Lin v. Cruz, 239 A.3d 720

Background

Three former Teppanyaki Grill employees sued for unpaid wages under the FLSA, the Maryland Wage and Hour Law, the Maryland Wage Payment and Collection Law, and Montgomery County law; the corporate defendant defaulted.
Teppanyaki Grill’s SDAT articles list Weiguang ("Ray") Chen as incorporator/owner; no payroll or time records were produced.
Qun Lin (Appellant) signed the commercial lease and two lease amendments (one using the trade name "Teppanyaki Grill & Supreme Buffet") and later assigned the lease; he testified he only signed as a favor and denied operational control.
Chen gave deposition testimony (admitted in full at trial because he did not appear); the trial judge credited parts of it and discredited others in making factual findings.
The trial court found Lin was the owner/employer and held him personally liable for substantial unpaid wages and attorneys’ fees; the court did not expressly apply the economic reality test or clearly state the legal theory (sole proprietorship, piercing veil, or employer-control) supporting personal liability.
The Court of Special Appeals affirmed the judge’s credibility determinations but vacated the judgment and remanded for the trial court to apply and explain the proper legal theory (economic reality test or other doctrine) and make the requisite factual findings; attorney’s fees judgment was vacated for further proceedings.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the trial court may credit parts of Chen's deposition but disbelieve others	Employees relied on Chen's deposition for facts about ownership/control	Lin argued the court could not selectively accept parts of the deposition and rebuts live witness testimony	Court: factfinder may credit or discredit parts of a witness's testimony; no clear error in selective reliance
Whether Lin was an "employer"/owner under the economic reality (control) test	Employees: lease, amendments, Lin’s signatures, cash infusions and implausibility of mere favor show Lin had effective ownership/control	Lin: operational evidence (hiring, firing, paying) shows Chen ran the business; signing lease alone insufficient	Court: trial court failed to apply or articulate the economic reality test factors; remand required for findings under that test
Whether Lin was personally liable as sole proprietor or via piercing the corporate veil	Employees: Lin effectively operated or controlled the business or should be treated as owner/alter ego; veil-piercing or sole-proprietor reasoning applies	Lin: Teppanyaki was a corporation in Chen’s name; no proof Lin owned/operated; no grounds to pierce veil	Court: unclear which theory (sole proprietor/veil piercing) the trial court relied on; court must state and support legal theory and findings on remand
Whether attorneys’ fees award was proper	Employees: Lin had no good-faith basis to withhold wages; fees appropriate	Lin: challenges liability basis and reasonableness	Court: fees vacated along with liability judgment and reserved for reconsideration after remand

Key Cases Cited

Rutherford Food Corp. v. McComb, 331 U.S. 722 (origin of the "economic reality" approach to employer status)
Newell v. Runnels, 407 Md. 578 (Maryland Court of Appeals adopting economic reality/control analysis)
Campusano v. Lusitano Cont. LLC, 208 Md. App. 29 (describing four-factor control test for employer status)
Pinnacle Grp., LLC v. Kelly, 235 Md. App. 436 (applying economic-reality factors to owner/member liability)
Hollingsworth & Vose Co. v. Connor, 136 Md. App. 91 (factfinder may believe parts of a witness's testimony and disbelieve others)
Donovan v. Agnew, 712 F.2d 1509 (corporate officers with operational control can be FLSA employers)
Baystate Alternative Staffing, Inc. v. Herman, 163 F.3d 668 (totality-of-circumstances/economic realities focus on control and role in undercompensation)
Carter v. Dutchess Cmty. Coll., 735 F.2d 8 (second-circuit formulation of control factors adopted in Maryland)
Hildreth v. Tidewater Equip. Co., Inc., 378 Md. 724 (standards for piercing the corporate veil in Maryland)
Residential Warranty Corp. v. Bancroft Homes Greenspring Valley, Inc., 126 Md. App. 294 (veil-piercing and alter-ego considerations)