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Guerrero v. 79TH Street Gourmet & Deli Inc.

United States District Court, E.D. New York

September 10, 2019

EDGAR BAIZAN GUERRERO, individually and on behalf of all others similarly situated, Plaintiff,
v.
79TH STREET GOURMET & DELI INC. D/B/A GOURMET DELI & GROCERY, NEW UTRECHT GOURMET DELI AND GROCERY INC. D/B/A GOURMET DELI & GROCERY, COLUMBUS GROCERY AND DELI CORP. D/B/A GOURMET DELI & GROCERY, MOHAMED S. MUTHANA, AND AHMED F. MUSTAFA, Defendants.

          REPORT AND RECOMMENDATION

          Steven L. Tiscione United States Magistrate Judge

         Plaintiff Edgar Baizan Guerrero brought this action against five Defendants-79th Street Gourmet & Deli Inc. (d/b/a Gourmet Deli & Grocery), New Utrecht Gourmet Deli and Grocery Inc. (d/b/a Gourmet Deli & Grocery), Columbus Grocery Deli Corp. (d/b/a Gourmet Deli & Grocery) (“Corporate Defendants”), Mohamed S. Muthana, and Ahmed F. Mustafa (“Individual Defendants”)-alleging that they employed him as a grill and deli worker and, in the course of his employment, violated the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., (“FLSA”) and several provisions of the New York Labor Law (“NYLL”), N.Y. Lab. Law § 650 et seq. Plaintiff moved for default judgment upon Defendants' failures to answer or otherwise respond to the Complaint despite proper service and, on December 7, 2018, the Honorable Allyne R. Ross referred the motion to this Court for a report and recommendation.

         Based on a review of the well-pleaded allegations and evidence presented in Plaintiff's filings, I respectfully recommend that the Court grant Plaintiff's motion for default judgment and enter damages as described herein.

         BACKGROUND[1]

         I. Factual History

         From approximately July 2015 until August 12, 2018, Plaintiff worked as a grill and deli worker at two delis owned and operated by Defendants under the name Gourmet Deli & Grocery and located at 7818 New Utrecht Ave., Brooklyn, NY 11214 (“New Utrecht Location”) and at 8523 18th Ave., Brooklyn, NY 11214 (“18th Ave. Location”). See Dkt. No. 1 (“Compl.”) ¶¶ 4, 35; Dkt. No. 21-12 (Declaration of Edgar Baizan Guerrero) (“Baizan Decl.”) ¶¶ 8-9. Individual Defendants served as the owners, managers, principals or agents of the Corporate Defendants, and controlled the wages and hours of Gourmet Deli's employees. See Compl. ¶ 3; Baizan Decl. ¶ 4.

         Plaintiff regularly worked in excess of 40 hours per week at the New Utrecht Location from July 2015 until May 2018, and then at the 18th Ave. Location from May 2018 until August 12, 2018. See Compl. ¶¶ 40-42; Baizan Decl. ¶¶ 14-17. Throughout his employment, Plaintiff was paid a fixed rate in cash, irrespective of the number of hours he worked: from approximately July 2015 until May 2018, Plaintiff was paid $11.00 per hour, and from approximately May 2018 until August 12, 2018, Plaintiff was paid $12.00 per hour.[2] See Compl. ¶¶ 43-45; Baizan Decl. ¶¶ 18- 20. Further, Plaintiff was never: (1) granted any breaks or meal periods; (2) required to track his time; or (3) provided with any wage statements or documents reflecting minimum wage and overtime requirements under New York State or federal law. See Compl. ¶¶ 46-50; Baizan Decl. ¶¶ 23-26.

         II. Procedural History

         Plaintiff initiated this putative collective action on August 22, 2018 to recover unpaid minimum and overtime wages under the FLSA and NYLL, and spread-of-hours pay, liquidated and statutory damages, interest, attorneys' fees and costs under the NYLL. Compl. ¶ 10. Corporate Defendants were duly served with copies of the Summons and Complaint via the Secretary of State on August 23, 2018. See Dkt. Nos. 6-8; Fed.R.Civ.P. 4(e)(1); N.Y. Bus. Corp. Law § 306(b). Individual Defendants were duly served on September 4, 2018 when copies of the Summons and Complaint were delivered to a person of suitable age and discretion at Individual Defendants' actual place of business and by mailing the same via first class mail to Individual Defendants' actual place of business. See Dkt. Nos. 9-10; N.Y. Civ. Prac. Laws and Rules (“C.P.L.R.”) § 308(2). On October 15, 2018, the Clerk of Court certified Defendants' default pursuant to Fed.R.Civ.P. 55(a) upon Defendants' failure to answer or otherwise respond to the Complaint. Dkt. No. 14.

         On November 21, 2018, Plaintiff moved for default judgment, but did not submit an accompanying memorandum of law. Dkt. Nos. 17-19. Therefore, on December 4, 2018, with leave from the Court, Plaintiff re-filed his motion, accompanied by a Memorandum of Law in Support of Plaintiff's Motion. Dkt. Nos. 20-22. The Honorable Allyne R. Ross then referred the motion to this Court for a report and recommendation on December 7, 2018. Dkt. No. 23.

         Plaintiff served Defendants with the Notice of Motion for Default Judgment, the Declaration of Michael Faillace in Support of Plaintiff's Motion, and the Memorandum of Law in Support of Plaintiff's Application for Default Judgment, on December 12, 2018. Dkt. No. 24. Although Plaintiff originally sought designation of this action as a collective action pursuant to 29 U.S.C. § 216(b) (Compl. ¶ 34), he has not reiterated this request in the present motion, and therefore the Court will consider his request to have been waived. See Galicia v. 63-68 Diner Corp., No. 13-CV-3689 (PKC), 2015 U.S. Dist. LEXIS 40599, at *2 (E.D.N.Y. Mar. 30, 2015) (citing Rodrigues v. Almighty Cleaning, Inc., 784 F.Supp.2d 114, 133 (E.D.N.Y. 2011)) (finding collective action request waived where Plaintiff failed to reiterate request in motion for default judgment).

         DISCUSSION

         I. Default Judgment

         The Federal Rules of Civil Procedure prescribe a two-step process for a plaintiff to obtain a default judgment. First, when “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).

         Once a defendant is found to be in default, he is deemed to have admitted all of the well-pleaded allegations in the complaint pertaining to liability. Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). However, a district court retains the discretion to determine whether a default judgment is appropriate based on the specific circumstances of a given case. Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993); see also Taylor v. 312 Grand St. LLC, No. 15-CV-5410 (BMC), 2016 U.S. Dist. LEXIS 36623, at *7 (E.D.N.Y. Mar. 22, 2016) (“[J]ust because a party is in default, the plaintiff is not entitled to a default judgment as a matter of right.”) (citations omitted). In light of the Second Circuit's “oft-stated preference for resolving disputes on the merits[, ]” default judgments are “generally disfavored[, ]” and any “doubt should be resolved in favor of the defaulting party.” Enron, 10 F.3d at 95-96.

         Thus, despite a defendant's default, the plaintiff bears the burden of demonstrating that the unchallenged allegations and all reasonable inferences drawn from the evidence provided establish the defendant's liability on each asserted cause of action. City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (citation omitted); see also, e.g., Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981) (reversing dismissal where district court failed to accept the plaintiff's factual allegations as true). 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) (citations omitted).

         II. Whether This Court Has Jurisdiction

         For the reasons discussed below regarding the applicability of the FLSA to Defendants' employment of Plaintiff, this Court concludes that federal question jurisdiction exists for Plaintiff's FLSA claims. See 28 U.S.C. § 1331. Where original jurisdiction exists, a district court “shall have supplemental jurisdiction over claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a). Under § 1367, claims form part of the same case or controversy if those claims “derive from a common nucleus of operative fact.” United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966); accord Kegun Chen v. Oceanica Chinese Rest., Inc., 13-CV-4623 (NGG) (PK), 2018 U.S. Dist. LEXIS 140925, at *5 (E.D.N.Y. 2018). “It is well settled that NYLL and FLSA claims that arise out of the same compensation policies and practices derive from the same common nucleus of operative fact.” Salustio v. 106 Columbia Deli Corp., 264 F.Supp.3d 540, 551 (S.D.N.Y. 2017) (citing Shahriar v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d 234, 245 (2d Cir. 2011) (other citation omitted)).

         Here, Plaintiff's NYLL and FLSA claims, like a previous case from this District involving alleged unpaid wage claims, both “involve allegations that [Defendants] were ‘employers' who denied Plaintiff wages and overtime payment” and the facts in both claims “all stem from the same time period, the same location, and the same overall circumstance”; thus, both claims “are considered to be part of a common nucleus of operative fact.” Kegun Chen, 2018 U.S. Dist. LEXIS 140925, at *7 (citing Treglia v. Town of Manlius, 313 F.3d 713, 723 (2d Cir. 2002)). Therefore, this Court concludes that the exercise of supplemental jurisdiction over Plaintiff's state law claims is appropriate.

         This Court also finds that it has personal jurisdiction over Defendants. Corporate Defendants are incorporated in the State of New York and maintain their principal place of business in Brooklyn, New York (Compl. ¶¶ 17-20); therefore, they are subject to the Court's general jurisdiction. See Daimler AG v. Bauman, 571 U.S. 117, 137 (2014) (noting that the “place of incorporation and principal place of business are ‘paradigm bases for general jurisdiction'”) (citations, ellipses, and brackets omitted). Moreover, Plaintiff demonstrated effective service on Corporate Defendants via the New York Secretary of State pursuant to N.Y. Bus. Corp. Law § 306(b)(1). Dkt. Nos. 6-8. Therefore, this Court has personal jurisdiction over Corporate Defendants. See Bhagwat v. Queens Carpet Mall, Inc., No. 14-CV-5474 (ENV) (PK), 2018 U.S. Dist. LEXIS 176986, at *8 (E.D.N.Y. Sept. 12, 2018) (“Personal jurisdiction over a New York corporation is established once it is validly served in this district.”) (citing Fed.R.Civ.P. 4(k)(1)(A), adopted by, 2018 U.S. Dist. LEXIS 176146 (E.D.N.Y. Oct. 7, 2018)). Individual Defendants transacted business within the state of New York as owners, officers and/or agents of Corporate Defendants. Compl. ¶¶ 21-22. In so doing, Defendants “purposefully availed themselves of the privilege of conducting activities within the forum State, thus invoking the benefits and protection of its laws.” Pintor v. Park King at JFK, LLC, No. 16-CV-6269 (PKC) (PK), 2018 U.S. Dist. LEXIS 28940, at *8 (E.D.N.Y. Feb. 21, 2018) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (other citation omitted)), adopted by, 2018 U.S. Dist. LEXIS 39352 (E.D.N.Y. Mar. 8, 2018). Based on Defendants' business activities, “they may be subject to the Court's specific jurisdiction under New York's long-arm statute.” Id. (citing N.Y. C.P.L.R. § 302(a)(1)). Furthermore, Plaintiff demonstrated effective service on Individual Defendants pursuant to New York Civil Practice Law and Rules § 308(2). Dkt. Nos. 9-10. Therefore, Individual Defendants are subject to the Court's specific jurisdiction. See N.Y. C.P.L.R. § 302(a); Pintor, 2018 U.S. Dist. LEXIS 28940, at *8.

         III. Whether the FLSA Applies to Plaintiff

         A. Legal Standard

         The FLSA governs minimum wages, maximum hours, and other policies and practices affecting employees and employers. See Sandifer v. U.S. Steel Corp., 571 U.S. 220, 224 (2014). Under the FLSA, an “employer” is broadly defined 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). The statute's definition of “person” extends to both individuals and entities. See Id. § 203(a). Subject to certain statutory exceptions, an “employee” is defined as “any individual employed by an employer.” Id. § 203(e)(1). Under the FLSA, an employee may have simultaneous employers, in which case “all joint employers are responsible, both individually and jointly, for compliance with all of the applicable provisions of the [FLSA].” See Sarikaputar v. Veratip Corp., 371 F.Supp.3d 101, 104 (S.D.N.Y. 2019) (quoting 29 C.F.R. § 791.2(a)).

         To demonstrate entitlement to the FLSA's wage and overtime protections, a plaintiff must show: (1) that the defendant employed plaintiff, and (2) that the employment fell under the FLSA's individual or enterprise coverage provisions. See Jacobs v. New York Foundling Hosp., 577 F.3d 93, 96-97 (2d Cir. 2009) (citing Tony & Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 295 n.8 (1985)); see also 29 U.S.C. § 206(a)(1) (providing for minimum wage for qualifying employees); id. § 207(a)(1) (providing for overtime protection for qualifying employees).

         i. Defendants Constitute Joint Employers

         In keeping with the FLSA's broad definition of “employer, ” The Second Circuit has held that “the determination of whether an employer-employee relationship exists for purposes of the FLSA should be grounded in ‘economic reality rather than technical concepts,' determined by reference not to ‘isolated factors, but rather upon the circumstances of the whole activity.'” Barfield v. N.Y.C. Health & Hosps. Corp., 537 F.3d 132, 141 (2d Cir. 2008) (quoting Goldberg v. Whitaker House Coop, Inc., 366 U.S. 28, 33 (1961); Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947)). There are “several sets of factors” that courts in this Circuit apply in assessing the economic reality of an employment relationship, ranging from a narrow set of “formal control” factors to a broad set of “functional control” factors. Granda v. Trujillo, No. 18-CV-3949 (PAE), 2019 U.S. Dist. LEXIS 14884, at *10 (S.D.N.Y. Jan. 30, 2019). The Second Circuit has noted that the purpose of these various sets of factors is to “ensure that the economic realities test mandated by the Supreme Court is sufficiently comprehensive and flexible to give proper effect to the broad language of the FLSA.” Barfield, 537 F.3d at 143. Thus, satisfaction of the more narrow “formal control” factors “is sufficient, but not necessary” to establish employer status. Coley v. Vannguard Urban Improvement Ass'n, No. 12-CV-5565 (PKC) (RER), 2018 U.S. Dist. LEXIS 54609, at *11 (E.D.N.Y. Mar. 29, 2018) (citing Zheng v. Liberty Apparel Co., 355 F.3d 61, 71 (2d Cir. 2003); see also Greenwalt v. AT&T Mobility LLC, 642 Fed.Appx. 36, 37 (2d Cir. 2016) (“satisfying [the formal control] test is sufficient, but not necessary, to show joint employment.”).

         The “formal control” factors include: “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.” Carter v. Dutchess Cmty. Coll., 735 F.2d 8, 12 (2d Cir. 1984) (citation omitted). Here, Plaintiff's allegations closely track the “formal control” factors. Plaintiff avers that Individual Defendants “had the power to hire and fire me, control my terms and conditions of employment, and determine the rate and method of my compensation.” Baizan Decl. ¶ 5; see also Compl. ¶ 30. Moreover, Plaintiff alleges that Individual Defendants established employee schedules and maintained employee records. Compl. ¶¶ 21-22. Therefore, Plaintiff's allegations are sufficient to establish that Individual Defendants were his “employers” within the meaning of the FLSA. See Thompson v. Hyun Suk Park, No. 18-CV-6 (AMD) (ST), 2019 U.S. Dist. LEXIS 36111, at *8 (E.D.N.Y. Mar. 5, 2019) (citations omitted) (tracking the “formal control” factors “has been repeatedly found sufficient to establish [employer status] at the default judgment stage”), adopted by, 2019 U.S. Dist. LEXIS 47176 (E.D.N.Y. Mar. 20, 2019); see also Kliger v. Liberty Saverite Supermarket Inc., No. 17-CV-2520 (FB) (ST), 2018 U.S. Dist. LEXIS 159450, at *9-10 (E.D.N.Y. Sept. 17, 2018) (individual defendant constituted employer where plaintiff alleged that he had sole power to hire and fire employees, control their schedule and pay, and maintain employment records) (citing Chuchuca v. Creative Customs Cabinets Inc., No. 13-CV-2506 (RLM), 2014 U.S. Dist. LEXIS 164846, at *19-20 (E.D.N.Y. Nov. 25, 2014)), adopted by, 2018 U.S. Dist. LEXIS 171180 (E.D.N.Y. Oct. 3, 2018).

         Further, Plaintiff's allegations suffice to conclude that Individual Defendants employed Plaintiff jointly with Corporate Defendants. Plaintiff alleges that “Defendants are associated and joint employers, act in the interest of each other with respect to employees, pay employees by the same method, and share control over the employees” (Compl. ¶ 25); that each Defendant “possessed substantial control over Plaintiff['s] . . . working conditions, and over the policies and practices with respect to the employment and compensation of Plaintiff” (id. ¶ 26); and that Defendants had the power to hire and fire Plaintiff, control the terms of his employment, and determine the rate and method of his compensation (id. ¶ 30). Thus, the allegations in the Complaint-deemed admitted by Defendants' default-are sufficient for this Court to conclude that Defendants jointly employed Plaintiff and that this employment fell under the FLSA's protections. See, e.g., Peralta v. M & O Iron Works, Inc., No. 12-CV-3179 (ARR) (RLM), 2014 U.S. Dist. LEXIS 34592, at *14 (E.D.N.Y. Feb. 19, 2014) (defendants constituted joint employers where they shared similar control over plaintiff's employment conditions), adopted by, 2014 U.S. Dist. LEXIS 32612 (E.D.N.Y. Mar. 11, 2014).

         ii. Enterprise or Individual Coverage

         Under the FLSA, individual coverage applies where any individual employee is “engaged in commerce or in the production of goods for commerce, ” irrespective of his employer's “enterprise” status. Jacobs, 577 F.3d at 96 (quoting 29 U.S.C. § 207(a)(1)). Alternatively, any “enterprise engaged in commerce or in the production of goods for commerce” is subject to the FLSA under enterprise coverage. 29 U.S.C. §§ 203(s)(1); 207(a)(1); Jacobs, 577 F.3d at 96. Enterprise coverage applies when an enterprise:

(1) ‘has employees engaged in commerce or in the production of goods for commerce,' or ‘has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person,' and (2) has annual gross volume of sales made or business done of not less than $500, 000.

Galicia v. 63-68 Diner Corp., No. 13-CV-3689 (PKC), 2015 U.S. Dist. LEXIS 40599, at *5 (E.D.N.Y. Mar. 30, 2015) (quoting 29 ...


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