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FILED: NEW YORK COUNTY CLERK 03/20/2015 04:15 PM INDEX NO. 160993/2014
NYSCEF DOC. NO. 15 RECEIVED NYSCEF: 03/20/2015
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
Index No. 160993/2014
xxxxxxxx xxxx AND STAR JADA RIVERA,
on behalf of themselves and a class of similarly
situated employees,
Plaintiffs,
-against-
HORNBLOWER NEW YORK, LLC;
HORNBLOWER YACHTS, INC.; HORNBLOWER
CRUISES & EVENTS; TERRY MACRAE ; and any
other related entities,
Defendants.
PLAINTIFFS’ MEMORANDUM OF LAW IN OPPOSITION TO
DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT
Lloyd R. Ambinder
Suzanne Leeds Klein
VIRGINIA & AMBINDER, LLP
40 Broad St, 7th Floor
New York, New York 10004
(212) 943-9080
lambinder@vandallp.com
Jeffrey K. Brown
Michael A. Tompkins
LEEDS BROWN LAW, P.C.
One Old Country Road, Suite 347
Carle Place, NY 11514
(516) 873-9550
jbrown@leedsbrownlaw.com
Attorneys for Plaintiffs and Putative Class
TABLE OF CONTENTS
TABLE OF AUTHORITIES……………………………………………………………………..iii
PRELIMINARY STATEMENT………………………………………………………………….1
ARGUMENT
Legal Standard………………………………………………………………………………...2
I. Plaintiffs Have Sufficiently Pled an Employment Relationship With Hornblower………3
II. Plaintiffs Have Sufficiently Pled That Individual Defendant Terry MacRae Is An
Employer………………………………………………………………………………6
III. Defendants’ Scant Documentary Evidence Does not Undermine Plaintiffs’ Labor Law
§196(d) Allegations…………………………………………………………………...8
IV. Hornblower Yachts, LLC Should Remain A Defendant In This Action………………...11
V. Plaintiffs Request Permission to Amend the Complaint in the Alternative……………...12
CONCLUSION…………………………………………………………………………………..13
ii
TABLE OF AUTHORITIES
CASES PAGE
ABN Amro Bank, N.V. v. MBIA Inc.,
17 N.Y.3d 208 (2011)……………………………………………………………………………..2
Addison v. Reitman Blacktop, Inc.,
283 F.R.D. 74, 84 (E.D.N.Y. 2011)……………………………………………………………….5
Andux v. Woodbury Auto Park, Inc.,
30 A.D.3d 362 (2d Dept. 2006)…………………………………………………………………...8
Bermudez v. Ruiz,
185 A.D.2d 212 (1st Dept. 1992)…………………………………………………………………..5
Berrios v. Nicholas Zito Racing Stable, Inc.,
849 F. Supp. 2d 372 (E.D.N.Y. 2012)…………………………………………………………….5
Bonito v. Avalon Partners, Inc.,
106 A.D. 3d 625 (1st Dept. 2013)……………………………………………………………….6-8
Bynog v. Cipriani Group,
1 N.Y. 3d 193 (2003)…………………………………………………………………………...3, 5
Carrion v. Orbit Messenger, Inc.,
192 A.D.2d 366 (1st Dept. 1993)…………………………………………………………………..5
Connor v. Pier Sixty, LLC,
23 Misc. 3d 435 (New York Sup. Ct. 2009)………………………………………………...passim
Cordero v. New York Inst. of Tech.,
2013 U.S. Dist. LEXIS 87655 (E.D.N.Y. June 20, 2013)………………………………………...2
Devlin v. City of New York,
254 A.D.2d 16 (1st Dept. 1998)……………………………………………………………………5
Donetto v. S.A.R.L. De Gestion Pierre Cardin,
3 Misc. 3d 1106(A), 2004 N.Y. Misc. LEXIS 643 (N.Y. Sup. Ct. May 4, 2004)……………….11
Edelman v. Taittinger,
298 A.D.2d 301 (1st Dept. 2002)…………………………………………………………………12
HBK Master Fund L.P. v. Troika Dialog USA, Inc.,
85 A.D.3d 665 (1st Dept. 2011)…………………………………………………………………..12
iii
Hernandez v. Habana Room, Inc.,
2012 WL 423355 (S.D.N.Y. Feb. 9, 2012)………………………………………………………..5
Leibowitz v. Impressive Homes, Inc.,
43 A.D.3d 1003 (N.Y. App. Div. 2d Dep't 2007)…………………………………………………9
Martin v. Restaurant Assoc. Events Corp.,
35 Misc. 3d 215 (Westchester Cty. Sup. Ct. 2012)…………………………………………2, 8, 10
Matter of Hornblower Yachts, LLC v. Harvey,
121 A.D.3d 1513 (4th Dept. 2014)……………………………………………………………….12
Matter of Yick Wing Chan v. New York Indus. Bd. of Appeals,
120 A.D.3d 1120 (1st Dept. 2014)…………………………………………………………………7
McGivney v Union Turnpike Rest. LLC,
2012 N.Y. Misc. LEXIS 1932 (N.Y. Sup. Ct. Apr. 6, 2012)…………………………………….10
Picard v. Bigsbee Enters., Inc.,
40 Misc. 3d 1240(A), 2013 N.Y. Misc. LEXIS 4030 (N.Y. Sup. Ct. 2013)……………………7-8
Renzer v. D.F. White, Inc.,
267 A.D.2d 443 (2d Dept. 1999)………………………………………………………………….8
Samiento v. World Yacht Inc.,
10 N.Y.3d 70 (2008)…………………………………………………………………………1, 8, 9
Selinger v. GF Health Prods.,
23 Misc. 3d 113(A), 2009 N.Y. Misc. LEXIS 879 (Sup. Ct. N.Y. March 5, 2009)………………7
STATUTES
New York Labor Law § 196-d………………………………………………………………passim
iv
PRELIMINARY STATEMENT
Named Plaintiffs xxxxxxxx xxxx and Star Jada Rivera, for themselves and on behalf of a
proposed class of similarly situated employees (collectively “Plaintiffs”), by their attorneys
Virginia & Ambinder, L.L.P., and Leeds Brown Law, P.C., submit this Memorandum of Law in
opposition to the motion of Defendants Hornblower New York, LLC, Hornblower Yachts, LLC,
Hornblower Cruises & Events and Terry Macrae (hereinafter collectively as “Hornblower” or
“Defendants”) seeking an order dismissing Plaintiffs’ Complaint for failure to state a claim under
CPLR §§ 3211(a)(1), (7) and (8). This is an action to recover unpaid gratuities pursuant to New
York Labor Law (“NYLL”) Article 6 § 196-d. Contrary to Defendants’ contentions, Plaintiffs’
well-pled Complaint should withstand dismissal.
First, Defendants contend that the Named Plaintiffs were never employees of Hornblower,
even though the Complaint explicitly pleads facts alleging an employment relationship. It is well-
established that a determination of employee status would be premature and inappropriate at this
pre-discovery stage of the litigation. Connor v. Pier Sixty, LLC, 23 Misc. 3d 435, 436 (New York
Sup. Ct. 2009). [Point I, below]. Likewise, an assessment of Individual Defendant Terry Macrae’s
employer status would be premature at this juncture. [Point II, below].
Next, Defendants aver that Plaintiffs’ well-pled NYLL § 196-d allegations should be
dismissed based on their production of two, unsigned contracts, purportedly showing that no
violation occurred. This scant documentary “evidence” certainly will not shield Defendants from
liability for a potential class period spanning six years, encompassing thousands of catered
events— nor does such evidence even address the “reasonable patron standard” which is required
to prove or disprove claims under § 196-d. See Samiento v. World Yacht, 10 N.Y.3d 70, 80-81
(2008). [Point III, below]. Finally, dismissal of Hornblower Yachts, LLC would be premature at
this stage without exploration into its relationship with the New York entities. [Point IV].
As set forth in detail below, Plaintiffs’ Complaint clearly proffers specific factual
allegations more than sufficient to satisfy the liberal pleading requirements.
ARGUMENT
Legal Standard
On a motion to dismiss, “Courts must accept the facts as alleged in the complaint as true,
accord plaintiffs the benefit of every possible favorable inference, and determine only whether the
facts as alleged fit within any cognizable legal theory.” ABN Amro Bank, N.V. v. MBIA Inc., 17
N.Y.3d 208, 227 (2011) (internal punctuation omitted). “The pleading of specific facts is not
required; rather a complaint need only give the defendant ‘fair notice of what the . . . claim is and
the grounds upon which itrests.’” Cordero v. New York Inst. of Tech., 2013 U.S. Dist. LEXIS
87655 (E.D.N.Y. June 20, 2013) (quoting Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 2200,
167 L.Ed.2d 1081 (2007)).
Plaintiffs are not required “to submit evidence in support of the allegations contained in
their pleadings.” Connor v. Pier Sixty, LLC, 23 Misc. 3d at 437 (citing Rovello v. Orofino Realty
Co., 40 NY2d 633, 635 (1976)). A complaint will withstand dismissal “[i]f from the four corners
of the complaint factual allegations are discerned which, taken together, manifest any cause of
action cognizable at law” Martin v. Restaurant Assoc. Events Corp., 35 Misc. 3d 215 (Westchester
Cty. Sup. Ct. 2012) (citing 511 West 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144,
152 (2002); Cooper, 242 Ad2d at 360). “[A]ccepting as true the factual averments of the
complaint”, Plaintiffs amply satisfy this low pleading standard. Martin, at 220.
2
I. Plaintiffs Have Sufficiently Pled an Employment Relationship With
Hornblower
Defendants’ main argument for dismissal is that Named Plaintiffs xxxx and Rivera were
never employees of Hornblower because of their affiliation with staffing agencies. [Def. Brief, pg.
6-7]. In determining whether an employment relationship exists under the New York Labor Law,
the “critical inquiry…pertains to the degree of control exercised by the putative employer over the
results produced...” Bynog v. Cipriani Group, 1 N.Y. 3d 193, 198 (2003). The New York Court of
Appeals has identified several factors relevant to assessing the degree of control, such as whether
the worker (1) worked at his own convenience; (2) was free to engage in other employment; (3)
received fringe benefits from the putative employer; (4) was on the putative employer’s payroll
and (5) was on a fixed schedule.” Bynog, at 198. A determination of whether a worker is considered
an “employee” requires analysis of all of these relevant factors, and is thus premature at this
pleading stage. Connor, 23 Misc. 3d at 436. Contrary to Defendants’ position, “[t]he extent of this
control is a matter which should be explored in discovery and is not an issue which is amenable
to” dismissal on the pleadings. Connor, at 437.
Plaintiffs’ Complaint more than meets the threshold requirements to plead an employment
relationship with Hornblower. Plaintiffs explicitly allege that Hornblower is an “employer” within
the meaning contemplated pursuant to the New York Labor Law, and that they seek to recover
unlawfully retained gratuities on behalf of themselves and other similarly situated persons
employed by Hornblower. [See e.g. Def. Ex. I,Complaint, ¶¶ 1, 23, 28, 45-49]. Demonstrating
control indicative of an employment relationship, Plaintiffs allege that the CEO of the Defendant
entities, Individual Defendant Terry Macrae, supervised and exercised control over their working
conditions. [Def. Ex. I, Complaint, ¶ 41].
3
Directly on point with this action is Connor v. Pier Sixty, LLC, 23 Misc. 3d 435, where the
plaintiffs obtained temporary employment at a catering hall through a staffing agency. In Connor,
the court rejected the very same argument Defendants here make—that pre-answer dismissal is
warranted because the plaintiff was a temporary employee. The court denied the defendant’s
motion to dismiss on the basis that employee status is a factual inquiry to be explored through
discovery. Id., at 436-347. As such, Defendants’ reliance on invoices from the staffing agencies
does not conclusively establish whether the Plaintiffs furnished labor to Hornblower in the legal
capacity of employees. [Def. Ex. F]. Nor is Defendants’ submission of Plaintiff xxxx’s cherry-
picked email communications dispositive of his employee status. [Def. Ex. E]. Further, the veracity
of the assertions proffered by Defendants in the Affidavit of Cameron Clark, Vice President and
General Manager of Hornblower New York, LLC, requires examination through deposition
testimony. Likewise, the length of Plaintiff xxxx’s employment and the circumstances
surrounding the events he worked should be addressed during discovery.1 The extent of
Hornblower’s supervision and control is clearly an issue that requires further exploration through
the discovery phase of the litigation. Hornblower’s purported documentary evidence does nothing
to resolve the claims in this lawsuit, and instead only raises issues to be investigated.
Notably, in Connor, when tested on summary judgment after the completion of discovery
the court ultimately denied the defendant’s motion, concluding that there were issues of fact in
dispute as to the plaintiffs’ status as employees. Connor v. Pier Sixty, LLC, 2010 N.Y. Misc.
LEXIS 5344, 5-6 (New York Sup. Ct. 2010) (Diamond, J.). Such a determination, however, would
clearly be premature at this stage. In fact, the First Department has repeatedly held that the issue
1
Likewise, the actual events worked by xxxx and Rivera is an issue to be explored through discovery, as plaintiffs
purport to have worked other events.
4
of employee status is not even amenable to summary disposition. See e.g. Devlin v. City of New
York, 254 A.D.2d 16, 17 (1st Dept. 1998) (“the resolution of that issue is for a jury”); Carrion v.
Orbit Messenger, Inc., 192 A.D.2d 366, 367 (1st Dept. 1993) (whether an agent or independent
contractor “is a question for the trier of fact”); Bermudez v. Ruiz, 185 A.D.2d 212, 213 (1st Dept.
1992) (employee status “is an ultimate fact to be determined from the evidence itself”) (quoting
Felice v. St. Agnes Hosp., 65 AD2d 388, 396 (2d Dept. 1978)). Federal courts have similarly held
that the issue of employer liability “is rarely suitable for summary judgment,” and thus even less
suitable for a motion to dismiss. Berrios v. Nicholas Zito Racing Stable, Inc., 849 F. Supp. 2d 372,
392 (E.D.N.Y. 2012). See also Hernandez v. Habana Room, Inc., 2012 WL 423355, at *3
(S.D.N.Y. Feb. 9, 2012) (“Whether the plaintiff will ultimately be able to...establish that the
individual defendants here had sufficient operational control to be considered ‘employers’ under
the FLSA and New York Labor Law is a matter to be determined on summary judgment or at
trial.”) “Thus, on a motion to dismiss . . . the relevant inquiry is whether a defendant has been put
‘on notice of the theory of employer liability.” Addison v. Reitman Blacktop, Inc., 283 F.R.D. 74,
84 (E.D.N.Y. 2011) (citing Fowler v. Scores Holding Co., Inc., 677 F.Supp.2d 673, 681 (S.D.N.Y.
2009). Here, Plaintiffs’ Complaint clearly notifies the Hornblower Defendants of the potential for
liability of unpaid gratuities brought by service employees.
Defendants’ heavy reliance on Bynog v. Cipriani Group, 1 N.Y. 3d 193, to support the
proposition that a temporary employee hired by a staffing agency is not entitled to the protections
of the New York Labor Law is misplaced. In Bynog the court was tasked with assessing the
standard on a motion for summary judgment, after the parties had engaged in discovery and
thoroughly explored the allegations. [Def. Brief, pg. 6-7]. Distinguishing the Bynog decision, the
court in Connor reasoned that “[t]he problem with the defendants’ motion is that it is brought as a
5
motion to dismiss for failure to state a claim of action…” Id., at 436.2 In fact, Defendants have not
“cited any case where such factual assessment has been made on a pre-answer motion to dismiss
for failure to state a cause of action.” Connor, at 436.
Based on the foregoing, Plaintiffs have certainly satisfied the pleading standard to allege
an employment relationship with Hornblower.
II. Plaintiffs Have Sufficiently Pled That Individual Defendant Terry MacRae Is
An Employer
Contrary to Defendants’ contentions, Plaintiffs’ allegations regarding the Individual
Defendant Terry MacRae’s liability as an employer should withstand dismissal [Def. Brief, pg. 9].
It is well-established that although there is no private right of action for Labor Law violations
against individuals acting solely as corporate officers, an individual acting as an employer under
Labor Law §190(3) can be held liable. Bonito v. Avalon Partners, Inc., 106 A.D. 3d 625, 625-626
(1st Dept. 2013) (internal citations omitted). Here, Plaintiffs’ Complaint clearly alleges that
MacRae should be held liable for wage violations as an employer, instead of in his capacity as a
corporate officer. See e.g. [Def. Ex. I, Complaint, ¶ 48 (“TERRY MACRAE is an employer, within
the meaning contemplated, pursuant to New York Labor Law Article 6 § 190(3) and the supporting
New York State Department of Labor Regulations.”)].
When assessing whether an individual may be held liable as an employer under the Labor
Law, “courts consider factors such as whether the individual exercises control of the day-to-day
operations of the business, including determination of the rate and method of payment of
2
Additionally, the Bynog court also addressed the “special employee doctrine” by citing Thompson v Grumman
Aerospace Corp., 78 N.Y.2d 553, 557 (1991), wherein “a person's categorization as a special employee is usually a
question of fact.” (citingIrwin v Klein, at 486-487; Wawrzonek v Central Hudson Gas & Elec. Corp., 276 NY 412,
419; Braxton v Mendelson, 233 NY 122).
6
employees” Picard v. Bigsbee Enters., Inc., 40 Misc. 3d 1240(A), 2013 N.Y. Misc. LEXIS 4030,
*8 (N.Y. Sup. Ct. 2013) (citing Bonito, 106 A.D.3d at 625). Allegations that an individual hired
and fired employees, supervised and controlled employee work schedules, determined the method
and rate of pay and kept employment records sufficiently satisfies the standard to allege that an
individual acted as an employer under New York law. See e.g. Picard, 2013 N.Y. Misc. LEXIS
4030 at *8 (motion to dismiss denied as to individual defendant because plaintiffs sufficiently pled
employer status with allegations similar to here); Bonito, 106 A.D. 3d at 626 (dismissal denied
where plaintiffs alleged individual defendant exercised control of “day-to-day operations”); see
also Matter of Yick Wing Chan v. New York Indus. Bd. of Appeals, 120 A.D.3d 1120, 1121 (1st
Dept. 2014) (individual qualified as employer because he tracked employee hours, instructed staff,
set hours, and “ke[pt] an eye” on workers).
Plaintiffs’ Complaint sufficiently meets the pleading standard to allege that MacRae should
be held liable in his capacity as an employer. Plaintiffs unequivocally state that Macrae “(i) had
the ability to hire and fire employees for the Defendant entities; (ii)supervised and controlled
employee work schedules or conditions of employment for the Defendant entities; (iii) determined
the rate and method of payment for Defendants’ employees; and (iv) maintained employment
records for Defendants.” [Def. Ex. I, Comp., ¶41].
In support of its position, Defendant relies solely on authority that is misplaced [Def. Brief,
pg. 9], as in those cases the plaintiffs sought liability by virtue of the individual defendant’s
position as a corporate officer, instead of as an employer as defined by the Labor Law. See e.g.
Andux v. Woodbury Auto Park, Inc., 30 A.D.3d 362, 363 (2d Dept. 2006) (liability sought “under
the doctrine of piercing the corporate veil”); Selinger v. GF Health Prods., 23 Misc. 3d 113(A),
2009 N.Y. Misc. LEXIS 879, **7 (Sup. Ct. N.Y. March 5, 2009) (shareholder cannot be held
7
personally liable for breaches of corporation); Renzer v. D.F. White, Inc., 267 A.D.2d 443, 444 (2d
Dept. 1999) (same).
Defendants fail to recognize that, as in Bonito v. Avalon Partners, Inc. and Picard v.
Bigsbee Enters., Inc., Plaintiffs’ claims against Macrae arise in his capacity as an employer.
Plaintiffs’ Complaint more than meets the pleading standard to allege employer liability, and
should thus withstand dismissal at this pre-discovery phase.
III. Defendants’ Scant Documentary Evidence Does not Undermine Plaintiffs’
Labor Law § 196(d) Allegations
Plaintiffs’ allegations clearly meet the pleading requirements for Labor Law § 196-d claims
as interpreted by the Court of Appeals in Samiento v. World Yacht Inc., 10 N.Y.3d 70, 80-81
(2008). Samiento held that employers may be liable where they “allowed their customers to
believe that the charges were in fact gratuities for their employees.” Samiento, 10 N.Y.3d at 81
(emphasis added). Here, Plaintiffs have alleged that: a) Defendants assessed a charge to its
customers; b) this charge was not remitted to the Plaintiffs; and c) as a result of Defendants’
inactions and customer documents, a reasonable customer would believe that the charge is a
gratuity. [Def. Ex. I, Complaint ¶¶ 2-6, 17, 30-35, 39]. Under the clear language of the Court of
Appeals’ decision, this is all that is required to state a claim under Labor Law § 196-d. See also
Martin v Restaurant Assoc. Events Corp., 106 A.D.3d 785, 786 (N.Y. App. Div. 2d Dep't 2013)
(denying motion to dismiss where the complaint alleged a mandatory charge was a gratuity
because, “among other reasons, customers reasonably believed that the service charge was a
gratuity, the defendants’ policies misled customers into believing that the service charge was a
gratuity, and the catering order forms and menus failed to notify customers that the service charge
was not a gratuity.”)
8
Plaintiffs have sufficiently alleged that Defendants imposed a mandatory charge purported
to be a gratuity. [See Def. Ex. I, Complaint ¶¶ 30-35]. Namely, Plaintiffs alleged that “Defendants
provided customers with other documents – such as menus, bills, and invoices – that conveyed a
‘service charge’ or ‘administrative charge’.” [Def. Ex. I, Complaint ¶ 31]. Plaintiffs also alleged
that “Defendants utilized the same standard forms for numerous events that contained a mandatory
Service Charge on it— without a disclaimer.” [Def. Ex. I, Complaint ¶ 33]. Plaintiffs further
alleged that as a result, “reasonable patrons would have understood the Service Charge to be in the
nature of a gratuity.” [Def., Ex. I, Complaint ¶ 34.]
To refute Plaintiffs’ well-pled allegations, Defendants submitted two unexecuted contracts
from events that Plaintiff Rivera worked. [See Def. Ex., G and H, respectively; Def. Brief, pg. 7-
8]. It is well-settled that dismissal of a complaint pursuant to CPLR § 3211 (a)(1) “based upon
documentary evidence is warranted ‘only if the documentary evidence submitted conclusively
establishes a defense to the asserted claims as a matter of law.’” Leibowitz v. Impressive Homes,
Inc., 43 A.D.3d 1003, 1004 (N.Y. App. Div. 2d Dep't 2007) (quoting Leon v. Martinez, 84 NY2d
83, 88, 638 NE2d 511 (1994)). Defendants fail to meet this onerous burden. Defendants’
submission of a mere two unsigned contracts does not conclusively resolve the issue of whether
service charges were improperly retained throughout the class period, dating back to November of
2008.3 [Def. Brief, pg. 7-8]. Defendants’ argument is not only wrong, but it purposefully evades
the actual standard of § 196-d claims under Samiento: what a reasonable patron understood he/she
paid and whether such charge was purported to be a gratuity. The standard is not based solely on
3
It should be noted that Defendants violated the Uniform Civil Rules of the Supreme Court, § 202.5 by filing papers
containing confidential information, namely, Plaintiff xxxx’s social security information. [Def. Ex. A]. Plaintiffs
request that this personal information be redacted or removed.
9
what language is included in the contract. Whether or not a reasonable customer would believe
charges imposed by Defendants were charges purported to be a gratuity “is dependent upon the
totality of all of the circumstances, including all of the statements made or not made by the
employer,” which would include statements made on all the various documents and forms used by
Defendants. Martin v Restaurant Assoc. Events Corp., 35 Misc. 3d 215, 225 (N.Y. Sup. Ct. 2012).
As noted by the Martin Court, “[t]his is obviously a fact intensive inquiry” and will clearly require
far more investigation beyond the limited documents submitted by Defendants. Id.4
Defendants’ “evidence” does not address the representations made to customers through
correspondence and other documents, and does not shed any light on what the reasonable patron
actually believed. Through discovery, Plaintiffs will have the opportunity to examine the complete
catering files, executed contracts, relevant correspondence with patrons, depose the key witnesses
responsible for relaying the service charge information to patrons, and assess whether patrons were
actually misled or formed a belief as to the nature of the charge. Although Defendants argue that
a reasonable customer would not believe such charges are gratuities, this is an argument on the
merits, and is not properly before the Court at this time.
Moreover, Plaintiffs brought this lawsuit as a class action on behalf of all similarly situated
workers. As such, the relevant evidence at issue spans six years and will cover thousands of
catered events. Defendants’ documentary evidence therefore “does not resolve the issues but
creates, or perhaps reflects, a question of fact” which prevents dismissal pursuant to CPLR § 3211
(a)(1). McGivney v Union Turnpike Rest. LLC, 2012 N.Y. Misc. LEXIS 1932 (N.Y. Sup. Ct. Apr.
6, 2012). Accordingly, Plaintiffs have adequately alleged a cause of action for unpaid gratuities
4
Likewise, Defendants’ submission of a ticket from one event Plaintiff xxxx worked does not resolve the service
charge issue, particularly in light of the fact that he alleges to have worked more events. [See e.g. Def. Ex. E].
10
under Labor Law § 196-d. The mere two contracts submitted by Defendants shed little light on
this issue of improperly retained gratuities, and instead creates issues of fact— only highlighting
the need for discovery.
IV. Hornblower Yachts, LLC Should Remain a Defendant in this Action
Defendants seek dismissal of the entity Hornblower Yachts, LLC, alleging that the state of
New York lacks jurisdiction over the California corporation pursuant to CPLR 302(a). [Def. Brief,
pg. 9]. Undermining this position, Plaintiffs allege Hornblower Yachts, LLC and Hornblower New
York, LLC are jointly liable as employers. [Ex. I, Complaint, ¶¶ 45-47].
Plaintiffs contend that Hornblower Yachts, LLC enforces uniform policies and procedures
with the other corporate entities, operating as joint employers. [Ex. I, Complaint ¶¶ 2-6; 45-47].
Plaintiffs further allege that the corporate entities utilized standardized forms to effectuate the
unlawful payroll scheme. [Complaint, ¶25]. Moreover, all of the corporate entities, including
Hornblower Yachts, LLC, are owned and operated by Defendant Terry Macrae. As such, the
entities are inextricably linked. See e.g. Donetto v. S.A.R.L. De Gestion Pierre Cardin, 3 Misc. 3d
1106(A), 787 N.Y.S.3d 677, 2004 N.Y. Misc. LEXIS 643 (N.Y. Sup. Ct. May 4, 2004) (New York
court exercised jurisdiction over parent French company for the plaintiffs’ employment
discrimination claims against subsidiary). At this pre-discovery phase, the Complaint “rais[es] an
issue as to whether [Hornblower Yachts, LLC and Hornblower New York, LLC] were in fact a
single employer subject to joint liability for employment-related acts.” Donetto, supra at *3 (citing
Yoder v. Novo Mediagroup, Inc., 2001 U.S. Dist. LEXIS 586 (S.D.N.Y.)). Further, Plaintiffs are
not in a position to know the complex relationship between the corporate entities, and thus require
investigation through discovery. “[A]t this juncture, plaintiffs should be allowed to learn whether
the complex corporate relationships involved the parents’ exercise of control over their
11
subsidiaries.” Edelman v. Taittinger, 298 A.D.2d 301, 302 (1st Dept. 2002). In light of the
irrefutably integrated nature of the corporate entities, Plaintiffs’ claims against Hornblower
Yachts, LLC are more than plausible.
Plaintiffs must be afforded the opportunity to examine whether Hornblower Yachts, LLC
has a New York presence. Based on the court’s decision in Matter of Hornblower Yachts, LLC v.
Harvey, 121 A.D.3d 1513 (4th Dept. 2014) (CPLR Article 78 proceeding brought regarding public
bidding of licenses to conduct boat tours of the Niagara River), Plaintiffs have reason to believe
that Hornblower Yachts, LLC does, in fact, conduct business in New York.
As such, this is clearly an issue that requires exploration through discovery. Plaintiffs have
made a “sufficient start” in demonstrating Hornblower Yachts, LLC conducts business in New
York “through their direct or indirect subsidiaries to warrant further discovery on the issue of
personal jurisdiction…” HBK Master Fund L.P. v. Troika Dialog USA, Inc., 85 A.D.3d 665, 666
(1st Dept. 2011) (dismissal denied and plaintiffs allowed to conduct discovery on whether Russian
parent corporation exercised control over subsidiary in New York to justify jurisdiction).
Dismissal at this pre-answer stage would be premature.
V. Plaintiffs Request Permission to Amend the Complaint in the Alternative
Plaintiffs have adequately pled a cause of action for unpaid gratuities pursuant to Labor
Law § 196(d). However, in the unlikely event this Court determines Plaintiffs’ pleadings are
deficient in some respect, Plaintiffs respectfully request an opportunity to amend the Complaint.
12
CONCLUSION
There can be no doubt that Plaintiffs’ Complaint states a valid cause of action for unpaid
gratuities pursuant to Labor Law § 196(d). Plaintiffs therefore respectfully request that
Defendants’ motion be denied in its entirely, together with such other and further relief as the
Court deems appropriate.
Date: March 20, 2015
New York, New York
VIRGINIA & AMBINDER, LLP
/s/ Lloyd R. Ambinder
Suzanne Leeds Klein
40 Broad Street, 7th Floor
New York, NY 10004
(212) 943-9080
and
Jeffrey K. Brown
Michael A. Tompkins
LEEDS BROWN LAW, P.C.
One Old Country Road, Suite 347
Carle Place, NY 11514
(516) 873-9550
Attorneys for Plaintiffs and Putative Class
To: KANE KESSLER, P.C.
Judith A. Stoll
1350 Avenue of the Americas
New York, New York 10019
(212) 519-5165
Attorneys for Defendants
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FILED: NEW YORK COUNTY CLERK 03/20/2015 04:15 PM INDEX NO. 160993/2014 NYSCEF DOC. NO. 15 RECEIVED NYSCEF: 03/20/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Index No. 160993/2014 xxxxxxxx xxxx AND STAR JADA RIVERA, on behalf of themselves and a class of similarly situated employees, Plaintiffs, -against- HORNBLOWER NEW YORK, LLC; HORNBLOWER YACHTS, INC.; HORNBLOWER CRUISES & EVENTS; TERRY MACRAE ; and any other related entities, Defendants. PLAINTIFFS’ MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS THE COMPLAINT Lloyd R. Ambinder Suzanne Leeds Klein VIRGINIA & AMBINDER, LLP 40 Broad St, 7th Floor New York, New York 10004 (212) 943-9080 lambinder@vandallp.com Jeffrey K. Brown Michael A. Tompkins LEEDS BROWN LAW, P.C. One Old Country Road, Suite 347 Carle Place, NY 11514 (516) 873-9550 jbrown@leedsbrownlaw.com Attorneys for Plaintiffs and Putative Class TABLE OF CONTENTS TABLE OF AUTHORITIES……………………………………………………………………..iii PRELIMINARY STATEMENT………………………………………………………………….1 ARGUMENT Legal Standard………………………………………………………………………………...2 I. Plaintiffs Have Sufficiently Pled an Employment Relationship With Hornblower………3 II. Plaintiffs Have Sufficiently Pled That Individual Defendant Terry MacRae Is An Employer………………………………………………………………………………6 III. Defendants’ Scant Documentary Evidence Does not Undermine Plaintiffs’ Labor Law §196(d) Allegations…………………………………………………………………...8 IV. Hornblower Yachts, LLC Should Remain A Defendant In This Action………………...11 V. Plaintiffs Request Permission to Amend the Complaint in the Alternative……………...12 CONCLUSION…………………………………………………………………………………..13 ii TABLE OF AUTHORITIES CASES PAGE ABN Amro Bank, N.V. v. MBIA Inc., 17 N.Y.3d 208 (2011)……………………………………………………………………………..2 Addison v. Reitman Blacktop, Inc., 283 F.R.D. 74, 84 (E.D.N.Y. 2011)……………………………………………………………….5 Andux v. Woodbury Auto Park, Inc., 30 A.D.3d 362 (2d Dept. 2006)…………………………………………………………………...8 Bermudez v. Ruiz, 185 A.D.2d 212 (1st Dept. 1992)…………………………………………………………………..5 Berrios v. Nicholas Zito Racing Stable, Inc., 849 F. Supp. 2d 372 (E.D.N.Y. 2012)…………………………………………………………….5 Bonito v. Avalon Partners, Inc., 106 A.D. 3d 625 (1st Dept. 2013)……………………………………………………………….6-8 Bynog v. Cipriani Group, 1 N.Y. 3d 193 (2003)…………………………………………………………………………...3, 5 Carrion v. Orbit Messenger, Inc., 192 A.D.2d 366 (1st Dept. 1993)…………………………………………………………………..5 Connor v. Pier Sixty, LLC, 23 Misc. 3d 435 (New York Sup. Ct. 2009)………………………………………………...passim Cordero v. New York Inst. of Tech., 2013 U.S. Dist. LEXIS 87655 (E.D.N.Y. June 20, 2013)………………………………………...2 Devlin v. City of New York, 254 A.D.2d 16 (1st Dept. 1998)……………………………………………………………………5 Donetto v. S.A.R.L. De Gestion Pierre Cardin, 3 Misc. 3d 1106(A), 2004 N.Y. Misc. LEXIS 643 (N.Y. Sup. Ct. May 4, 2004)……………….11 Edelman v. Taittinger, 298 A.D.2d 301 (1st Dept. 2002)…………………………………………………………………12 HBK Master Fund L.P. v. Troika Dialog USA, Inc., 85 A.D.3d 665 (1st Dept. 2011)…………………………………………………………………..12 iii Hernandez v. Habana Room, Inc., 2012 WL 423355 (S.D.N.Y. Feb. 9, 2012)………………………………………………………..5 Leibowitz v. Impressive Homes, Inc., 43 A.D.3d 1003 (N.Y. App. Div. 2d Dep't 2007)…………………………………………………9 Martin v. Restaurant Assoc. Events Corp., 35 Misc. 3d 215 (Westchester Cty. Sup. Ct. 2012)…………………………………………2, 8, 10 Matter of Hornblower Yachts, LLC v. Harvey, 121 A.D.3d 1513 (4th Dept. 2014)……………………………………………………………….12 Matter of Yick Wing Chan v. New York Indus. Bd. of Appeals, 120 A.D.3d 1120 (1st Dept. 2014)…………………………………………………………………7 McGivney v Union Turnpike Rest. LLC, 2012 N.Y. Misc. LEXIS 1932 (N.Y. Sup. Ct. Apr. 6, 2012)…………………………………….10 Picard v. Bigsbee Enters., Inc., 40 Misc. 3d 1240(A), 2013 N.Y. Misc. LEXIS 4030 (N.Y. Sup. Ct. 2013)……………………7-8 Renzer v. D.F. White, Inc., 267 A.D.2d 443 (2d Dept. 1999)………………………………………………………………….8 Samiento v. World Yacht Inc., 10 N.Y.3d 70 (2008)…………………………………………………………………………1, 8, 9 Selinger v. GF Health Prods., 23 Misc. 3d 113(A), 2009 N.Y. Misc. LEXIS 879 (Sup. Ct. N.Y. March 5, 2009)………………7 STATUTES New York Labor Law § 196-d………………………………………………………………passim iv PRELIMINARY STATEMENT Named Plaintiffs xxxxxxxx xxxx and Star Jada Rivera, for themselves and on behalf of a proposed class of similarly situated employees (collectively “Plaintiffs”), by their attorneys Virginia & Ambinder, L.L.P., and Leeds Brown Law, P.C., submit this Memorandum of Law in opposition to the motion of Defendants Hornblower New York, LLC, Hornblower Yachts, LLC, Hornblower Cruises & Events and Terry Macrae (hereinafter collectively as “Hornblower” or “Defendants”) seeking an order dismissing Plaintiffs’ Complaint for failure to state a claim under CPLR §§ 3211(a)(1), (7) and (8). This is an action to recover unpaid gratuities pursuant to New York Labor Law (“NYLL”) Article 6 § 196-d. Contrary to Defendants’ contentions, Plaintiffs’ well-pled Complaint should withstand dismissal. First, Defendants contend that the Named Plaintiffs were never employees of Hornblower, even though the Complaint explicitly pleads facts alleging an employment relationship. It is well- established that a determination of employee status would be premature and inappropriate at this pre-discovery stage of the litigation. Connor v. Pier Sixty, LLC, 23 Misc. 3d 435, 436 (New York Sup. Ct. 2009). [Point I, below]. Likewise, an assessment of Individual Defendant Terry Macrae’s employer status would be premature at this juncture. [Point II, below]. Next, Defendants aver that Plaintiffs’ well-pled NYLL § 196-d allegations should be dismissed based on their production of two, unsigned contracts, purportedly showing that no violation occurred. This scant documentary “evidence” certainly will not shield Defendants from liability for a potential class period spanning six years, encompassing thousands of catered events— nor does such evidence even address the “reasonable patron standard” which is required to prove or disprove claims under § 196-d. See Samiento v. World Yacht, 10 N.Y.3d 70, 80-81 (2008). [Point III, below]. Finally, dismissal of Hornblower Yachts, LLC would be premature at this stage without exploration into its relationship with the New York entities. [Point IV]. As set forth in detail below, Plaintiffs’ Complaint clearly proffers specific factual allegations more than sufficient to satisfy the liberal pleading requirements. ARGUMENT Legal Standard On a motion to dismiss, “Courts must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory.” ABN Amro Bank, N.V. v. MBIA Inc., 17 N.Y.3d 208, 227 (2011) (internal punctuation omitted). “The pleading of specific facts is not required; rather a complaint need only give the defendant ‘fair notice of what the . . . claim is and the grounds upon which itrests.’” Cordero v. New York Inst. of Tech., 2013 U.S. Dist. LEXIS 87655 (E.D.N.Y. June 20, 2013) (quoting Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007)). Plaintiffs are not required “to submit evidence in support of the allegations contained in their pleadings.” Connor v. Pier Sixty, LLC, 23 Misc. 3d at 437 (citing Rovello v. Orofino Realty Co., 40 NY2d 633, 635 (1976)). A complaint will withstand dismissal “[i]f from the four corners of the complaint factual allegations are discerned which, taken together, manifest any cause of action cognizable at law” Martin v. Restaurant Assoc. Events Corp., 35 Misc. 3d 215 (Westchester Cty. Sup. Ct. 2012) (citing 511 West 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 152 (2002); Cooper, 242 Ad2d at 360). “[A]ccepting as true the factual averments of the complaint”, Plaintiffs amply satisfy this low pleading standard. Martin, at 220. 2 I. Plaintiffs Have Sufficiently Pled an Employment Relationship With Hornblower Defendants’ main argument for dismissal is that Named Plaintiffs xxxx and Rivera were never employees of Hornblower because of their affiliation with staffing agencies. [Def. Brief, pg. 6-7]. In determining whether an employment relationship exists under the New York Labor Law, the “critical inquiry…pertains to the degree of control exercised by the putative employer over the results produced...” Bynog v. Cipriani Group, 1 N.Y. 3d 193, 198 (2003). The New York Court of Appeals has identified several factors relevant to assessing the degree of control, such as whether the worker (1) worked at his own convenience; (2) was free to engage in other employment; (3) received fringe benefits from the putative employer; (4) was on the putative employer’s payroll and (5) was on a fixed schedule.” Bynog, at 198. A determination of whether a worker is considered an “employee” requires analysis of all of these relevant factors, and is thus premature at this pleading stage. Connor, 23 Misc. 3d at 436. Contrary to Defendants’ position, “[t]he extent of this control is a matter which should be explored in discovery and is not an issue which is amenable to” dismissal on the pleadings. Connor, at 437. Plaintiffs’ Complaint more than meets the threshold requirements to plead an employment relationship with Hornblower. Plaintiffs explicitly allege that Hornblower is an “employer” within the meaning contemplated pursuant to the New York Labor Law, and that they seek to recover unlawfully retained gratuities on behalf of themselves and other similarly situated persons employed by Hornblower. [See e.g. Def. Ex. I,Complaint, ¶¶ 1, 23, 28, 45-49]. Demonstrating control indicative of an employment relationship, Plaintiffs allege that the CEO of the Defendant entities, Individual Defendant Terry Macrae, supervised and exercised control over their working conditions. [Def. Ex. I, Complaint, ¶ 41]. 3 Directly on point with this action is Connor v. Pier Sixty, LLC, 23 Misc. 3d 435, where the plaintiffs obtained temporary employment at a catering hall through a staffing agency. In Connor, the court rejected the very same argument Defendants here make—that pre-answer dismissal is warranted because the plaintiff was a temporary employee. The court denied the defendant’s motion to dismiss on the basis that employee status is a factual inquiry to be explored through discovery. Id., at 436-347. As such, Defendants’ reliance on invoices from the staffing agencies does not conclusively establish whether the Plaintiffs furnished labor to Hornblower in the legal capacity of employees. [Def. Ex. F]. Nor is Defendants’ submission of Plaintiff xxxx’s cherry- picked email communications dispositive of his employee status. [Def. Ex. E]. Further, the veracity of the assertions proffered by Defendants in the Affidavit of Cameron Clark, Vice President and General Manager of Hornblower New York, LLC, requires examination through deposition testimony. Likewise, the length of Plaintiff xxxx’s employment and the circumstances surrounding the events he worked should be addressed during discovery.1 The extent of Hornblower’s supervision and control is clearly an issue that requires further exploration through the discovery phase of the litigation. Hornblower’s purported documentary evidence does nothing to resolve the claims in this lawsuit, and instead only raises issues to be investigated. Notably, in Connor, when tested on summary judgment after the completion of discovery the court ultimately denied the defendant’s motion, concluding that there were issues of fact in dispute as to the plaintiffs’ status as employees. Connor v. Pier Sixty, LLC, 2010 N.Y. Misc. LEXIS 5344, 5-6 (New York Sup. Ct. 2010) (Diamond, J.). Such a determination, however, would clearly be premature at this stage. In fact, the First Department has repeatedly held that the issue 1 Likewise, the actual events worked by xxxx and Rivera is an issue to be explored through discovery, as plaintiffs purport to have worked other events. 4 of employee status is not even amenable to summary disposition. See e.g. Devlin v. City of New York, 254 A.D.2d 16, 17 (1st Dept. 1998) (“the resolution of that issue is for a jury”); Carrion v. Orbit Messenger, Inc., 192 A.D.2d 366, 367 (1st Dept. 1993) (whether an agent or independent contractor “is a question for the trier of fact”); Bermudez v. Ruiz, 185 A.D.2d 212, 213 (1st Dept. 1992) (employee status “is an ultimate fact to be determined from the evidence itself”) (quoting Felice v. St. Agnes Hosp., 65 AD2d 388, 396 (2d Dept. 1978)). Federal courts have similarly held that the issue of employer liability “is rarely suitable for summary judgment,” and thus even less suitable for a motion to dismiss. Berrios v. Nicholas Zito Racing Stable, Inc., 849 F. Supp. 2d 372, 392 (E.D.N.Y. 2012). See also Hernandez v. Habana Room, Inc., 2012 WL 423355, at *3 (S.D.N.Y. Feb. 9, 2012) (“Whether the plaintiff will ultimately be able to...establish that the individual defendants here had sufficient operational control to be considered ‘employers’ under the FLSA and New York Labor Law is a matter to be determined on summary judgment or at trial.”) “Thus, on a motion to dismiss . . . the relevant inquiry is whether a defendant has been put ‘on notice of the theory of employer liability.” Addison v. Reitman Blacktop, Inc., 283 F.R.D. 74, 84 (E.D.N.Y. 2011) (citing Fowler v. Scores Holding Co., Inc., 677 F.Supp.2d 673, 681 (S.D.N.Y. 2009). Here, Plaintiffs’ Complaint clearly notifies the Hornblower Defendants of the potential for liability of unpaid gratuities brought by service employees. Defendants’ heavy reliance on Bynog v. Cipriani Group, 1 N.Y. 3d 193, to support the proposition that a temporary employee hired by a staffing agency is not entitled to the protections of the New York Labor Law is misplaced. In Bynog the court was tasked with assessing the standard on a motion for summary judgment, after the parties had engaged in discovery and thoroughly explored the allegations. [Def. Brief, pg. 6-7]. Distinguishing the Bynog decision, the court in Connor reasoned that “[t]he problem with the defendants’ motion is that it is brought as a 5 motion to dismiss for failure to state a claim of action…” Id., at 436.2 In fact, Defendants have not “cited any case where such factual assessment has been made on a pre-answer motion to dismiss for failure to state a cause of action.” Connor, at 436. Based on the foregoing, Plaintiffs have certainly satisfied the pleading standard to allege an employment relationship with Hornblower. II. Plaintiffs Have Sufficiently Pled That Individual Defendant Terry MacRae Is An Employer Contrary to Defendants’ contentions, Plaintiffs’ allegations regarding the Individual Defendant Terry MacRae’s liability as an employer should withstand dismissal [Def. Brief, pg. 9]. It is well-established that although there is no private right of action for Labor Law violations against individuals acting solely as corporate officers, an individual acting as an employer under Labor Law §190(3) can be held liable. Bonito v. Avalon Partners, Inc., 106 A.D. 3d 625, 625-626 (1st Dept. 2013) (internal citations omitted). Here, Plaintiffs’ Complaint clearly alleges that MacRae should be held liable for wage violations as an employer, instead of in his capacity as a corporate officer. See e.g. [Def. Ex. I, Complaint, ¶ 48 (“TERRY MACRAE is an employer, within the meaning contemplated, pursuant to New York Labor Law Article 6 § 190(3) and the supporting New York State Department of Labor Regulations.”)]. When assessing whether an individual may be held liable as an employer under the Labor Law, “courts consider factors such as whether the individual exercises control of the day-to-day operations of the business, including determination of the rate and method of payment of 2 Additionally, the Bynog court also addressed the “special employee doctrine” by citing Thompson v Grumman Aerospace Corp., 78 N.Y.2d 553, 557 (1991), wherein “a person's categorization as a special employee is usually a question of fact.” (citingIrwin v Klein, at 486-487; Wawrzonek v Central Hudson Gas & Elec. Corp., 276 NY 412, 419; Braxton v Mendelson, 233 NY 122). 6 employees” Picard v. Bigsbee Enters., Inc., 40 Misc. 3d 1240(A), 2013 N.Y. Misc. LEXIS 4030, *8 (N.Y. Sup. Ct. 2013) (citing Bonito, 106 A.D.3d at 625). Allegations that an individual hired and fired employees, supervised and controlled employee work schedules, determined the method and rate of pay and kept employment records sufficiently satisfies the standard to allege that an individual acted as an employer under New York law. See e.g. Picard, 2013 N.Y. Misc. LEXIS 4030 at *8 (motion to dismiss denied as to individual defendant because plaintiffs sufficiently pled employer status with allegations similar to here); Bonito, 106 A.D. 3d at 626 (dismissal denied where plaintiffs alleged individual defendant exercised control of “day-to-day operations”); see also Matter of Yick Wing Chan v. New York Indus. Bd. of Appeals, 120 A.D.3d 1120, 1121 (1st Dept. 2014) (individual qualified as employer because he tracked employee hours, instructed staff, set hours, and “ke[pt] an eye” on workers). Plaintiffs’ Complaint sufficiently meets the pleading standard to allege that MacRae should be held liable in his capacity as an employer. Plaintiffs unequivocally state that Macrae “(i) had the ability to hire and fire employees for the Defendant entities; (ii)supervised and controlled employee work schedules or conditions of employment for the Defendant entities; (iii) determined the rate and method of payment for Defendants’ employees; and (iv) maintained employment records for Defendants.” [Def. Ex. I, Comp., ¶41]. In support of its position, Defendant relies solely on authority that is misplaced [Def. Brief, pg. 9], as in those cases the plaintiffs sought liability by virtue of the individual defendant’s position as a corporate officer, instead of as an employer as defined by the Labor Law. See e.g. Andux v. Woodbury Auto Park, Inc., 30 A.D.3d 362, 363 (2d Dept. 2006) (liability sought “under the doctrine of piercing the corporate veil”); Selinger v. GF Health Prods., 23 Misc. 3d 113(A), 2009 N.Y. Misc. LEXIS 879, **7 (Sup. Ct. N.Y. March 5, 2009) (shareholder cannot be held 7 personally liable for breaches of corporation); Renzer v. D.F. White, Inc., 267 A.D.2d 443, 444 (2d Dept. 1999) (same). Defendants fail to recognize that, as in Bonito v. Avalon Partners, Inc. and Picard v. Bigsbee Enters., Inc., Plaintiffs’ claims against Macrae arise in his capacity as an employer. Plaintiffs’ Complaint more than meets the pleading standard to allege employer liability, and should thus withstand dismissal at this pre-discovery phase. III. Defendants’ Scant Documentary Evidence Does not Undermine Plaintiffs’ Labor Law § 196(d) Allegations Plaintiffs’ allegations clearly meet the pleading requirements for Labor Law § 196-d claims as interpreted by the Court of Appeals in Samiento v. World Yacht Inc., 10 N.Y.3d 70, 80-81 (2008). Samiento held that employers may be liable where they “allowed their customers to believe that the charges were in fact gratuities for their employees.” Samiento, 10 N.Y.3d at 81 (emphasis added). Here, Plaintiffs have alleged that: a) Defendants assessed a charge to its customers; b) this charge was not remitted to the Plaintiffs; and c) as a result of Defendants’ inactions and customer documents, a reasonable customer would believe that the charge is a gratuity. [Def. Ex. I, Complaint ¶¶ 2-6, 17, 30-35, 39]. Under the clear language of the Court of Appeals’ decision, this is all that is required to state a claim under Labor Law § 196-d. See also Martin v Restaurant Assoc. Events Corp., 106 A.D.3d 785, 786 (N.Y. App. Div. 2d Dep't 2013) (denying motion to dismiss where the complaint alleged a mandatory charge was a gratuity because, “among other reasons, customers reasonably believed that the service charge was a gratuity, the defendants’ policies misled customers into believing that the service charge was a gratuity, and the catering order forms and menus failed to notify customers that the service charge was not a gratuity.”) 8 Plaintiffs have sufficiently alleged that Defendants imposed a mandatory charge purported to be a gratuity. [See Def. Ex. I, Complaint ¶¶ 30-35]. Namely, Plaintiffs alleged that “Defendants provided customers with other documents – such as menus, bills, and invoices – that conveyed a ‘service charge’ or ‘administrative charge’.” [Def. Ex. I, Complaint ¶ 31]. Plaintiffs also alleged that “Defendants utilized the same standard forms for numerous events that contained a mandatory Service Charge on it— without a disclaimer.” [Def. Ex. I, Complaint ¶ 33]. Plaintiffs further alleged that as a result, “reasonable patrons would have understood the Service Charge to be in the nature of a gratuity.” [Def., Ex. I, Complaint ¶ 34.] To refute Plaintiffs’ well-pled allegations, Defendants submitted two unexecuted contracts from events that Plaintiff Rivera worked. [See Def. Ex., G and H, respectively; Def. Brief, pg. 7- 8]. It is well-settled that dismissal of a complaint pursuant to CPLR § 3211 (a)(1) “based upon documentary evidence is warranted ‘only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law.’” Leibowitz v. Impressive Homes, Inc., 43 A.D.3d 1003, 1004 (N.Y. App. Div. 2d Dep't 2007) (quoting Leon v. Martinez, 84 NY2d 83, 88, 638 NE2d 511 (1994)). Defendants fail to meet this onerous burden. Defendants’ submission of a mere two unsigned contracts does not conclusively resolve the issue of whether service charges were improperly retained throughout the class period, dating back to November of 2008.3 [Def. Brief, pg. 7-8]. Defendants’ argument is not only wrong, but it purposefully evades the actual standard of § 196-d claims under Samiento: what a reasonable patron understood he/she paid and whether such charge was purported to be a gratuity. The standard is not based solely on 3 It should be noted that Defendants violated the Uniform Civil Rules of the Supreme Court, § 202.5 by filing papers containing confidential information, namely, Plaintiff xxxx’s social security information. [Def. Ex. A]. Plaintiffs request that this personal information be redacted or removed. 9 what language is included in the contract. Whether or not a reasonable customer would believe charges imposed by Defendants were charges purported to be a gratuity “is dependent upon the totality of all of the circumstances, including all of the statements made or not made by the employer,” which would include statements made on all the various documents and forms used by Defendants. Martin v Restaurant Assoc. Events Corp., 35 Misc. 3d 215, 225 (N.Y. Sup. Ct. 2012). As noted by the Martin Court, “[t]his is obviously a fact intensive inquiry” and will clearly require far more investigation beyond the limited documents submitted by Defendants. Id.4 Defendants’ “evidence” does not address the representations made to customers through correspondence and other documents, and does not shed any light on what the reasonable patron actually believed. Through discovery, Plaintiffs will have the opportunity to examine the complete catering files, executed contracts, relevant correspondence with patrons, depose the key witnesses responsible for relaying the service charge information to patrons, and assess whether patrons were actually misled or formed a belief as to the nature of the charge. Although Defendants argue that a reasonable customer would not believe such charges are gratuities, this is an argument on the merits, and is not properly before the Court at this time. Moreover, Plaintiffs brought this lawsuit as a class action on behalf of all similarly situated workers. As such, the relevant evidence at issue spans six years and will cover thousands of catered events. Defendants’ documentary evidence therefore “does not resolve the issues but creates, or perhaps reflects, a question of fact” which prevents dismissal pursuant to CPLR § 3211 (a)(1). McGivney v Union Turnpike Rest. LLC, 2012 N.Y. Misc. LEXIS 1932 (N.Y. Sup. Ct. Apr. 6, 2012). Accordingly, Plaintiffs have adequately alleged a cause of action for unpaid gratuities 4 Likewise, Defendants’ submission of a ticket from one event Plaintiff xxxx worked does not resolve the service charge issue, particularly in light of the fact that he alleges to have worked more events. [See e.g. Def. Ex. E]. 10 under Labor Law § 196-d. The mere two contracts submitted by Defendants shed little light on this issue of improperly retained gratuities, and instead creates issues of fact— only highlighting the need for discovery. IV. Hornblower Yachts, LLC Should Remain a Defendant in this Action Defendants seek dismissal of the entity Hornblower Yachts, LLC, alleging that the state of New York lacks jurisdiction over the California corporation pursuant to CPLR 302(a). [Def. Brief, pg. 9]. Undermining this position, Plaintiffs allege Hornblower Yachts, LLC and Hornblower New York, LLC are jointly liable as employers. [Ex. I, Complaint, ¶¶ 45-47]. Plaintiffs contend that Hornblower Yachts, LLC enforces uniform policies and procedures with the other corporate entities, operating as joint employers. [Ex. I, Complaint ¶¶ 2-6; 45-47]. Plaintiffs further allege that the corporate entities utilized standardized forms to effectuate the unlawful payroll scheme. [Complaint, ¶25]. Moreover, all of the corporate entities, including Hornblower Yachts, LLC, are owned and operated by Defendant Terry Macrae. As such, the entities are inextricably linked. See e.g. Donetto v. S.A.R.L. De Gestion Pierre Cardin, 3 Misc. 3d 1106(A), 787 N.Y.S.3d 677, 2004 N.Y. Misc. LEXIS 643 (N.Y. Sup. Ct. May 4, 2004) (New York court exercised jurisdiction over parent French company for the plaintiffs’ employment discrimination claims against subsidiary). At this pre-discovery phase, the Complaint “rais[es] an issue as to whether [Hornblower Yachts, LLC and Hornblower New York, LLC] were in fact a single employer subject to joint liability for employment-related acts.” Donetto, supra at *3 (citing Yoder v. Novo Mediagroup, Inc., 2001 U.S. Dist. LEXIS 586 (S.D.N.Y.)). Further, Plaintiffs are not in a position to know the complex relationship between the corporate entities, and thus require investigation through discovery. “[A]t this juncture, plaintiffs should be allowed to learn whether the complex corporate relationships involved the parents’ exercise of control over their 11 subsidiaries.” Edelman v. Taittinger, 298 A.D.2d 301, 302 (1st Dept. 2002). In light of the irrefutably integrated nature of the corporate entities, Plaintiffs’ claims against Hornblower Yachts, LLC are more than plausible. Plaintiffs must be afforded the opportunity to examine whether Hornblower Yachts, LLC has a New York presence. Based on the court’s decision in Matter of Hornblower Yachts, LLC v. Harvey, 121 A.D.3d 1513 (4th Dept. 2014) (CPLR Article 78 proceeding brought regarding public bidding of licenses to conduct boat tours of the Niagara River), Plaintiffs have reason to believe that Hornblower Yachts, LLC does, in fact, conduct business in New York. As such, this is clearly an issue that requires exploration through discovery. Plaintiffs have made a “sufficient start” in demonstrating Hornblower Yachts, LLC conducts business in New York “through their direct or indirect subsidiaries to warrant further discovery on the issue of personal jurisdiction…” HBK Master Fund L.P. v. Troika Dialog USA, Inc., 85 A.D.3d 665, 666 (1st Dept. 2011) (dismissal denied and plaintiffs allowed to conduct discovery on whether Russian parent corporation exercised control over subsidiary in New York to justify jurisdiction). Dismissal at this pre-answer stage would be premature. V. Plaintiffs Request Permission to Amend the Complaint in the Alternative Plaintiffs have adequately pled a cause of action for unpaid gratuities pursuant to Labor Law § 196(d). However, in the unlikely event this Court determines Plaintiffs’ pleadings are deficient in some respect, Plaintiffs respectfully request an opportunity to amend the Complaint. 12 CONCLUSION There can be no doubt that Plaintiffs’ Complaint states a valid cause of action for unpaid gratuities pursuant to Labor Law § 196(d). Plaintiffs therefore respectfully request that Defendants’ motion be denied in its entirely, together with such other and further relief as the Court deems appropriate. Date: March 20, 2015 New York, New York VIRGINIA & AMBINDER, LLP /s/ Lloyd R. Ambinder Suzanne Leeds Klein 40 Broad Street, 7th Floor New York, NY 10004 (212) 943-9080 and Jeffrey K. Brown Michael A. Tompkins LEEDS BROWN LAW, P.C. One Old Country Road, Suite 347 Carle Place, NY 11514 (516) 873-9550 Attorneys for Plaintiffs and Putative Class To: KANE KESSLER, P.C. Judith A. Stoll 1350 Avenue of the Americas New York, New York 10019 (212) 519-5165 Attorneys for Defendants 13