Case 2:13-cv-00877-RSL Document 3 Filed 05/17/13 Page 1 of 8
1 Hon. Robert S. Lasnik
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6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 SETH D. HARRIS, ACTING SECRETARY OF ) 9 LABOR, UNITED STATES DEPARTMENT ) OF LABOR, ) Case No. 2:13-cv-00877-RSL 10 ) Plaintiff, ) DECLARATION OF WAGE HOUR 11 ) INVESTIGATOR MING SPROULE IN v. ) SUPPORT OF PLAINTIFF'S MOTION 12 ) FOR A TEMPORARY RESTRAINING HUANG "JACKIE" JIE, an individual, ZHAO ) ORDER AND ORDER TO SHOW 13 "JENNY" ZENG HONG, an individual, PACIFIC ) CAUSE WHY A PRELIMINARY COAST FOODS, INC., a Washington corporation ) INJUNCTION SHALL NOT ISSUE 14 doing business as J & J MONGOLIAN GRILL, and J) & J COMFORT ZONE, INC. doing business as SPA) 15 THERAPY, ) ) 16 Defendants. ) ------~~~~~------17 I, MING SPROULE, declare as follows: 18 I. I am presently employed by the Wage and Hour Division of the United States 19 Department of Labor ("Wage and Hour") in Seattle, Washington, known as the "Seattle District Office." 20 2. I am a Wage Hour Investigator ("WHI"). I have been a WHI since September 1998. 21 3. As a WHI, I am responsible for investigating compliance with the laws enforced by 22 Wage and Hour, including compliance with the Fair Labor Standards Act ("FLSA").
23 SPROULE DEC. -PAGE 1 U.S. DEPARTMENT OF LABOR Harris v. Huang, et al. - Case No. 2: 13-cv-00877 OFFICE OF THE SOLICITOR 24 300 Fifth Ave., Suite 1120 Seattle, W A 98104 (206) 757-6762 Fax: (206) 757-6761 Case 2:13-cv-00877-RSL Document 3 Filed 05/17/13 Page 2 of 8
1 4. As a WHI, I carry a caseload and accompany other WHis on their investigations.
2 5. I was assigned this case by my supervisor, Seattle District Office Assistant District
3 Director ("ADD") Tuan Huynh on January 25, 2012 to determine whether Mr. Huang "Jackie" Jie, Ms.
4 Zhao "Jenny" Zeng Hong, Pacific Coast Foods, Inc. and J & J Comfort Zone, Inc. (collectively
5 "Employers"') were in compliance with the FLSA. On February 23, 2012, I visited the establishment of
6 Pacific Coast Foods, Inc. and J & J Comfort Zone, Inc. and carried a letter requesting documents with
7 me. I met with and delivered the letter to Huang Jie during my meeting with him that same day. My
8 letter requested, among other things, all time and payroll records an employer is required to keep and
9 maintain, a list of employees, legal information about the Employers, and documentation of annual gross
10 sales.
11 6. I determined that Pacific Coast Foods, Inc. operates J & J Mongolian Grill, located in the
12 Bellis Fair Mall in Bellingham, Washington. J & J Comfort Zone, Inc. operates Spa Therapy out of a
13 salon and a separate kiosk in the Bellis Fair Mall in Bellingham, Washington. J & J Comfort Zone, Inc.
14 previously operated Spa Therapy out of a second location which was the Alderwood Mall in Lynnwood,
15 Washington. The Alderwood Mall Spa Therapy was closed on January 31, 2012.
16 7. Both Pacific Coast Foods, Inc. and J & J Comfort Zone, Inc. are owned and operated by
17 (Mr.) Huang "Jackie" Jie, and his wife (Ms.) Zhao "Jenny" Zeng Hong. Mr. Huang and Ms. Zhao
18 perform all management duties related to the running of these business, including hiring and firing
19 employees, setting pay rates, scheduling hours of work, calculating pay, paying employees, preparing
20 documentation for the accountant to prepare the payroll, ordering supplies, and supervising the daily
21 operations of these businesses. I determined that Pacific Coast Foods, Inc., J & J Comfort Zone, Inc.,
22 Mr. Huang, and Ms. Zhao met the definition of an "employer" under §3(d) of the FLSA (29 U.S.C.
23 SPROULE DEC. -PAGE 2 U.S. DEPARTMENT OF LABOR Harris v. Huang, et at. - Case No. 2: 13-cv-00877 OFFICE OF THE SOLICITOR 24 300 Fifth Ave., Suite 1120 Seattle, W A 98104 (206) 757-6762 Fax: (206) 757-6761 Case 2:13-cv-00877-RSL Document 3 Filed 05/17/13 Page 3 of 8
§203(d)).
2 8. The individual Employers and most of their employees speak Mandarin. I speak
3 Mandarin. My contact with the Employers and with the employees was conducted in the Mandarin
4 language.
5 9. I visited the Employers' worksite, also referred to as an "Initial Conference," on February
6 23, 2012 and met with president and owner Huang "Jackie" Jie. I made Mr. Huang aware of the
7 importance of keeping records pursuant to the FLSA and advised him of the requirements of 29 C.F.R.
8 §516.2 I told him that he needed to record employees' start time, their end time, the days they worked,
9 the hours they worked, and the basis of their pay, whether hourly or otherwise. I took handwritten notes
10 of the Employers' position, my questions and requests, and the Employers' responses. I also have an
11 independent recollection of this meeting. I obtained only a handful of documents during this meeting.
12 Mr. Huang watched me as I scanned the posted employee schedules at the restaurant. At that time, Mr.
13 Huang was not aware that I obtained copies of individual therapists' daily sales and tips journal from the
14 Spa Therapy kiosk. I later provided these copies to Mr. Huang. I came into contact with the employer's
15 payroll accountant Diana Long but I cannot recall if she called me or I called her first.
16 10. Ms. Long made some documents available to me but not the documents each employer is
17 required to keep pursuant to the FLSA. There was no accurate recording of the days of the week or the
18 hours per day which employees worked. There was no accurate recording of the basis of employees'
19 pay. The payroll summaries I was provided with showed a salary to employees who are not exempt
20 from the FLSA (a salary basis is only appropriate for bona fide administrative, executive or professional
21 employees).
22 11. The Employers meet the requirements for enterprise coverage and separately, for
23 SPROULE DEC. -PAGE 3 U .S . DEPARTMENT OF LABOR Harris v. Huang, et al. - Case No. 2: 13-cv-00877 OFFICE OF THE SOLICITOR 24 300 Fifth Ave., Suite 1120 Seattle, W A 98104 (206) 757-6762 Fax: (206) 757-6761 Case 2:13-cv-00877-RSL Document 3 Filed 05/17/13 Page 4 of 8
1 individual coverage under the FLSA.
2 12. Following my initial meeting with Mr. Huang and my explanation of the records required
3 to be kept to comply with the FLSA, Mr. Huang provided me with documents he claimed were accurate
4 records of hours worked by employees. The documents were obvious fabrications, unsupported by
5 verifiable payroll records and inconsistent on their face.
6 13. My investigation covered the period from January 1, 2010 to December 3I, 2012.
7 14. I determined that Huang "Jackie" Jie, and Zhao "Jenny" Zeng Hong, and Pacific Coast
8 Foods, Inc. dba J & J Mongolian Grill (collectively for this paragraph "Pacific Coast Foods") employed
9 between three and five full-time and part-time employees per day including cooks, kitchen helpers,
10 servers, and cashiers. Pacific Coast Foods was required to be open for business during all mall hours
11 which were from 10:00 a.m. to 9:00p.m. Mondays through Saturday, and II :00 a.m. to 6:00p.m. on
12 Sundays. Employees began work at 9:30a.m. and worked until 15 to 30 minutes after closing.
13 Employees typically had one day off each week. All employees were paid a monthly salary, not by the
14 hour. Employees' wages ranged in pay from $1,600 to $2,600 per month. Employees were paid
15 partially in cash, partially by check, some completely in cash. Deductions were only taken on a portion
16 of the compensation paid by check. Employees ate three meals throughout their work day and took
I7 between five and fifteen minutes for each meal. Pacific Coast Foods failed to keep payroll records as
18 required by 29 C.F.R. §516.2. Pacific Coast Foods failed to provide me with a list of employee names
19 and contact information for all of their employees. I determined that Pacific Coast Foods sought to limit
20 my ability to contact current and former employees.
21 15. During the investigative period, there were three separate locations of businesses run by
22 Huang "Jackie" Jie, Zhao "Jenny" Zeng Hong, and J & J Comfort Zone, Inc. dba Spa Therapy
23 SPROULE DEC. -PAGE 4 U.S. DEPARTMENT OF LABOR Harris v. Huang, et al. - Case No.2: 13-cv-00877 OFFICE OF THE SOLICITOR 24 300 Fifth Ave., Suite 1120 Seattle, W A 98104 (206) 757-6762 Fax: (206) 757-6761 Case 2:13-cv-00877-RSL Document 3 Filed 05/17/13 Page 5 of 8
(collectively for this paragraph "Comfort Zone"). Two locations were in Bellis Fair Mall and there was
2 one Alderwood Mall location. Comfort Zone operated as Oriental Massage, Inc. for the period from
3 November 5, 2009 to July 22, 2010. The corporation Oriental Massage, Inc. was dissolved on
4 November 5, 2010. I determined that Comfort Zone employed between twelve and fourteen employees
5 per day. The business was seasonal, with summer being the high season where up to fourteen
6 employees may be employed. Comfort Zone was required to be open for business during all mall hours
7 which were from 10:00 a.m. to 9:00p.m. Mondays through Saturday, and 11:00 a.m. to 6:00p.m. on
8 Sundays at Bellis Fair Mall, and from 11:00 a.m. to 7:00p.m. at Alderwood Mall. Employees were
9 exclusively massage therapists and the majority were classified by Comfort Zone as independent
10 contractors. Employees were required to report to work fifteen to thirty minutes prior to opening and
11 worked until closing or fifteen minutes after closing. Employees typically had one day off per month.
12 All employees were paid on a commission basis where the commissions for the day were evenly divided
13 between the employees at work that day. When I converted the commission rate into an hourly rate, it
14 was between $4.42 and $8.10 per hour. A few employees were paid a flat daily rate of between $50 and
15 $80, which converts to between $4.16 and $6.66 per hour. Most employees were paid partially in cash,
16 partially by check. For those who were classified as employees deductions were only taken on a portion
17 of the compensation paid by check. Employees ate between one and two meals throughout their work
18 day, with most bringing their food from home. They took between five and fifteen minutes for each
19 meal. Employees were required to stand all day without sitting down, even when there were no
20 customers. Employees were required to solicit customers from people walking by the kiosk and salon
21 when they were not giving a massage. Comfort Zone failed to keep time and payroll records as required
22 by 29 C.F.R. §516.2. Comfort Zone failed to provide me with a list of employee names and contact
23 SPROULE DEC. -PAGE 5 U .S. DEPARTMENT OF LABOR Harris v. Huang, et al. - Case No. 2: 13-cv-00877 OFFICE OF THE SOLICITOR 24 300 Fifth Ave., Suite 1120 Seattle, W A 981 04 (206) 757-6762 Fax: (206) 757-6761 Case 2:13-cv-00877-RSL Document 3 Filed 05/17/13 Page 6 of 8
1 information for all employees. I determined that Comfort Zone sought to limit my ability to contact
2 current and former employees.
3 16. During the course of my investigation I spoke with as many former and current
4 employees of the Employers as I could. Most employees expressed concern and distress that their name
5 or identity would be revealed to the Employers. Some employees told me that Mr. Huang and/or Ms.
6 Zhao instructed them to lie to me about their hours of work and their rate and method of pay. Some
7 employees told me they were afraid Mr. Huang would harm or cause harm to them physically. Some
8 employees told me that Mr. Huang searched their personal property without their permission, both while
9 they were at work and at the home he provided to workers while they were at work. Some employees
10 told me that they were intimidated by Mr. Huang and his wife; that the Employers would speak to the
11 employees disrespectfully and demand personal services (such as foot treatments at Spa Therapy).
12 Some employees told me that Mr. Huang told them that if his interest was harmed, he would call the
13 police and falsely tell the police that the employee was caught stealing. Some employees told me that
14 Mr. Huang threatened to turn them in to the immigration authorities. Mr. Huang promised some
15 employees the opportunity to make as much as $2,500 a month. Mr. Huang promised these employees
16 that if they didn't make that amount, he would make up the difference. They came to work for him on
17 his representation but when they failed to earn $2,500 in a month, Mr. Huang never made up the
18 difference. Some employees told me they were afraid for their physical safety if Mr. Huang ever knew
19 their names.
20 17. During my investigation, I was made aware of undated documents which the Employers'
21 accountant, Ms. Long, provided to the Employers prior to my investigation. Ms. Long called these
22 documents The Newsletter. Ms. Long provided me with two versions of The Newsletter, one for Fall
23 SPROULE DEC. -PAGE 6 U.S. DEPARTMENT OF LABOR Harris v. Huang, et al. - Case No. 2: 13-cv-00877 OFFICE OF THE SOLICITOR 24 300 Fifth Ave., Suite 1120 Seattle, W A 98104 (206) 757-6762 Fax: (206) 757-6761 Case 2:13-cv-00877-RSL Document 3 Filed 05/17/13 Page 7 of 8
1 2011 and another for Spring 2012. The Newsletter summarizes employment law regarding pay,
2 minimum wages, tipped employees, hours of work, and overtime. The Newsletter is in Mandarin with
3 some contact information and title issues in English. I asked Ms. Long when these documents were
4 provided to the Employers but she would not tell me.
5 18. Comfort Zone employees were misclassified as independent contractors, despite acting,
6 working and taking direction as employees. Most of the Employers' employees were paid in violation
7 of the FLSA with regard to minimum wage because they were not paid at a rate no less than the federal
8 minimum wage. Employees were paid in violation of the FLSA with regard to overtime because they
9 were not paid at a rate one and one-half times a lawful hourly rate for each hour worked over 40 in a
10 workweek. The Employers violated the FLSA by failing to keep records pursuant to the statute (29
11 U.S.C. §21l(c)) and the implementing regulations (29 C.F.R. §516.2). The Employers violated the
12 FLSA by failing to cooperate with my investigation because they: misled me; falsified records
13 following my contact with them and presented such records to me as accurate; specifically refused to
14 authorize Ms. Long to provide me with accounting and payroll records in her possession; instructed
15 employees to lie to me about their hours or work and pay, and; continued to intimidate and threaten
16 employees following the beginning of my investigation.
17 19. I held a Final Conference with the Employers on August 21, 2012. The purpose of the
18 Final Conference is to explain the law, discuss future compliance, and advise the employer of the results
19 of the investigation and explain the violations which were found, including the amount of backwages
20 due employees. At the Final Conference, I informed Mr. Huang of the violations I found, and the
21 backwages I had calculated to date. I informed Mr. Huang that the backwage amounts could change
22 based on information yet to be provided. I requested at this conference that the Employers provide me
23 SPROULE DEC. -PAGE 7 U.S. DEPARTMENT OF LABOR Harris v. Huang, et al. - Case No. 2: 13-cv-00877 OFFICE OF THE SOLICITOR 24 300 Fifth Ave., Suite 1120 Seattle, W A 98104 (206) 757-6762 Fax: (206) 757-6761 Case 2:13-cv-00877-RSL Document 3 Filed 05/17/13 Page 8 of 8
1 with the records that I previously requested but that they had not yet given to me, such as the name of
2 each employee, periods of employment, actual salary paid, daily sales journals that was kept for each
3 therapist, and the commissions paid. The Employers failed to provide the information.
4 20. On January 4, 2013, I requested monthly excise taxes, payroll registers, daily time
5 records, lists of employees, job classification, and employees' starting and ending dates for the year of
6 2012 from the Employers. These records had not been previously requested. Based on the information
7 I determined in my investigation to date, I extended the investigation period from ending on January 1,
8 2012 to ending on December 31, 2012.
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10 I DECLARE UNDER PENALTY OF PERJURY THAT THE FOREGOING IS TRUE AND CORRECT. 11
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13 May 17,2013 14 Seattle, Washington Ming Sproule, Wage and Hour Investigator
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23 SPROULE DEC. - PAGE 8 U.S. D EPARTMENT OF LABOR Harris v. Hua11g, et al. - Case No. 2: 13-cv-00877 O FFICE OF THE SOLICITOR 24 300 Fifth Ave., Suite 1120 Seattle, W A 98104 (206) 757-6762 Fax: (206) 757-676 1