Chang v. L&L New Beginnings LLC

Background

Chang Yan Chen, a delivery worker, sued L&L New Beginnings LLC, doing business as Lili and Loo, and Yasmin Kuhn. He alleged violations of the Fair Labor Standards Act, a federal wage law, and the New York Labor Law. Chen claimed that two restaurants where he worked between July 2014 and June 2019 failed to pay the required minimum wage and overtime, among other alleged violations.

Chen did not allege that he had worked for L&L or Kuhn. Instead, he argued that L&L was legally responsible as a successor to the two earlier restaurants and that Kuhn could also be liable through that theory. The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not allege enough facts to state a legally plausible claim.

Court’s Analysis

The court explained that both New York tests for successor liability require facts plausibly showing that the alleged successor purchased assets from the earlier company. Chen alleged that L&L began operating around the time one restaurant closed, used the same telephone number and website, referred to itself in some context as the “new Lili and Loo Restaurant,” and may have employed some of the same workers and managers. But he did not allege that L&L purchased kitchen equipment, utensils, crockery, or any other assets from either earlier restaurant.

The court also noted that L&L operated at a different physical location from the restaurants where Chen had worked. In the court’s view, the alleged timing, shared personnel, telephone number, and website did not plausibly establish the required asset purchase or successor relationship. The court said that Chen’s allegations also would not satisfy the relevant factors even if L&L had purchased assets, and that the complaint did not adequately allege either a fraudulent transaction or that L&L was merely a continuation of an earlier restaurant.

The court separately rejected the claim against Kuhn. Chen alleged that Kuhn worked for and managed employees at L&L, but he did not allege that she had been a manager or shareholder of a company that employed him. The court further stated that successor liability does not extend to shareholders of an allegedly liable successor entity. It also found that Kuhn’s alleged prior business history with Siew Moy Low, one of Chen’s earlier employers, did not plausibly make Kuhn liable for wage violations by other companies.

Disposition

Judge Valerie Caproni granted the defendants’ motion to dismiss. The court dismissed all claims in the complaint with prejudice, denied Chen’s request for permission to amend because amendment would be futile, directed the Clerk of Court to terminate open motions, and closed the case.