Guan v. Lash Princess 56 Inc.

Background

Liling Guan alleged that she worked as a lash technician for Lash Princess 56 Inc. from April 29, 2021, through September 10, 2021. She alleged that Oscar Lin and Qinyu Liu were involved in operating the company and had authority over employees. According to Guan, she worked approximately 47.5 to 50 hours per week during one period and 57 to 60 hours per week during another, without receiving overtime premiums or uninterrupted meal breaks.

Guan also alleged that she was paid in cash every two weeks, received little or no base salary during parts of her employment, and was not paid $640 allegedly owed for September 2021. She further alleged violations involving spread-of-hours pay, wage notices in Chinese, accurate wage statements, and the required frequency of wage payments. Her claims arose under the federal Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL).

While defendants’ motion to dismiss the First Amended Complaint was pending, Guan moved for leave to file a Second Amended Complaint adding Lash Moment Studio as a defendant. She alleged that Lash Moment Studio was a “substantial continuity” of Lash Princess because the same individual defendants opened it, it provided the same services, and Lash Princess had closed. The proposed pleading identified the new entity as “Lash Princess 57 Inc. d/b/a Lash Moment Studio d/b/a Lash Princess.”

Motion to Amend

The court granted Guan’s cross-motion for leave to amend. Under the applicable rules, amendments are generally allowed unless there is undue delay, bad faith, unfair prejudice, or futility. Because the proposed amendment added a defendant, the court also considered whether joining that defendant would be futile—meaning that the amended complaint could not survive a motion to dismiss.

The court found no undue delay or bad faith. Guan stated that she learned about Lash Princess’s closure and Lash Moment Studio’s opening in August 2022, near the time defendants moved to dismiss. The case was still in its early stages, no discovery had occurred, and the proposed amendment added no new wage claims. The court therefore found no substantial prejudice to defendants.

The court also found that the proposed allegations plausibly supported successor liability under both New York’s common-law standards and the more flexible “substantial continuity” test. The allegations included that Lash Princess had permanently closed, the same individual defendants opened Lash Moment Studio near the former Manhattan location, Lash Princess presented itself as having moved and changed its name, Lash Moment Studio provided the same services, and its website listed Lash Princess’s former location. The court treated these allegations as true at this stage and declined to resolve defendants’ competing factual assertions based on an affidavit.

Motion to Dismiss

The court denied defendants’ motion to dismiss the First Amended Complaint. A motion under Federal Rule of Civil Procedure 12(b)(6) tests whether a complaint contains enough factual allegations to make a claim legally plausible. The court was required to accept well-pleaded allegations as true and draw reasonable inferences in Guan’s favor.

The court held that Guan adequately alleged that the FLSA applied through “enterprise coverage.” She alleged that Lash Princess had annual sales exceeding $500,000 and that her work as a lash technician involved lash extensions, machines, equipment, or other materials that could reasonably be inferred to have moved in interstate commerce.

The court also held that Guan adequately pleaded that Lin and Liu were her employers under the FLSA and NYLL. The allegations stated that Lin and Liu were founders, officers, or owners; that Lin set wages, maintained employment records, and could hire and fire employees; that Liu hired Guan and could hire and fire employees; and that both participated in day-to-day management. These allegations satisfied the “economic realities” test, which examines the actual power and control an individual exercises over an employment relationship.

The court further held that Guan adequately pleaded overtime violations. Her allegations identified specific work periods, work schedules, approximate weekly hours, and the failure to pay one-and-a-half times her regular rate for hours over 40 per week. The court found that the related NYLL overtime claim was also adequately pleaded.

Finally, the court held that Guan adequately pleaded her remaining NYLL claims. Her allegations that she worked more than 10 hours on some days without receiving spread-of-hours pay were sufficient. So were her allegations that she did not receive the required wage notice in Chinese or accurate wage statements. Her allegation that she was paid every two weeks, rather than within the required period for a manual worker, also adequately pleaded a frequency-of-payment claim.

Disposition

The court granted Guan’s cross-motion for leave to amend and denied defendants’ motion to dismiss. Guan was directed to file the Second Amended Complaint by March 13, 2023. Defendants were directed to answer by April 3, 2023. These rulings allowed the claims to proceed; they did not decide whether Guan would ultimately prove the alleged wage violations.