Opinion
No. 11 Civ. 5584 (CM)
05-30-2012
JIA HU QIAN, Plaintiff, v. SIEW FOONG HUI A/K/A AMY HUI AND AMY'S RESTAURANT INC., ABC CORP., operating under the trade name "AMY'S RESTAURANT", Defendants.
DECISION AND ORDER
:
Before the Court is Defendants' motion to dismiss the complaint for lack of subject matter jurisdiction. For the reasons discussed below, the motion is denied.
BACKGROUND
On August 11, 2011, Plaintiff filed this action against Defendants — a restaurant and its owner — seeking overtime, minimum, and spread of hours wages pursuant to the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. § 201 et seq., and the New York Labor Law (the "NYLL"), NYLL §§ 650 et seq.
Relevant to this motion, Plaintiff alleges that Defendants failed to pay him both the federal minimum wage and overtime wages in violation of sections 206 and 207, respectively, of the FLSA. See 29 U.S.C. §§ 206, 207. Both sections provide coverage for every "employee[ ] who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce . . . ." Id. Thus, an employer is subject to both the minimum wage and overtime provisions of the FLSA if either (1) their employees are "engaged in commerce" or (2) the employer is an "enterprise engaged in commerce." Id.; see also Padilla v. Manlapaz, 643 F. Supp. 2d 298, 299 (E.D.N.Y. 2009); Jacobs v. New York Foundling Hosp., 483 F. Supp. 2d 251, 257 (E.D.N.Y. 2007). The FLSA defines "commerce" as "trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof." 29 U.S.C. § 203(b). These two distinct types of coverage are termed "individual coverage" and "enterprise coverage," respectively. Bowrin v. Catholic Guardian Soc., 417 F. Supp. 2d 449, 457 (S.D.N.Y.2006) (citing Tony & Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290 at 295 n.8 (1985)).
In order to determine if individual coverage of the FLSA applies, courts must examine the employment actions of each employee asserting a claim. Jacobs, 483 F. Supp. 2d at 257.
Enterprise coverage applies when an employer:
(i) has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person; and29 U.S.C. § 203(s)(1)(A).
(ii) is an enterprise whose annual gross volume of sales made or business done is not less than $500,000 . . . .
On December 9, 2011, Defendants filed a Rule 12(b)(1) motion to dismiss, arguing that this Court lacks subject matter jurisdiction over Plaintiff's claims under the FLSA, and that if Plaintiff's FLSA claims are dismissed, this Court should decline to exercise supplemental jurisdiction over Plaintiff's state law claims. Defendants argue that Plaintiff does not meet the Defendants introduce affidavits purporting to demonstrate that "Amy's Restaurant is a local, isolated business," and that its employees "do not do work involving or related to commerce." As to the latter, Defendants introduce evidence, which Plaintiff contests, to show that the annual sales of Defendants' restaurant has always been under $500,000, and that neither it nor its employees are engaged in "commerce."
Plaintiff only contests Defendants' enterprise coverage in his Opposition. It is also the only type of coverage he alleges in his complaint. (See Compl. ¶ 19.) Defendants did not file a reply.
SUBJECT MATTER JURISDICTION
The standard of review for a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) is quite familiar:
A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it. In resolving a motion to dismiss for lack of subject matter jurisdiction, the Court may consider affidavits and other materials beyond the pleadings to resolve jurisdictional questions. The Court must accept as true the factual allegations contained in the Complaint, but it will not draw argumentative inferences in favor of Plaintiff because subject matter jurisdiction must be shown affirmatively. Plaintiff bears the burden of establishing subject matter jurisdiction by a preponderance of the evidence.Zaldivar v. Anna Bella's Cafe, LLC, No. 11-CV-1198 JS ETB, 2012 WL 642828, at *2 (E.D.N.Y. Feb. 28, 2012) (internal citations and quotations omitted). "Subject-matter jurisdiction . . . can never be forfeited or waived." Union Pac. R.R. Co. v. Bhd. of Locomotive Eng'rs and Trainmen Gen. Comm. of Adjustment, Cent. Region, 130 S.Ct. 584, 596 (2009).
DISCUSSION
In this case, "Defendants may raise some doubts as to whether Plaintiff's claims under the FLSA are viable[, but] this does not raise a jurisdictional issue." See Padilla, 643 F. Supp. 2d at 299. "The question of whether or not Defendants actually are an 'enterprise engaged in commerce' within the meaning of 29 U.S.C. § 203(s)(1) is an issue that goes to the merits of Plaintiff['s] claims rather than the Court's subject matter jurisdiction." Velez v. Vassallo, 203 F. Supp. 2d 312, 332 (S.D.N.Y. 2002); see also Benitez v. F & V Car Wash, Inc., No. 11-CV-01857 DLI SMG, 2012 WL 1414879, at *1 (E.D.N.Y. Apr. 24, 2012) ("After review of recent case law in this Circuit, the court . . . concludes that the question of whether a defendant qualifies as an enterprise under the FLSA is not a jurisdictional issue, but an element that a plaintiff must establish in order to prove liability."); Zaldivar, 2012 WL 642828, at *3; Padilla, 643 F. Supp. 2d at 300; Romero v. Jocorena Bakery, Inc., No. CV 09-5402 SJF ETB, 2010 WL 4781110, at *2 (E.D.N.Y. Nov. 23, 2010). A plaintiff's obligation to demonstrate that an employer is an enterprise engaged in commerce is "simply an element of the cause of action" and a "failure to make this showing constitutes a failure on the merits." Velez, 203 F. Supp. 2d at 332 (emphasis added).
Thus, because whether the Defendants' restaurant is an "enterprise engaged in commerce" raises a merits — and not a jurisdictional — issue, Defendants' motion to dismiss the complaint for lack of subject matter jurisdiction is denied.
Moreover, "Dismissal for lack of subject matter jurisdiction is only proper where an alleged federal claim 'clearly appears immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous.'" Id. at 331 (quoting Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1188 (2d Cir. 1996)). That is not the case here. Taking the facts alleged as true, as I must, Plaintiff's Complaint pleads sufficient facts to state a claim for FLSA liability under an enterprise coverage theory. (See Compl. ¶ 19.) While Plaintiff will have to ultimately prove that Defendants grossed more than $500,000 in annual sales in order to be successful on his FLSA claims, the Court "has jurisdiction over Plaintiff['s] FLSA claims irrespective of whether Plaintiff can ultimately prevail on the merits." Padilla, 643 F. Supp. 2d at 301.
CONCLUSION
For the reasons discussed above, Defendants' motion to dismiss the complaint for lack of subject matter jurisdiction is denied.
As promised in our initial pretrial conference, I am setting a discovery schedule for this case. While Defendants chose the wrong procedural mechanism for asserting its arguments, Defendants' tax returns make me believe that there is merit in their position. (See Opp'n Ex. C.) Thus, the parties have 60 days to conduct discovery solely into whether Defendants constitute an "enterprise" under the FLSA — i.e., whether Defendants' "annual gross volume of sales made or business done is not less than $500,000" — with the goal being a summary judgment motion made by Defendants shortly thereafter.
To the extent that Defendants wish to reargue that they are not engaged in "commerce" of any sort under 29 U.S.C. § 203(s)(1)(A)(i), the Court directs them to Velez, 203 F. Supp. 2d at 328-29 (citation and quotations omitted): "Indeed, it has been noted that the 1974 amendments effectively signify that virtually every enterprise in the nation doing the requisite dollar volume of business is covered by the FLSA." --------
Discovery disputes in this case will be resolved by Magistrate Judge Frank Maas. The first time there is a discovery dispute that counsel cannot resolve on their own, notify my chambers by letter and I will sign an order referring your case to the Magistrate Judge for discovery supervision. Thereafter, go directly to the Magistrate Judge for resolution of discovery disputes; do not contact my chambers.
The Clerk of the Court is directed to remove the motions at ECF No. 8 from the Court's list of open motions. Dated: May 30, 2012
/s/_________
U.S.D.J. BY ECF TO ALL COUNSEL