Summary
finding that conclusory allegations that an individual "is the principle owner and chairperson" of an entity is insufficient to establish that that individual meets the economic reality test
Summary of this case from Solis v. ZEP LLCOpinion
No. 99 Civ. 9474 (WK).
March 30, 2001
Kai W. De Graaf, Nelson Mar, New York, New York, for Plaintiffs.
Steven M. Post, New York, New York, for the Donna Karan Defendants.
MEMORANDUM ORDER
*1 This case has been brought under the Fair Labor Standards Act, 29 U.S.C. § 216(b) ("FLSA"); Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq; 42 U.S.C. § 1981; as well as New York State and City Civil Rights Laws.FN1 Defense counsel, who represents all the various Donna Karan entities named in the amended complaint (collectively the "Donna Karan Defendants"), has moved to dismiss it as to all of the Donna Karan Defendants except for Donna Karan International, Inc. For the reasons discussed below, we grant this motion and dismiss the amended complaint without prejudice.
FN1. Plaintiffs in this action initially sought to join their claims with an action pending before Judge Denise Cote, Lai v. Eastpoint Int'l, Inc., 99 Civ. 2095, through a motion to amend the complaint in that action to include plaintiffs herein and to name Gabriel, Beauty and Ms. Karan as additional defendants. Judge Cote denied this motion.
BACKGROUND
Plaintiffs are latino workers who worked in a garment factory which was owned and operated by defendants Eastpoint International, Inc., Couture Enterprises, Limited, Choe, Ltd., and C.S. Choe, who was the individual director/manager and principal owner of Eastpoint Inc. (collectively the "Eastpoint Defendants."). FN2 The amended complaint states that upwards of 90% of the clothing at the factory was manufactured for the Donna Karan Defendants.
FN2. The amended complaint alleges that Control Reach Group Ltd., a named defendant in this case, is the successor in interest to the factory. According to Steven Post, attorney for the Donna Karan Defendants, no one has been able to locate or knows of the existence of Control Reach Group Ltd.
Most of the claims sound in violations of federal and state labor laws and federal and state civil rights laws Plaintiffs also seek relief based on negligence in hiring and negligence in violating the aforementioned laws. Plaintiffs claim defendants failed to pay them minimum wage or sufficient overtime. The discrimination claim states that plaintiffs were treated poorly, given jobs below their capabilities and made to adhere to a different set of rules than their fellow workers who happen to be Chinese.
Plaintiffs bring this claim against the Donna Karan Defendants on the theory that they acted as a joint employer with the factory and are therefore liable for its alleged violations of the FLSA. The factory predominantly manufactured clothing for the Donna Karan Defendants and plaintiffs claim that the Donna Karan Defendants profited directly from the alleged unlawful and inhumane treatment of plaintiffs and other workers in this factory. Plaintiffs state that they controlled plaintiffs' wages and hours through "establishing contract prices and dates of production." (Amended Complaint at ¶ 99). Plaintiffs also allege that the Donna Karan Defendants supplied all of the "materials, assembly instructions, patterns, cutting control sheets, tags, zippers, buttons, pre-cut pieces of fabric [and] care labels," and had a representative present in the factory at least once a day to monitor quality control. (Id. at ¶ 104, 106).
The Donna Karan Defendants have filed a motion to dismiss the amended complaint as to: (1) Donna Karan individually; and (2) Donna Karan Store Corporation ("DKSC"), Donna Karan, Inc. a.k.a. Gabriel Designs, Inc. ("Gabriel"), and Donna Karan Beauty Corporation a.k.a. Donka Co., Inc. ("Beauty").FN3 They make no motion as to Donna Karan International, Inc.
FN3. On October 12, 2000 we held a case conference where we instructed the parties to try to stipulate as to what entities should be named as defendants to this action in the hope of avoiding this motion. Such an attempt proved futile.
DISCUSSION I. The Claims Against Donna Karan Individually
*2 Individuals may be liable as joint employers under the FLSA only if they possess the power to control the workers in question. Herman v. RSR Security Services Ltd. (2d Cir. 1999) 172 F.3d 132. Plaintiffs claim that Ms. Karan "is the principle owner and chairperson of" the Donna Karan Defendants. (Amended Complaint at ¶ 18). However they allege no fact which would tend to establish her power to control the plaintiff workers. This conclusory statement by itself is insufficient. We suggest to plaintiffs' counsel that he apply to this case the opinion in Herman beginning at the top of page 140 where the Court applies the "economic reality" test. See also Liu v. Donna Karan Internation, Inc. (S.D.N.Y. 2001) 20001 WL 8595. These opinions indicate what type of facts plaintiffs need to state to hold an individual liable as a joint employer under the FLSA.FN4
FN4. In addition, the amended complaint does not distinguish which claims are asserted against which defendants-for example, whether the Title VII claim is being brought against the Donna Karan defendants, or even Ms. Karan individually. It is well established that an individual may not be liable under Title VII. Tomka v. Seiler (2d Cir. 1995) 66 F.3d 1295, 1314-15.
II. The Claims Against DKSC, Gabriel and Beauty
Plaintiffs name multiple Donna Karan related entities as defendants and then lump them together as one in the allegations contained in the amended complaint. It is undisputed that most of the named Donna Karan defendants never had any contact with the Eastpoint Defendants and their factory. Gabriel and Beauty have never been part of the Donna Karan corporate group and might not even exist as legal entities or otherwise. DKSC is a holding company whose only business is as a general partner for the Donna Karan Company Store, which is a general partnership that operates all of the Donna Karan retail stores throughout the United States.
CONCLUSION
Defendant's motion to dismiss the amended complaint as to all defendants except Donna Karan International, Inc. is granted. However, we dismiss the amended complaint without prejudice to allow plaintiffs properly to state their claims if they so wish.
SO ORDERED.