Carollo v. United Capital Corp.

528 F.Supp.3d 37

Deanna CAROLLO and Diana J. Owens, on behalf of themselves and all other employees similarly situated, Plaintiffs,

v.UNITED CAPITAL CORP., AFP Management Corp., and AFP 101 Corp., Defendants.

6:16-CV-13

United States District Court, N.D. New York.

Signed March 24, 2021

OF COUNSEL: J. NELSON THOMAS, ESQ., JESSICA L. LUKASIEWICZ, ESQ., MICHAEL J. LINGLE, ESQ., PATRICK J. SOLOMON, ESQ., THOMAS, SOLOMON LAW FIRM, Attorneys for Plaintiffs, 693 East Avenue, Rochester, New York 14607.

OF COUNSEL: JOHN M. HARRAS, ESQ., VIRGINIA & AMBINDER LLP, Attorneys for Defendants, 40 Broad Street, Suite 7th Floor, New York, New York 10004.

OF COUNSEL: ROBERT F. MILMAN, ESQ., JAMIE S. FELSEN, ESQ., MILMAN LABUDA LAW GROUP PLLC, Attorneys for Defendants, 3000 Marcus Avenue, Suite 3W8, Lake Success, New York 11042.

MEMORANDUM-DECISION and ORDER

DAVID N. HURD, United States District Judge

Table of Contents

I. INTRODUCTION...46

II. BACKGROUND...47

III. LEGAL STANDARD...48

A. Summary Judgment...48

B. Rule 23 Class Certification...48

C. FLSA Class Certification...49

IV. DISCUSSION...49

A. Summary Judgment...49

B. Rule 23 Class Certification...51

1. Rule 23(a)...52

a. Numerosity...52

b. Commonality...53

c. Typicality...55

d. Adequacy...55

e. Ascertainability...57

2. Rule 23(b)(1)(A)...58

3. Rule 23(b)(3)...58

C. FLSA Certification...60

D. Adequacy of Plaintiffs’ Proposed Notice...63

1. Rule 23 Notice...64

2. FLSA Notice...64

V. CONCLUSION...65

I. INTRODUCTION

The Radisson Hotel-Utica Centre (the "hotel") is, as its name suggests, a hotel in the city of Utica. An important part of the hotel's business comes from its food service offerings through both the Garden Grille (the "restaurant")—the hotel's featured restaurant—and from a banquet space the hotel rents out from time to time. Plaintiffs Deanna Carollo ("Carollo") and Diana J. Owens ("Owens" and together with Carollo "plaintiffs") are erstwhile hotel employees. At various times, plaintiffs worked as servers for the restaurant, for banquets, or both. In either capacity, plaintiffs were paid an hourly wage below the mandatory minimum—commonly called a "subminimum wage" among businesses that employ them—plus tips.

Plaintiffs filed this class action complaint against defendants United Capital Corp., the company that owns the hotel, as well as AFP Management Corp. and AFP 101 Corp., the entities that apparently managed the hotel during portions of plaintiffs’ employment. Plaintiffs’ complaint alleges that the hotel's policies for paying its servers violate New York and federal law in five ways and across five counts: (I) paying employees a wage below the mandatory minimum in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 206(a) ; (II) not properly compensating service workers¹ for overtime in violation of FLSA provision 29 U.S.C. § 207(a) ; (III) illegal retention of gratuities in violation of New York Labor Law ("NYLL") § 196-d ; (IV) a minimum wage violation under NYLL under NYLL § 652; and (V) failure to provide a proper wage notice in violation of NYLL § 195.1.

Defendants have moved for summary judgment against plaintiffs’ complaint under Federal Rule of Civil Procedure ("Rule") 56. Plaintiffs moved to certify a class action under both FLSA, 29 U.S.C. § 216(b) (" § 216(b)") and Rule 23. Those motions, having been fully briefed, will now be decided on the basis of the parties’ submissions without oral argument.

II. BACKGROUND

Plaintiffs worked for the hotel as servers, whether in the restaurant or for banquets. Dkt. 68-1, Defendants’ Statement of Material Facts ("DSMF"), ¶ 2.² As banquet servers, plaintiffs earned an hourly wage that was supplemented by a mandatory service charge of 20% of the customer's base bill. See id. ¶ 3. But that service charge did not belong to the service workers alone. See id. ¶ 4. Instead, the service workers would evenly split a portion of the service charge equal to 12% of the customer's base bill, while the hotel would keep the remaining portion of the service charge, or 8% of the customer's base bill, to cover administrative expenses. Id. ¶¶ 3-4; Dkt. 76-13 ("McCurdy Dep."), p. 3³ (noting that "banquet servers, captains, [and] bartenders" would split 12% of bill between them).

Generally, the hotel paid service workers the lowest wage permitted under state and federal law. DSMF ¶ 8. However, state and federal laws allow employers of hourly, tipped, food service workers to claim a "credit" that permits them to pay a "subminimum" wage below the standard minimum so long as the tips their employees earn bring their wages to or above the minimum wage. Id. Whether defendants violated those laws is the basis of the parties’ disagreement in this case.

The hotel maintained a timecard system and employee earning reports to keep track of their employees’ wages. DSMF ¶ 10. The parties agree that if a server worked more than forty hours in a week, she would be paid overtime, but they disagree as to whether the hotel paid that overtime at the proper rate. Compare DSMF ¶ 12, with Dkt. 76-24, Plaintiffs’ Statement of Material Facts ("PSMF"), ¶ 12. The parties also disagree as to whether the hotel provided its employees with a wage notice, either in the form of a document signed by the employee as required by state law or through a posted notice that would satisfy federal law. Compare DSMF ¶¶ 39-40, with PSMF ¶¶ 39-40.

Evidently, this pay arrangement began to grate on plaintiffs, who filed this class complaint. United States Magistrate Judge Thérèse Wiley Dancks set a deadline for the parties to conduct class discovery. The parties conducted discovery to that end.

III. LEGAL STANDARD

A. Summary Judgment

Summary judgment under Rule 56 is warranted if the entirety of the parties’ submissions show "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Johnson v. Killian , 680 F.3d 234, 236 (2d Cir. 2012) (citing FED. R. CIV. P. 56(a) ). A fact is "material" if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). And a dispute of a material fact is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. The movant bears the burden of pointing the court to the materials that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Additionally, a court considering a summary judgment motion "must resolve any ambiguities and draw all inferences from the facts in a light most favorable to the nonmoving party." Ward v. Stewart , 286 F. Supp. 3d 321, 327 (N.D.N.Y. 2017) (citing Jeffreys v. City of New York , 426 F.3d 549, 553 (2d Cir. 2005) ). Even so, a non-movant's conclusory allegations without support from record evidence are insufficient: the non-movant must "put up or shut up." Weinstock v. Columbia Univ. , 224 F.3d 33, 41 (2d Cir. 2000). At bottom, summary judgment tasks the Court with assessing the assembled evidence and determining whether a reasonable factfinder could find in the nonmovant's favor. Treglia v. Town of Manlius , 313 F.3d 713, 719 (2d Cir. 2002).

B. Rule 23 Class Certification

Class certification is the exception, not the rule, so the party moving for class certification "must affirmatively demonstrate" compliance with Rule 23. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011). A plaintiff's burden under Rule 23 is satisfied if she can prove that a class action is appropriate by a preponderance of the evidence. Teamsters Local 445 Freight Div. Pension, Fund v. Bombardier Inc. , 546 F.3d 196, 202 (2d Cir. 2008).

A plaintiff's proof must first survive a "rigorous analysis" of whether Rule 23(a) ’s requirements have been satisfied. Roach v. T.L. Cannon Corp. , 778 F.3d 401, 405 (2d Cir. 2015) (citing Comcast Corp. v. Behrend , 569 U.S. 27, 33, 133 S.Ct. 1426, 185 L.Ed.2d 515 (2013) ). There are four: "(1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation." Glatt v. Fox Searchlight Pictures, Inc. , 811 F.3d 528, 538 (2d Cir. 2016).

But even if Rule 23(a) is satisfied, the plaintiff must also prove that one of the three subcategories of permissible class actions under Rule 23(b) fit the particular case. See FED. R. CIV. P. 23(b) (noting that class action may be maintained if Rule 23(a) is satisfied and if case fits criteria for one of three class action forms). "Such an analysis will frequently entail overlap with the merits of the plaintiff's underlying claim ... because the class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's cause of action." Comcast , 569 U.S. at 33-34, 133 S.Ct. 1426 (cleaned up).

In addition, the Second Circuit has noted that a purported class must "be defined using objective criteria that establish a membership with definite boundaries," under what courts refer to as the "ascertainability doctrine." In re Petrobras Sec. , 862 F.3d 250, 264 (2d Cir. 2017).

C. FLSA Class Certification

Under FLSA § 216(b), district courts "have discretion, in appropriate cases," to provide notice of a pending FLSA claim to potential plaintiffs so that they may "opt in" to that claim. Myers v. Hertz Corp. , 624 F.3d 537, 554 (2d Cir. 2010). The decision of whether to employ § 216(b) follows a two-step method. Id. at 555.

The first step tasks a court with deciding whether to send notice to potential opt-in plaintiffs who may be "similarly situated" to the named plaintiffs in the present action. Myers , 624 F.3d at 555. The inquiry in the first step uses a "low standard of proof" and only requires a "modest factual showing" that the named plaintiffs and the potential opt-ins "were victims of a common policy or plan that violated the law." Id.

The second step determines whether a collective...