Zhang v. Xyz Limousine, Inc.

• Decision Date: 15 March 2019
• Docket Number: CV 15-7440 (JS) (AKT)
• Parties: JIHUI ZHANG and XIDONG GAO, on behalf of themselves and others similarly situated, Plaintiffs, v. XYZ LIMOUSINE, INC. d/b/a XYZ Car; XYZ TWO WAY RADIO TAXI ASSOC., INC., d/b/a XYZ Car; XYZ TWO WAY RADIO SERVICE, INC., d/b/a XYZ CAR; and MOHAMED MOWAD, Defendants.
• Court: U.S. District Court — Eastern District of New York

JIHUI ZHANG and XIDONG GAO, on behalf of themselves and others similarly situated, Plaintiffs, v. XYZ LIMOUSINE, INC. d/b/a XYZ Car; XYZ TWO WAY RADIO TAXI ASSOC., INC.,d/b/a XYZ Car; XYZ TWO WAY RADIO SERVICE, INC., d/b/a XYZ CAR;and MOHAMED MOWAD, Defendants.

CV 15-7440 (JS) (AKT)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

March 15, 2019

REPORT AND RECOMMENDATION

A. KATHLEEN TOMLINSON, Magistrate Judge:

I. PRELIMINARY STATEMENT

Plaintiffs Jihui Zhang and Xidong Gao ("Plaintiffs") bring the instant action on behalf of themselves and others similarly situated, including Shenglin Liu and Luguang Tan ("Proposed Party Plaintiffs"), alleging violations of the Fair Labor Standards Act ("FLSA"), the New York State Labor Law ("NYLL"), the Compilations of Codes, Rules and Regulations of the State of New York ("NYCRR"), and the New York General Business Law ("New York GBL"). See Am. Compl. [DE 9]. Plaintiffs also assert claims for breach of implied contract and fraudulent filing of Internal Revenue Service ("IRS") returns under 26 U.S.C. § 7434. Id.

Plaintiffs allege that Defendants XYZ Limousine, Inc. d/b/a XYZ Car, XYZ Two Way Radio Taxi Assoc., Inc. d/b/a XYZ Car, XYZ Two Way Radio Service, Inc. d/b/a XYZ Car, and Mohamed Mowad (collectively, "Defendants") made unlawful deductions from Plaintiffs' pay in violation of the FLSA and NYLL; failed to pay Plaintiffs minimum wage, overtime, and spread of hours pay in violation of the FLSA, NYLL, and NYCRR; and failed to provide Plaintiffs with meal periods in violation of the NYLL. Plaintiffs further allege that Defendants breached an implied contract for reimbursement of Plaintiffs' vehicle costs and expenses; failed to maintain Plaintiffs' weekly payroll records as required by the NCYRR; and failed to provide Plaintiffs paystubs or time of hire wage notices as required by the NYLL.

Presently before the Court is Defendants' motion for summary judgment, pursuant to Federal Rule of Civil Procedure 56, which Judge Seybert referred to this Court for a Report and Recommendation as to whether the motion should be granted. Having considered the moving papers, the record evidence, and the applicable law, the Court respectfully recommends to Judge Seybert that Defendants' motion for summary judgment be GRANTED.

II. BACKGROUND

A. Factual Background

The material facts, drawn from the Complaint, the papers submitted with respect to the instant motion, and the parties' Local Civil Rule 56.1 Statements, are undisputed unless otherwise noted. In considering a motion for summary judgment, the Court construes the facts in the light most favorable to the party opposing the motion. Coastal Pipeline Prod. of New York v. Gonzales, No. 04 CIV. 8252, 2006 WL 473883, at *4 (S.D.N.Y. Feb. 28, 2006); see Beyer v. Cty. of Nassau, 524 F.3d 160, 163 (2d Cir. 2008); Capobianco v. New York, 422 F.3d 47, 50 (2d Cir. 2001).

1. XYZ and its Drivers

Plaintiffs and Proposed Party Plaintiffs formerly worked as drivers for a chauffeured ground transportation service, colloquially known as a "black radio car" service, operated by Defendant XYZ Two Way Radio Service, Inc. ("XYZ"), in the New York metropolitan area from its base in Brooklyn, New York. Defendants' Rule 56.1(a) Statement of UndisputedMaterial Facts ("Defs.' SOMF") ¶ 1. XYZ is comprised of wholly independent shareholders who own shares, or "radio rights," entitling the shareholder to drive one black radio car within XYZ's service. Id. ¶ 3. An XYZ shareholder can drive her vehicle utilizing her own radio, contract out or lease her radio rights to a third party driver, or allow her radio to sit dormant. Id. ¶ 4.

Plaintiffs and Proposed Party Plaintiffs are not XYZ shareholders. Id. ¶¶ 5, 7. To drive cars within XYZ's service, they obtained "For-Hire" licenses from the New York Taxi and Limousine Commission ("TLC") and leased radio rights from certain XYZ shareholders. Id. ¶¶ 6, 8, 9. Plaintiffs and Proposed Party Plaintiffs utilized XYZ radio rights and drove cars within XYZ's service between September 2013 and July 2014.¹ Id. ¶¶ 9-13. While driving for XYZ, Plaintiffs drove five-person vehicles and Proposed Party Plaintiffs drove seven-person vehicles. Id ¶¶ 14, 18, 24, 28. Neither Plaintiffs nor Proposed Party Plaintiffs were ever reimbursed or paid for their vehicle expenses. Id. ¶¶ 33-37. When Plaintiffs and Proposed Party Plaintiffs ceased driving for XYZ, they were each paid all amounts owed, in exchange for which they signed broadly-worded releases generally discharging XYZ from any liability. Id. ¶¶ 38, 39.

There is disagreement between the parties as to whether Plaintiffs were paid minimum wage while working as XYZ drivers. Defendants point to evidence in the record showing that Plaintiff Zhang was paid minimum wage at all relevant times. See id. ¶¶ 40-47. Although Plaintiff Gao states that he was paid below minimum wage during one pay period, he hasprovided no evidence, documentary or otherwise, to support that assertion. See id. Plaintiffs maintain that there is an issue of fact as to whether they were paid minimum wage after accounting for out-of-pocket vehicle expenses. See Pls.' CSMF ¶¶ 64-6. Plaintiffs submit, inter alia, a declaration signed by Plaintiff Zhang in which he states that he received multiple paychecks for $0.00 while driving for XYZ. See Declaration of Jihui Zhang ("Zhang Decl.") [DE 72] ¶ 28. Attached to Zhang's Declaration are check summaries for two checks made payable to Zhang in the amount of $0.00, dated June 18, 2014 and July 2, 2014 respectively. See Zhang Decl., Ex. A. Plaintiffs have provided no explanation for the check summaries or otherwise described what they detail. The summaries seem to account for 19% of one workweek, list various deductions, and include trips made between May 27, 2014 and June 20, 2014. Notably, the summaries fail to indicate hours worked. It is undisputed that Plaintiffs did not serve Defendants with any document requests in this action, nor did Plaintiffs produce any documents responsive to Defendants document demands. See Defs.' SOMF ¶ 46-47.

2. XYZ Operations

XYZ drivers chauffeur customers to different locations within New York City and surrounding areas according to GPS or customer instructions. See Defs.' SOMF ¶¶ 15, 16, 20, 21. XYZ drivers wear white shirts and black or dark pants,² receive customers through radio dispatch, and cannot be hailed on the street. See Pls.' CSMF ¶¶ 49, 56, 57. XYZ fares are flat [not metered], based on geographical zones, and are publicly available in a Rate Book, which is accessible at XYZ's official website. Id. ¶¶ 59, 61. XYZ drivers do not chauffeur customers onfixed or predetermined routes, nor do they shuttle passengers from fixed pick-up and drop-off locations under recurring contracts. See Defs.' SOMF ¶¶ 15-17, 20-22, 27-29, 31-32.

Although Plaintiffs assert — through declarations attached to their opposition papers — that XYZ communicated preferred or predetermined routes to drivers both through radio dispatch and the Rate Book, Plaintiffs admit explicitly in their deposition testimony that Defendants did not require them to drive predetermined or fixed routes and that they primarily relied on GPS or customer instructions. See Deposition Transcript of Zidong Gao ("Gao Dep. Tr."), annexed to Declaration of Thomas G. O'Brien ("O'Brien Decl.") as Ex. 1 at 13:22-14:5, 38:25-39:5; Deposition Transcript of Jihui Zhang ("Zhang Dep. Tr."), annexed to O'Brien Decl. as Ex. 2 at 36:18-25, 37:2-10. The limited declaration statements on which Plaintiffs rely in asserting that XYZ conveyed route instructions to drivers do not indicate that drivers were required to take predetermined or recommended routes. See Zhang Decl. ¶ 21. As such, the parties do not dispute that XYZ drivers do not chauffeur customers on fixed or predetermined routes.

With respect to XYZ's contract business, the parties dispute whether XYZ maintains contracts with third parties, located primarily in Manhattan, for reoccurring transportation. They also dispute whether business derived from contracts with third parties makes up a significant percentage of XYZ's overall business. While there is no mention of any such reoccurring transportation contracts in Plaintiffs' and Proposed Party Plaintiffs' deposition testimony, Plaintiffs assert in their declarations that Defendants have contracts for reoccurring transportation with firms, corporations, organizations, and/or other entities — mostly located in Manhattan — and that such contracts constitute a significant percentage of XYZ's overall business. See Pls.' CSMF ¶¶ 68-73. Plaintiffs further assert that contract orders are referred toas "voucher orders" and that non-contract individual customers are referred to as "cash orders." Id. ¶ 70.

Defendants deny Plaintiffs' allegations regarding the provision of reoccurring contract transportation. See Defs.' Response to Pls.' CSMF ¶¶ 68-73. Defendants argue that Plaintiffs (1) lack personal knowledge of any such contracts; (2) fail to establish any foundation that such contracts exist; and (3) base their allegations on hearsay and speculation contained in self-serving declarations attached to their opposition papers. Id. Further, Defendants underscore Plaintiffs' and Proposed Party Plaintiffs' deposition testimony to the contrary — that Plaintiffs and Proposed Party Plaintiffs almost always picked up and dropped off customers at different locations and were not required to pick up or drop off customers in any specific zones. See id. Defendants also deny Plaintiffs' distinction between contract and cash customers and assert that Plaintiffs fail to lay any foundation to support the purported distinction. Id. at ¶ 70.

B. Procedural Background

Plaintiffs filed the initial Complaint in this action on January 5, 2016, asserting fourteen causes of action for: violations of the FLSA, NYLL, and NYCRR; breach of implied contract for reimbursement of motor vehicle costs and expenses;...