Ke v. J R Sushi 2 Inc

Background

Yi Mei Ke brought an action under the Fair Labor Standards Act (FLSA) and New York Labor Law. She alleged violations involving minimum wage, overtime, spread-of-hours pay, required notices, and wage statements. The opinion states that the action was brought on behalf of herself and others similarly situated.

On January 15, 2021, Magistrate Judge Barbara C. Moses granted Ke’s motion for conditional certification of an FLSA collective action. The certified group consisted of non-managerial, non-exempt employees employed by JR Sushi 2 Inc. or Famous Sichuan New York Inc. At this preliminary stage, Judge Moses found that Ke had adequately shown that the two companies operated as a single integrated enterprise and used the same unlawful pay policies.

The Famous Sichuan defendants—Famous Sichuan, Ruifeng Yang, and Zi Wang—objected to extending certification to Famous Sichuan employees. Their objections did not challenge the finding that JR Sushi and Famous Sichuan operated as a single economic enterprise. Instead, they argued that the employment practices at the two restaurants were not sufficiently similar. They identified two alleged errors: reliance on hearsay statements in Ke’s affidavit and failure to give proper weight to their own affidavits.

Legal standard

The court treated conditional FLSA certification as a non-dispositive motion reviewed under Federal Rule of Civil Procedure 72(a). Under that rule, the district court had to modify or set aside the magistrate judge’s decision if it was clearly erroneous or contrary to law. The court described this as a highly deferential standard. A finding is clearly erroneous when review of the entire record leaves the court firmly convinced that a mistake was made; a ruling is contrary to law when it fails to apply or misapplies relevant law or procedural rules.

The FLSA allows employees to bring a collective action for themselves and other employees who are similarly situated. In the Second Circuit, courts use a two-step process. At the first step, the court may conditionally certify a collective action when the plaintiffs make a modest factual showing that they and potential opt-in plaintiffs were victims of a common policy or plan that violated the law. After discovery, the court may later decertify the collective if the opt-in plaintiffs are not similarly situated.

Court’s analysis

The court rejected the hearsay objection. It acknowledged that Ke’s affidavit included hearsay from conversations with employees at JR Sushi and Famous Sichuan, but explained that courts regularly rely on affidavits and hearsay when deciding whether to send notice at the conditional-certification stage. The court also rejected the argument that Judge Moses improperly disregarded the defense affidavits. Considering competing declarations at this stage could require credibility determinations and factual findings, which were better addressed through discovery and, if appropriate, a later motion to decertify.

The court further noted that Judge Moses had reviewed the defendants’ affidavits but concluded that they raised factual disputes that should not be resolved at this stage. The opinion states that some allegations in Ke’s affidavit were limited, but others provided enough detail to support conditional certification. Those details included allegations that the restaurants shared ownership; treated employees, equipment, and supplies interchangeably; assigned employees to perform work at the other restaurant; and used common compensation policies.

The opinion also identified allegations that the same person owned both restaurants and served as the Alcoholic Beverage Control principal for both, supervised and controlled employees’ schedules and payment rates and methods, and controlled employment records at both restaurants. It further noted allegations that at least two employees received flat monthly wages for work at both restaurants.

Disposition

The court denied the Famous Sichuan defendants’ objections and affirmed Judge Moses’s certification decision in full. The ruling concerned conditional certification at the preliminary notice stage; the opinion stated that the collective could later be decertified after discovery if the employees were not similarly situated.