Gao v. Umi Sushi, Inc.

Background

Shiqiang Gao and Jianmin Peng sued Umi Sushi, Inc., and individual defendants under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL). They alleged that defendants failed to pay minimum wage and overtime, failed to pay New York “spread of time” pay, failed to maintain records, failed to provide required wage notices and wage statements, and breached an implied contract by failing to reimburse costs associated with an electric delivery vehicle.

The motion addressed a narrower issue than all of the alleged violations. Ai Zhen Zheng and Sumiati Ong sought summary judgment that they were not “employers” under the FLSA and NYLL and therefore could not be held personally liable for damages. Summary judgment is granted when the evidence shows that no genuine dispute of important fact requires a trial and the moving party is entitled to judgment under the law.

FLSA employer status

The FLSA imposes liability on an “employer” who violates the statute. The court applied the Second Circuit’s economic-reality analysis, which considers whether the alleged employer had power to hire and fire workers, supervised or controlled work schedules or conditions, determined pay, and maintained employment records. The court also explained that an individual must control the company’s actual operations in a way related to the plaintiff’s employment; ownership or corporate status alone is not enough.

The defendants submitted declarations stating that Ong and Zheng did not manage Umi Sushi or its employees, set pay, make schedules, hire or fire employees, or maintain employment records. The defendants also pointed to the plaintiffs’ testimony that a man—not Ong or Zheng—hired them, set their pay, and supervised them.

The plaintiffs argued that Ong had managed Umi Sushi by hiring workers, setting a non-party employee’s initial wage and later raise, retaining part of that employee’s tips, and handling customer delivery orders. The court rejected these arguments. It found that the unverified complaint and Gao’s declaration did not provide evidence creating a triable factual issue. The court also found that Ong’s testimony about Peng calling her for work directed Peng to speak with her husband and did not show that Ong had hiring or firing authority.

The court treated notes by plaintiffs’ counsel recording statements from a non-party employee as hearsay and found them insufficient to create a genuine issue for trial. It also found that Ong’s testimony showed she took some customer orders but did not instruct or interact with delivery workers about delivering them.

As to Zheng, the plaintiffs relied on her name on Umi Sushi’s liquor license. The court held that the liquor license alone did not establish that Zheng controlled Umi Sushi’s operations in a way related to the plaintiffs’ employment. The plaintiffs offered no other evidence creating a triable issue about her employer status.

The court therefore granted defendants’ motion for summary judgment as to Ong and Zheng on the FLSA claims.

NYLL employer status

The court noted that New York courts had not definitively resolved whether the NYLL and FLSA employer tests are identical, but courts in the district generally interpreted them together. For the same reasons that the plaintiffs failed to show that Ong and Zheng were employers under the FLSA, the court found that they failed to do so under the NYLL. The court granted defendants’ motion for summary judgment on the NYLL claims against Ong and Zheng.

Implied-contract claim

The parties’ briefs did not specifically address the plaintiffs’ implied-contract claim seeking reimbursement for electric delivery-vehicle costs, including depreciation, insurance, maintenance, and repairs. The court ordered the plaintiffs to show cause—in writing within 30 days of the opinion—why summary judgment should not also be granted on that claim in light of the court’s conclusion about Ong’s and Zheng’s employer status. Defendants could respond within two weeks afterward, and plaintiffs could reply within one week after that.

Disposition

The opinion states that the defendants’ motion for summary judgment is granted. More specifically, the court granted summary judgment on the FLSA and NYLL claims against Ong and Zheng and ordered further briefing before deciding whether summary judgment should also be granted on the implied-contract claim.