Ke v. J R Sushi 2 Inc

Background

Yi Mei Ke brought claims under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL), alleging violations involving minimum wages, overtime, spread-of-hours pay, notices, and wage statements. The pending motions concerned defendants Zi Wang and Xin Wang, called the “Moving Defendants,” and sanctions against Ke’s lawyers, Troy Law, PLLC.

The Moving Defendants argued that they were not proper defendants because they had never been Ke’s employers. They also sought sanctions under 28 U.S.C. § 1927, which allows a court to require a lawyer to pay costs and attorneys’ fees caused by unreasonably and vexatiously prolonging a case. Ke cross-moved to remove the Moving Defendants without prejudice and argued, alternatively, that disputed facts prevented summary judgment. Troy Law opposed sanctions.

After Ke’s deposition, the Moving Defendants’ lawyers asked Troy Law to dismiss the claims against Zi and Xin. Troy Law offered to dismiss them without prejudice but would not agree to dismissal with prejudice. The court permitted the parties to present the issue through summary-judgment and dismissal motions. Magistrate Judge Barbara C. Moses later recommended granting summary judgment to the Moving Defendants, denying Ke’s cross-motion as moot, and awarding sanctions against Troy Law. Ke objected to that recommendation.

Summary judgment

Summary judgment is appropriate when the evidence shows that there is no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. The court reviewed Ke’s objections and adopted Judge Moses’s report and recommendation in full.

The court treated the FLSA and NYLL definitions of “employer” as equivalent for this decision. Under the applicable economic-reality analysis, the relevant evidence included whether the alleged employer had authority to hire or fire workers, controlled their schedules or working conditions, determined their pay, maintained employment records, or otherwise exercised functional control over their work.

As to Zi Wang, the undisputed evidence showed that he was a full-time college student who worked occasional weekend shifts at the restaurant at his father’s direction. He had no ownership interest, did not hire or fire Ke or other employees, did not determine Ke’s pay, and did not maintain employment records. The court found that Ke’s testimony showed only that Zi was an occasional coworker, not that he supervised her or exercised employer-like control.

As to Xin Wang, the undisputed evidence showed that she had no ownership interest, did not employ Ke, did not control Ke’s pay, schedule, workload, or employment conditions, and did not maintain employment records. Ke saw Xin only occasionally, when Xin helped her parents adjust restaurant menu prices. The court held that this limited task, and the fact that Ke’s father sometimes directed Ke to prepare a meal for Xin, did not make Xin Ke’s employer.

The court also rejected Ke’s arguments that family ties supported an inference of supervisory authority and that her earlier written statements created a factual dispute. It concluded that no reasonable juror could find that either Zi or Xin employed Ke. The court therefore granted the Moving Defendants’ motion for summary judgment. The adopted recommendation called for the claims against them to be dismissed with prejudice. Ke’s cross-motion to drop them without prejudice was denied as moot, and the clerk was directed to terminate Zi Wang and Xin Wang from the action.

Sanctions

The court awarded sanctions against Troy Law for its conduct after Ke’s deposition, but not against Ke. The court did not impose sanctions for Troy Law’s pre-deposition conduct, although Judge Moses had described some of that conduct as troubling, and the court noted that Troy Law had already been sanctioned for discovery delays.

The court found that Ke’s deposition made clear that neither Moving Defendant was her employer and that Ke did not know she had sued them or believe there was a factual basis for suing them. In the court’s view, Troy Law agreed that dismissal was appropriate but unreasonably insisted on dismissal without prejudice, despite repeated requests for dismissal with prejudice and opportunities to resolve the issue. The court concluded that this conduct unnecessarily prolonged the litigation and satisfied the requirements for sanctions under Section 1927.

The court directed the Moving Defendants’ lawyers to submit declarations concerning recoverable fees and expenses, contemporaneous time records, and a memorandum supporting the reasonableness of their rates. The amount of the sanctions was left to be determined through that process and Judge Moses’s review. The court ordered that Ke would not bear the sanctions directly or indirectly.

Disposition

The court granted the Moving Defendants’ motion for summary judgment; denied Ke’s cross-motion as moot; awarded sanctions against Troy Law in an amount to be determined; directed the submission of materials supporting the fee award; and directed the clerk to terminate the motions and Zi Wang and Xin Wang from the action.