United States District Court, E.D. New York
MEMORANDUM AND ORDER
ROANNE L. MANN, Magistrate Judge.
In April 2013, plaintiff Augusto Chuchuca ("plaintiff") filed this wage-and-hour action against four defendants, alleging that they had failed to properly compensate him for his work, in violation of the Fair Labor Standards Act ("FLSA"), the New York Labor Law ("NYLL"), and New York common law. See Complaint (Apr. 25, 2013) ("Compl."), Electronic Case Filing ("ECF") Docket Entry ("DE") #1. Following initial settlement discussions, the parties consented to have the case handled by a magistrate judge for all purposes. See Consent to Jurisdiction (Jan. 9, 2014) ("Consent"), DE #21. Ultimately, however, settlement discussions broke down, and none of the defendants responded to the complaint.
Plaintiff thereafter moved for a default judgment against defendants Creative Custom Cabinets, Inc. ("Creative"),  Royal Contracting & Design Corp. ("Royal"), and Nexhmi Prebreza, a/k/a Nino Prebreza ("Prebreza") (collectively, "defendants"). See Mot. for Default. The following month, the Court held an evidentiary hearing on the motion. See Minute Entry (June 20, 2014), DE #39.
For the reasons that follow, the Court grants in part and denies in part plaintiff's motion for default judgment. Plaintiff has established liability under the FLSA and the NYLL with respect to unpaid overtime premiums, but not as to minimum wage violations. The Court further concludes that the complaint does not sufficiently allege a claim for unpaid spread-of-hours compensation under the NYLL, but does sufficiently allege a breach of contract claim for unpaid wages under New York common law. As for damages, the Court finds that Prebreza and Creative are jointly and severally liable for $66, 205.50 in damages - $52, 775.50 of which is subject to prejudgment interest as of April 25, 2010. The Court concludes that Prebreza and Royal are jointly and severally liable for $1, 000 in damages, the entirety of which is subject to prejudgment interest of as May 1, 2012.
Finally, the Court expresses its displeasure with the quality of the advocacy afforded by the Law Offices of William Cafaro, and, in particular, its failure to properly supervise an inexperienced junior associate, Amit Kumar ("Kumar").
As an initial matter, inconsistences abound among the allegations in plaintiff's complaint, statements in his affidavit, and his testimony at the evidentiary hearing. Nevertheless, the following facts may be gleaned from the record.
I. Plaintiff's Allegations
Defendant Creative, a cabinet manufacturer located in Brooklyn, New York, employed plaintiff as a cabinet maker from 2006 through approximately March 15, 2012. See Compl. ¶¶ 2, 25, 27. In April 2012, following his employment with Creative, plaintiff began working in the same capacity for defendant Royal in Queens. See 6/20/14 Tr. at 24. Plaintiff's employment with Royal ceased in or around May 2012. See id. Defendant Prebreza served as the principal, officer and/or manager of both Creative and Royal. See Compl. ¶ 5.
The complaint alleges that, while he was employed with Creative and Royal, plaintiff's agreed-upon hourly rate was $20 and that he "usually" worked six days per week, from 8 a.m. to 7 p.m. See Compl. ¶¶ 28-29. The pleading further alleges that, although plaintiff "regularly worked... in excess of forty (40) hours per week, " he "never received any overtime premium for work performed in excess of the forty hour work week." See id. ¶ 30. According to the complaint, defendants "frequently allowed [p]laintiff's wages to become delinquent, and as such delinquencies accumulated, [d]efendants would pay them down from time to time, and they would accumulate again." See id. ¶ 31.
Plaintiff avers that his work for defendants is covered by the FLSA, the NYLL and New York common law. See Compl. ¶¶ 36-48. Furthermore, plaintiff claims that defendants violated the FLSA "knowingly" and "willfully, " id. ¶¶ 38, 42, and violated the NYLL "in bad faith, " id. ¶¶ 40, 44, 46. Plaintiff also alleges that Creative and Royal constituted a "joint enterprise, " see id. ¶ 16, and that, during all relevant times while performing his duties as a cabinet maker for Creative and Royal, he worked "at the direction and under the control of" Prebreza, who "controlled the terms and conditions of employment, supervised employees, [and] made decisions as to hiring and firing and as to wages..., " id. ¶¶ 32, 34.
II. Procedural History
A. The Initiation of the Case and Defendants' Failure to Respond to the Complaint
Plaintiff commenced this action in April 2013. See generally Compl. Summonses were issued, and defendants were properly served on May 31, 2013. See Affidavits of Service (June 10, 2013), DE #4-DE #8. On July 2, 2013, defendants moved for, and were granted, an extension of time to respond to the complaint. See Endorsed Order (July 3, 2013), DE #9. Thereafter, defense counsel requested additional extensions of time to answer or otherwise respond, which the Court granted. See Endorsed Order (July 19, 2013), DE #11; Endorsed Order (Aug. 23, 2013), DE #13; Endorsed Order (Sept. 9, 2013), DE #15. On September 20, 2013, the parties requested yet another extension of time for defendants to answer the complaint, as "[s]ettlement appears close[.]" See Endorsed Order (Sept. 20, 2013), DE #18. The Court extended defendants' time to respond until September 27, 2013. See id.
Defendants failed to respond by the Court's deadline. On December 10, 2013, plaintiff requested a certificate of default against all defendants, but, within a month, plaintiff sought to hold that request in abeyance, as the parties were "currently in the middle of settlement negotiations[.]" See Status Letter (Jan. 9, 2014), DE #21. That same day, the parties filed an executed consent form, pursuant to 28 U.S.C. § 636(c), authorizing the undersigned magistrate judge to handle the case for all purposes. See Consent.
Eventually, settlement negotiations broke down, and defense counsel moved to withdraw as defendants' attorney. See Endorsed Order (Feb. 3, 2014), DE #25; Motion to Withdraw (Feb. 11, 2014), DE #26. The Court directed defendants to show cause why their attorney's application to withdraw should not be granted and, in addition, ordered them to respond to the complaint by March 14, 2014. See Endorsed Order (Feb. 13, 2014), DE #28. On April 21, 2014, after defendants ignored the Court's order to show cause and failed to respond to the complaint, the Clerk of the Court entered a notation of default. See Clerk's Entry of Default (Apr. 21, 2014), DE #32.
B. Plaintiff's Motion for Default Judgment
Thereafter, plaintiff moved for default judgment against all defendants named in the complaint. See Mot. for Default. As part of plaintiff's motion, plaintiff's counsel submitted, inter alia, an affidavit of plaintiff (hereinafter, the "Chuchuca Affidavit"), as well as a chart summarizing the categories and amounts of damages plaintiff claimed to have suffered as a result of defendants' conduct (hereinafter, the "Motion Damages Chart"). See Affidavit of Augusto Chuchuca (Apr. 25, 2014) ("Chuchuca Aff."), DE #36-6; Damages Chart (May 2, 2014) ("5/2/14 Damages Chart"), DE #36-7. Defendants never responded to plaintiff's motion, despite the Court's direction that they do so. See Order (Apr. 21, 2014), DE #33.
The Court's review of plaintiff's motion papers raised concerns about the reliability of the Chuchuca Affidavit and the Motion Damages Chart. For example, although plaintiff alleged that defendants never issued him a W-2, plaintiff claimed, based on his "recollections, " that from 2006 until March 15, 2012, "the [d]efendants only paid [him] $67, 030.00." See Chuchuca Aff. ¶ 13. The Court wondered how plaintiff, who failed to proffer any checks or other documentation to support that figure, was able to recall such a precise sum for work performed over so lengthy a period of time. See Order (June 9, 2014) at 1-2, DE #37. Moreover, the Motion Damages Chart presumed that plaintiff worked 52 weeks per year during the entire period of his employment, and plaintiff's affidavit failed to address whether and when plaintiff had taken time off for vacation or for medical reasons. See id. at 2. Therefore, the Court scheduled a damages inquest hearing to explore those issues and directed that, prior to the hearing, plaintiff provide the Court with "copies of all documents relevant to the number of days worked or not worked by plaintiff (including travel records, etc.) and the amount of money paid by defendants." See id.
C. Plaintiff's Supplemental Submissions and the Evidentiary Hearing
In accordance with the Court's directive, plaintiff submitted several documents: (1) a complaint plaintiff had filed with the New York State Department of Labor in December 2012 ("NYSDOL Complaint"); (2) a spreadsheet purporting to list the hours plaintiff worked, the payments made by defendants and the payments owed to plaintiff for the period from January 1, 2010 through May 31, 2012, DE #38-3 (the "Hours Spreadsheet"); and (3) copies of select time cards, DE #38-4 (the "Time Cards"). See Letter (June 19, 2014) ("6/19/14 Let."), DE #38, and accompanying attachments. None of those documents had been submitted in support of plaintiff's motion for default judgment or otherwise previously presented to the Court.
Instead of alleviating the Court's concerns regarding the accuracy of plaintiff's claimed damages, plaintiff's submissions served to heighten those concerns. For example, the NYSDOL Complaint, prepared in December 2012, stated that plaintiff worked 72 hours per week. See NYSDOL Complaint, DE #38-1 at 3. A few months later, in April 2013, plaintiff filed this action, alleging that plaintiff worked 66 hours per week. See Compl. ¶ 28. In May 2014, as part of his default motion, plaintiff submitted the Motion Damages Chart, which assumed that plaintiff worked 63 hours per week. See 5/2/14 Damages Chart. And then in June 2014, prior to the evidentiary hearing, plaintiff's counsel conceded that plaintiff's own records (i.e., the Time Cards and Hours Spreadsheet) reflect that plaintiff's hours were substantially lower - approximately 48 hours per week, according to counsel's calculations. See 6/19/14 Let. at 2; see infra p. 27 n.13. Plaintiff's counsel stated that he nevertheless decided to utilize the 63-hours-per-week assumption after "review[ing] and consider[ing] all of the available records" and that he deemed the assumption to be "fair and reasonable." See 6/19/14 Let. at 2. Apart from vaguely referencing his review of the records, counsel provided no explanation or mathematical breakdown for how he arrived at the 63-hours-per-week estimate. See id.
On June 20, 2014, the Court held an evidentiary hearing on plaintiff's motion for default judgment. There, plaintiff testified (through an interpreter) that, while working for defendants, he had kept track of his hours and pay in the following manner: First, plaintiff would hand-write the hours he worked on a time card; he would then copy the time card information into a computerized spreadsheet (i.e., the Hours Spreadsheet). See 6/20/14 Tr. at 15. Plaintiff would retain the physical time card until defendants paid him for the time reflected in the card. See id. Once defendants paid him in full for a particular time period, he would surrender the physical time card to defendants and delete the hours paid from the Hours Spreadsheet. See id. at 15, 17, 25. Thus, as plaintiff explained, the Hours Spreadsheet in effect showed that, over the course of the period from January 2010 through May 2012, plaintiff was paid $67, 030 and was owed $41, 560. See id. at 16-17; Hours Spreadsheet (compare "Discharges" column with "Balances" column). For the period prior to January 2010, defendants paid plaintiff for all of his straight-time pay, see 6/20/14 Tr. at 17, 29,  but did not pay him the requisite overtime premium for any hour that he worked in excess of 40 hours in any single week, see id. at 29.
At the hearing, plaintiff conceded that the information contained in his Hours Spreadsheet was more accurate than the estimate of hours contained in the NYSDOL Complaint. See id. at 17. More importantly, plaintiff confirmed that he had given the Hours Spreadsheet, Time Cards and NYSDOL Complaint to his attorneys shortly after retaining them. See id. at 18.
At the conclusion of plaintiff's testimony, the Court expressed its frustration with the manner in which plaintiff's counsel had handled the motion for default judgment. See 6/20/14 Tr. at 30 (questioning why Kumar used an estimated number of hours when time records containing actual hours were available); id. at 31 (questioning why plaintiff's Memorandum of Law stated that there were no records to contradict plaintiff's estimates, when counsel was aware of the Hours Spreadsheet and Time Cards). During the Court's colloquy with him, counsel stated that he would be withdrawing plaintiff's common law contract claim, as well as all claims against defendant Flamur Prebreza. See id. at 32-33. He also confirmed that his firm would not be seeking an award of attorney's fees. See id. at 33.
I. Default Judgment Standard
If a defendant fails to respond to the complaint and defaults, any well-pleaded factual allegation contained within the complaint, "other than one relating to the amount of damages, " is deemed to be admitted. Fed.R.Civ.P. 8(b)(6); see Lyons P'ship, L.P. v. D & L Amusement & Entm't, Inc., 702 F.Supp.2d 104, 111 (E.D.N.Y. 2010) ("A defendant's default is an admission of all well-pleaded factual allegations in the complaint except those relating to damages." (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). Nevertheless, a fact is not "well-pleaded' if it is inconsistent with other allegations of the complaint[, ]" In re Indus. Diamonds Antitrust Litig., 119 F.Supp.2d 418, 420 (S.D.N.Y. 2000), or is "contrary to uncontroverted material in the file of the case, " Trans World Airlines v. Hughes, 449 F.2d 51, 63 (2d Cir. 1971), rev'd on other grounds, 409 U.S. 363 (1973).
Moreover, a pleading's legal conclusions are not assumed to be true; consequently, on a motion for a default judgment, the factual allegations in the complaint must themselves be sufficient to establish a right to relief. See Stein v. Valentine & Kebartas, Inc., No. 10 CV 2465 (RJD), 2012 WL 1416924, at *4-5 (E.D.N.Y. Mar. 15, 2012), adopted, 2012 WL 1416901 (E.D.N.Y. Apr. 24, 2012); see also City of N.Y. v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (in assessing a plaintiff's entitlement to default judgment, a court is "required to determine whether the [plaintiff's] allegations establish the [defendant's] liability as a matter of law'") (quoting Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009)).
Even if liability has been sufficiently alleged, the extent of the damages pleaded by the plaintiff is not deemed to be established by the default; instead, the Court must conduct "an inquiry in order to ascertain the amount of damages with reasonable certainty." Credit Lyonnais Secs. (USA) Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999) (citing Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997)). This inquiry may be accomplished by evaluating and analyzing affidavits and other documentary evidence submitted by the plaintiff in regards to the level of damages sought. See Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989) (finding that a "court may rely on detailed affidavits or documentary evidence... to evaluate the proposed sum [of damages]"). A court may also, in its discretion, conduct a hearing to ascertain the level of damages to be awarded against a defaulting defendant. See Action S.A. v. Marc Rich & Co., 951 F.2d 504, 508 (2d Cir. 1991).
A. The Fair Labor Standards Act - ...