Ye Ming Huang v. Sakura Mandarin, Inc.
| Decision Date | 07 June 2022 |
| Docket Number | Civil Action 21-3757 |
| Parties | YE MING HUANG, Plaintiff v. SAKURA MANDARIN, INC. et al., Defendant |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Ye Ming Huang claims that a restaurant underpaid him and his co-workers. Pie now seeks to bring a collective action under the Fair Labor Standards Act, 28 U.S.C. § 201 et seq., against that restaurant, plus two other restaurants owned by the same people. But Mr. Huang has not plausibly pled that the three restaurants form a single integrated enterprise, such that the other two restaurants can be held liable for the violations by the restaurant that actually employed him. Nor has Mr. Huang plausibly pled that Anna Chen, one of the restaurants' owners, actually supervised him. The Court thus dismisses these two other restaurants and Ms. Chen from this suit, but without prejudice to Mr. Huang seeking leave to file an amended complaint.
Ye Ming Huang worked as a chef at Bai Wei, a restaurant operated by Sakura Mandarin Inc. He worked 70 hours a week and made about $4, 000 per month. He was never given an hourly pay rate, nor told of tip deductions towards his wages. And he never received a pay stub in Chinese, his native language.
To recover for these purported Fair Labor Standards Act (“FLSA”) violations, Mr. Huang has sued Bai Wei its owner Jack Chen, and its manager Wen He Wang. He has also sued Jack Chen's wife, Anna Chen, who co-owns Bai Wei. And he has sued two other restaurants owned by the Chens: the bakery A La Mousse, operated by Dessert Pop Inc., and the restaurant Spice 28, operated by Chili Bamboo LLC.
Mr Huang never worked at A La Mousse or Spice 28. But, according to Mr. Huang, these three restaurants worked in concert. The restaurants shared some ingredients, supplies, and even products. For example, if a slice of cake is ordered for dessert at Bai Wei, an employee goes to A La Mousse to pick it up and brings it to the customer, and the cake appears on the bill at Bai Wei. One employee worked at Spice 28 before moving to Bai Wei. Another worked at Bai Wei before moving to A La Mousse. Employees at A La Mousse received daily meals made at Bai Wei. One time, when the power went out at Bai Wei, the employees went to Spice 28 for a free dinner.
Because Mr. Huang never worked at Spice 28 or A La Mousse, those restaurants have asserted that they are not Mr. Huang's employer and so cannot be held liable to him under the FLSA. Likewise, Arma Chen claims that she does not count as his employer because she never supervised him. All three have moved for judgment on the pleadings.
The plaintiff must set out in a complaint “a short and plain statement of [his] claim showing that [he] is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), complete with specific allegations of wrongdoing and “enough facts” to make his claim “plausible on its face, ” Bell All. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In his answer, the defendant must “admit or deny [these] allegations” and “state in short and plain terms its [affirmative] defenses.” Fed.R.Civ.P. 8(b)(1). Once these pleadings have been filed, if the defendant “is entitled to judgment as a matter of law” based on the facts and law laid out in the pleadings, the Court must grant judgment on the pleadings. Fed Cetera, LLC v. Nat'l Credit Servs., Inc., 938 F.3d 466, 469 n.7 (3d Cir. 2019) (internal quotation marks omitted). In assessing the pleadings, the Court takes the non-movant's well-pled factual allegations as true and draws all reasonable inferences in his favor. Id.
Under the FLSA, an employer may not underpay its employees. An employee is someone who “work[s], ” or does something in exchange for pay. 29 U.S.C. § 203(g). His employer is the one to benefit from this work. That includes both the entity that pays the paycheck and “any [other] person[s] acting directly or indirectly” in that entity's interest “in relation to an employee.” 29 U.S.C. § 203(d). The restaurants Spice 28 and A La Mousse and owner Anna Chen have all moved for judgment on the pleadings, asserting that they do not count as Mr. Huang's employer under the FLSA because they did not pay or supervise him or otherwise fall within the reach of the FLSA as to Mr. Huang. The Court grants their motion and dismisses them from the case without prejudice.
I. Mr. Huang has not plausibly pled that Bai Wei, Spice 28, and A La Mousse form a single integrated enterprise
For an employer to be liable for not paying someone, that person must have actually worked for the employer. Mr. Huang never worked at or received a paycheck from Spice 28 or A La Mousse. So, the two restaurants reason, they cannot count as Mr. Huang's employer. Mr. Huang counters that these two restaurants formed a single integrated enterprise with Bai Wei, such that these two restaurants should be held responsible for Bai Wei's violations. Though conceivably the three restaurants could be held liable on this enterprise theory, Mr. Huang has not plausibly pled that the three restaurants did act as a single integrated enterprise.
Under the FLSA, one employer typically cannot be held liable for the actions of another. Murray v. Miner, 74 F.3d 402, 404 (2d Cir. 1996); Frank v. U.S. West, Inc., 3 F.3d 1357, 1362 (10th Cir. 1993). Sometimes, however, a court must pierce the corporate veil to “prevent fraud illegality, or injustice, ” or to further “public policy.” Pearson v. Component Tech. Corp., 247 F.3d 471, 484 (3d Cir, 2001).
In the labor context, there is a particular type of veil-piercing for so-called single integrated enterprises, in which “nominally separate” employers count as “part of a single integrated enterprise so that, for all purposes, there is in fact only a single employer.” NLRB v. Browning-Ferris Indus, of Pa., Inc., 691 F.2d 1117, 1122 (3d Cir. 1982).
In such enterprises, the entities do not operate “at arm's length.” Pearson, 247 F.3d at 491. Their operations are so “integrated” that they function as a single unit. Browning-Ferris, 691 F.2d at 1121; accord NLRB v. Deena Artware, Inc., 361 U.S. 398, 402 (1960), One member's actions are “attributable” to the others. Engelhardt v. S.P. Richards Co., Inc., 4T1 F.3d 1, 4 n.2 (1st Cir. 2006). The members are separate entities in name only. Browning-Ferris, 691 F.2d at 1122.
In such an enterprise, the entities “are jointly and severally liable for remedying unfair labor practices committed by either of them.” Grane Health Care v. NLRB, 712 F.3d 145, 150 (3d Cir. 2013). In other words, the underpaid employee can sue both his nominal employer and its integrated affiliates in the enterprise. The goal, as with all veil-piercing, is to prevent the entities from using their “formally separate legal existencefs] as a shield against liability for [their] collective violations” of labor law. Martin v. Linear Eatery, Inc., 423 F.Supp.3d 432, 437 (E.D. Mich. 2019).
Though approving of this veil-piercing test in other labor contexts, the Court of Appeals for the Third Circuit has not yet applied this test to the FLSA to permit employees to hold liable companies that are not their nominal employer. At least one other court of appeals has permitted it, however. See Ash v. Anderson Merchandisers, LLC, 799 F.3d 957, 961 (8th Cir. 2015). District courts within the Third Circuit have too. See, e.g., Xiao v. Sichuan Gourmet LLC, No. 21-cv-482, 2022 WL 819096, at *9 (W.D. Pa. Mar. 18, 2022).[1] So have district courts across the country. See, e.g., Martin, 423 F.Supp.3d at 438- 40.[2] But one court of appeals and several district courts have ruled to the contrary. See Patel v. Wargo, 803 F.2d 632, 635-37 (11th Cir. 1986); Roman v. Gitapos Hl, Inc., 970 F.Supp.2d 407, 414-15 (D. Md. 2013).[3] This Court joins the first group as articulating the more compelling analysis and rules that employees may hold all the members of a single integrated enterprise accountable for the FLSA violations of a single member. But, of course, the particular facts of the case must merit it.
The FLSA operates against the backdrop of corporate law, including the longstanding doctrine of veil-piercing. See Dole Food Co. v. Patrickson, 538 U.S. 468, 475-76 (2003); First Nat'l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 629 (1983). The single-integrated-enterprise test is simply a veil-piercing test designed for labor disputes.
Traditional veil-piercing focuses on disrespect for the nominal corporate form, as demonstrated through inadequate capitalization, or a failure to hold board meetings, or commingling of funds, or common decision-makers, or a non-payment of dividends. 1 William Fletcher, Cyclopedia of the Law of Corporations § 41 (Sept. 2021). But this focus on the corporate form carries less weight in the labor and employment context, which cares far more about common management and shared employment policies. Reflecting this, the single-integrated-enterprise test shifts the focus for veil-piercing from “corporate formalities” to the “economic realities” of employment. Pearson, 247 F.3d at 486. It asks not how the companies are structured but how they acted with respect to their employees. Id. For that reason, courts have used the test in many labor and employment contexts. See, e.g., Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers, Gen. Truck Drivers, Off, Food & Warehouse Local 952 v. Am. Delivery Serv. Co., 50 F.3d 770, 776 (9th Cir. 1995) (Labor Management Relations Act); Trevino v. Celanese Corp., 701 F.2d 397, 405 (5th Cir. 1983) (Title VII); York v. Tenn. Crushed Stone Ass'n, 684 F.2d 360, 362 (6th Cir. 1982) (ADEA); see also 29 C.F.R. § 825.104 (FMLA).
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