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Case 1:10-cv-08372-LLS Document 119 Filed 02/12/13 Page 1 of 35



UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK


ZU GUO YANG, XIAO HONG WANG, BAO
LAN DENG, CINDY CHAN, and MOOI YANG,


Plaintiffs,














Case No. 1:10-cv-8372-LLS

ECF Case

v.


SHANGHAI CAFE INC., SHANGHAI CAFE
DELUXE INC., GRACE LAU, YUNG MEI KU,
PING LIN, and JOSEPH TANG,


Defendants.











PLAINTIFFS' MEMORANDUM IN OPPOSITION TO DEFENDANT

SHANGHAI CAFE DELUXE, INC.’S MOTION FOR SUMMARY JUDGMENT

Michael J. Gulliford
michael.gulliford@kirkland.com
Wanda D. French-Brown
wanda.french-brown@kirkland.com
Kuangyan Huang
kuan.huang@kirkland.com
Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
(212) 446-4800

David Colodny
dcolodny@urbanjustice.org
URBAN JUSTICE CENTER
123 William Street, 16th Floor
New York, New York 10038
(646) 602-5600

Attorneys for Plaintiffs



Case 1:10-cv-08372-LLS Document 119 Filed 02/12/13 Page 2 of 35



TABLE OF CONTENTS

Page

INTRODUCTION..........................................................................................................................1

STATEMENT OF FACTS ............................................................................................................2

I.

II.

PLAINTIFFS AND THEIR CLAIMS .................................................................2

EVENTS SURROUNDING SHANGHAI CAFE’S DEMISE AND
DELUXE’S INCORPORATION .........................................................................3

LEGAL STANDARD ....................................................................................................................5

ARGUMENT ..................................................................................................................................6

I.

II.

DELUXE’S MOTION SHOULD BE DENIED BECAUSE DELUXE
HAS VIOLATED FEDERAL RULE OF CIVIL PROCEDURE 56
AND LOCAL RULE 56.1......................................................................................6

DELUXE'S MOTION SHOULD BE DENIED BECAUSE NOT
ONLY ARE THERE GENUINE ISSUES OF MATERIAL FACT,
THE EVIDENCE IN FAVOR OF PLAINTIFFS' CLAIMS IS
OVERWHELMING ..............................................................................................8
A.

Deluxe Is Liable Under The Common Law, De Facto Merger
Doctrine........................................................................................................9
There Is Substantial Evidence For A Fact Finder To Conclude That
Deluxe Is Liable Under the Substantial Continuity Test. ..........................19
A Formal Transaction Between Shanghai Cafe And Deluxe Is Not
Required To Establish Successor Liability. ...............................................23

B.

C.

III. DELUXE’S THEORIES WITH RESPECT TO MR. YANG ARE
BOTH PROCEDURALLY IMPROPER AND WRONG ON THE
MERITS ................................................................................................................24
Deluxe Fails To State The Relief Sought. .................................................25
A.
B.
Deluxe Mischaracterizes The Record With Respect To Mr. Yang. ..........25
C. Whether Or Not Mr. Yang Is An Employer Is Irrelevant To His

Claims Against Shanghai Cafe. .................................................................26
Any Contribution Claim Brought By Deluxe Is Barred As A
Matter of Law. ...........................................................................................27
Deluxe’s Attempt To Amend Its Pleadings Is Untimely And Futile. ........27

D.

E.

IV.

THE RECORD SHOWS SHANGHAI CAFE HAD GROSS
REVENUES OF OVER $500,000 PER YEAR .................................................28

CONCLUSION ............................................................................................................................29


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TABLE OF AUTHORITIES



CASES

Page(s)

24/7 Records, Inc. v. Sony Music Entertainment, Inc.,

566 F. Supp. 2d 305 (S.D.N.Y. 2008) ..................................................................................... 23

Abdel-Khalek v. Ernst & Young, L.L.P.,

No. 97 CIV. 4514 JGK, 1999 WL 190790, at *8 (S.D.N.Y. Apr. 7, 1999)............................ 22

Alvarez v. 40 Mulberry Rest., Inc.,

No. 11 CIV. 9107 PAE, 2012 WL 4639154, at *1 (S.D.N.Y. Oct. 3, 2012) .............. 17, 18, 19

Ansoumana v. Gristedes Operating Corp.,

No. 00 Civ. 253(AKH), 2003 WL 30411, at *1 (S.D.N.Y. Jan. 3, 2003) ............................... 27

Baker v. Latham Sparrowbush Associates,

72 F.3d 246 (2d Cir. 1995)...................................................................................................... 21

Battino v. Cornelia Fifth Ave.,

LLC, 861 F. Supp. 2d 392 (S.D.N.Y. 2012) ............................................................... 19, 20, 22

Cargo Partner AG v. Albatrans, Inc.,

352 F.3d 41 (2d Cir. 2003)........................................................................................................ 9

Classicberry Ltd. v. Musicmaker.com, Inc.,

48 F. App'x 360 (2d Cir. 2002) ............................................................................................... 27

Cresswell v. Sullivan & Cromwell,

922 F.2d 60 (2d Cir.1990)....................................................................................................... 27

Fall River Dyeing & Finishing Corp. v. NLRB,

482 U.S. 27 (1987) ............................................................................................................ 19, 20

Feingold v. New York,

366 F.3d 138 (2d Cir. 2004)...................................................................................................... 6

Fitzgerald v. Fahnestock & Co.,

286 A.D.2d 573 N.Y.S.2d 70 (1st Dep’t 2001) ...................................................................... 23

Giannullo v. City of New York,

322 F.3d 139 (2d Cir. 2003)...................................................................................................... 6

Glynwed, Inc. v. Plastimatic, Inc.,

869 F. Supp. 265 (D.N.J. 1994) .............................................................................................. 15

Gustafson v. Bell Atl. Corp.,

171 F. Supp. 2d 311, 328 n.8 (S.D.N.Y. 2001)....................................................................... 27

Herman v. RSR Sec. Services Ltd.,

172 F.3d 132 (2d Cir. 1999).................................................................................................... 27



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Lucente v. Int'l Bus. Machines Corp.,

310 F.3d 243 (2d Cir. 2002).................................................................................................... 28

Lumbard v. Maglia, Inc.,

621 F. Supp. 1529 (S.D.N.Y. 1985) ........................................................................................ 11

Marvel Characters, Inc. v. Simon,

310 F.3d 280 (2d Cir. 2002)...................................................................................................... 6

Medina v. Unlimited Sys., LLC,

760 F. Supp. 2d 263 (D. Conn. 2010) ..................................................................................... 23

Merino v. Beverage Plus America Corp.,

No. 10 Civ. 0706(JSR)(RLE), 2011 WL 3739030, at *7 (S.D.N.Y. Apr. 12, 2011) .............. 19

Miller v. Forge Mench P’ship Ltd.,

No. 00 Civ. 4314(MBM), 2005 WL 267551, at *6 (S.D.N.Y. Feb. 2, 2005) ..................... 9, 15

MSF Holding Ltd. v. Fiduciary Trust Co. Int'l,

435 F. Supp.2d 285 (S.D.N.Y. 2006) ........................................................................................ 8

Musikiwamba v. ESSI, Inc.,

760 F.2d 740 (7th Cir. 1985) .................................................................................................. 20

N.L.R.B. v. Star Color Plate Serv., Div. of Einhorn Enterprises, Inc.,

843 F.2d 1507, 1510 n.3 (2d Cir. 1988).................................................................................. 25

Nationwide Life Ins. Co. v. Bankers Leasing Ass'n, Inc.,

182 F.3d 157 (2d Cir. 1999)...................................................................................................... 6

NetJets Aviation, Inc. v. LHC Commc'ns, LLC,

537 F.3d 168 (2d Cir. 2008)...................................................................................................... 8

Nettis v. Levitt,

241 F.3d 186 (2d Cir. 2001)...................................................................................................... 9

New York v. Nat'l Serv. Indus., Inc.,

460 F.3d 201 (2d Cir. 2006).................................................................................................... 16

Old Republic Ins. Co. v. Hansa World Cargo Serv., Inc.,

51 F. Supp. 2d 457 (S.D.N.Y. 1999) ....................................................................................... 21

Riley v. Town of Bethlehem,

5 F. Supp. 2d 92 (N.D.N.Y. 1998) ............................................................................................ 8

Rubens v. Mason,

527 F.3d 252 (2d Cir. 2008)...................................................................................................... 6

Sanders v. Thrall Car Mfg. Co.,

582 F. Supp. 945 (S.D.N.Y. 1983).......................................................................................... 27

Shamis v. Ambassador Factors Corp.,

34 F. Supp. 2d 879 (S.D.N.Y. 1999) ....................................................................................... 11



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Stern v. Trustees of Columbia Univ.,

131 F.3d 305 (2d Cir. 1997)...................................................................................................... 6

Taggart v. Time Inc.,

924 F.2d 43 (2d Cir. 1991)........................................................................................................ 6

Thomas v. Hsiao,

No. 12 Civ. 1128(ILG)(SMG), 2012 WL 5897412 (E.D.N.Y. Nov. 21, 2012) ....................... 8

Ulanet v. D'Artagnan, Inc.,

170 F. Supp. 2d 356 (E.D.N.Y. 2001) .................................................................................... 15

Union Carbide Corp. v. Montell N.V.,

179 F.R.D. 425 (S.D.N.Y. 1998) .............................................................................................. 8

United States v. Letscher,

83 F. Supp. 2d 367 (S.D.N.Y. 1999) ....................................................................................... 25

New York Labor Law § 196-6 ........................................................................................................ 3

STATUTES

RULES

Fed. R. Civ. P. 56(c) ................................................................................................................... 6, 7
Fed. R. Civ. P. 56(c)(1)(A) ............................................................................................................. 7
Fed. R. Civ. P. 7(b)(1)(C) ............................................................................................................. 25





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INTRODUCTION

Although Shanghai Cafe was by all accounts a profitable business, it abruptly closed its

doors after learning of Plaintiffs' intention to bring this suit. A mere two weeks later, following a

lease signing attended by Shanghai Cafe's owner, Grace Lau, Shanghai Cafe Deluxe ("Deluxe")

began operating at the very same location. Besides its remarkably similar name, the "new"

Shanghai Cafe Deluxe was similar to the "old" Shanghai Cafe in nearly every conceivable

respect. As discovery in this case has revealed, when Deluxe reopened its doors, many of its

owners, managers, and/or employees were from Shanghai Cafe. Similarly, Deluxe's assets,

accounts and general business operations were also the assets, accounts and business operations

of Shanghai Cafe. On these facts, Deluxe claims that it is entitled to prevail, as a matter of law,

on its claim that it is not liable under the "de facto merger" or "substantial continuity" tests of

successor liability. Plaintiffs respectfully disagree, and submit that not only are there layers of

disputed fact surrounding Deluxe's claim, but that a reasonable fact finder will find Deluxe liable

for Plaintiffs' claims under the "de facto merger” doctrine or "substantial continuity" test. (See

Ex. A1 (setting forth the examples of overlap between Shanghai Cafe and Deluxe).)

In addition to failing on the facts, Deluxe's motion fails this Court's local rules and

Federal Rule of Civil Procedure 56. At the heart of both rules is the requirement that a party

moving for summary judgment must carry its burden with fact. Yet, Deluxe moves for summary

judgment with a motion and alleged statement of non-disputed material facts that contain very

little in the way of citation to the factual record. And although the facts do not support the relief

Deluxe seeks—a conclusion buttressed by Deluxe's inability to support its motion in the factual

record—Deluxe cannot satisfy this Court's Local Rule 56.1 or Rule 56 without them. Because

1 Unless otherwise specified, all references to Exhibits herein shall refer to the lettered exhibits attached to the



attached Declaration of Michael Gulliford.



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Deluxe offers the Court what is largely unsupported, attorney argument, rather than facts rooted

in the record, Plaintiffs request that Deluxe's motion be denied on this additional basis.

Finally, Plaintiffs respectfully request that the relief Deluxe seeks with respect to Plaintiff

Zu Guo Yang (“Mr. Yang”) be denied in its totality. Deluxe appears to intimate that Mr. Yang,

who was but a mere cook at Shanghai Cafe, was actually an employer for purposes of the Fair

Labor Standards Act (“FLSA”). Putting aside that Deluxe has never raised this defense despite

taking Mr. Yang's deposition almost two years ago, Deluxe's claim is wrong on its face. As is set

forth below, Mr. Yang was a cook who did not possess anything close to the requisite authority

and control necessary to elevate him to the status of employer. Finally, Deluxe's request to

amend the pleadings and seek contribution should respectfully be denied as well. Although

Deluxe claims it is entitled to contribution, which it is not, such claims are barred as a matter of

law in FLSA cases. And allowing Deluxe the opportunity to amend its pleadings would be

improper given Deluxe's failure to specify the defense or counterclaim it seeks to interpose, as

well as its failure to provide a justification for seeking to amend its pleadings at this late stage.

I.

PLAINTIFFS AND THEIR CLAIMS

STATEMENT OF FACTS

Plaintiffs are all former employees of Shanghai Cafe, a Chinese restaurant located at 100

Mott Street, New York, New York. Plaintiff Mr. Yang worked as a cook for Shanghai Cafe

from approximately March 2006 until June 8, 2010. (Ex. B, [Zu Guo Yang Deposition

Transcript (“Z. Yang Dep. Tr.”)] at 13:8-23, 23:9-11.) Plaintiff Xiao Hong Wang worked as a

stir fry cook at Shanghai Cafe from June 2004 until March 2005, and from March 2006 through

June 2010. (Ex. C, [Xiao Hong Wang Deposition Transcript (“Wang Dep. Tr.”)] at 63:6-17,

35:12-14, 37:4-6, 38:4-8.) Plaintiff Bao Lan Deng worked as a dim sum cook at Shanghai Cafe

from October 25, 2005 through June 8, 2010. (Ex. D, [Bao Lan Deng Deposition Transcript



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(Deng Dep. Tr.”)] at 98:7-14, 99:7-9, 8:20-9:1, 87:12-18.) Plaintiff Cindy Chan worked as a

waitress at Shanghai Cafe from March 2003 through June 8, 2010. (Ex. E, [Cindy Chan

Deposition Transcript (“Chan Dep. Tr.”)] at 9:10-18, 20:3-5.) Plaintiff Mooi Yang worked as a

waitress at Shanghai Cafe from September 2005 through June 7, 2010. (Ex. F, [Mooi Yang

Deposition Transcript (“M. Yang Dep. Tr.”)] at 15:9-10, 47:4-14, 103:8-12.) Plaintiffs allege

that while employed at Shanghai Cafe, they were denied the minimum wage, overtime and

spread of hour payments mandated by the New York Labor Law ("NYLL") and/or the FLSA.

(D.I. 18 at ¶¶ 1-4.) Plaintiffs further allege that their employers at Shanghai Cafe improperly

retained their tips in violation of New York Labor Law § 196-6. (Id. at ¶ 4.)

II.

EVENTS SURROUNDING SHANGHAI CAFE’S DEMISE AND DELUXE’S
INCORPORATION

By all accounts, Shanghai Cafe was a successful and profitable business. (Ex G, [Philip

Lam Deposition Transcript (“Lam Dep. Tr.”)] at 116:17–20 (“The restaurant worth quarter of a

million dollars … It's a good business restaurant.”).) Nonetheless, on June 8, 2010, Shanghai

Cafe abruptly closed its doors without liquidating any of its assets or its equipment. (Ex. H,

[Ping Lin Deposition Transcript (“Lin Dep. Tr.”)] at 64:15-65:15.) Although Shanghai Cafe's

ownership had known it was violating the labor laws for quite some time—after all, the

ownership had directed its employees to lie to the Department of Labor, engage in a kickback

scheme and post fake schedules (Affidavit of Cindy Chan (“C. Chan Aff.”) ¶¶ 15-19; Affidavit

of Bao Lan Deng (“B. Deng Aff.”) ¶¶ 7-8; Affidavit of Mooi Yang (“M. Yang Aff.”) ¶¶24-28;

Affidavit of Xiao Hong Wang (“X. Wang Aff.”) ¶¶ 6-9, submitted in connection with Plaintiffs’

Opposition to Joseph Tang’s Motion for Summary Judgment)—it learned of a new fact just prior

to the restaurant's closure: Plaintiffs' intention to bring the present suit. (See, e.g., Ex. I, [Grace

Lau Deposition Transcript (“Lau Dep. Tr.”)] at 15:16-16:10, 106:17-107:5, 125:11-17.)



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Less than two weeks after Shanghai Cafe closed its doors, Shanghai Cafe Deluxe opened

its doors at the exact same location. (Ex. H, [Lin Dep. Tr.] at 11:24-12:5; D.I. 26-4, Affidavit of

Man Peng Ma (“Ma Aff.”) ¶ 8).) Prior to the Deluxe lease signing, Grace Lau represented to

Philip Lam, the manager of 100 Mott Street, that she had transferred her interest at Shanghai

Cafe to the owners of the new restaurant. (Ex. G, [Lam Dep. Tr.] at 36:18-21.) At his

deposition, Philip Lam also doubted Deluxe's claim that the restaurant was in fact “abandoned.”

(Id. at 37:21-38:5, 116:12-20, 117:22-118:2.)

In addition to having the same physical location as Shanghai Cafe, Deluxe served the

exact same menu, (Ex. J, [Wei Bo Li Deposition Transcript (“Li Dep. Tr.”)] at 80:13–82:6),

owned the same telephone number, (Ex. I, [Lau Dep. Tr.] at 183:8-184:2), used the exact same

Chinese name, “???,” (Compare Ex. K, at PTF00031 with id. at PTF00040), and operated the

same kitchen and dishwashing equipment as the restaurant it replaced at 100 Mott Street. Deluxe

also hired at least ten of Shanghai Cafe’s staff members. (Ex. I, [Lau Dep. Tr.] at 178:22–

179:20.)

What's more, documents produced from third parties—that Deluxe did not produce—

reveal the continuity between Shanghai Cafe and Deluxe. Among the documents produced by

the Bank of East Asia are Deluxe's by-laws and meeting minutes, which list Ms. Lau and Ms.

Ping Lin as owners of Deluxe. (Ex. L,2 at BEA01410–25.) Ms. Lau was the former owner of

Shanghai Cafe whom Plaintiffs notified of their suit before Shanghai Cafe suddenly closed. (Ex.

I, [Lau Dep. Tr.] at 17:9-13 (Lau was an owner at Shanghai Cafe); see also id. at 15:16-16:10,

106:17-107:5, 125:11-17 (Lau testifying that she had notice of a prospective suit prior to the

closing of Shanghai Cafe).) Ms. Lin was similarly employed at Shanghai Cafe. (Ex. H, [Lin

2 Ex. L-1 to the attached Declaration of Michael Gulliford is a declaration from the Bank of East Asia regarding



documents produced by the Bank of East Asia.



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Dep. Tr.] at 12:3-12:9.) Although Deluxe did not produce these harmful documents, they did

produce the very same, identically dated documents with one key difference—in the version of

the documents that Deluxe produced, the names of Ms. Lin and Ms. Lau have been erased and

replaced with the names of their relatives. (Compare D.I. 26-8 at 12 with Ex. L, at BEA1424.)

Third party documents produced from vendors—again, which Deluxe did not produce—

demonstrate yet more continuity between the old and new versions of the Shanghai Cafe

restaurant. By way of example, from June 2010 to at least April 2011,3 Deluxe continued to

receive services under Shanghai Cafe’s accounts with Crown Container Company, Inc.

(“Crown”) and Ecolab, for waste disposal and dishwashing services, respectively. The receipts

from these companies indicate that Deluxe paid nearly $8,000.00 to Crown under Shanghai

Cafe’s account,4 and similarly paid more than $3,000.00 to Ecolab under Shanghai Cafe’s

account.5 Deluxe also used and benefitted from the permit that Ms. Lau acquired from the

Department of Health while operating Shanghai Cafe. (Ex. O, [Yi Li Weng Deposition

Transcript (“Weng Dep. Tr.”)] at 214:15-215:8.) Based on the totality of facts set forth below,

demonstrating the continuity between Shanghai Cafe and Deluxe, Plaintiffs respectfully submit

that Deluxe's motion should be denied.

LEGAL STANDARD

A party is entitled to summary judgment “only if the court concludes that the case

presents ‘no genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.’” Rubens v. Mason, 527 F.3d 252, 254 (2d Cir. 2008) (quoting Fed.

R. Civ. P. 56(c)). Summary judgment is a “drastic device,” and accordingly, “the moving party



3 April 2011 is the last month for which Plaintiffs received relevant documents in discovery.
4 See, e.g., Ex. N, at BEA1493 (check no. 8998), BEA1500 (check no. 1034), BEA1513 (check no. 1096).
5 See, e.g., Ex. N, at BEA1493 (check no. 8999 to Ecolab for “Shanghai Cafe - 019602326”), BEA1498 (check

no. 1019), BEA1498 (check no. 1021).



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bears a heavy burden of demonstrating the absence of any material issues of fact.” Nationwide

Life Ins. Co. v. Bankers Leasing Ass'n, Inc., 182 F.3d 157, 160 (2d Cir. 1999) (citation omitted).

The moving party bears the burden of establishing “the absence of any material factual issues.”

Feingold v. New York, 366 F.3d 138, 148 (2d Cir. 2004)). “[W]here the movant fail[s] to fulfill

its initial burden of providing admissible evidence of the material facts entitling it to summary

judgment, summary judgment must be denied, even if no opposing evidentiary matter is

presented, for the non-movant is not required to rebut an insufficient showing.” Giannullo v.

City of New York, 322 F.3d 139, 140-41 (2d Cir. 2003) (internal quotation marks and citation

omitted).

The Court, in determining whether there are genuine issues of material fact, is “required

to resolve all ambiguities and draw all permissible factual inferences in favor of the party against

whom summary judgment is sought.” Stern v. Trustees of Columbia Univ., 131 F.3d 305, 312

(2d Cir. 1997). When the non-movant’s “assertions conflict” with those of the movant, “[t]he

nonmovant’s allegations are taken as true and it receives the benefit of the doubt.” Taggart v.

Time Inc., 924 F.2d 43, 46 (2d Cir. 1991). Summary judgment is not appropriate “if there is any

evidence in the record that could reasonably support a jury’s verdict for the non-moving party.”

Marvel Characters, Inc. v. Simon, 310 F.3d 280, 286 (2d Cir. 2002) (emphasis added).

ARGUMENT

I.

DELUXE’S MOTION SHOULD BE DENIED BECAUSE DELUXE HAS
VIOLATED FEDERAL RULE OF CIVIL PROCEDURE 56 AND LOCAL RULE
56.1

Plaintiffs respectfully submit that the Court should deny Deluxe's motion for failing to

satisfy Rule 56(c) of the Federal Rules of Civil Procedure and this Court's Local Rule 56.1. At

the heart of both rules is the requirement that a party seeking summary judgment must carry its

burden with supportable fact. Rule 56(c)(1)(A) provides that “[a] party asserting that a fact



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cannot be or is genuinely disputed must support the assertion by . . . citing to particular parts of

materials in the record.” Fed. R. Civ. P. 56(c)(1)(A) (emphasis added). Likewise, Local Rule

56.1(d) further provides that “[e]ach statement by the movant or opponent . . . must be followed

by citation to evidence which would be admissible” as required by Fed. R. Civ. P. 56(c). Local

Rule 56.1(d) (emphasis added).

Yet, that is not what Deluxe has done. Faced with a lack of support in the record for its

present motion, Deluxe instead offers the Court nearly 37 pages of attorney argument

unsupported by requisite fact and citation. By way of example, nearly the entirety of Deluxe's

alleged "Statement of Facts," upon which Deluxe's arguments are premised, is attorney argument

devoid of any citation to the factual record. (See D.I. 117-13 at 4-8.) The same holds true

throughout Deluxe's brief. (See, e.g., D.I. 117 at 21 (asserting, without any factual support, that

“Shanghai Cafe and Shanghai Cafe Deluxe did not have any managers or officers in common,

and only a small number of workers in common.”); Id. at 22 (claiming, without any factual

support, that “[a]lthough Grace Lau was an owner of Shanghai Cafe, her role was brief and

limited in Defendant Deluxe’s business as she only acted as a consultant to Deluxe for a period

of three months.").) Because Deluxe's motion is not based on fact, as Rule 56(c) plainly

requires, Plaintiffs request that it be denied.

Deluxe's Rule 56.1 Statement fares no better. First, Deluxe's Rule 56.1 Statement fails to

offer any factual support for nearly all its twenty-seven paragraphs. Second, Deluxe's Rule 56.1

Statement offers the Court attorney argument, rather than fact. Indicative of Deluxe's failure to

abide by this Court's Local Rule 56.1 is paragraph 10 of Deluxe's Rule 56.1 Statement, which

claims the following to be a fact: “[t]here was no de facto merger between Shanghai Cafe and

Defendant Deluxe, and Defendant Deluxe is not a continuation of Shanghai Cafe.” Such legal



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argument is improperly advanced in a Rule 56.1 Statement and cannot assist Deluxe in carrying

its burden. See Union Carbide Corp. v. Montell N.V., 179 F.R.D. 425, 428 (S.D.N.Y. 1998)

(rejecting Statement of Material facts that was basically “a compendium of the arguments

plaintiff plans to make at trial, rather than a short and concise statement of facts.”). Because

Deluxe has failed to comply with Local Rule 56.1, and its attorney argument is not substantiated

by fact or the record, Plaintiffs submit that its motion should be denied. See MSF Holding Ltd.

v. Fiduciary Trust Co. Int'l, 435 F. Supp. 2d 285, 304 (S.D.N.Y. 2006) (denying motion for

summary judgment because moving party failed to submit the required 56.1 Statement); Thomas

v. Hsiao, No. 12 Civ. 1128(ILG)(SMG), 2012 WL 5897412 (E.D.N.Y. Nov. 21, 2012) (denying

motion for summary judgment for failure to supply record citations supporting statement of

material facts); see also Riley v. Town of Bethlehem, 5 F. Supp. 2d 92, 94 (N.D.N.Y. 1998)

(same).

II.

DELUXE'S MOTION SHOULD BE DENIED BECAUSE NOT ONLY ARE
THERE GENUINE ISSUES OF MATERIAL FACT, THE EVIDENCE IN FAVOR
OF PLAINTIFFS' CLAIMS IS OVERWHELMING

Deluxe alleges that it is not, as a matter of law, a successor business liable for the

obligations of Shanghai Cafe. But not only do numerous material facts preclude the relief

Deluxe seeks, they further demonstrate that a reasonable fact finder could very well return a

verdict for Plaintiffs under the de facto merger standard or substantial continuity test of successor

liability. Respectfully, Deluxe's motion should thus be denied. See, e.g., NetJets Aviation, Inc.

v. LHC Commc'ns, LLC, 537 F.3d 168, 178–79 (2d Cir. 2008) (summary judgment should be

denied “if the evidence is such that a reasonable jury could return a verdict” in favor of the non-

moving party).



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A.

Deluxe Is Liable Under The Common Law, De Facto Merger Doctrine.

1.

The Common Law Test.

Under Federal common law and New York law, “[a] successor [business] may be held

liable for the obligations of its predecessor if any of the following conditions is present: (i) the

purchaser expressly or impliedly agrees to assume such debts or liabilities; (ii) the transaction

amounts to a de facto merger or consolidation of the seller and purchaser; (iii) the purchasing

corporation is a mere continuation of the selling corporation; or (iv) the transaction is entered

into fraudulently to escape liability for such obligations.” Miller v. Forge Mench P’ship Ltd.,

No. 00 Civ. 4314(MBM), 2005 WL 267551, at *6 (S.D.N.Y. Feb. 2, 2005) (citing Cargo Partner

AG v. Albatrans, Inc., 352 F.3d 41, 45 (2d Cir. 2003)). Courts have observed that the “mere-

continuation” and “de facto merger” doctrines are so similar that they may be considered a single

exception. Cargo Partner, 352 F.3d at 45 n.3.

“To determine whether such a ‘de facto merger’ or ‘mere continuation’ of the

predecessor’s business has occurred, courts consider (1) continuity of ownership; (2) cessation of

ordinary business by the predecessor; (3) assumption by the successor of liabilities ordinarily

necessary for continuation of the predecessor's business; and (4) continuity of management,

personnel, physical location, assets, and general business operation.” Miller, 2005 WL 267551,

at *7 (citing Nettis v. Levitt, 241 F.3d 186, 194 (2d Cir. 2001)). “These factors are analyzed in a

flexible manner that disregards mere questions of form and asks whether, in substance, ‘it was

the intent of [the successor] to absorb and continue the operation of [the predecessor].’” Nettis,

241 F.3d at 194.



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2.

A Reasonable Fact Finder Could Well Return A Verdict in Plaintiffs'
Favor Based on the De Facto Merger Doctrine.

As set forth, shortly after the ownership of Shanghai Cafe received news of Plaintiffs'

intention to bring the present action, the profitable business abruptly closed its doors. (Ex. I,

[Lau Dep. Tr.] at 15:16-16:10, 106:17-107:5, 125:11-17 (Lau testifying that she had notice of a

prospective suit prior to the closing of Shanghai Cafe); Ex. H, [Lin Dep. Tr.] at 64:15-65:15

(same).) A little more than two weeks later, Shanghai Cafe Deluxe opened its doors at the very

same address. (Ex. H, [Lin Dep. Tr.] at 11:24-12:5; D.I. 26-4, Ma. Aff. ¶ 8).) As the collective

circumstances surrounding Deluxe's operations demonstrate, which Plaintiffs set forth in Exhibit

A to this brief, Deluxe could very well be held liable under the de facto merger standard. (See

Ex. A (explaining the examples of overlap between Shanghai Cafe and Deluxe.) At a very

minimum, there are layers of disputed fact that make summary judgment in favor of Deluxe

inappropriate.

a.

There is compelling evidence of continuity of ownership.

Although Deluxe alleges in its memorandum that "there is no continuity of ownership

between Defendant Deluxe and Shanghai Café," (D.I. 117 at 15), that assertion is nowhere

supported in Deluxe's Rule 56.1 Statement. A careful review of its 56.1 statement reveals that

Deluxe artfully asserted who the owners of the corporation were on the day the 56.1 statement

was signed, but provide no information regarding who owned the restaurant in 2010.6 Moreover,

the documents obtained by Plaintiffs in discovery show continuity of ownership.



6 The Rule 56.1 statement notably uses the present tense to assert who the owners are of Shanghai Cafe rather
than setting forth who the owners were in June, 2010, the relevant time period. (See, e.g., D.I. 117-13 at ¶ 2
(“The owners of Deluxe… include Yi Li Weng, Wei Bo Li and Man Peng Ma.”) (emphasis added); ¶ 21
(“Neither Grace Lau nor any previous owner of manager of Shanghai Cafe is an owner or manager of Shanghai
Cafe Deluxe.”) (emphasis added).) The only allegation that Deluxe makes that arguably might have covered the
relevant time period is a vague assertion that Grace Lau “did not have any ownership interest in Deluxe,” (see ¶
17), a statement that doesn’t clarify the time period referred to. If Paragraph 17 was intended to include the
time period of June 2010, an uncertain proposition, that assertion is clearly refuted by documentary evidence.



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Generally, the continuity of ownership factor looks to whether the shareholders of the

predecessor become shareholders of the successor corporation “at the time of the sale of the

assets.” Shamis v. Ambassador Factors Corp., 34 F. Supp.2d 879, 897 (S.D.N.Y. 1999). Since

there is no open transfer or acquisition of assets in this case, the relevant time period to examine

continuity of ownership should be in or around June 2010 when Shanghai Cafe closed and

Deluxe opened in its place. Uniformity of ownership is not required. Lumbard v. Maglia, Inc.,

621 F. Supp. 1529, 1535 (S.D.N.Y. 1985) (“[T]he cases uniformly hold that continuity, not

uniformity, is the significant variable.”).

Contrary to Deluxe's self-serving argument, documents produced from the Bank of East

Asia—Deluxe's bank—prove a continuity of ownership between Shanghai Cafe and Deluxe. It

is indeed undisputed that Ms. Lau was a former owner of Shanghai Cafe. Likewise, the Bank of

East Asia documents include Deluxe's corporate meeting minutes, which reveal that Ms. Lau

owned 20% of Deluxe's shares. (See Ex. L, at BEA1422.) Similarly, on the Corporate

Authorization Resolution that the Bank of East Asia produced, dated June 15, 2010, Ms. Lau

“certif[ied]” that she was the Secretary of Deluxe and signed twice in that capacity. (Ex. L, at

BEA1410.) Both Yi Li Weng and Ms. Lau certified the veracity of the contents of that

document. (Id.) Ms. Lau again signed as Secretary of Deluxe on a Bank of East Asia form on

June 15, 2010. (Ex. L, at BEA1407.)

And the Bank of East Asia documents are not the only documents revealing the

continuity of ownership that Deluxe continues to deny. Plaintiffs also obtained documents from

the New York City Department of Health. Those documents reveal that on September 23, 2010,

Ms. Lau signed as an “owner” of Deluxe on a New York City Department of Health & Mental



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Case 1:10-cv-08372-LLS Document 119 Filed 02/12/13 Page 17 of 35



Hygiene health inspection report under penalty for falsification.7 (Ex. P,8 at PTF311–PTF312.)

In her deposition, Ms. Lau admitted that she held herself out as an owner of Deluxe during the

Department of Health inspection. (Ex I, [Lau Dep. Tr.] at 138:11-140:15.)

Yet, Deluxe has gone to great lengths to "remove" Ms. Lau as an owner of Deluxe.

Ignoring the undisputed third party evidence, Deluxe claims in its Rule 56.1 Statement that

"Defendant Lau did not have an ownership interest in Deluxe . . . ." (D.I. 117-13 at ¶ 17.) And

although Deluxe did not produce the corporate documents that Plaintiffs were able to obtain from

the Bank of East Asia, Deluxe did file with this Court, in connection with its Motion to Dismiss,

identical documents minus one major revision—on the documents that Deluxe filed, Ms. Lau's

name has been removed as a shareholder of Deluxe and replaced with the name of her son,

Raymond:

Minutes Submitted to Bank of East Asia

Minutes Attached to Deluxe’s Motion to Dismiss

(Ex. L, at BEA01422.)







7 The health inspection report states that “[f]alsification of any statement make [sic] herein is an offense
punishable by a fine of not more than $500 or not more than 60 days imprisonment or both, NYC Admin. Code-
section 10-154.” (Ex. P, at PTF311–PTF312.)

8 Ex. P-1 to the attached Declaration of Michael Gulliford is a declaration from the Department of Health and
Mental Hygiene of the City of New York, regarding documents produced by the Department of Health and
Mental Hygiene of the City of New York.



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Case 1:10-cv-08372-LLS Document 119 Filed 02/12/13 Page 18 of 35



(D.I. 26-8 at 13.)



Bank of East Asia Version







Motion to Dismiss Version

(Ex. L, at BEA01420.)

(D.I. 26-8 at 9.)

(Ex. L, at BEA01424.)

(D.I. 26-8 at 12.)


Bank of East Asia Version

Motion to Dismiss Version

(Ex. L, at BEA01420.)

(D.I. 26-8 at 9.)



13





Case 1:10-cv-08372-LLS Document 119 Filed 02/12/13 Page 19 of 35


Deluxe has yet to account for this discrepancy, or explain why its own corporate

documents, which it submitted to the Bank of East Asia, list Ms. Lau as an undisputable owner

of Deluxe. For this reason alone, there are genuine issues of fact that preclude the relief Deluxe

seeks.

Moreover, it is undisputed that although Ms. Lau is no longer "officially" involved with

Deluxe, she only allegedly left Deluxe because her presence looked bad for the litigation. As

Man Peng Ma, another owner of Deluxe, testified:

Q: … Because she was a previous owner of Shanghai Cafe, the old restaurant, you
asked her to leave; is that right?
A. Yes.
Q. Did you ask her to leave because you didn't want people to think she was
involved with Deluxe?
A. Yes.

(Ex. Q, [Man Peng Ma Deposition Transcript (“Ma Dep. Tr.”)] at 67:5–12.)

And although Ms. Lau is no longer officially listed as an owner of Deluxe, a reasonable

fact finder could very well infer that her interest in the restaurant continues by way of her son's

apparently sham ownership. For instance, at the time of Deluxe’s incorporation, Raymond Lau

was not even in the country (Ex. I, [Lau Dep. Tr.] at 132:15–23, 134:24–135:3), was just twenty

years old (id. at 126:18-19) and had been living in Hong Kong for over ten years (id. at 134:14–

17). Nor was Mr. Lau employed, (id. at 131:17–19 (testifying that Raymond Lau returned to

Hong Kong to continue his studies)), or in possession of “money to spend on his own,” let alone

to invest in a restaurant. (Id. at 129:15–20.) Finally, in addition to not being physically present

at Deluxe’s incorporation or at its everyday operations, Mr. Lau’s personal connection to other

shareholders of Deluxe is tenuous at best. For example, Man Peng Ma testified that he first met

Mr. Lau in May or June of 2010, (Ex. Q, [Ma Dep. Tr.] at 19:17–21), barely a month before

Deluxe was incorporated.



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Case 1:10-cv-08372-LLS Document 119 Filed 02/12/13 Page 20 of 35


Faced with these overwhelming facts, Deluxe hangs its hat on whether Ms. Lau was the

secretary of Deluxe or properly signed her name as such when at the Bank of East Asia.

Respectfully, that is not the issue. Regardless of whether Ms. Lau was a secretary of Deluxe—

which Deluxe's own corporate documents show she was—the Deluxe corporate documents

produced by the Bank of East Asia show that she was a shareholder. Deluxe's denials to the

contrary thus do not deserve weight.

b.

Shanghai Cafe ceased ordinary business in June 2010.



It is undisputed that Shanghai Cafe ceased operations on or around June 8, 2010. There

can be no doubt that this factor of the traditional common law test is met.

c.

Deluxe assumed the liabilities of Shanghai Cafe ordinarily
necessary for the uninterrupted continuation of business.

Deluxe baldly alleges that "Plaintiffs . . . cannot show any facts suggesting an assumption

of liability . . . ." (D.I. 117 at 17.) Again, however, the facts tell a different story. The de facto

merger doctrine requires “only that the successor assume the liabilities that would ‘ordinarily’ be

necessary to continue the predecessor's business, not the particular debt in question or all actual

and potential debts.” Miller, 2005 WL 267551, at *9; see also Ulanet v. D'Artagnan, Inc., 170 F.

Supp.2d 356, 358-59 (E.D.N.Y. 2001) (assumption of liabilities found where successor company

voluntarily assumed predecessor’s contractual duties with a third party); Glynwed, Inc. v.

Plastimatic, Inc., 869 F. Supp. 265, 276 (D.N.J. 1994) (assumption of liabilities found where

successor company voluntarily paid some debts owed to suppliers of predecessor).

Here, Plaintiffs have obtained significant third party evidence showing that Deluxe

assumed the liabilities of its predecessor, Shanghai Cafe. At a very minimum, Deluxe assumed a

Con Ed account for electricity, an AT&T account for telephone services, a Crown account for

waste disposal, and an Ecolab account for dishwashing services, all in order to continue



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Case 1:10-cv-08372-LLS Document 119 Filed 02/12/13 Page 21 of 35



operating the Shanghainese restaurant business of both Deluxe and Shanghai Cafe without

interruption. It is undisputed that Deluxe made a payment to the Shanghai Cafe account at Con

Ed for $4909.50. (Ex. N,9 at BEA01493 (check no. 8996).) It is undisputed that Deluxe made

payments to the Shanghai Cafe account at AT&T, totaling at least $640.90. (See, e.g., Ex N, at

BEA1491 (check no. 1001), BEA1502 (check no. 1048), BEA1515 (check no. 1111).) It is also

undisputed that Deluxe made payments to the Shanghai Cafe account at Crown—a commercial

garbage collection company—totaling almost $8,000.00,10 as well as payments to Ecolab—a

leasing and maintenance service company for restaurant kitchen equipment—totaling

$3,286.78.11 (See, e.g., Ex. N, at BEA1493 (check no. 8999 to Ecolab for “Shanghai Cafe -

019602326”), BEA1498 (check no. 1019), BEA1498 (check no. 1021).)

Altogether, Deluxe paid at least $17,000.00 towards Shanghai Cafe’s accounts. The

assumption of these obligations enabled Deluxe to minimize any interruption to its Shanghainese

restaurant business after its predecessor Shanghai Cafe closed. Indeed, it is undisputed that

Deluxe opened within two weeks after Shanghai Cafe closed on June 8, 2010. A reasonable fact

finder could thus more than conclude that the third prong of the common law test is satisfied.

d.

There is substantial continuity of management, personnel,
physical
location, assets and general business operation
between Shanghai Cafe and Deluxe.

The fourth factor courts consider in determining whether a “de facto merger” or “mere

continuation” of a predecessor’s business has occurred is “continuity of management, personnel,

physical location, assets, and general business operation.” New York v. Nat'l Serv. Indus., Inc.,



documents produced by the Bank of East Asia.

9 Ex. L-1 to the attached Declaration of Michael Gulliford is a declaration from the Bank of East Asia regarding

10 See, e.g., Ex. N, at BEA1493 (check no. 8998), BEA1500 (check no. 1034), BEA1513 (check no. 1096).
11 Deluxe makes the unsupported assertion that sanitation and food safety services are “merely incidental” to
Deluxe’s restaurant business. (D.I. 117 at 20.) Deluxe does not and cannot explain how a restaurant in New
York City can operate without such services.



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Case 1:10-cv-08372-LLS Document 119 Filed 02/12/13 Page 22 of 35



460 F.3d 201, 209 (2d Cir. 2006). As set forth above, although Shanghai Cafe abruptly shut its

doors on June 8, 2010, Deluxe incorporated and reopened at the same location within 2 weeks.

The reason Deluxe was able to reopen in such an extraordinarily short period of time is because

it had largely the same personnel, management, assets and general business operations as

Shanghai Cafe. (See Ex. A, (setting forth the examples of overlap between Shanghai Cafe and

Deluxe).)

i.

Continuity of Management/Personnel.

Firstly, there is substantial evidence of continuity of management and personnel between

Shanghai Cafe and Deluxe. In addition to Ms. Lau, who was an owner at Shanghai Cafe, (Ex. I,

[Lau Dep. Tr.] at 17:9–13), and manager/owner of Deluxe, (see, e.g., Ex. O, [Weng Dep. Tr.] at

194:11–195:2; Ex. L, at BEA01420, BEA01422, BEA01424; Ex. R, at PTF0039412), another

owner of Deluxe—Ms. Ping Lin—was also previously at Shanghai Cafe. (See Ex. H, [Lin Dep.

Tr.] at 13:23–14:24.) Although, as it did with respect to Ms. Lau, Deluxe has removed Ms.

Lin's name from its corporate documents listing her as an owner of Deluxe, (see supra at pp. 14-

15), the corporate documents that Deluxe provided to the Bank of East Asia indisputably show

Ms. Lin's ownership in Deluxe. (See Ex. L, at BEA01422, BEA01424.) And in addition to Ms.

Lau, at least ten other workers continued working for Deluxe after the purported closing of

Shanghai Cafe. (Ex. I, [Lau Dep. Tr.] at 178:22-179:20.) Plaintiffs submit that this evidence is

more than sufficient to defeat Deluxe's motion. See, e.g., Alvarez v. 40 Mulberry Rest., Inc., No.

11 CIV. 9107 PAE, 2012 WL 4639154, at *1 (S.D.N.Y. Oct. 3, 2012) (finding issue of material

fact with respect to successor liability under the traditional common law test where, inter alia,

the predecessor and successor entities shared “numerous employees”).



12 In addition to the Bank of East Asia documents and the health inspection report, Grace Lau’s name also appears
on an application to the Department of Health dated August 26, 2010. (Ex. R, at PTF00394.) Her title on the
form is listed as “MANAGER.” (Id.) Yi Li Weng signed the application. (Id.)



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ii.

Continuity of Physical Location.

It is undisputed that Shanghai Cafe and Deluxe operate out of the exact same physical

location: 100 Mott Street New York, New York.

iii.

Continuity of Assets.



With respect to continuity of assets, Deluxe concedes in its brief that Deluxe used the

same “equipment, supplies, and materials” as Shanghai Cafe. (D.I. 117 at 4-5.) Additionally,

Deluxe used the same telephone number, (Ex. I, [Lau Dep. Tr.] at 183:8-184:2), as well as the

same dishwashing equipment, (id. at 105:10-106:2). These facts also warrant denying Deluxe's

motion. See, e.g., Alvarez, 2012 WL 4639154, at *6 (finding issue of material fact with respect

to successor liability under the traditional common law test where, inter alia, the predecessor and

successor entities used the same kitchen equipment).

iv.

Continuity of General Business Operations.



Deluxe’s contention that Shanghai Cafe was “abandoned” dates back to its Motion to

Dismiss. In connection with that Motion, Deluxe shareholder Man Peng Ma submitted an

affidavit stating, inter alia, that Shanghai Cafe was “abandoned,” and that “[t]he former

employees of the old Shanghai Cafe were gone and we did not know who they were.” (D.I. 26-

4, Ma Aff. ¶¶ 7-8.) Mr. Ma’s affidavit is contradicted by documentary evidence demonstrating

that Shanghai Cafe owner Ms. Lau also possessed an ownership interest in Deluxe. (See, e.g.,

Ex. L, at BEA 1410, 1422; Ex P, at PTF311–PTF312.) Mr. Ma’s affidavit is also contradicted

by his own subsequent deposition testimony, wherein he admitted that Ms. Lau was hired at

Deluxe because two of Deluxe’s shareholders knew Ms. Lau based on their prior work

experience at Shanghai Cafe. (Ex Q, [Ma. Dep. Tr.] at 65:14-18.)



Additional evidence also contradicts Deluxe's already disproven allegation that Shanghai

Cafe was abandoned. Belying Deluxe’s claim of “abandon[ment],” Grace Lau ordered new



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supplies for the restaurant and had repair work done on its elevator one week before Shanghai

Cafe supposedly “closed.” (D.I. 34, Affidavit of Mooi Yang ¶¶ 12, 13.) Philip Lam, the

property manager for 100 Mott Street also doubted that the business was abandoned. (Ex. G,

[Lam Dep. Tr.] at 37:21-38:5; 116:12-20, 117:22-118:2.) Rather, Mr. Lam testified that Ms. Lau

represented to him that she transferred Shanghai Cafe to the owners of Deluxe. (Id. at 36:18-21.)

Thus, it is unsurprising that Deluxe used the exact same menu and served the same dishes as

Shanghai Cafe. (Ex. I, [Lau Dep. Tr.] at 173:7-23; Ex. J, [Li Dep. Tr.] at 80:13-82:6.) Yi Li

Weng testified that Deluxe also used Ms. Lau’s Health Permit because Deluxe needed to use it

“in order to operate [the] business.” (Ex. O, [Weng Dep. Tr.] at 214:15-217:4.) Finally,

Deluxe’s Chinese name, “???,” remained the same. (Compare Ex. K, at PTF00031 with id at

PTF00040.) Such evidence indicates continuity of general business operations between the two

entities. See Alvarez, 2012 WL 4639154, at *6 (finding “substantial evidence” exists to support

a finding of mere continuation where predecessor and successor restaurants “share[d] a host of

characteristics, including physical space, equipment, personnel, menu, trade name, website and

Facebook page”); see also Merino v. Beverage Plus America Corp., No. 10 Civ.

0706(JSR)(RLE), 2011 WL 3739030, at *7 (S.D.N.Y. Apr. 12, 2011) (finding mere continuation

where the transition between the two entities “did not significantly change in any way the

functioning of the . . . business.”).

B.

There Is Substantial Evidence For A Fact Finder To Conclude That Deluxe
Is Liable Under the Substantial Continuity Test.

In addition to denying liability under the “de facto merger” doctrine, Deluxe claims that it

is not, as a matter of law, liable under the substantial continuity test of successor liability. Again,

however, the record demonstrates not only issues of fact, but that Deluxe is also liable under the

substantial continuity test.



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1.

The Substantial Continuity Test.

The broader “substantial continuity” test of successor liability 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.” Battino v. Cornelia Fifth Ave., LLC,

861 F. Supp. 2d 392, 404 (S.D.N.Y. 2012) (quoting Fall River Dyeing & Finishing Corp. v.

NLRB, 482 U.S. 27, 43 (1987)). Courts applying this test look to nine factors:

(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; (7) 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.



Id. (quoting Musikiwamba v. ESSI, Inc., 760 F.2d 740, 750 (7th Cir. 1985)). No one

factor is dispositive, and it is not necessary that each factor be met in order to find

successor liability. Id.

2.

A Reasonable Fact Finder Could Find In Plaintiffs' Favor On The
Substantial Continuity Issue.

a.

Deluxe had notice of Plaintiffs’ claims.



The first factor under the “substantial continuity” test for successor liability looks to

whether “the successor company had notice of the charge or pending lawsuit prior to acquiring

the business or assets of the predecessor.” Battino, 861 F. Supp. 2d at 404. Knowledge of an

actual pending lawsuit is not necessary to constitute notice; the successor need only have notice

of potential liability. Id. at 405-407 (finding the notice factor present where successor had