Orellana v. One If By Land Restaurant LLC

Background

Bairon Orellana, Kirk Adair, and Juan Carlos Ortiz sued One If By Land Restaurant LLC and David Ghatanfard under the Fair Labor Standards Act (FLSA) and New York Labor Law. Adair also asserted claims under New York State and New York City human-rights laws. The plaintiffs sought to represent themselves and other current and former non-exempt tipped employees who worked at the restaurant on or after January 1, 2015.

The plaintiffs alleged that the defendants used an invalid tip credit, failed to pay the required minimum wage and overtime, failed to pay a spread-of-hours premium, required non-tipped side work, and provided inadequate wage notices and wage statements. The opinion states that the defendants used the same employment policies for non-exempt tipped employees. The defendants paid tipped employees hourly rates below the applicable minimum wage based on a claimed tip credit, but their notices did not adequately explain the tip credit and contained inaccurate or incomplete information. The court also found that the wage statements did not include required information about regular pay and the tip-credit allowance.

Class Certification

The court granted plaintiffs’ motion to certify a class under Federal Rule of Civil Procedure 23. The certified class consists of all non-exempt tipped employees employed by One If By Land Restaurant LLC at the restaurant located at 17 Barrow Street, New York, New York 10014, at any time between January 1, 2015, and the present.

The court found that the proposed class satisfied Rule 23’s requirements of numerosity, commonality, typicality, and adequate representation. Although the available payroll records did not clearly establish that the class contained at least forty members, they showed more than twenty-one members, and the court found that a class action would be more practical and cost-effective than individual lawsuits. The court also found that the alleged violations arose from common employment and pay policies, that the named plaintiffs’ claims were typical, and that the plaintiffs and their counsel could adequately represent the class.

The court further found that common issues predominated over individualized issues and that a class action was superior to other methods of resolving the dispute. It appointed Lee Litigation Group, PLLC as class counsel and appointed the plaintiffs as class representatives. The court approved the proposed class notice subject to changing the class definition to match the definition stated in the order.

David Ghatanfard’s Summary Judgment Motion

Ghatanfard sought summary judgment—an early ruling without a trial—on the ground that he was not an employer covered by the FLSA or New York Labor Law. His declaration stated that he was a minority investor, had no management or supervisory responsibilities, lacked authority over hiring, firing, pay, schedules, and records, and was not involved in the restaurant’s daily operations.

The plaintiffs presented testimony that Ghatanfard could hire and fire employees, give raises and vacation time, access employment records, and change schedules to reduce overtime. Because this evidence created a genuine dispute of material fact about whether Ghatanfard was an employer, the court denied his motion for summary judgment.

Plaintiffs’ Partial Summary Judgment Motion

The court granted in part and denied in part the plaintiffs’ motion for partial summary judgment. The court granted summary judgment that One If By Land Restaurant LLC was an employer. It also ruled in the plaintiffs’ favor on the defendants’ liability for the following claims and issues:

- Minimum wage and overtime: The defendants could not rely on the tip credit because their notices did not satisfy federal and New York requirements. The court also found that the defendants improperly calculated overtime rates during some periods. The specific periods and damages remained for trial. - Non-tipped side work: The evidence showed that plaintiffs performed non-tipped work, including cleaning, stocking, food preparation, and related tasks. The court found no genuine dispute that plaintiffs performed such work during some periods, while the precise periods remained for trial. - Wage Theft Prevention Act claims: The defendants’ wage notices and wage statements did not meet New York requirements. The court also ruled that Adair’s claims were not barred as retroactive claims because the restaurant’s ownership changed when One If By Land Restaurant LLC took over in 2015. - Spread-of-hours premiums: The court granted summary judgment on the defendants’ liability for failing to pay the required additional hour of pay on days when the workday’s spread exceeded ten hours. Damages remained for trial. - Liquidated damages: The court granted summary judgment on liquidated damages because the defendants did not provide sufficient evidence that they acted in good faith and had reasonable grounds for their wage practices. The court stated that plaintiffs could not recover duplicative liquidated damages under both the FLSA and New York Labor Law.

The court denied without prejudice the plaintiffs’ requests for summary judgment on whether Ghatanfard was their employer, whether the defendants were jointly and severally liable, and whether a two- or three-year FLSA limitations period applied. The court found that factual disputes remained on those issues. The court also found that plaintiffs had not established willfulness, which would be necessary for the longer three-year limitations period.

Disposition

The court denied Ghatanfard’s motion for summary judgment. It granted plaintiffs’ motion for class certification and directed them to distribute the opt-out notice after revising the class definition. It granted in part and denied in part plaintiffs’ motion for partial summary judgment. The case continued toward trial on unresolved issues, including damages and Ghatanfard’s employer status.