Buttar v. Elite Limousine Plus, Inc.
| Decision Date | 29 March 2022 |
| Docket Number | Index 651088/2019 |
| Citation | 2022 NY Slip Op 31035 (U) |
| Parties | SHAHID BUTTAR, HAROON RASHID, JOSE RODRIGUEZ, ARTHUR NACE, CHAUDHRY AHSAN, ZURAB ANUASHVILI, GAGANJOT ARORA, SHIMON ASOL, SIKANDER AWAN, SATWINDERJIT BAL, STEFAN BERNICZKY, VINCENTE DUARTE, HOSSAME GABER, KHIZAR HUSSAIN, MUHAMMAD IJAZ, SHAIR JAWAID, ERIC KIBANDA, VARINDER KUMAR, BIMAL KUNWAR, GREGORY LACHOWICZ, JAN LUKASEWICZ, TANWEER MUHAMMAD, ZAWAR SHAHID, RAVINDER SINGH, KULDIP SINGH, CHARANJEET SINGH, RATJWINDER SINGH, LAKHBIR SINGH, VIOREL SIRBU, SARABJEET SODHI, SUKHVINDER SODHI, ROMAN STASINTCHOUK, SALMAN TARAR, RABAH TEMZI, ITALO VERA, MILTON VILLAGOMEZ, AHMAD KHAN, MUHAMMAD YOUNIS MALIK, INDIVIDUALLY AND ON BEHALF OF ALL OTHER SIMILARLY SITUATED PLAINTIFFS, Plaintiffs, v. ELITE LIMOUSINE PLUS, INC., FIRST CORPORATE SEDANS, INC., GUY BEN ZION, AMIR BEN ZION, SHAFQUAT CHAUDHARY, and DOE 1-10, Defendants. Motion Seq. Nos. 001, 004 |
| Court | New York Supreme Court |
Unpublished Opinion
MOTION DATE 07/28/2021.
PRESENT: HON. MELISSA A. CRANE, Justice.
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 001) 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 38, 39, 40, 41, 42, 43, 44, 50, 51, 144, 145, 146, 147, 148 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159, 160, 161, 164, 165, 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176, 177, 178 were read on this motion to/for ORDER MAINTAIN CLASS ACTION . The following e-filed documents, listed by NYSCEF document number (Motion 004) 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 163, 179, 180, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 198, 199, 179-1, 200 were read on this motion to/for DISMISSAL .
Motion sequence nos. 001 and 004 are consolidated for disposition.
This putative class action concerns franchise rights plaintiffs purchased from defendant First Corporate Sedans, Inc. (FSC), a black car company that a competitor, defendant Elite Limousine Plus, Inc. (Elite) later acquired.[1] In motion sequence no. 001, plaintiffs move, pursuant to CPLR article 9, for class certification, to appoint plaintiffs Shahid Buttar (Buttar), Haroon Rashid (Rashid), Stefan Berniczky (Berniczky), Muhammad Tarar (Tarar)[2] and Jose Rodriguez (Rodriguez) (collectively, the Proposed Lead Plaintiffs) as lead plaintiffs and to appoint Slarskey LLC and Imbesi Law P.C. as class counsel. In motion sequence no. 004, Elite and defendant Shafquat Chaudhary (Chaudhary) (together, the Elite Defendants) move, pursuant to CPLR 3211 (a) (5) and (a) (7), to dismiss the claims brought by plaintiffs Shimon Asol (Asol), Viorel Sirbu (Sirbu), Arthur Nace (Nace), Shair Jawaid (Jawaid) and Roman Stasintchouk (Stasintchouk) and the first, second, third, fifth, sixth, seventh, eighth and tenth causes of action.
Plaintiffs are professional drivers (NYSCEF Doc No. 130, ¶ 1). FCS with its subsidiary OZOcar, maintains a fleet of more than 375 vehicles[3] (id., ¶ 50). Defendant Amir Ben Zion (Amir) is a majority owner of FCS and is its former chief executive officer (id., ¶ 51). His brother, defendant Guy Ben Zion (Guy) (together with Amir, the Ben Zions), is an owner of FCS and was a nominal executive officer and its president through 2017 (id., ¶ 52). Elite is based in Long Island City, New York (id., ¶ 53). Chaudhary is Elite's president (id., ¶ 54).
Beginning in the 1990s through May 2017, plaintiffs purchased franchises from FCS with each plaintiff paying between $25, 000 to $40, 000, amortized over a 5- to 10-year period, for which they received the right to drive on FCS's network, a percentage of the revenues for each completed journey, and the ability to transfer their franchise rights to a third-party either directly or through an "on the shelf" consignment process managed by FCS (id., ¶¶ 1-2, 60 and 66). Each plaintiff is an independent contractor to FCS (id., ¶ 2).
To purchase a franchise, an existing FCS driver had to sponsor an incoming driver, and each incoming driver had to execute a written acknowledgement that he or she had reviewed a franchise disclosure document (id., ¶ 59). An incoming driver also executed a transfer sales agreement (TSA) and an independent contractor agreement (ICA) (together, the FCS Agreements) (id., ¶¶ 59 and 61; oral argument 7/28/21 tr at 38). Pursuant to the TSA, each driver purchased a "system," or a four-digit dispatch radio number within the FCS network unique to that driver (NYSCEF Doc No. 130, ¶ 62), and made payments in installments on a set schedule (id., ¶ 66). Plaintiffs believed they were entering into the TSAs with FCS (id., ¶ 63). FCS managed and collected fees on the process, and the TSA contained numerous references to FCS (id., ¶¶ 63-64). However, the TSAs stated that FCS was not a party (id., ¶ 64). Instead, each plaintiff, as an incoming driver, and an existing FCS driver, as the outgoing driver selling a franchise, executed the TSA (id., ¶ 63). Pursuant to the ICA, plaintiffs agreed to pay FCS a commission of approximately 18% of the billable fee for each completed journey (id., ¶ 70). The FCS Agreements gave each driver, upon his or her resignation or termination, the right to sell his or her system to an incoming FCS Driver, to assign or delegate the system to a person of choice, to return the system to the outgoing driver, or to consign the system by placing it "on the shelf" with FCS (the Transfer Provision) (id., ¶ 67).
After Amir left his position at FCS in the mid-2000s, he made numerous risky investments. This allegedly placed significant financial strain on the Ben Zions or FCS (id., ¶¶ 3 and 73-75 and 78). According to a UCC financing statement dated July 18, 2016, Amir pledged his majority shares in FCS to Doron Marom (id., ¶ 79). Rosenthal & Rosenthal, Inc. (Rosenthal) became one of FCS's creditors (id., ¶ 81). FCS or its principals allegedly made payments to support Amir or his businesses without regard to FCS's financial obligations (id., ¶ 83). For instance, checks issued to plaintiffs and non-driver employees bounced (id., ¶ 85). FCS refused to allow drivers to retire or transfer their franchises to third-parties and failed to resell systems placed on the shelf, instead choosing to sell new franchises (id., ¶ 87). Meanwhile, FSC continued to collect franchise payments (id., ¶ 86).
In May 2017, FCS announced it had entered into an asset purchase agreement (the Purchase Agreement) with Elite whereby Elite acquired FCS's assets for $13.5 million (the Transaction) (id., ¶ 5). FCS represented in the Purchase Agreement that it was current in its annual franchise filings and had at least 300 active drivers (id., ¶ 96). Elite acquired FCS's base license and a list of all drivers under that license, its client accounts, "franchises for more than 300 drivers who serviced those accounts," and all "assets that underlie the company-driver relationship" (id., ¶¶ 5, 7, 91, 94-95 and 103). Elite allegedly agreed to assume FCS's liabilities to plaintiffs, including $1.24 million in unpaid vouchers for completed journeys, savings accounts and security deposits, because doing so was "necessary to ensure that Plaintiff franchises would transfer to Elite and to continue to service customers" (id., ¶ 97). Otherwise, Elite did not exclude any liabilities, such as the FCS Agreements (id., ¶ 99). Guy, FCS's then-chief executive officer, became Elite's vice present of client relations (id., ¶ 102). The Transaction closed on May 25, 2017 (NYSCEF Doc No. 85, Slarskey affirmation, Ex B).
After the Transaction was announced, Elite and FCS met with FCS's franchisees (NYSCEF Doc No. 130, ¶ 106). FCS, claiming insolvency, refused to refund the franchise fees paid by its franchisees or offer them recourse (id., ¶ 107). Elite explained it would not support or honor the FCS franchises and offered to issue new Elite franchises (id., ¶¶ 106 and 108-109). Elite promised to treat those plaintiffs who chose to work with it that they "would be treated just like existing Elite drivers, and receive the benefits of owning an Elite Franchise" (id., ¶ 109). Plaintiffs claim their relationship with Elite bears the hallmarks of a franchisor/franchisee relationship because Elite referred to them as franchisees, charged monthly installment and radio fees, dispatched jobs on Elite's network and insisted they use its name and brand[4] (id., ¶ 110). Elite insisted plaintiffs pay transfer fees of $2, 500 to $5, 000, which plaintiffs claim resemble franchise down payments (id., ¶ 111). Plaintiffs claim these fees duplicate those they had already paid to FCS and further claim they been charged arbitrary fees (id., ¶ 115). Elite also refused to furnish them with a franchise disclosure document or a franchise contract (id., ¶ 113).
Elite has allegedly refused to provide plaintiffs with information on its compensation structure, including the rates and method of compensation, timing of payments, and costs and deductions (id., ¶¶ 116-117). Elite's invoices contain alleged inaccuracies about rates, discounts and voucher values (id., ¶ 118). As an example, Elite levies customer discounts on its drivers, which reduces the net share of the driver's ride revenue (id., ¶ 119). Plaintiffs, though, assert the discounts are applied arbitrarily and do not correspond to the actual discounts given to customers (id.). Elite allegedly retaliated against those plaintiffs who complained about the payment structure by threatening to discharge them, and in some cases, terminating or constructively discharging them, or by withholding payments (id., ¶ 120).
Elite has allegedly given preferential treatment to drivers related to Chaudhary or other managers over former FCS drivers (id., ¶ 124). Although...
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