Ramirez v. Exclusive Management Solution Group

Background

Leslie Ramirez sued her former employers—Exclusive Management Solution Group, Inc. (EMSG), Eco. Miss Bubble, Inc. (Miss Bubble), 171st & St. Nicholas Laundromat Inc. (Laundromat Inc.), and Dmitriy Berezovsky—under the Fair Labor Standards Act (FLSA) and New York labor laws. Ramirez alleged that she worked for the defendants from approximately July 2021 through May 14, 2023, primarily at the St. Nicholas Avenue Laundromat and periodically at the Fifth Avenue Laundromat.

Ramirez alleged that she performed manual work, regularly worked more than 40 hours per week, and was required to work at least 30 additional minutes after her shifts to finish tasks. She alleged that the defendants did not pay her for that additional time or for unpaid administrative work she performed from home. She identified three pay periods in which the defendants recorded more than 40 hours but allegedly omitted additional time from their records.

She also alleged that the defendants did not provide a required wage notice when she was hired and provided inaccurate wage statements. According to Ramirez, these violations impaired her ability to challenge her pay, delayed payment of wages, caused her to struggle with bills and debts, and reduced the wages reported for purposes of future Social Security benefits. She further alleged that the defendants paid her by check and cash but filed a Form 1099 with the Internal Revenue Service that reported only her check payments.

The Defendants’ Motion

The defendants moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Rule 12(b)(1) concerns the court’s subject-matter jurisdiction, including whether a plaintiff has standing. Rule 12(b)(6) concerns whether the complaint alleges enough facts to state a legally plausible claim.

The defendants argued that Ramirez had not adequately alleged that they were engaged in interstate commerce as required by the FLSA; that the defendants jointly operated the laundromats; that Ramirez worked unpaid overtime; that she had standing to bring her New York wage-notice and wage-statement claims; and that she had stated a claim under 27 U.S.C. § 7434 concerning fraudulent information returns.

FLSA Interstate-Commerce Allegations

The court held that Ramirez adequately alleged that the defendants engaged in interstate commerce. The FLSA requirement at issue can be met when employees handle goods or materials that moved in interstate commerce and the employer has at least $500,000 in annual gross sales or business.

Ramirez alleged that the laundromats used detergents, dryer sheets, washing machines, and dryers manufactured outside New York. The court concluded that these allegations sufficiently showed that employees handled goods or materials that had moved in interstate commerce. The court also found that Ramirez’s allegations of approximately 100 customers per day at a laundromat, with each customer spending at least $10 and often more, were enough at the pleading stage to support the required business volume. The court additionally stated that the 28 laundromats’ revenues could be aggregated because, as discussed below, Ramirez adequately alleged that they operated as one enterprise.

Single Integrated Enterprise

The court held that Ramirez adequately pleaded that the defendants and the 28 laundromats formed a “single integrated enterprise.” Under the FLSA, multiple entities may be treated as one employer, and potentially be jointly liable, when they operate as a single integrated enterprise. Courts consider such factors as the relationship among the operations, centralized labor control, common management, and common ownership or financial control.

The court relied on allegations that the laundromats offered identical services at identical prices, were advertised on the same website, described themselves as one chain, used the same payroll system, and transferred employees among locations. The court also found sufficient alleged connections between the laundromats and the named defendants, including that Laundromat Inc. was located at the St. Nicholas Avenue Laundromat, Miss Bubble was associated with the website, the website displayed “ESMG Inc.” on numerous pages, and Berezovsky owned EMSG.

Overtime Claim

The court held that Ramirez stated a plausible FLSA overtime claim. The FLSA and New York labor laws require time-and-a-half pay for hours worked above 40 in a week by a nonexempt employee. A plaintiff must allege both more than 40 hours in a particular workweek and some unpaid time beyond 40 hours, but need not provide mathematically precise records at the pleading stage.

The court found sufficient detail in Ramirez’s allegations that she worked additional time every day after her shift, performed unpaid work from home, and worked more than 40 hours during three specifically identified pay periods. The court rejected the defendants’ reliance on wage statements showing some overtime because those statements did not address Ramirez’s allegation that she was not paid for the additional 30 minutes worked each day.

Standing for New York Wage-Notice and Wage-Statement Claims

The court held that Ramirez adequately alleged standing—an injury sufficiently connected to the defendants’ conduct—for her New York wage-notice and wage-statement claims. New York law requires employers to provide a wage notice when employment begins and a wage statement with each wage payment.

The court identified Ramirez’s allegations that the violations made it harder to challenge her pay, delayed payment of wages and caused her to struggle with bills and debts, and reduced the wages reported on her tax documents. The court concluded that her first two alleged injuries were independently sufficient to establish standing. The court expressly stated that it was not deciding whether Ramirez had otherwise stated a claim under the New York wage-notice and wage-statement provisions because the defendants had not moved to dismiss those claims on that ground.

Claim Concerning the Form 1099

The court held that Ramirez stated a claim under 27 U.S.C. § 7434. That statute provides a private civil claim for damages when a person willfully files a fraudulent information return concerning payments made to an individual. “Willfulness” in this context means a voluntary and intentional violation of a legal duty.

Ramirez alleged that she was paid by both check and cash, that the defendants issued and filed a Form 1099, and that the form reported only her check payments. The court held that these allegations were sufficient at the pleading stage because the defendants allegedly knew that Ramirez had received both forms of payment and therefore would have known that a form reporting only check payments was inaccurate. The court rejected the defendants’ argument that Ramirez’s responsibility for paying taxes was relevant to whether the defendants filed a fraudulent or inaccurate form.

Disposition

Judge Margaret M. Garnett denied the defendants’ motion to dismiss and supplemental motion to dismiss. The opinion therefore did not dismiss the claims addressed by the motion, but it did not finally resolve the underlying wage, labor-law, or tax-form disputes.