BARRY NEWMAN, Plaintiff, -v.- ASA COLLEGE, INC.; ALEXANDER SHCHEGOL; and JOSE VALENCIA, Defendants.
23 Civ. 3503 (KPF) (RWL)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
October 24, 2024
KATHERINE POLK FAILLA, District Judge
OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATION
Pending before the Court is the August 29, 2024 Report and Recommendation from United States Magistrate Judge Robert W. Lehrburger (the “Report” (Dkt. #37), attached), after an inquest on damages. In his Report, Judge Lehrburger recommends that the Court award a judgment in favor of Plaintiff and against Defendants in the following amounts: (i) unpaid wages in the amount of $12,196.50; (ii) liquidated damages on unpaid wages in the amount of $12,196.50; (iii) liquidated damages for untimely payments in the amount of $10,865.40; (iv) damages for breach of contract in the amount of $25,002.39; (v) pre-judgment interest on unpaid wages of $12,196.50 at the rate of nine percent, starting from January 15, 2023; (vi) pre-judgment interest on breach of contract damages of $25,002.39 at the rate of nine percent, starting from January 1, 2021; (vii) attorneys’ fees in the amount of $5,240.00; and (viii) compensable costs in the amount of $779.80.
The Court has carefully reviewed the Report and notes that no party has objected within the fourteen-day period from its service, as provided by
BACKGROUND
The relevant facts and procedural history underlying this action are set forth in the Report, and the Court assumes familiarity with them. Nonetheless, those facts relevant to the instant Opinion are set forth herein, and they are drawn from the recitation of the facts in the Report (see Report 2-5), as well as from the public docket.
In or about April 2018, Plaintiff Barry Newman became the Chair of the Massage Therapy Department at Defendant ASA College, Inc. (“ASA”), a for-profit college that has since gone out of business. (Report 1-2). Defendant Alexander Shchegol was the founder and owner of ASA and its President for much of the relevant time period; Defendant Jose Valencia (together with ASA and Shchegol, “Defendants”) then took over as interim President of ASA. (Id. at 2).
While Plaintiff had been promised an annual salary of $62,000 in 2018, he did not receive the full amount of his salary in any of the years between 2019 and 2022. (Report 2). Indeed, while Plaintiff was required to clock in and out of work and generally worked 45 to 50 hours per week, ASA falsified his records to reflect fewer than 40 hours worked. (Id.). ASA also failed to compensate Plaintiff properly for vacation time and other expenses, and paid him on an untimely basis throughout 2022. (Id. at 2-3).
Plaintiff filed his complaint in this Court on April 26, 2023, bringing claims under the Fair Labor Standards Act (the “FLSA”),
On September 15, 2023, Plaintiff sought from the Court an order to show cause why default judgment should not be entered. (Dkt. #21-23). The Court issued an Order to Show Cause on September 18, 2023. (Dkt. #24). A hearing on the Order was held on December 20, 2023, at which counsel for Plaintiff, but none of the Defendants, appeared. (Dkt. #35 (transcript)). After and as a
judgment jointly and severally against Defendants in an amount to be determined after the inquest, which amount may include compensatory damages, other permissible damages and penalties, and any permissible pre-judgment interest, as well as post-judgment interest as provided for in
28 U.S.C. § 1961(a) [, along with] reasonable attorneys’ fees and compensable costs incurred in bringing this matter.
(Dkt. #29 at 2). The Court separately issued an order referring the case to Judge Lehrburger for an inquest into damages. (Dkt. #28).
On December 21, 2023, Judge Lehrburger issued a scheduling order for Plaintiff to file proposed findings of fact and conclusions of law concerning damages and for Defendants to respond. (Dkt. #30). Plaintiff submitted his materials on January 16, 2024, and served them on Defendants the following day. (Dkt. #32-34). Defendants did not respond.
Judge Lehrburger issued his meticulous 30-page Report on August 29, 2024. (Dkt. #37). He began by summarizing the relevant facts, the procedural history, and the applicable law. (Report 1-7). From there, Judge Lehrburger addressed several antecedent issues concerning (i) the interplay of Plaintiff’s FLSA and NYLL claims, (ii) which, if any, of the Defendants qualified as Plaintiff’s employer, (iii) whether Plaintiff was an exempt employee; and (iv) the relevant time periods for calculating damages. (Id. at 7-13). Concluding ultimately that all three Defendants qualified as Plaintiff’s employer and that Plaintiff was not an exempt employee, Judge Lehrburger then calculated the damages to which Plaintiff was entitled under the NYLL, which provided for a
Judge Lehrburger then considered Plaintiff’s common-law claims for breach of contract, unjust enrichment, and quantum meruit. (Report 19-22). After concluding that the latter two claims were duplicative of Plaintiff’s breach of contract claim, Judge Lehrburger calculated the damages due to Plaintiff under his contract with ASA, and reduced that figure in light of certain of Plaintiff’s NYLL damages, in order to avoid a double recovery. (Id. at 20-22).
Judge Lehrburger also considered whether Plaintiff was entitled to pre-judgment interest on any of his claims, and set the amounts and beginning dates for such interest to run. (Report 22-24). Finally, he calculated the attorneys’ fees and compensable costs to which Plaintiff was entitled. (Id. at 25-29). In sum, Judge Lehrburger recommended that this Court award judgment in favor of Plaintiff and against Defendants, jointly and severally, in the following amounts: (i) unpaid wages in the amount of $12,196.50; (ii) liquidated damages on unpaid wages in the amount of $12,196.50;1 (iii) liquidated damages for untimely payments in the amount of $10,865.40; (iv) damages for breach of contract in the amount of $25,002.39; (v) pre-judgment interest on unpaid wages of $12,196.50 at the rate of nine percent,
At the end of the Report, Judge Lehrburger advised the parties that they had fourteen days from the issuance of the Report to file written objections and, further, that “Failure to file timely objections will result in a waiver of the right to object and will preclude appellate review.” (Report 30 (emphasis in original)). As of the date of this Order, no objections to the Report have been filed.
DISCUSSION
A court may accept, reject, or modify, in whole or in part, the findings or recommendations made by a magistrate judge. See
Judge Lehrburger’s Report issued on August 29, 2024, and objections were due by September 12, 2024. As neither party has submitted objections to the Report, review for clear error is appropriate. See Miller v. Brightstar Asia, Ltd., 43 F.4th 112, 120 (2d Cir. 2022). The Court has reviewed the Report and finds that its reasoning is sound and that it is grounded in fact and in law. More specifically, the Court agrees with Judge Lehrburger’s ultimate conclusions regarding the applicability and interrelationship of Plaintiff’s statutory and common-law claims, and with the damages, fees, and costs determinations that he made. Having reviewed the record, the Court finds no error, much less clear error, and adopts the Report in its entirety.
The Court agrees completely with Judge Lehrburger’s careful and correct Report and hereby adopts its analysis and calculations by reference. Accordingly the Clerk of Court is ORDERED to enter judgment in favor of Plaintiff and against Defendants, jointly and severally, on Plaintiff’s FLSA, NYLL, and breach of contract claims, in the following amounts: (i) unpaid wages in the amount of $12,196.50; (ii) liquidated damages on unpaid wages in the amount of $12,196.50; (iii) liquidated damages for untimely payments in the amount of $10,865.40; (iv) damages for breach of contract in the amount of $25,002.39; (v) pre-judgment interest on unpaid wages of $12,196.50 at the rate of nine percent, starting from January 15, 2023; (vi) pre-judgment interest on breach of contract damages of $25,002.39 at the rate of nine percent, starting from January 1, 2021; (vii) attorneys’ fees in the amount of $5,240.00; and (viii) compensable costs in the amount of $779.80.
The Clerk of Court is further directed to terminate all pending motions, adjourn all remaining dates, and close this case.
Plaintiff shall serve a copy of this Order on Defendants within two days of its issuance.
SO ORDERED.
Dated: October 24, 2024
New York, New York
KATHERINE POLK FAILLA
United States District Judge
BARRY NEWMAN, Plaintiff, - against - ASA COLLEGE, INC., ALEXANDER SHCHEGOL, and JOSE VALENCIA, Defendants.
23-CV-3503 (KPF) (RWL)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
August 29, 2024
ROBERT W. LEHRBURGER, United States Magistrate Judge
REPORT AND RECOMMENDATION TO HON. KATHERINE POLK FAILLA: INQUEST AFTER DEFAULT
ROBERT W. LEHRBURGER, United States Magistrate Judge.
Plaintiff Barry Newman is the former Chair of the Massage Therapy Department at ASA College, Inc. (“ASA”), a for-profit college that has gone out of business. Newman alleges he did not receive the pay that he was due and filed this action against ASA, its founder and owner Alexander Shchegol, and interim President Jose Valencia (collectively, “Defendants”) for violations of the Fair Labor Standards Act (the “FLSA”) and the New York Labor Law (the “NYLL”), as well as common law claims for breach of an oral contract, unjust enrichment, and quantum meruit. District Judge Katherine Polk Failla granted Newman’s motion for default judgment and referred the matter to me for an inquest on damages. After due consideration, I recommend that the Court award Newman damages, pre-judgment interest, attorney’s fees and costs as specified below.
ASA is a higher education institution with locations in New York County and Kings County. (Compl. ¶ 7.) In addition to founding and owning ASA, Shchegol served as its President for many years until he resigned at the end of 2021, except for a period of time between 2019 and 2021. (Id. ¶¶ 9, 11-15.) Valencia became interim President of ASA after Shchegol resigned. (Id. ¶ 17.) Despite his resignation, Shchegol continues to exercise operational and financial control over ASA. (Id. ¶ 16.)
Newman became Chair of the Massage Therapy Department of ASA in or about April 2018. (Id. ¶ 43.) When he began working in that position, he “was promised by Defendants that he would be paid an annual salary of $62,000.” (Id. ¶ 44.) From 2019 through 2022, however, Newman did not receive that salary. Instead, in 2019, ASA paid him $54,800.30; in 2020, ASA paid him $55,690.22; in 2021 ASA paid him $54,936.68; and in 2022, ASA paid him $50,949.81. (Newman Decl. ¶¶ 6-10 and Ex. A-D.) Moreover, ASA paid Newman effectively on an hourly basis; he was required to clock in and out to record his time worked and was told by Defendants that his bi-weekly pay would be reduced if he worked less than 40 hours per week. (Compl. ¶¶ 45-49; Newman Decl. ¶¶ 4, 6, 11-14.) During all relevant times, Newman worked 45 to 50 hours per week. (Compl. ¶ 53.) Yet, ASA falsified time records to show that the actual time worked per week was less than 40 hours. (Newman Decl. ¶ 20.)
On several occasions during 2022, Newman did not receive his bi-weekly pay on the day it was due. Specifically, wages due on April 1, 2022 were paid on April 2, 2022; wages due on August 19, 2022 were paid on August 23, 2022; wages due on September 2, 2022 were paid on September 6, 2022; wages due on September 16, 2022 were paid on September 17, 2022; wages due on October 28, 2022 were paid on November 22, 2022; wages due on November 13, 2022 were paid on November 22, 2022; and wages due on December 11, 2022 were paid on December 22, 2022. (Id. ¶¶ 30-31, 33.) Newman claims that due to untimely payment, he could not timely pay rent, had to take out a loan with interest, and was forced to use credit cards for living expenses, which accrued additional interest. (Id. ¶ 32.)
In or about November 2022, ASA lost its accreditation, effective March 1, 2023, due in part to its failure to timely pay its employees. (Compl. ¶ 20.) In a town hall meeting with faculty on November 14, 2022, Shchegol promised he would pay faculty the wages
The payment Newman received on December 22, 2022, covered the bi-weekly period of November 21 through December 4, 2022, and was the last payment of wages Newman received from ASA. (Newman Decl. ¶ 33.) He nonetheless continued to perform his regular duties through February 24, 2023. (Id. ¶ 34.) Newman received no pay for work performed from December 5, 2022 through February 24, 2023. (Id. ¶ 35.)
NEWMAN’S CLAIMS
Newman asserts the following claims: (1) Unpaid minimum wages in violation of the FLSA and NYLL; (2) unpaid overtime wages in violation of the FLSA and NYLL; (3) unpaid regular wages in violation of
As relief, Newman seeks an award of: (1) unpaid minimum wages in the amount of $7,200.00; (2) unpaid overtime wages in the amount of $3,669.30; (3) unpaid accrued paid vacation wages in the amount of $1,087.20; (4) $240 for unlawful deductions; (5) liquidated damages for unpaid minimum wages, unpaid overtime wages, unpaid accrued vacation time, unlawful deductions, and untimely paid wages in the amount of $23,061.90; (6) economic loss damages due to breach of contract in the amount of $31,622.99; (7)
PROCEDURAL HISTORY
Newman commenced this action on April 26, 2023 (Dkt. 1), and duly served the summons and complaint on each Defendant. (Dkts. 9-11.) None of the Defendants answered or otherwise appeared. On July 19, 2023, Newman applied for and received certificates of default as to each Defendant. (Dkt. 12-18.) After the Defendants failed to respond to or appear for a hearing on an order to show cause why default judgment should not be entered, Judge Failla entered an order for default judgment on December 20, 2023. (Dkt. 29.) The matter was referred to me for inquest. (Dkt. 28.) Pursuant to a scheduling order entered on December 21, 2023 (Dkt. 30), Newman filed and served proposed findings of fact and conclusions of law and supporting declarations from Newman and his attorney, Justin S. Clark. (Dkt. 32-34.) Despite being duly served with the summons and complaint, order to show cause, and inquest scheduling order, none of the Defendants ever responded or appeared in the action.
JURISDICTION
The Court has federal subject matter jurisdiction by virtue of the FLSA claims. See
LEGAL STANDARDS
When a defendant defaults, all well-pled facts alleged in the complaint, except those relating to the amount of damages, must be accepted as true. City Of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ancient common law axiom that a defendant who defaults thereby admits all well-pleaded factual allegations contained in the complaint”) (internal quotations marks omitted); Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (trial court is required to “accept all of [the plaintiff’s] factual allegations as true and draw all reasonable inferences in its favor”). “This principle applies regardless of whether default is entered as a discovery sanction or for failure to defend.” Walpert v. Jaffrey, 127 F. Supp. 3d 105, 129 (S.D.N.Y. 2015) (internal quotation marks and citation omitted). The court may also rely on factual allegations pertaining to liability contained in affidavits and declarations submitted by the plaintiff. See, e.g., Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993); Fustok v. ContiCommodity Services, Inc., 873 F.2d 38, 40 (2d Cir. 1989). Nonetheless, the court “must still satisfy itself that the plaintiff has established a sound legal basis upon which liability may be imposed.” Shld, LLC v. Hall, No. 15-CV-6225, 2017 WL 1428864, at *3 (S.D.N.Y. April 20, 2017) (internal quotations marks and citation omitted); see Finkel, 577 F.3d at 84.
Once liability has been established, a plaintiff must provide admissible evidence establishing the amount of damages with reasonable certainty. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Division Of Ace Young Inc., 109 F.3d 105, 111 (2d Cir. 1997); see also Lenard v. Design Studio, 889 F. Supp. 2d 518, 527 (S.D.N.Y. 2012) (in an inquest following a default, “[a] plaintiff must … substantiate a claim with evidence to prove the extent of damages”).
To assess whether the plaintiff has established a sufficient basis for damages, a court has the discretion, but is not required, to hold a hearing. See
For simplicity, the Court discusses liability and damages together for each respective claim.
I. FLSA AND NYLL CLAIMS
A. General Principles
The Court begins by addressing general principles concerning threshold FLSA requirements, employer status, the applicable time period for damages, and assessment of damages where there are violations of both the FLSA and the NYLL.
1. Threshold FLSA Requirement
The FLSA has an interstate commerce requirement,
2. Employer
The FLSA and NYLL impose liability on “employers.” Under the FLSA’s broad definition, an employer is “any person acting directly or indirectly in the interest of an employer in relation to an employee.”
In determining whether an employment relationship exists, courts evaluate the “economic reality” of the relationship, looking beyond rigid corporate constructs to consider the functional realities facing employees. Goldberg v. Whitaker House Co-op., Inc., 366 U.S. 28, 33 (1961); Irrizary v. Catsimatidis, 722 F. 3d 99, 104 (2d Cir. 2013). Since the economic reality test is a “flexible concept to be determined on a case-by-case basis by review of the totality of the circumstances,” different sets of factors may apply to different “factual challenges posed by particular cases.” Barfield v. New York City Health and Hospitals Corp., 537 F.3d 132, 141-42 (2d Cir. 2008).
In Barfield, the Second Circuit identified two relevant formulations of the economic reality test: (1) whether a formal employment relationship existed between the employees and a putative employer, and (2) whether an entity lacking formal control nevertheless could be considered a joint employer due to the “functional control” it
“Satisfying the four Carter factors ‘may be sufficient to establish joint employment under the FLSA [but] it is not necessary to establish joint employment.’” Fernandez v. HR Parking, Inc., 407 F. Supp. 3d 445, 456 (S.D.N.Y. 2019) (citing Zheng v. Liberty Apparel Co., 355 F.3d 71, 79 (2d Cir. 2003) and Greenawalt v. AT&T Mobility LLC, 642 F. App’x. 36, 37 (2d Cir. 2016) (summary order)). Even in the absence of the formal control described by the Carter factors, a defendant may be characterized as an employer for FLSA purposes if he or she exercises functional control over the workers in question. Zheng, 355 F.3d at 72. The Second Circuit has declined to circumscribe this analysis to a precise set of factors, noting instead that a district court is “free to consider any … factors it deems relevant to its assessment of the economic realities.” Id. at 71-72; accord Irrizary, 722 F. 3d at 105.
Newman asserts that ASA, Shchegol, and Valencia were his employers. It is evident from the Complaint and Newman Declaration that ASA was Newman’s employer. As for the individual Defendants, the Complaint asserts, generally, that both Shchegol and Valencia had the power to hire or fire, controlled the conditions of employment of
3. Exempt Status
Under both the FLSA and NYLL, certain employees are exempt from receiving overtime pay. The Second Circuit engages in a single analysis under the FLSA to resolve both FLSA and NYLL exemption defenses. See Ramos v. Baldor Specialty Foods, Inc., 687 F.3d 554, 556 n. 1 (2d Cir. 2012). An exempt employee is “any employee employed in a bona fide executive ... capacity.”
Here, although Newman held the position of Chair of a department, there is no evidence of the extent to which he directed the work of two or more people or had a role in hiring and firing other employees. And, although Newman was promised a “salary” of $62,000 (in excess of the weekly monetary threshold), he in fact was paid on an hourly basis. Accordingly, the Court concludes that Newman was not an exempt employee.
4. Relevant Time Period
The statute of limitations is six years for claims under the NYLL, three years for claims under the FLSA if a defendant’s acts are willful, and two years if they are not.
5. Statute Providing The Greatest Recovery
Although “plaintiffs may not recover under both the
B. Unpaid Regular Wages
The
C. Overtime Pay
New York requires employers to pay employees “a wage rate of 1 ½ times the employee‘s regular rate for hours worked in excess of 40 hours in one workweek.”
D. Unpaid Accrued Vacation Time
The
The well-pled facts show that ASA policy for full-time faculty included paid vacation, and that ASA had a practice or policy of paying for accrued but unused vacation time at the end of a full-time employee‘s employment. (Newman Decl. ¶ 27; Compl. ¶ 72.) At the time his employment terminated, Newman had accrued 40 hours of paid vacation time. As of his last pay check, in December 2022, Newman was paid at an hourly rate of $27.18. (See Newman Decl., Ex. E at ECF 6 ($1,835.37 divided by 67.52 hours).) He therefore is entitled to recover accrued vacation time pay of 40 hours times $27.18 per hour, or $1,087.20.
E. Unlawful Deductions
Under the
F. Liquidated Damages
Both the
The
Here, Defendants failed to pay Newman minimum wages, overtime wages, vacation pay, and an amount taken for an unlawful deduction totaling $12,965.50. Imposition of liquidated damages in this case is mandatory. By failing to appear in this action, Defendants are deemed to have acted willfully. See Stokes v. MilkChocolateNYC LLC, No. 22-CV-6786, 2023 WL 447073, at *6 (S.D.N.Y. July 11, 2023) (collecting cases); All-Star Marketing Group, LLC v. Media Brands Co., Ltd., 775 F.Supp.2d 613, 621 (S.D.N.Y. 2011) (“Defendants have defaulted … and by virtue of their default are deemed to be willful infringers“). Default aside, the Complaint alleges Defendants’ knowing and willful conduct, supported by allegations that both Shchegol and Valencia knew that Newman and other faculty had not been paid as they should and made empty representations of efforts to obtain funding that never materialized. (Compl. ¶¶ 20-35, 70.) Accordingly, Newman is entitled to recover liquidated damages in the amount of $12,965.50, equal to 100 percent of the amount owed to them in unpaid wages.
G. Untimely Paid Wages
The
A majority of courts in this Circuit have held that workers paid on an untimely basis necessarily incur a concrete harm due to the time value of money and thus have standing to claim damages under the same provisions. E.g., Levy v. Endeavor Air Inc., 638 F. Supp.3d 324, 329 (E.D.N.Y. 2022), recons. denied, 2024 WL 1422322 (E.D.N.Y. March 29, 2024); Beh v. Community Care Companions Inc., No. 19-CV-01417, 2022 WL 5039391, at *7-9 (W.D.N.Y. Sept. 29, 2022); Gillett v. Zara USA, Inc., No. 20-CV-3734, 2022 WL 3285275, at *5-7 (S.D.N.Y. Aug. 10, 2022); Caul v. Petco Animal Supplies, Inc., No. 20-CV-3534, 2021 WL 4407856, at *2-4 (E.D.N.Y. Sept. 27, 2021); but see Rosario v. Icon Burger Acquisition LLC, No. 21-CV-4313, 2022 WL 198503, at *3 (E.D.N.Y. Jan. 21, 2022) (requiring allegations that plaintiff incurred injury from untimely payment such as lost opportunity to invest or to otherwise use the money); Rath v. Jo-Ann Stores, LLC, No. 21-CV-791, 2022 WL 3701163, at *8 (W.D.N.Y. Aug. 26, 2022) (same). In any event, Newman has alleged concrete harm by having to take out a loan with interest and paying extra interest on his credit cards. (Newman Decl. ¶ 32.)
For multiple periods in 2022, Newman was not paid on time; his bi-weekly pay was late by as little as a day and as much as three and a half weeks. (See id. ¶¶ 31-32.) Newman has not calculated his actual damages from being paid late. Instead, he seeks an additional award of liquidated damages at a rate of one day‘s wages for every day he was paid late. Although draconian (as the amount well exceeds the time value of money), support for such damages is found in the liquidated damages provision of
The Court adopts Newman‘s calculation of a day‘s wages during 2022 as follows: total number of hours per week (47.5) multiplied by the regular hourly rate for the first 40 hours multiplied by the 1.5 overtime premium rate for the remaining 7.5 hours – which equals $1087.20 – divided by five work days per week yields $278.60. Newman was paid late a total of 39 days. (See Newman Decl. ¶ 31; FFCL at 13.) He thus is entitled to recover $10,865.40 as liquidated damages for untimely payment of wages.
II. BREACH OF CONTRACT
The Complaint asserts three state common law claims. However, Newman‘s unjust enrichment and quantum meruit claims are duplicative of his breach of contract claim, and his FFCL makes an argument only for breach of contract and resulting economic loss. (FFCL at 14-15 and Conclusion ¶ (f).) The Court thus assesses liability under only that cause of action.
To state a claim for breach of contract under New York law, “the complaint must allege: (i) the formation of a contract between the parties; (ii) performance by the plaintiff; (iii) failure of [the] defendant to perform; and (iv) damages.” Johnson v. Nextel Communications, Inc., 660 F.3d 131, 142 (2d Cir. 2011); see also Terwilliger v. Terwilliger, 206 F.3d 240, 246 (2d Cir. 2000) (applying New York law). The well-pled allegations of the Complaint establish each of the required elements: (1) ASA and Shchlegol entered into an oral contract that Newman would provide his services in exchange for $62,000 per year; (2) Newman performed his duties as required; (3)
As articulated by the Second Circuit, “‘damages for breach of contract should put the plaintiff in the same economic position he would have occupied had the breaching party performed the contract.‘” Process America, Inc. v. Cynergy Holdings, LLC, 839 F.3d 125, 143 (2d Cir. 2016) (quoting Oscar Gruss & Son, Inc. v. Hollander, 337 F.3d 186, 196 (2d Cir. 2003)). Under New York law, “[t]he damages an employee is entitled to recover for breach of an employment agreement are the amount of wages and other benefits he … would have received under the contract.” Siegel v. Laric Entertainment Corp., 307 A.D.2d 861, 862, 763 N.Y.S.2d 607 (1st Dep‘t 2003). While Newman was “‘required to mitigate damages upon breach, the burden of proving a lack of diligent effort to mitigate damages is upon the defendants.‘” Wilkinson v. R. MacDonald Electricians, Inc., No. 03-CV-6441, 2006 WL 8456460, at *2 (W.D.N.Y. July 10, 2006) (quoting Cornell v. T.V. Development Corp., 17 N.Y.2d 69, 74, 268 N.Y.S.2d 29, 33 (1966)). By defaulting, Defendants have failed to do.
Calculating Newman‘s economic loss damages for Defendants’ breach of his employment contract is straight-forward. For each year he was paid less than $62,000, Newman‘s economic loss is the difference between what he was paid and $62,000. For 2019, Newman was paid $54,800.30, resulting in economic loss damages of $7,199.70. For 2020, Newman was paid $55,690.22, resulting in economic loss damages of $6,309.78. For 2021, Newman was paid $54,936.68, resulting in economic loss damages of $7,063.32. And, for 2022, Newman was paid $50,949.81, resulting in economic loss
To avoid double recovery, however, the Court considers whether Newman‘s breach of contract claim seeks damages that are duplicative of his statutory wage and hour claims. Breach of contract claims are compatible with both
Here, the damages that Newman seeks for breach of contract are, for the most part, not duplicative of his
III. PRE-JUDGMENT INTEREST
Newman seeks pre-judgment interest on both his unpaid wages claims and his breach of contract claim.
A. Pre-Judgment Interest For FLSA And NYLL Claims
Under the
“The Court has discretion to choose a reasonable date from which prejudgment interest should accrue.” Junmin Shen v. Number One Fresco Tortillas, Inc., No. 16-CV-2015, 2018 WL 6712771, at *14 (S.D.N.Y. Nov. 26, 2018) (citing Santana v. Latino Express Restaurants, Inc., 198 F. Supp.3d 285, 294-95 (S.D.N.Y. 2016)). Where unpaid wages accumulate over time rather than all being payable at once, courts “often choose the midpoint of the plaintiff‘s employment within the limitations period.”
Newman also is entitled to pre-judgment interest on his breach of contract damages. State law governs the award of pre-judgment interest on Newman‘s state common law claim. See Schipani v. McLeod, 541 F.3d 158, 164-65 (2d Cir. 2008). The Court thus applies New York law, which provides that pre-judgment interest “shall be recovered upon a sum awarded because of a breach of performance of a contract.”
A. Fees
Newman seeks compensation for $5,240 in attorneys’ fees. (Clark Decl. ¶ 9.) The
The traditional approach to determining a fee award is the “lodestar” calculation, which is the number of hours expended multiplied by a reasonable hourly rate. See Healey v. Leavitt, 485 F.3d 63, 71 (2d Cir. 2007); Tackie v. Keff Enterprises LLC, No. 14-CV-2074, 2014 WL 4626229, at *6 (S.D.N.Y. Sept. 16, 2014). The Second Circuit has held that “the lodestar … creates a ‘presumptively reasonable fee.‘” Millea v. Metro-North Railroad Co., 658 F.3d 154, 166 (2d Cir. 2011) (first quoting Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany, 522 F.3d 182, 183 (2d Cir. 2008, and then citing Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 552 (2010)); see also Stanczyk v. City Of New York, 752 F.3d 273, 284-85 (2d Cir. 2014) (reaffirming Millea). To arrive
1. Hourly Rates
Courts assess the reasonableness of a proposed hourly rate by considering the prevailing market rate for lawyers in the district in which the ruling court sits. Polk v. New York State Department of Correctional Services, 722 F.2d 23, 25 (2d Cir. 1983). “The rates used by the court should be current rather than historic hourly rates.” Reiter v. Metropolitan Transportation Authority Of New York, 457 F.3d 224, 232 (2d Cir. 2006) (internal quotation marks and citations omitted). “[C]ourts may conduct an empirical inquiry based on the parties’ evidence or may rely on the court‘s own familiarity with the rates if no such evidence is submitted.” Wong v. Hunda Glass Corp., No. 09-CV-4402, 2010 WL 3452417, at *2 (S.D.N.Y. Sept. 1, 2010) (internal quotation marks and citations omitted). Additionally, “the range of rates that a plaintiff‘s counsel actually charges their clients … is obviously strong evidence of what the market will bear.” Rozell v. Ross-Holst, 576 F. Supp.2d 527, 544 (S.D.N.Y. 2008); see also Lilly v. County Of Orange, 910 F. Supp. 945, 949 (S.D.N.Y. 1996) (“The actual rate that counsel can command in the market place is evidence of the prevailing market rate“).
Newman is represented in this action by Justin S. Clark, a non-equity partner of Levine & Blit, PLLC. He is the only time-keeper whose time is billed on the matter. He focuses on employment law, including cases for unpaid wages and has eleven years of experience litigating in that area. (Clark Decl. ¶¶ 1-5.) The rate sought for Clark is his
2. Hours Worked
To determine compensable hours, “the court must examine the hours expended by counsel and the value of the work product of the particular expenditures to the client‘s case.” Tlacoapa v. Carregal, 386 F. Supp.2d 362, 371 (S.D.N.Y. 2005) (citing Gierlinger v. Gleason, 160 F.3d 858, 876 (2d Cir. 1998)). “In making this examination, the district court does not play the role of an uninformed arbiter but may look to its own familiarity with the case and its experience generally as well as to the evidentiary submissions and arguments of the parties.” Gierlinger, 160 F.3d at 876 (quoting DiFilippo v. Morizio, 759 F.2d 231, 235-36 (2d Cir.1985)). “The relevant issue ... is not whether hindsight vindicates an attorney‘s time expenditures, but whether, at the time the work was
The time records submitted reflect that Clark worked a modest 13.1 hours on this matter. (Clark Decl., Ex. A.) The Court finds the overall number of hours to be reasonable for having prepared a complaint, filed for default, moved by order to show cause for default judgment, and prepared proposed findings of fact and conclusions of law in a wage-and-hour case such as this one. The work appears to have been performed efficiently and without redundancy, and the billing entries do not include administrative tasks or other work more appropriately performed by someone else.
Accordingly, the Court finds that Newman should be awarded fees of $5,240.
B. Costs
Newman seeks $779.80 in costs for the court filing fee, service on Defendants, and the transcript of the order to show cause hearing. (Clark Decl. ¶¶ 10-11 and Ex. B.) Those expenses are routinely recoverable. See e.g., Angamarca, 2012 WL 3578781, at *14 (approving $350 court filing fee and $600 in service of process fees for default judgment in
The Court has reviewed Newman‘s submissions, which include invoices for each charge, and finds the costs set forth are recoverable. Accordingly, Newman should be awarded $779.80 in costs.
CONCLUSION
For the foregoing reasons, I recommend awarding Plaintiff judgment against Defendants, jointly and severally, for the following monetary relief:
- Unpaid wages in an amount of $12,196.50.
- Liquidated damages on unpaid wages in an amount of $12,196.50.
- Liquidated damages for untimely payments in an amount of $10,865.40.
- Damages for breach of contract in an amount of $25,002.39.
- Pre-judgment interest on unpaid wages of $12,196.50 at the rate of nine percent, starting from January 15, 2023.
- Pre-judgment interest on breach of contract damages of $25,002.39 at the rate of nine percent starting from January 1, 2021.
- Attorney‘s fees in an amount of $5,240.00
- Costs in an amount of $779.80.
Plaintiffs shall serve a copy of this Report and Recommendation on Defendants within two days of entry and shall file proof of service of same within two days following service.
DEADLINE FOR OBJECTIONS AND APPEAL
Pursuant to
Respectfully Submitted,
ROBERT W. LEHRBURGER
UNITED STATES MAGISTRATE JUDGE
Dated: August 29, 2024
New York, New York
Copies transmitted this date to all counsel of record.