ALVAREZ QUIZAR ROMUALDO BORIS ASARAEL HERNANDEZ LOPEZ v. GURU KRUPA 104 CORPORATION 104 DELI CORPORATION FAMILY GROCERY DELI JATIN PATEL NAJMA MOHAMED RAZA MOHAMED ABBASALI RAZA HABIB ALI (2023)

REPORT AND RECOMMENDATION

On September 11, 2019, Plaintiff Alvarez Quizar Romualdo (“Romualdo”) brought this action against a series of corporations and individuals which owned and operated two New York delis: Guru Krupa 104 Corporation (d/b/a 104 Deli) (“Guru Krupa”), M&Z Corporation (d/b/a Family Grocery & Deli) (“M&Z”), Jatin Patel (“Patel”), Najma Mohamed Raza (a/k/a Mohamed) (“Mohamed”), Abbasali Raza (“Raza”), and Habib H. Ali (“Ali” and collectively, “Defendants”), alleging violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201–219, and the New York Labor Law (“NYLL”), N.Y. Lab. Law §§ 160–199. (Compl. dated Sept. 11, 2019 (“Compl.”), Dkt. No. 1). On August 20, 2021, the Court approved a settlement between Romualdo and Plaintiff Boris Asarael Hernandez Lopez (“Lopez”) and Defendants Guru Krupa and Patel (the “Settling Defendants”). (Order dated Aug. 20, 2021). Both Plaintiffs proceeded to voluntarily dismiss their claims against Defendants Mohamed, Raza, and Ali. (Notice of Voluntary Dismissal dated Nov. 10, 2022, Dkt. No. 41; Notice of Voluntary Dismissal dated Dec. 14, 2022, Dkt. No. 46). On December 14, 2022, Romualdo moved for default judgment against the sole remaining Defendant, M&Z. (Mot. for Default J., Dkt. No. 44).¹ The Honorable Diane Gujarati referred the motion to the undersigned for a report and recommendation. (Order Referring Mot. dated Jan. 6, 2023). The briefing of the motion was completed on July 6, 2023.

Having filed a Complaint that broadly groups all parties together under the common rubric of “Defendants,” without differentiating the timeframe of their respective ownership or control over the two delis, or detailing the interrelationship between them, it is impossible to determine the scope of M&Z's liability. Furthermore, the Complaint appears to suggest that M&Z owned and operated a deli other than the one where Romualdo worked. These problems of proof are compounded by (a) the broad release in the settlement agreement exculpating one set of defendants, who apparently owned the deli where Romualdo did work; (b) the dismissal of individuals who could not be served; and (c) the haphazard and conclusory use of the labels “alter ego” and “joint employer,” which are used in a futile attempt to tie M&Z to the activities of another corporation. It may well be—and certainly because of M&Z's default—Romualdo suffered wage and hour violations, and M&Z bears some liability for those violations. But obtaining a default judgment requires more. The Court cannot grant an undefined default judgment without a specific claim, and certainly not a damages award without the requisite specificity.

For the reasons stated below, it is therefore respectfully recommended that the motion be denied without prejudice to renewal.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

M&Z is a corporation with its principal place of business at 10727 Atlantic Avenue, Jamaica, New York 11418, doing business as Family Grocery & Deli (hereinafter “Family Deli”). (Compl. ¶¶ 19, 21). Guru Krupa is a corporation with its principal place of business at 104-10 Atlantic Avenue, Ozone Park, New York 11416, doing business as 104 Deli (hereinafter “104 Deli”). (Id. ¶¶ 19–20). According to the Complaint, all of the four Individual Defendants—Patel, Mohamed, Raza, and Ali—are owners of both corporations—which operate as two delis. (Id. ¶¶ 19, 22–25). They each possess “operational control over” and “control significant functions of” the “Defendant Corporations.” (Id. ¶ 27). The Complaint does not allege when M&Z or Guru Krupa was formed or when any of the Individual Defendants obtained or sold their respective ownership interests, despite the fact—as the settlement between Plaintiffs and some of the parties, as discussed below, demonstrates—that the ownership interests of all the Defendants over the two delis was not co-extensive. And yet the Complaint also alleges that “Defendants” are “associated and joint employers” or, in the alternative, “constitute a single employer.” (Id. ¶¶ 28, 31). As for the Individual Defendants, they too are undifferentiated and are allegedly to be treated just like the corporate defendants: they operate the “Defendant Corporations” as alter egos of themselves, not as entities legally separate and apart from each other. (Id. ¶ 32).

Romualdo was employed by “Defendants” as a “grill man” from January 2018 to July 2019. (Compl. ¶¶ 16, 37–38). He alleges that on Mondays through Saturdays, he regularly began work at 104 Deli at approximately 5:00 to 5:30 A.M., and finished around 5:30 to 6:00 P.M., for a total of 72–78 hours per week. (Id. ¶ 42). For approximately four weeks during the course of his employment, in addition to those hours on Monday through Saturday, Romualdo also worked at 104 Deli on Sundays, from approximately 7:00 A.M. until 3:00 P.M. (Id. ¶ 43). Thus, during those four weeks, Romualdo worked a total of 80–86 hours per week. (Id.). In addition, during two weeks in April 2019, Romualdo alleges that he worked at 104 Deli from approximately 5:00 to 5:30 A.M. until 5:30 to 6:00 P.M. for five days per week, and he worked at Family Deli from 6:00 A.M. until 5:00 P.M. for one day per week—for a total of 71–76 hours in each of those two weeks. (Id. ¶ 44).

“Defendants” paid Romualdo a fixed salary of $650 per week throughout the course of his employment, (id. ¶ 46), except on five occasions he was paid $600 per week, and on three occasions he received no pay for the week. (Compl. ¶¶ 47–48). “Defendants” did not pay Romualdo overtime wages, (id. ¶¶ 49–50), and never permitted him to take breaks or meal periods. (Id. ¶ 51). In addition, Romualdo alleges that “Defendants” failed to follow various state notice and record-keeping requirements. (Id. ¶¶ 52–55).

The Complaint was filed on September 11, 2019. It alleges eight causes of action: (1) failure to pay minimum wages under FLSA; (2) failure to pay overtime compensation under FLSA; (3) failure to pay minimum wages under NYLL; (4) failure to pay overtime wages under NYLL; (5) failure to pay spread of hours compensation under NYLL; (6) failure to provide a wage notice under NYLL § 195(1); (7) failure to provide wage statements under NYLL § 195(3); and (8) failure to make timely payments under NYLL § 191. (Compl. ¶¶ 87–119).

Patel and Guru Krupa appeared through counsel on February 19, 2020. (See Notice of Appearance, Dkt. No. 13). The Court approved a settlement pursuant to Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015), between Plaintiffs and Defendants Guru Krupa and Patel on August 20, 2021, (Order dated Aug. 20, 2021), and the parties filed a stipulation of dismissal on September 10, 2021. (Stipulation of Dismissal, Dkt. No. 28). In exchange for a monetary sum of $36,000, Plaintiffs agreed to release all wage and hour claims against Guru Krupa and Patel. (Settlement Agreement & Release dated July 2, 2021 (“Settlement Agreement & Release”), Dkt. No. 23-1 §§ 1, 3).²

Defendant M&Z was served with a summons and the Complaint via the Office of the Secretary of State of New York on November 22, 2019. (Aff. of Service dated Nov. 22, 2019, Dkt. No. 10). Ali and Mohamed were served by leaving the documents with a person of suitable age and discretion at their place of business, and by mailing to the same address. (Affs. of Service dated Nov. 22, 2019, Dkt. Nos. 8, 11). Raza was not served.

These remaining Defendants—M&Z, Mohamed, Raza, and Ali—did not appear, answer, or otherwise defendant the lawsuit. As a result, Plaintiffs sought a certificate of default against each of them on September 3, 2021. (Req. for Certificate of Default, Dkt. No. 26). The Clerk of Court entered a default against M&Z, Mohamed, and Ali, (Entry of Default dated Nov. 15, 2021, Dkt. No. 31), but denied the request as to Raza because no affidavit of service was filed for him. (See Denial of Req. for Certificate of Default dated Nov. 16, 2021).

Romualdo moved for default judgment against M&Z, Mohamed, and Ali on January 13, 2022. (Mot. for Default J., Dkt. No. 35). The Court directed him to show cause why his motion should not be denied for failure to properly serve Mohamed and Ali with the summons and Complaint under Federal Rule 4(e) and N.Y. C.P.L.R. 308(2), and the motion papers in accordance with Local Civil Rule 55.2(c). (Order to Show Cause dated July 8, 2022, Dkt. No. 38). Romualdo withdrew the motion, (Letter dated July 22, 2022, Dkt. No. 39; Order dated July 23, 2022), and subsequently informed the Court he has been unable to locate current residential addresses for Mohamed, Ali, and Raza. (Letter dated Oct. 20, 2022, Dkt. No. 40). As such, Romualdo voluntarily dismissed his claims against them without prejudice on November 10, 2022. (Notice of Voluntary Dismissal, Dkt. No. 41).

Romualdo filed a motion for default judgment against the sole remaining Defendant, M&Z, on December 14, 2022. (Mot. for Default J., Dkt. No. 44). The Court directed him to submit a memorandum of law in support of the motion, in compliance with Local Rule 7.1, (Order dated June 23, 2023), which Romualdo filed on July 6, 2023. (See Mem. of Law in Supp. of Mot. for Default J., Dkt. No. 49).

The motion seeks damages for FLSA and NYLL violations occurring from January 2018 through January 14, 2019. (Decl. of Ramsha Ansari dated Dec. 14, 2022 (“Ansari Decl.”), Dkt. No. 45 ¶¶ 16–17, 71 & n.2). According to Romualdo, Guru Krupa and Patel purchased “the business” on January 14, 2019, and as such, the settlement between him and Patel and Guru Krupa only resolved claims for violations occurring after January 14, 2019. (Id.; Mot. for Settlement Approval dated July 9, 2021 (“Mot. for Settlement Approval”), Dkt. No. 23 at 2). For violations prior to that date, Romualdo here seeks recovery of: (1) $48,158.13 in unpaid wages and overtime, plus $48,158.13 in liquidated damages on these claims; (2) $3,828 for unpaid spread of hours, plus $3,828 in liquidated damages on this claim; (3) $18,553.44 in prejudgment interest on unpaid wages and overtime; (4) $1,528.74 in prejudgment interest on unpaid spread of hours; (5) $10,000 in penalties for wage notice and statement violations; and (6) $7,410.30 in attorney's fees and costs. (Ansari Decl. ¶¶ 35, 49, 52, 54, 58–59, 66).

DISCUSSION

Rule 55 of the Federal Rules of Civil Procedure establishes a two-step process for obtaining a default judgment. See Shariff v. Beach 90th St. Realty Corp., No. 11-CV-2551, 2013 WL 6835157, at *3 (E.D.N.Y. Dec. 20, 2013) (adopting report and recommendation). First, “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Fed. R. Civ. P. 55(a). Second, after default has been entered, and the defendant fails to appear or move to set aside the default under Rule 55(c), the Court may, on plaintiff's motion, enter a default judgment against that defendant. Id. R. 55(b)(2).

Whether to enter a default judgment is committed to the discretion of the district court, within the limits articulated by the Second Circuit. Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993) (“The circumscribed scope of the district court's discretion in the context of a default is a reflection of our oft-stated preference for resolving disputes on the merits.”). That is, the Second Circuit “ha[s] a strong preference for resolving disputes on the merits” and has cautioned that “a default judgment is the most severe sanction which the court may apply.” City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 129 (2d Cir. 2011) (quotations omitted).

“A default does not establish conclusory allegations, nor does it excuse any defects in the plaintiffs’ pleading.” Mateo v. Universal Language Corp., No. 13-CV-2495, 2015 WL 5655689, at *4, *6–*7 (E.D.N.Y. Sept. 4, 2015) (finding defendant was not plaintiff's employer based on his testimony that contradicted allegations in the complaint), report and recommendation adopted, 2015 WL 5664498, at *1 (Sept. 23, 2015). For example, an allegation is not “well-pleaded” if is contradicted by other evidence put forth by the plaintiff. See id. at *6–*7; Montblanc-Simplo GmbH v. Colibri Corp., 739 F. Supp. 2d 143, 151 (E.D.N.Y. 2010) (“[O]nce plaintiffs provided an actual picture of the allegedly infringing pen that contradicted the allegations in the Complaint, those allegations would no longer be considered well-pleaded.”).

In deciding a motion for default judgment, a court “is required to accept all of the [plaintiff]’s factual allegations as true and draw all reasonable inferences in its favor.” Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009). A party's default is deemed an admission of all well-pleaded allegations of liability. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Morales v. B & M Gen. Renovation Inc., No. 14-CV-7290, 2016 WL 1266624, at *2 (E.D.N.Y. Mar. 9, 2016), report and recommendation adopted, 2016 WL 1258482, at *2 (Mar. 29, 2016). The Court must then determine “whether the unchallenged facts constitute a legitimate cause of action.” 10A Charles Alan Wright & Arthur R. Miller et al., Federal Practice and Procedure § 2688.1 (4th ed. 2022) (hereinafter Wright & Miller et al.) (“Once the default is established, defendant has no further standing to contest the factual allegations of plaintiff's claim for relief. Even after default, however, it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit conclusions of law.”); Labarbera v. ASTC Lab'ys Inc., 752 F. Supp. 2d 263, 270 (E.D.N.Y. 2010) (adopting report and recommendation).

There is a threshold liability question the Court must resolve before default judgment can be granted. As noted, Romualdo seeks damages for hours worked solely at 104 Deli for the period from January 2018 until January 14, 2019. (Ansari Decl. ¶¶ 16–17, 71 & n.2; Damages Chart, attached as Ex. 5 to Ansari Decl.; see also Compl. ¶¶ 42–44 (alleging that all of Romualdo's hours worked from January 2018 through January 2019 were performed at 104 Deli)). And he seeks recovery only from M&Z.

However, the Complaint alleges that Guru Krupa, doing business as 104 Deli, maintains its principal place of business at 104-10 Atlantic Avenue. (Compl. ¶ 20). On the other hand, M&Z, doing business as Family Grocery & Deli, has its principal place of business elsewhere: 10727 Atlantic Avenue. (Id. ¶ 21). The Complaint also refers to 104 Deli as “the 104-10 Atlantic Avenue location,” and Family Grocery & Deli as “the 10727 Atlantic Avenue location.” (Id. ¶ 2). The natural inference to be drawn from these allegations is that Guru Krupa bears responsibility for wage and hour violations at 104 Deli (since Guru Krupa is located at and owns 104 Deli). And the corollary would follow that M&Z—which was located at and operated Family Deli—only bears responsibility for hours worked at Family Deli. But this default judgment motion (solely for hours worked at 104 Deli) is not brought against Guru Krupa—with whom Romualdo has settled—but M&Z. In other words, the motion ostensibly seeks to recover from M&Z for wage and hour violations committed by Guru Krupa, a separate and distinct entity.

To proceed in this manner, Romualdo would have to demonstrate M&Z and Guru Krupa operated as a “single integrated employer,” often referred to as a “single enterprise.” Romualdo's motion papers do not address the need to establish this connection between 104 Deli (ostensibly owned by Guru Krupa) and M&Z; indeed, no discussion of single enterprise is in his briefs. And the Complaint's bare allegations, even when accepted as true on default, are insufficient to establish M&Z's liability for work done at a location owned and operated by Guru Krupa.

“A ‘single employer’ situation exists where two nominally separate entities are actually part of a single integrated enterprise.” In such circumstances, of which examples may be parent and wholly-owned subsidiary corporations, or separate corporations under common ownership and management, the nominally distinct entities can be deemed to constitute a single enterprise․ [U]nder this theory ․, an employee, who is technically employed on the books of one entity, which is deemed to be part of a larger “single-employer” entity, may impose liability for certain violations of employment law not only on the nominal employer but also on another entity comprising part of the single integrated employer.

Arculeo v. On-Site Sales & Mktg., LLC, 425 F.3d 193, 198 (2d Cir. 2005) (first alteration in original) (quoting Clinton's Ditch Coop. Co. v. NLRB, 778 F.2d 132, 137 (2d Cir. 1985)) (citation omitted). The doctrine applies in “extraordinary circumstances” where a plaintiff can show “sufficient indicia of an interrelationship between the immediate corporate employer and the affiliated corporation.” Morangelli v. Chemed Corp., 922 F. Supp. 2d 278, 285 (E.D.N.Y. 2013) (quoting Herman v. Blockbuster Ent. Grp., 18 F. Supp. 2d 304, 308 (S.D.N.Y. 1998)).

While the Second Circuit has not endorsed the single enterprise theory in the FLSA context, district courts in this Circuit have applied it because the “shared policy concerns underlying the doctrine and the FLSA urge the theory's application to FLSA claims.” Gonzalez v. Hanover Ventures Marketplace LLC, No. 21-CV-1347, 2022 WL 193004, at *4 (S.D.N.Y. Jan. 21, 2022) (quoting Lopez v. Pio Pio NYC, Inc., No. 13-CV-4490, 2014 WL 1979930, at *3 (S.D.N.Y. May 15, 2014)). Courts evaluate four factors enumerated by the Supreme Court: (1) interrelation of operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership. Chen v. TYT E. Corp., No. 10-CV-5288, 2012 WL 5871617, at *3 (S.D.N.Y. Mar. 21, 2012) (citing Murray v. Miner, 74 F.3d 402, 404 (2d Cir. 1996)); Radio & Television Broad. Technicians Loc. Union 1264 v. Broad. Serv. of Mobile, Inc., 380 U.S. 255, 256 (1965). “Entities which provide mutually supportive services to the substantial advantage of each entity are operationally interdependent and may be treated as a single enterprise under the [FLSA].” Archie v. Grand Cent. P'ship, Inc., 997 F. Supp. 504, 525 (S.D.N.Y. 1998) (Sotomayor, J.).

In the FLSA context—and more specifically, in the restaurant industry—facts that go to the existence of a single, integrated enterprise include, inter alia, “common decor, name, menu, and marketing; the use of the same employees at multiple locations; the transfer of items between restaurants; use of the same central payroll office, common storage space and leases; and the distribution of common employee guidelines and procedures across different businesses.” Yeh v. Han Dynasty, Inc., No. 18-CV-6018, 2019 WL 633355, at *8 (S.D.N.Y. Feb. 14, 2019) (quoting Khereed v. W. 12th St. Rest. Grp. LLC, No. 15-CV-1363, 2016 WL 590233, at *4 (S.D.N.Y. Feb. 11, 2016) (collecting cases)); see also Garcia v. Chirping Chicken NYC, Inc., No. 15-CV-2335, 2016 U.S. Dist. LEXIS 32750, at *20–*22 (E.D.N.Y. Mar. 11, 2016) (finding two entities constituted single employer under FLSA where they maintained “the same address, owners, management, personnel, [and] equipment”), report and recommendation adopted, 2016 U.S. Dist. LEXIS 46183, at *1 (Mar. 31, 2016). “But in the end, the decisive factor as to whether a named defendant is responsible for FLSA violations as to a particular plaintiff turns on control, whether formal or functional. Courts will dismiss a complaint against defendants within a broader alleged enterprise that lack a nexus suggesting control of the plaintiff at hand[.]” Yeh, 2019 WL 633355, at *8.

Here, the Complaint is devoid of any such facts. One could argue (though Romualdo does not) that it should be inferred that M&Z and Guru Krupa “treated their employees interchangeably or subjected them to the same policies,” Kwan v. Sahara Dreams Co. II Inc., No. 17-CV-4058, 2018 WL 6655607, at *4 (S.D.N.Y. Dec. 19, 2018), because Romualdo worked for both delis during his employment. (Compl. ¶ 4). However, Romualdo only worked at Family Deli on “two occasions”—two days, for a total of 22 hours—over several years. (Id. ¶ 44). That suggests Romualdo regularly worked at 104 Deli, and the time worked at Family Deli was a singular occurrence. Indeed, in the previously filed default judgment motion, counsel indicated Plaintiff Lopez, “who was Mr. Quizar[ ] [Romualdo's] coworker at 104 Deli ․, only recalls working for ․ Patel and Guru Krupa 104 Corporation, with whom he has fully settled his claims” and as such is not moving for default judgment against M&Z. (Decl. of Clela Errington dated Jan. 13, 2022, Dkt. No. 36 at 1 n.1). This, too, suggests employees were not treated interchangeably.

The Complaint does allege that the four Individual Defendants—Patel, Mohamed, Raza, and Ali—“possess operational control over,” “ownership interests in,” and “control significant functions of” the “Defendant Corporations.” (Compl. ¶ 27). This, too, is not sufficient to establish a single enterprise. As an initial matter, “demonstrating common management and ownership, without more, is insufficient to establish single employer status.” Nuriddinov v. Masada III, Inc., No. 15-CV-5875, 2017 WL 9253401, at *6 (E.D.N.Y. July 24, 2017), report and recommendation adopted as modified, 2018 WL 1251335, at *1, *3 (Mar. 12, 2018). But in any event, this contention is flatly contradicted by all the other evidence in the record.³ In the parties’ motion for settlement approval, counsel stated Patel purchased the business in January 2019, and the other Individual Defendants—who were then in default and who have subsequently been dismissed—“formerly owned” it. (See Mot. for Settlement Approval at 1–2). And the remainder of the settlement papers suggest there was no unity of interests between 104 Deli and Family Deli. The Cheeks motion says that Guru Krupa purchased “the delicatessen” or “the business.” (Id.). While Romualdo avers in his declaration that he was employed by M&Z “at their delis”—104 Deli and Family Deli—he then states that “the deli” was sold to Patel and Guru Krupa in January 2019. (Decl. of Alvarez Quizar Romualdo dated Dec. 5, 2022, attached as Ex. 4 to Ansari Decl., ¶¶ 3, 6).⁴ (Thus, the Cheeks papers further bolster the impression created by the Complaint, supra at 9, that M&Z ran only Family Deli, and had no relationship to 104 Deli, which appears, at least in some papers supplied by counsel, to have been sold, on its own, to Patel and formed as Guru Krupa.)

The remaining allegations do not save the single employer allegations. Romualdo alleges “Defendants constitute a single employer of Plaintiffs,” and the Individual Defendants “fail to operate Defendant Corporations as entities legally separate and apart from themselves.” (Compl. ¶¶ 31–32; see also id. ¶ 3 (alleging that the Individual Defendants “operated the delis as a joint or unified enterprise”)). The Complaint also alleges that “Defendants are associated and joint employers, act in the interest of each other with respect to employees, pay employees by the same method, and share control over the employees.” (Id. ¶ 28). But merely reciting the elements of the single employer doctrine—or asserting “Defendants” constitute a single employer in conclusory fashion—is not enough. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”); e.g., Kwan, 2018 WL 6655607, at *3–*4 (finding the operative complaint did not plausibly allege the corporate defendants comprise a single integrated enterprise, where it “principally relie[d] on conclusory, boilerplate allegations of the elements of a single integrated enterprise ․ without any factual support”).

And even if some of the conclusory allegations are credited, Romualdo misapprehends the single employer test, confusing it with an “alter ego” theory of liability. (See Compl. ¶ 32 (referring to “alter egos” and Defendants’ failure to adhere to corporate formalities)). “[T]he two doctrines are ‘conceptually distinct.’ ” Lihli Fashions Corp. v. NLRB, 80 F.3d 743, 748 (2d Cir. 1996) (quoting Truck Drivers Loc. Union No. 807, I.B.T. v. Reg'l Imp. & Exp. Trucking Co., 944 F.2d 1037, 1046 (2d Cir. 1991)), as amended (May 9, 1996).

The focus of the alter ego doctrine, unlike that of the single employer doctrine, is on “the existence of a disguised continuance ․ through a sham transaction or technical change in operations.” The single employer doctrine, in contrast, focuses on determining if the entities “are part of a single integrated enterprise,” and is “characterized by absence of an arm's length relationship found among unintegrated companies.”

Trs. of Mosaic & Terrazzo Welfare, Pension, Annuity & Vacation Funds v. High Performance Floors, Inc., 233 F. Supp. 3d 329, 334 (E.D.N.Y. 2017) (quoting Lihli Fashions Corp., 80 F.3d at 747–48). Establishing alter ego liability would not establish that M&Z and Guru Krupa constituted a single enterprise or employer.⁵

Since the Complaint fails to allege single enterprise liability—and therefore to establish that hours worked at 104 Deli and liability of Guru Krupa can be a basis to impose liability on M&Z—the Court turns to whether liability can be imposed on M&Z based solely on allegations related to it.

There is the threshold problem, just discussed, that it appears that M&Z—if the Complaint's allegations are accepted—had no relationship to 104 Deli, and only controlled and operated out of Family Deli. So without a theory like single enterprise, M&Z could only be liable for work performed at Family Deli, whereas Romualdo's motion is based on work performed at 104 Deli.

In any event, the nonspecific allegations that “Defendants”—an all-encompassing category that includes M&Z—employed Romualdo are not enough to impose liability on M&Z for hours worked at 104 Deli. Rule 8 requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although the Rule “does not demand that a complaint be a model of clarity or exhaustively present the facts alleged, it requires, at a minimum, that a complaint give each defendant ‘fair notice of what the plaintiff's claim is and the ground upon which it rests.’ ” Atuahene v. City of Hartford, 10 F. App'x 33, 34 (2d Cir. 2001) (quoting Ferro v. Ry. Express Agency, Inc., 296 F.2d 847, 851 (2d Cir. 1961)). “ ‘[I]t is well-established ․ that plaintiffs cannot simply lump defendants together for pleading purposes,’ and that ‘Rule 8(a) is violated where a plaintiff, by engaging in group pleading, fails to give each defendant fair notice of the claims against it.’ ” Nesbeth v. N.Y.C. Mgmt. LLC, No. 17-CV-8650, 2019 WL 110953, at *3 (S.D.N.Y. Jan. 4, 2019) (quoting Canon U.S.A., Inc. v. F & E Trading LLC, No. 15-CV-6015, 2017 WL 4357339, at *7 (E.D.N.Y. Sept. 29, 2017)); see also Atuahene, 10 F. App'x at 34 (“By lumping all the defendants together in each claim and providing no factual basis to distinguish their conduct, Atuahene's complaint failed to satisfy this minimum [Rule 8] standard[.]”).

Here, the Complaint alleges that all “Defendants owned, operated, or controlled two American delis, located at 104-10 Atlantic Avenue ․ under the name ‘104 Deli’ and at 10727 Atlantic Avenue ․ under the name ‘Family Grocery & Deli.’ ” (Compl. ¶ 19). It fails to specify which corporate entities owned which delis, and for what period of time. The Complaint further alleges “Defendants maintained a policy and practice of requiring Plaintiff[ ] ․ to work in excess of 40 hours a week without paying [him] appropriate minimum wage, spread of hours pay, and overtime compensation.” (Id. ¶ 72). But again, Romualdo does not detail which of the six Defendants engaged in the wage and hour violations and when. As a result, the Court cannot conclude that M&Z owned, operated, and controlled 104 Deli for the period from January 2018 until January 2019, or that it violated Romualdo's rights under FLSA or NYLL during that timeframe—which it must conclude to grant the relief sought in the default judgment motion, in the absence of well-pled allegations establishing single enterprise liability. See, e.g., Stewart v. Hudson Hall LLC, No. 20-CV-885, 2020 WL 8732875, at *8 (S.D.N.Y. Oct. 19, 2020) (“The Court cannot discern from the FAC whether Stewart contends that the ‘decisions, policies, plans, programs, practices, procedures, protocols, routines, and rules’ that he claims violates the FLSA and the NYLL were imposed by Hudson Hall, Holdings, or Think. Stewart's reference to ‘Defendants’ corporate-wide policies and practices’ is similarly deficient in advising as to which Defendant's policies and practices are implicated. Accordingly, the failure of the FAC to comply with the minimal requirements of Rule 8(a)(2) as to the Corporate Defendants is an additional ground for dismissal of his claims against them.” (citations omitted)), report and recommendation adopted, 2021 WL 735244, at *8 (Feb. 24, 2021). These pleading deficiencies take on added significance where, as is the case here, the parties executed a release that discharges Romualdo's claims against one corporate defendant (i.e., Guru Krupa), but not the other (i.e., M&Z).⁶

At bottom, the general and bare-bones allegations in the Complaint are insufficient to place all FLSA and NYLL liability onto M&Z. In addition, other documents contradict many of the Complaint's allegations and create additional confusion.⁷ In other words, the Court cannot, based on the Complaint's allegations, clearly impose liability—and certainly cannot calculate damages—against M&Z for particular conduct occurring at a particular time. E.g., Klimchak v. Cardrona, Inc., No. 09-CV-4311, 2014 WL 3778964, at *6 n.8 (E.D.N.Y. July 31, 2014) (adopting report and recommendation) (denying default judgment with respect to corporation alleged to be single enterprise, in light of conclusory allegations); Duarte v. Falcon Gen. Const. Servs., Inc., No. 13-CV-596, 2014 WL 4906661, at *4 n.3 (E.D.N.Y. Sept. 11, 2014) (“[P]laintiffs have not set forth any facts in the complaint to establish that the defendants Falcon General, Falcon Development and Sewell were a joint ‘enterprise,’ a requisite element for imposing FLSA liability against ․ defendant corporations for the same labor.”), report and recommendation adopted, 2014 WL 4904759, at *1 (Sept. 30, 2014).

The Court is doubtful that even an Amended Complaint could navigate the Scylla and Charybdis of on the one hand, failing to adequately provide enough facts to infer a single enterprise between M&Z and Guru Krupa—which would require dismissal—and the broad release given to Guru Krupa, which on the other hand, shields it and all other related corporations from FLSA liability for all time, and leads to the same result. See supra n.6. But should Romualdo intend to pursue the case against M&Z, and file a renewed default judgment motion, he must first file and serve an Amended Complaint that reflects the facts in the record and otherwise corrects the pleading deficiencies identified herein. He must also explain in his motion papers the theory of liability he relies upon, with citations to case law, and analyze the impact of the Settlement Agreement and Release, if any, on the imposition of such liability.

CONCLUSION

For the reasons stated above, it is respectfully recommended that Romualdo's default judgment motion be denied without prejudice to renewal. The Court also recommends that Romualdo be directed to file an Amended Complaint within 30 days of the District Judge's decision on this Report and Recommendation, and should he fail to do so, the Clerk of Court be directed to close this case. Separately, the Court recommends Lopez's claims against M&Z be dismissed without prejudice.

Any objections to the Report and Recommendation above must be filed with the Clerk of the Court within 14 days of service of this report. Failure to file objections within the specified time may waive the right to appeal any judgment or order entered by the District Court in reliance on this Report and Recommendation. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(2); see also Caidor v. Onondaga County, 517 F.3d 601, 604 (2d Cir. 2008) (“[F]ailure to object timely to a magistrate[ ] [judge's] report operates as a waiver of any further judicial review of the magistrate[ ] [judge's] decision.” (quotations omitted)).

Romualdo is directed to serve a copy of this Report and Recommendation on M&Z and file proof of such service on the record.

SO ORDERED.

FOOTNOTES

1.   Plaintiff Lopez does not join in this motion, and will not move for default judgment against M&Z. (Status Report dated Jan. 5, 2023, Dkt. No. 48). The Court therefore separately recommends that Lopez's claims against M&Z be dismissed without prejudice. He has no other live claim against any other party.

2.   The Settlement Agreement defined “Defendants” as Guru Krupa and Patel. (See Settlement Agreement & Release at 1).

3.   The Court is permitted to consider all the evidence in the record, even on default. See, e.g., J & J Sports Prods., Inc. v. Exclusive Lounge & Grill Inc., No. 15-CV-6534, 2017 WL 1082416, at *3 (E.D.N.Y. Mar. 22, 2017) (denying default judgment motion and dismissing case where default was entered but there were discrepancies between complaint and documentary evidence such that the court could not conclude plaintiff possessed standing); Lin v. Quality Woods, Inc., No. 17-CV-3043, 2021 WL 4129151, at *7 (E.D.N.Y. Aug. 10, 2021) (“In keeping with this directive—that default judgments are an ‘extreme’ remedy to be rarely granted—the Court is within its discretion to deny a procedurally valid motion for default judgment where the complaint's allegations are contradicted by one another or by a plaintiff's other offered evidence.” (citation omitted) (collecting cases)), report and recommendation adopted, Order (Sept. 10, 2021); see also 10A Wright & Miller et al., supra, § 2685 (“In determining whether to enter a default judgment, the court is free to consider a number of factors that may appear from the record before it․ Among the factors considered are ․ whether the grounds for default are clearly established or are in doubt.” (footnote omitted)); Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 63 (2d Cir. 1971) (“For example, an allegation made indefinite or erroneous by other allegations in the same complaint is not a well-pleaded allegation. Other examples ․ are allegations which are contrary to facts of which the court will take judicial notice, or which are not susceptible of proof by legitimate evidence, or which are contrary to uncontroverted material in the file of the case.” (quotations omitted)), rev'd on other grounds, 409 U.S. 363, 389 (1973); supra at 8.

4.   Romualdo's counsel, for her part, avers that “[u]pon information and belief, the delis were sold to Appearing Defendants [Patel and Guru Krupa] on or about January 14, 2019.” (Ansari Decl. ¶ 16). This only adds to the confusion and inability to award judgment to Romualdo.

5.   The “single employer” doctrine is distinct from the “joint employer” doctrine. “In a ‘joint employer’ relationship, ․ there is no single integrated enterprise. A conclusion that employers are ‘joint’ assumes that they are separate legal entities, but that they handle certain aspects of their employer-employee relationship jointly.” Arculeo, 425 F.3d at 198 (quotations omitted). “When two or more entities operate as joint employers of a given worker, each employer is jointly and severally liable for the FLSA violations of all other joint employers.” Fernandez v. HR Parking Inc., 407 F. Supp. 3d 445, 450–51 (S.D.N.Y. 2019). To determine whether entities are joint employers, courts apply the “economic reality test,” which “assesses whether each putative employer had either formal or functional control over the employee.” Nuriddinov, 2017 WL 9253401, at *6. Here, the Complaint merely alleges that all “Defendants,” in the collective, “share control over the employees,” (Compl. ¶ 28), and conclusory allegations of control are insufficient. Moreover, as discussed, Romualdo states at various points that 104 Deli was sold separately to Patel, who appears to have no identifiable relationship with the other Individual Defendants or to M&Z. The joint employer doctrine would, therefore, also not save Romualdo's claims against M&Z.

6.   Even if Romualdo could successfully demonstrate M&Z and Guru Krupa operated as a “single enterprise,” Romualdo's motion would run into another barrier to recovery. The “release of claims” executed as part of the settlement agreement discharged all claims against Guru Krupa and “its current and former parents, subsidiaries, ․ affiliated and related companies or entities, and its predecessors.” (Settlement Agreement & Release § 3). If Guru Krupa and M&Z were a single enterprise, the Settlement Agreement would appear to release M&Z as a former affiliated or related company. (Notably, the release is not limited in time, meaning it releases Guru Krupa and its affiliates from all FLSA liability, not just liability from 2019 forward.) Though the parties may have intended to release Guru Krupa only from FLSA claims from 2019 forward, the scope of the release is far broader.

7.   As noted, supra at 13, the Cheeks motion says Guru Krupa purchased “the business.” And the Secretary of State's website, which this Court may take judicial notice of, indicates Guru Krupa was incorporated on December 7, 2018. See J & J Sports Prods., Inc. v. La Parranda Mexicana Bar & Restaurante Co., No. 17-CV-4171, 2018 WL 4378166, at *1 n.3 (E.D.N.Y. Apr. 9, 2018) (“The Court can and does take judicial notice of information from the New York Secretary of State's website.”); Dep't of State, Div. of Corps., State Records & UCC, Corp. & Bus. Entity Database Searches, https://www.dos.ny.gov/corps (last visited Aug. 30, 2023). As such, it is logically impossible for Romualdo to have been employed by Guru Krupa from January 2018 until December 7, 2018—since the entity was not even in existence then—despite the Complaint's allegation that he was. (Compl. ¶ 37 (“Plaintiff Quizar was employed by Defendants from approximately January 2018 until on or about July 8, 2019.”)). As yet another example, the Complaint alleges that “[a]t all relevant times, Defendants owned, operated, or controlled [both] American delis.” (Id. ¶ 19). But the evidence suggests that neither Guru Krupa nor Patel owned either of the delis prior to January 2019. (See Mot. for Settlement Approval at 1–2). Thus lies the problem of “group pleading.”

SANKET J. BULSARA United States Magistrate Judge