Ling Nan Zheng v. LIBERTY APPAREL CO. INC.
617 F.3d 182, 2010 U.S. App. LEXIS 16478, 16 Wage & Hour Cas.2d (BNA) 830 (2010)
Rule of Law:
The determination of whether an entity constitutes a joint employer under the Fair Labor Standards Act (FLSA) and analogous state laws is a mixed question of law and fact, properly submitted to a jury for decision when disputed factual issues exist, with the jury applying the legal definition to the specific facts found.
Facts:
- Ling Nan Zheng and 24 other Chinese garment workers were employed by Lai Huen Yam, who owned and operated a factory in New York City’s Chinatown.
- In 1997, Yam entered into a business relationship with Liberty Apparel Company, Inc., Albert Nigri, and Hagai Laniado (collectively, the Liberty Defendants).
- Liberty Defendants delivered partially-finished clothes to Yam’s factory, and the plaintiffs would finish the clothes by sewing fabrics together and adding buttons, labels, cuffs, and hems.
- Liberty Defendants regularly sent quality control representatives to Yam’s factory to supervise the plaintiffs’ work.
- Plaintiffs testified that approximately 70% to 80% of their work was performed on Liberty garments, despite Yam also doing work for other manufacturers and Liberty subcontracting to other factories.
- Liberty Defendants paid Yam by the piece, and Yam, in turn, paid the plaintiffs using the same piece-rate method.
- Plaintiffs often worked more than 85 hours per week and were paid at rates below federal and state minimums, without receiving overtime pay.
Procedural Posture:
- Plaintiffs sued Lai Huen Yam and the Liberty Defendants in the United States District Court for the Southern District of New York, alleging violations of the Fair Labor Standards Act (FLSA) and New York state labor laws.
- Plaintiffs later voluntarily dismissed their claims against Lai Huen Yam.
- The parties cross-moved for summary judgment.
- The District Court (Sullivan, J.) granted the Liberty Defendants’ motion for summary judgment in part, finding they were not joint employers under the Carter four-factor test, and denied plaintiffs’ motion in full (Zheng I).
- Plaintiffs appealed to the United States Court of Appeals for the Second Circuit.
- The Second Circuit vacated the district court’s judgment and remanded the case, ruling that the district court applied the wrong test for joint employment and establishing a new six-factor test (Zheng II).
- On remand, the Liberty Defendants again moved for summary judgment.
- The District Court (Sullivan, J.) denied the Liberty Defendants’ motion for summary judgment, finding genuine issues of fact regarding three of the six Zheng II factors (Zheng III).
- After a two-and-a-half week jury trial, the jury found in plaintiffs’ favor.
- The District Court denied the Liberty Defendants’ post-verdict motions to set aside the verdict and for a new trial.
- The District Court entered final judgment, awarding plaintiffs $556,566.76 in damages.
- The Liberty Defendants appealed that judgment to the United States Court of Appeals for the Second Circuit.
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Issue:
Does the district court properly allow a jury to determine the ultimate question of whether an entity is a 'joint employer' for purposes of the FLSA and analogous state laws, or should this determination be made solely by the court?
Opinions:
Majority - PER CURIAM
Yes, the district court properly allowed the jury to determine whether the Liberty Defendants were a joint employer of the plaintiffs. The court held that the question of joint employment under the FLSA is a mixed question of law and fact, meaning it involves applying a legal standard to a particular set of facts, and such questions are 'especially well-suited for jury determination.' The jury's role was to apply the facts bearing on the multi-factor joint employment inquiry to the legal definition of 'joint employer' as properly defined by the district court in its jury charge. The court rejected the Liberty Defendants' argument that the district court should have required a special verdict form for the jury to make factual findings, which the court would then use to make the final determination, stating that such a rule would distort the jury's proper role and is anomalous in law. Furthermore, the court clarified that its prior ruling in Zheng II, which suggested de novo review of a joint employment determination, applied only in the context of summary judgment, not a jury trial, and that de novo review of a jury’s determination would raise serious Seventh Amendment concerns.
Analysis:
This decision clarifies the proper allocation of responsibility between judge and jury in FLSA joint employment cases, particularly in complex litigation scenarios involving multiple appeals. It reinforces the principle that while the legal framework for determining joint employment is established by the judiciary, the application of that framework to disputed facts falls squarely within the jury's province. This outcome has significant implications for future labor law disputes involving independent contractors or subcontracted labor, affirming the fact-intensive nature of the 'joint employment' inquiry and safeguarding the Seventh Amendment right to a jury trial for resolving such mixed questions of law and fact.
