claims. The federal and state claims involved the same workers, jobs, hours, payments, and compensation practices. The court rejected the argument that the NYLL claims substantially predominated and concluded that sending the case to state court would be neither fair nor convenient, particularly because the case had been pending for more than a year and discovery was nearly complete.

The court also held that the plaintiffs had Article III standing, meaning a concrete injury sufficient to bring their claims in federal court, to challenge missing wage notices and statements and delayed weekly payments. The plaintiffs alleged that the missing information contributed to underpayment and that delayed payments deprived them of the use of money they were owed. The court treated those alleged economic harms as concrete rather than speculative.

Disposition

Judge Arun Subramanian denied the defendants’ motion to dismiss the amended complaint. The opinion allowed the pleaded claims to proceed but did not decide whether the defendants were ultimately liable or what damages the plaintiffs might recover.