OPINION AND ORDER
This is а collective action for unpaid wages under the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. (“FLSA”) and a class action for violations of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. (“ERISA”), and New York state labor laws.
Presently before the Court is a motion by one of the defendants, Michael Cañizales, for partial summary judgment (a) dismissing the plaintiffs’ complaint as against Cañizales; and (b) dismissing the cross-claims against Cañizales by co-defendants Cornelia Fifth Avenue, LLC (“Cornelia Fifth”), Cornelia Zicu International, LLC (“Zicu”), Cornelia International 401(K) Plan (“Cornelia 401(K)”), Richard Aidekman and Ellen Sackoff (collectively, the “Cornelia Defendants”).
For the reasons that follow, Cañizales’ motion is granted in part and denied in part.
I. Background
The following facts are drawn from the parties’ Local Civil Rule 56.1 Statements and other submissions in connection with the instant motion, and are undisputed unless otherwise noted.
A. The Parties
Until February 6, 2009, Defendant Cornelia Fifth owned and operated the Cornelia Day Resort at One East 52nd Street, New York, New York. Defendant Richard Aidekman was the owner of Samson Spas, LLC, which owned defendant Zicu, which, in turn, was the managing member of Cornelia Fifth.
Defendant Michael Cañizales was a part owner and member of defendant Spa Chakra Fifth Avenue, LLC (“SCFAL”).
During 2009, Aidekman entered into negotiations with Cañizales to sell certain assets of Cornelia Fifth to SCFAL. On February 6, 2009, SCFAL entered into an asset purchase agreement with Cornelia Fifth (with Richard Aidekman and Defendant Ellen Sackoff as principals). (See Affidavit of Michael Cañizales (“Cañizales Aff.”), Ex. A, Asset Purchase Agreement Dated as of February 6, 2009 Among Spa Chakra Fifth Avenue, LLC, as Buyer,
Plaintiffs are a class of individuals who were employees of Cornelia Fifth, and at least some of whom were also hired by SCFAL. (Defendant Michael Cañizales’ Rule 56.1 Statement of Undisputed Facts in Support of His Motion for Partial Summary Judgment, Dkt. No. 143 (“Cañizales 56.1 Stmt.”), ¶ 45.) They include, inter alia, hairstylists, nail technicians, massage therapists, make-up artists, and department managers. (Third Amended Class Action Complaint, Dkt. No. 109 (“Comp.”), ¶¶ 7-68.) Plaintiffs are allegedly owed wages incurred during the weeks leading up to the closing of the APA that were not paid by Cornelia Fifth or SCFAL.
B. The Asset Purchase Agreement
The APA contained several provisions relevant to this motion.
APA § 2.1 identified particular assets that were being purchased by SCFAL, including, inter alia, inventory, equipment, certain contracts related to the business, accounts receivable, and goodwill of the business as a going concern. APA § 2.2 sets forth certain assets that were expressly not being sold, including, inter alia, shares of the capital stock of the seller, corporate policies of the seller, all marks, and other documents having to do with the corporate organization of Cornelia Fifth, including seals, charter documents, minute books, stock books, tax returns, and books of account.
APA § 2.3 sets forth particular liabilities being transferred, and § 2.4 sets forth ex-eluded liabilities.
Article IV of the APA contains the seller’s representations and warranties, including that Cornelia Fifth “has conducted, and is conducting, the Business in material compliance with all applicable laws ... ”; that “[n]o event has occurred and that no circumstances exist that ... would result in a violation of, conflict with or failure on the part of the Seller to conduct the business in compliance with, any applicable Law”; and that “[t]he Seller has not received notice regarding any violation of, conflict with, or failure to conduct the Business in compliance with any applicable Law.” (APA § 4.8.) Cornelia Fifth also specifically warranted that “[t]here are, and have been, no violations of any other Law respecting the hiring, hours, wages, occupational safety and health, employment, promotion, termination or benefits of any Business Employee or other Person in connection with the Business.” (APA § 4.18.)
Under Article VI of the APA, containing the parties’ covenants, Cornelia Fifth covenanted that “[a]ny and all Liabilities relating to or arising out of the employment, or
The APA also contained indemnification provisions for each side. The seller (ie., Cornelia Fifth) and the principals (ie., Aidekman and Sackoff) agreed to indemnify “the Buyer [ie., SCFAL] and its Affiliatеs and their respective stockholders, members, managers, officers, directors, employees, agents, successors and assigns” for various losses arising in connection with any breach of the APA (including the representations, warranties and covenants) by the seller or its principals. (APA § 7.2(a).) The buyer (ie., SCFAL) agreed to indemnify “the Seller and its Affiliates and their respective stockholders, members, managers, officers, directors, employees, agents, successors and assigns” against, inter alia, breaches of the APA or failure to perform the assumed liabilities by SCFAL. (APA § 7.3.)
C. The Running and Subsequent Failure of the Business
After the closing, SCFAL opened the Spa Chakra Fifth Avenue Spa at the former location of the Cornelia Day Resort. Some, but not all, of the Cornelia Fifth employees were hired by SCFAL. SCFAL also hired additional new employees who had not worked for Cornelia Fifth. SCFAL did not sell the Cornelia-branded beauty products that had previously been sold at that location, but the business was operated as a beauty spa. Customers calling thе new spa were informed of the change in the business when they called to make appointments. SCFAL created a new website for the spa.
Cañizales states in an affidavit that “SCFAL had made clear to all of its employees that it was a new company and that they were no longer working for Cornelia Fifth. They all knew that [Cañizales] was now in charge of operations, whereas [he] had no part in the prior operations of Cornelia Fifth.” (Cañizales Aff. ¶ 27.)
What happened next is the subject of sharp dispute among the defendants. There is no dispute that soon after the closing, SCFAL ran into financial difficulty and the business failed less than a year after the closing. Cañizales claims that the failure was a result of various undisclosed liabilities and obligations of the Cornelia Defendants, and the Cornelia Defendants’ subsequent refusal to indemnify SCFAL and pay the various liabilities they had agreed to pay in the APA. For their part, the Cornelia Defendants contend that the failure of thе business was due to Mr. Cañizales’ violations of the APA. In particular, they contend that he diverted to his other businesses funds that they had transferred to him pursuant to the APA. (See generally Affidavit of Richard Aidekman (Dkt. No. 150).)
Suffice it to say that there are genuine issues of material fact regarding the precise causes and effects of all of these events, but these issues are not material to the instant motion, so it is unnecessary for the Court to resolve these disputes. It is, however, undisputed that the business did fail, and that on November 30, 2009, three of SCFAL’s creditors filed an involuntary petition against SCFAL under Chapter 7 of the United States Bankruptcy Code; that Spa Chakra, Inc. later filed a Chapter 11 petition; and that both cases were later consolidated into one Chapter 11 case. After certain reorganization efforts ultimate
D. Plaintiffs’ Claims
When Cornelia Fifth sold the assets of the business to SCFAL, it had allegedly not yet paid its employees’ wages for January 2009 and February 2009 through the closing date. Cañizales states that “[a]t or about the time of the February 6, 2009 closing of the APA, Aidekman told [him] that Cornelia Fifth had not yet paid its employees” these wages, but that “Cornelia Fifth would promptly make arrangements to pay the employees for then-wages for the period January 4 through January 17, 2009, by leaving sufficient funds in an operating account to be turned over to SCFAL so that SCFAL could, on Cornelia Fifth’s behalf, remit the wage payments to the employees.” (Cañizales 56.1 Stmt. ¶ 52.) Cañizales contends that Cornelia Fifth did not turn over accounts containing sufficient funds from which to make these payments, and that “[s]hortly after the closing, Aidekman told [him] that none of the Cornelia Fifth employees would be paid for the period January 18 through January 31, 2009 because Cornelia Fifth did not have the funds to pay them.” (Id. ¶ 55.)
Plaintiffs submit an affidavit from one of the class members, Amanda Wells, the Director of Marketing and Public Relations for Cornelia Fifth, and subsequently for SCFAL. (Dkt. No. 147 (“Wells Aff.”).) Wells states that after a power-point presentation to the Cornelia Fifth employees by Cañizales on February 4, 2009, she overheard Cañizales and Aidekman arguing “for several hours” in the next office. (Wells Aff. ¶ 5.) She states that she heard Cañizales tell Aidekman “that Cornelia Fifth would have to be responsible to pay all of the employees, including [herself] and plaintiffs, all outstanding unpaid wages.” (Id.)
Cañizales concedes that he became aware prior to the closing that Cornelia Fifth had not yet paid the employees’ wages for January and February 2009, but states that Aidekman assured him that Cornelia Fifth had sufficient assets to make those payments, and would do so. Cañizales states that SCFAL “relied on that representation,” and states further that
[t]he fact that this became an issue caused SCFAL to make sure that the APA required Cornelia Fifth to attend to this important obligation preсisely so that SCFAL would not face any unanticipated liability. Thus, Cornelia Fifth represented that it was in compliance with applicable laws pertaining to its employees and that there were no known claims against it.
(Reply Affidavit of Michael Cañizales, Dkt. No. 156, (“Cañizales Reply Aff.”) ¶ 3.)
The parties dispute the significance of certain actions that SCFAL allegedly took after the closing and after it became clear that Cornelia Fifth had not yet paid the employees’ back wages. For example, SCFAL offered certain cash advances to the employees against their paychecks to help provide them with assistance until they were fully paid. Cañizales contends that these actions did not amount to an admission of any kind of obligation to pay these wages, but rather was just an effort to help his employees. In any event, these issues are not ultimately material to this motion, as Cañizales’ potential liability as a
It is undisputed that Plaintiffs did not file any formal claim for unpaid wages until this lawsuit was initiated on April 27, 2009.
E. Procedural History
Plaintiffs filed this action on April 27, 2009 as a class action under Rule 23 of the Federal Rules of Civil Procedure, and as a collective action under FLSA. At that time, the case was before Hon. Paul G. Gardephe, U.S. District Judge.
The action was initially filed against Cornelia Fifth, Zicu, Cornelia 401(K), Aidekman, Sackoff, Cañizales, and SCFAL. The complaint alleged one claim against all defendants jointly and severally under FLSA (Claim 1). The class action claims included claims against all defendants jointly and severally under New York labor law, and under New York common law for breach of contract and the covenant of good faith and fair dealing, and for unjust enrichment (Claims 2, 3, 6 and 7). Plaintiffs also brought class action claims under ERISA against the Cornelia Defendants only (Claims 4 and 5). The initial complaint included 28 named plaintiffs. The plaintiffs amended their complaint twice, on August 17, 2009 and September 22, 2009, to include additional named plaintiffs, ultimately bringing the total number of named plaintiffs to 62. (Dkt. Nos. 57, 60.)
On November 30, 2010, the Court granted Plaintiffs’ motion to amend its complaint to join an additional defendant, Cornelia Essentials, LLC. (Dkt. No. 108.) On December 7, 2010, Plaintiffs filed the Third Amended Complaint. (Dkt. No. 109. ) Cañizales answered and asserted cross-claims for indemnification and contribution against the Cornelia Defendants and Cornelia Essentials, LLC. (Dkt. No. 110. ) Cornelia Fifth, Zicu, Aidekman, and Sackoff (the “Cornelia Cross-Claimants”) each answered and asserted cross-claims for indemnification against Cañizales and SCFAL.
On September 30, 2011, the case was reassigned to the undersigned pursuаnt to this District’s Rules for the Division of Business Among District Judges governing the reassignment of cases to new district judges.
On October 17, 2011, Cañizales filed the instant motion for summary judgment dismissing the Third Amended Complaint against him, and dismissing the Cornelia Defendants’ cross-claims against him.
II. Summary Judgment Standard
Summary judgment is appropriate only “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute of fact is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. SCR Joint Venture L.P. v. Warshawsky, 559
In resolving this inquiry, the Court must construe “the evidence in the light most favorable to the non-moving party and draw[] all reasonable inferences in that party’s favor.” Sledge v. Kooi,
III. Summary Judgment Regarding Plaintiffs’ Claims
Plaintiffs seek to hold Cañizales liable for the wages that Cornelia Fifth failed to pay. This will ultimately turn first on whether SCFAL can be held liable as a successor to Cornelia Fifth, and then on whether Cañizales can be held personally liable when SCFAL — and not Cañizales personally — is the successor entity.
Plaintiffs concede that they cannot sustain a basis for successor liability on the part of Cañizales for their New York Labor law and common law claims. Thus, Plaintiffs consent to the dismissal of claims 2, 3, 6 and 7 as against Cañizales. (Plaintiffs’ Memorandum of Law in Opposition to Defendant Canizales’s Motion for Summary Judgment, Dkt. No. 149, (“PL Opp.”) at 1.) However, Plaintiffs contend that there are, at a minimum, genuine disputes of material fact precluding summary judgment that Cañizales is jointly and severally liable with SCFAL as a successor under FLSA.
A. Potential Successor Liability of SCFAL
The Second Circuit has not delineated ■what the proper test for successor liability should be in the FLSA context. Cañizales argues that the Court should apply the traditional common law test for successor liability applied in New-York, while Plaintiffs argue that the Court should apply the broader “substantial continuity” test applied by federal courts in most labor and employment contexts. Resolution of this question is necessary, as it is potentially dispositive of the motion.
1. Traditional Test
Under the traditional common law test applied in New York, there can be little dispute that Cañizales would not be liable as a successor. “Under both New York law and traditional common law, a corporation that purchases the assets of
This case does not fall within any of these four exceptions. There is no allegation that the APA was entered into fraudulently to escape any obligations, and in light of the provisions of the APA setting forth which liabilities were and were not transferred, there can be no dispute that SCFAL did not expressly or impliedly assume Cornelia Fifth’s liabilities for unpaid wages to its employees.
Nor is there a genuine issue of material fact as to whether SCFAL was a “mere continuation” of Cornelia Fifth, or entered into a defacto merger with Cornelia Fifth. Courts have held that the “de facto merger” and “mere continuation” exceptions are “so similar that they may be considered a single exception.” Cargo Partner AG v. Albatrans, Inc.,
(1) continuity of ownership; (2) cessation of ordinary business and dissolution of the acquired corporation as soon as possible; (3) assumption by the purchaser of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the acquired corporation; and (4) continuity of management, personnel, physical location, assets, and general business operation.
NSI,
Accordingly, if the Court were to apply the traditional common law test used in New York state courts, SCFAL would not be held liable as a successor to Cornelia Fifth.
2. Whether to Apply the Broader “Substantial Continuity” Test
Plaintiffs argue that the Court should apply the broader test for successor liability that federal courts typically apply in the labor and employment context. Under this test, a company that purchases another company’s assets may be liable as a successor if there was “ ‘substantial continuity’ between the enterprises.” Fall River Dyeing & Finishing Corp. v. NLRB,
The Second Circuit has not yet addressed the applicability of the “substantial continuity” test in the FLSA context. However, several courts outside this Circuit have held that the “substantial continuity” test should be applied to FLSA cases. See Steinbach v. Hubbard,
District Courts in this Circuit have reached divergent results on this issue. One Magistrate Judge in this District applied the substantial continuity test in a jury trial under FLSA, but did not provide any analysis as to how he determined that that was the appropriate test. See Wong v. Hunda Glass Corp., No. 09 Civ. 4402,
The Court does not find persuasive the Eastern District courts’ analysis of this issue. In Kaur, the court rejected the defendants’ argument that the court should follow the Ninth Circuit in Steinbach (and the District of Nebraska in Brock) and import the broader “substantial continuity test” from Title VII cases to a FLSA case. The court cited the Second Circuit’s decision in NSI,
Thе Supreme Court originally applied this broader form of successor liability in the NLRA context “to avoid labor unrest and provide some protection for employees against the effects of a sudden change in the employment relationship.” Steinbach,
FLSA’s provisions regarding employee wages and hours invoke the same concerns as the other laws for which courts have applied the substantial continuity test. The Ninth Circuit noted that “FLSA was passed to protect workers’ standards of living through the regulation of working conditions,” and concluded that “[t]hat fundamental purpose is as fully deserving of protection as the labor peace, anti-discrimination, and worker security policies underlying the NLRA, Title VII, 42 U.S.C. § 1981, ERISA, and MPPAA.”
In light of these policy considerations, and the Second Circuit’s instruction to use a “flexible” approach in applying FLSA, Barfield,
3. The Substantial Continuity Test
The substantial continuity test in the labor relations context looks to “whether the new company has acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor’s business operations.” Fall River,
(1) whether the successor company had notice of the charge or pending lawsuit prior to acquiring the business or assets of the predecessor; (2) the ability of the predecessor to provide relief; (3) whether there has been a substantial continuity of business operations; (4) whether the new employer uses the same plant; (5) whether he uses the same or substantially the same work force; (6) whether he uses the same or substantially the same supervisory personnel; whether the same jobs exist under substantially the same working conditions; (8) whether he uses the same machinery, equipment, and methods of production; and (9) whether he produces the same product.
Musikiwamba,
Courts in this District have explained, in the Title VII context, that “[cjourts considering the appropriateness of imposing successor liability on a purchaser of assets (as distinguished from a purchaser of stock, who acquires the assets and liabilities of the seller) have focused on only two factors from MacMillan Bloedel.” Rowe Entm’t,
4. Applying the Substantial Continuity Test
The Court finds that there are, at a minimum, genuine issues of material fact as to whether SCFAL (and therefore Cañizales) can be liable as a successor under the substantial continuity test.
a. Notice
Cañizales correctly points out that Plaintiffs have the burden to show that SCFAL had notice of Plaintiffs’ claim prior to the acquisition. Barney Skanska Const.,
Plaintiffs contend that Cañizales had notice of their claims prior to the acquisition. In opposition to Cañizales’ motion, Plaintiff filed the Wells Affidavit to demonstrate that there is a genuine issue of fact as to whether Cañizales was aware of the claims for unpaid wages at least two days prior to the closing.
Cañizales argues that because Plaintiffs did not file this action until April 27, 2009, more than two months after the closing (on February 6), Cañizales could not possibly have had notice of their claims. According to Cañizales, a “putative successor must have notice of the pendency of an actual claim, not notice of a mere failure to pay wages оr other conduct by the predecessor giving rise to liability when no employee has asserted a claim.” (Defendant Michael Cañizales’ Reply Memorandum of Law in Further Support of his Motion for Partial Summary Judgment, Dkt. No. 154, (“Cañizales Reply”) at 4.)
Cañizales also states that in closing the deal for the purchase, he relied upon Cornelia’s representation in the APA that it “has not received any notice regarding any violation of, conflict with, or failure to conduct the Business in compliance with, any applicable Law” (APA ¶ 4.8(b)), and its warranty that there had been “no violations of any other Law respecting the hiring, hours, wages, occupational safety and health, employment, promotion, termination or benefits” of any of the employees. (APA ¶ 4.18(c)). (Cañizales Mem. at 14.) Cañizales argues that he could not have had any notice of a violation of FLSA when Cornelia Fifth expressly represented and warranted that no such violations existed.
Cañizales misconstrues the law on this point. It is true that many decisions finding successor liability were based on notice of actual pending lawsuits. See, e.g., Nichols Gas & Oil, Inc.,
As several appellate courts, including the Supreme Court, have explained, the principal reason for the notice requirement is “to ensure fairness by guaranteeing that a successor had an opportunity to protect against liability by negotiating a lower price or indemnity clause.” Steinbach,
Cañizales states that he became aware “at or about the time of the February 6, 2009 closing of the APA” that Cornelia Fifth had not yet paid its employees their wages for January and February 2009, through the closing date. (Cañizales Aff. ¶ 23.) He concedes that the conversation that was overheard by Plaintiff Wells did take place, and that he knew of Cornelia Fifth’s failure to pay the employees’ wages at least as of that date. (Cañizales Reply Aff. ¶ 3.) Indeed, Cañizales states that “[t]he fact that this became an issue caused SCFAL to make sure that the APA required Cornelia Fifth to attend to this important obligation precisely so that SCFAL would not face any unanticipated liability.” (Id.) Thus, according to Cañizales, he negotiated the various representations and warranties in the APA, as well as the indemnifiсation provisions, at least partially in response to his knowledge of the potential liability for unpaid wages. (Id. ¶¶ 3-4.)
In other words, the precise rationale for the notice requirement was served here. SCFAL had notice of the potential liability and took the opportunity to structure the agreement around the possibility of that liability. SCFAL or Cañizales may very well have valid cross-claims against the Cornelia Defendants based on the alleged breach of the representations and warranties or the indemnity provisions. But a predecessors’ breach of representations and warranties in an asset purchase agreement does not control whether the successor can be held liable under the substantial continuity doctrine.
Cañizales is correct that several of the decisions in this District applying the successor liability test in the context of discrimination claims found that there was no notice where the claims were not yet “pending.” See, e.g., Long,
This is not a case of an “innocent purchaser” who “exercised due diligence and failed to uncover evidence” of any potential liability. Musikiwamba,
b. Substantial Continuity in the Operation of the Business
The Court need not dwell at length on this factor, as it is clear that there are genuine issues of fact as to whether there was sufficient “substantial continuity” between the two businesses.
There is no dispute that SCFAL operated its business in the same location as Cornelia Fifth, and that it hired at least some of Cornelia Fifth’s employees. However, the record is not clear precisely what percentage of Cornelia’s employees were hired by SCFAL, and what percentage of SCFAL’s employees had previously been employed by Cornelia. Although many of the supervisory personnel were different between the two businesses, it is not clear how many, if any, the two businesses had in common. The record is also not clear on whether the “same jobs exist[ed] under substantially the same working conditions” or whether they used “the same machinery, equipment or methods of production,” Musikiwamba,
Accordingly, drawing all inferences in favor of the non-moving party, as the Court must do on a motion for summary judgment, the Court concludes that there are genuine issues of material fact as to whether there was substantial continuity of business operations.
c. Ability of Predecessor to Provide Relief
The Court also concludes that there are genuine issues of fact as to the predecessor’s ability to provide relief.
Cañizales argues that the proper inquiry is not whether.the predecessors currently have the ability to provide relief, but whether they had the ability to provide relief at the time of the acquisition. (Id. at 5-6.) But that is not precisely true. Courts have consistently held that the equitable considerations behind successor liability may make it inaрpropriate “to impose successor liability on an innocent purchaser when the predecessor is fully capable of providing relief.” Musikiwamba,
In any event, there are, at a minimum, genuine issues of fact as to whether the predecessors could have provided relief before the transfer, or could do so now.
In sum, the Court determines that there are genuine issues of fact as to whether SCFAL meets the requirements for the imposition of successor liability under the substantial continuity test. Accordingly, the Court denies Cañizales’ motion for summary judgment on that issue.
B. Joint and Several Liability of Cañizales
Cañizales argues that he cannot be held personally liable, even if SCFAL is found to be liable as a successor, because he was not personally a successor to Cornelia Fifth; SCFAL entered into the APA, not Cañizales.
It is black letter law that a limited liability company exists as a separate entity from its members. See Morris v. New York State Dep’t of Taxation and Finance,
As Plaintiffs point out, Cañizales misconstrues the basis for his potential liability. Cañizales is not potentially liable under a veil-piercing analysis, but rather is potentially jointly and severally liable with SCFAL as an “employer” of the plaintiffs under FLSA.
The definitions of “employer” and “employee” under FLSA are “strikingly br[oad],” “stretching] the meaning of ‘employee’ to cover some parties who might not qualify as such under a strict application of traditional agency law principles.” Nationwide Mut. Ins. Co. v. Dar
Cañizales was indisputably a “part owner and member” of SCFAL, as well as “an officer, director and shareholder of a related entity, Spa Chakra, Inc.” (Cañizales Aff. ¶ 2.) Cañizales also stated that he was “in charge of operations” at SCFAL. (Id. ¶ 27.) This evidence is sufficient to create a triable issue of fact as to whether he can be held jointly and severally liable as an “employer” with SCFAL.
In light of these issues of material fact, the Court denies Cañizales’ motion for summary judgment as to his liability to Plaintiffs.
III. Motion for Summary Judgment Regarding Cross-Claims
Cañizales also moves for summary judgment on the Cornelia Cross-Claimants’ crossclaims for indemnification under the APA.
The Cornelia Cross-Claimants each asserted a cross-claim against Cañizales and SCFAL, alleging that pursuant to the APA, Cañizales and SCFAL “are obligated to pay certain monies and to assume and pay certain obligations, and are obligated to indemnify” the Cornelia CrossClaimants “for any third-party actions brought against them related to any failure on their part” to meet those obligations. (Cornelia Defendant Cross-Claims, Dkt. Nos. Ill— 14, ¶ 2.)
Cañizales argues that he cannot be held personally liable as an indemnitor under the APA because he is not personally a signatory to the APA (although he did sign the APA in his capacity as Chief Executive Officer of SCFAL), and was not a party to any contract with the Cornelia Cross-Claimants. (See APA at 40.) As previously explained, a member of an LLC ordinarily cannot be held personally liable for the acts of the LLC. See Weber,
(1) the absence of the formalities and paraphernalia that are part and parcel of the corporate existence, ie., issuance of stock, election of directors, keeping of corporate records and the like, (2) inadequate capitalization, (3) whether funds are put in and taken out of the corporation for personal rather than corporate purposes, (4) overlap in ownership, officers, directors, and personnel, (5) common office space, address and telephone numbers of corporate entities, (6) thе amount of business discretion displayed by the allegedly dominated corporation, (7) whether the related corporations deal with the dominated corporation at arms length, (8) whether the corporations are treated as independent profit centers, (9) the payment or guarantee of debts of the dominated corporation by other corporations in the group, and (10) whether the corporation in question had property that was used by other of the corporations as if it were its own.
William Passalacqua Builders, Inc. v. Resnick Developers South, Inc.,
In response to Cañizales’ arguments, the Cornelia Cross-Claimants offer only vague assertions that “Michael Cañizales was the de facto entity negotiating this agreement and handling the assets of the Purchaser which were turned over in сonnection with the sale,” and that because it was “his role to determine whether those assets were used as agreed to or diverted to other areas,” “he should be held liable under the Buyer’s indemnity obligation as the primary representative of the Buyer as its Chief Executive Officer.” (Defendant Cornelia Fifth Avenue, LLC, Cornelia Zicu International, LLC, Cornelia International 401(K) Plan, Richard Aidekman, and Ellen Sackoff, Memorandum of Law in Opposition to Defendant Michael Cañizales’ Motion for Partial Summary Judgment, Dkt. No. 152, at 4.)
While it is true that the Court grants the non-moving party all reasonable favorable inferences on a motion for summary judgment, a non-movant may not defeat summary judgment with mere “conclusory allegations.” Scotto,
IV. Conclusion
For the reasons stated above, Defendant Michael Cañizales’ motion for partial summary judgment is GRANTED in part and DENIED in part. The motion for summary judgment dismissing Plaintiffs’ second, third, sixth, and seventh causes of action as against Cañizales is GRANTED. The motion for summary judgment regarding Cañizales’ liability for the first cause of action under FLSA is DENIED. The motion for summary judgment dismissing the crossclaims against Michael Cañizales by Cornelia Fifth Avenue, LLC, Cornelia Zicu International, LLC, Richard Aidekman and Ellen Sackoff is GRANTED, and those cross-claims are hereby dismissed.
The Clerk of Court is directed to close this motion (Dkt. No. 140).
SO ORDERED.
Notes
. Plaintiff states that defendant Ellen Sackoff was an owner of Zicu, but the Cornelia Defendants deny this. (Cornelia Defs. Rule 56.1 Counter Statement of Disputed Facts, Dkt. No. 153.) Because this is not a material fact for the resolution of this motion, the Court need not attempt to resolve whether the dispute is genuine.
. Cañizales submitted a full copy of the APA as an exhibit to his affidavit, Dkt. No. 142, but did not include the schedules that are incorporated by reference into the аgreement. These schedules set forth additional assets and liabilities that are being transferred or excluded. Without those documents in the record, the Court is unable to rule as a matter of law which liabilities were or were not transferred. However, because the Court concludes that there are genuine disputes of material fact on several points, the absence of these schedules was not dispositive of the motion one way or the other.
. The Cornelia Defendants dispute numerous aspects of this description of events, but resolution of these factual disputes is ultimately unnecessary to the resolution of this motion.
. Cañizales moves for summary judgment dismissing the cross-claims of all of the Cornelia Defendants, including Cornelia 401(K). (See Dkt. No. 140.) All of the Cornelia Defendants, including Cornelia 401(K), opposed the motion. (See Dkt. No. 152.) However, unlike the other Cornelia Defendants, Cornelia 401(K) did not assert any cross-claims. (Dkt. No. 115.) Thus, Cañizales’ motion as to Cornelia 401(K) is denied as moot.
. Fоr similar reasons, the Court finds the district court's holding in Vasquez, 2010 WL
. Cañizales states, without citation to authority, and without elaboration, that "the concern with unfair labor practices going unremedied does not apply outside the union context." (Defendant Michael Cañizales’ Memоrandum of Law in Support of his Motion for Partial Summary Judgment, Dkt. No. 144, ("Cañizales Mem.’’) at 16.)
. Cañizales points out that Brock has not been followed by any other decision, and that in that case, the president of the successor company was the same as the president of the predecessor company. The court acknowledged that ''[t]he notice inquiry is more significant in the case of a disinterested third party purchase[r] than in a situation involving the same parties on both sides of the transaction.”
. Of course, one could conceive of a situation where the discrimination was so patent and obvious that a successor could have notice of it, even if no employee had yet asserted a claim based on that discrimination.
. The statute defines an "employee" as "any individual employed by an employer.” 29 U.S.C. § 203(e). An "employer" includes "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). To "employ” "includes to suffer or permit to work." 29 U.S.C. § 203(g).