United States District Court, S.D. New York
January 7, 2004.
ZENG LIU, et al., Plaintiffs, -against- JEN CHU FASHION CORP., JEN CHU APPAREL INC., W & C FASHION CORP., WONG CHAI SPORTSWEAR INC., Y & C MFG. INC., CALVIN CHEN, WINNIE YOUNG CHEN, JEN JEN OF NEW YORK INC., and H.L.S. FASHION CORP., Defendants
The opinion of the court was delivered by: ANDREW PECK, Magistrate Judge
REPORT AND RECOMMENDATION
On October 16, 2003, Judge Rakoff (to whom the case was then assigned)
entered a default judgment for plaintiffs against defendants Jen Chu
Fashion Corp., Jen Chu Apparel, Inc., W & C Fashion Corp., Wong Chai
Sportswear Inc., Y & C Mfg. Inc., Jen Jen of New York Inc., and Calvin
Chen (hereafter collectively "the Calvin Chen defendants"). (Dkt. No.
Defendants Winnie Young Chen and her company, H.L.S. Fasion Corp.
(hereinafter collectively "the Winnie Chen defendants") were represented
by John Courtney, Esq., but Mr. Courtney moved to withdraw as counsel.
(See Dkt. No. 65.) The Court initially denied the
motion because Mr. Courtney "lost" his client, i.e., had no means to
reach her. (See Dkt. Nos. 65 & 68:10/17/03 & 11/3/03 Orders: see
also Dkt. No. 71:11/26/03 Courtney Letter to Court.) Neither Mr. Courtney
nor Ms. Chen have responded to plaintiffs' inquest/summary judgment
motion. (See Dkt. No. 70: 11/13/03 Order.) By memo endorsed Order dated
December 22, 2003, the Court granted Mr. Courtney's renewed withdrawal
application. (12/22/03 Memo Endorsed Order.) The Court has heard nothing
from Winnie Chen. Therefore, judgment against the Winnie Chen defendants
should be entered on default.
For the reasons discussed below, the Court should enter judgment for
plaintiffs against the Calvin Chen defendants and the Winnie Chen
defendants jointly and severally, for damages (including prejudgment
interest) of $556,577.07, attorneys' fees of $20,355, and costs of $90.
"Where, as here, `the court determines that defendant is in default,
the factual allegations of the complaint, except those relating to the
amount of damages, will be taken as true.'" Chen v. Jenna Lane, Inc.,
30 F. Supp.2d 622, 623 (S.D.N.Y. 1998) (Carter, D.J. & Peck, M.J.)
(quoting 10A C. Wright, A. Miller & M. Kane, Federal Practice &
Procedure: Civil 3d § 2688 at 58-59 (3d ed. 1998)).*fn2
There are twenty-three plaintiffs five original plaintiffs and
eighteen "opt in" plaintiffs pursuant to 29 U.S.C. § 216(b).
(See Dkt. No. 75: Plfs. Inquest Br. at 2 n.1.)
The Amended Complaint (Dkt. No. 5) alleges as follows:
Plaintiffs are Chinese immigrant garment workers who worked long hours
for the defendant companies producing expensive garments but were not
paid minimum wages or overtime. (Dkt. No. 5: Am. Compl. ¶ 1.)
Plaintiffs were paid either by the hour or by the piece. (Am. Compl.
¶ 6.) Plaintiffs worked at a garment factory at 519 Eighth Avenue in
New York City that had various corporate owners, all of which were
controlled by Calvin Chen and his then-wife Winnie Chen. (Am. Compl.
¶¶ 8-14.) Defendants thus were employers and joint employers of
plaintiffs under the
Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and
the New York Labor Law. (Am. Compl. ¶ 16.)
According to the Amended Complaint:
Plaintiffs worked for defendants generally seven
days a week. Prior to May 1999, the hourly workers,
Liu and Chen, generally worked eleven hours a day
during the weekdays and ten and eight hours a day on
Saturday and Sunday. Plaintiff Huang and the piece
workers, plaintiffs Jiang and Li, generally worked
twelve hours a day during the weekdays and ten and
eight hours a day on Saturday and Sunday. They were
rarely paid overtime; and when they were, it was for
only a few hours and not the 30 to 40 hours of
overtime that they generally worked. The piece workers
sometimes were unable to earn the minimum wage. None
of the plaintiffs ever received spread-of-hours pay
an extra hour's pay for each ten-hour day.
(Am. Compl. ¶ 17.)
Following a New York State Department of Labor visit to the factory,
defendants began maintaining two sets of books one reflecting
plaintiffs' actual hours worked and "the other a false record reflecting
a workweek with no, or almost no, overtime," and "[p]laintiffs were
required to sign both [time] cards." (Am. Compl. ¶ 37; see also
id. ¶¶ 38-43.)
The Amended Complaint asserts three causes of action: (a) a federal
wage claim for defendants' "failure to pay plaintiffs the minimum wage
and overtime pay for work over 40 hours per week" (Am. Compl. ¶ 53),
(b) a state wage claim for "failure to pay plaintiffs their wages,
minimum wages, and overtime pay for work over 40 hours per week" (Am.
Compl. ¶ 55), and (c) a New York spread of hours claim for "fail[ure]
to pay plaintiffs an extra hour's pay for every day that plaintiffs
worked over 10 hours" in violation of New York Labor Law (Am. Compl.
¶ 57). The Amended Complaint seeks, inter alia, (i) unpaid wages and
liquidated damages pursuant to the FLSA, (ii) unpaid wages including
minimum wage, overtime pay and spread of hours pay, plus
prejudgment interest, under the New York Labor Law, and (iii) attorneys'
fees and costs. (Am. Compl. Wherefore Clause ¶¶ a, b & d.)
EVIDENCE ON THE INQUEST AND ANALYSIS
The Second Circuit has approved the holding of an inquest by
affidavit, without an in-person court hearing, "`as long as [the Court
has] ensured that there was a basis for the damages specified in the
default judgment.'" Transatlantic Marine Claims Agency. Inc. v. Ace
Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (quoting Fustok v. Conti
Commodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989)).*fn3 Here, using
affidavits was particularly appropriate because plaintiffs are
Chinese-speakers who do not speak English, and the evidence could best be
provided in cumulative chart form. (See Dkt. No. 77: Kimerling 12/12/03
Inquest Aff. Exs. A-B.) The Court has reviewed plaintiffs' affidavits and
interrogatory responses (Kimerling 12/12/03 Inquest Aff. Ex. B) and
counsel's charts and summaries (id., Exs. A, C & E; see also
Kimerling 12/29/03 Supp. Aff. Exs. A-C).
Plaintiffs' affidavits described: the plaintiffs job positions at the
factory owned by Calvin Chen and Winnie Chen; the time period during
which plaintiff worked for defendants; plaintiffs normal work schedule;
and plaintiffs rate of pay or wage calculations, based on defendants'
records where available, otherwise based on plaintiffs records. (Dkt. No.
77: Kimerling 12/12/03 Inquest Aff. Exs. A(1)-A(23).) Where available the
affidavits also included sample pages
from the plaintiff's piecework or other records, but since they are, for
the most part, in Chinese, including the complete records would not have
assisted the Court.
It should be noted that "plaintiffs were unable to obtain any time
records from the defendants," and only obtained from defendants "some
wage records for 1999 and 2000 . . . [which] plaintiffs rely on . . . for
the time that they cover." (Kimerling 12/12/03 Inquest Aff. ¶¶ 5-6.)
"For other periods of employment, plaintiffs rely on their own records
and/or estimates of their weekly wages . . . [which] are most often based
on average wages drawn from the Defendants' records or the plaintiffs'
own records." (Kimerling 12/12/03 Inquest Aff. ¶ 6.)
Defendants were served with a copy of plaintiff's inquest papers but
did not respond. In a FLSA case, in the absence of rebuttal by
defendants, plaintiffs' recollection and estimates of hours worked are
presumed to be correct. See, e.g., Anderson v. Mt. Clemens Pottery Co.,
328 U.S. 680, 687-88, 66 S.Ct. 1187, 1192 (1946) ("[A]n employee has
carried out his burden [of production under the FLSA] if he proves that
he has in fact performed work for which he was improperly compensated and
if he produces sufficient evidence to show the amount and extent of that
work by just and reasonable inference. The burden then shifts to the
employer to come forward with evidence of the precise amount of work
performed or with evidence to negative the reasonableness of the inference
to be drawn from the employee's evidence. If the employer fails to
produce such evidence, the court may then award damages to the employee,
even though the result be only approximate."); Grochowski, v. Phoenix
Constr., 318 F.3d 80, 87-88 (2dCir. 2003); Harold Levinson Assocs., Inc.
v. Chao, No. 01-6105, 37 Fed. Appx. 19, 20, 2002 WL 1032708 at *1 (2d
Cir. May 22, 2002); Tran v. Alphonse Hotel Corp., 281 F.3d 23, 31 (2d
Cir. 2002); Reich v. Southern New England Telecomms. Corp., 121 F.3d 58,
66 (2d Cir. 1997); Moon v. Kwon, 248 F. Supp.2d 201, 219
(S.D.N.Y. 2002); Chao v. Vidtape, Inc., 196 F. Supp.2d 281, 293
(E.D.N.Y. 2002), affd as modified on other grounds, Nos. 02-6090,
02-6129, 66 Fed. Appx. 261, 2003 WL 21243085 (2dCir. May 29, 2003); Cao
v. Chandara Corp., 00 Civ. 8057, 2001 WL 34366628 at *4-5 (S.D.N.Y. July
25, 2001); Chen v. Jenna Lane, Inc., 30 F. Supp.2d 622, 624-25 (S.D.N.Y.
1998) (Carter, D.J. & Peck, M.J.). Here, plaintiffs' hours worked
were derived from their contemporaneous piecework and other records. The
Court accepts plaintiffs' estimates of hours worked.
Consistent with the approach previously used by Mr. Kimerling and
approved by the Court in Chen v. Jenna Lane, Inc., 30 F. Supp.2d at 625,
Mr. Kimerling described the methodology he employed to determine minimum
wage payment, overtime and spread of hours pay for plaintiffs, as
12. To determine whether Plaintiffs were paid the
minimum wage, the charts calculate the minimum wages
based [on] what was the appropriate hourly rates at
the time of the work. The minimum wage requirements
were different under the federal Fair Labor Standards
Act and under the New York State Labor Law during the
periods covered by this lawsuit. Because the
nonpayment of minimum wage and overtime were
intentional and willful acts, a three year statute of
limitations applies under FLSA. 29 U.S.C. § 255(a).
For the three years prior to the date the complaint
was filed, June 7, 2000, the FLSA rates were used. As
of September 1, 1997, the FLSA rate of $5.15 applied.
29 U.S.C. § 206(a). Prior to that, a rate of $4.75
applied. Id. For the Plaintiffs that opted into the
case, their opt-in dates became the starting point for
statute of limitation purposes. As stated above, the
opt-in dates of the opt-in plaintiffs, as well as the
date of the filing of the Complaint for the original
plaintiffs, are attached in Exhibit E.
13. Under the New York State Labor Law, the
minimum wage for the period prior to June 7, 1997
(three years before the filing of the Complaint)
was $4.25 and [sic; an] hour. N.Y. Lab. § 652.
New York's minimum wage did not change until March
31, 2000 when it
went up to $5.15. Thus, for all the plaintiffs the New
York State minimum wage claims are based on a rate of
$5.15 and [sic; an] hour.*fn4
14. Plaintiffs' actual weekly earnings were
compared to the appropriate minimum wage weekly
earnings. If a plaintiffs' earnings were below the
minimum wage, the amount owed was inserted in the
column called Minimum Wage (MW) Owed.
15. For those plaintiffs who were paid by the hour
at a rate above the minimum wage, this analysis was
16. Plaintiffs almost always worked overtime
more than 40 hours a week. However, they were
not paid for their overtime. The damage charts
calculate what they should have earned in overtime pay
using their average hourly rate earned in a week (the
"regular rate") or the minimum wage, which ever is
larger. The amounts overtime pay owed was placed in
the Overtime (OT) Owed column.
SPREAD OF HOUR'S PAY
17. Plaintiffs are entitled to an extra hour's pay,
at the minimum wage under New York Labor Law, for
every day they are on the job more than 10 hours. To
calculate the amount owed, the damage charts did two
things. For some plaintiffs, their total weekly work
hours were known because they kept their own hours, or
because they were paid by the hour, and thus their
hours could be calculated based on their reported
wages. For these plaintiffs, all of whom generally
worked at least 6 days a week, where their hours were
60 or more including lunch time, they were considered
to be entitled to 6 days of spread hours pay. If their
total hours were between 53 and 60 hours, they were
determined to be entitled to 5 days of spread hours
pay. If their total hours were below 53 hours, it was
impossible to estimate how many days, if any, were
more than 10 hours. For these weeks, no days were
determined to [be] entitled to spread of hours pay.
This conservative consideration of these 53 hours
weeks was done to offset any overestimation that may
have occurred in other weeks.
18. Other plaintiffs did not have their own records
but provided counsel with their recollections of their
regular work hours, i.e., start and leaving times, and
their work weeks,
i.e., how many seven-day weeks. Using this
information, spread-of-hour calculations were done.
19. The New York State minimum wage rate of $4.25
was used in these spread-of-hours calculations for all
days prior to March 31, 2000, after which the rate of
$5.15 was used. N.Y. Lab. § 652.
20. Plaintiffs are entitled to liquidated damages
for the willful and intentional acts of defendants.
There is no excuse for not paying the minimum wages
and overtime wages to manual laborers like
plaintiffs. The Defendants must have acted willfully
21. At the bottom of Plaintiffs' damage charts, the
federal and New York State liquidated damages are
calculated. The federal FLSA's liquidated damages,
100%, are calculated for the first three years of the
overtime and minimum wage violations, i.e., for the
first three years before the filing date or opt-in
date. The New York State liquidated damages, 25%, are
calculated for the overtime and minimum wage
violations that occurred in the period of time between
six years and three years before the filing date or
opt-in date. The spread-of-hours damages are subject
to New York State's liquidated damages for the total
period covered in the damage charts.
(Dkt. No. 77: Kimerling 12/12/03 Inquest Aff. ¶¶ 12-21.)
As noted, the above methodology was approved by this Court previously
in Chen v. Jenna Lane, Inc., 30 F. Supp.2d at 625, and the Court again
approves it here. The Court has reviewed the affidavits and the charts
derived therefrom (Kimerling 12/12/03 Inquest Aff. Exs. B & A,
respectively) and has "spot checked" the arithmetic calculations in the
Plaintiffs' original inquest submissions, however, did not reflect the
fact that plaintiffs had settled with former defendant Donna Karan. By
Order dated December 18, 2003, the Court directed plaintiffs' counsel to
address this issue. (12/18/03 Order.) The matter was further discussed at
a December 22, 2003 conference before the Court, attended by plaintiffs'
counsel and counsel for Donna Karan. (See 12/22/03 Conf. Tr.) As a
result, plaintiffs' counsel Mr. Kimerling submitted a
supplemental affidavit showing how much each plaintiff had received
in the Donna Karan settlement, and deducting that from the amount of
damages (including federal and state liquidated damages) sought by each
plaintiff. (Kimerling 12/29/03 Supp. ¶¶ 2-3, 5 & Exs. A-C.)
Plaintiffs also seek prejudgment interest on their state law claims
pursuant to C.P.L.R. § 5001. (Dkt. No. 75: Plfs. Inquest Br. at 10.)
The Second Circuit has held that even where a plaintiff is awarded
liquidated damages under the New York Labor Law, prejudgment interest
still is appropriate. Reilly v. Natwest Mkts. Group Inc., 181 F.3d 253,
265 (2d Cir. 1999), cert denied, 528 U.S. 1119, 120 S.Ct. 940 (2000);
Moon v. Kwon, 99 Civ. 11810, 2003 U.S. Dist. LEXIS 22959 at *2 (S.D.N.
Y. Oct. 30, 2002) (awarding liquidated damages and prejudgment interest
for violations of FLSA and New York Labor Law). The statutory interest
rate in New York is 9%. C.P.L.R. § 5004. Because the unpaid wages to
each plaintiff occurred at different times, interest is to be calculated
pursuant to C.P.L.R. § 5001(b) ("Where . . . damages were incurred at
various times, interest shall be computed upon each time from the date it
was incurred or upon all of the damages from a single reasonable
intermediate date."); see also, e.g., Reilly v. Natwest Mkts. Group
Inc., 181 F.3d at 265. Plaintiffs' counsel used the "midpoint of the
accrual of damages" for each plaintiff to calculate interest. (Kimerling
12/29/03 Supp. Aff. ¶¶ 7-8 & Ex. B.) The Court finds acceptable
the methodology used by plaintiffs' counsel to compute interest.
(Kimerling 12/29/03 Supp. Aff. ¶¶ 7-8 & Ex. B.)*fn5
Accordingly, plaintiffs are entitled to judgment for the following
damage amounts, including federal and state liquidated damages and
interest on the state wage claims:
Cai, Rui Yu $2,643.53
Cao, Ke Xiu 39,233.72
Cao, Yao Chai 29,932.63
Chan, Lai Yee 23,952.28
Chen, Bi Fang 33,950.82
Chen, Jin Sen 52,152.58
Chen, Miao Qiong 1,714.76
Chen, Sheng Jian 27,718.42
Chen, Shu Hui 26,804.74
Chen, Yi Qing 20,708.62
Huang, Hong Biao 11,629.74
Jiang, Feng Ying 29,272.14
Li, Xiao Dian 23,969.30
Lin, Jin Shun 62,436.75
Lin, Xiu Feng 26,741.95
Liu, Hui Qin 22,568.80
Liu, Zeng Guan 636.06
Peng, Yue Ming 8,254.46
Shi, Ke Yue 37,139.99
Wang, Qi Kai 13,834.76
Wang, Tang Qing 11,087.30
Xue, Bao Yu 20,020.50
Zou, Jian Qin 30,173.22
(Dkt. No. 77: Kimerling 12/12/03 Inquest Aff. Exs. A1-A23; Kimerling
12/29/03 Supp. Aff. Exs. B-C.)
Under both the FLSA and New York Labor Law, both Calvin Chen and Winnie
Chen are considered employers and thus are individually liable for these
damages. (See Dkt. No. 75: Plfs. Inquest Br. at 8-10.)
29 U.S.C. § 203(d); N.Y. Labor Law §§ 2(5)-(6); see, e.g., Herman
v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139-40 (2d Cir. 1999); Chung v.
New Silver Palace Rest., Inc., 272 F. Supp.2d 314, 318 & n.6
(S.D.N.Y. 2003) (test for employee under New York Labor Law is same as
Herman test under FLSA).
The FLSA provides for attorneys' fees and costs to a successful
plaintiff. 29 U.S.C. § 216(b); see also, e.g., Chen v. Jenna Lane,
Inc., 30 F. Supp.2d 622, 625 (S.D.N.Y. 1998) (Carter, D.J. & Peck,
Plaintiffs request $20,355 in attorneys' fees and $90 in costs. (See
Dkt. No. 76: Kimerling 12/12/03 Fee Aff. ¶ 15.) The Court finds Mr.
Kimerling's hourly rate of $350 (id. ¶¶ 5-11)
to be reasonable.*fn6 Mr. Kimerling has taken a conservative approach to
the hours requested, claiming reimbursement only for the hours billed
after the plaintiffs' settlement with Donna Karan. (See id. ¶ 3.) The
Court has reviewed Mr. Kimerling's hourly time entries and finds them
reasonable. (See id. ¶¶ 2-4 & Ex. A.) The $90 cost for a court
transcript is reasonable.
Accordingly, plaintiffs are entitled to attorneys' fees of $20,355
($350 times 58.1 hours) and costs of $90.
For the reasons set forth above, the Court should enter judgment for
plaintiffs against the Calvin Chen defendants and the Winnie Chen
defendants, jointly and severally, for damages (including prejudgment
interest) of $556,577.07, plus $20,355 in attorneys' fees and $90 in
FILING OF OBJECTIONS TO THIS REPORT AND
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal
Rules of Civil Procedure, the parties shall have ten (10) days from
service of this Report to file written objections. See also Fed.R.Civ.P.
6. Such objections (and any responses to objections) shall be filed with
the Clerk of the Court, with courtesy copies delivered to the chambers of
the Honorable Richard J. Holwell, 500 Pearl Street, Room 1950, and to my
chambers, 500 Pearl Street, Room 1370. Any requests for an extension of
time for filing objections must be directed to Judge Holwell. Failure to
file objections will result in a waiver of those objections for purposes
of appeal. Thomas v. Arn, 474 U.S. 140
, 106 S.Ct. 466 (1985): IUE AFL-CIO
Pension Fund v. Herrmann, 9 F.3d 1049
, 1054 (2d
Cir. 1993), cert. denied, 513 U.S. 822, 115 S.Ct. 86
(1994); Roldan v.
Racette, 984 F.2d 85
, 89 (2d Cir. 1993): Frank v. Johnson, 968 F.2d 298.
300 (2d Cir.), cert. denied, 506 U.S. 1038, 113 S.Ct. 825
v. Secretary of Health & Human Servs., 892 F.2d 15
, 16 (2d Cir.
1989); Wesolek v. Canadair Ltd., 838 F.2d 55
, 57-59 (2d Cir. 1988);
McCarthy v. Manson, 714 F.2d 234
, 237-38 (2d Cir. 1983);
28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72, 6(a), 6(e).