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Coley v. Vannguard Urban Improvement Association, Inc.

United States District Court, E.D. New York

March 29, 2018

SONYA COLEY, ET AL., Plaintiffs,
v.
VANNGUARD URBAN IMPROVEMENT ASSOCIATION, INC., ET AL., Defendants. Time Period Wage Rate Accrued Vacation Hours Vacation Pay Owed Time Period Number of Weeks Overtime Wage Rate Overtime Wages Owed Time Period Number of Pay Periods Biweekly Wage Biweekly Wage Paid Wages Owed Time Period Number of Weeks Wage Rate Total Hours Gap-Time Hours Gap-Time Wages Owed Vacation Pay Owed Overtime Wages Owed Wages Owed Gap-Time Wages Owed Individual Total NYLL Liquidated Damages Time Period Wage Rate Time Period Number of Weeks Overtime Wage Rate Overtime Hours Total Overtime

          MEMORANDUM & ORDER

          PAMELA K. CHEN, United States District Judge:

         In this action alleging violations of the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”), Plaintiffs Sonya Coley, Ebony Hall, Sonya Johnson, Mossa Jones, Ruth Richardson, Salika Taylor, Elizabeth Wright, and Thomas Pope now move for default judgment against Defendant Arthur Niles. This Court has already granted default judgments against Defendants Vannguard Urban Improvement Association, Inc. (“Vannguard” or “VUIA”); Vannguard Local Development Corporation, Inc. (“Local” or “VLDC”); and 1686 Gates General Partners Corp., Malcolm 1677 General Partners Corp., 1659 Hancock General Partners Corp., and 1661 Macon General Partners Corp. (collectively, “the Partnership Corporations”). (Dkt. 220.) For the reasons set forth below, Plaintiffs' motion for default judgment is GRANTED as to the liability of Defendant Niles, and the Court holds that Defendants Niles, Vannguard, Local, and the Partnership Corporations (collectively, “Defendants”) are liable for $929, 973.07.

         BACKGROUND

         Plaintiffs filed their original complaint on November 9, 2012, naming Vannguard, among others, as Defendants. (Dkt. 1.) Based on Vannguard's failure to answer (Dkt. 12), the Clerk of Court entered default on April 25, 2013. (4/25/13 Dkt. Entry of Default.) On May 3, 2013, Plaintiffs moved for default judgment against Vannguard. (Dkt. 14.) However, Vannguard, whose counsel, Andre Soleil, entered an appearance on May 28, 2013 (Dkt. 31), sought to respond to the complaint, and appeared at a status conference on July 22, 2013, at which the Honorable Ramon E. Reyes vacated the entry of default (7/22/13 Minute Order). Plaintiffs filed an amended complaint on September 3, 2013 (Dkt. 58) and a Second Amended Complaint (“SAC”) on October 23, 2013, (Dkt. 68). Niles and Vannguard both answered the SAC, and asserted similar counterclaims against Plaintiff Coley, on November 21 and November 22, 2013, respectively. (Dkts. 70, 71.) On May 5, 2014, with leave of the Court and over Vannguard's objections (Dkt. 96), Plaintiffs filed the Third Amended Complaint, now the operative complaint in this action, in which Plaintiffs named Local and the Partnership Corporations as Defendants (Dkt. 100). Plaintiffs served Local and the Partnership Corporations on October 1, 2015 (see Dkts. 135-39), but those Defendants failed to answer or otherwise move against the Third Amended Complaint. Plaintiffs sought another entry of default against Local and the Partnership Corporations. (See 11/23/15 Minute Entry; Dkt. 140.) The Clerk of Court entered default on December 8, 2015 (Dkt. 144), and Plaintiffs then moved for default judgment as to those Defendants on December 12, 2015 (Dkt. 145).

         On January 29, 2016, Vannguard's counsel, Soleil, filed a letter advising the Court that “Vannguard is currently an empty entity with no directors, employees, properties, interests, etc.”, and that the company would not continue to defend itself in the litigation. (Dkt. 153 at 3.) On March 16, 2016, Plaintiffs sought entry of default against Vannguard (Dkt. 173), which the Clerk of Court entered on March 25, 2016 (3/25/16 Dkt. Entry of Default). Plaintiffs moved for default judgment against Vannguard on April 13, 2016. (Dkt. 178.) On August 5, 2016, the Court granted default judgment against Vannguard, Local, and the Partnership Corporations, but reserved the damages inquest, pursuant to Fed.R.Civ.P. 55(b)(2), as to these defaulting defendants until the resolution of the liability portion of the case against Niles, after which the Court would hold a damages determination as to all Defendants. (Dkt. 220.) On April 10, 2017, the Clerk of Court entered a default order against Niles.[1] (4/10/17 Dkt. Entry of Default.) On April 12, 2017, Plaintiffs moved for a default judgment against Niles, and moved to dismiss Niles's counterclaim against Plaintiff Coley. (Dkt. 269.)

         DISCUSSION

         I. Legal Standard for Default Judgment

         Under Rule 55(a) of the Federal Rules of Civil Procedure (“Rule 55(a)”), the process for entry of default against a party who fails to defend is two-fold: “first, the entry of a default, and second, the entry of a default judgment.” City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 128 (2d Cir. 2011) (citation omitted). The entry of a default under Rule 55(a) is an admission of the well-pleaded factual allegations in the complaint except for claims for damages. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Taking the factual allegations and all reasonable inferences as true, the court determines whether such alleged facts show liability on the cause of action claimed. AF Holdings, LLC v. Olivas, 3:12-CV-1401 (JBA), 2014 WL 4782816, at *2 (D. Conn. Sept. 24, 2014). In other words, “after 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 v. Rolls-Royce USA Inc., 688 F.Supp.2d 150, 153 (E.D.N.Y. 2010) (quotation marks omitted) (alteration in original). A district court is empowered, under Rule 55(b)(2) of the Federal Rules of Civil Procedure (“Rule 55(b)(2)”), in the exercise of its discretion, to “‘conduct hearings or make referrals' as may be necessary, inter alia, to determine the amount of damages or establish the truth of the plaintiff's allegations.” Mickalis, 645 F.3d at 129 (citing Fed.R.Civ.P. 55(b)(2)(B)-(C)).

         II. Entry of Default Against Defendants

         The “typical Rule 55 case [is one] in which a default has entered because a defendant failed to file a timely answer.” Id. (quotation marks omitted) (alteration in original). The Court previously noted that this was the case with Local and the Partnership Corporations, which failed to answer or move against the Third Amended Complaint after being properly served. (Dkt. 220, at 3.) The Partnership Corporations also failed to enter an appearance in a subsequent conference before the Court on November 23, 2015. (Id.) Therefore, the entry of default against Local and the Partnership Corporations was proper.

         “[A] district court is also empowered to enter a default against a defendant [that] has failed to . . . otherwise defend.” Mickalis, 645 F.3d at 129 (quotation marks omitted) (alterations in original). The Second Circuit has “embraced a broad understanding of the phrase ‘otherwise defend.'” Id. It has found entry of default proper in a variety of circumstances, i.e., where a defendant has failed to appear for trial after a lack of diligence in pre-trial proceedings, Brock v. Unique Racquetball & Health Clubs, Inc., 786 F.2d 61, 64-65 (2d Cir. 1986); where a defendant has willfully disregarded court orders, Eagle Assocs. v. Bank of Montreal, 926 F.2d 1305, 1310 (2d Cir. 1991); and where a defendant has refused to participate further in litigation, Mickalis, 645 F.3d at 129-30.

         The Court previously held that Vannguard failed to “otherwise defend” against the current litigation. (Dkt. 220, at 5.) Even though Vannguard participated at various points in this litigation, Vannguard refused, at least as of January 29, 2016, to respond to the litigation, seemingly because there is no longer any corporate entity left to do so. (See, e.g., Dkt. 153, at 3 (“Vannguard is currently an empty entity with no directors, employees, properties, interests, etc.”; “Vannguard only has one volunteer agent left-[Soleil], ” and he “ha[d] only one authorized purpose- Vannguard's dissolution”).) As a result, the Court found that entry of default against Vannguard was proper. (Dkt. 220, at 6.)

         Like Vannguard, Niles also failed to “otherwise defend” himself in the present action. During a hearing on August 8, 2016, counsel for Niles stated, “it is unclear whether Niles can or will continue to defend himself in this litigation.” (8/8/16 Minute Entry.) The Court set a telephonic conference for March 2, 2017 to discuss Niles's continuing involvement in the case, and counsel for Niles represented that Niles may not defend this action at trial. (3/7/17 Minute Entry.) In a letter filed on March 9, 2017, Niles notified the Court that “[a]t this juncture, Defendant is not going to defend against Plaintiffs' action at trial, provided that there are no material changes in the status of the case, which we do not anticipate.” (Dkt. 254, at 1.) On March 10, 2017, this Court directed Plaintiffs to move for a default order and thereafter a default judgment against Niles (3/10/17 Order); Plaintiffs have since complied (Dkt. 259). The Court will now address the merits of Plaintiffs' motion for default judgment against all of the defendants, including Niles. The Court will also address Plaintiffs' motion to dismiss the counterclaim against Plaintiff Sonya Coley.

         III. Defendants Qualify as Employers Under the FLSA and NYLL

         Liability under the FLSA extends only to “employers, ” defined as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). “Employ” means to “suffer or permit to work”. Id. at § 203(g). These definitions “sweep broadly” in “identifying the persons or entities who qualify as ‘employers' subject to [the FLSA], ” Barfield v. N.Y.C. Health & Hosps. Corp., 537 F.3d 132, 140 (2d Cir. 2008), and have a “striking breadth” meant to “cover some parties who might not qualify . . . under a strict application of traditional agency law principles, ” Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 326 (1992). For the following reasons, the Court finds that Defendants Niles, Vannguard, and the Partnership Corporations are employers under the FLSA and NYLL

         A. Vannguard, Local, and the Partnership Corporations Were Plaintiffs' Employers Under the FLSA and the NYLL

         The FLSA's requirements apply “pursuant to either ‘individual' or ‘enterprise' coverage, ” the former encompassing individuals “engaged directly in interstate commerce or in the production of goods for interstate commerce” and the latter, “substantially broaden[ing] the scope of [FLSA], ” encompassing “any employee of an enterprise engaged in interstate commerce.” Tony & Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 295 n.8 (1985); see also Jacobs v. N.Y. Foundling Hosp., 577 F.3d 93, 96 (2d Cir. 2009) (FLSA's requirements apply “if an employee either: (1) is engaged in commerce or in the production of goods for commerce, or (2) is employed in an enterprise engaged in commerce or in the production of goods for commerce”) (quotation marks omitted) (emphasis in original).

         Enterprise coverage “has been interpreted broadly by the courts.” Ethelberth v. Choice Sec. Co., 91 F.Supp.3d 339, 355 (E.D.N.Y. 2015). Enterprise liability under the FLSA extends to entities that: (1) perform related activities “for a common business purpose”; (2) have “employees engaged in commerce or in the production of goods for commerce, or . . . employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person”; and (3) have an “annual gross volume of sales made or business done [] not less than $500, 000.” 29 U.S.C. § 203(r)-(s).

         This Court previously held that Plaintiffs' allegations are sufficient to establish that enterprise liability extended to Vannguard, Local, and the Partnership Corporations under the FLSA. (Dkt. 220, at 15 (holding, in prior order granting Plaintiffs' motion for default judgment, that Vannguard and Partnership Corporations are liable as employers).) Vannguard, Local, and the Partnership Corporations: (1) performed activities through contracts with New York City for the common business purposes of providing services to disadvantaged teens and young adults; (2) used and worked with goods that have been moved in or produced in interstate commerce; and (3) had an annual gross volume of business that was not less than $500, 000. (Dkt. 100, at ¶¶ 4-6.)

         Vannguard was clearly Plaintiffs' employer: Vannguard hired Plaintiffs (id. at ¶ 28), issued Plaintiffs' paychecks, albeit belatedly on many occasions (id. at ¶¶ 43-46), covered Plaintiffs' health insurance and retirement plans (id. at ¶ 35), withheld taxes (id. at ¶ 36), provided Plaintiffs' W-2 and W-4 tax forms classifying Plaintiffs as employees (id. at ¶ 37), and “was responsible for providing the instrumentalities by which the work was to be done, ” i.e., “computers, office equipment, and office supplies, ” (id. at ¶ 40).

         B. Niles Was Plaintiffs' Employer Under the FLSA

         To determine who qualifies as an “employer” for purposes of individual liability, the Second Circuit looks to the factors enumerated in Carter v. Dutchess Cmty. Coll., 735 F.2d 8 (2d Cir. 1984) (the “Carter factors”), which are “whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.” Id. at 12. Satisfaction of these factors is sufficient, but not necessary, to establish an employer-employee relationship. Zheng v. Liberty Apparel Co., 355 F.3d 61, 71 (2d Cir. 2003).

         The Court considers Niles to be Plaintiffs' employer because he satisfied all of the Carter factors. At the May 3, 2016 hearing, Niles admitted that, during the relevant period, he served as executive director for both Vannguard and Local and that he held the position of general manager for Vannguard. (5/3/2016 Hearing Tr., Dkt. 193, at 19-20.) He testified that at Vannguard, he had employees under him and was responsible for the day-to-day direction of the workforce, and that as executive director, he was authorized to sign checks on behalf of Vannguard and Local. (Id. at 20-21.) Similarly, in Niles's answer to Plaintiffs' Second Amended Complaint, he admitted Plaintiffs' allegation that “[a]s Executive Director and General Manager, defendant Niles possessed the power to control the plaintiffs[, and] was authorized to hire, fire, discipline, assign employees, set work schedules, determine the rate and method of wage payments, establish classification of employees and maintain employment records.” (Dkt. 68, at ¶ 10; Dkt. 70, at ¶ 3.) For these reasons, Niles qualifies as one of Plaintiffs' employers under the FLSA.

         C. Defendants Were Plaintiffs' Employers Under the NYLL

         The NYLL defines “employer” to include “any person . . . employing any individual in any occupation, industry, trade, business or service” or “any individual . . . acting as employer.” Teri v. Spinelli, 980 F.Supp.2d 366, 373 (E.D.N.Y. 2013) (citing NYLL §§ 190(3), 651(6)) (quotation marks omitted). The NYLL and FLSA definitions are nearly identical, and, as a result, “[d]istrict courts in this Circuit have interpreted the definition of employer under the [NYLL] coextensively with the definition used by the FLSA, ” id. (quotation marks and citation omitted), and have “regularly applied the same factors and tests to determine whether entities are joint employers under the NYLL, ” id. at 375. NYLL also permits liability under the “single employer” doctrine. See, e.g., Ayala v. Your Favorite Auto Repair & Diagnostic Ctr., Inc., 14-CV-5269 (ARR)(JO), 2016 WL 5092588, at *16 (E.D.N.Y. Sept. 19, 2016) (“The ‘single integrated enterprise doctrine' allows for multiple defendants to be jointly and severally liable for any FLSA and NYLL violations.”). Thus, for the same reasons discussed with respect to the FLSA, the Court finds that all Defendants qualify under the NYLL as Plaintiffs' “employer”.

         III. Defendants' Liability ...


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