Restaurant News

59 Diner Owner Owes More Than $200,000 to Employees for Unpaid Wages

As we reported two days ago, all remaining 59 Diner locations closed on Monday: the oldest, at 3801 Farnham at Shepherd; a location in Stafford; and the Willowbrook location, at 17695 Tomball Parkway. Readers informed us that another location, in The Woodlands, was extremely short-lived. It appears to have closed sometime in January, less than a year after it opened.

It turns out the closings may mask some deeper problems. Specifically: a more than $200,000 unpaid settlement to 19 employees at 59 Diner, a judgment of close to $137,000 owed to restaurant supply company Sysco Houston Inc., a back tax bill of more than $2,600 to Spring ISD and the City of Houston, and a sexual harrassment lawsuit against owner Naveed Baig filed by a former female employee. 

Our attempts to reach Baig were unsuccessful. His listed phone number is out of service and directory assistance had no other number. We left a voicemail message at the 59 Diner on Shepherd, and will update this story if we hear from him.

Attorney Alex Mabry of the Mabry Law Firm, PLLC, says Baig still owes more than $200,000 to a group of 19 employees of 59 Diner — part of a settlement agreement over unpaid wages. Baig purchased the 59 Diner properties in 2010 from Frank Tavakoli, the person who successfully expanded the business to several locations after buying it from a restaurant group in the mid-2000s.

Tavakoli started with the Shepherd and Willowbrook locations, then opened new 59 Diner locations in Stafford, Memorial City and Missouri City. However, after Baig purchased the company, various locations closed in rapid succession until only a few remained.

In the lawsuit, the 19 employees accused Baig of manipulating time clock records and therefore under-reporting earned tips and overtime to the payroll processing company responsible for issuing paychecks.

Additionally, the lawsuit says Baig, “required Plaintiff and her co-workers to contribute to a tip pool that was to be distributed to bus boys, but Defendants appropriated to themselves substantial percentages of those tip pool funds in violation of the FLSA’s [Fair Labor Standards Act] tip pooling provisions."

After mediation, an agreed judgment was issued and part of the deal was that the plaintiffs would not actually file the judgment with the district clerk of the United States District Court for the Southern District of Texas for enforcement as long as Baig was keeping his end of the agreement. Specifically, Baig was to make payments of $18,750 every six months.

The first payment was due on January 1, 2015. Mabry says Baig didn’t make it on time and tried to renegotiate the terms. When Mabry refused to cut a new deal and threatened to file the agreed judgment, Baig made the payment.

The second payment was due on July 1, 2015, and, again, Baig failed to pay. Mabry says when Baig did finally send a check, it was in the wrong amount. Eventually, Baig paid the correct amount, but only after again being threatened with filing of the agreed judgment.

Then, the third payment became due on January 1, 2016 — and Baig never made it. At that point, Mabry filed the agreed judgment on behalf of the 59 Diner employees on January 22.

Baig failed to honor the terms of the settlement agreement, which resulted in judgment being entered against him and SNA Shepherd Enterprises Company, Mabry says, adding that the only reason he is free to talk about the settlement is that Baig breached its terms. 

This isn’t the only lawsuit pending against Baig. On December 22, 2014, a former employee of the Memorial City location filed a sexual harassment lawsuit, claiming that the 59 Diner owner cut her pay multiple times after she rejected his advances. The suit reads: 

On or around January 15, 2012, Baig grabbed Charging Party's arm and tried to hug her again
when they were alone in his office. Charging Party pulled away and told him to leave her alone.
However, shortly afterwards, Charging Party discovered that her paycheck had been cut once again from $1100.00 to $880.00. Realizing that her paycheck would be cut each time she rejected the owner's sexual advances, Charging Party was forced to resign her job on March 14, 2012.

Baig owes yet another plantiff a hefty sum: Sysco Houston, Inc. On April 1, 2015, the restaurant supply company was awarded a judgment in Harris County District Court for $136,788.82 plus court costs, attorney fees and interest. Baig was to pay $12,000 per month but Sysco claims he has only paid $60,527.55 to-date. On January 22, 2016, Sysco filed for a writ of execution.

Spring Branch Independent School District and the City of Houston say Baig also owes $2,633.96 in back taxes related to the former 59 Diner location in Sugar Land. Their original petition was filed on February 15, 2016.

The defense attorney in the case brought by the 59 Diner employees, including the sexual harassment lawsuit, is Trang Q. Tran. He said he is no longer representing Baig as of about two weeks ago. According to court documents, Baig hasn't been paying Tran, either, the attorney says. Tran's motion to withdraw as defendant's counsel in the harassment suit reads, "Defendant has a substantial outstanding balance and has not made any payments in several months." 

Mabry said Baig may have transferred his assets to an uncle, and has been told that Baig is involved with a new restaurant, Al Caliente at 20210 Katy Freeway, which was formerly a 59 Diner location. Baig's uncle and a cousin of Baig's are listed as making the filing, Mabry said. 

Mabry said, “My clients are hard-working people who barely scratch out a living. They deserve better than this.” Now that Baig has shut down all of the 59 Diner locations and has stopped making payments on the judgment, whether or not these former employees will ever receive another dime of the settlement money owed remains to be seen. 

For that matter, it now seems doubtful that the employees who were unceremoniously dismissed on Monday will receive their final paychecks, as according to an anonymous source they were told to pick them up today. 
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Phaedra Cook
Contact: Phaedra Cook