Zhao v. Surge Private Equity LLC

Background

Marianna Zhao sued Surge Private Equity LLC doing business as Surge Private Equity, Hippodrome Services Corp. doing business as Hippodrome Services, Hippodrome LLC doing business as Hippodrome Services LLC, and Douglas Kopelman. She asserted claims under the federal Fair Labor Standards Act (FLSA) and New York Labor Law. Zhao alleged that the defendants used time-shaving and time-rounding practices that caused employees to receive less pay than they were owed.

Zhao stated that she worked as a cleaner at the defendants’ commercial laundry operation from June 2012 through December 1, 2019, and again from April 2020 through June 30, 2020. She alleged that, beginning in August 2019, employees were required to clock out for 30-minute meal breaks even when they worked through those breaks. She also stated that employees had to arrive about 15 minutes before shifts and remain about 30 minutes after shifts without compensation. In addition, she alleged that the defendants rounded hours down to the nearest 15-minute increment throughout her employment.

Zhao supported her motion with her own declaration. She identified eight coworkers by first name—Hilda, Francisca, Sonia, Rosa, Olivia, Amelia, Susana, and Teresa—and described conversations in which they allegedly complained about unpaid meal-break work, unpaid pre- and post-shift work, and time rounding. The opinion states that, at this stage, the court primarily considered Zhao’s account and did not consider factual assertions in the defendants’ opposition brief.

Legal standard

The FLSA permits employees to bring a collective action on behalf of themselves and other employees who are similarly situated. The court described the Second Circuit’s two-step process. At the first step, a plaintiff must make a modest factual showing that she and other workers were subject to a common policy or plan that violated the FLSA. If that showing is made, the court may authorize notice to potential workers so they can choose whether to join the case. At a later step, after a fuller record usually developed through discovery, the court determines whether the workers who joined are actually similarly situated.

The court emphasized that conditional certification does not resolve factual disputes, decide the ultimate legal issues, or determine whether the alleged violations occurred.

Conditional certification

The court found that Zhao met the initial, relatively low burden. Her declaration contained specific information about several coworkers, their job functions, and their complaints about the same alleged compensation practices. The court concluded that this was enough to show that Zhao and other potential opt-in plaintiffs may have been subject to a common unlawful policy or plan.

The court rejected both sides’ proposed scope. It did not limit the collective to cleaners, because Zhao provided information about coworkers in several positions. But it also did not certify a collective of all current and former non-exempt employees, because Zhao had not provided sufficient non-conclusory information about positions beyond those supported by her evidence.

The court therefore conditionally certified a collective consisting of dry cleaners, pressers, packers, laundry workers, linen section workers, and ironing workers employed by the defendants within the three years before the complaint was filed on August 26, 2022. This ruling was preliminary and did not decide the merits of Zhao’s claims.

Employee information and notice

The court ordered the defendants to provide, within 14 days, the names, job titles, compensation rates, employment dates, last known mailing addresses, email addresses, and known telephone numbers for employees within the conditionally certified collective. The court limited the information to employees who worked within three years before the complaint was filed.

The court approved court-facilitated notice with modifications. Notice could be sent by mail, email, and text message, posted in employee common areas at the defendants’ workplaces, and translated into Spanish. The notice had to include defense counsel’s contact information. The court shortened the proposed opt-in period from 90 days to 60 days and directed Zhao to submit a revised notice within 14 days for approval.

Equitable tolling and disposition

Zhao asked the court to pause the FLSA limitations period for potential collective members until notice could be sent. The court denied without prejudice that request. It concluded that the issue did not need to be decided immediately because it was not yet clear whether any potential opt-in plaintiff would be barred by delays in receiving notice. The court stated that individual opt-in plaintiffs could later seek tolling based on an individualized showing.

Judge Katherine Polk Failla’s order granted in part and denied in part Zhao’s motion for conditional certification and court-facilitated notice. The court granted the motion to send notice subject to the stated modifications, denied without prejudice the equitable-tolling request, ordered production of the employee information, and directed the clerk to terminate the pending motion.