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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); ...


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