September 08, 2025|Publications
September 8, 2025 | United States District Court for the Eastern District of New York | Report and Recommendation (Unpublished)
Executive Summary
In a Report and Recommendation dated September 8, 2025, Magistrate Judge Robert M. Levy of the Eastern District of New York recommended granting default judgment in favor of two former employees against several affiliated Total by Verizon retail stores. The plaintiffs alleged that multiple corporations, owned by the same individual, failed to pay minimum and overtime wages in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and the New York Labor Law (“NYLL”). Accepting the allegations as true for purposes of default, the court found that the defendants functioned as a single integrated enterprise, jointly and severally liable for the alleged wage violations. Although issued in the default context, the opinion provides a thorough application of the Lihli Fashions factors—interrelation of operations, centralized control of labor relations, common management, and common ownership—and offers a useful reference point for analyzing integrated-enterprise exposure in multilocation operations.
Relevant Background
Plaintiffs Juan Pablo Albim and Maricela Martinez Moran filed the action on March 6, 2023, against multiple affiliated entities operating under the Total by Verizon trade name, formerly Total Wireless. The defendants included 4017 Wireless Inc., NY Cell Spot Inc., NY Mobilai Inc., GC Wireless Solutions Inc., and Wireless Point Inc. Each operated a wireless retail store in Queens, New York. Albim v. 1656 Wireless Inc., No. 23-CV-1732 (DG)(RML), 2025 WL 2791384, at *1 (E.D.N.Y. Sept. 8, 2025). The plaintiffs alleged that all defendants were owned and controlled by Yarin Nadel, who “dictated virtually every aspect of [their] work including the hours [they] worked, the locations of [their] work, and the manner of performing [their] work.” Compl. ¶ 55, Albim, No. 23-CV-1732.
Plaintiff Albim alleged that he worked from August 3, 2020, through June 16, 2022, averaging between 75 and 93.5 hours per week while being paid a flat weekly salary regardless of hours worked. Id. ¶¶ 62–69. He also alleged that he was required to wear a company uniform, could not negotiate his compensation, and faced termination if he refused tasks assigned by Nadel. Id. ¶ 54. Plaintiff Moran alleged that she worked from February 1, 2022, through March 22, 2022, averaging 72 hours per week for a weekly cash payment of $500. Id. ¶¶ 99–111. Both alleged that despite being labeled “store managers,” their duties primarily involved sales and customer service.
The complaint asserted that all stores shared employees, identical inventory, and common branding, and that Nadel exercised direct control over hiring, discipline, scheduling, and pay decisions. Id. ¶¶ 26–28. Employees were allegedly rotated among locations according to business needs, and payroll was administered centrally. The plaintiffs claimed that these practices demonstrated that the entities operated as a single enterprise rather than independent stores. After the defendants failed to appear, the Clerk entered default on April 10, 2024, and plaintiffs sought default judgment for unpaid wages, liquidated damages, and statutory penalties under the Wage Theft Prevention Act.
Decision
Judge Levy first reiterated that, in the context of default judgment, “the court is required to accept all of the plaintiffs’ factual allegations as true and draw all reasonable inferences in their favor.” Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009). The central question was whether the corporate defendants collectively constituted a single integrated enterprise for purposes of liability under the FLSA and NYLL.
Applying the framework from Lihli Fashions Corp. v. NLRB, 80 F.3d 743, 747 (2d Cir. 1996), Judge Levy considered four factors: “(1) interrelation of operations, (2) centralized control of labor relations, (3) common management, and (4) common ownership or financial control.” Id. The magistrate emphasized that “control of labor relations is the central concern” because it reflects “the fairness of imposing liability for labor infractions where two nominally independent entities do not act under an arm’s-length relationship.” Chen v. TYT E. Corp., No. 10-CV-5288 (NG)(RER), 2012 WL 5871617, at *3 (S.D.N.Y. Mar. 21, 2012) (internal quotation marks omitted).
As to interrelation of operations, Judge Levy found that the defendants’ employees “marketed, sold, and repaired virtually identical inventory, including cellphones, cellphone plans, and cellphone accessories,” and were “directed and required … to work interchangeably at defendants’ various retail stores.” Albim, 2025 WL 2791384, at *4. The court concluded that such shared resources and cross-employee assignments demonstrated interrelated operations. See Mangahas v. Eight Oranges Inc., 754 F. Supp. 3d 468, 486 (S.D.N.Y. 2024) (finding interrelation where nominally separate entities shared employees, materials, and facilities).
Regarding centralized control of labor relations, the court accepted allegations that Nadel “visited and worked at each of defendants’ retail stores, exercised the power to hire and fire employees, supervised and controlled employee work schedules and their conditions of employment, provided all equipment and materials necessary for employees to perform their jobs, and determined employees’ rates and methods of compensation.” Albim, 2025 WL 2791384, at *5. These facts, if true, indicated a unified management structure that directed labor decisions across all locations.
For common management and ownership, the court credited the plaintiffs’ allegation that all stores were “owned and managed by the same individual, Nadel.” Id. The magistrate noted that common ownership, combined with shared supervision and policies, supports single-enterprise status. See Chicas v. Kelco Constr., Inc., No. 21-CV-9014 (LJL), 2023 WL 5016457, at *4 (S.D.N.Y. July 25, 2023) (holding that companies with a common manager and owner constituted a single enterprise).
Based on these findings, the court concluded that “defendants constitute a single employer integrated enterprise and that plaintiffs were employed by the enterprise.” Albim, 2025 WL 2791384, at *5. Because the defendants failed to appear, the magistrate recommended finding joint and several liability for the alleged wage violations.
Having established enterprise liability, Judge Levy then found that plaintiffs sufficiently alleged coverage under the FLSA’s enterprise provisions, 29 U.S.C. § 203(s)(1)(A), as the defendants collectively had annual gross revenues exceeding $500,000 and regularly engaged in interstate commerce by selling phone plans, accepting credit card payments, and purchasing equipment from out-of-state suppliers. Albim, 2025 WL 2791384, at *5. The magistrate also concluded that plaintiffs were nonexempt employees because their duties required neither discretion nor independent judgment, notwithstanding their “manager” titles. Id. at *6 (citing Sevilla v. House of Salads One LLC, No. 20-CV-6072 (ARR)(RER), 2022 WL 954740, at *5 (E.D.N.Y. Mar. 30, 2022)).
Looking Forward
Although Albim v. 1656 Wireless arose from a default, its reasoning illustrates how courts analyze operational overlap in determining enterprise liability. For franchisors and multilocation operators, the opinion reinforces that courts focus less on formal corporate separateness and more on the degree of practical control over hiring, pay, and scheduling decisions.
In the franchise context, centralized brand standards and shared marketing alone generally do not create joint liability. However, when a franchisor or affiliated entity directly controls personnel functions or payroll, plaintiffs may argue that those actions amount to “centralized control of labor relations.” The Albim decision demonstrates how even informal cross-location supervision or shared management personnel can support integrated-enterprise allegations if not carefully delineated.
The ruling also highlights that plaintiffs may rely on allegations of shared branding, employee rotation, or centralized pay policies to support collective liability across entities. For franchisors, maintaining distinct corporate identities, local payroll control, and separate HR decision-making structures may help mitigate such claims. Courts in the Second Circuit continue to apply the Lihli Fashions test on a fact-intensive basis, suggesting that integrated-enterprise findings will depend on the totality of operational practices rather than ownership structure alone.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create or constitute, nor does it create or constitute, an attorney-client or any other legal relationship. No statement in this communication constitutes legal advice nor should any communication herein be construed, relied upon, or interpreted as legal advice. This communication is for general information purposes only regarding recent legal developments of interest, and is not a substitute for legal counsel on any subject matter. No reader should act or refrain from acting on the basis of any information included herein without seeking appropriate legal advice on the particular facts and circumstances affecting that reader. For more information, visit www.buchalter.com.
