United States District Court, D. Maryland
case has been referred to me for post-judgment discovery
disputes and related scheduling matters as authorized by
Local Rule 301.6 (aj) and pursuant to Maryland Rule of Civil
Procedure 2-633. [ECF No. 39]. Presently pending is Plaintiff
Michael Scott's (“Plaintiff”) Motion to
Permit Discovery Concerning Successorship Pursuant to Federal
Rule of Civil Procedure 25(c) [ECF No. 52], Defendant
Mudassar Rana's (“Rana”) Opposition [ECF No.
66], and Plaintiff's Reply [ECF No. 69]. I find that no
hearing is necessary. See Loc. R. 105.6 (D. Md.
2016). For the reasons discussed below, Plaintiff's
Motion will be granted.
background, Plaintiff drove a tow truck for Shaheen Group,
LLC (t/a “Empire Towing”), which was managed by
Faizal “Frank” Nisar and Mudassar Rana. On
December 19, 2017, a judgment for violations of the Fair
Labor Standards Act was entered against: (1) Shaheen Group,
Nisar, and Rana (collectively “Defendants”),
jointly and severally, in the amount of $131, 466.00; and (2)
Rana in the amount of $100, 000.00. [ECF No. 20 at 2]. The
judgment also awarded Plaintiff attorneys' fees and costs
in the amount of $7, 797.91. Id. On March 19, 2018,
with the judgment remaining unpaid, Plaintiff filed a Request
for Order Directing Judgment Debtor Rana to Appear for
Examination in Aid of Enforcement of Judgment. [ECF No. 32].
On April 5, 2018, I granted Plaintiff's Request and
ordered Rana to appear for examination on May 7, 2018, [ECF
No. 40]. On May 7, 2018, however, Rana filed for bankruptcy
under Chapter 7. [ECF No. 48]. Consequently, Rana's
post-judgment examination was stayed.
to the instant motion, the corporate charter to Shaheen
Group, LLC was revoked by the state of Maryland [ECF No.
52-2], and Rana began operating State Towing, LLC in 2017,
[ECF Nos. 52 at 3, 52-1]. According to Plaintiff, State
Towing, LLC: (1) utilizes several vehicles that were once
operated by Empire Towing; (2) serves former clients of
Empire Towing; and (3) “[i]n all respects . . . is run
like Empire Towing.” [ECF No. 52 at 3]. Plaintiff
further alleges that, “in order to finance and assist
in the establishment of State Towing, LLC,  Rana used
assets received, recovered or transferred from Empire
Towing.” Id. Accordingly, Plaintiff contends
that State Towing, LLC, as a potential successor in interest
of Shaheen Group, LLC, may be legally responsible for the
December 19, 2017 judgment referenced above. Id. at
3. As such, Plaintiff requests that I grant limited
post-judgment discovery to permit Plaintiff to determine
whether State Towing, LLC qualifies as Shaheen Group,
LLC's successor in interest.
Rule of Civil Procedure 25(c) provides that, “[i]f an
interest is transferred, the action may be continued by or
against the original party unless the court, on motion,
orders the transferee to be substituted in the action or
joined with the original party.” Fed.R.Civ.P. 25(c).
“In other words, the rule serves as a procedural
mechanism to bring a successor in interest into court when
‘it has come to own the property in issue.'”
Rodriguez-Miranda v. Benin, 829 F.3d 29, 40 (1st
Cir. 2016) (citation omitted). Thus, Rule 25(c) “may be
‘invoked to substitute a successor in interest who . .
. obtained the assets of the corporation against whom
judgment had been rendered.'” Id.
(citation omitted); see also Explosives Corp. of Am. v.
Garlam Enterprises Corp., 817 F.2d 894, 907 (1st Cir.
1987) (“Substitution may be ordered after judgment has
been rendered in the district court for the purpose of
subsequent proceedings to enforce judgment.”) (citation
the Fourth Circuit has not opined on whether or not successor
liability is available under the FLSA, ‘the trend among
the courts that have decided the question is to recognize
successor liability in FLSA cases' including various
district courts, along with the Ninth and Seventh
Circuits.” Carrillo v. Borges Constr., LLC,
No. GJH-13-641, 2016 WL 5716186, at *5 (D. Md. Sept. 30,
2016) (citation omitted). Importantly, this District has also
expressly recognized the applicability of successor liability
in FLSA cases. See Id. (“[T]his Court finds
that successor liability is appropriate under the
FLSA.”). Thus, provided Plaintiff demonstrates that
State Towing, LLC is a successor in interest of Shaheen
Group, LLC, State Towing, LLC may be substituted into the
instant action pursuant to Rule 25(c). Specifically, State
Towing, LLC is a successor in interest and liable for the
judgment “that may be attached to the transferred
assets” if it: (1) is a bona fide successor; (2) had
notice of the potential liability, and (3) the predecessor
(Shaheen Group, LLC) is unable to directly provide adequate
relief. Herrera v. Singh, 118 F.Supp.2d 1120, 1123
(E.D. Wash. 2000) (citing Steinbach v. Hubbard, 51
F.3d 843, 845-46 (9th Cir.1995)). “Whether an employer
qualifies as a bona fide successor will hinge principally on
the degree of business continuity between the successor and
predecessor.” Steinbach, 51 F.3d at 846 (9th
Cir. 1995) (citation omitted). Furthermore, business
continuity is established by weighing:
(1) the similarity of business operations; (2) use of the
same physical facilities; (3) use of the same workforce; (4)
existence of the same jobs under the same working conditions;
(5) presence of the same supervisors; (6) use of the same
methods of production; and (7) production of similar products
Herrera, 118 F.Supp.2d at 1123 (E.D. Wash. 2000)
(citing NLRB v. Jeffries Lithograph Co., 752 F.2d
459, 463-64 (9th Cir.1985)).
opposes Plaintiff's request for limited post-judgment
discovery as to the issue of State Towing, LLC's
potential successor liability, on the grounds that State
Towing, LLC is “included among the assets of  Rana
that constitute property of his bankruptcy estate and,
thereby, are subject to the efforts of the Chapter 7
Bankruptcy Trustee.” [ECF No. 66 at 1]. Thus, Rana
contends that any discovery should be stayed until the
conclusion of his bankruptcy proceedings. Id.
Rana's position is without merit. Federal courts have
routinely held that the protections afforded by the automatic
stay do not extend to the assets of separate legal entities.
See In re Calhoun, 312 B.R. 380, 383 (Bankr. N.D.
Iowa 2004) (refusing to extend the automatic stay to a
chapter 7 debtor's limited liability company);
Kreisler v. Goldberg, 478 F.3d 209, 214 (4th Cir.
2007) (holding that the assets of a separate LLC belonged to
the LLC “and did not form part of [the] bankruptcy
estate” necessary to implicate the automatic stay).
Indeed, in explaining why the assets of a separate and
distinct LLC are not affected by the automatic stay, the
Fourth Circuit stated:
Although [the debtor] could have established an ownership
interest in the property, it chose not to do so. Instead, it
created an LLC for the purpose of holding title to the
property. Having assumed whatever benefits flowed from that
decision, it cannot now ignore the existence of the LLC in
order to escape its disadvantages . . . The assets of [the
LLC] belong to [the LLC] and d[o] not form part of [the
debtor's] bankruptcy estate.
Kreisler, 478 F.3d at 214 (citation omitted).
Accordingly, the Fourth Circuit stated that, “had [the
LLC] wished to receive the protections afforded by [the
automatic stay], it must have filed ...