Xue v. Koenig

Background

Feng Xue and Calculus Trading Technology, LLC brought wage-related claims under the Fair Labor Standards Act against Stewart Koenig and Prime Consulting International, LLC. The opinion describes Xue as a software engineer who received employment with a third party through Koenig’s staffing agency. The parties worked together from 2005 through December 2017.

Defendants had previously moved to dismiss the Fair Labor Standards Act claims for lack of subject-matter jurisdiction and for summary judgment. Plaintiffs moved to dismiss defendants’ amended counterclaims, which alleged that plaintiffs breached contracts by bringing the Fair Labor Standards Act claims or using the possibility of such claims to take a client. In a September 14, 2022 order, the court denied defendants’ motions concerning the wage claims and granted plaintiffs’ motion to dismiss the amended counterclaims. The court later denied defendants’ motion for reconsideration in a March 31, 2024 order.

Defendants’ Motions

Defendants sought certification under 28 U.S.C. § 1292(b) for an interlocutory appeal to the Second Circuit. An interlocutory appeal is an appeal before the district court has entered a final judgment. Defendants proposed asking how a person’s choice to provide services through a limited liability company, and the benefits received from that choice, affect whether the person qualifies as an employee under the Fair Labor Standards Act.

Defendants also moved to stay, or pause, the action while the court considered the certification request and, if certification were granted, while the appellate court considered the appeal.

Certification Standard

Section 1292(b) requires the moving party to show three things: a controlling question of law, a substantial ground for disagreement about that question, and that an immediate appeal could materially advance the end of the litigation. All three requirements must be met. The court also explained that interlocutory appeals are strongly disfavored and generally reserved for exceptional circumstances.

Court’s Analysis

The court held that defendants had not shown a controlling question of law. A qualifying legal question must be a pure question of law that an appellate court could decide quickly and cleanly without studying the factual record. The court found that the proposed question required a fact-intensive analysis of the parties’ working relationship. It therefore characterized the issue as a mixed question of law and fact rather than a controlling issue of pure law suitable for certification.

The court also held that defendants had not shown a substantial ground for disagreement. Defendants relied on authority suggesting that courts are somewhat divided about the importance of how a working relationship is treated for tax purposes. The court found that this did not establish the required substantial difference of opinion. It further noted defendants’ acknowledgment that Second Circuit precedent considers a person’s self-designation as an independent contractor for tax purposes when deciding whether that person receives Fair Labor Standards Act protection.

The court noted that defendants filed their motions more than a month after the court set a briefing schedule for plaintiffs’ proposed partial summary-judgment motion and three days after defendants were served with that motion. Although the court said timing was not required for its analysis under Section 1292(b), it stated that it would not prolong the case and would address plaintiffs’ summary-judgment motion.

Disposition

Judge Nelson S. Roman denied defendants’ motion under 28 U.S.C. § 1292(b) seeking certification for an interlocutory appeal of the March 31, 2024 order. The court also denied defendants’ related motion to stay the action. The clerk was directed to terminate the motions at ECF No. 109.