United States District Court, S.D. New York
August 26, 2005.
DEYANIRA ESPINAL, ANGELA BERISE, PERALTA FRITMAN and MARIA ARACELI GONZALES FLORES, Plaintiffs,
RAMCO GENERAL STORES, INC., d/b/a RAMCO and/or NATIONAL DISCOUNT STORE; RAMCO GENERAL STORE INC 2, d/b/a RAMCO and/or NATIONAL DISCOUNT STORE; and ALBERT PALACCI, Defendants.
The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge
Plaintiffs, former employees at defendant stores, claim that
they were denied the compensation required under the Fair Labor
Standards Act, 29 U.S.C. §§ 201 et seq. ("FLSA") and the New
York Labor Law §§ 190 et seq. They also assert claims for
various forms of wrongdoing under New York statutes and common
The federal claim under FLSA was disposed of by plaintiffs'
acceptance of an offer of judgment and dismissal of this claim.
The state law compensation claims were also covered by this
Pursuant to Fed.R.Civ.P. Rule 12(b)(1), defendants move to
dismiss the remaining causes of action, which assert the other state law
claims. Defendants contend that the court should decline further
supplemental jurisdiction over these state law claims. The motion
Plaintiffs have filed a motion to obtain the attorneys' fees
provided for in the offer of judgment. That motion is not dealt
with in this opinion.
In view of the nature of the motion, the relevant facts relate
mainly to the procedures that have occurred thus far in the
course of litigation.
Plaintiffs are three women who worked in the defendant retail
stores, Ramco and National Discount Store, located on Dyckman
Street in upper Manhattan. Defendant Albert Palacci is the owner
of these stores.
The action was commenced on May 4, 2004. In addition to the
compensation claims under the FLSA and the New York Labor Law,
the complaint alleged sexual harassment and related wrongdoing in
violation of New York statutes and common law.
In July 2004 the parties engaged in initial disclosures and
plaintiffs served their first request for production of
On August 5, 2004 defendants made an offer of judgment to
plaintiffs pursuant to Fed.R.Civ.P. Rule 68. The offer was
(a) Judgment for the plaintiffs in the total amount
of $60,712.00 as respects the First, Second and Third
Causes of Action; and
(b) in accordance with F.R.C.P. 23, 5 U.S.C. § 501 or
other statute, reasonable attorneys' fees as determined by the Court to be incurred up
through the date of this Offer.
The first cause of action was brought under the FLSA. The second
and third causes of action were under the New York Labor Law.
These were the compensation claims.
A pre-trial conference was held on August 6, 2004. Plaintiffs
served their second request for production of documents and first
set of interrogatories on the same day.
Plaintiffs accepted the offer of judgment on August 16, 2004.
The $60,712 was paid on September 15, 2004. On October 21, 2004,
the court entered an order dismissing the first, second, and
third causes of action with prejudice.
The state law claims relating to sexual harassment were not
disposed of and remained to be litigated. Also, the issue about
attorneys' fees, which was part of the offer of judgment, was
still to be resolved.
On September 10, 2004, the court referred the parties to
mediation. The parties attended the mediation on October 18,
2004. No settlement was reached.
Defendants' motion to dismiss the state law claims was filed on
October 21, 2004. Opposition papers were not filed until February
9, 2005. In the meantime, other events occurred in the
Defendants served responses to plaintiffs' first set of
interrogatories on October 22, 2004.
The parties continued to engage in settlement discussions. In a
letter to the court dated November 4, 2004, the parties jointly
requested an extension of all deadlines so that they could
continue the settlement discussions. The parties eventually
agreed on a settlement of both the state law claims and the
amount of the attorneys' fees involved in the offer of
On January 4, 2005 defendants' attorney informed plaintiffs'
attorney that defendants were no longer willing to proceed with
the settlement and were terminating his representation.
Plaintiffs requested an emergency conference, which was held with
the court on January 5, 2005.
At the conference, the court permitted defendants' counsel to
withdraw and gave defendants two weeks in which to obtain new
counsel. Defendants retained new counsel shortly thereafter.
Plaintiffs filed their opposition to the motion to dismiss on
February 9, 2005. Subsequently, plaintiffs took the depositions
of defendant Palacci and one witness.
Supplemental jurisdiction is provided for in 28 U.S.C. § 1367,
which states in relevant part:
(a) . . . in any civil action of which the district
courts have original jurisdiction, the district
courts shall have supplemental jurisdiction over all
other claims that are so related to claims in the
action within such original jurisdiction that they
form part of the same case or controversy under Article III of the United States Constitution.
. . .
(c) The district courts may decline to exercise
supplemental jurisdiction over a claim under
subsection (a) if
(1) the claim raises a novel or complex issue of
(2) the claim substantially predominates over the
claim or claims over which the district court had
(3) the district court has dismissed all claims over
which it has original jurisdiction, or
(4) in exceptional circumstances, there are other
compelling reasons for declining jurisdiction.
Despite the grant of supplemental jurisdiction in subsection (a),
subsection (c) makes it clear that district courts "may decline"
to exercise supplemental jurisdiction under certain
The decision whether to exercise supplemental jurisdiction is
within the sound discretion of the district court. See Tops
Market, Inc. V. Quality Markets, Inc., 142 F.3d 90 (2d Cir.
1998); Purgess v. Sharrock, 33 F.3d 134, 138 (2d Cir. 1994). In
doing so, the district court should "consider and weigh in each
case, and at every stage of the litigation, the values of
judicial economy, convenience, fairness and comity."
Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988);
United Mine Workers v. Gibbs, 383 U.S. 715, 726-27 (1966)).
One of the grounds for declining supplemental jurisdiction,
specifically listed by the statute, is where the district court
has dismissed the claims over which it has original jurisdiction.
Indeed the Second Circuit has indicated that generally "if
federal claims are dismissed before trial . . . the state claims should be dismissed as well" Castellano v. Bd. of Trustees,
937 F.2d 752, 758 (2d Cir. 1991).
However, the Second Circuit has stated that when the dismissal
of a federal claim occurs late in the action, after there has
been a substantial expenditure in time, effort, and money in
preparing the dependant claims, a belated rejection of
supplemental jurisdiction over the dependent claims may not be
fair and is not necessary. See Motorola Credit Corp., v.
Uzan, 388 F.3d 39, 56 (2d Cir. 2004); Purgess, 33 F.3d at 138.
The following are cases in which supplemental jurisdiction over
state claims was retained after the federal claims were
dismissed. Ametex Fabrics, Inc. v. Just in Materials, Inc. v.
Am. Fast Print, Ltd., 140 F.3d 101, 105 (2d Cir. 1998); Nowak
v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1192 (2d Cir.
1996); Raucci v. Town of Rotterdam, 902 F.2d 1050, 1055 (2d
Cir. 1990); Philian Ins. Ltd. v. Frank B. Hall & Co.,
786 F. Supp. 345, 347-9 (S.D.N.Y. 1992).
In the present case, the federal claim has been dismissed.
However, there has been substantial discovery, including
depositions, regarding the state law claims. Mediation, and
settlement discussions aside from the mediation, have occurred as
to these claims. A settlement agreement was actually reached,
although not consummated. Much of this occurred after the
dismissal of the federal claims.
Under these circumstances, the interests of judicial economy,
fairness to litigants, and convenience weigh in favor of
maintaining supplemental jurisdiction over the state law claims in the case. Accordingly,
the motion to dismiss is denied.
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