Ling Nan Zheng v. LIBERTY APPAREL CO. INC.

09-4890-cv
Zheng v. Liberty Apparel Co.

1 UNITED STATES COURT OF APPEALS
2
3 FOR THE SECOND CIRCUIT
4
5 August Term, 2009
6
7
8 (Argued: July 15, 2010 Decided: August 10, 2010)
9
10 Docket No. 09-4890-cv
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13
14 LING NAN ZHENG, REN ZHU YANG, YUN ZHEN
15 HUANG, WEN QIN LIN, SAI BING WANG, YE
16 BIAO YANG, RONG YUN ZHENG, HUI FANG LIN,
17 XIU YING ZHENG, JIN PING LIN, HUI MING
18 DONG, YU BING LUO, SAU CHI KWOK, SAI XIAN
19 TANG, YI ZHEN LIN, RUI FANG ZHANG, MEI
20 JUAN YU, MEI YING LI, QIN FANG QIU, YI
21 MEI LIN, MEI ZHU DONG, FUNG LAM, XIU ZHU
22 YE, SING KEI LAM, XUE JIN LIN,
23
24 Plaintiffs-Appellees,
25
26 CUI ZHEN LIN,
27
28 Plaintiff,
29
30 -v.-
31
32 LIBERTY APPAREL COMPANY, INC., ALBERT
33 NIGRI, HAGAI LANIADO,
34
35 Defendants-Cross-Claimants
36 -Appellants,
37
38 NGON FONG YUEN, 88 FASHION INC., TOP
39 FIVE SPORTSWEAR, INC., S.P.R.
40 SPORTSWEAR, INC., 91 FASHION INC.,
41
42 Defendants,
43
44 LAI HUEN YAM, also known as Steven
1 Yam, 998 FASHIONS INC., 103 FASHION
2 INC.,
3
4 Defendants-Cross-Defendants.
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7

8 Before: JACOBS, Chief Judge, PARKER and HALL,
9 Circuit Judges.
10
11 Appeal from a judgment entered in the United States

12 District Court for the Southern District of New York

13 (Sullivan, J.), after a jury verdict finding that appellants

14 acted as a joint employer of the plaintiff garment workers,

15 and are liable for unpaid and underpaid wages pursuant to

16 the Fair Labor Standards Act, New York state analogs, and

17 New York Labor Law § 345-a(1). We affirm. We consider the

18 defendants’ remaining arguments in a summary order filed

19 contemporaneously with this opinion.

20 VANO I. HAROUTUNIAN (Will
21 Levins, on the brief), Ballon
22 Stoll Bader & Nadler, P.C., New
23 York, New York , for Appellants.
24
25 JAMES REIF (Anna Roberts on the
26 brief), Gladstein, Reif &
27 Meginniss, LLP, New York, New
28 York, for Appellees.
29
30
31 PER CURIAM:
32
33 Plaintiff s-appellees are 25 Chinese garment workers

2
1 living and working in New York City’s Chinatown. In 1999,

2 they sued Liberty Apparel Company and its principals Albert

3 Nigri and Hagai Laniado (collectively, “the Liberty

4 Defendants”), and others, for violations of the Fair Labor

5 Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., New York

6 state analogs, see N.Y. Labor Law § 652(1); N.Y. Comp. Codes

7 R. & Regs. tit. 12, § 142-2.2, and New York Labor Law § 345-

8 a(1). After a lengthy procedural history, the case went to

9 a jury trial, and the principal issue was whether the

10 Liberty Defendants were plaintiffs’ “joint employer” for

11 purposes of the FLSA and New York state analogs. The jury

12 returned a verdict in favor of plaintiffs, and following

13 resolution of various post-trial motions, the United States

14 District Court for the Southern District of New York

15 (Sullivan, J.) entered judgment accordingly.

16 The Liberty Defendants appeal that judgment. In this

17 opinion, we consider their contention that the district

18 court--rather than the jury--should have determined whether

19 the Liberty Defendants were plaintiffs’ joint employer. And

20 on that issue, we affirm. We consider the Liberty

21 Defendants’ remaining arguments in a summary order filed

22 contemporaneously with this opinion.

3
1

2 I

3 The full factual background of this case is set forth

4 in Judge Casey’s opinion in Zheng v. Liberty Apparel Co.,

5 No. 99-Civ-9033, 2002 WL 398663, at *1-2 (S.D.N.Y. Mar. 13,

6 2002) (“Zheng I”). We recount only those facts necessary to

7 resolve the single legal issue that requires an opinion.

8 Plaintiffs’ direct employer was Lai Huen Yam, who owned

9 and operated a factory where plaintiffs worked in New York

10 City’s Chinatown. In 1997, Yam entered into a business

11 relationship with the Liberty Defendants. Liberty would

12 deliver partially-finished clothes to Yam’s factory, and

13 plaintiffs would finish the clothes by sewing the fabrics

14 together and adding buttons, labels, cuffs, and hems. The

15 Liberty Defendants would regularly send quality control

16 representatives to the Factory to supervise plaintiffs’

17 work.

18 The dealings between Yam and the Liberty Defendants

19 were non-exclusive; Yam’s employees (including plaintiffs)

20 did work for other manufacturers, and the Liberty Defendants

21 subcontracted work to approximately 30-40 other factories.

22 Nonetheless, plaintiffs testified that approximately 70 to

4
1 80 percent of their work was done on Liberty garments. The

2 Liberty Defendants paid Yam by the piece (not the hour), and

3 Yam paid plaintiffs the same way.

4 On average, each plaintiff worked more than 85 hours

5 per week. When they were paid for their work--which was not

6 always--they were paid at a rate below the federal and state

7 minimums, and they were never paid overtime.

8 On August 19, 1999, plaintiffs sued Yam and the Liberty

9 Defendants for violations of the minimum wage and overtime

10 provisions of the FLSA and New York state analogs; they also

11 brought a claim pursuant to New York Labor Law § 345-a(1).

12 Plaintiffs later voluntarily dismissed their claims against

13 Yam, either because he could not be located or had ceased

14 doing business.

15 The parties cross-moved for summary judgment, and by

16 opinion and order dated March 13, 2002, the court granted

17 the Liberty Defendants’ motion in part and denied

18 plaintiffs’ motion in full. Zheng I, 2002 WL 398663, at *1.

19 Applying the four-factor joint employment test articulated

20 in Carter v. Dutchess Community College, 735 F.2d 8, 12 (2d

21 Cir. 1984), the court held that the Liberty Defendants were

22 not plaintiffs’ joint employer within the meaning of the

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1 FLSA and analogous New York state laws. Zheng I, 2002 WL

2 398663, at *7.

3 Plaintiffs appealed, and this Court vacated and

4 remanded on the ground that the district court applied the

5 wrong test for determining joint employment. Zheng v.

6 Liberty Apparel Co., 355 F.3d 61, 64 (2d Cir. 2003) (“Zheng

7 II”). Extrapolating from Second Circuit and Supreme Court

8 precedent, Zheng II identified six specific factors relevant

9 to whether the Liberty Defendants were plaintiffs’ joint

10 employer:

11 (1) whether Liberty’s premises and equipment were
12 used for the plaintiffs’ work; (2) whether [Yam’s
13 Factory] had a business that could or did shift as
14 a unit from one putative joint employer to another;
15 (3) the extent to which plaintiffs performed a
16 discrete line-job that was integral to Liberty’s
17 process of production; (4) whether responsibility
18 under the contracts could pass from one
19 subcontractor to another without material changes;
20 (5) the degree to which the Liberty Defendants or
21 their agents supervised plaintiffs’ work; and (6)
22 whether plaintiffs worked exclusively or
23 predominantly for the Liberty Defendants.
24
25 Id. at 72.

26 In language particularly relevant to this appeal, Zheng

27 II identified “three types of determinations” that bear on

28 the analysis of these factors: “First, there are historical

29 findings of fact that underlie each of the relevant factors.

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1 Second, there are findings as to the existence and degree of

2 each factor. Finally, there is the conclusion of law to be

3 drawn from applying the factors, i.e., whether an entity is

4 a joint employer.” Id. at 76. “The first two

5 determinations . . . are findings of fact that must be

6 accepted on appeal unless clearly erroneous.” Id.; see also

7 id. at 76 n.13 (noting “[t]he fact-intensive character of

8 the joint employment inquiry”). “Only the last

9 determination--the ultimate decision as to whether a party

10 is an employer--is a legal conclusion that is reviewed de

11 novo.” Id. at 76. Zheng II also clarified that “[s]hould

12 the District Court, on remand, deny summary judgment in

13 favor of defendants, it will be incumbent upon the Court to

14 conduct a trial.” Id. at 77.

15 On remand, the defendants again moved for summary

16 judgment, and on May 23, 2008, Judge Sullivan denied that

17 motion. Zheng v. Liberty Apparel Co., 556 F. Supp.2d 284,

18 287 (S.D.N.Y. 2008) (“Zheng III”). The court determined

19 that, while there was no genuine issue of fact that the

20 first, second, and fourth Zheng II factors weighed in the

21 Liberty Defendants’ favor, there was a dispute of fact

22 regarding factors three, five, and six. Id. at 289-95.

7
1 On February 11, 2009, after a two-and-a-half week

2 trial, the jury found in plaintiffs’ favor. The court

3 denied the Liberty Defendants’ post-verdict motions to set

4 aside the verdict and for a new trial. By final judgment

5 entered October 26, 2009, plaintiffs were awarded

6 $556,566.76 in damages.

7 The Liberty Defendants now appeal that judgment. As to

8 the FLSA and the analogous state law claims, they argue

9 that (1) the district court improperly allowed the jury to

10 determine the “ultimate legal question” whether the Liberty

11 Defendants were plaintiffs’ joint employer, whereas instead

12 the court itself should have resolved that issue; (2) the

13 district court refused to charge the jury that, as a matter

14 of law, three of the six Zheng II factors weighed in the

15 Liberty Defendants’ favor (to some degree); and (3) as a

16 matter of law, plaintiffs’ evidence was insufficient to

17 support the jury’s finding of joint employment. As to the

18 § 345-a(1) claim, the Liberty Defendants argue that (1) the

19 statute does not authorize a private right of action, and,

20 alternatively, (2) whether it authorizes a private right of

21 action raises a novel and complex issue of state law such

22 that the district court should have declined to exercise

8
1 supplemental jurisdiction over that claim, see 28 U.S.C.

2 § 1367(c)(1).

3 This opinion is confined to an analysis of whether the

4 district court properly allowed the jury to make the joint-

5 employment determination. We conclude that it did. The

6 Liberty Defendants’ remaining arguments are considered in a

7 summary order filed contemporaneously with this opinion.

8

9 II

10 In the context of a jury trial, the question whether a

11 defendant is a plaintiffs’ joint employer is a mixed

12 question of law and fact. Such questions “involve[] the

13 application of a legal standard to a particular set of

14 facts.” Richardson v. N.Y. State Dep’t of Corr. Serv., 180

15 F.3d 426, 437 (2d Cir. 1999) (internal quotation marks

16 omitted). “FLSA claims typically involve complex mixed

17 questions of fact and law . . . .” Barrentine v. Arkansas-

18 Best Freight Sys., 450 U.S. 728, 743 (1981); cf. Holzapfel

19 v. Town of Newburgh, N.Y., 145 F.3d 516, 521 (2d Cir. 1998).

20 The jury’s role was to apply the facts bearing on the

21 multi-factor joint employment inquiry to the legal

22 definition of joint employer, as that term had been

9
1 (properly) defined by the district court in the jury charge.

2 “[M]ixed questions [of law and fact] are ‘especially well-

3 suited for jury determination . . . .’” Richardson, 180

4 F.3d at 437 (quoting Mendell v. Greenberg, 927 F.2d 667, 673

5 (2d Cir. 1990)); see also Kirsch v. Fleet St., Ltd., 148

6 F.3d 149, 171 (2d Cir. 1998); Simms v. Vill. of Albion,

7 N.Y., 115 F.3d 1098, 1110 (2d Cir. 1997) (“A mixed question

8 of fact and law may be submitted to the jury only if the

9 jury is instructed as to the applicable legal standards.”).

10 In the Liberty Defendants’ view, the district court

11 should have provided a special verdict form so that the jury

12 could detail its factual findings regarding the various

13 joint employment factors, and so that the district court

14 could then have applied those findings to make the final

15 determination as to joint employment. But such a rule would

16 distort the jury’s proper role, described above, of applying

17 law to fact. Moreover, requiring the use of a special

18 verdict form would be anomalous in the law, cf. Fed. R. Civ.

19 P. 49(a); Kirsch, 148 F.3d at 171; 9B C. Wright & A. Miller,

20 Federal Practice & Procedure § 2505 (“Wright & Miller”); and

21 appellate courts rarely--if ever--vacate for failure to use

22 a special verdict form, see Skidmore v. Balt. & O.R. Co.,

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1 167 F.2d 54, 67 (2d Cir. 1948) (“[W]e cannot hold that a

2 district judge errs when, as here, for any reason or no

3 reason whatever, he refuses to demand a special verdict,

4 although we deem such verdict usually preferable to the

5 opaque general verdict.”); Wright & Miller § 2505 (“[A]s

6 numerous courts have held, as evidenced by the many cases

7 cited in the note below, the exercise of th[e trial court’s

8 discretion in using a general rather than a special verdict

9 form] is not likely to be overturned on appeal.”).

10 The Liberty Defendants’ reliance on language from Zheng

11 II is misplaced. That decision recognized that the joint

12 employment question is a mixed one of law and fact:

13 “Finally, there is the conclusion of law to be drawn from

14 applying the factors, i.e., whether an entity is a joint

15 employer.” Zheng II, 355 F.3d at 76 (emphasis added); cf.

16 id. at 76 n.13 (noting “[t]he fact-intensive character of

17 the joint employment inquiry”). Moreover, to the extent

18 Zheng II contemplated de novo review of a joint employment

19 determination, it did so only in the context of summary

20 judgment, not a jury trial. De novo review of a jury’s

21 joint employment determination would necessitate use of a

22 special verdict--which, as we explained above, we do not

11
1 require--and would cause the appellate court to tease apart

2 the interwoven elements of facts and law, a project that

3 would raise serious Seventh Amendment concerns, cf. Castillo

4 v. Givens, 704 F.2d 181, 199 (5th Cir. 1983) (Higginbotham,

5 J., concurring)--if it could even be done.

6

7 CONCLUSION

8 For the foregoing reasons, we hold that the district

9 court properly submitted the joint employment issue to the

10 jury. The judgment of the district court is affirmed,

11 subject to the partial vacatur and remand required by the

12 companion summary order. The mandate shall issue forthwith.

12