Cao v. Atami on 2nd Avenue, Inc.

Background

The plaintiffs in the related Cao and Zhu actions alleged that Atami on 2nd Avenue, Inc., and individuals associated with it violated the Fair Labor Standards Act and New York Labor Law. The claims included failure to pay minimum wages and overtime, failure to provide required wage notices and pay information, and failure to reimburse delivery-vehicle expenses. Some claims were later dismissed at the plaintiffs’ request.

Jing Liang Dong and Li Dong did not respond to either complaint or appear in the actions. After the plaintiffs obtained certificates of default, the court entered a default judgment against them on April 4, 2018. The judgment awarded $77,436.55 to Yi Cao, $9,676.18 to Bin Dou, $122,018.31 to Zhiwei Yuan, and $36,601 to Letian Zhu, as well as costs and attorneys’ fees.

In September 2021, Jing Liang Dong and Li Dong moved under Federal Rule of Civil Procedure 60(b)(4) to vacate the default judgment. That rule permits a court to set aside a judgment that is legally void, including when the court lacked authority over a defendant because service of process was defective. The defendants said they first learned of the actions when their bank accounts were restrained on July 6, 2021, and argued that they had no connection to Atami or the other defendants.

Service of Process

The plaintiffs claimed that the defendants were served in the Cao action by delivering the complaint to Qiu Ru Dong at Atami and in the Zhu action by delivering the complaint to a manager identified as “Jane Doe” at Atami. They argued that this method complied with New York Civil Practice Law and Rules § 308(2), which allows service by delivery to a person of suitable age and discretion at the defendant’s actual place of business, followed by mailing and other required steps.

The court considered affidavits, identification documents, property records, deposition testimony, trial testimony, and other materials submitted by both sides. The evidence indicated that Jing Liang Dong was not the “Michael Dong” identified in the complaints. Qiu Ru Dong testified that her brother Jing Liang Dong did not work at Atami and that the Michael who worked there was Michael Yang. The court also found that Li Dong was not the female “Jenny Dong” described by the plaintiffs; the evidence identified Li Dong as male and as Jing Liang Dong’s son.

The court concluded that Jing Liang Dong and Li Dong did not own or operate Atami, transact business there, or match the “Michael” and “Jenny” defendants named in the complaints. Because Atami was not their actual place of business, service through a manager at the restaurant was not proper. Without valid service, the court lacked personal jurisdiction over them, and the default judgment was void as to them.

Ruling

Judge Paul G. Gardephe granted Jing Liang Dong and Li Dong’s motion to vacate the default judgment under Rule 60(b)(4). The court denied the plaintiffs’ cross-motion for attorneys’ fees, directed the clerk to terminate the relevant motions, and reopened the case. The plaintiffs were ordered to properly serve Jing Liang Dong and Li Dong within thirty days of the order, or the action will be dismissed.