Lipstein v. 20X Hospitality LLC

Background

Milan Lipstein brought claims under the Fair Labor Standards Act (FLSA) for himself and other similarly situated employees against 20X Hospitality LLC, doing business as Spicy Moon, June Kwan, Joanna Avery, and Yidi Mao. He alleged that Defendants failed to pay overtime wages and failed to pay back-of-house employees on or before their regularly scheduled paydays. The proposed back-of-house group consisted of line cooks, wok cooks, preparation cooks, dishwashers, and packers, excluding the executive chef.

Lipstein moved for conditional certification of an FLSA collective action under 29 U.S.C. § 216(b). He also asked the court to require Defendants to provide contact information for potential collective members on an expedited basis and to authorize distribution of a notice of the case and consent-to-join forms.

A prior motion for conditional certification had been denied without prejudice because Lipstein had provided insufficient detail about potentially similarly situated employees, had not identified individuals mentioned in text messages about unpaid wages, and had proposed an inadequately defined collective. Lipstein later filed a renewed motion supported by a second amended complaint and an amended declaration.

Magistrate Judge Jennifer E. Willis recommended granting the renewed motion. Defendants timely objected, arguing that Lipstein had not provided enough detail, that discovery showed he was exempt from the FLSA and not similarly situated to back-of-house employees, and that the proposed collective should not include employees at a second Spicy Moon location.

Legal standard

At the first, or notice, stage of an FLSA collective action, a plaintiff must make a modest factual showing that the plaintiff and other workers were subject to a common policy or plan that violated the law. Conditional certification is a case-management device that allows notice to be sent to potential opt-in plaintiffs; it does not decide the ultimate merits of the wage claims. At this stage, the court generally does not resolve factual disputes, decide credibility, or determine whether the plaintiff is ultimately exempt from the FLSA.

Because the motion was treated as a non-dispositive pretrial matter, the court reviewed Defendants’ objections under the clearly erroneous or contrary-to-law standard. The court explained that this standard is highly deferential and places a heavy burden on the objecting party.

Court’s reasoning

The court found that Lipstein’s amended declaration provided enough information to satisfy the modest factual-showing requirement. The declaration identified Morgan, a hostess; Jorge, a line cook; Pema, a preparation cook; and Leonel, a line cook, by first name and job title. It also described specific conversations and instances involving alleged failures to pay wages, underpayment, and untimely payment. The court concluded that this evidence went beyond Lipstein’s own circumstances and supported an inference that other employees may have experienced similar FLSA violations.

The court rejected Defendants’ argument that Lipstein was not similarly situated because he had been an exempt executive head chef. Lipstein stated that he had been an executive head chef until approximately September 2021, when he was demoted to preparation cook. Defendants offered evidence disputing his description of his role. The court treated that disagreement as a factual dispute and held that resolving whether Lipstein was exempt, or whether his duties differed from those of other back-of-house employees, would improperly address the merits at the conditional-certification stage.

The court also upheld including employees from both Spicy Moon locations. Defendants acknowledged that the same entity owned two restaurants, one in the West Village and one in the East Village. The court determined that the common ownership, the businesses’ relatively small size and close proximity, and Lipstein’s declaration provided enough support for an inference that the locations may have shared common pay practices.

Disposition and effect

The court found no clear error or other error in Magistrate Judge Willis’s recommendation. It overruled Defendants’ objections and adopted the 2024 Report in full, thereby granting the renewed motion for conditional certification. The court directed the parties, within ten days, to jointly provide Magistrate Judge Willis with a status update concerning the proposed process for notifying potential plaintiffs and collecting consent-to-join forms.

The ruling was conditional rather than a final decision on whether Defendants violated the FLSA. The court stated that, if Defendants later seek decertification, Lipstein will have to present evidence that all opt-in plaintiffs suffered the same wage violations alleged in the case.