Xie v. Sakura Kai I Inc.
1:17-cv-07509
E.D.N.YApr 11, 2019Background
- Plaintiff Haifeng Xie worked as a delivery/utility employee at Sakura Japanese Cuisine from August 19, 2016 to December 29, 2017 (reinstated briefly in Jan–Mar/Apr 2018). He was paid largely in cash, typically $375/week, and Defendants kept no contemporaneous payroll/time records.
- Xie sued Sakura Kai I Inc., manager/co-owner Youlin Wang, and a named "John" Chen asserting federal and New York wage-and-hour claims, statutory notice/pay-stub penalties, retaliation, tax-fraud and GBL claims. He amended the complaint to add Chen and sought a TRO; the court briefly reinstated him.
- At a bench trial the court heard three witnesses: Xie (plaintiff), employee Jingcheng Liang, and Wang (owner/manager). The court found significant credibility problems with Xie (including that “John” Chen likely did not exist) and adopted the employer’s handwritten weekly schedules as a reasonable floor for hours/pay.
- The court found Defendants failed to provide required tip‑credit notices and did not afford bona fide 30‑minute meal periods; it also found statutory time‑of‑hire notices and pay‑stub requirements were violated. Defendants did not keep required records.
- Holdings: judgment for Xie in the amount of $18,694.09 against Sakura and Wang on Counts II (NY min wage), IV (NY overtime), V (spread‑of‑hours), VIII (time‑of‑hire notice penalty), and IX (pay‑stub penalty). Claims against Chen, and claims for meal‑break private right of action, recordkeeping private right of action, tax fraud (26 U.S.C. § 7434) and GBL § 349 were dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiff was underpaid under NY law (min wage, overtime, spread) | Xie contended he worked more hours (often 6 days/week, on‑call during short breaks) and was underpaid | Defendants offered weekly schedules showing ~38.5 hrs/week and paid flat sums; no contemporaneous payroll records otherwise | Court credited schedules as baseline, found NY underpayment of $4,024.53 and an equal amount in liquidated damages; awarded prejudgment interest and fees to follow |
| Validity of employer tip credit | Xie argued tips should count toward wages or employer failed to take proper credits | Wang claimed employees kept tips but conceded he did not provide the written/offered tip‑credit notices required by law | Court found no compliant tip‑credit notices; no tip credit applied |
| Statutory penalties for NYLL §195 notices and pay‑stubs (Counts VIII & IX) | Xie alleged never received time‑of‑hire notices or pay‑stubs through relevant period | Defendants conceded paystubs/SSN were provided only after lawsuit; lacked written hire notices | Court awarded statutory maximum penalties: $5,000 for time‑of‑hire notice and $5,000 for pay‑stub violations plus attorney’s fees |
| Retaliation under FLSA/NYLL (Counts XI & XII) | Xie alleged he was told not to return/was terminated for filing suit | Defendants asserted he left or was not fired for protected activity; contested facts | Credibility issues for both sides; plaintiff failed to meet burden—retaliation claims dismissed |
| Claims for filing false IRS returns (26 U.S.C. §7434) and GBL §349 | Xie alleged defendants filed fraudulent information returns and engaged in deceptive consumer‑oriented conduct | Defendants denied and plaintiff offered no tax returns or direct evidence of willful fraud; GBL claim not consumer‑oriented | Court dismissed both claims for lack of evidence/legal applicability |
Key Cases Cited
- Reich v. Southern New England Telecommunications Corp., 121 F.3d 58 (2d Cir. 1997) (burden shifting when employer fails to keep records; employee may rely on reasonable inference)
- Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (U.S. 1946) (standards for proof of hours when employer records are inadequate)
- Kuebel v. Black & Decker Inc., 643 F.3d 352 (2d Cir. 2011) (employee estimates may satisfy proof burden)
- Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132 (2d Cir. 1999) (good faith/ objectively reasonable defense to liquidated damages)
- Barfield v. New York City Health & Hospitals Corp., 537 F.3d 132 (2d Cir. 2008) (employer must take active steps to ascertain law to avoid liquidated damages)
- Rana v. Islam, 887 F.3d 118 (2d Cir. 2018) (NY liquidated damages provision parallels FLSA)
- Inclan v. New York Hospitality Group, Inc., 95 F. Supp. 3d 490 (S.D.N.Y. 2015) (comparison of state and federal liquidated damages standards)
- Gamero v. Koodo Sushi Corp., 272 F. Supp. 3d 481 (S.D.N.Y. 2017) (bona fide meal periods non‑compensable under NY law)