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Ecoquij-Tzep v. LE Arlington, Inc.

United States District Court, N.D. Texas, Dallas Division

December 21, 2017

PASCUAL ECOQUIJ-TZEP, and all others similarly situated under 29 USC 216b, Plaintiff,
v.
LE ARLINGTON, INC. d/b/a MW HAWAIIAN GRILL also d/b/a MW'S HAWAIIAN GRILL also d/b/a LITTLE TOKYO and f/k/a SHUN FAR EL PASO, INC., GRAND FAST FOOD INC d/b/a FAMOUS CAJUN GRILL and also d/b/a FAMOUS WOK, SHIZHONG ZHANG, YING HUI WANG, and KONG SHEN WANG, Defendants.

          MEMORANDUM OPINION AND ORDER

          DAVID L. HORAN, UNITED STATES MAGISTRATE JUDGE.

         Defendants Le Arlington, Inc. d/b/a/ MW Hawaiian Grill also d/b/a MW's Hawaiian Grill also d/b/a Little Tokyo and f/k/a Shun Far El Paso, Inc. (“Le Arlington”), Grand Fast Food, Inc. d/b/a Famous Cajun Grill and also d/b/a Famous Wok (“Grand Fast Food”), Shizhong Zhang, Ying Hui Wang, and Kong Shen Wang (collectively, “Defendants”) move to dismiss Plaintiff Pascual Ecoquij-Tzep's Third Amended Complaint Under 29 U.S.C. §§ 201- 216 Overtime and Minimum Wage Violations [Dkt. No. 84]. See Dkt. No. 93 (“Third MTD”).

         Ecoquij-Tzep, on behalf of himself and other similarly situated, filed a response, see Dkt. No. 116, and Defendants filed a reply, see Dkt. No. 120.

         For the following reasons, the Court DENIES Defendants' Amended Third Motion to Dismiss [Dkt. No. 93].

         Background

         Ecoquij-Tzep sued Hawaiian Grill, his former employer, alleging that it failed to pay him the minimum wage or overtime, in violation of the Fair Labor Standards Act, 28 U.S.C. § 206, et seq. (the “FLSA”). Hawaiian Grill filed a motion to dismiss, see Dkt. No. 6, which the Court granted in part and denied in part, and the Court gave Ecoquij-Tzep leave to file an amended complaint as to his individual coverage and collective action allegations, see Dkt. No. 10

         In his First Amended Complaint, Ecoquij-Tzep again sued Hawaiian Grill for violations of the FLSA's minimum wage and overtime provisions. See Dkt. No. 11. Hawaiian Grill filed another motion to dismiss, see Dkt. No. 13, which the Court granted in part and denied in part, see Dkt. No. 24. The Court dismissed with prejudice Ecoquij-Tzep's FLSA claims based on individual coverage but allowed Ecoquij-Tzep to proceed on his FLSA claims based on enterprise coverage, which had not been raised in the motion to dismiss. The Court also denied the motion to strike the collective action allegations. See id.

         Ecoquij-Tzep sought and was granted leave to file a Second Amended Complaint. See Dkt. Nos. 32 & 47. In his Second Amended Complaint, Ecoquij-Tzep changed the name of Hawaiian Grill to Le Arlington, Inc. d/b/a MW Hawaiian Grill also d/b/a MW's Hawaiian Grill also d/b/a Little Tokyo and f/k/a Shun Far El Paso, Inc. See Dkt. No. 49. Ecoquij-Tzep also added four additional defendants - Grand Fast Foods, Inc., Shizhong Zhang, Ying Hui Wang, and Kong Shen Wang - and a joint enterprise allegation. See Dkt. No. 49.

         Ecoquij-Tzep alleged that he worked as a server and cashier for a Hawaiian Grill restaurant and a Famous Cajun restaurant from approximately December 3, 2014 to January 25, 2016; that he was paid in lump sum payments resulting in an average hourly rate of $6.00 per hour; and that, although he worked an average of seventy hours per week, he was not paid the time-and-a-half rate for time that he worked in excess of 40 hours, as required by the FLSA. Ecoquij-Tzep sues Le Arlington and Grand Fast Food as FLSA joint employers and sues Shizhong Zhang, Ying Hui Wang, and Kong Shen Wang as corporate officers, owners, or managers of one or more of the corporate defendants who were responsible for paying Ecoquij-Tzep's wages and controlling Ecoquij-Tzep's work and schedule during the relevant time period. See id.

         Ecoquij-Tzep sues both individually and on behalf of other similarly-situated hourly employees of Defendant. See id.

         Defendants moved to dismiss the Second Amended Complaint. See Dkt. No. 55. Defendants asserted that Ecoquij-Tzep's enterprise coverage claims are factually insufficient to state a claim, that the joint enterprise claim is both factually insufficient and conclusory, and that the joint employer claim is conclusory. Defendants again attacked Ecoquij-Tzep's individual coverage, overtime, and minimum wage claims.

         The Court granted in part and denied in part Defendants' motion to dismiss Ecoquij-Tzep's Second Amended Complaint, determining that “Ecoquij-Tzep has alleged the basic elements of enterprise coverage but not the necessary factual support”; that “Ecoquij-Tzep's allegations regarding the commerce and handling requirements are merely conclusory and do not state any facts from which it can be gleaned that the enterprise and its employees are involved in commerce as required to satisfy the FLSA's coverage element”; and that, while “Ecoquij-Tzep argues that the allegations that he and other similarly situated employees include cashiers, servers, and cooks are factually sufficient because the Court can reasonably infer that cashiers, servers, and cooks by their very nature must use goods and materials like cash registers, credit card machines, cooking utensils, food, spices, beverages, and cooking equipment that have traveled through interstate commerce, ” “Ecoquij-Tzep's complaint contains no allegations concerning the goods and materials that he and the other cashiers, servers, and cooks used.” Dkt. No. 72 at 7-8.

         The Court explained that

Ecoquij-Tzep's Second Amended Complaint “leaves the court asking what goods or materials did the employees handle or what instrumentalities of interstate commerce did they use. The court concludes it is not unreasonable to require the plaintiffs to answer these questions.” Centeno v. Facilities Consulting Group, Inc., No. 3:14-cv-3696-G, 2015 WL 247735, at *11 (N.D. Tex. Jan. 20, 2015).
Even viewing the factual allegations in the light most favorable to Ecoquij-Tzep, the Court cannot reasonably be expected to read these additional factual allegations into the complaint. Ecoquij-Tzep should understand the nature of his employer's business activities and be able to include some factual allegations indicating that his employer meets the commerce standard. See Centeno, 2015 WL 247735, at * 11. The court will not infer that Ecoquij-Tzep and other similarly situated employees handled goods and materials that traveled through interstate commerce, and, without those allegations, Ecoquij-Tzep fails to sufficiently plead enterprise coverage.

Id. at 8. Because that was “the third motion to dismiss in this case but the first motion to properly raise a challenge to Ecoquij-Tzep's pleaded enterprise coverage allegations, ” the Court “grant[ed] Ecoquij-Tzep one last chance to replead these allegations or face dismissal of all of his FLSA claims.” Id.

         As to joint enterprise, the Court noted that “Ecoquij-Tzep alleges that Le Arlington and Grand Fast Foods (the ‘corporate defendants') are part of a joint enterprise and that Shizhong Zhang, Ying Hui Wang, and Kong Shen Wang (the ‘individual defendants') are officers, directors, or managers of the business entities comprising the joint enterprise” and “predicates this claim on the fact that he worked for both a Hawaiian Grill restaurant and a Famous Cajun Grill restaurant and that the two restaurants shared management personnel.” Id. at 9. The Court agreed with Defendants “that Ecoquij-Tzep's joint enterprise allegations are conclusory and factually insufficient” where it “is not enough” that “Ecoquij-Tzep alleges that Le Arlington, Grand Fast Food, and at least one other entity, Megatrend Food Management, Inc., are part of a joint enterprise as defined by 29 U.S.C. § 203(r) because ‘the related activities between the various businesses, performed through unified operation and/or common control, are being done for a common business purpose[, ]' Dkt. No. 49 at 5”; “that the related activities include the operation of numerous restaurants under the MW Hawaiian Grill, Little Tokyo, and Famous Cajun Grill brands throughout the state of Texas”; and “that, according to the Texas Secretary of State, Ying Hui Wang and Kong Sheng Wang appear as officers, directors, or managers for both of the corporate defendants and Ying Hui Wang is the president of Megatrend Food Management, Inc.” Id. at 9-10.

         The Court explained that, “[a]lthough Ecoquij-Tzep's alleges that he worked for two restaurants - Hawaiian Grill and Famous Cajun Grill - he does not allege any other facts showing how the two restaurants' activities are related other than that they ‘shared management personnel'” and that “[t]he Court cannot, without more, reasonably infer that the activities of the two alleged employer restaurants were the same or similar.” Id. at 10-11.

         The Court noted that “Ecoquij-Tzep also alleges that the two restaurants are under unified operation or common control because Ying Hui Wang and Kong Shen Wang are officers, directors, or managers of Le Arlington and Grand Fast Food and that Yin Hui Wang is the president of the other business entity alleged involved in the joint enterprise” but that, “[i]n assessing whether the requisite ‘common control' is present, the determinative question is whether a common entity has the power to control the related business operations” and that “[t]he test of common control is not ownership but rather whether there is a common control center with the ultimate power to make binding policy decisions for all units of the enterprise.” Id. at 11. The Court determined that “Ecoquij-Tzep's allegations that the corporate defendants have common corporate officers is not sufficient to show that the individual defendants exercised common control over the corporate defendants” or “that the corporate defendants were under unified operation, ” which is defined as ‘combining, uniting, or organizing the performance of related activities so that they are in effect a single business unit or an organized business system which is an economic unit directed to the accomplishment.'” Id. As the Court explained, “[t]he common business purpose requires more than a common goal to make a profit, ” and “Ecoquij-Tzep alleges no facts to show that the activities of the corporate defendants were unified to accomplish a common business purpose.” Id. at 12.

         The Court determined that “Ecoquij-Tzep's joint enterprise allegations mention each of the requisite elements: related activities, unified operation/common ownership, and common business purpose. But those allegations lack sufficient factual allegations to sufficiently plead joint enterprise coverage.” Id. Still, “[b]ecause [that was] the first motion to dismiss to address these allegations, the Court [afforded] Ecoquij-Tzep one chance to replead the joint enterprise allegations.” Id.

         As for Ecoquij-Tzep's allegations that “Le Arlington and Grand Fast Foods were his joint FLSA employers and that the individual defendants were his employers, ” the Court explained that it “addressed Defendants' employer status in its June 21, 2017 Memorandum Opinion and Order [and] determined that Ecoquij-Tzep sufficiently alleged in his Second Amended Complaint that Defendants were his employers” and that, “[f]or the same reasons, the Court will deny the motion to dismiss on this ground.” Id.

         And the Court determined that Ecoquij-Tzep otherwise sufficiently alleges FLSA overtime violations and FLSA minimum wage violations. See Id. at 13-14.

         Accordingly, the Court dismissed Ecoquij-Tzep's enterprise coverage and joint enterprise allegations without prejudice, with leave to amend to replead. See Id. at 14.

         Ecoquij-Tzep repleaded these allegations in his Third Amended Complaint. See Dkt. No. 84. Specifically, he alleges the following as to enterprise coverage:

         13. Defendants' business activities involve those to which the Fair Labor Standards Act applies. The Defendants' business affected interstate commerce for the relevant time period because the materials and goods that Plaintiff and other employees handled and/or used on a constant and/or continual basis and/or that were supplied to Plaintiff and other employees by the Defendants to use on the job moved through interstate commerce prior to and/or subsequent to the employees' use of the same. Examples of the goods and materials regularly and routinely handled and/or used by Plaintiff and other employees of the Defendants many of which discovery will show travelled through interstate commerce are listed below in paragraph 16.

         14. Upon information and belief, the Defendant Corporations had gross sales or business done, individually and/or collectively as part of the joint enterprise described in paragraph 17 below, in excess of $500, 000 annually for the years 2012, 2013, 2014, and 2015.

         15. Upon information and belief, the Defendant Corporations' sales or business done, individually and/or collectively as part of the joint enterprise described in paragraph 17 below, is expected to exceed $500, 000 for the year 2016.

         16. Furthermore, Defendants regularly employed two or more employees for the relevant time period who handled goods or materials that travelled through interstate commerce, or used instrumentalities of interstate commerce, thus making Defendants' businesses an enterprise covered under the Fair Labor Standards Act. For example, Plaintiff and other employees of the Defendants regularly and routinely handled a variety of goods and materials many of which discovery will show travelled through interstate commerce, including but not limited to the following:

a) Noodles
b) Rice
c) Canned pineapple
d) Chicken
e) Egg rolls
f) Chile peppers
g) Honey ...

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