Ucarer v. ALA Turk, Inc.

Background

Akin Ucarer brought claims against Ala Turk, Inc., doing business as A La Turka, and Suleyman Secer, Huseyin Secer, and Utku Secer. The claims alleged violations of the Fair Labor Standards Act, a federal wage-and-hour law, and New York Labor Law.

On July 15, 2020, Ala Turk filed for bankruptcy in the United States Bankruptcy Court for the Eastern District of New York. That filing automatically paused the lawsuit against Ala Turk, but not the claims against the individual defendants. On October 12, 2020, Ucarer filed a proof of claim in Ala Turk’s bankruptcy proceeding.

Ala Turk moved under 28 U.S.C. § 1404(a), with the individual defendants’ support, to transfer the entire lawsuit to the United States District Court for the Eastern District of New York, so that it could then be referred to that district’s Bankruptcy Court. The court also discussed § 1412, another statute authorizing transfer of bankruptcy-related matters.

Transfer Analysis

For a transfer under § 1404(a), the court first determines whether the proposed receiving district is a proper venue. If it is, the court considers whether convenience and the interests of justice favor transfer. The court found that venue was proper in the Eastern District because Ala Turk maintained its principal place of business there and the individual defendants were residents of New York State.

The defendants had to show by clear and convincing evidence that transfer was justified. The court adopted the reasoning of a prior related proceeding involving wage claims, a corporate defendant’s bankruptcy in the Eastern District, and claims filed in that bankruptcy case. That reasoning favored having related litigation handled together with the bankruptcy proceeding rather than dividing jurisdiction between courts.

The court concluded that Ucarer’s filing of a proof of claim made his claim against Ala Turk a “core” bankruptcy proceeding, meaning one subject to resolution by the Bankruptcy Court. The court also found that the entire lawsuit was related to the bankruptcy because its outcome could affect the bankruptcy estate.

The court identified two reasons why the transfer case was particularly strong here. First, this lawsuit was still in the early stages of discovery. Second, the automatic bankruptcy stay remained in place. As a result, the Eastern District’s Bankruptcy Court was the only forum in which Ucarer’s claims against Ala Turk, and therefore all of Ucarer’s claims together, could be resolved.

Ruling

Judge Jesse M. Furman granted the defendants’ motion under § 1404(a). He ordered that the case be transferred to the United States District Court for the Eastern District of New York for referral to the United States Bankruptcy Court for the Eastern District of New York in connection with Bankruptcy Case No. 20-42628. He did not decide whether transfer was appropriate under § 1412 because the § 1404(a) ruling resolved the transfer request. The Clerk was directed to transfer the case and close it in the Southern District of New York.