DECISION AND ORDER I. INTRODUCTION According to the complaint, plaintiffs are former employees of nonparty IntegraMed America, Inc. Each plaintiff entered an employment contract with IntegraMed America that guaranteed bonuses and severance payments to induce plaintiffs to continue working for IntegraMed America while the corporation sought a buyer. The corporation was never sold; filed for bankruptcy protection in May 2020, 11 U.S.C. ch. 7; simultaneously terminated plaintiffs employment; and failed to pay plaintiffs their earned wages, including the contractual bonuses and severance payments. While IntegraMed Americas bankruptcy proceeding still is pending, plaintiffs sue Sagard Capital Partners, L.P, as the largest beneficial shareholder of IntegraMed America, alleging a single claim for their wages under New York Business Corporation Law (BCL) §630, which allows employees to hold their employers 10 largest shareholders liable for unpaid wages. Defendant moves to dismiss the complaint based on its failure to state a viable claim, because it does not allege the conditions precedent to a BCL §630 claim and therefore is premature, and defendant is not IntegraMed Americas direct shareholder. C.P.L.R. §3211(a)(7). II. APPLICABLE STANDARDS Upon a motion to dismiss the complaint, the court considers the factual allegations as true. Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc., 37 N.Y.3d 169, 175 (2021); Connaughton v. Chipotle Mexican Grill, Inc., 29 N.Y.3d 137, 141 (2017); Seaman v. Schulte Roth & Zabel LLP, 176 A.D.3d 538, 538 (1st Dept 2019). In a motion pursuant to C.P.L.R. §3211(a)(7), defendant bears the burden to establish that the complaint “fails to state a viable cause of action.” Connolly v. Long Island Power Auth., 30 N.Y.3d 719, 728 (2018). Dismissal is warranted if the complaint fails to allege facts that “fit within any cognizable legal theory.” Sassi v. Mobile Life Support Servs., Inc., 37 N.Y.3d 236, 239 (2021). III. RIPENESS Defendant maintains this claim is not yet ripe because BCL §630(a) requires an action to be filed “within ninety days after the return of an execution unsatisfied against the corporation upon a judgment recovered against it for such services,” and plaintiffs have not yet obtained a judgment. Obtaining a judgment against the employer and unsuccessfully attempting to execute the judgment are conditions precedent to suing the employers shareholders. Wing Wong v. King Sun Yee, 262 A.D.2d 254, 255 (1st Dept 1999); Garcia v. Tamir, 269 A.D.2d 423, 423 (2d Dept 2000). Plaintiffs insist they may proceed immediately with this action because their employers bankruptcy proceeding bars them from suing the debtor and shows it will not be able to pay plaintiffs claims in full. Local 2110 v. Getter, 2019 WL 2929549, at *1 (Sup. Ct. N.Y. Co. July 8, 2019). While plaintiffs may not sue their employer in this court after the employer filed for bankruptcy protection, id. at *4, they admit they have filed claims in their employers bankruptcy proceeding and may recover a portion of their claims there, but expect it will be a small percentage of the bonuses, severance payments, or other wages owed, which plaintiffs may not receive for years. This action is distinguishable from Local 2110 v. Getter on which plaintiffs rely. An action under BCL §630 does not contemplate litigation of the merits of plaintiffs claims for wages, but contemplates litigation to determine whether an employers shareholder is liable for a judgment against the employer. It follows a judgment that plaintiffs are entitled to wages from their employer, even though it may not possess the assets to satisfy plaintiffs claims. Most significantly, in Local 2110 v. Getter, 2019 WL 2929549, at *4, an arbitrator already had issued an award to the plaintiffs for the unpaid wages, severance payments, benefits, and reimbursements the plaintiffs claimed. Here, in contrast, plaintiffs still await a determination of the merits of plaintiffs claims that their employer owes wages, severance payments, and benefits to plaintiffs, which will occur in their employers bankruptcy proceeding, since the claims plaintiffs filed in the bankruptcy proceeding are analogous to a complaint. Matter of Contl Airlines, 928 F.2d 127, 129 (5th Cir. 1991); In re Cerrato, 504 B.R. 23, 38 (E.D.N.Y. 2014); In re Cruisephone, Inc., 278 B.R. 325, 330 (E.D.N.Y. 2002); In re Franchi, 451 B.R. 604, 607 (S.D. Fla. 2011). Moreover, in Local 2110 v. Getter, 2019 WL 2929549, at *4, the employer debtors attorney in its bankruptcy proceeding had attested that “the possibility of any creditor ecoveries” there was remote. Plaintiffs present no such testimony or affidavit here. Plaintiffs nevertheless contend that waiting for a judgment against their former employer in the bankruptcy proceeding would be futile, so pursing their claim there is unnecessary, again relying on Local 2110 v. Getter, 2019 WL 2929549, at *4. While Local 2110 v. Getter acknowledges that the plaintiff was barred from suing his employer debtor due to the bankruptcy stay, citing Grossman v. Sendor, 64 A.D.2d 561, 561 (1st Dept 1978), in Grossman the plaintiff commenced his civil suit against the debtors shareholders pursuant to BCL §630 only after confirmation of the plan in the bankruptcy proceeding: the equivalent of a judgment. The court excused the plaintiff only from waiting for the return of the unsatisfied execution. Grossman v. Sendor, 64 A.D.2d at 561. Plaintiffs also cite In re Nargassans, 103 B.R. 446, 453-54 (S.D.N.Y. 1989), but it merely speculated that the New York Court of Appeals would not require an employee to await resolution of his employers Chapter 11 bankruptcy proceeding before seeking satisfaction from shareholders when the debtor no longer conducted business, so its assets were obviously insufficient to pay the outstanding wages. Importantly, the court there emphasized that an employers shareholders would not be liable until the employers inability to pay wages was confirmed. Id. at 452. Here, plaintiffs have not established the futility of pursuing their claims in the bankruptcy proceeding, even though plaintiffs allege they will not recover fully there. To avoid a double recovery, plaintiffs propose that, if the court grants a judgment here, the court may require plaintiffs to withdraw their claims in the bankruptcy proceeding. The pertinent determination, however, is not whether plaintiffs prefer to recover in this forum, but whether they are able to recover in the bankruptcy forum. Without a representation from the employer as in Local 2110 v. Getter, 2019 WL 2929549, at *4, the time to seek a remedy from the employers shareholders is when plaintiffs are left without a complete remedy from the employer after the bankruptcy proceeding has concluded and determined plaintiffs are entitled to such a remedy. Grossman v. Sendor, 64 A.D.2d at 561. While plaintiffs insist that the bankruptcy proceeding will cap their recovery well below the full value of their claims, in fact the bankruptcy proceeding may reach any of at least three conclusions. (1) Plaintiffs recovery is capped below the value of their claims. (2) Plaintiffs claims are satisfied. (3) Plaintiffs are not entitled to the wages they seek, because plaintiffs did not meet the requirements for the 2021 performance bonus, the retention bonus, or the severance payment. Only in the first instance might plaintiffs be entitled to sue their employers shareholder. IV. WHETHER DEFENDANT IS A SHAREHOLDER The parties also dispute whether defendant qualifies as one of the “ten largest shareholders” under BCL §630(a), since plaintiffs do not allege that defendant directly owns any of plaintiffs employer. Although plaintiffs allege that defendant publicly has admitted it is a shareholder owning more than a 98% interest in IntegraMed America, plaintiffs negate that allegation by repeatedly, in this action, admitting defendant actually owns three “shell” entities, one of which owns the vast majority of the shares of IntegraMed America. Aff. of Terence W. McCormick in Supp. of Mot. Ex. 1 (Compl.) 26. These shell entities are 1069759 B.C. Unlimited Liability Company, IntegraMed Fertility Holding, LLC, and IntegraMed Holding Corp., but plaintiffs do not identify which one owns IntegraMed Americas shares. Plaintiffs contend this ownership of IntegraMed Americas owner makes defendant the holder of a “beneficial interest,” BCL §630(a), in IntegraMed America and a shareholder for BCL §630s purposes, but defendants “beneficial interest” in IntegraMed America does not render defendant a shareholder of IntegraMed America. Under BCL §630(a), defendant first must be a shareholder. Then the fair value of the shareholders beneficial interest determines whether the shareholder is one of the employers 10 largest. Plaintiffs again rely on Local 2110 v. Getter, 2019 WL 2929549, at *4, which found the facts pleaded there stated “a veil piercing, alter ego or joint employer theory” that brought the defendant within §630s parameters. This decision departs from an earlier decision that the statute must be construed strictly, as allowing former employees to seek a remedy only from their employers direct shareholder, and not creating a claim against holding companies shareholders, regardless of their beneficial interest. Local 1181-1061 v. Wayzata Opportunities Fund, LLC, 2016 WL 3646988, at *3 (Sup. Ct. N.Y. Co. June 30, 2016). BCL §630 already effectively pierces the corporate veil between employers and their shareholder and creates an exception to the rule that “a corporation exists independently of its owners…and that it is perfectly legal to incorporate for the express purpose of limiting the liability of the corporate owners.” Skanska USA Bldg. Inc. v. Atlantic Yards B2 Owner, LLC, 146 A.D.3d 1, 12 (1st Dept 2016), affd, 31 N.Y.3d 1002 (2018). The two decisions different conclusions may be reconciled, however, because Local 1181-1061 v. Wayzata Opportunities Fund determined only whether BCL §630, alone, would allow the claim. Local 2110 v. Getter also considered allegations that supported other theories for piercing the corporate veil between a shell entity and either the employer or the defendant, allowing the BCL §630 claim to proceed under the combination of theories. Plaintiffs may use the statute only once, either to connect the shell entity to the employer or to connect the defendant to the shell entity, and then may use a piercing the corporate veil theory to make the second connection. Here, plaintiffs allege that defendant has held itself out as the largest shareholder of IntegraMed America, but that defendant owns its more than 98 percent of the shares of IntegraMed America through an unidentified passthrough shell entity. According to plaintiffs, the shell entity comprises no officers or employees and holds no real or personal property, yet acted as a joint employer with or alter ego of IntegraMed America, allowing plaintiffs to pierce the corporate veil between their employer and the shell entity to reach the latter. Compl.
