Galeana v. Lemongrass on Broadway Corp.
120 F. Supp. 3d 306
| S.D.N.Y. | 2014Background
- Plaintiffs sued Lemongrass on Broadway Corp. and Hann Low under FLSA and NYLL for minimum/overtime pay and spread-of-hours pay, arguing pay violations, tip handling, and missing notices.
- Defendants allegedly owned/operated Lemon Grass Grill at 2534 Broadway, NY; Low controlled management and compensation decisions.
- Plaintiffs Galeana and Calixto were deliverymen with multi-year employment periods and alleged prolonged workweeks (>40 hours) without proper wages.
- Defendants allegedly paid cash wages well below statutory minimums and failed to post required wage/overtime notices or account for tips.
- Plaintiffs sought unpaid wages/overtime, spread-of-hours compensation, liquidated damages, and costs; default judgment was entered with damages recommended by a magistrate judge.
- Court adopted the magistrate’s Report and Recommendation, entering judgment for plaintiffs and holding defendants jointly and severally liable
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Tip credit invalid due to lack of notice | Galeana; Calixto claim tip credit invalid without notice | Defendants would rely on tip credit if valid | Tip credit not allowed; tips cannot satisfy minimum wages without notice |
| Willfulness and statute of limitations | Defendants’ conduct was willful; recovery goes back 3 years (federal) and 6 years (state) | Willfulness not conclusively proven from default | Willfulness established; 3-year FLSA and 6-year NYLL limitations apply |
| Damages calculations and wage rates | Use higher of state or federal minimum wage; apply liquidated damages accordingly | Rates and liquidated damages contested; seek alternative calculation | State minimum wage used; FLSA liquidated damages applied for post-2007 periods; 25% state liquidated damages pre-2007; 100% federal liquidated damages post-2007 |
| Spread-of-hours entitlement and damages | Deliverymen exceeded 10 hours/day; entitled to 1 hour at minimum wage plus liquidated damages | Not disputed hours; spread-of-hours not owed | Entitled to spread-of-hours pay and 25% liquidated damages on those amounts |
| Joint and several liability of Low | Low jointly liable as an employer under FLSA/NYLL | Low not an employer | Low is an employer; jointly and severally liable with Lemongrass on Broadway |
Key Cases Cited
- Finkel v. Romanowicz, 577 F.3d 79 (2d Cir. 2009) (default liability; liability established on well-pleaded allegations)
- Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105 (2d Cir. 1997) (damages proof required; basis for damages in default)
- Moon v. Kwon, 248 F.Supp.2d 201 (S.D.N.Y. 2002) (willfulness defined by recklessness or knowing violation; default as support)
- Reich v. S. New England Telecomm. Corp., 121 F.3d 58 (2d Cir. 1997) (double damages norm under FLSA; proof of willfulness)