Opinion
22 Civ. 03034 (PAE) (GWG)
11-16-2022
ROSALBA ESPINAL and JUAN RIVERA, individually and on behalf of all others similarly situated, Plaintiffs, v. SEPHORA USA, INC., Defendant.
REPORT & RECOMMENDATION
GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE
Plaintiffs Rosalba Espinal and Juan Rivera, individually and on behalf of all others similarly situated (“plaintiffs”), brought suit against defendant Sephora, USA, Inc. (“Sephora”), alleging violations of the New York Labor Law, Article 6, §§ 190 et seq. (“NYLL”). See Complaint, filed April 12, 2022 (Docket # 1); First Amended Complaint, filed July 26, 2022 (Docket # 18) (“Compl.”). Sephora has moved to dismiss the complaint.For the following reasons, Sephora's motion should be denied.
See Motion to Dismiss the First Amended Complaint, filed Aug. 25, 2022 (Docket # 19); Memorandum of Law in Support of the Motion to Dismiss, filed Aug. 25, 2022 (Docket # 20) (“Def. Mem.”); Memorandum of Law in Opposition, filed Sept. 26, 2022 (Docket # 23) (Pl. Opp.”); Declaration of Yitzchak Kopel in Opposition, filed Sept. 26, 2022 (Docket # 24) (“Kopel Decl.”); Reply Memorandum, filed Oct. 17, 2022 (Docket # 28) (“Def. Reply”); Notice of Supplemental Authority, filed Oct. 6, 2022 (Docket # 27); Notice of Supplemental Authority, filed Oct. 31, 2022 (Docket # 29); Notice of Supplemental Authority, filed Nov. 11, 2022 (Docket # 30); Response to Plaintiff's Notice of Supplemental Authority, filed Nov. 9, 2022 (Docket # 31).
I. BACKGROUND
A. Facts
According to the complaint, Sephora operates multiple stores in New York State. Compl. ¶ 10. Espinal worked at one such store, located at 750 Lexington Ave., New York, New York, from January 2020 to March 2021, as a “Beauty Advisor.” Id. ¶ 11. Her duties included tasks she characterizes as involving “manual labor,” such as “stocking products on shelves, assisting customers on the sales floor, tending the cash register, cleaning, and applying makeup to customers.” Id. Rivera worked in a Sephora store located at Times Square, New York, as an “Operations Associate” from November 2017 to July 2021. Id. at ¶ 12. He too characterizes his work as involving manual labor, including “receiving and removing shipments from pallets, unwrapping product shipments, organizing and processing shipments, carrying boxes of product back and forth between the stockroom and the sales floor, assembling product displays, and cleaning the store.” Id. While New York law requires manual workers to be paid on a weekly basis, NYLL § 191(1)(a), Sephora paid the plaintiffs on a biweekly basis. Id. at ¶¶ 11-12. Both plaintiffs allege that this meant they were “temporarily deprived of money owed to” them and that they “could not invest, earn interest on, or otherwise use these monies that were rightfully” theirs, meaning they “lost the time value of that money.” Id.
Sephora seeks dismissal of the suit on the ground that plaintiffs lack Article III standing, and thus the Court lacks subject matter jurisdiction, because plaintiffs fail to allege that they suffered an actual injury. Def. Mem. at 6-10. Sephora also argues that NYLL §191(1)(a) cannot be enforced through a lawsuit by a private party. Id. at 10-13.
II. LEGAL STANDARD
“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994). A case must be dismissed for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) “when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (citing Fed.R.Civ.P. 12(b)(1)). The plaintiff carries “the burden of proving by a preponderance of the evidence that [subject matter jurisdiction] exists.” Id. When deciding a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction based exclusively on the face of the complaint, “the district court must take all uncontroverted facts in the complaint (or petition) as true, and draw all reasonable inferences in favor of the party asserting jurisdiction.” Tandon v. Captain's Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014) (citation omitted). If the parties dispute jurisdictional facts, “the court has the power and obligation to decide issues of fact by reference to evidence outside the pleadings, such as affidavits.” APWU v. Potter, 343 F.3d 619, 627 (2d Cir. 2003) (punctuation omitted) (quoting LeBlanc v. Cleveland, 198 F.3d 353, 356 (2d Cir. 1999)).
“Where, as here, the defendant moves for dismissal under Rule 12(b)(1), as well as on other grounds, the court should consider the Rule 12(b)(1) challenge first since if it must dismiss the complaint for lack of subject matter jurisdiction, the accompanying defenses and objections become moot and do not need to be determined.” Rhulen Agency, Inc. v. Alabama Ins. Guar. Ass'n, 896 F.2d 674, 678 (2d Cir. 1990) (citation and punctuation omitted).
A party may move to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) when the opposing party's complaint “fail[s] to state a claim upon which relief can be granted.” While a court must accept as true all of the factual allegations contained in a complaint, that principle does not apply to legal conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (“[A] plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”) (punctuation omitted). In other words, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice,” Iqbal, 556 U.S. at 678, and a court's first task is to disregard any conclusory statements in a complaint, id. at 679.
Next, a court must determine if the complaint contains “sufficient factual matter” which, if accepted as true, states a claim that is “plausible on its face.” Id. at 678 (punctuation omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (punctuation omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct,” a complaint is insufficient under Fed.R.Civ.P. 8(a) because it has merely “alleged” but not “‘show[n]' . . . that the pleader is entitled to relief.” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).
III. DISCUSSION
A. Subject Matter Jurisdiction
Sephora maintains that the Court must dismiss the complaint for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) because plaintiffs “have not alleged an actual injury that could be remedied by the Court,” and thus they “lack standing to bring this lawsuit.” Def. Mem. at 7.
“Article III of the Constitution grants the Judicial Branch authority to adjudicate ‘Cases' and ‘Controversies.'” Already, LLC v. Nike, Inc., 568 U.S. 85, 90 (2013). To establish Article III standing, and thus to establish subject matter jurisdiction, “a plaintiff must show (1) an injury in fact, (2) a sufficient causal connection between the injury and the conduct complained of, and (3) a likelihood that the injury will be redressed by a favorable decision.” Susan B. Anthony List v. Driehaus, 573 U.S. 149, 157-58 (2014) (punctuation omitted). “The ‘case or controversy' requirement is not satisfied by a ‘difference or dispute of a hypothetical or abstract character.'” Nike, Inc. v. Already, LLC, 663 F.3d 89, 94 (2d Cir. 2011) (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937)), aff'd, 568 U.S. 85 (2013). Plaintiffs, “as the party invoking federal jurisdiction, bear[] the burden of establishing these elements.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016).
Of the three standing requirements, Sephora argues that plaintiffs' claim fails the first element: that is, that they did not suffer “any actual injury” when Sephora paid their wages on a biweekly rather than on a weekly basis. See Def. Mem. at 7.
“[T]he injury-in-fact requirement . . . helps to ensure that the plaintiff has a personal stake in the outcome of the controversy.” Susan B. Anthony List, 573 U.S. at 158 (punctuation omitted). “To demonstrate injury in fact, a plaintiff must show the invasion of a [1] legally protected interest that is [2] concrete and [3] particularized and [4] actual or imminent, not conjectural or hypothetical.” Strubel v. Comenity Bank, 842 F.3d 181, 188 (2d Cir. 2016) (punctuation omitted). “[I]n suits for damages plaintiffs cannot establish Article III standing by relying entirely on a statutory violation or risk of future harm.” Maddox v. Bank of N.Y. Mellon Tr. Co., 19 F.4th 58, 64 (2d Cir. 2021); see TransUnion LLC v. Ramirez, 141 S.Ct. 2190, 2205 (2021) (“an important difference exists between (i) a plaintiff's statutory cause of action to sue a defendant over the defendant's violation of federal law, and (ii) a plaintiff's suffering concrete harm because of the defendant's violation of federal law.”). “[H]istory and tradition offer a meaningful guide to the types of cases that Article III empowers federal courts to consider.” Sprint Commc'ns Co. v. APCC Servs., Inc., 554 U.S. 269, 274 (2008). Accordingly, “courts should assess whether the alleged injury to the plaintiff has a ‘close relationship' to a harm ‘traditionally' recognized as providing a basis for a lawsuit in American courts.” TransUnion LLC, 141 S.Ct. at 2204.
The amended complaint alleges that Sephora, by paying plaintiffs biweekly rather than weekly, effectively denied them the timely payment of their wages every other week. See Compl. ¶¶ 11-12. Plaintiffs allege that they “lost the time value of [their] money” because they “could not invest, earn interest on, or otherwise use these monies that were rightfully” theirs for each of these weeks without timely pay. Id. In Sephora's view, these allegations are insufficient to satisfy the standing requirement because they do not show the late payments amounted to “any economic loss.” Def. Mem. at 7.
Courts have commonly held that the “temporary deprivation of money to which a plaintiff has a right constitutes a sufficient injury in fact to establish Article III standing.” Porsch v. LLR, Inc., 380 F.Supp.3d 418, 424 (S.D.N.Y. 2019); accord Van v. LLR, Inc., 962 F.3d 1160, 1161 (9th Cir. 2020) (“the temporary deprivation of money gives rise to an injury in fact for purposes of Article III standing”); MSPA Claims 1, LLC v. Tenet Fla., Inc., 918 F.3d 1312, 1318 (11th Cir. 2019) (“The inability to have and use money to which a party is entitled is a concrete injury.”); Dieffenbach v. Barnes & Noble, Inc., 887 F.3d 826, 828 (7th Cir. 2018) (“The plaintiffs have standing . . . because unauthorized withdrawals from their accounts cause a loss (the time value of money) even when banks later restore the principal”). This reasoning has led courts to hold that “the late payment of wages can constitute a concrete harm sufficient to confer standing on a plaintiff who seeks relief under Sections 191 and 198 of the NYLL.” Rosario v. Icon Burger Acquisition LLC, 2022 WL 198503, at *3 (E.D.N.Y. Jan. 21, 2022); accord Levy v. Endeavor Air Inc., 2022 WL 16645829, at * 3 (E.D.N.Y. Nov. 1, 2022); Elhassa v. Hallmark Aviation Servs., L.P., 2022 WL 563264, at *2 (S.D.N.Y. Feb. 24, 2022); Caul v. Petco Animal Supplies, Inc., 2021 WL 4407856, at *4 (E.D.N.Y. Sept. 27, 2021). As Levy pointed out, “the loss of the time value of the money owed to plaintiff is not a harm that might occur, but one that has occurred; it is not a harm that might materialize, but one that has materialized.” 2022 WL 16645829 at *4 (emphasis in original). This Court agrees. While the harm plaintiffs suffered may be difficult to measure or approximate, the harm is real, not hypothetical.
In any event, plaintiffs need not describe the particularity of their alleged injury at length at the pleading stage, because “general factual allegations of injury resulting from the defendant's conduct may suffice.'” Lujan, 504 U.S. at 561; accord Whole Foods, 858 F.3d at 736; see also Gillett v. Zara USA, Inc., 2022 WL 3285275, at *7 (S.D.N.Y. Aug. 10, 2022) (“This Court does not read TransUnion or any other binding precedent to require a plaintiff to specify how he intended to take advantage of the time value of his wages if they had not been improperly withheld for a period of time.”).
Thus, although plaintiffs have not identified specific interest-bearing accounts in which they would have invested their weekly earnings or articulated specific purchases they would have made rather than foregone had their pay been timely, at this stage it is enough that plaintiffs have pled injury through the allegation that they were denied the ability to “invest, earn interest on, otherwise use” the money from the wages they were owed. Compl. ¶¶ 11-12. Courts have declined to dismiss a § 191 claim based on standing at the pleading stage “[e]ven if Plaintiff's allegations currently are on the light side and do not contain detail on how the late payment specifically harmed her.” Elhassa, 2022 WL 563264, at *2.
That being said, we recognize that the extent of plaintiffs' injury may ultimately be difficult to prove. Thus, while we conclude that they have pled injury sufficient to give rise to standing to bring their claim, we emphasize that we do not necessarily conclude that they will ultimately be able to prove damages resulting from any failure to receive timely wage payments (whether considered singly or cumulatively). Certainly, we reject the proposition that the injury to plaintiffs from a one-week late payment is the full amount of the salary that was paid late. This is because standing is dependent on the “actual harm” the plaintiff suffered, see e.g., Escobar v. Midland Credit Mgt., 2019 WL 3751486, at *3 (D. Conn. Aug. 8, 2019), and where wages are ultimately paid in full - even if a week late - the harm to the plaintiff is not the full amount of the wage that was paid late, but rather whatever loss specifically resulted to plaintiff from the delay in payment. In sum, all that we have determined as a result of this standing analysis is that plaintiffs have pled that they suffered some concrete and particularized injury, even the injury is later found to be minimal.
B. Whether Plaintiffs Have a Cause of Action For Violations of NYLL § 191(1)(a)
Sephora argues (1) that the New York Labor Law does not expressly provide a private right of action for violations of NYLL § 191, and (2) that courts may not imply a private right of action. See Def. Mem. at 10-13.
The Second Circuit has held as follows on how federal courts should decide issues of state law:
When deciding a question of state law, we . . . look to the state's decisional law, as well as to its constitution and statutes.... Where state law is unsettled, we are obligated to carefully . . . predict how the state's highest court would resolve the uncertainty or ambiguity.... Absent a clear directive from a state's highest court, federal authorities must apply what they find to be the state law after giving proper regard to relevant rulings of other courts of the State.Chufen Chen v. Dunkin' Brands, Inc., 954 F.3d 492, 497 (2d Cir. 2020) (punctuation omitted); accord Phansalkar v. Andersen Weinroth & Co., 344 F.3d 184, 199 (2d Cir. 2003) (“Where the substantive law of the forum state is uncertain or ambiguous, the job of the federal courts is carefully to predict how the highest court of the forum state would resolve the uncertainty or ambiguity.” (punctuation omitted)).
We address each of Sephora's arguments as to whether there is a private right of action next.
1. Express Right of Action
§ 191(1) of the New York Labor Law provides that “[e]very employer shall pay wages in accordance with the following provisions.” One of the provisions is entitled “Manual worker” and provides in pertinent part that “[a] manual worker shall be paid weekly and not later than seven calendar days after the end of the week in which the wages are earned.” § 191(1)(a)(i). The statute does not contain any text providing for a private right of action, but plaintiffs do not rely on § 191 for this purpose.
Instead, plaintiffs rely on § 198(1-a) of the New York Labor Law, which provides in relevant part:
In any action instituted in the courts upon a wage claim by an employee or the commissioner in which the employee prevails, the court shall allow such employee to recover the full amount of any underpayment, all reasonable attorney's fees, prejudgment interest as required under the civil practice law and rules, and, unless the employer proves a good faith basis to believe that its underpayment of wages was in compliance with the law, an additional amount as liquidated damages equal to one hundred percent of the total amount of the wages found to be due, except such liquidated damages may be up to three hundred percent of the total amount of the wages found to be due for a willful violation of section one hundred ninety-four of this article.In Vega v. CM & Assocs. Constr. Mgmt., LLC, 175 A.D.3d 1144 (1st Dep't 2019), the First Department held that NYLL §198(1-a) provides an express private right of action to enforce the weekly wage requirement because the term “underpayment” in the statute encompasses the late payment of wages. See id. at 1145-46. Vega reasoned that the word “underpay” means “to pay less than what is normal or required” and that “[t]he moment that an employer fails to pay wages in compliance with section 191(1)(a), the employer pays less than what is required.” 175 A.D.2d at 1145.
The Court accepts that the term “underpayment” might in some circumstances encompass a nonpayment. But here, the complaint does not allege a nonpayment - that is, a claim that wages were never paid. Rather, the complaint alleges that all wages have been paid in full, albeit late. The term “underpayment” in common usage does not easily embrace the notion of a late payment of a properly paid wage. We thus doubt that a worker who was fully paid her wages, even if late, may later claim to have received an “underpayment” of those wages. The complaint is devoid of any allegation that there was a single period of work that was not ultimately compensated within one week of its due date. While Vega suggests that any claim that a wage was paid late must be asserted via an “affirmative defense,” 175 A.D.3d at 1145, we do not find that reasoning persuasive. There is no need to assert an affirmative defense of payment where the complaint itself concedes that full payment was actually made. Here, plaintiffs do not allege that a single penny of wages due to them went unpaid, and thus there is no underpayment. Indeed, they allege the opposite: namely, that the allegedly required salary payments were actually fully paid, but that some payments were not timely.
Nonetheless, we do not address this issue in a vacuum. “Although we are not strictly bound by state intermediate appellate courts, rulings from such courts are a basis for ‘ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.'” DiBella v. Hopkins, 403 F.3d 102, 112 (2d Cir. 2005) (quoting West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237 (1940)). Here, the First Department in Vega interpreted NYLL § 198(1-a) to “expressly provide[] a private right of action for a violation of Labor Law § 191.” 175 A.D.3d at 1146.
While we would likely not reach this conclusion ourselves if the issue were presented afresh, for reasons explained further below, we feel bound to follow Vega's holding on this point.
2. Implied Private Right of Action
Vega found that even if there were no express right of action, NYLL also contains an implied right of action for manual workers to enforce the weekly pay requirement. See 175 A.D.3d at 1146. Vega seems to suggest that the implied action is brought under § 191, though it also refers to the action somehow being implied under § 198 as well. Id.
With respect to an implied cause of action under § 191, Vega found that such an action was available. See 175 A.D.3d at 1146. Sephora asks this Court to reject that finding and examine the factors New York law provides for determining whether a private right of action exists absent express statutory authorization. See Def. Mem. at 12-13.
New York courts find private rights of action through implication using a three-factor test:
In New York, where a statute does not make express provision for a private remedy, such a remedy may be had “only if a legislative intent to create such a right of action is ‘fairly implied' in the statutory provisions and their legislative history” (Brian Hoxie's Painting Co. v. Cato-Meridian Cent. School Dist., 76 N.Y.2d 207, 211, 557 N.Y.S.2d 280, 556 N.E.2d 1087 [1990]). To evaluate whether the legislative intent favors such implied private rights of action, we have identified three relevant factors: “(1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme” (Sheehy v. Big Flats Community Day, Inc., 73 N.Y.2d 629, 633, 543 N.Y.S.2d 18, 541 N.E.2d 18 [1989], citing CPC Intl. Inc v. McKesson Corp., 70 N.Y.2d 268, 276-277, 519 N.Y.S.2d 804, 514 N.E.2d 116 [1987], and Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 329-331, 464 N.Y.S.2d 712, 451 N.E.2d 459 [1983]). “Critically, all three factors must be satisfied before an implied private right of action will be recognized” (Haar v. Nationwide Mut. Fire Ins. Co., 34 N.Y.3d 224, 229, 115 N.Y.S.3d 197, 138 N.E.3d 1080 [2019]).Ortiz v. Ciox Health LLC, 37 N.Y.3d 353, 360 (2021).
As to the first point, Sephora argues that plaintiffs are “not the type of menial laborers the statute was designed to protect,” and that § 191 addresses concerns over “securing prompt payment of wages for laborers and mechanics dependent upon their weekly earnings.” Def. Mem. at 12. It is unclear what Sephora means by this argument. To the extent Sephora is arguing that the plaintiffs are not in fact “manual workers” within the meaning of § 191, the argument is rejected because Sephora's brief provides literally no argument as to why the allegations in the complaint would not be sufficient to show that plaintiffs fit within this category. To the extent Sephora concedes for purposes of this motion that plaintiffs are properly classified as “manual workers” but argues that the statute was enacted only for the benefit of a subset of those workers who are “menial laborers,” or “mechanics,” this argument too is rejected since the statute makes no distinction in the types of manual workers who were to benefit from weekly pay. We thus conclude that the plaintiffs are within the class § 191 sought to benefit.
The second factor requires “an analysis of what the Legislature was seeking to accomplish when it enacted the statute and a determination of whether a private right of action would promote that objective.” Konkur v. Utica Acad. of Sci. Charter Sch., 38 N.Y.3d 38, 41 (2022) (quotations omitted). This factor looks to “what indications there are in the statute or its legislative history of an intent to create (or conversely to deny) such a remedy.” Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 325 (1983). It appears that the earliest iteration of the NYLL regarding wage timing requirements provided that only the state (not individuals) could enforce the statute or seek penalties. See 1897 N.Y. Laws ch. 415 §§ 1011. The 1966 revision of state labor law moved the weekly wage requirement to a new section, § 191, which was separate from the section containing a private right of action for “underpayment” of wage claims, § 198. See 1966 N.Y. Laws ch. 548 §§ 191, 198. In our view, the deliberate separation of the statutes governing “underpayment” of wages (which we have suggested does not include late payments) and the requirement regarding frequency of payment suggests that the Legislature intended to treat the two types of claims differently. It appears also that the state legislature did not appear to be trying to create a new private cause of action for frequency of payment claims in its re-arranging of these sections. Thus, there is no evidence that the New York legislature was attempting to create a remedy in § 191. On the other hand, while we have already found that § 198 was not explicitly written to encompass a late payment of wage claim, it is not so clear that there was an intention to deny manual workers the right to enforce § 191 through some means, even if that means was not the means provided in § 198. In the end, we view the intentions of the legislature to be unclear.
The Court of Appeals considers the third factor - compatibility with the legislative scheme - as the “most critical.” Carrier v. Salvation Army, 88 N.Y.2d 298, 302 (1996). A key consideration is whether the legislature “specifically considered and expressly provided for enforcement mechanisms” in the statute at issue. Cruz v. TD Bank, N.A., 22 N.Y.3d 61, 71, (2013) (citation omitted). The Court of Appeals has declined to recognize a private right of action in cases “where the statutes in question already contained substantial enforcement mechanisms, indicating that the legislature considered how best to effectuate its intent and provided the avenues for relief it deemed warranted.” Id. While Sephora points to the Department of Labor's general powers to enforce the labor laws and pay frequency violations, Def. Mem. at 13, there is no indication that the Legislature specifically considered the Department of Labor's role in taking enforcement action against frequency of payment violators. On the other hand, New York case law appears to recognize that the availability of general enforcement mechanisms may counsel against finding a private right of action. See Ortiz, 37 N.Y.3d at 359-60 (finding an implied private right of action was inconsistent with a law that already provides for “overarching enforcement mechanisms” including civil penalties sought by the state, injunctive relief by the New York attorney general, and C.P.L.R. Article 78 proceedings); Sheehy, 73 N.Y.2d at 635 (no implied private action where the statute provides for criminal penalties, a separate law articulating civil damages, and specifically limited private actions); CPC Int'l Inc., 70 N.Y.2d at 276-277 (no implied cause of action under state securities law because, among other things, the purpose of the statute at issue “was to create a statutory mechanism” where the state attorney general has regulatory and enforcement powers, so a private right of action would not be consistent “with this enforcement mechanism”).
While the analysis of these factors likely shies away from creating a remedy under § 191, once again, however, we do not write on a clean slate with respect to these issues (as described in the next section). We note, however, that even if a cause of action was implied under § 191, it would not provide for any of the remedies listed in § 198 (such as liquidated damages and attorneys' fees) and demanded in plaintiffs' complaint. See Compl. ¶ 23. Instead, the cause of action would be under § 191 itself.
While, as noted, Vega could be construed as referring to the possibility of an implied cause of action under § 198, we do not understand how there could be an “implied” cause of action under that provision, given that § 198 is a statute providing for an express cause of action.
3. Obligation to Follow Vega
“Although we are not strictly bound by state intermediate appellate courts, rulings from such courts are a basis for ‘ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.'” DiBella, 403 F.3d at 112 (quoting West, 311 U.S. at 237). Here, the Appellate Division in Vega interpreted NYLL § 198(1-a) to “expressly provide[] a private right of action for a violation of Labor Law § 191.” 175 A.D.3d at 1146. Vega further held that, if NYLL did not supply an express private right of action, the court would imply one. Id.
In addition to the five justices sitting on the First Department panel, three justices sitting on a panel of the Appellate Term in the Second Department followed Vega. See Phillips v. Max Finkelstein, Inc., 73 Misc.3d. 1 (App. Term. 2021). Phillips, however, indicated that it was “bound by principles of stare decisis to follow precedents set by the Appellate Division of another department until the Court of Appeals or the Appellate Division, Second Department, pronounces a contrary rule,” and thus concluded that Vega “is controlling on the issue of whether plaintiff stated a cause of action for damages, pursuant to Labor Law §§ 191(1)(a) and 198(1-a).” Id. at 752.
While we find Sephora's arguments against finding a private right of action - whether express or implied - to be cogent, our doubts about the correctness of the holding in Vega do not constitute sufficiently “persuasive data” to cause us to believe that the New York Court of Appeals would reject Vega's conclusions. If the questions raised had clear cut or obvious answers, we would not hesitate to find that our own reasoning provided the “persuasive data” needed to ignore Vega's definitive ruling. But the answers are not clear cut or obvious, and this uncertainty causes us to defer to the holding in Vega. See Harris v Old. Navy, LLC, 2022 WL 16941712 (S.D.N.Y. Nov. 15, 2022) (opinion of this Court criticizing Vega but concluding that its holding should be followed).
We are not alone in reaching this outcome. “Since Vega, every court in this Circuit to consider that decision appears to have followed its construction of the New York Labor Law.” Rodrigue v. Lowe's Home Centers, LLC, 2021 WL 3848268, at *5 (E.D.N.Y. Aug. 27, 2021). Examples of such cases - most of which cite many other cases - are legion. See, e.g., Levy, 2022 WL 16645829, at *5 (E.D.N.Y. Nov. 1, 2022); Gillett, 2022 WL 3285275, at *11-12; Katz v. Equinox Holdings, Inc., 2022 WL 1292262, at *5 (S.D.N.Y. Apr. 29, 2022); Mabe v. Wal-Mart Assocs., Inc., 2022 WL 874311, at *8 (N.D.N.Y. Mar. 24, 2022); Carrera v. DT Hosp. Grp., 2021 WL 6298656, at *10 (S.D.N.Y. Nov. 1, 2021), adopted, 2021 WL 6298654 (S.D.N.Y. Dec. 7, 2021); Sorto v. Diversified Maint. Sys., LLC, 2020 WL 7693108, at *2-3 (E.D.N.Y. Dec. 28, 2020); Duverny v. Hercules Med. P.C., 2020 WL 1033048, at *5 (S.D.N.Y. Mar. 3, 2020).
One postVega federal court decision reached the opposite result, see Arciello v. Cnty. of Nassau, 2019 WL 4575145, at *8-9 (E.D.N.Y. Sept. 20, 2019). However, Arciello was issued only ten days after Vega, and there is no indication that the Arciello court was aware of that ruling.
Sephora argues that the Court of Appeals' decision in Konkur, 38 N.Y.3d 38, provides reason to doubt the holding in Vega. See Def. Mem. at 12; Def. Reply at 9. Konkur held that a private right of action was unavailable for NYLL § 198-b, which prohibits wage kickbacks. See 38 N.Y.3d at 39. After concluding that the statute did not provide for an express private right of action, see id. at 40, the Court considered whether “a legislative intent to create such a right of action is fairly implied in the statutory provisions and their legislative history,” id. at 40-41 (punctuation omitted). Because the legislature had considered enforcement mechanisms and expressly provided for an “already comprehensive [enforcement] scheme,” the Court declined “to find another enforcement mechanism.” Id. at 42-43.
Although the reasoning of Konkur does echo issues raised here, we cannot say that it provides the level of “persuasive data” that we need to conclude that the Court of Appeals would reject the result in Vega. DiBella, 403 F.3d at 112. Most importantly, Vega held that the NYLL expressly provided for a private right of action to enforce NYLL § 191(1)(a) in § 198(1-a), which contemplates an “action instituted in the courts upon a wage claim by an employee.” See 175 A.D.3d at 1146. Nothing in Konkur undermines this statutory interpretation, because Konkur addresses an implied cause of action. Konkur also dealt with a different and unrelated statute. Other federal courts have specifically rejected the argument that Konkur undermines the holding in Vega. See Mabe, 2022 WL 874311, at *7 (“[T]he Court does not read Konkur as establishing that the New York Court of Appeals would reject the conclusions reached in Vega.”); Elhassa, 2022 WL 563264, at *2 (S.D.N.Y. Feb. 24, 2022) (noting that Konkur was not inconsistent with Vega's holding that the NYLL expressly permitted private rights of action for § 191(1)(a)).
In sum, the First Department's decision in Vega provides a definitive ruling on the question of whether a private right of action is available under NYLL § 191(1)(a). While we are not bound by Vega inasmuch as it comes from an intermediate appellate state court, we cannot say that Sephora's arguments overcome the presumption requiring us to acquiesce in Vega's result.
IV. CONCLUSION
For the foregoing reasons, Sephora's motion to dismiss (Docket # 19) should be denied.
PROCEDURE FOR FILING OBJECTIONS TO THIS 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 have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file any objections. See also Fed.R.Civ.P. 6(a), (b), (d). A party may respond to any objections within 14 days after being served. Any objections and responses shall be filed with the Clerk of the Court. Any request for an extension of time to file objections or responses must be directed to Judge Engelmayer. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).