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1199 Seiu United Healthcare Workers East v. South Bronx Mental Health Council, Inc.

United States District Court, Second Circuit

November 13, 2013

1199 SEIU UNITED HEALTHCARE WORKERS EAST, Plaintiff,
v.
SOUTH BRONX MENTAL HEALTH COUNCIL, INC., Defendant.

REPORT AND RECOMMENDATION

JAMES C. FRANCIS, IV, Magistrate Judge.

The plaintiff, 1199 SEIU United Healthcare Workers East ("SEIU"), brings this action pursuant to the federal Worker Adjustment and Retraining Notification Act (the "WARN Act"), 29 U.S.C. § 2101 et seq., and its New York analog (the "NY WARN Act"), New York Labor Law ("NYLL") § 860 et seq., on behalf of its members formerly employed by the defendant South Bronx Mental Health Council ("SBMHC"). The plaintiff alleges that SBMHC violated the federal and NY WARN Acts by providing inadequate notice before shutting down operations of their mental health clinics. The Honorable John G. Koeltl, U.S.D.J., granted judgment by default against SBMHC and referred this case to me for the calculation of damages. (Order of Default dated July 25, 2013 at 1). On September 27, 2013, I held an inquest, and although notice was sent to the defendant, it did not appear. The following findings are therefore based on SEIU's submissions. For the reasons set forth below, the plaintiff should be awarded damages in the amount of $501, 298.69. In addition, the plaintiff should be granted attorneys' fees and costs in the amount of $5, 257.

Background

SBMHC was a nonprofit community health organization in the Bronx, where it operated four clinics. (Complaint ("Compl."), ¶ 8). The plaintiff is the exclusive bargaining representative of SBMHC's former clerical and direct care employees. (Compl., ¶ 6). On March 5, 2013, SBMHC sent notification to SEIU that, due to "an unexpected and unforeseeable crisis in [SBMHC's] funding stream, " SBMHC would be temporarily laying off nine employees represented by SEIU. (Letter of Vicky Gatell dated March 5, 2013 ("Gatell Letter"), attached as Exh. A to Compl.). The layoffs would be effective the following day. (Gatell Letter). On March 19, 2013, SBMHC sent a letter informing SEIU that it would be permanently closing all of its clinics by the end of the month. (Letter of Humberto L. Martinez dated March 19, 2013, attached as Exh. B to Compl.). Although the letter referenced the federal WARN Act and the NY WARN Act, it was sent only 10 to 12 days before the clinics were to be closed. It did not provide a rationale for the closings. SEIU contends that as SBMHC was well aware of its financial difficulties as early as January 30, 2013, the defendant has no justification for providing its employees with such limited notice. (Compl., ¶ 23). One clinic, at 781 East 142 Street, was closed on March 29, 2013, and the remaining three locations were closed two days later. (Compl., ¶ 15). "[V]irtually all of [SBMHC's] employees at all of its locations" were terminated. (Compl., ¶ 15).

Discussion

A. Jurisdiction

This Court has subject matter jurisdiction over the plaintiffs' federal WARN Act claim pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 2104(a)(5), and over the NY WARN Act claim pursuant to 28 U.S.C. § 1367. As SBMHC is a non-profit corporation organized and doing business in New York, it is subject to personal jurisdiction in this Court pursuant to New York Civil Practice Law and Rules § 301.

B. Liability

When defendants default, all of the facts alleged in the complaint, except those relating to the amount of damages, must be accepted as true. See Lenard v. Design Studio , 889 F.Supp.2d 518, 526 (S.D.N.Y. 2012) (citing Au Bon Pain Corp. v. Artect, Inc. , 653 F.2d 61, 65 (2d Cir. 1981)). Nonetheless, a court "must still satisfy itself that the plaintiff has established a sound legal basis upon which liability may be imposed." Jemine v. Dennis , 901 F.Supp.2d 365, 373 (E.D.N.Y. 2012); see also GAKM Resources LLC v. Jaylyn Sales Inc., No. 08 Civ. 6030 , 2009 WL 2150891, at *2 (S.D.N.Y. July 20, 2009).

1. Federal WARN Act

Congress enacted the federal WARN Act to ensure that workers receive advance notice before plant closings and mass layoffs. See Grimmer v. Lord Day & Lord , 937 F.Supp. 255, 256 (S.D.N.Y. 1996). This advance notice allows workers transition time to seek new jobs, and, if necessary, enter skills training programs. See id.; 29 C.F.R. § 639.1.

A business enterprise with more than 100 full time employees qualifies as an employer under the WARN Act, 29 U.S.C. § 2101(a)(1), and must give workers 60 days notice before any plant closing or mass layoff, 29 U.S.C. § 2102. If an employer that orders a plant closing fails to give the required notice, it is liable to each affected employee for back pay and benefits for the period of violation. 29 U.S.C. at § 2104(a)(1).

2. NY WARN Act

The NY WARN Act largely mirrors the federal WARN Act, with three material differences. First, it sets a lower trigger threshold for its protections. "Employer" includes all employers that employ more than 50 full time employees, as opposed to 100, NYLL § 860-a(3), and a "plant closing" is defined as the termination of at least 25, as opposed to 50, employees at a single site of employment, NYLL § 860-a(6). Second, its notification requirements are stricter, and require employers to give 90 days notice before plant closings or mass layoffs, as opposed to 60 days. NYLL § 860-b(1). Finally, it provides for administrative enforcement in addition to ...


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