Kim v. DKCOSMETICS

Background

Ga Ho Kim brought claims under the Fair Labor Standards Act (FLSA), the New York Labor Law (NYLL), and the New Jersey Wage and Hour Law (NJWHL) against Jong Kyun “John” Lee and four companies he controlled: DK Cosmetics (DKC), DK Cos Corp. (DKCC), Club Clio Corp. (CCC), and Club Clio NYC Corp. (CCNC). The claims sought unpaid overtime wages, New York spread-of-hours premiums, and damages for alleged violations of state record-keeping and notice requirements.

The court had conditionally certified the FLSA case as a collective action, and Aeri Moon consented to join as a plaintiff. Kim worked for the Club Clio retail stores in New York beginning in May 2016 and was reassigned to the New Jersey warehouse in October 2017. Moon worked at Club Clio from November 2014 through July 2018. Both were paid fixed monthly salaries and, according to the record, worked more than forty hours during at least some periods.

Kim and Moon moved for partial summary judgment, which asks the court to decide issues when the record shows no genuine dispute about material facts. DKCC cross-moved for partial summary judgment, seeking a ruling that it was not Kim’s employer before its incorporation on October 1, 2018.

Issues on Which Plaintiffs Obtained Summary Judgment

Defendants conceded that Lee was Kim’s and Moon’s employer under the FLSA, NYLL, and NJWHL; that CCC and CCNC were Kim’s and Moon’s employers while they worked at the New York retail stores; and that DKC was Kim’s employer while he worked at the New Jersey warehouse. Defendants also conceded that Kim and Moon did not receive all overtime to which they were entitled, subject to specific disputes about the calculations.

Defendants further conceded that the Club Clio entities failed to provide certain notices required by the NYLL in the plaintiffs’ primary language, Korean, and that the wage statements they provided lacked information required by the NYLL. The court therefore granted summary judgment to the plaintiffs on those issues and on Counts Four and Five, which alleged violations of NYLL Sections 195(1)(a) and 195(3).

The court also granted summary judgment to the plaintiffs on Kim’s hourly rate. The plaintiffs calculated his rate using a forty-hour workweek. Defendants argued that Kim had agreed to work forty-five hours per week, which would produce a lower hourly rate. The court rejected that argument because Lee’s declaration asserting the forty-five-hour arrangement contradicted Lee’s earlier deposition testimony. The court treated the declaration as a “sham affidavit,” meaning testimony submitted to create a factual dispute that conflicts with the witness’s earlier sworn testimony. The court applied the presumption that a weekly salary covers forty hours.

Issues That Remained Disputed

The court did not grant summary judgment to the plaintiffs concerning Kim’s lunch breaks. Defendants argued that Kim’s calculations improperly included one-hour lunch periods. Kim testified about scheduled lunch periods, but the record did not establish whether he actually took those breaks or how often he worked during them. The court found the evidence insufficient to decide the issue on summary judgment.

The court also denied summary judgment on whether Kim was entitled to compensation for travel between his home area in Queens and the New Jersey warehouse. The plaintiffs argued that the travel was compensable because Kim drove other employees, used a company vehicle, received reimbursement for tolls and gas, and sometimes delivered merchandise to the New York stores. Defendants characterized the arrangement as carpooling and argued that driving was not part of Kim’s job.

The court explained that ordinary commuting is generally not compensable under the FLSA, but work performed during a commute may be compensable when it is integral and necessary to the employee’s main job duties. The record did not establish how often Kim performed pickups or deliveries or how much additional time those tasks added. The court therefore denied summary judgment on whether, and to what extent, Kim could recover for commuting time, including whether the limited amount of time might fall within the rule excluding very small or difficult-to-record amounts of work time.

The court denied summary judgment on Moon’s overtime claim because the parties disputed how many hours she worked. The plaintiffs relied on records from part of Moon’s employment and asked the court to infer that she worked the same hours during periods without records. Defendants submitted a co-worker’s declaration stating that Moon initially worked part time, generally three days per week. The court found that this evidence created a genuine factual dispute.

New Jersey Liquidated Damages

The court granted defendants summary judgment on the applicability of the New Jersey Wage Theft Act’s liquidated-damages provision. That law, effective August 6, 2019, allowed liquidated damages of up to 200 percent of lost or unpaid wages. Kim’s New Jersey employment ended on November 15, 2018, before the law took effect. Relying on the prevailing authority discussed in the opinion, the court held that the provision did not apply retroactively to conduct predating August 6, 2019. The court granted defendants summary judgment on the plaintiffs’ claim for those damages even though defendants had not formally cross-moved on that issue.

DKCC’s Liability Before Incorporation

The court granted DKCC’s cross-motion for summary judgment on liability for conduct before October 1, 2018, the date DKCC was incorporated. The court reasoned that, absent a valid basis for successor liability, a corporation cannot be directly liable for conduct occurring before it existed. The plaintiffs did not pursue successor liability and offered no valid basis for holding DKCC liable for earlier conduct. The court noted that other doctrines might address efforts to avoid liability, but did not decide any such issue.

Disposition

The court’s conclusion states that the plaintiffs’ motion for summary judgment was granted in part and denied in part. Defendants were granted summary judgment on the applicability of the New Jersey Wage Theft Act, and DKCC’s cross-motion for summary judgment—seeking a ruling that it was not liable for conduct before October 1, 2018—was granted. The court directed the parties to submit proposed pretrial materials and encouraged settlement discussions.