Opinion
No. 160993/14.
06-13-2016
Marshall MAOR and Star Rivera, on on behalf of themselves and others similarly situated, Plaintiffs, v. HORNBLOWER NEW YORK, LLC, Hornblower Cruises and Events; Terry MacRae; and any other related entities, Defendants.
Virginia & Ambinder LLP, Suzanne Leeds Klein, Esq., New York, Leeds Brown Law, P.C., Jeff Brown, Esq., Michael Tompkins, Esq., Brett Cohen, Esq., Carle Place, for Plaintiffs/Putative Class. Kane Kessler, P.C., Lois M. Traub, Esq., Jaclyn Ruocco, Esq., New York, for Defendants.
Virginia & Ambinder LLP, Suzanne Leeds Klein, Esq., New York, Leeds Brown Law, P.C., Jeff Brown, Esq., Michael Tompkins, Esq., Brett Cohen, Esq., Carle Place, for Plaintiffs/Putative Class.
Kane Kessler, P.C., Lois M. Traub, Esq., Jaclyn Ruocco, Esq., New York, for Defendants.
CAROL R. EDMEAD, J.
In a case involving claims of unpaid gratuities, plaintiffs move, pursuant to CPLR 901 and CPLR 902, for class certification (motion seq. No 002). Defendants Hornblower New York, LLC (“Hornblower”), Hornblower Cruises and Events (“Hornblower Cruises”) and Terry Macrae (“Macrae”) cross-move, pursuant to CPLR 3212, for summary judgment dismissing the complaint.
BACKGROUND FACTS
The named plaintiffs, Marshall Maor (“Maor”) and Star Rivera (“Rivera”), are temp-agency employees who worked briefly as servers for Hornblower's cruise and event company. Maor and Rivera claim that they, along with other servers, bartenders, and bar-backs, were not paid a portion of service charges to which they were entitled. More specifically, plaintiffs allege that, in violation of Labor Law § 196–d, defendants charged customers 20% to 22% on their contracts for events or on the per-person price for events—charges that a reasonable customer would have construed as a gratuity—and then failed to share those fees with defendants' waitstaff.
In December 2014, plaintiffs filed an amended complaint alleging damages, for themselves and other members of the putative waitstaff members, under Labor Law § 196–d. In February 2015, defendants moved to dismiss the complaint in its entirety, arguing that Maor and Rivera were not employees of Hornblower, and thus could not recover under Labor Law § 196–d, that Macrae was not a proper defendant, and that the court did not have jurisdiction over Hornblower Yachts, as it is a California entity with insufficient connections to New York.
The Court, by an order dated May 5, 2015, denied the motion except as to Hornblower Yachts, which was dismissed from the action for lack of jurisdiction. Additionally, the Court noted that while the amended complaint alleges violations of Labor Law § 196–d dating back to 2008, Hornblower provided unrefuted evidence that it has only been in business in New York since 2012.
DISCUSSION
Labor Law § 196–d, entitled “Gratuities,” provides, in relevant part, that no “employer or his agent ... shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee.” The Court of Appeals, in Samiento v. World Yacht Inc., held that mandatory charges can be considered gratuities under Labor Law section 196–d “when it is shown that employers represented or allowed their customers to believe that the charges were in fact gratuities for their employees” (10 N.Y.3d 70, 81 [2008] ). Samiento also held that “[t]he standard under which a mandatory charge or fee is purported to be a gratuity should weighed against the expectation of the reasonable customer” and the “reasonable patron standard should govern when determining whether a banquet patron would understand a service charge was being collected in lieu of a gratuity” (id. at 79, 854 N.Y.S.2d 83, 883 N.E.2d 990 ).
Subsequent to Samiento, the New York Department of Labor (DOL) promulgated rules that rebuttably presume that service charges are gratuities under section 196–d : “There shall be a rebuttable presumption that any charge in addition to charges for food, beverage, lodging, and other specified materials or services, including but not limited to any charge for service' or food service,' is a charge purported to be a gratuity” (12 NYCRR 146–2.18 [b] ). Moreover, “[t]he employer has the burden of demonstrating, by clear and convincing evidence, that the notification was sufficient to ensure that a reasonable customer would understand that such charge was not purported to be a gratuity” (12 NYCRR 146–2.19 [b] ). Finally, the DOL specifies what an employer would need to do in order to rebut the presumption:
The DOL also requires employers who make charges to keep records of those charges and their disposition (12 NYCRR 146–2.18 [c] ).
“Adequate notification shall include a statement in the contract or agreement with the customer, and on any menu and bill listing prices, that the administrative charge is for administration of the banquet, special function, or package deal, is not purported to be a gratuity, and will not be distributed as gratuities to the employees who provided service to the guests. The statements shall use ordinary language readily understood and shall appear in a font size similar to surrounding text, but no smaller than a 12–point font” (12 NYCRR 146–2.19 [c] ).
I.Plaintiffs' Motion For Class Certification
Plaintiffs' motion for class certification is governed by CPLR 901 and 902. CPLR 901(a), “Prerequisites to a class action,” provides that members of a class may sue as representatives of the class if:
“1. the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable; 2. there are questions of law or fact common to the class which predominate over any questions affecting only individual members; 3. the claims or defenses of the representative parties are typical of the claims or defenses of the class; 4. the representative parties will fairly and adequately protect the interest of the class; and 5. a class action is superior to other available methods for the fair and efficient adjudication of the controversy.”
“These factors are commonly referred to as the requirements of numerosity, commonality, typicality, adequacy of representation and superiority” (City of New York v. Maul, 14 N.Y.3d 499, 508 [2010] ).
CPLR 902, “Order allowing class action,” directs the proposed class action plaintiffs to move for an order maintaining the suit as a class action. Approval of the motion is only appropriate “if the court finds that the prerequisites under section 901 have been satisfied” (id. ). Beyond the prerequisites, the statute provides additional overlapping concerns for the court to consider.
While the question of “[w]hether a particular lawsuit qualifies as a class action rests within the sound discretion of the trial court, [i]n exercising this discretion, [it] must be mindful ... that the class certification statute should be liberally construed” (Kudinov v. Kel–Tech Constr., Inc., 65 A.D.3d 481, 481, 884 N.Y.S.2d 413 [1st Dept 2009] ). The Court of Appeals has explained that the standards for certifying class actions “should be broadly construed not only because of the general command for a liberal construction of all CPLR sections, but also because it is apparent that the Legislature intended article 9 to be a liberal substitute for the narrow class action legislation which preceded it” (Maul, 14 N.Y.3d at 509, 903 N.Y.S.2d 304, 929 N.E.2d 366 [internal quotation marks and citation omitted]; see also Stecko v. RLI Ins. Co., 121 A.D.3d 542, 543–544, 995 N.Y.S.2d 13 [1st Dept 2014] [contrasting the “rigorous analysis” required by rule 23(b) of the Federal Rules of Civil Procedure with the more liberal standard under article 9] ). Under this forgiving standard, courts have held that “the merits of the claims [are] not at issue” on a motion to certify a class, but that, instead, plaintiffs must “satisfy the minimal threshold of establishing that their claim [is] not a sham” (Weinstein v. Jenny Craig Operations, Inc., 138 A.D.3d 546, 547, 30 N.Y.S.3d 618 [1st Dept 2016] ).
As to the general subject matter of plaintiffs' amended complaint, wage claims, the Appellate Division has held that:
[c]lass action is an appropriate method of adjudicating wage claims arising from an employer's alleged practice of underpaying employees, given that the damages allegedly suffered by an individual class member are likely to be insignificant, and the costs of prosecuting individual actions would result in the class members having no realistic day in court' “ (Id. at 547, 30 N.Y.S.3d 618, quoting Nawrocki v. Proto Constr. & Dev. Corp., 82 A.D.3d 534, 536, 919 N.Y.S.2d 11 [1st Dept 2011] ).
“The party seeking class certification ... bears the initial burden of establishing the criteria prescribed in CPLR 901(a) (CLC/CFI Liquidating Trust v. Bloomingdale's, Inc., 50 A.D.3d 446, 447, 855 N.Y.S.2d 497 [1st Dept 2008] ).
a. The CPLR 901(a) Prerequisites
1. Numerosity
CPLR 901(a)(1) requires that “the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable.” While courts have not drawn a magic number at which the numerosity prerequisite is met, they have, as noted above, held that class actions are an appropriate method of adjudicating wage claims because the litigation of individual claims in this context is impracticable (see Weinstein, 138 A.D.3d at 547, 30 N.Y.S.3d 618 ).
Here, plaintiffs submit the deposition testimony of Cameron Clark (Clark), Hornblower's vice president and general manager. Clark testified that, at any one time, Horblower employs 100 to 150 “front of the house” service employees that would qualify as members of plaintiffs' proposed class (Clark tr at 37 [Pl Exh B ] ). This is sufficient to meet the prerequisite of numerosity, as it would be impracticable for each member of the proposed class to bring an individual suit. Indeed, defendants do not challenge the sufficiency of this prerequisite in their opposition.
Courts sometimes also refer to this requirement as “predominance” (see e.g. Ackerman v. Price Waterhouse, 252 A.D.2d 179, 191, 683 N.Y.S.2d 179 [1st Dept 1998] ).
CPLR 901(a)(2) requires that “there are questions of law or fact common to the class which predominate over any questions affecting only individual members.” Courts interpret this prerequisite broadly. For example, the fact that members of a class have different damages because they are paid different amounts does not defeat commonality as long there is a shared claim that all of the class members were denied pay to which they were entitled (see Stecko, 3121 AD3d at 543 ). More generally, the Court of Appeals has held that “commonality cannot be determined by any mechanical test and that the fact that questions peculiar to each individual may remain after resolution of the common questions is not fatal to the class action” (Maul, 14 N.Y.3d at 514, 903 N.Y.S.2d 304, 929 N.E.2d 366 [internal quotation marks and citation deleted] ).
Defendants argue that plaintiffs fail to show commonality between themselves and the putative class because the named plaintiffs were not employees of Hornblower. Plaintiffs counter that, while they were temporary employees and much of the proposed class includes full-time Hornblower employees, this is a distinction without a difference. Plaintiffs argue that the ultimate question in this action—whether Hornblower regularly charged service fees that reasonable customers would interpret as a gratuities without distributing those funds to its waitstaff—applies equally to waitstaff supplied by temp agencies and waitstaff employed directly by Hornblower.
In determining whether an employment relationship exists for section 196–d purposes, a court looks to the “degree of control exercised by the purported employer over the results produced or the means used to achieve the results (Bynog v. Cipriani Group, 1 N.Y.3d 193, 198 [2003] ). As to assessing control in this context, Bynog outlined five relevant non-exhaustive factors: “whether the worker (1) worked at his own convenience, (2) was free to engage in other employment, (3) received fringe benefits, (4) was on the employer's payroll and (5) was on a fixed schedule” (id. ).
In Bynog, the Court found that the employees there were independent contractors, rather than employees for section 196–d purposes. Critical to the Court's reasoning was that the plaintiffs worked at their own discretion, worked for the defendants' competitors, and were under the “exclusive direction and control” of the temp service which hired and paid them (id. at 198–199, 770 N.Y.S.2d 692, 802 N.E.2d 1090 ).
In order to show that temporary servers were employees of Hornblower, plaintiffs submit an affidavit from Maor, in which he states:
“During the events, I reported to and took orders from individuals employed by Hornblower. While I was working, I was unable to differentiate between employees of Hornblower and those provided by staffing agencies. I do not believe patrons would have had any idea that I was working the party through a staffing agency rather than through Hornblower directly. For example, we wore similar (if not the same) outfits and took orders from the same people” (Maor aff, ¶ 7 [Pl Exh C ] ).
At his deposition, Maor further testified that the temp agency was not at the function he worked and that Hornblower's manager was in charge of him the whole time (Maor tr at 94 [Pl Exh G ] ).
Additionally, plaintiffs point to testimony from Rivera and Clark, as well as an affidavit from Sakima Rodriguez (Rodriguez), who worked as a server for Hornblower between April 2013 and August 2013. In language identical to that used by Maor, Rodriguez stated:
“[w]hile I was working, I was unable to differentiate between employees of Hornblower and those provided by staffing agencies. I do not believe patrons would have had any idea who was working the party through a staff agency rather than through Hornblower directly. For example, we wore similar (if not the same) outfits and took orders from the same people” (Rodriguez aff, ¶ 7 [Pl Exh D ] ).
Clark testified at his deposition that Hornblower's waitstaff all conform to a dress code consisting of “black shoes, black socks, black pants, black belt, black shirt” (Clark tr at 39). As to whether a customer could tell the difference between Hornblower's internal staff and workers provided by temp agencies, Clark testified as follows:
“Q: During the course of the event itself, would there be any way for a guest or a host to distinguish between a staffing agency person and a W–2 person doing the same job?
A: If the host or hostess is observant, they will typically notice a difference. Our internal crew have a name badge and outside staffing agencies that we engage with do not have a name badge from Hornblower.
Q: Anything else? As far as when they're serving food, bringing drinks, cleaning the tables, is there anything that would distinguish the W–2 employee from the staff employee to a typical guest or host?
A: I can't answer for a guest or host's behalf, but I can answer on our behalf that our goal to the customer, to the guest, is to make it feel as a seamless experience regardless of whether it was outside staff we engaged or our internal crew” (id. at 71–72, 770 N.Y.S.2d 692, 802 N.E.2d 1090 ).
Like Maor, Rivera testified that she took instructions from Hornblower employees:
“We always get our instructions from a manager at the event from setting up an event and how the client wants it set up. How many people are attending the event. Allergies. And specifically with this company because it's a cruise line emergency procedures, evacuation, everything that you need to know as a staff to be as efficient as possible to accommodate so many guests ...” (Rivera tr at 38).
Plaintiffs make a showing that, under Bynog, the named plaintiffs were employees of Hornblower, as they remained under the control of Hornblower's managers and, with the exception of nametags, were indistinguishable from Hornblower's non-temp employees. Moreover, the expansive language of the DOL's Hospitality Wage Order extends the protections of section 196–d to temporary servers such as the named plaintiffs. It provides that “[a] charge purported to be a gratuity must be distributed in full as gratuities to the service employees or food service workers who the provided service” (12 NYCRR 146–2.18 [a] ).
Defendants also argue that Maor and Rivera lack commonality with the putative class because all waitstaff hired internally, instead of through a temp service, signed mandatory arbitration clauses. Defendants submit Rodriguez's signed “Employment Application” to exemplify the mandatory arbitration clauses allegedly agreed to by all internal waitstaff. The document contains an “Acknowledgment of Policies,” lists various policies, and provides a line for the prospective employee to check which purportedly confirms that the signatories have read the various policies. One of the policies is “Binding Arbitration,” which provides:
“I hereby agree to submit to binding arbitration, all disputes and claims arising out of the submission of this application following the rules for such arbitration as detailed in HCE policies. I further agree, in the event that I am hired by HCE, that all disputes that cannot be resolved by informal internal resolution which might arise out of my employment with HCE, whether during or after that employment, will be submitted to binding arbitration following the rules for such arbitration as detailed in HCE policies and I hereby waive my statutory rights to a jury trial under any state and federal laws. I also agree that the venue for any arbitration proceeding will be in San Francisco and that the prevailing party in any dispute between me and [Hornblower] will be able to recover reasonable attorneys fees and costs. This application contains the entire agreement between the parties with regard to dispute resolution and there are no other agreements as to dispute resolution, either oral or written.”
This “Employment Application” clause does not expressly prevent any putative class member from being a passive class member. Thus, it does not destroy commonality between the named plaintiffs and the rest of the putative class (see e.g. Guzman v. Three Amigos SJL Inc., 117 F Supp 3d 516, 526 [SDNY 2015], citing Lloyd v. J.P. Morgan Chase & Co., 2014 WL 2109903, at *7 [SDNY Apr. 1, 2014] [“[T]he precedent in this District ... holds that the existence of an arbitration agreement is irrelevant at the conditional certification stage”] ). The federal cases that defendants cite are inapposite.
Moreover, New York's standard for class certification is more forgiving than the federal standard and New York has articulated a preference for allowing wage claims to proceed as class actions because the impracticability of individual plaintiffs making legal challenges unrealistic. The Hornblower arbitration clause puts this policy in sharp relief. It is beyond improbable and inadvisable that any member of the putative class would try to recover her tips when, compelled by her “Employment Application,” she would have to travel from New York to San Francisco to appear before an arbitrator and be responsible for Hornblower's legal fees should the San Francisco arbitrator find against her. Thus, defendants' argument regarding the arbitration clauses fails to destroy commonality.
Defendants also argue that plaintiffs fail to establish commonality because plaintiffs rely on hearsay with respect to establishing a common practice of failing to distribute funds from administrative or service charges that a reasonable consumer would consider a tip. Defendants cite specifically to a portion of Maor's affidavit, in which he states: “Hornblower required its customers to pay a mandatory service charge. I know this because I saw forms and contracts that listed a service charge. I was also told by colleagues that Hornblower charged a service charge” (Maor aff, ¶ 10). Defendants also point to the testimony of Lillian Vazquez (“Vazquez”), a putative class member who stated that “Hornblower required its customers to pay a mandatory service charge. I know this because I would sometimes overhear the managers ... speaking about this business practice of the company” (Vazquez aff, ¶ 8 [Pl Exh E ] ).
Defendants rely on inapposite federal cases to support its argument, such as Okolie v. Paikoff, which held that plaintiff failed to create a factual basis to defeat summary judgment as he proferred only “inadmissible hearsay evidence” (589 F.Supp.2d 204, 210 n. 5 [ED N.Y.2008] ). Here, Maor's statement contains both hearsay and non-hearsay evidence. Moreover, the standard of proof is clearly stricter in a summary judgment context than in a class certification context. As such, defendants fail to defeat plaintiffs' showing that the common issue of whether Hornblower illegally failed to disperse service and administrative charges to its waitstaff predominates over issues affecting only individual class members.
3. Typicality
CPLR 901(a)(3) requires that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” Once again, courts have interpreted this requirement broadly, holding that typicality “is satisfied even if the class representative cannot personally assert all the claims made on behalf of the class” (Cheng v. Oxford Health Plans, Inc., 84 A.D.3d 673, 675, 923 N.Y.S.2d 533 [1st Dept 2011] [internal quotation marks and citation omitted] ). Generally, the touchstone of this inquiry is whether “the named [p]laintiffs' claims derive from the same practice or conduct that gave rise to the remaining claims of the class members and is based on the same legal theory” (Pajaczek v. CEMA Constr. Corp., 18 Misc.3d 1140[A], 2008 N.Y. Slip Op 50386[U], *4 [Sup Ct, N.Y. County 2008], citing (Friar v. Vanguard Holding Corp., 78 A.D.2d 83, 434 N.Y.S.2d 698 [2d Dept 1980] ).
Here, since the named plaintiffs' claims are typical of those of the putative class—namely that Hornblower improperly withheld tips—plaintiffs have satisfied the typicality requirement (see e.g. Cardona v. Maramont Corp., 2009 N.Y. Slip Op 32695(U) [Sup Ct, N.Y. County 2009, Edmead, J.] [holding that the plaintiffs “satisfied the typicality requirement” by submitting affidavits from putative class members asserting they were not paid appropriate wages] ). Defendants again make the arbitration-clause argument that fails for the reasons discussed above with reference to commonality.
Defendants also argue that, since the named plaintiffs only worked for four events in 2013 and 2014, the class can only be certified for those four events. This argument misses the point that typicality goes to the nature of the claim rather than the amount of damages (see Pruitt v. Rockefeller Ctr. Props., 167 A.D.2d 14, 22, 574 N.Y.S.2d 672 [1st Dept 1991] [holding that, “(s)ince the typicality requirement relates to the nature of the claims and the underlying transaction, not the amount or measure of damages, that plaintiff's damages may differ from those of other members of the class is not a proper basis to deny class certification”] ).
4. Adequacy
CPLR 901(a)(4) requires that “the representative parties will fairly and adequately protect the interest of the class.” Again, courts typically interpret this requirement broadly (see e.g. Ackerman, 252 A.D.2d at 202, 683 N.Y.S.2d 179 ). “The factors to be considered in determining adequacy of representation are whether any conflict exists between the representative and the class members, the representative's familiarity with the lawsuit and his or her financial resources, and the competence and experience of class counsel” (id. ).
Plaintiffs submit evidence to the effect that the named plaintiffs are motivated by a desire to recover money for the rest of the putative class (Maor tr at 98; Rivera tr at 60). Plaintiffs' counsel cites to a First Department decision praising counsel's competence (Dabrowski v. Abax Inc., 84 A.D.3d 633, 634–635, 923 N.Y.S.2d 505 [1st Dept 2011] [“(p)laintiffs' counsel (Virginia & Ambinder, LLP) has demonstrated its expertise and zealous representation of the plaintiffs here, as well as in prior class action cases which have reached this court on appeal”] ).
In opposition, defendants argue that Maor and Rivera are inadequate representatives because they lack standing. Defendants cite to Lavaggi v. Republic of Arg., which held that “[i]n order to have standing to assert a claim on behalf of a class, the proposed class representative must allege that he has been personally injured, not that injury has been suffered by other unidentified members of the class which he purports to represent” (2005 U.S. Dist LEXIS 18548, *6 [SDNY 2005], citing Warth v. Seldin, 422 U.S. 490, 502 [1975] ).
Defendants point to portions of Maor's deposition where he was asked about the basis of his belief that customers were charged a service fee for the October 31, 2014 event that he worked:
“Q: Let me direct you to the October 31, 2014 event. Did you ever see any documentation that the customers at that event were charged a Service Charge?
A: I believe, for the second event—I went home before they took it off on-line—I looked it up and a Service Charge was charged. But I can't say for sure.
...
Q: So, you have no documentation at this time that even at the second event they charged a Service Charge?
A: No, I do not.
Q: Have you seen the documentation that was produced in Discovery in this case?
A: Yes.
Q: You saw the tickets that were sold to individual customers for the first event and only one of them has an administrative charge of $.99?
A: Yes.
Q: And that was charged by the processing company? That was charged by the processing company, the $.99?
A: I saw something about that $.99.
Q: And there was no administrative charge for any of the other tickets; is that correct?
A: I don't believe so.
Q: And do you have any evidence, at all, that Hornblower did charge an administrative fee or administrative charge for either of the events on October 31st?
A: From what I recall—I went on-line; but I don't have with me—that they charged a Service Charge for the second event” (Maor tr at 99–100).
This evidence goes to Maor's damages. It does not alter the fact that Maor is alleging that he was denied gratuities to which he was entitled. Thus, defendants' argument fails under their own precedent, Lavaggi, which held that “the proposed class representative must allege that he has been personally injured” (2005 U.S. Dist LEXIS 18548, *6 [emphasis added] ).
Rivera's standing is even more clear. Defendants argument as to her standing relies on a portion of her deposition testimony referring to Hornblower's Charter Agreement:
“Q: And would you agree with me that it is clear—that this contract clearly says it is [ ], referring to the administrative fee, is not a gratuity and will not be distributed as a gratuity to our employees?
...
A: I do agree with that. However, then who's collecting the money? And what's the purpose of them collecting it if it's supposed to be paying us as the staff?
Q: Why do you think this [is] supposed to be paying you as the staff?
A: Because we're only the ones working the event” (Rivera tr at 44–45).
Rivera also states, at length, that she believes the language in the Charter Agreement is “misleading” (id. at 42). Moreover, even if Rivera had found that the Charter Agreement was clear, that does not prove that a reasonable customer would have read the Charter Agreement and or whether it was sufficient to make a reasonable customer believe that the administrative fee was not a gratuity. In any event, Rivera is clearly alleging an injury. Accordingly, defendants' opposition fails to defeat plaintiffs' showing of adequacy of representation.
5. Superiority
CPLR 901(a)(5) requires that “a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” Here, a class action is plainly superior to other methods, as it is unrealistic that individual members of the putative class would seek redress of a violation outside of a class action, especially since under the arbitration clause of Hornblower's Employment Application, non-temp waitstaff would have to fly to San Francisco to arbitrate that claim and, in the event that the arbitrator finds against them, pay Hornblower's legal fees, which are certain to exceed any lost tips.
b. The CPLR 902 factors
CPLR 902 provides that “[a]mong the matters which the court shall consider” in evaluating a motion for class certification are:
1. the interest of members of the class in individually controlling the prosecution or defense of separate actions; 2. the impracticability or inefficiency of prosecuting or defending separate actions; 3. the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; 4. the desirability or undesirability of concentrating the litigation of the claim in the particular forum; 5. The difficulties likely to be encountered in the management of a class action.”
The discussion of superiority under CPLR 901(a) overlaps with the factors of CPLR 902, particularly CPLR 902(2), which directs the court to consider “the impracticability or inefficiency of prosecuting or defending separate actions.” The other factors also cut in favor of certification. Under CPLR 902(1), the individual members of the class have little interest in controlling the prosecution of separate actions, as discussed above. As for CPLR 902(3), the parties have alerted the court to no other litigation involving this subject matter brought by members of the putative class. As for the final two factors, CPLR 902(4) and CPLR 902(5), New York county is a more desirable forum than, for example, San Francisco, as the work in question was done on the waterways of New York and there are no salient difficulties likely to be encountered in the management of this class action.
As plaintiffs have met the requirements of CPLR 901(a), and the factors of CPLR 902 cut in favor of certification, the application for class certification is granted.
II. Defendants' Cross Motion For Summary Judgment
The majority of defendants' motion for summary judgment is denied for the same reasons that plaintiffs' motion for class certification is granted. In other words, plaintiffs have raised issues of fact as to the precise standing of the parties, the significance and interpretation of the arbitration clauses, the nature of the employment relationship between the named plaintiffs and other putative class members, and other issues raised by defendants that cannot yet be decided as a matter of law (see e.g. Pludeman v. N. Leasing Sys., Inc., 106 A.D.3d 612, 615, 966 N.Y.S.2d 383 [1st Dept 2013], citing Pludeman v. N. Leasing Sys., Inc., 87 A.D.3d 881, 882, 929 N.Y.S.2d 246 [1st Dept 2011] [summary judgment precluded because there was an issue of fact as to plaintiffs' receipt of complete lease at issue] ). However, the remaining portion of defendants' motion for summary judgment—the question of Macrae's liability—was not touched on by the discussion of class certification.
Contrary to plaintiffs' argument, defendants' cross-motion is not premature. The cross-motion's denial does not rest on incomplete discovery, but on the substantive discussion above. To the extent that discovery remains outstanding, however, the Court hereby orders a further status conference on July 12, 2016 at 11:00 a.m.
Macrae's role with Hornblower is discussed very little by either party in the papers. The amended complaint alleges that he was “an officer, director, shareholder, CEO, and/or president of Defendants' entities” and that he “(i) had the power to hire and fire employees for the Defendant entities; (ii) supervised and controlled employee work schedules or conditions of employment for the Defendant entities; (iii) determined the rate and method of payment for Defendants' employees; and (iv) maintained employment records for Defendants” (amended complaint, ¶ 41).
Defendants, in moving to dismiss all claims against Macrae, cite to Patrowich v. Chemical Bank, in which the Court of Appeals noted that provisions in article 6 of the Labor Law subjecting “corporate officers to criminal sanctions for violation of the article indicates a legislative intent that they not be subject to civil liability” (63 N.Y.2d 541, 543 [1984] ). More generally, Patrowich held that “a corporate employee, though he has a title as an officer and is the manager or supervisor of a corporate division, is not individually subject to suit with respect to discrimination based on age or sex” under the various statutes, including the Labor Law, “if he is not shown to have any ownership interest or any power to do more than carry out personnel decisions made by others” (id. at 542, 483 N.Y.S.2d 659, 473 N.E.2d 11 ).
Defendants argue that there is no evidence that Macrae acted as an employer, directed or controlled the terms and conditions of employment, or even met the named plaintiffs. However, they do not submit an affidavit from Macrae and he has not yet been deposed. The question thus becomes whether there any circumstances where a corporate officer can be considered a employer (and thus can be held liable) for purposes of Labor Law section 196–d. If so, then defendants' application must be denied because they have proffered no evidence to support this branch of their motion. If not, then, obviously, Macrae would be entitled to dismissal.
Plaintiffs argue that the motion is premature with regard to Macrae as he has not yet been deposed. Plaintiffs cite to Picard v. Bigsbee Enters., Inc., which states that “[i]n determining whether an individual may be subject to civil liability as an employer' under Article 6, courts consider factors such as whether the individual exercises control of the day-to-day operations of the business, including determination of the rate and method of payment of employees” (40 Misc.3d 1240[A], 2013 N.Y. Slip Op 51495[U], *3 [Sup Ct, Albany County 2013], citing Bonito v. Avalon Partners, Inc., 106 A.D.3d 625, 625, 967 N.Y.S.2d 19 [1st Dept 2013] ).
Bonito held that, under the minimum wage provisions of article 6 of the Labor Law, a corporate officer could be held liable if he was the plaintiffs' employer or the plaintiffs showed that the corporate veil should be pierced (id. at 626, 967 N.Y.S.2d 19 ). The First Department held that defendants' motion to dismiss should not have been granted as the plaintiffs alleged in the complaint that the corporate officer “exercised control of [the corporate employer's] day-to-day operations' and that he was their employer under New York law” and submitted an affidavit stating that the officer “hired and fired employees, supervised and controlled employees' work schedules, determined the method and rate of pay, kept employment records, and approved any vacations” (id. ).
Plaintiffs argue only the former.
Reading Patrowich and Bonito together, it cannot be said that a corporate officer can never be held liable under article 6 of the Labor Law. Patrovich and Bonito together stand for the proposition that Macrae cannot be held liable unless he was acting as the plaintiffs' employer. Because Macrae has provided no evidence that he did not act as plaintiffs' employer, the branch of defendants' motion seeking dismissal of the claims against him must be denied. Accordingly, defendants' cross motion for summary judgment must be denied in its entirety.
CONCLUSION
Accordingly, it is ORDERED that plaintiffs' motion for class certification under CPLR 901(a) and CPLR 902 is granted; and it is further
ORDERED that defendants' cross motion for summary judgment is denied; and it is further
ORDERED that the parties shall appear for a further status conference on July 12, 2016 at 11:00 a.m.; and it is further
ORDERED that plaintiffs shall serve a copy of this Order upon all parties within 20 days.
This constitutes the decision and order of the court.