Imbarrato v. Banta Management Services, Inc.

Background

Patrick Imbarrato and Nick Praino, former servers at the Buffalo Wild Wings restaurant in Middletown, New York, sued Banta Management Services, Inc., several related companies, George Banta, Sr., and George Banta, Jr. They asserted claims under the Fair Labor Standards Act and the New York Labor Law on behalf of themselves and other similarly situated tipped employees.

Plaintiffs alleged that the defendants improperly took a tip credit while requiring them to perform non-tip-producing side work for more than 20% of their work time or more than two hours on a consistent basis. They also alleged that the defendants failed to pay required minimum and overtime wages, spread-of-hours pay, and call-in pay, and failed to provide proper wage notices and wage statements.

Defendants moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. George Banta, Sr. and George Banta, Jr. sought dismissal of all claims against them. All defendants sought dismissal of the wage-notice and wage-statement claims, as well as claims under New York Business Corporation Law § 630 and New York Limited Liability Company Law § 609(c).

Individual Defendants’ Employer Liability

The court denied the motion to dismiss the Fair Labor Standards Act and New York Labor Law claims against George Banta, Sr. and George Banta, Jr. Under the statutes, an individual may qualify as an employer when the economic reality of the relationship shows control over the employees’ work. Relevant factors include the power to hire and fire, control over schedules or working conditions, authority over pay, and maintenance of employment records.

The court found that plaintiffs alleged more than that the individual defendants merely owned or held positions in the companies. Plaintiffs alleged that they controlled and directed the restaurants’ operations and employment practices, had authority over hiring, firing, wages, and payroll, and were involved in day-to-day operations. Plaintiffs also relied on statements by Banta Jr. describing the family business’s oversight and operational guidance over its restaurants and hotels. The court held that these allegations plausibly supported an employer-employee relationship at the pleading stage. It noted that the individual defendants could renew the argument later on a motion for summary judgment if discovery did not produce supporting evidence.

Shareholder and Member Liability

The court dismissed plaintiffs’ claims seeking to impose liability under New York Business Corporation Law § 630 and New York Limited Liability Company Law § 609(c). Those provisions can impose personal liability on certain shareholders or limited-liability-company members for unpaid employment debts, but they require timely notice of the intent to invoke the provisions. An enforcement action also requires an unsatisfied execution against the company after a judgment.

The court found that plaintiffs had alleged neither timely notice to the shareholders or members nor an attempt to execute an unsatisfied judgment against the corporate defendants. Plaintiffs did not dispute that the complaint lacked those allegations. The court therefore dismissed these claims against the individual defendants in their capacity as shareholders or members, while leaving their separate employer-liability claims under the Fair Labor Standards Act and New York Labor Law in place.

Wage Notices, Wage Statements, and Standing

The court denied defendants’ argument that plaintiffs lacked standing to bring claims under New York Labor Law §§ 195(1) and 195(3). Standing is the requirement that a plaintiff show a concrete, personal injury connected to the defendant’s conduct and likely to be remedied by the court.

The court held that the alleged failure to provide required wage notices and wage statements created a concrete risk of harm to plaintiffs’ interest in being paid the wages required by New York law. The notices and statements were intended to inform employees about their pay rates, payment methods, allowances, deductions, and other wage information. The court concluded that plaintiffs alleged a concrete and particularized injury rather than merely a technical violation with no meaningful risk of harm.

Annual Wage Notices

The court dismissed plaintiffs’ claim for damages based on the failure to provide annual written wage notices. The annual-notice requirement applied before a 2014 amendment, but the amendment removed that requirement. The court further held that the law did not provide damages for annual wage-notice violations even during the period when the requirement was in effect. The court did not dismiss the claims based on required notices at hiring or the required wage statements accompanying wage payments on the standing ground discussed in the opinion.

Disposition

Judge Nelson S. Roman granted in part and denied in part defendants’ motion to partially dismiss the complaint. The motion was granted to the extent that plaintiffs’ claims under New York Business Corporation Law § 630 and New York Limited Liability Company Law § 609(c), and plaintiffs’ claim seeking damages for failure to provide annual written wage notices under the prior version of New York Labor Law § 195, were dismissed. The motion was otherwise denied. Defendants were directed to file an answer by April 20, 2020, and the parties were directed to submit a case discovery plan and scheduling order by May 1, 2020.