Napoli v. 243 Glen Cove Ave. Grimaldi, Inc.

397 F.Supp.3d 249

Michael NAPOLI, Plaintiff,

v.243 GLEN COVE AVENUE GRIMALDI, INC., d/b/a Grimaldi's Pizzeria, and Frank Ciolli, Defendants.

No. 13-CV-5828 (JFB) (ETB)

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

Signed September 6, 2019

Plaintiff is represented by Douglas Brian Lipsky, Lipsky Lowe LLP, 630 Third Avenue, Fifth Floor, New York, NY 10017.

Defendants are represented by Vito A. Palmieri, Palmieri, Castiglione & Associates, PC, 250 Mineola Boulevard, Second Floor, Mineola, NY 11501.

MEMORANDUM AND ORDER

Joseph F. Bianco, Circuit Judge (sitting by designation):

Plaintiff Michael Napoli ("plaintiff"), brings this action against 243 Glen Cove Avenue Grimaldi, Inc., and Frank Ciolli ("Ciolli") (collectively, "defendants"), asserting claims under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201, et seq. , and the New York Labor Law ("NYLL"). Specifically, plaintiff alleges that defendants violated the following provisions of the FLSA: (1) by failing to pay plaintiff minimum wage and overtime compensation; and (2) by retaliating against plaintiff for filing the initial, first, and second amended complaints. Plaintiff also asserts claims under NYLL for: (1) failure to pay plaintiff minimum wage and overtime compensation; (2) failure to reimburse employment-related expenses; and (3) for retaliation against plaintiff for the filing of the initial, first, and second amended complaints. Plaintiff further asserts unjust enrichment and quantum meruit claims.¹ In connection with these claims, plaintiff seeks a declaratory judgment that defendants' practices are unlawful under the FLSA and the NYLL, and an order finding defendants liable for unpaid overtime compensation and an equal amount of liquidated damages. Plaintiff also requests compensatory and punitive damages for violations of the anti-retaliation provisions of the FLSA. Finally, plaintiff requests an award, jointly and severally against defendants, for loss of compensation, financial harm, and other economic loss.

A bench trial was held on November 13, 15, and 19, of 2018, as well as on February 1, 2019. Having held a bench trial, the Court now issues its findings of fact and conclusions of law, as required by Rule 52(a) of the Federal Rules of Civil Procedure, and concludes, after carefully considering the evidence introduced at trial (including assessing the credibility of the witnesses based upon their demeanor and their answers to questions in light of all the evidence in the case), the arguments of counsel, and the controlling law on the issues presented, that plaintiff has not met his burden of proof on any of his claims. As such, plaintiff is not entitled to any relief. In particular, the Court finds Ciolli's testimony to be credible on each and every one of the key elements in the case and was often corroborated by other evidence in the case, including plaintiff's own testimony in many instances. Based upon all of the evidence, plaintiff has failed to prove by a preponderance of the evidence that Ciolli acted as an employer under either the FLSA or NYLL. As discussed in detail below, the credible evidence demonstrates that plaintiff had the power to hire and fire employees, supervised and controlled employee work schedules and conditions of employment, determined the rate and method of payment, and maintained Grimaldi's pizzeria's (the "Restaurant") employment records. Ciolli's investment and involvement in the Restaurant was part of an oral joint venture agreement that he had reached with the plaintiff regarding the opening and operation of the Restaurant where, as a result of the time and money both were expending, they would share equally (50/50) in the profits of the Restaurant. Under the circumstances of this case, it is clear that no employer/employee relationship existed between Ciolli and plaintiff. Accordingly, judgment is warranted in defendants' favor on all of the FLSA and NYLL claims. Similarly, given the financial arrangement agreed upon by plaintiff and Ciolli, plaintiff has failed to prove his quasi-contract claims and judgment in favor of defendants is warranted on such claims.

I. BACKGROUND

On October 22, 2013, plaintiff filed his complaint alleging violations of the FLSA and NYLL. (ECF No. 1.) On December 18, 2013, plaintiff filed his first amended complaint. (ECF No. 5.) On March 7, 2014, plaintiff filed his second amended complaint. (ECF No. 25.) On April 1, 2014, defendants moved to dismiss the complaint. (ECF No. 28.) The Court denied this motion in its entirety on May 7, 2014. Plaintiff then filed his third amended complaint on May 14, 2014. (ECF No. 37.) Defendants answered on May 28, 2014. (ECF No. 40.) On October 30, 2015, the parties filed cross-motions for summary judgment. (ECF Nos. 56, 62.) On May 23, 2016, the Court denied both parties' summary judgment motions. (ECF No. 88.)

The Court held a bench trial on November 13, 15, 19, 2018, and February 1, 2019.² Plaintiff, John Napoli, plaintiff's brother, and Roger DeBonis, a former assistant to Ciolli, testified for plaintiff.³ Ciolli and Michael Feldman, Ciolli's accountant, testified for defendants. During the trial, both sides also submitted exhibits to be considered by the Court. Finally, the parties submitted proposed findings of fact and conclusions of law, as well as other memoranda, to the Court.

The Court has fully considered all of the evidence presented by the parties, as well as their written submissions. Below are the Court's Findings of Fact and Conclusions of Law.

II. FINDINGS OF FACT

The following section constitutes the Court's Findings of Fact⁴ pursuant to Federal Rule of Civil Procedure 52(a)(1). These Findings of Fact are drawn from witness testimony at trial and the parties' trial exhibits.

A. The Formation of Grimaldi's

In 1996, Ciolli acquired the corporation Pattabe, which owns the Grimaldi's Pizzeria in Brooklyn, New York, as well as the Grimaldi's trademark. (Tr.⁵ 14:13-16:20.)

Around 2000, the Grimaldi trademark was transferred to JMC Restaurant Holdings, a corporation with Ciolli owning 49% and his son, Joseph Ciolli, owning 51%. (Tr. 17:07-18:18.) On March 9, 2011, Ciolli and Joseph signed the Intellectual Property License Agreement ("the Agreement").⁶ (Tr. 21:17-24:13; Pl. Ex. 3.) The Agreement provided that any use of the intellectual property at additional locations was at the sole discretion of JMC and required that defendant Frank Ciolli wholly own the restaurant business operating at the additional location. (Pl. Ex. 3 at 1.) The Agreement also mandated that Ciolli had to maintain all services associated with the trademark, at a high-quality standard "reasonably acceptable to JMC." (Id. at 2.) Ciolli testified that he entered into this Agreement in order to help his son "grow his end of the business and borrow money." (Tr. 29:01-03.) Since signing the Agreement, Ciolli has opened two additional locations. For each new location, he created a corporation, of which he owns 100%, and had an operating partner to assist with running the store, who was compensated through a share of the profits. (Tr. 98:07-99:13.)

B. Agreement Between the Parties

In or around 2011, plaintiff and Ciolli discussed opening a Grimaldi's pizzeria (the "Restaurant") in Sea Cliff, New York. (Tr. 135:14-138:04.) On March 29, 2012, Ciolli created the defendant corporation 243 Glen Cove Avenue Grimaldi, Inc. (the "Corporation"), to facilitate ownership of the pizzeria. (Tr. 36:16-36:22.) Ciolli was the sole shareholder of the Corporation, never issuing any shares. (Tr. 37:09-23.)

Ciolli and plaintiff agreed that plaintiff would be an operating partner of the Restaurant, splitting 50% of any potential profits, while Ciolli would maintain ownership of the Grimaldi name and property.⁷

(Tr. 35:17-19.) Plaintiff testified that he understood the profit-sharing arrangement, and it was an incentive for him to enter the business arrangement with Ciolli. (Tr. 208:16-22.)⁸ After this oral agreement was reached, plaintiff expended over $155,000 of his own money in building the Restaurant.⁹ (Tr. 173:20-175:17; Pl. Ex. 5.) Plaintiff also testified that Ciolli had introduced him as a partner and had told plaintiff that they had both "built a hell of a place." (Tr. 187:02-07.)

Plaintiff testified that, in addition to the profit-sharing arrangement, Ciolli stated that he would give plaintiff a small salary for a short period of time before the Restaurant opened.¹⁰ Ciolli denied that such a conversation took place. The Court finds Ciolli's testimony to be credible, and there is no credible evidence in the record to support plaintiff's contention. In fact, plaintiff acknowledged that he did not request a salary check from Ciolli after both his first and second week of work on the Restaurant. (Tr. 212:10-16.) Plaintiff further acknowledged that he did not make any request for his salary after a year and a half of work prior to the Restaurant opening. (Tr. 214:06-13.) In other words, despite the fact that plaintiff claimed that he worked seven days a week from 9:00 a.m. to 4:00 p.m. between July 1, 2011 (when the lease began) to the opening of the Restaurant in January 2013 (Tr. 149:05-25), plaintiff never requested or inquired as to the circumstances surrounding his purported salary. In short, based upon all the testimony and evidence in this case, the Court finds that Ciolli did not offer plaintiff a salary for any period of time, but rather their agreement involved only the above-referenced profit-sharing arrangement.

C. Preparation for Opening

1. Ciolli's Role

On June 21, 2011, Ciolli signed a lease – for July 1, 2011 to June 30, 2021 – for 243 Glen Cove Avenue, Sea Cliff, New York with Samiano Realty Corporation with Sal Imbriano ("Imbriano"), the property's landlord. (Tr. 38:18-39:11, Pl. Ex. 6.) Plaintiff was not at the meeting when the lease was signed, nor was he involved in lease negotiations. (Tr. 139:11-140:04.) In order to assist with the renovations, an architect was hired. (Tr....