Garcia v. Three Decker Restaurant LTD

Background

Guillermina Rodriguez Garcia sued Three Decker Restaurant, Ltd.; 1746 Food Corp.; Athanasios Raftopoulos; Ramiro Tecorral; and Meredith Raftopoulos under the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL). She alleged unpaid minimum and overtime wages, unpaid spread-of-hours compensation, missing wage notices and wage statements, unlawful handling of gratuities, and related damages. Diana Parra had also been a plaintiff, but she settled her claims and the court approved that settlement on March 4, 2024.

Garcia worked as a waitress at 3 Decker Restaurant from approximately December 27, 2011, through January 1, 2022. The defendants did not dispute that Three Decker Restaurant, Athanasios Raftopoulos, and Ramiro Tecorral were Garcia’s employers under the FLSA and NYLL. They disputed whether Meredith Raftopoulos was an employer and whether 1746 Food Corp. was an operational entity or otherwise liable.

The parties filed cross-motions for partial summary judgment. Summary judgment is a decision made without a trial when the record shows no genuine dispute over a fact that could affect the result and the moving party is entitled to judgment under the law.

Defendants’ motion

The court granted the defendants’ motion as to Meredith Raftopoulos and dismissed her as a defendant. Applying the FLSA’s economic-realities test, the court considered whether she had power to hire or fire employees, controlled schedules or working conditions, set pay, or maintained employment records. Her testimony, supported by testimony from other witnesses, showed that she had no operational involvement in the restaurant. Garcia’s evidence that Meredith was listed as a principal on a liquor-license application did not establish control over employees or satisfy those factors.

The court denied 1746 Food Corp.’s motion for summary judgment. The record showed that 1746 Food Corp. and Three Decker Restaurant had the same owner and the same principal place of business. Those facts supported a possible finding that the entities were a single integrated employer. Although the defendants argued that 1746 Food Corp. was dormant and had no active role, the court held that a factual issue remained and that the evidence had to be viewed favorably to the party opposing summary judgment.

Garcia’s employer and coverage claims

The court granted Garcia summary judgment establishing that Three Decker Restaurant, Athanasios Raftopoulos, and Ramiro Tecorral were her employers under the FLSA and NYLL. The defendants did not dispute that point. The court also found that the defendants were covered employers under the FLSA because they earned more than $500,000 annually and engaged in interstate commerce.

The court held that the limitations period for Garcia’s NYLL claims was six years and 228 days. It applied the 228-day tolling period created by New York executive orders issued during the COVID-19 pandemic. Because the complaint was filed on February 18, 2022, the court determined that the covered NYLL period began on July 5, 2015.

Wage notices, records, and tip credit

The court granted Garcia summary judgment on her claims that the defendants failed to provide the wage notices and wage statements required by NYLL sections 195(1) and 195(3). Because the defendants admitted that they provided no notice and had no payroll records for Garcia before October 2019, the court awarded the maximum statutory damages stated in the opinion: $5,000 for wage-notice violations and $5,000 for wage-statement violations, plus costs and reasonable attorney’s fees.

The court also held that Garcia was entitled to an inference that the wage-and-hour evidence she presented was accurate unless the defendants produced evidence undermining the reasonableness of that inference. The court found the defendants’ records inadequate because they had no records before October 2019 and the later records did not reliably show hours, rates, overtime rates, or the tip-credit rate.

The court granted Garcia’s motion concerning the tip credit. The defendants agreed that they could not take a tip credit because they had not provided the required notice. The court therefore precluded them from taking tip credits against wages owed. The court noted that whether Tecorral improperly received tips remained disputed, but that issue did not affect the tip-credit ruling.

Minimum wage, overtime, and spread-of-hours claims

The court granted Garcia partial summary judgment on minimum-wage and overtime violations. The defendants admitted that Garcia was paid less than the minimum wage throughout her employment. The court found that, from July 5, 2015, through October 21, 2019, the defendants violated the minimum-wage and overtime laws by having Garcia work at least 42.5 hours per week while paying her no more than $260 per week. Garcia could still prove additional unpaid wages at trial.

For October 21, 2019, through January 1, 2022, the court found as a matter of law that the defendants continued violating minimum-wage and overtime requirements. The opinion states that the records showed Garcia worked at least 38.5 hours per week and was paid no more than $260 per week. Garcia could seek additional minimum-wage damages and pursue overtime violations at trial.

The court denied Garcia’s motion for summary judgment on spread-of-hours pay. Although the defendants did not dispute that they failed to pay it, the record did not establish whether Garcia worked more than 10 hours in any particular day. She could present evidence on that issue at trial.

Liquidated damages, fees, costs, and interest

The court granted Garcia summary judgment on her entitlement to liquidated damages for the wage violations. Liquidated damages are an additional amount equal to unpaid wages under the statutes discussed in the opinion. The court found that the defendants had not acted in good faith because they did not take active steps to learn or comply with wage-and-hour requirements, failed to keep adequate records, and systematically paid Garcia $260 per week despite the applicable wage laws.

The court held that Garcia was entitled to attorney’s fees and costs based on the wage violations and the wage-notice and wage-statement violations. It also held that she was entitled to prejudgment interest on damages awarded under the NYLL at 9% per year, calculated from the midpoint of the employment period. The court stated that it would consider a motion concerning fees, costs, and the interest calculation 14 days after final judgment.

Tips and counterclaim

The defendants disputed whether Tecorral misappropriated Garcia’s tips, arguing that he shared in a tip pool only when working as a waiter and supervised Garcia only when acting as a manager. The court held that whether Tecorral misappropriated tips was an issue for trial in the wage claims.

The defendants also asserted counterclaims alleging that Garcia took tip money and cash from the restaurant. The court granted Garcia’s motion to dismiss the cash-register theft portion because it arose from the employment relationship but was unrelated to the FLSA or NYLL claims, so the court lacked subject-matter jurisdiction over that portion. The court initially denied dismissal of the tip-theft portion because it related to issues in the wage case. After ruling that the defendants could not take a tip credit, however, the court concluded that they had no legally protected interest in Garcia’s tips and dismissed the counterclaim. The opinion does not add a with-prejudice or without-prejudice qualifier to that dismissal.

Disposition

The court granted in part and denied in part the defendants’ motion for partial summary judgment. It granted in part and denied in part Garcia’s motion for partial summary judgment. Meredith Raftopoulos was dismissed from the case; claims involving 1746 Food Corp. remained subject to a factual dispute; several wage-law issues were resolved for Garcia; and remaining damages and factual questions were left for later proceedings or trial.