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Acosta v. Hall of Fame Music Stores, Inc.

United States District Court, E.D. New York

February 2, 2015

JESSICA ACOSTA, Plaintiff,
v.
HALL OF FAME MUSIC STORES, INC., ERIK DABNEY, and KEITH BARBOUR, Defendants

For Jessica Acosta, Plaintiff: David Stein, Samuel & Stein, New York, NY.

REPORT AND RECOMMENDATION

LOIS BLOOM, United States Magistrate Judge.

Plaintiff, Jessica Acosta, brings this civil action against defendants, Hall of Fame Music Stores, Inc., Erik Dabney, and Keith Barbour, to recover unpaid wages pursuant to the Fair Labor Standards Act, 29 U.S.C. § 201 et seq . (" FLSA"), and the New York Labor Law (" NYLL"). Despite proper service of the summons and complaint, defendants have failed to plead or otherwise defend this action. Plaintiff now moves for a default judgment pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure. The Honorable Sandra L. Townes referred plaintiff's motion for a default judgment to me for a Report and Recommendation in accordance with 28 U.S.C. § 636(b). For the reasons set forth below, it is respectfully recommended that plaintiff's motion for a default judgment should be granted and that a default judgment should be entered against defendants in the total amount of $69, 224.50.

BACKGROUND

Plaintiff alleges that she was employed by defendants from July 2008 until October 2010. Compl. ¶ 12. Defendants Dabney and Barbour were plaintiff's employers at Hall of Fame Music Stores, Inc., which is both a recording studio and a retail store. Compl. ¶ ¶ 11, 12. During this time, plaintiff performed various administrative tasks on behalf of the recording studio and also occasionally worked in the retail store as a sales clerk. Compl. ¶ 12. Plaintiff was initially labelled an intern but was eventually given the job description of " manager of operations at the recording studio." Compl. ¶ ¶ 12, 14. While initially labelled an internship, plaintiff's employment was not arranged through plaintiff's school and defendants provided no educational component. Compl. ¶ 20. When the defendants hired plaintiff, they told her it would be an unpaid internship until the recording studio began making a profit. Compl. ¶ 18. Plaintiff alleges that despite being called an internship, she worked solely for the benefit of the defendants. Compl. ¶ 19. As plaintiff received no compensation for her work, she alleges defendants willfully failed to pay her in accordance with federal and New York state minimum wage laws. Compl. ¶ 23. Further, plaintiff alleges that defendants willfully failed to pay her overtime for hours worked in excess of forty hours a week. Compl. ¶ 24.

Plaintiff commenced this action on November 4, 2010. (ECF No. 1.) On November 22, 2014, plaintiff served defendants Erik Dabney and Hall of Fame Music Stores, Inc. with process. (ECF Nos. 3, 4.) On December 1, 2010, plaintiff served defendant Keith Barbour with process. (ECF No. 2.) On January 1, 2011, the Clerk of Court noted defendants' default. (ECF No. 6.) As defendants failed to plead or otherwise defend this action, by Order dated April 30, 2014, the Court directed plaintiff to take appropriate action against defendants by filing a motion for default judgment. (ECF No. 9.) On May 23, 2014, plaintiff moved for a default judgment against defendants pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure. (ECF No. 10.)

DISCUSSION

I. Liability

Rule 55 of the Federal Rules of Civil Procedure establishes the two-step process for a plaintiff to obtain a default judgment. First, " [w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." Fed.R.Civ.P. 55(a). Second, after a default has been entered against a defendant, and the defendant fails to appear or move to set aside the default under Rule 55(c), the Court may, on a plaintiff's motion, enter a default judgment. Fed.R.Civ.P. 55(b)(2). In light of the Second Circuit's " oft-stated preference for resolving disputes on the merits, " default judgments are " generally disfavored." Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95-96 (2d Cir. 1993). " Accordingly, just because a party is in default, the plaintiff is not entitled to a default judgment as a matter of right." Mktg. Devs., Ltd. v. Genesis Imp. & Exp., Inc., 08 CV 3168 (CBA)(CLP), at *6 (E.D.N.Y. Oct. 6, 2009) (citing Erwin DeMartino Trucking Co. v. Jackson, 838 F.Supp. 160, 162 (S.D.N.Y. 1993)).

On a motion for a default judgment, the Court " deems all the well-pleaded allegations in the pleadings to be admitted." Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997). In determining whether to issue a default judgment, the Court has the " responsibility to ensure that the factual allegations, accepted as true, provide a proper basis for liability and relief." Rolls-Royce PLC v. Rolls-Royce USA, Inc., 688 F.Supp.2d 150, 153 (E.D.N.Y. 2010) (citing Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981)). In other words, " [a]fter default . . . it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit conclusions of law." Rolls-Royce PLC, 688 F.Supp.2d at 153 (citation omitted).

" In order to make a prima facie showing of a violation under the minimum wage and overtime provisions of the FLSA, [plaintiff] must adequately allege that [she was a] covered employee[] under the FLSA." Rodriguez v. Almighty Cleaning, Inc., 784 F.Supp.2d 114, 120 (E.D.N.Y. 2011).[1] " It is for the court to 'consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit conclusions of law.'" Jemine v. Dennis, 901 F.Supp.2d 365, 373 (E.D.N.Y. 2012) (quoting Leider v. Ralfe, 2004 WL 1773330, at *7 (S.D.N.Y. 2004)). The factual allegations in plaintiff's complaint establish defendants' liability under the FLSA. The FLSA broadly defines an employer to include " any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). An " employee" is defined as " any individual employed by an employer." 29 U.S.C. § 203(e)(1).

Whether an unpaid intern falls within the " trainee" exception to the FLSA and therefore is not a covered employee is currently an unsettled question of law in this Circuit. Two pending cases before the Second Circuit Court of Appeals address whether the Department of Labor's " Six Factor Test" or the " primary benefit test, " (or some combination of the two), should govern this inquiry. See Glatt v. Fox Searchlight Pictures, Inc., 11 CV 6784 (WHP), 2013 WL 5405696 (S.D.N.Y. Sept. 17, 2013) (granting defendants' motion to certify for immediate appeal after the Court granted class certification and recognizing that " [t]his Court's decision [to adopt the Department of Labor's six-factor test] conflicts with Wang v. Hearst Corp., 2013 WL 1903787 (S.D.N.Y. May 8, 2013). There, [the Court] concluded that the determination of whether interns are 'employees' under the FLSA and NYLL is not limited to the six DOL factors but depends on the 'totality of the circumstances, ' including 'who is the primary recipient of benefits from the relationship.") (citations omitted).[2]

Here, plaintiff has adequately alleged facts, uncontraverted by defendants, which are sufficient under either test to establish that plaintiff does not fall under the " trainee exception." Plaintiff alleges that defendants told her " it would be an unpaid internship until the recording studio began making a profit." Compl. ¶ 18. Plaintiff performed administrative tasks and worked as a sales clerk. Compl. ¶ 12. Plaintiff " perform[ed] work solely for the benefit of the defendants, " and the internship " was not arranged through [plaintiff's] school, and did not have an educational component." Compl. ¶ ¶ 19, 20. Even when defendants eventually changed plaintiff's title so that she was no longer an " intern, " they did not pay her. Compl. ¶ 21. These allegations are sufficient to establish that plaintiff was a " covered employee" under the FLSA.

The factual allegations in plaintiff's complaint establish defendants' liability under the FLSA and NYLL for minimum wage and overtime violations. The FLSA requires employers to pay their employees at least the federal minimum wage for every hour they work. 29 U.S.C. § 206. " Where an employer fails to maintain adequate records of his employees' compensable time as required by the FLSA, a plaintiff employee must produce only 'sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.'" Gurung v. Malhotra, 851 F.Supp.2d 583, 589 (S.D.N.Y. 2012) (quoting Cuzco v. Orion Builders, Inc., 262 F.R.D. 325, 331 (S.D.N.Y. 2009)). In support of her motion for a default judgment, plaintiff provides a chart detailing the hours she worked each week she was employed by defendants. Acosta Decl. ¶ 11. " If the employer fails to produce [records of wages and hours worked], the court may then award damages to the employee, even though the result be only approximate." Anderson v. Mr. Clemens Pottery Co., 328 U.S. 680, 688 (1946); see also Reich v. Southern New England Telecomms. Corp., 121 F.3d 58, 66, 69 (2d Cir. 1995). Defendants have not contested plaintiff's estimation of the hours she worked. Plaintiff is therefore entitled to receive the federal minimum wage for these hours.

The section in FLSA regarding overtime wages provides:

no employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.

29 U.S.C. § 207(a)(1). " To succeed on an FLSA overtime claim, plaintiff must show that: (1) [she] was an employee who was eligible for overtime (not exempt from the Act's overtime pay requirements); and (2) that [she] actually worked overtime hours for which [she] was not compensated." Hosking v. New World Mortg., Inc., 602 F.Supp.2d 441, 447 (E.D.N.Y. 2009) (citation omitted). The FLSA contains several exemptions from its overtime requirement, but " the application of an exemption under the Fair Labor Standards Act is a matter of affirmative defense on which the employer has the burden of proof." Corning Glass Works v. Brennan, 417 U.S. 188, 196-97 (1974). " With respect to state law overtime claims, courts have stated that the relevant portions of New York Labor Law do not diverge from the requirements of the FLSA." Hosking, 602 F.Supp.2d at 447 (internal quotation marks and citation omitted).

Plaintiff alleges that she was employed by defendants from July 2008 until October 2010. Compl. ¶ 12. Plaintiff further alleges that when her school was not in session, she worked approximately fifty hours per week and occasionally worked as many as eighty hours per week. Compl. ¶ 17. Plaintiff states she was not paid at all and therefore received no overtime wages. Compl. ¶ 24. These factual allegations in plaintiff's complaint, accepted as true, establish defendants' liability under the FLSA and NYLL for failure to pay overtime wages. Accordingly, it is respectfully recommended that plaintiff's motion for a default judgment should be granted.

II. Damages

It is well established that a default constitutes an admission of well-pleaded factual allegations in the complaint, except those relating to damages. Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999) (" Even when a default judgment is warranted based on a party's failure to defend, the allegations in the complaint, with respect to the amount of the damages are not deemed true."); Greyhound Exhibitgroup Inc. v. E.L.U.L Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). The Court " may conduct hearings or make referrals . . . when, to enter or effectuate judgment, it needs to . . . determine the amount of damages [or] establish the truth of any allegation by evidence." Fed.R.Civ.P. 55(b)(2). However, the Court is not required to hold a hearing, as " [d]etailed affidavits and other documentary evidence can suffice in lieu of an evidentiary hearing." Chanel, Inc. v. Louis, 06 CV 5924 (ARR)(JO), at *11 (E.D.N.Y. Dec. 7, 2009) (citing Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504, 508 (2d Cir. 1991)). On a motion for a default judgment, a plaintiff has the burden to prove damages to the Court with a " reasonable certainty." Credit Lyonnais Secs. (USA), Inc., 183 F.3d at 155 (citing Transatlantic Marine Claims Agency, Inc., 109 F.3d at 111).

" Under the FLSA, an employee seeking to recover unpaid minimum wages or overtime 'has the burden of proving that [she] performed work for which [she] was not properly compensated.'" Jiao v. Chen, 03 CV 0165 (DF), at *8 (S.D.N.Y. Mar. 30, 2007) (quoting Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946)). " When an employer fails to comply with the FLSA's record-keeping requirements, however, . . . [t]he plaintiff is able to meet [her] initial burden under the statute by relying on [her] recollection alone." Id. at 8-9 (citations omitted). Plaintiff supports her claim for damages with a sworn declaration regarding the hours that she worked for defendants without receiving pay. Plaintiff's submission provides a sufficient basis for the Court to determine damages. See Maldonado v. La Nueva Rampa, Inc., 10 CV 8195 (LLS)(JLC), at *8 (S.D.N.Y. May 14, 2012) (" An affidavit that sets forth the number of hours worked is sufficient."). Accordingly, a hearing on damages is not necessary.

a. Unpaid Minimum and Overtime Wages

Plaintiff seeks unpaid minimum wages from July 1, 2008 through August 31, 2010. Pl. Mem. Ex. B. As plaintiff's hours changed based on whether her school was in session, she did not work an exact set schedule each week. Instead, plaintiff relies on her recollection and provides a chart detailing the approximate number of hours she worked during the weeks she was employed. Plaintiff provides a calculation of unpaid wages based on working thirty hours per week when school was in session and fifty to sixty hours when school was not in session.[3]

Plaintiff provides a calculation of $32, 885.25 in unpaid minimum and overtime wage. The Court has reviewed plaintiff's calculation of unpaid wages and, while there is a calculation error, as plaintiff requests less than she is actually owed, the Court should award plaintiff the requested amount of $32, 885.25 in unpaid wages. In the chart provided, plaintiff requests actual damages of $32, 885.25. Based on the Court's calculations, plaintiff neglected to include the $525 amount from the first line of the chart, detailing her first weeks worked, when calculating her total damages. However, in her motion for a default judgment, plaintiff does admit to receiving some compensation, although it was " no more than $500, based on some orders that she shipped to customers." Pl. Mem. p. 3. As plaintiff did receive some amount of compensation, it is appropriate to reduce her damages by $500. Plaintiff's miscalculation accomplishes this by reducing her damages by $525. She therefore requests slightly less than she is owed.

The chart reflects plaintiff's recollection of the approximate number of hours she worked. She worked thirty hours per week for defendants during the majority of the year and fifty hours per week during schools breaks, winter and summer, excluding the final summer of her employment when she worked approximately sixty hours per week. Plaintiff provides calculations based on the federal minimum wage applicable at the time. Plaintiff seeks unpaid minimum wages equal to the federal minimum wage for all the hours she worked up to forty hours per week, and unpaid overtime wages equal to one and one half times the applicable federal minimum wage for all hours worked in excess of forty hours per week.

The statute of limitations under the FLSA is two years, " except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued." 29 U.S.C. § 255(a). Plaintiff's complaint alleges that defendants' failure to properly compensate her for minimum wage and overtime hours was willful. Compl. ¶ ¶ 23, 24. The Court deems this fact admitted given defendants' default and therefore applies the three-year statute of limitations to plaintiff's claims. See Wicaksono v. XYZ 48 Corp., 10 CV 3635, 2011 WL 2022644, at *3 (S.D.N.Y. May 2, 2011) (" Because the defendant defaulted and the complaint alleges that all of the violations were undertaken 'knowingly, intentionally and willfully, ' the plaintiffs are entitled to a finding that the defendant's conduct was willful, and the three year statute of limitations will apply."). Accordingly, it is respectfully recommended that plaintiff should be awarded $32, 885.25 in unpaid wages under the FLSA.

b. Liquidated Damages

Both the FLSA and the NYLL provide for an award of liquidated damages. Plaintiff seeks an award of liquidated damages only under the FLSA.[4] Under the FLSA, an employer " shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages." 29 U.S.C. § 216(b).[5] " Liquidated damages awards under the FLSA are equal to the amount owed in federal unpaid and overtime wages." Maldonado, 2012 WL1669341 at *9 (S.D.N.Y. May 14, 2012) (citation omitted). Plaintiff seeks liquidated damages under the FLSA for the entire period of her employment, all of which falls within the three-year statute of limitations. Accordingly, it is respectfully recommended that plaintiff should be awarded $32, 885.25 in liquidated damages.

III. Attorney's Fees and Costs

The FLSA and New York Labor Law both allow for an award of " reasonable" attorney's fees. See 29 U.S.C. § 216(b); N.Y. Lab. Law § 663(1). In the Second Circuit, the amount of attorneys' fees to award a prevailing party is determined by calculating the " presumptively reasonable fee." Simmons v. N.Y. City Transit Auth., 575 F.3d 170, 172 (2d Cir. 2009). To determine this fee, the Court begins by multiplying the number of hours spent on the litigation by " a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). A reasonable rate is " the rate a paying client would be willing to pay, " based on the " prevailing [hourly rate] in the community . . . . where the district court sits." Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 190 (2d Cir. 2007); see also Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984) (" [T]he requested rates [must be] in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.") In determining the reasonable hourly rate, the Court should consider the following factors:

(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the level of skill required to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the attorneys' customary hourly rate; (6) whether the fee is fixed or contingent; (7) the time limitations imposed by the client or the circumstances; (8) the amount involved in the case and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the " undesirability" of the case; (11) the nature and length of the professional relationship with the client, and (12) awards in similar cases.

Arbor Hill, 522 F.3d at 186 n.3. " The burden is on the party moving for attorneys' fees to justify the hourly rate sought." Ehrlich v. Royal Oak Fin. Servs., Inc., 12 CV 3551 (BMC), at *8-9 (E.D.N.Y. Nov. 5, 2012) (citing Hensley, 461 U.S. at 437).

Plaintiff's attorney, David Stein, a partner at Samuel & Stein, has been practicing law for twenty-four years and requests an hourly rate of $350. Plaintiff's attorney, David Neiporent, a senior associate at Samuel & Stein, has been practicing law for thirteen years, and requests an hourly rate of $275. Courts have found that the prevailing hourly rate for law firm partners in this district is between $350 and $400. See Concrete Flotation Sys., Inc. v. Tadco Construction Corp., 07 CV 319, 2010 WL 2539771, at *4 (E.D.N.Y. March 15, 2010)(collecting cases). Although the prevailing hourly rate for senior associates in this district was $200 to $250, Cho v. Koam Med. Servs. P.C., 524 F.Supp.2d 202, 207 (E.D.N.Y. 2007) (noting that in FLSA cases, " hourly rates for attorneys approved in recent Eastern District of New York cases have ranged from. . . .$200 to $250 for senior partners."), the prevailing rate in recent years has been slightly higher. See Man Wei Shiu v. New Peking Taste, Inc., 11 CV 1175 (NGG), 2013 WL 2351370, at *13 (E.D.N.Y. May 28, 2013) (awarding $275 hourly fee to attorney with ten years' experience in FLSA cases); Ferrara v. Professional Pavers Corp., 11 CV 1433 (KAM), 2013 WL 12110522, at *9 (E.D.N.Y. Feb. 15, 2013) (awarding hourly rate of $300 for senior associates); Brady v. Wal-Mart Stores, Inc., 03 CV 3843 (JO), 2010 WL 4392566, at *5 (E.D.N.Y. October 29, 2010) (" Fee awards in this district in recent years have approved hourly rates in the range of . . . $100 to $295 for associates."). Given his experience as a senior associate, Mr. Nieporent's hourly requested rate of $275 is consistent with the prevailing rate in this district. The Court has also reviewed the hours billed in this matter. " [T]he Court must use its experience with the case, as well as its experience with the practice of law to assess the reasonableness of the hours spent . . . in a given case." Beach, at *38-39 (internal quotation marks omitted); see also Firststorm Partners 2, LLC v. Vassel, 10 CV 2356(KAM)(RER), at *14 (E.D.N.Y. Aug. 15, 2012) (the court must determine if the hours " have been reasonably expended"). Mr. Stein and Mr. Nieporent submit contemporaneous time records documenting 10.6 hours drafting litigation documents and discussing the case with plaintiff. Pl. Mem. Ex. C. Mr. Nieporent spent 9.4 hours on this case and Mr. Stein spent 1.2 hours. I find the time expended on this action by Mr. Stein and Mr. Nieporent to be reasonable.

Plaintiff also seeks $449 in costs. Plaintiff requests $350 for the filing fee and $99 for service of process. The fees are detailed in the contemporaneous time records submitted by plaintiff's attorneys. Pl. Mem. Ex. C. See Kalloo v. Unlimited Mechanical Co. of N.Y., Inc., 977 F.Supp.2d 209, 214 (E.D.N.Y. 2013) (" Plaintiffs' request for. . . .costs is reasonable and sufficiently supported by their contemporaneous records."); Garcia v. Badyna, 13 CV 4021 (RRM)(CLP), 2014 WL 4728287, at *17 (E.D.N.Y. Sept. 23, 2014) (awarding $514.25 in litigation costs for the filing fee and service of process based on plaintiff's counsel's contemporaneous time records). The Court finds that the requested costs are reasonable and respectfully recommends that plaintiff be awarded $449 in costs.

CONCLUSION

Accordingly, it is respectfully recommended that plaintiff's motion for a default judgment should be granted. A default judgment should be entered against defendants in the total amount of $69, 224.50, consisting of: $32, 885.25 in unpaid minimum wages and unpaid overtime; $32, 885.25 in liquidated damages; $3, 005 in attorney's fees, and $449 in costs. Plaintiff is hereby ordered to serve a copy of this Report upon defendants at their last known addresses and to file proof of service with the Court forthwith.

FILING OF OBJECTIONS TO REPORT AND RECOMMENDATION

Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections shall be filed with the Clerk of the Court. Any request for an extension of time to file objections must be made within the fourteen-day period. Failure to file a timely objection to this Report generally waives any further judicial review. Marcella v. Capital Dist. Physician's Health Plan, Inc., 293 F.3d 42 (2d Cir. 2002); Small v. Sec'y of Health & Human Servs., 892 F.2d 15 (2d Cir. 1989); see Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985).

SO ORDERED.


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