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Acosta v. JM Osaka Inc.

United States District Court, E.D. Virginia, Alexandria Division

August 30, 2017

R. ALEXANDER ACOSTA, Secretary of Labor United States Department of Labor Plaintiff,
v.
JM OSAKA INC., et al., Defendants.

          MEMORANDUM OPINION

          T. S. Ellis, III United States District Judge.

         In this FLSA action, the Secretary of Labor, as authorized by statute, [1] has brought this action on behalf of certain employees against (i) two restaurants, (ii) the individual owners of the restaurants, and (iii) a manager of one of the restaurants. Specifically, the complaint alleges that defendants failed to pay the minimum wage and to compensate employees for overtime, in violation of the FLSA, 29 U.S.C. §§ 206, 207, and 211. One of the defendants, a manager at one of the restaurants, seeks threshold dismissal pursuant to Rules 12(b)(1) and 12(b)(6), Fed. R. Civ. P, on the ground that he is not an “employer” under the FLSA. The matter has been fully briefed and argued orally, and is now ripe for disposition.

         I.

         The Secretary of Labor has brought this FLSA action on behalf of approximately 58 employees[2] of the Osaka Japanese Restaurant and Murusaki Japanese Restaurant. According to the complaint, the 58 restaurant employees on whose behalf the Secretary sues are sushi chefs, cooks, and tipped employees, such as wait staff.

         There are five named defendants: (i) the two corporations that own the restaurants, JM Osaka, Inc. and IK Murusaki, Inc., (ii) the two individuals who jointly own and are the corporate officers of the restaurant corporations, In Ky Kim and Yeo Ing My, and (iii) Hoyung Ju, an individual alleged to be a manager of one of the restaurants. At issue is defendant Hoyung Ju's motion to dismiss on grounds of jurisdiction and that the complaint fails to state a claim because he is not an “employer” under the FLSA, but is merely a manager of the restaurant.

         The complaint alleges that Hoyung Ju served as manager of Murusaki and “overs[aw] the daily operation of the business.” Doc. 1 at ¶ 6. In that role, he is alleged to have “supervise[d] and direct[ed] the work of all employees of Murusaki, including specific directions on how to prepare food.” Id. It is also alleged that he is “involved in the interviewing and hiring of employees” and “served as the point-of-contact and represented both Osaka and Murusaki vis-à-vis the U.S. Department of Labor[, ]” bearing “responsibility for producing payroll and other employment records” and answering questions.[3] Id.

         The complaint further alleges that from at least May 25, 2013 through April 13, 2017, all defendants, including Hoyung Ju failed to compensate their employees in accordance with the FLSA. According to the complaint, non-tipped employees were paid a semi-monthly salary of between $219.98 and $3, 666.87 and worked between 52.5 and 65.75 hours each week. Therefore, the complaint alleges that employees were paid at wage-rates of between $1.05 and $7.22 per hour, all of which are under the current federal minimum wage of $7.25 per hour, and in violation of 15 U.S.C. § 206, which requires that employers pay the federal minimum wage.

         The complaint also alleges defendants failed to pay tipped and non-tipped employees appropriate overtime compensation. Specifically, the complaint alleges that the salaries of non-tipped employees were not increased to time-and-a-half for hours worked in excess of 40-hours per week, and tipped employees, who worked between 40.65 and 47 hours a week at a rate of $2.50 to $3.00 per hour, were also not paid time-and-a-half for hours worked in excess of 40 per week, in violation of 15 U.S.C. § 207, which requires employers to pay overtime wages. The complaint also states that defendants failed to maintain adequate records of their employees, including employee names, addresses, wages, hours, and conditions of employment in violation 15 U.S.C. § 211. Doc. 1 at ¶ 11.

         Hoyung Ju seeks dismissal of the complaint on two grounds: (i) lack of subject matter jurisdiction pursuant to 12(b)(1) on the ground that he is not an “employer” under the FLSA and (ii) failure to state a claim on the ground that the complaint's allegations do not warrant a plausible inference that he is an FLSA “employer.”

         II.

         Hoyung Ju's jurisdiction argument - that he is not an “employer” under the FLSA - is a challenge to subject matter jurisdiction under Rule 12(b)(1), and is therefore appropriately considered first. An objection to subject matter jurisdiction may be raised by the parties or by the court at any stage in the litigation and the plaintiff bears the burden of proving the existence of such jurisdiction by a preponderance of the evidence. Ellenburg v. Spartan motors Chassis Inc., 519 F.3d 192, 196 (4th Cir. 2008).

         Hoyung Ju's argument in support of a jurisdictional challenge is a non-starter;[4] whether Hoyung Ju, given the scope of his duties as manager, is an “employer” under the FLSA is an issue of fact, and his argument that he is not an “employer” concerns whether the complaint alleges facts warranting a plausible inference that he is an FLSA “employer.” As such, the argument is more appropriately raised as a ground for dismissal under Rule 12(b)(6).

         Notably, it is not uncommon for such a dispute to be confused with the existence or non-existence of jurisdiction. As the Supreme Court has noted in Arbaugh v. Y & H Corp., 546 U.S. 500, 506 (2006), “[s]ubject matter jurisdiction in federal-question cases is sometimes erroneously conflated with a plaintiff's need and ability to prove the defendant bound by the federal law asserted as the predicate for relief - a merits-related determination.”[5] Simply put, therefore, the dispute here seems clearly a factual one, not one of jurisdiction. Unless “the Legislature clearly states that a threshold limitation on a statute's scope shall count as jurisdictional, ” that limitation “is an element of the plaintiff's claim for relief, not a jurisdictional issue.” Id. at 515-16. Accordingly, Hoyung Ju's 12(b)(1) argument fails at the threshold.

         Hoyung Ju's reliance on Maravilla v. Ngoc Anh Restaurant Ltd., No. 1:16-cv-427 (LMB/MSN), 2016 WL 6821090 (E.D. Va., Nov. 17, 2016), is misplaced. That case, far from supporting Hoyung Ju, in fact makes clear that his jurisdictional argument lacks merit. There the court held that “‘whether a defendant is an employer as defined in the FLSA is an element of the plaintiff's meritorious FLSA claim' and . . . ‘does not implicate subject matter jurisdiction.'” Id. at 3 (citing Gilbert v. Freshbikes, LLC, 32 F.Supp.3d 594, 600 (D. Md. 2014)). Applying Arbaugh's reasoning, the court in Maravilla found that “the FLSA provides no indication that Congress intended the coverage requirements to operate as a jurisdictional ...


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