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FLSA Class Action Defense Cases-Zhong v. August August: New York Federal Court Partially Grants Defense Motion To Dismiss Overtime/Minimum Wage Class Action Claims

Class Action Complaint Alleging Violations of Federal Fair Labor Standards Act (FLSA) and State Law Equivalent Failed to Adequately Plead Overtime Violations New York Federal Court Holds

Plaintiff filed a putative class action against his employer, August August Corp. (doing business as “River Vietnamese and Thai Restaurant”) alleging failure to pay overtime and minimum wages required by the federal Fair Labor Standards Act (FLSA) and New York’s Minimum Wage Act (NYMWA). Zhong v. August August Corp., 498 F.Supp.2d 625, 627 (S.D.N.Y. 2007). The class action complaint asserted that federal court jurisdiction exists under 28 U.S.C. § 1337 as to the FLSA §§ 206 and 207 claims (the first and second claims for relief), and under 28 U.S.C. §1367 (supplemental jurisdiction) over the third claim for relief brought under New York state law, id. Defense attorneys moved to dismiss the class action on several grounds; the district court granted the motion in part.

Preliminarily, the district court rejected defense claims that the class action complaint failed to adequately plead that defendant was plaintiff’s “employer” within the meaning of the FLSA, holding that under the liberal standards applicable to a motion to dismiss, the allegations that plaintiff was “an employee” and was “employed by” sufficiently placed defendant on notice of the claims against it. Zhong, at 628-29. The next question was whether defendant was “engaged in commerce or in the production of goods for commerce” within the meaning of the FLSA, id., at 629. Again, the federal court held that the class action complaint adequately alleged this element of an FLSA claim, id. Similarly, the allegation that plaintiff earned only $10 per day but worked 3 or 4 hours a day adequately pleaded a breach of the FLSA’s minimum wage requirement. Id., at 629. In this regard, while the district court acknowledged that plaintiff had not demanded any specific amount in damages, “he has provided enough information to give August sufficient notice from which to calculate the alleged damages” because he alleged that he worked “twenty hours per week, spread out over six days per week, at a wage of $10.00 per day, for a total of (roughly) twenty weeks.” Id., at 629-30.

The district court reached a different conclusion with respect to the class action complaint’s overtime claim because of an “internal conflict” in the allegations. On the one hand, plaintiff alleged that he “regularly worked overtime hours,” Zhong, at 630; on the other hand, plaintiff states he “worked from 4:00 p.m. until 7:00 p.m. from Monday through Thursday, and 4:00 p.m. until 8:00 p.m. on Friday and Saturday,” which comes to only 20 hours a week, id. While the federal court recognized at page 630 that “the possibility exists that [plaintiff] worked beyond forty hours on one or more occasions,” “’[s]imply stating that [a plaintiff] w[as] not paid for overtime work does not sufficiently allege a violation of Section 7 of the FLSA.’” Id. (citation omitted). Accordingly, the court concluded that the class action failed to adequately plead an overtime claim for relief. Id. The district court additionally found that the allegations seeking to support class action treatment failed, as “no reference is made to a policy to which other employees are subject, nor to any company policy at all.” Id., at 631. Thus, the federal court concluded that the class action allegations failed for lack of specificity, id.

With respect to his state law claims, the district court opined that the class action complaint adequately alleged violations of the state’s minimum wage laws, and agreed to exercise supplemental jurisdiction over those claims. Zhong, at 631. However, the federal court refused to exercise jurisdiction over the state law overtime claims in the putative class action because the complaint failed to properly allege such a violation under federal law and because the class action failed to “sufficiently alleged the facts necessary to sustain an independent recovery of overtime compensation under the state law.” Id.

NOTE: The district court granted plaintiff leave to amend his class action complaint because “[t]he Second Circuit has repeatedly expressed its lenient stance towards allowing plaintiffs to amend claims that have been dismissed pursuant to Fed.R.Civ.P. 12(b)(6).” Zhong, at 632 (citation omitted).

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