Song v. JFE Franchising, Inc., CASE NO. 4:17-CV-1775

• Decision Date: 19 August 2019
• Docket Number: CASE NO. 4:17-CV-1775
• Parties: SEONG SONG and JAE BAK BAE, individually and on behalf of all others similarly situated, Plaintiffs, v. JFE FRANCHISING, INC. and JIM KIM, Defendants.
• Court: U.S. District Court — Southern District of Texas

SEONG SONG and JAE BAK BAE,individually and on behalf of all others similarly situated, Plaintiffs, v. JFE FRANCHISING, INC. and JIM KIM, Defendants.

CASE NO. 4:17-CV-1775

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

ENTERED: August 20, 2019

August 19, 2019

REPORT AND RECOMMENDATION

Plaintiffs bring this suit for unpaid overtime compensation as a collective action under the Fair Labor Standards Act of 1938 (the "FLSA" or "Act"), 29 U.S.C. §§ 201-19. Presently before the Court is Defendant Jim Kim's motion for summary judgment, ECF No. 68.¹ Having reviewed the parties' briefing,² the evidence presented, and the applicable law, the Court RECOMMENDS that the motion be DENIED.

I. Background

Defendant JFE Franchising, Inc. ("JFE Franchising") is a Texas corporation engaged in the franchising and management of sushi kiosks located in grocery stores throughout the United States. ECF No. 68-1 at 6.³ Defendant Jim Kim ("Defendant Kim" or "Defendant") is JFE Franchising's founder and chairman, as well as a shareholder in the company, and he "control[s] the business with a holding company." ECF No. 68-1 at 5; ECF No. 68-3 at 28.⁴

Between 2012 and 2017, Plaintiffs Seong Song, Jae Bak Bae, Matthew Kim, and Johnathan Olvera worked at JFE Franchising's headquarters in Houston. ECF Nos. 71-6, 71-7, 71-8, and 71-9. Plaintiffs' principal claim is that they were often required to work more than 40 hours per week but were not paid proper overtime compensation, in violation of the FLSA's overtime pay provision. ECF No. 46 ¶¶ 20, 23, 26, 29, 30, 32, 35.⁵ They seek to hold both JFE Franchising and Defendant Kimliable for this violation, alleging that both "employed" them within the meaning of the FLSA. ECF No. 46 ¶ 15. JFE Franchising admits that it employed Plaintiffs. ECF No. 47 ¶ 15. Plaintiffs also allege that Defendant Kim was their "employer" and/or a "joint employer." ECF No. 46 ¶¶ 13-14.

Defendant Kim denies Plaintiffs' allegations and moves for summary judgment on the sole ground that he was not their "employer" and/or a "joint employer" alongside JFE Franchising. ECF No. 68. Relying on Gray v. Powers, 673 F.3d 352 (5th Cir. 2012), he argues that he cannot be held liable for the alleged overtime pay violation because there is no evidence that he "(1) possessed the powerto hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records." ECF No. 68 at 9 (quoting Gray, 673 F.3d at 355).

Plaintiffs oppose the motion for summary judgment, arguing that there is a genuine issue of material fact as to whether Defendant Kim was their "employer" and/or "joint employer." ECF No. 71. While they maintain that Defendant Kim meets the criteria identified in Gray, Plaintiffs also rely on a more expansive framework for determining "employer" and "joint employer" status set forth in Wirtz v. Lone Star Steel Co., 405 F.2d 668, 669-70 (5th Cir. 1968) (listing five questions that courts should consider in assessing "whether a person or corporation is an 'employer' or 'joint employer'" under the FLSA). ECF No. 71 at 15-16. Plaintiffs point to evidence showing that, during the course of their employment at JFE Franchising, they were required to work at and for private events held at Defendant Kim's home, and to do work on his house, vehicles, and private ranch. ECF No. 71 at 5, 7, 9, 11-14, 16. In addition, Plaintiffs cite evidence indicating that Defendant Kim's influence within JFE Franchising enabled him to exercise power over their employment; they note, for example, that JFE Franchising's human resources manager served a dual role as Defendant Kim's secretary and conveyed work instructions to Plaintiffs. Id. at 14, 16. All this evidence, Plaintiffs claim,demonstrates Defendant Kim's "position of authority and power" over them and provides a sufficient basis for holding him accountable, along with JFE Franchising, for violating the FLSA. Id. at 16.

II. Legal Standard for Summary Judgment

"Summary judgment is appropriate only if 'the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'" Tolan v. Cotton, 572 U.S. 650, 656-57 (2014) (quoting 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 (1986). A dispute about a material fact is "genuine" if the evidence, taken as a whole, could lead a rational trier of fact to find for the nonmoving party. Id.; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Kariuki v. Tarango, 709 F.3d 495, 501 (5th Cir. 2013).

The summary-judgment movant bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the record that demonstrate the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); EEOC v. Chevron Phillips Chem. Co., 570 F.3d 606, 615 (5th Cir. 2009). If the movant seeks summary judgment based on an issue for which the nonmoving party bears the burden of proof at trial, the movant may satisfy this initial burden by showing that there is an absence of evidence to supportan essential element of the nonmoving party's case and that, as a result, judgment should be entered in the movant's favor on the basis of purely legal considerations. Celotex, 477 U.S. at 325; Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). If the movant fails to meet its initial burden, the motion for summary judgment must be denied, regardless of the nonmoving party's response. Celotex, 477 U.S. at 325; United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir. 2008).

If the summary-judgment movant carries its initial burden, the burden then shifts to the nonmoving party to show that summary judgment should not be granted. Celotex, 477 U.S. at 323-24; Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). The nonmoving party may discharge this burden by identifying specific evidentiary material showing that there is a genuine issue for trial. Sanchez v. Young Cty., Tex., 866 F.3d 274, 279 (5th Cir. 2017); Isquith ex rel. Isquith v. Middle South Utilities, Inc., 847 F.2d 186, 198-200 (5th Cir. 1988).

On a motion for summary judgment, "a court must view the evidence 'in the light most favorable to the opposing party.'" Tolan, 572 U.S. at 657 (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)). The nonmoving party's evidence must be accepted as true, and all reasonable inferences must be drawn in that party's favor. Anderson, 477 U.S. at 255; Chaplin v. NationsCredit Corp., 307 F.3d 368, 372 (5th Cir. 2002); Richardson v. Oldham, 12 F.3d 1373, 1379 (5th Cir. 1994). "Ifreasonable minds could differ on the inferences arising from undisputed facts, then a court should deny summary judgment." Carlson v. FedEx Ground Package Sys., Inc., 787 F.3d 1313, 1318 (11th Cir. 2015) (quoting Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997)); accord Askanase v. Fatjo, 130 F.3d 657, 665 (5th Cir. 1997) ("Summary judgment is inappropriate when conflicting inferences and interpretations may be drawn from the evidence."); see also Byrd v. Roadway Express, Inc., 687 F.2d 85, 87 (5th Cir. 1982) ("That the movant appears more likely to prevail at trial is no reason to grant summary judgment; it is not the province of the court on a motion for summary judgment to weigh the evidence, assess its probative value, or decide factual issues.").

III. Discussion

A. Joint Employment and the Fair Labor Standards Act

Section 7(a) of the FLSA mandates that "no employer shall employ any of his employees . . . for a workweek longer than forty hours" unless the employee is compensated for time worked in excess of that threshold "at a rate not less than one and one-half times the regular rate at which he is employed." 29 U.S.C. § 207(a)(1). Liability for violating the FLSA's overtime provision attaches to individuals and entities who qualify as an "employer." See Donovan v. Grim Hotel Co., 747 F.2d 966, 971 (5th Cir. 1984).

In keeping with its "remedial and humanitarian" purpose, Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 597 (1944), the FLSA defines the term "employer" expansively: the statute places no express limitation on the word's meaning, stating only that it "includes any person acting directly or indirectly in the interest of an employer in relation to an employee," 29 U.S.C. § 203(d) (emphasis added); see also id. § 203(a) (defining "person" as "an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons"). The Act defines the related terms "employee" and "employ" in similarly broad fashion. Id. § 203(e)(1) (defining "employee" as "any individual employed by an employer"); id. § 203(g) (stating that the term "employ" "includes to suffer or permit to work"). As the Supreme Court has recognized, the "striking breath" of these definitions brings within the FLSA's coverage some employment relationships that might not qualify as such "under a strict application of traditional agency law principles" or under other federal statutes. Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992); see also United States v. Rosenwasser, 323 U.S. 360, 363 n.3 (1945) (describing the FLSA's definition of "employee" as "the broadest definition that has ever been included in any one act" (quoting 81 Cong. Rec. 7657 (1937) (statement of Sen. Hugo Black))).

Under the FLSA, "[a] single [worker] may stand in the relation of an employee to two or more employers at the same time." 29 C.F.R. § 791.2(a). "If all the relevantfacts establish that [those] employers are acting entirely independently of each other and are completely disassociated with respect to the...