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E.D.N.Y.: Named-Plaintiff’s Failure to File Consent to Join Not Fatal to Collective Action, Where Defendants Acknowledged Intent to Proceed as Collective Action in Answer and Plaintiff Filed Sworn Affidavit

December 22, 2012 10:36 am / Leave a comment

Ahmed v. T.J. Maxx Corp.

This case was before the court on the plaintiff’s motion to conditionally authorize a collective action, pursuant to Section 216 of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq. As discussed here, the court held that the plaintiff had “commenced” his FLSA case for the purposes of serving as the representative plaintiff in a collective action, notwithstanding his initial failure to file a formal consent to join, as required by 216(b), by virtue of the defendant’s admissions regarding same in their answer and the fact that plaintiff filed an sworn (signed) affidavit in support of his motion.

Discussing the issue, the court explained:

Defendants maintain, as an initial matter, that Ahmed’s case cannot proceed as a collective action because Ahmed himself has not filed a consent form as required by section 216(b) of the FLSA. (Defendant’s Memorandum of Law in Opposition to Plaintiff’s Motion for Conditional Certification, hereinafter “Def. Mem. of Law in Opp’n”, at 19.) It is defendant’s position that the FLSA requires a plaintiff—even a named plaintiff—to opt-in to his or her own action in order to proceed as a collective action. (Id.)

Although the cases upon which defendants rely provide that all plaintiffs must affirmatively opt in to a suit in order to proceed as part of a collective action, see, e.g. Gonzalez v. El Acajutla Restaurant, Inc., No. 04 Civ. 1513, 2007 U.S. Dist. LEXIS 19690, at *14–15 (E.D.N.Y. Mar. 20, 2007), courts in this Circuit have held that the FLSA itself does not require such written consent in order for a plaintiff to file a motion for conditional certification, see, e.g. Aros v. United Rentals, Inc., 269 F.R.D. 176, 181 (D.Conn.2010) (“The court concludes that denying the Motion for Conditional Certification … would undermine the FLSA’s broad remedial purpose”). Moreover, “[t]he purpose of this consent requirement … is to put the Defendants on notice, which many courts have noted is somewhat redundant with regard to named plaintiffs,” particularly when the named plaintiff has submitted sworn affidavits to the court, participated in depositions, and otherwise taken necessary action to pursue his claims and demonstrate that he “intends to participate in the lawsuit.” D’Antuono v. C & G of Groton, Inc., No. 11 Civ. 33, 2012 U.S. Dist. LEXIS 49788, at *6–7, 10–11 (D.Conn. Apr. 9, 2012).

Given that defendants expressly acknowledged, in their answer, that Ahmed purports to bring this action “pursuant to FLSA, 20 U.S.C.s. 216(b), on behalf of ‘Assistant Mangers’ employed in T.J. Maxx stores” (see Answer at ¶ 8), it cannot be said that defendants lacked notice of Ahmed’s consent, nor can it be said that defendants were unaware of Ahmed’s intent to pursue his claims as part of a collective action, particularly as Ahmed has already participated in a deposition and has submitted an affidavit in support of the instant motion. Consequently, while the form of Ahmed’s consent may not have strictly adhered to the preferred standard in FLSA collective actions, the substance of Ahmed’s complaint and his conduct throughout the discovery process was sufficient to satisfy the purpose of the written consent requirement. Furthermore, since defendants first raised this issue, Ahmed has filed a formal written consent with the Court. At this point, Ahmed is in compliance with not only the spirit, but also the letter of the written consent requirement. Thus, this Court finds that defendants had sufficient notice of Ahmed’s intent to proceed with a collective action, and this Court will therefore consider Ahmed’s request for conditional certification as a collective action on its merits.

Click Ahmed v. T.J. Maxx Corp. to read the entire Memorandum Opinion and Order.

While this case is certainly helpful to practitioners in the situation where the named-plaintiff has not filed a consent to join, as a practical matter (especially in courts outside of the Second Circuit), the best practice is to file a consent to join on behalf of all plaintiffs and opt-in plaintiffs, including the named-plaintiffs, to avoid the necessity of even addressing this issue.  Further, it should be noted that even in this case, the named-plaintiff ultimately did file a consent to join, after the issue had been raised by the defendants in their opposition to his motion for conditional certification.

EDITOR’S NOTE:  Within days of the Ahmed decision, another court- this one in the Eleventh Circuit- was faced with a similar issue.  In that case the plaintiff had actually styled his complaint as an individual claim, excluding language that he sought to proceed on a collective action basis.  Nonetheless, the court held that the defendants had adequate notice of plaintiff’s intent to proceed as a collective action, and ultimately granted plaintiff’s motion for conditional certification.  See  Hogan v. Allstate Beverage Co., Inc., 2012 WL 6027748, at *5 (M.D. Ala. Dec. 4, 2012).

E.D.Va.: Plaintiff Alleged Actionable Retaliation Claim, Where Asserted Former Employer Denied Him Work as Independent Contractor In Retaliation for Testimony in Co-Employee’s Case

May 1, 2011 12:14 pm / Leave a comment

Boscarello v. Audio Video Systems, Inc.

In this Fair Labor Standards Act (FLSA) retaliation action, a former employee sued his former employers alleging that defendants retaliated against him, in violation of 29 U.S.C. § 215(a)(3), by refusing to provide him work as an independent contractor following his submission of an affidavit supporting a current employee’s FLSA claim against the employers.  The case was before the court on defendants’ motion to dismiss, for failure to state a claim.  At issue on defendants’ motion was whether a former employee states a valid FLSA retaliation claim where, the alleged retaliation consists of the employer’s refusal to provide its former employee work as an independent contractor, work that the employer was not contractually obligated to provide, but which the employer indicated would be provided.  Following Fourth Circuit precedent, the court held that the Plaintiff had indeed stated a valid cause of action.

Click Boscarello v. Audio Video Systems, Inc. to read the entire Opinion.

E.D.N.Y.: Alleged Operators Of Garment Factory May Constitute Plaintiffs’ Employers Or Joint Employers Under FLSA; Motion To Dismiss Denied

June 5, 2009 10:51 am / Leave a comment

Lin v. Great Rose Fashion, Inc.

In this Fair Labor Standards Act (“FLSA”) case, Plaintiffs allege that they were deprived of a minimum wage and overtime pay while working in a garment factory, and ultimately discharged from their employment in retaliation for pursuing their rights to this compensation. Plaintiffs had previously moved for both a preliminary injunction and a TRO, based on alleged retaliatory conduct from Defendants, and allegations that Defendants were seeking to strip the factory where Plaintiffs had been employed of their assets. Of particular interest on the parties Motions currently before the Court, the Defendants sought to dismiss Plaintiffs’ claims based on alleged lack of standing—arguing that that Defendants were not Plaintiffs’ employers under the FLSA. Denying Defendants’ Motion to Dismiss based on lack of standing, the Court reviewed the elements of joint employers under the FLSA as well as those used to distinguish between independent contractors and employees. The Court held an evidentiary hearing and made factual findings regarding the nature of the parties’ relationship.

“Defendants argue that Plaintiffs lack standing to sue because they were not ’employees,’ as defined in the FLSA, but rather ‘independent contractors.’ Defendants claim they ‘outsourced the packing and trimming work to Wen Ming Lin and Yu Jiao Lin,’ and Wen Ming Lin’ in turn employed a group of ‘independent contractors,’ the Packer Plaintiffs. In support of their view, Defendants assert that they did not hire, fire, supervise, or manage the workers. They claim that the ‘subcontractors’ maintained the other workers’ employment records, negotiated a pay rate for the group and collected checks on one desk, and that ‘the plaintiffs themselves decided when they should arrive, depart, and the amount of time for which they were to work.’

The evidence presented at the Hearing exposed each of these assertions to be patently false. Applying the Brock factors, there is simply no question that these Plaintiffs “depend[ed] upon someone else’s business for the opportunity to render service” and were not “in business for themselves.” See Brock, 840 F.2d at 1059. The Plaintiffs were low-skilled, immigrant piece-workers toiling for long hours of manual labor in a garment factory. At least one, Yu Jiao Lin, expressed that she was illiterate. The testimony of the Plaintiffs established that they were interviewed, hired, fired, assigned work and hours, and supervised and managed by Mrs. Lin and Fang Zhen, or others under their control. (Tr. 31, 33-36, 78-81.) Contrary to the Defendants’ assertions, there is no evidence that Wen Ming Lin or Yu Jiao Lin had the power to hire, fire, manage assignments and schedules, or discipline other workers. (Id.)

It is plain that Mrs. Lin and Fang Zhen exercised a degree of control over the workers commensurate with the role of an employer. The Defendants’ collective denial of control over the workers is not credible. Wen Ming Lin’s referral of prospective workers to Mrs. Lin for her to interview does not elevate him to the role of independent contractor. (Tr. 52-53.) The Defendants’ additional arguments are similarly unavailing and unsupported by the evidence. For example, the Defendants’ repeatedly point to a single paycheck issued on December 9, 2005 and marked “payment for the assigned contractors” as evidence that “Plaintiffs shared and shared alike,” creating a relationship “best [ ] characterized as a partnership.” (Def. Post-Hearing Opp. 3, Def. Ex. A.) The Defendants’ choice to unilaterally label the Plaintiffs “contractors,” and to attempt to pay them via a collective paycheck on one occasion years ago, does not control the legal question before the court. This crude argument fails to set the Plaintiffs apart as independent contractors.

Considering the remaining Brock factors, the Defendants’ “independent contractor” theory proves even more preposterous. There is zero evidence that Plaintiffs had any opportunity for profit or loss or an “investment” in the business. The packers and thread-cutters were engaged in low-skilled factory labor, which was obviously not a matter of “independent initiative.” The Plaintiffs who took the stand worked at the Factory on a permanent, daily basis for three years. Their work at the Factory was not an occasional project. The Plaintiffs performed discrete tasks that assisted the line production, assembly, and packaging of goods. It is clear that their work was “an integral part of the employer’s business.”

Defendants’ contrived efforts to distance themselves from their workers and treat them as “subcontractors” have failed. The Defendants’ argument is nothing more than a transparent attempt to use a legal fiction to escape liability for their alleged labor abuses. The notion that these Plaintiffs acted as independent contractors outside the protection of the FLSA is so thoroughly without merit that it borders on an affront to the dignity of this court.”

B. Silver Fashion and Mrs. Lin Constitute “Employers” Under the FLSA

As a matter of economic reality, the Plaintiffs were employed by the Factory and the entities that owned it over the years: Silver Fashion, Great Rose, and Spring Fashion. Under the Carter factors, Silver Fashion maintained formal control over the Plaintiffs through the actions of its principal managers. Since Mrs. Lin’s parents were absentee, nominal owners of the business, Mrs. Lin controlled the company. The persistent euphemism that Mrs. Lin was just “helping out” her parents and that Fang Zhen was “helping” Mrs. Lin cannot be taken seriously. The only conceded owners or managers of Silver Fashion were Mrs. Lin’s parents, who live in China and appear to have no involvement whatsoever in the operations of this company held in their names. As Mrs. Lin eventually summarized: “Basically I was running the company.”(Tr. 262.)

As reviewed above, Plaintiffs were interviewed, hired, fired, assigned work and hours, and supervised and managed by Mrs. Lin and Fang Zhen, or others under their control. (Tr. 31, 33-36, 78-81.) There is no serious dispute that Mrs. Lin or others acting on her behalf determined the rate and method of payment. Mrs. Lin also maintained employment records, as demonstrated by the Defendants’ production of the Weekly Trim/Packing Reports. (See Def. Ex. A (original records in blue ink).) These records purport to show the quantity and price of the piecework performed by the Packer Plaintiffs, which formed the basis for their weekly compensation. At a minimum, Plaintiffs have standing to sue Silver Fashion, its predecessor entities, and Mrs. Lin under the FLSA. The court reserves judgment pending discovery as to the role of Fang Zhen in the employment scheme.

C. Great Wall and Mr. Lin May Constitute Joint Employers Under the FLSA

Defendants also argue that the case should be dismissed as to Great Wall and Mr. Lin, because they had no “operational control” over the Plaintiffs. (Def. Post-Hearing Opp. 10-15.) The agency regulations promulgated under the FLSA expressly recognize that a worker may be employed by more than one entity at the same time. See29 C.F.R. § 791.2 (2003); Zheng, 355 F.3d at 66 (citing Torres-Lopez v. May, 111 F.3d 633, 639-45 (9th Cir.1997) (permitting claims against joint employers under the FLSA); Antenor v. D & S Farms, 88 F.3d 925, 929-38 (11th Cir.1996) (same)). Plaintiffs have standing to sue Great Wall and Mr. Lin, in addition to the other Defendants, if they exercised “functional control” over the Factory and its workers. See Barfield, 537 F .3d at 143;
Zheng, 355 F.3d at 66, 72.

Discovery is needed to determine whether a functional employment relationship existed between the Plaintiffs and Great Wall under the Zheng factors. The economic reality test intentionally reaches beyond traditional concepts of agency law to encompass “working relationships, which prior to [the FLSA], were not deemed to fall within an employer-employee category.” Zheng, 355 F.3d at 69 (quoting Walling v. Portland Terminal Co., 330 U.S. 148, 150-51 (1947)). Under the theory of functional control, “an entity can be a joint employer under the FLSA even when it does not hire and fire its joint employees, directly dictate their hours, or pay them.” Zheng, 355 F.3d at 70 (interpreting Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947)). Evidence already establishes that purported agents of Great Wall-Mrs. Lin and Fang Zhen, who each testified that they were employed exclusively by Great Wall-supervised the Plaintiffs’ work in the Factory. The ownership of the premises and the equipment used in the Factory could be imputed to Great Wall, given the tangled leasing relationships between Mr. and Mrs. Lin and the fact that the Factory’s space was distinguished from Great Wall’s space by nothing more than a pile of paper boxes. The Second Circuit has also recognized that a company can de facto set employees’ wages and “dictate[ ] the terms and conditions” of their employment, though they do not “literally pay the workers,” where those employees perform work exclusively in service of that company. Id. at 72.In effect, Plaintiffs functionally worked for Great Wall, because they worked in a Factory that manufactured garments exclusively for Great Wall. Upon review of the preliminary evidence before the court, the relationship between Plaintiffs and Silver Fashion appears to have had “no substantial, independent economic purpose” beyond serving as a “subterfuge meant to evade the FLSA or other labor laws” for the benefit of Great Wall.Id.

In light of the court’s obligation to look beyond the strictures of formal tests and consider all relevant facts, the court finds that Defendants’ dubious uses of the corporate form and the interlocking relationships between the Defendant Corporations are pertinent to the joint employer inquiry in this case. Defendants’ attempt to distinguish Great Wall as a mere “customer of Silver Fashion” is a fallacy. Nearly every aspect of these businesses was intertwined. Together, the Lins controlled both companies. Mr. Lin owned Great Wall, and his wife operated Silver Fashion. Mrs. Lin’s parents appear to be nothing more than straw owners of Silver Fashion. Great Wall was Silver Fashion’s landlord and sole client. Silver Fashion manufactured garments exclusively for Great Wall. In turn, Mr. Lin could not identify a single supplier to his company other than Silver Fashion. Mrs. Lin owned the building where both companies were housed, yet leased the entire building to a company wholly controlled by her husband, so that he could sublet part of it back to her parents for $18,000 a month. (See Section II.A supra.)From the rent and the garment sales, significant funds flowed between these related companies on a regular basis. These entities were functioning as complementary components of a single business enterprise.FN9Based upon these facts, Plaintiffs may have standing to hold Great Wall and Mr. Lin liable either as their functional employers or under other legal theories. The court denies Defendants’ Motion to Dismiss for lack of standing in its entirety.”