Munoz v. The Group US Management LLC

Background

Osvaldo Munoz brought a proposed class and collective action under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL) against The Group US Management LLC, La Grande Boucherie LLC, Olio Restaurants LLC, and Emil Stefkov. The opinion states that Munoz worked as a busser at La Grande Boucherie from February through December 2021. He alleged that he was scheduled to work 43 hours per week and was paid the prevailing tip-credit minimum wage.

Munoz alleged that he had to arrive 30 minutes before each shift to polish silverware and set tables, and that on two days each week he had to work about 30 minutes after his shift cleaning tables or taking out garbage. He alleged that these tasks totaled 3.5 hours of unpaid work each week. He also alleged that the defendants failed to pass on all gratuities, and that they did not provide proper wage notices or wage statements.

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim, and Rule 12(b)(1), which tests whether the federal court has authority to hear a claim. They also asked the court not to exercise supplemental jurisdiction over the remaining state-law claims.

Rulings on the FLSA Claims

The court held that Munoz plausibly alleged an FLSA overtime claim based on his off-the-clock work. Because he alleged 43 scheduled hours plus 3.5 additional unpaid hours each week, the court found enough detail to support an inference that he worked more than 40 hours and was not paid for some of that time. The court denied the motion to dismiss any claim based on this theory.

The court reached a different conclusion about Munoz’s claim that he was underpaid for his scheduled overtime hours because the defendants used an invalid tip credit. Munoz’s complaint listed several possible defects, including inadequate tip-credit notice, excessive non-tipped work, an invalid tip pool, improper wage statements, and inadequate records. The court found these allegations conclusory and lacking factual detail. It therefore granted the motion to dismiss the claim based on an invalid tip credit and scheduled overtime. The opinion does not add a prejudice qualifier to this ruling.

The court also held that Munoz plausibly alleged that the defendants improperly retained tips. His allegation that his weekly tip payments did not vary with his workload or the number of customers, and instead consisted of a flat payment, supported a reasonable inference that the defendants kept tips received by him. That claim could proceed.

New York Wage-Notice and Wage-Statement Claims

The court dismissed Munoz’s NYLL claims concerning wage notices and wage statements. Although the complaint alleged that the defendants had policies of failing to provide proper notices and statements, the court found those allegations conclusory. More importantly, the court held that Munoz did not allege a concrete injury caused by the lack of notices or statements. The court therefore concluded that he lacked standing to bring those claims in federal court. The opinion does not add a prejudice qualifier to this dismissal.

Remaining State-Law Claims and Disposition

Because several FLSA claims remained, the court allowed any remaining state-law claims to proceed and declined the defendants’ request to stop exercising supplemental jurisdiction over them. The court’s final order states that the motion to dismiss was GRANTED IN PART and DENIED IN PART. Specifically, the off-the-clock FLSA overtime claim and FLSA unpaid-tip claim may proceed; the FLSA scheduled-overtime claim based on an invalid tip credit and the NYLL wage-notice and wage-statement claims do not; and any remaining state-law claims may proceed.