Stewart v. Hudson Hall LLC

Background

Derrick Stewart brought a proposed collective and class action under the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL). He alleged that he worked at various restaurants, bars, and kiosks making up Mercado Little Spain from March 1, 2019, until September 15, 2019. According to the amended complaint, he regularly worked more than 40 hours per week without receiving overtime pay, performed work after clocking out, was not fully recorded as working at the beginning of shifts, worked through automatically deducted meal breaks, and did not receive required wage notices or proper wage statements.

The defendants were Hudson Hall LLC, doing business as Mercado Little Spain; Hudson Hall Holdings LLC, doing business as Mercado Little Spain; Think Food Group, LLC; and José Ramon Andrés Puerta, also known as José Andrés. For purposes of the motion, the defendants conceded that Hudson Hall LLC was Stewart’s employer but argued that Holdings, Think, and Andrés were not.

Motion to Dismiss

The defendants moved under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a legally sufficient claim. The motion was referred to Magistrate Judge Sarah L. Cave, who issued a Report and Recommendation. No party objected, so Judge Gardephe reviewed the recommendations for clear error.

Under the FLSA, an employer can be an entity or individual that has the power to control the workers. Courts consider factors such as the power to hire and fire, control over schedules and working conditions, control over pay, and maintenance of employment records. The NYLL uses the same definition of employer for the issues relevant here.

Hudson Hall Holdings LLC and Think Food Group, LLC

The court agreed that the amended complaint did not adequately allege that Holdings or Think was Stewart’s employer. The complaint stated that Hudson Hall LLC was a subsidiary of Holdings and Think and alleged, in a conclusory way, that Holdings and Think owned and operated Mercado Little Spain. But it did not provide specific facts showing that either entity hired Stewart, supervised him, controlled his schedule or pay, maintained his employment records, or otherwise exercised formal or functional control over his work.

The court also found insufficient allegations that the corporate defendants operated as a single integrated enterprise in a way that would make Holdings and Think responsible for Stewart’s employment. Accordingly, the court adopted the recommendation and granted the motion to dismiss as to Hudson Hall Holdings LLC and Think Food Group, LLC.

José Ramon Andrés Puerta

The court reached the opposite conclusion as to Andrés. The amended complaint alleged that Andrés was an owner and principal of the corporate defendants, exercised operational control over employees, could hire and fire workers, supervised schedules and working conditions, determined compensation, and could change employees’ schedules, pay, and employment status.

The complaint also attached statements Andrés posted on Twitter and the Mercado Little Spain website. The court found that those statements supported the allegations that Andrés participated in decisions about closing the facilities and controlled or influenced employees’ schedules, compensation, and benefits. The court therefore found that the complaint alleged more than conclusory control and adopted the recommendation to deny the motion to dismiss as to Andrés.

Leave to Amend and Disposition

Although Stewart had not requested permission to amend, Magistrate Judge Cave recommended allowing amendment as to Holdings and Think. Judge Gardephe found that amendment would not necessarily be futile and granted leave to amend as to those entities.

The Report and Recommendation was adopted in its entirety. The motion to dismiss was granted as to Hudson Hall Holdings LLC and Think Food Group, LLC, denied as to José Ramon Andrés Puerta, and leave to amend was granted as to Holdings and Think. Any motion for leave to file a second amended complaint was due by March 8, 2021. The order did not decide whether Stewart ultimately proved his wage claims.