Opinion
Civil Action 20 Civ. 9375 (GBD) (SLC)
12-14-2023
DANIEL ZAK, Plaintiff, v. FIVE TIER, INC., Defendant.
HONORABLE GEORGE B. DANIELS, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION
SARAH L. CAVE, UNITED STATES MAGISTRATE JUDGE
I. INTRODUCTION
In this action under the Fair Labor Standards Act, 29 U.S.C. §§ 207, et seq. and the New York Labor Law (“NYLL”), Plaintiff Daniel Zak (“Zak”) seeks to recover unpaid wages and related relief from Defendant Five Tier, Inc. (“Five Tier”). (ECF No. 1 (the “Complaint”)). Zak alleges that, during his employment at Five Tier from December 29, 2017 to November 2018, Five Tier misclassified him as an independent contractor, and from July 2019 until September 17, 2019, underpaid him for his hours worked. (Id. ¶¶ 16-55, 63-72). After Five Tier defaulted, the Honorable George B. Daniels granted Zak's motion for default judgment and referred the action to the undersigned for an inquest on damages. (ECF Nos. 48; 62; 63). For the reasons set forth below, I respectfully recommend that Zak be awarded (1) unpaid wages under the NYLL in the amount of $15,750.00; (2) liquidated damages in the amount of $15,750.00; (3) prejudgment interest at a rate of nine percent on the amount of $15,750.00 calculated from August 17, 2019 until the date of entry of judgment; (4) postjudgment interest pursuant to 28 U.S.C. § 1961; (5) attorneys' fees in the amount of $28,511.30; and (6) costs in the amount of $889.53.
II. BACKGROUND
A. Factual Background
Unless otherwise indicated, the facts are taken from Zak's Declaration (ECF No. 68), the Declaration of Yuting Li (“Li”) and exhibits thereto (ECF No. 67 - 67-5), the Declaration of Daniel Grace (“Grace”) (ECF No. 69), the Declaration of Douglas Mace (“Mace”) (ECF No. 70), and Proposed Findings of Fact and Conclusions of Law (ECF No. 72 (collectively, the “Damages Submission”)), as well as the Complaint (ECF No. 1) and the First Amended Complaint (“FAC”) (ECF No. 39). Given Five Tier's default, the Court accepts as true all well-pleaded factual allegations in the Complaint, except as to damages. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“[i]t is an ‘ancient common law axiom' that a defendant who defaults thereby admits all ‘well-pleaded' factual allegations contained in the complaint”) (quoting Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004)); Alm v. Spence, No. 19 Civ. 4005 (GBD) (RWL), 2023 WL 3967790, at *2 (S.D.N.Y. June 13, 2023).
Unless otherwise indicated, all internal citations and quotation marks are omitted from case citations.
Zak first began working at Five Tier on December 29, 2017, pursuant to a written Independent Contractor Agreement (the “ICA”), which Frank O'Brien signed as Chief Executive Officer of Five Tier. (ECF Nos. 39 ¶ 25; 39-1; 68 ¶¶ 3, 6-7). The ICA provided that Zak was “an Independent Contractor and shall not be considered for any purpose to be an employee of” Five Tier. (ECF No. 39-1 at 4 ¶ 4). Zak's responsibilities at Five Tier included software development and web application development, and he reported directly to O'Brien. (ECF Nos. 39 ¶ 41; 68 ¶¶ 3-5). From December 29, 2017 until February 2018, Zak was paid $1,000.00 per week, and from March 2018 until November 2018, he was paid at a salary of $90,000.00 per year. (ECF No. 68 ¶ 10). In November 2018, Zak left Five Tier after O'Brien told him there was no longer work for him. (ECF Nos. 39 ¶ 27; 68 ¶ 9).
In March 2019, O'Brien induced Zak to leave his position with another employer and return to full time employment at Five Tier at an hourly rate of $50.00, with a promise to discuss a higher rate “in the near future.” (ECF No. 68 ¶¶ 11-12; see ECF No. 39 ¶¶ 29-30). In April 2019, O'Brien told Zak that his hourly rate “needed to be temporarily changed” to $375.00 paid bi-weekly, with no changes to his duties or schedule. (ECF Nos. 39 ¶ 33-35; 68 ¶¶ 13-16). Zak worked at least eight hours per day, five days per week, and reported to O'Brien, who provided Zak with instructions and work arrangements. (ECF Nos. 39 ¶¶ 32, 37, 39; 68 ¶¶ 15, 19-21). Zak's services constituted an integral part of Five Tier's business. (ECF Nos. 39 ¶ 40; 68 ¶ 22). Five Tier reimbursed Zak for approved business expenses and costs. (ECF Nos. 39 ¶ 42; 68 ¶ 23). Five Tier required Zak to adhere to its dress code and other policies, provided him with an email account, and encouraged him to attend office meetings and social gatherings. (ECF Nos. 39 ¶¶ 52-53, 56-57; 68 ¶¶ 25-27). At no point did Zak receive employee benefits such as holidays, a retirement plan, tax withholding, or health insurance. (ECF Nos. 39 ¶ 24; 68 ¶ 24).
Beginning in July 2019, Five Tier refused to pay Zak for the entirety of his services. (ECF Nos. 39 ¶ 69; 68 ¶ 28). Although he submitted invoices to O'Brien and requested payment, Five Tier did not pay Zak wages for the period from July 16, 2019 to September 17, 2019, a total of 42 days of work. (ECF No. 68 ¶ 29). Although, during this period, he took three days off during this period with O'Brien's approval and one day was a federal holiday, Zak claims he was entitled to payment for 46 days of work because he was a full-time employee. (Id. ¶ 31). On September 17, 2019, Zak informed O'Brien that he was resigning due to Five Tier's failure to pay him. (ECF Nos. 39 ¶ 73; 68 ¶ 33).
B. Procedural Background
On November 9, 2020, Zak filed the Complaint, asserting claims for improper classification under the FLSA and NYLL, breach of contract, unjust enrichment, promissory estoppel, and unpaid wages under the NYLL. (ECF No. 1). Zak's first three attempts to serve Five Tier were unsuccessful, but an attorney for Five Tier contacted Zak's counsel and in late 2020 the parties engaged in settlement negotiations. (ECF No. 14). On June 11, 2021, Five Tier was successfully served with the summons and Complaint. (Id.) On September 24, 2021, the parties reached a settlement, which Judge Daniels approved under Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015), and under which Zak was to receive a settlement payment of $15,150.00 and attorneys' fees and costs of $5,650.00 (the “Settlement”). (ECF Nos. 10; 12 (the “Cheeks Order”)).
On May 26, 2022, Zak notified the Court that Five Tier had failed to pay him pursuant to the Settlement and was in default. (ECF No. 14 (the “Default Letter”)). On May 27, 2022, the Court held a telephone conference, at which Zak's counsel appeared but Five Tier's did not. (ECF No. 16; ECF min. entry May 27, 2022 (the “Conference”)). At the Court's direction, Zak served on Five Tier a copy of the Cheeks Order, the Default Letter, the Court's Order scheduling the conference, and the Court's post-conference Order. (ECF Nos. 17-19). On July 11, 2022, the Court ordered Five Tier to show cause why (i) it failed to appear at the Conference, (ii) it failed to honor the Settlement, and (iii) the Court should not direct that a certificate of default be entered based on Five Tier's failure to continue to appear and defend. (ECF No. 20 (the “OTSC”)). In the OTSC, the Court also warned Five Tier that the failure to respond “will result in the Court directing the Clerk of Court to enter certificates of default and permitting Plaintiff to move for default judgment.” (Id. (citing Fed.R.Civ.P. 55)). Zak served the OTSC on Five Tier, which did not respond. (ECF Nos. 23; 25). On August 29, 2022, the Clerk of the Court entered a certificate of default, which Zak served on Five Tier. (ECF Nos. 30; 31).
On October 7, 2022, Zak notified the Court of his intent to file the FAC, for which the Court then set a schedule for filing and service. (ECF Nos. 35; 36).On October 13, 2022, Zak filed the FAC, which he served on Five Tier. (ECF Nos. 39; 43; 44).After Five Tier failed to timely respond to the FAC, the Court ordered Zak to request a certificate of default and move for default judgment pursuant to Judge Daniels' practices. (ECF No. 45). On December 5, 2022, the Clerk of the Court entered a certificate of default. (ECF No. 48).
Because Five Tier had not yet responded to the Complaint, leave of court was not required. See Fed.R.Civ.P. 15(a)(1)(B).
The FAC no longer contains an unjust enrichment claim. (Compare ECF No. 1 ¶¶ 101-06 with ECF No. 39).
On January 4, 2023, Zak filed a motion for default judgment (ECF Nos. 51-53; 56; 60-61), which Judge Daniels granted and referred to the undersigned for an inquest on damages, prejudgment interest, costs, and attorneys' fees. (ECF Nos. 62 (the “Default Order”); 63). On March 16, 2023, the Court ordered Zak to file and serve the Damages Submission on Five Tier, which was warned that, should it fail to respond to the Damages Submission or fail to contact the Court to request a hearing, the Court would issue a report and recommendation based on Zak's Damages Submission alone. (ECF No. 64 (the “Inquest Order”)). On April 17, 2023, Zak filed the Damages Submission (ECF Nos. 67-70; 72; see ECF No. 66 (memorandum of law in support)). Zak served the Inquest Order as well as his Damages Submission on Five Tier. (ECF Nos. 65; 73). To date, Five Tier has not responded to the Damages Submission or requested a hearing.
III. DISCUSSION
A. Legal Standards
1. Obtaining a Default Judgment
A party seeking a default judgment must follow the two-step procedure set forth in Federal Rule of Civil Procedure 55. See Bricklayers & Allied Craftworkers Loc. 2 v. Moulton Masonry & Constr., LLC, 779 F.3d 182, 186-87 (2d Cir. 2015) (per curiam). First, under Rule 55(a), where a party has failed to plead or otherwise defend in an action, the Clerk of the Court must enter a certificate of default. See Fed.R.Civ.P. 55(a). Second, after entry of the default, if the party still fails to appear or move to set aside the default, the Court may enter a default judgment. See Fed.R.Civ.P. 55(b). Whether to enter a default judgment lies in the “sound discretion” of the trial court. Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993). Because a default judgment is an “extreme sanction” that courts are to use as a tool of last resort, Meehan v. Snow, 652 F.2d 274, 277 (2d Cir. 1981) (per curiam), the district court must “carefully balance the concern of expeditiously adjudicating cases, on the one hand, against the responsibility of giving litigants a chance to be heard, on the other.” Lopez v. Emerald Staffing, Inc., No. 18 Civ. 2788 (SLC), 2020 WL 915821, at *4 (S.D.N.Y. Feb. 26, 2020).
In considering whether to enter a default judgment, district courts are “guided by the same factors [that] apply to a motion to set aside entry of a default.” First Mercury Ins. Co. v. Schnabel Roofing of Long Is., Inc., No. 10 Civ. 4398 (JS) (AKT), 2011 WL 883757, at *1 (E.D.N.Y. Mar. 11, 2011). “These factors include: (1) whether the default was willful; (2) whether ignoring the default would prejudice the opposing party; and (3) whether the defaulting party has presented a meritorious defense.” J & J Sports Prods. Inc. v. 1400 Forest Ave. Rest. Corp., No. 13 Civ. 4299 (FB) (VMS), 2014 WL 4467774, at *4 (E.D.N.Y. Aug. 12, 2014), adopted by, 2014 WL 4467774, at *1 (E.D.N.Y. Sept. 9, 2014) (citing Swarna v. Al-Awadi, 622 F.3d 123, 142 (2d Cir. 2010)); see Enron, 10 F.3d at 96 (noting that “[a]lthough the factors examined in deciding whether to set aside a default or a default judgment are the same, courts apply the factors more rigorously in the case of a default judgment [] because the concepts of finality and litigation repose are more deeply implicated in the latter action”).
2. Determining Liability
A defendant's default is deemed “a concession of all well-pleaded allegations of liability,” Rovio Entm't, Ltd. v. Allstar Vending, Inc., 97 F.Supp.3d 536, 545 (S.D.N.Y. 2015), but a default “only establishes a defendant's liability if those allegations are sufficient to state a cause of action against the defendants.” Gesualdi v. Quadrozzi Equip. Leasing Corp., 629 Fed.Appx. 111, 113 (2d Cir. 2015) (summary order). The Court must determine “whether the allegations in [the] complaint establish the defendants' liability as a matter of law.” Id. If the Court finds that the well-pleaded allegations establish liability, the Court then analyzes “whether plaintiff has provided adequate support for the relief [he] seeks.” Gucci Am., Inc. v. Tyrrell-Miller, 678 F.Supp.2d 117, 119 (S.D.N.Y. 2008). If, however, the Court finds that the complaint fails to state a claim on which relief may be granted, the Court may not award damages, “even if the post-default inquest submissions supply the missing information.” Lopez, 2020 WL 915821, at *4.
3. Determining Damages
Once liability has been established, the Court must “conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.” Getty Images (US) Inc. v. Advernet, Inc., 797 F.Supp.2d 399, 411 (S.D.N.Y. 2011) (citing Credit Lyonnais Sec. (USA) v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)). A plaintiff “bears the burden of establishing [its] entitlement to recovery and thus must substantiate [its] claim with evidence to prove the extent of damages.” Lopez, 2020 WL 915821, at *4. The evidence the plaintiff submits must be admissible. See Poulos v. City of New York, No. 14 Civ. 3023 (LTS) (BCM), 2018 WL 3750508, at *2 (S.D.N.Y. July 13, 2018), adopted by, 2018 WL 3745661 (S.D.N.Y. Aug. 6, 2018); see also House v. Kent Worldwide Mach. Works, Inc., 359 Fed.Appx. 206, 207 (2d Cir. 2010) (summary order) (“damages must be based on admissible evidence.”). If the documents the plaintiff has submitted provide a “sufficient basis from which to evaluate the fairness of” the requested damages, the Court need not conduct an evidentiary hearing. Fustok v. ContiCommodity Servs. Inc., 873 F.2d 38, 40 (2d Cir. 1989); see Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (noting that a court may determine appropriate damages based on affidavits and documentary evidence “as long as [the court has] ensured that there [is] a basis for the damages specified in the default judgment”).
With respect to claims for unpaid wages, when the employer's payroll records are inaccurate or incomplete, “an employee has carried out his burden if he proves” enough for the court to make an “inference” that he “has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work.” Kuebel v. Black & Decker Inc., 643 F.3d 352, 362 (2d Cir. 2011). The Court may credit a plaintiff's “recollections regarding [his] hours and pay in conducting [the] inquest.” Coley v. Vannguard Urban Improvement Ass'n, Inc., No. 12 Civ. 5565 (PKC) (RER), 2018 WL 1513628, at *7 (E.D.N.Y. Mar. 29, 2018). The Court “must ensure that [his] approximations and estimates are reasonable and appropriate.” Id. Ultimately, the default judgment the Court enters “must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c); see Silge v. Merz, 510 F.3d 157, 160 (2d Cir. 2007) (limiting damages to those specified in demand in complaint “ensures that a defendant who is considering default can look at the damages clause, satisfy himself that he is willing to suffer judgment in that amount, and then default without the need to hire a lawyer”); Joint Stock Co. Channel One Russia Worldwide v. Infomir LLC, No. 16 Civ. 1318 (GBD) (BCM), 2018 WL 4760345, at *1 (S.D.N.Y. Sept. 28, 2018) (holding that plaintiff could not recover damages for unalleged claims against defaulted defendant).
B. Default Judgment
In accordance with the two-step process in Rule 55, the Clerk of the Court entered a certificate of default as to Five Tier. (ECF No. 48). Furthermore, an analysis of the relevant factors set forth above reveals first that the Court can infer, from Five Tier's failure to submit any written reply to Zak's Damages Submission, after having been properly served, that its default was willful. See Indymac Bank, F.S.B. v. Nat'l Settlement Agency, Inc., No. 07 Civ. 6865 (LTS) (GWG), 2007 WL 4468652, at *1 (S.D.N.Y. Dec. 20, 2007) (finding that a failure to respond to a complaint and subsequent motion for default judgment “indicate[s] willful conduct”). Second, delaying entry of a default judgment might prejudice Zak. See Inga v. Nesama Food Corp., No. 20 Civ. 909 (ALC) (SLC), 2021 WL 3624666, at *6 (S.D.N.Y. July 30, 2021) (finding that FLSA plaintiff would “be prejudiced in the absence of a default judgment, not only by the delay in resolving this action, but by his inability to recover from another source for the lost wages and other losses he sustained while working for Defendants”), adopted by, 2021 WL 3617191 (S.D.N.Y. Aug. 16, 2021). Third, Five Tier has failed to respond to the Court's orders to appear and defend in this action. Thus, because the requirements of Rule 55 are satisfied and the relevant factors weigh in Zak's favor, the Court finds that entry of default judgment is proper in this case.
C. Liability
In the FAC, Zak asserted claims under the FLSA and the NYLL, as well as several common law claims. (ECF No. 39 ¶¶ 95-107 (asserting claims for breach of contract and promissory estoppel)). In the Damages Submission, however, Zak seeks damages under the FLSA and NYLL only. (ECF Nos. 66 at 10-15; 72 ¶¶ 17-33). The Court therefore respectfully recommends that the breach of contract and promissory estoppel claims be deemed abandoned and dismissed with prejudice. See Arch Specialty Ins. Co. v. Canbert Inc., No. 19 Civ. 5920 (EK) (PK), 2021 WL 1200329, at *3 n.3 (E.D.N.Y. Mar. 9, 2021) (recommending that claim asserted in complaint but “not discussed in the Motion” for default judgment be deemed abandoned), adopted by, 2021 WL 1193004 (E.D.N.Y. Mar. 30, 2021); Time Inc. Retail v. Newsways Servs., Inc., No. 16 Civ. 9479 (VSB) (JLC), 2018 WL 316995, at *4 (S.D.N.Y. Jan. 8, 2018) (deeming abandoned requests in complaint for attorneys' fees, costs, and prejudgment interest where the plaintiff failed to provide legal or documentary support for the requests in its motion for default judgment), adopted by, 2018 WL 2332067 (S.D.N.Y. May 22, 2018); Melgadejo v. S & D Fruits & Vegetables Inc., No. 12 Civ. 6852 (RA) (HBP), 2015 WL 10353140, at *2, n.1 (S.D.N.Y. Oct. 23, 2015) (deeming abandoned requests in complaint for pre and postjudgment interest and damages for conversion where the plaintiff did “not seek recovery for these items” in his damages submission), adopted by, 2016 WL 554843 (S.D.N.Y. Feb. 9, 2016).
Given that recommendation, the Court limits its analysis to the FLSA and NYLL claims discussed in the Damages Submission.
1. Jurisdiction and Venue
As a threshold matter, the Court has subject matter jurisdiction over this action. Zak sues in part under a federal statute-the FLSA-that gives rise to the Court's subject matter jurisdiction under 28 U.S.C. § 1331. The Court may exercise supplemental jurisdiction over Zak's NYLL claims because they arise out of the same facts and circumstances as his FLSA claims. See Lopez, 2020 WL 915821, at *5.
The Court also has personal jurisdiction over Five Tier. Personal jurisdiction is “a necessary prerequisite to entry of a default judgment.” Reilly v. Plot Commerce, No. 15 Civ. 5118 (PAE) (BCM), 2016 WL 6837895, at *2 (S.D.N.Y. Oct. 31, 2016), adopted by, 2016 U.S. Dist. LEXIS 160884 (S.D.N.Y. Nov. 21, 2016). The Court has personal jurisdiction over Five Tier, which is located in this District and was properly served. (ECF Nos. 1 ¶ 13; 14 at 1; 39 ¶ 13; 43-44). Venue is proper because Five Tier is domiciled in this District (ECF No. 39 ¶ 13), and because the events or omissions giving rise to Zak's claims occurred in this District. (Id. ¶¶ 12-15, 21-79).
2. Statute of Limitations
Under the NYLL, the statute of limitations is six years. See NYLL § 198(3). Under the FLSA, the statute of limitations is two years, or three years if the violations were “willful.” See 29 U.S.C. § 255(a); see also McLaughlin v. Richland Shoe Co., 486 U.S. 128, 129 (1988). An FLSA violation is willful if “the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited.” McLaughlin, 486 U.S. at 133. Although plaintiffs may not recover under both the FLSA and the NYLL for the same injury, courts allow plaintiffs to recover under the statute that provides for the greatest relief. Ni v. Bat-Yam Food Servs. Inc., No. 13 Civ. 7274 (ALC) (JCF), 2016 WL 369681, at *1 (S.D.N.Y. Jan. 27, 2016).
Here, Zak worked for Five Tier from December 29, 2017 until November 2018, and March 2019 until September 17, 2019. (ECF Nos. 39 ¶¶ 21, 25-27, 29-36, 63-78; 68 ¶¶ 6-8, 1116, 28-33). Zak filed the Complaint on November 9, 2020. (ECF No. 1). Thus, his employment period is entirely within the NYLL's six-year statute of limitations, but would not be entirely covered by the FLSA's shorter statute of limitations. Because the NYLL provides for equal or greater relief relative to the FLSA, I respectfully recommend awarding Zak damages under the NYLL. See Suriel v. Cruz, No. 20 Civ. 8442 (VSB) (SLC), 2022 WL 1750232, at *9 (S.D.N.Y. Jan. 10,2022), adopted by, 2022 WL 1751163 (S.D.N.Y. May 31, 2022); Schalaudek v. Chateau 20th St. LLC, No. 16 Civ. 11 (WHP) (JLC), 2017 WL 729544, at *5 (S.D.N.Y. Feb. 24, 2017), adopted as modified on other grounds by, 2017 WL 1968677 (S.D.N.Y. May 11, 2017).
Zak's employment period would be completely covered by FLSA's three-year statute of limitations for willful violations, but not by the two-year period applicable to non-willful violations. (ECF Nos. 39 ¶¶ 21, 25-27, 29-36, 63-78; 68 ¶¶ 6-8, 11-16, 28-33). To support his contention that Five Tier's conduct was willful, Zak alleges that Five Tier “willfully” violated his rights under the FLSA and NYLL. (ECF No. 39 ¶¶ 5, 112). In Whiteside v. Hover-Davis, Inc., the Second Circuit held that “a plaintiff at the pleadings stage must allege facts that give rise to a plausible inference of willfulness for the three-year exception to the FLSA's general two-year statute of limitations to apply.” 995 F.3d 318, 320 (2d Cir. 2021). “The Whiteside Court did not address what impact, if any, its ruling would have when a defendant defaults and willfulness is therefore inferred as a matter of law assuming it has been pled.” Baez v. RCO Restoration Corp., No. 20 Civ. 1066 (VSB) (JLC), 2021 WL 1847379, at *2 n.3 (S.D.N.Y. May 10, 2021), adopted by, 2021 WL 4077944 (S.D.N.Y. Sept. 8, 2021); see Wicaksono v. XYZ 48 Corp., No. 10 Civ. 3635 (LAK) (JCF), 2011 WL 2022644, at *3 (S.D.N.Y. May 2, 2011) (finding that, “[b]ecause the defendant defaulted and the complaint alleges that all of the violations were undertaken ‘knowingly, intentionally and willfully,' the plaintiffs [were] entitled to a finding that the defendant's conduct was willful, and the three year statute of limitations will apply”), adopted by, 2011 WL 2038973 (S.D.N.Y. May 24, 2011). Because Zak is “being awarded damages under New York Labor Law, which has a six-year statute of limitations, this issue need not be further considered in this case.” Baez, 2021 WL 1847379, at *2 n.3; see Wen v. Hair Party 24 Hours Inc., No. 15 Civ. 10186 (ER) (DF), 2021 WL 3375615, at *15 (S.D.N.Y. May 17, 2021) (“[t]he NYLL, however, with its six-year statute of limitations, would cover the entire period of Plaintiff's employment, without the Court's needing to reach the question of whether Plaintiff has adequately pleaded ‘willfulness' under the FLSA, so as to be able to take advantage of the ‘willfulness' exception to the statute's two-year limitations period.”), adopted by, 2021 WL 2767152 (S.D.N.Y. July 2, 2021).
3. FLSA and NYLL Elements
To state a claim for unpaid wages under the FLSA, a plaintiff must allege that: (1) he was the defendant's employee, (2) his work involved interstate activity, and (3) he worked for hours for which he did not receive minimum or overtime wages. See Tackie v. Keff Enter., Inc., No. 14 Civ. 2074 (JPO), 2014 WL 4626229, at *2 (S.D.N.Y. Sept. 16, 2014). A wage-and-hour claim under the NYLL involves a similar analysis, “except that the NYLL does not require plaintiffs to show a nexus with interstate commerce or a minimum amount of annual sales.” Id. at *2 n.2. To recover overtime compensation, a plaintiff “must allege sufficient factual matter to state a plausible claim that [he] worked compensable overtime in a workweek longer than 40 hours.” Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 114 (2d Cir. 2013).
a. The Employer-Employee Relationship
Under the FLSA, an “employer” is “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). Courts afford the term employer “an expansive definition with ‘striking breadth.'” Mondragon v. Keff, No. 15 Civ. 2529 (JPO) (BCM), 2019 WL 2551536, at *7 (S.D.N.Y. May 31, 2019), adopted by, 2019 WL 2544666 (S.D.N.Y. June 20, 2019) (quoting Nationwide Mut. Ins. Co. v. Darden, 503 US. 318, 326 (1992)). Under the FLSA, “[a]n individual may simultaneously have multiple ‘employers,'” such that “‘all joint employers are responsible, both individually and jointly, for compliance with all of the applicable provisions of the [FLSA].'” Martin v. Sprint United Mgmt. Co., 273 F.Supp.3d 404, 421 (S.D.N.Y. 2017) (quoting 29 C.F.R. § 791.2(a)).
To determine whether Five Tier was Zak's “employer” for FLSA purposes, the Court must examine the “economic reality” of the working relationship. Irizarry v. Catsimatidis, 722 F.3d 99, 104 (2d Cir. 2013). Courts in the Second Circuit consider four non-exclusive factors to assess the “economic reality” of an alleged employment relationship, including “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 105 (quoting Barfield v. N.Y.C. Health & Hosps. Corp., 537 F.3d 132, 142 (2d Cir. 2008)). This “inquiry is a totality-of-the-circumstances approach, so no one factor is dispositive.” Tackie, 2014 WL 4626229, at *2.
Under the NYLL, the definition of “employer” is also broad, see NYLL § 190(3),“and the crucial inquiry, in determining whether an employer-employee relationship exists, is the ‘degree of control exercised by the purported employer over the results produced or the means used to achieve the results.'” Mondragon, 2019 WL 2551536, at *7 (quoting Hart v. Rick's Cabaret Int'l, Inc., 967 F.Supp.2d 901, 923 (S.D.N.Y. 2013)). In the absence of a decision from the New York Court of Appeals answering “the question of whether the test for ‘employer' status is the same under the FLSA and the NYLL,” Camara v. Kenner, No. 16 Civ. 7078 (JGK), 2018 WL 1596195, at *7 (S.D.N.Y. Mar. 29, 2018), “[t]here is general support for giving FLSA and the [NYLL] consistent interpretations . . . [a]nd there appears to have never been a case in which a worker was held to be an employee for purposes of the FLSA but not the NYLL (or vice versa).” Hart, 967 F.Supp.2d at 924. “Accordingly, courts in this District regularly apply the same tests to determine whether entities were joint employers under NYLL and the FLSA.” Martin, 273 F.Supp.3d at 422.
The NYLL defines “employer” as “any person, corporation, limited liability company, or association employing any individual in any occupation, industry, trade, business or service.” NYLL § 190(3).
In addition, to recover under both the FLSA and the NYLL, Zak must demonstrate that he is qualified as an “employee.” Nuriddinov v. Masada III, Inc., No. 15 Civ. 5875 (KAM) (RML), 2017 WL 9253401, at *4-5 (E.D.N.Y. July 24, 2017), adopted as modified on other grounds by, 2018 WL 1251335 (E.D.N.Y. Mar. 12, 2018). The FLSA broadly defines an “employee” as “any individual employed by an employer,” and defines “employ” as including “suffer[ing] or permit[ting] to work.” 29 U.S.C. §§ 203(e)(1), (g). Whether a worker is an employee or an independent contractor under the FLSA ultimately depends on the “economic reality” of the relationship, Saleem v. Corp. Transp. Grp., Ltd., 854 F.3d 131, 139 (2d Cir. 2017); i.e., “whether, as a matter of economic reality, the workers depend upon someone else's business for the opportunity to render service or are in business for themselves.” Brock v. Superior Care, Inc., 840 F.2d 1054, 1059 (2d Cir. 1988). Factors used in evaluating the economic reality of the relationship include:
(1) the degree of control exercised by the employer over the workers, (2) the workers' opportunity for profit or loss and their investment in the business, (3) the degree of skill and independent initiative required to perform the work, (4) the permanence or duration of the working relationship, and (5) the extent to which the work is an integral part of the employer's business.Id. at 1058-59 (citing United States v. Silk, 331 U.S. 704, 716 (1947)).
Similarly, Zak must show that he is an employee within the meaning of the NYLL. See Short v. Churchill Benefit Corp., No. 14 Civ. 4561 (MKB), 2016 WL 8711349, at *8 n.21 (E.D.N.Y. Apr. 8, 2016). The NYLL includes as an “employee” “any person employed for hire by an employer in any employment.” NYLL § 190(2). Although this definition is broad, it excludes independent contractors. See Nuriddinov, 2017 WL 9253401, at *4. “The standard for differentiating between an independent contractor and an employee is similar to that under the FLSA, but the focus is on the degree of control exercised by the alleged employer rather than the economic reality of the situation.” Id. at *5.
Zak alleges that Five Tier employed him to provide services regarding software and web application development and determined his rate of pay. (ECF Nos. 39 ¶¶ 29, 32, 41, 63-65; 68 ¶ 4). Zak also alleges that, throughout his employment, he operated under Five Tier's “control and supervision,” performed services based on Five Tier's “instruction and detailed arrangements,” was subject to Five Tier's instruction about how he performed his services, reported directly to O'Brien, and adhered to Five Tier's dress code, time, and other policies. (ECF No. 39 ¶¶ 37, 39, 46, 48, 52-53, 58). He also alleges that, while employed at Five Tier, his wages provided his only source of income and he provided services that were an integral part of Five Tier's business, in whose profits he did not share. (ECF No. 39 ¶¶ 38, 40, 59). By its default, Five Tier has admitted facts establishing both its status as Zak's employer and Zak's status as an employee, rather than an independent contractor. See Suriel, 2022 WL 1750232, at *11; Rovio Entmt, 97 F.Supp.3d at 545; see also Doe v. G.M. Holdings, Inc., No. 14 Civ. 2933 (WMN), 2016 WL 827247, at *2 (D. Md. Mar. 3, 2016) (under the FLSA, holding that, “for purposes of default judgment, it is established that Plaintiff was an employee of [Defendant], as opposed to an independent contractor”). Zak has therefore established an employer-employee relationship with Five Tier. See Lopez v. Cajmant LLC, No. 15 Civ. 593 (ENV) (RER), 2020 WL 9814059, at *4 (E.D.N.Y. Oct. 26, 2020) (finding that similar allegations supported finding that plaintiff was employee rather than independent contractor); Nuriddinov, 2017 WL 9253401, at *5 (same). Accordingly, the Court finds that Zak was an employee and Five Tier was his employer for purposes of the FLSA and the NYLL.
b. Interstate Commerce
Under the FLSA, a plaintiff must establish that he or his employer were engaged in interstate commerce. See Ethelberth v. Choice Sec. Co., 91 F.Supp.3d 339, 353 (E.D.N.Y. 2015) (“[e]ngagement in interstate commerce, either by an employee or by the employer as a whole, is a prerequisite for liability for the FLSA's overtime requirement.”); 29 U.S.C. § 207(a)(1) (stating that employees “engaged in commerce or in the production of goods for commerce” are entitled to overtime compensation at “one and one-half times the regular rate at which [they are] employed”); 29 U.S.C. § 203(s)(1)(A) (defining “[e]nterprise engaged in commerce”).
Here, Zak alleges that during his employment at Five Tier, “he routinely engaged in activities which facilitated or were related to interstate or foreign commerce while on the job.” (ECF No. 39 ¶ 17). He also alleges that Five Tier is engaged in interstate commerce, “including handling and working with goods or materials that have been moved in or produced for interstate commerce,” and advertises on its website its ability to serve customers domestically and globally. (Id. ¶¶ 18-19). He also alleges, on information and belief, that Five Tier's annual gross volume of sales exceeds $500,000.00. (Id. ¶ 17). “[L]ocal business activities fall within the reach of the FLSA when an enterprise employs workers who handle goods or materials that have moved or been produced in interstate commerce.” Cabrera v. Canela, 412 F.Supp.3d 167, 173 (E.D.N.Y. 2019) (quoting Archie v. Grand Cent. P'ship, Inc., 997 F.Supp. 504, 530 (S.D.N.Y. 1998)); see Gora v. Acer Restorations LLC, No. 13 Civ. 4776 (JBW), 2014 WL 10537433, at *3 (E.D.N.Y. Oct. 8, 2014) (finding allegations that New York-based construction company with employees who handle, sell or otherwise work on goods or materials that have been moved in or produced for interstate commerce and with annual profits exceeding $500,000 were “sufficient to establish that the defendants were engaged in interstate commerce and thus are subject to liability under the FLSA”), adopted by, Order, 13 Civ. 4775 (E.D.N.Y. Jan. 22, 2015), ECF No. 27. Accordingly, Zak's allegations meet the threshold for enterprise liability under the FLSA, see 29 U.S.C. § 203(s)(1)(A), such that Zak has satisfied the interstate commerce element for FLSA liability. See Mondragon, 2019 WL 2251536, at *9.
c. Unpaid wages
The FLSA requires employers to pay employees at least the federal minimum wage for every hour worked, see 29 U.S.C. § 206, or the state minimum wage, if it is greater than the federal minimum wage. See 29 U.S.C. § 218(a). While “[t]he FLSA allows recovery for unpaid ‘straight' time only up to the minimum wage rate[,] . . . [t]he NYLL provides . . . for a claim of straight time at a rate higher than the minimum wage if the parties previously agreed to the rate.” Villar v. Prana Hosp., Inc., No. 14 Civ. 8211 (RA) (JCF), 2017 WL 1333582, at *4 (S.D.N.Y. Apr. 11, 2017) (collecting cases), adopted by, 2018 WL 3579841 (S.D.N.Y. July 25, 2018); see NYLL §§ 191(1)(d) (“clerical and other worker[s] shall be paid the wages earned in accordance with the agreed terms of employment”)). “[I]n the absence of rebuttal by defendants, plaintiffs' recollection and estimates of hours worked are presumed to be correct.” Liu v. Jen Chu Fashion Corp., No. 00 Civ. 4221 (RJH) (AJP), 2004 WL 33412, at *3 (S.D.N.Y. Jan. 7, 2004), adopted by, Order, No. 00 Civ. 4221 (S.D.N.Y. Feb. 26, 2004), ECF No. 89.
Here, Zak has submitted his Declaration attesting that Five Tier promised that he would be paid $375.00 per day and that he performed work in exchange for that promise, but Five Tier failed to pay him for the period from July 16, 2019 to September 17, 2019 entirely. (ECF No. 68 ¶¶ 14-16, 28-33). In the default context, this provides “a sufficient basis for determination of damages.” See Marvici v. Roche Facilities Maint. LLC, No. 21 Civ. 4259 (AS) (JLC), 2023 WL 5810500, at *6 (S.D.N.Y. Sept. 8, 2023) (collecting cases finding that plaintiff's declaration was sufficient basis on which to calculate damages), adopted by, 2023 WL 6648902 (S.D.N.Y. Oct. 12, 2023). Because his agreed-upon hourly rate of $46.88 exceeds both the federal and state minimum wage rates, Zak may recover damages under the NYLL only, not the FLSA. See Marvici, 2023 WL 5810500, at *6 (awarding unpaid wages under the NYLL at agreed-upon rate); Villar, 2017 WL 1333582, at *4 (awarding damages under the NYLL at “agreed-upon wage that was higher than the minimum wage”). Accordingly, the remainder of the Court's analysis will focus on Zak's claims under the NYLL.
$375.00 / 8 = $46.88.
d. Liquidated damages
The NYLL authorizes liquidated damages. See Xochimitl v. Pita Grill of Hell's Kitchen, Inc., No. 14 Civ. 10234 (JGK) (JLC), 2016 WL 4704917, at *15 (S.D.N.Y. Sept. 8, 2016), adopted by, 2016 WL 6879258 (S.D.N.Y. Nov. 21, 2016). Effective November 24, 2009, “an employee was entitled to NYLL liquidated damages ‘unless the employer proves a good faith basis for believing that its underpayment of wages was in compliance with the law.'” Id. (quoting NYLL § 198(1-a)). “Courts deem defendants' actions willful where they have defaulted and, . . . consequently, such defaulting defendants will have ‘[o]bviously . . . made no showing of “good faith.”'” Xochimitl, 2016 WL 4704917, at *15. Effective April 9, 2011, the liquidated damages award under the NYLL is 100% of the amount of unpaid wages. See NYLL §§ 198(1-a), 663(1). The NYLL allows a court to award prejudgment interest in addition to liquidated damages. See NYLL § 198(1-a).
Having defaulted, Five Tier has not carried its burden of demonstrating good faith under the NYLL, see Mondragon, 2019 WL 2551536, at *11, and therefore, Zak is entitled to liquidated damages equivalent to 100% of his unpaid wages. See Schalaudek, 2017 WL 729544, at *10 (awarding liquidated damages of 100% of unpaid wages where defendants had defaulted); Suriel, 2022 WL 1750232, at *16 (same).
* * *
In summary, the Court finds that that the well-pleaded allegations in the Damages Submission establish Five Tier's liability for unpaid wages and liquidated damages under the NYLL only.
D. Damages Calculation
The Court must determine whether Zak has provided sufficient evidence to support his claim for damages. See Transatlantic Marine, 109 F.3d at 111; Bleecker v. Zetian Sys., Inc., No. 12 Civ. 2151 (DLC), 2013 WL 5951162, at *7 (S.D.N.Y. Oct. 3, 2013), adopted by, 2013 WL 5951162 (S.D.N.Y. Nov. 1, 2013). The Damages Submission includes a Declaration from Zak attesting to the dates and circumstances of his employment with Five Tier. (ECF No. 68). Despite a warning (ECF No. 64 ¶ 3), Five Tier has not responded to the Default Order or the Damages Submission or contacted the Court. The Court finds that Zak has met his evidentiary burden of proving damages, and that an in-person hearing is unnecessary because the Damages Submission, combined with Five Tier's admissions resulting from its default, constitute a sufficient basis from which to evaluate the fairness of Zak's damages request. Fustok, 873 F.2d at 40; see Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors, Inc., 699 F.3d 230, 234 (2d Cir. 2012) (“a district court may determine there is sufficient evidence either based upon evidence presented at a hearing or upon a review of detailed affidavits and documentary evidence.”); Boston Sci. Corp. v. New York Ctr. for Specialty Surgery, No. 14 Civ. 6170 (RRM), 2015 WL 13227994, at *3 (E.D.N.Y. Aug. 31, 2015) (same), adopted by, 2016 WL 8711378 (E.D.N.Y. Jan. 29, 2016); Fed.R.Civ.P. 55(b)(2).
1. Unpaid Wages
As noted above, Zak attests in his Declaration that Five Tier agreed to pay him at a rate of $375.00 per day but failed to pay him entirely for the period from July 16, 2019 until September 17, 2019, a period of 46 days (including 42 “billable working days,” three approved days off, and one federal holiday, September 2, 2019). (See § II.A, supra). (ECF No. 68 ¶¶ 2833). He thus seeks damages in the amount of $17,250.00 ($375 * 46). (ECF Nos. 66 at 11-12; 72 ¶ 22). In the Damages Submission, Zak also requests “equitable damages” of $1,125.00- representing three additional unpaid holidays (May 27, 2019, June 19, 2019, and July 4, 2019)- based on Five Tier's “misclassification” of him as an independent contractor during the period from April 2019 until September 17, 2019. (ECF Nos. 66 at 10-11; 72 ¶¶ 17-18).
Although the Court has found that Zak is entitled to be treated as an employee, rather than an independent contractor (see § III.C.3.a, supra), Zak provides no legal authority for his entitlement to recover wages for holidays or approved days off resulting from misclassification, nor has the Court's independent research located any such support.Furthermore, the FAC does not allege that Five Tier failed to pay wages for holidays. (See ECF No 39). Accordingly, the Court respectfully recommends that no damages be awarded with respect to misclassification. See Chung v. Sano, No. 10 Civ. 2301 (DLI), 2011 WL 1303292, at *13 (E.D.N.Y. Feb. 25, 2011) (recommending denial of damages where “plaintiff ha[d] not presented any legal authority in support”), adopted by, 2011 WL 1298891 (E.D.N.Y. Mar. 31, 2011).
The Court also notes that Juneteenth did not become a federal holiday until June 17, 2021 (see Juneteenth National Independence Day Act, P.L. 117-17 (2021) (amending 5 U.S.C. § 6103(a))), and a public holiday in New York until October 14, 2020 (A.B. 10628, 242nd Ann. Legis. Sess. (N.Y. 2020)), which provides an alternative basis to deny Zak's request for misclassification damages for June 19, 2019.
As to the period from July 16, 2019 to September 17, 2019-which Zak alleges include 42 working days-the Court respectfully recommends that Zak be awarded damages of $15,750.00.
42 * $375.00.
2. Liquidated Damages
Liquidated damages are calculated as the “one hundred percent of the total amount of the wages found to be due . . . .” NYLL § 198(1-a). Here, that is equal to Zak's unpaid wages. See Agureyev v. H.K. Second Ave. Rest., Inc., No. 17 Civ. 7336 (SLC), 2021 WL 847977, at *10 (S.D.N.Y. Mar. 5, 2021) (awarding liquidated damages of 100% of unpaid wages where defendants had defaulted). Accordingly, I respectfully recommend that Zak be awarded liquidated damages in the amount of $15,750.00.
3. Prejudgment Interest
Zak requests prejudgment interest on any award of damages. (ECF Nos. 39 ¶¶ 3, 100, 107; 66 at 14-15). “[C]ourts typically award prejudgment interest on damages for NYLL violations.” Pineda v. Frisolino, Inc., No. 15 Civ. 3774 (GBD), 2017 WL 3835882, at *13 (S.D.N.Y. Aug. 29, 2017). “Prejudgment interest is available only for compensatory damages, not liquidated damages.” Marvici, 2023 WL 5810500, at *10; accord Maldonado v. La Nueva Rampa, Inc., No. 10 Civ. 8195 (LLS) (JLC), 2012 WL 1669341, at *11 (S.D.N.Y. May 14, 2012), adopted by, 2012 U.S. Dist. LEXIS 200251 (S.D.N.Y. Aug. 9, 2012). New York law sets the prejudgment interest rate at nine percent per year. N.Y. C.P.L.R. § 5004. “Courts in this District generally calculate prejudgment interest from the midpoint date between the start of the damages period up to and including the date judgment is entered.” Marvici, 2023 WL 5810500, at *10; see N.Y. C.P.L.R. § 5001 (for damages accruing “at various times, interest shall be computed upon each item from the date it was incurred or upon all of the damages from a single reasonable intermediate date”).
For Zak, a reasonable intermediate date is August 17, 2019, the midpoint (32 days) between the first time (July 16, 2019) and the last time (September 17, 2019) he was denied wages. This is also the midpoint date that Zak proposes. (ECF No. 72 ¶ 33). Therefore, the Court respectfully recommends that a nine percent interest rate be applied to the unpaid wage amount of $15,750.00 from August 17, 2019 until the date that final judgment is entered. See Mondragon, 2019 WL 2551536, at *11
4. Postjudgment Interest
Zak also seeks postjudgment interest. (ECF Nos. 39 ¶ 3; 66 at 22; 72 ¶ 51). The applicable federal statute provides that “[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court . . . calculated from the date of the entry of the judgment, at a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding . . . the date of the judgment.” 28 U.S.C. § 1961. The Second Circuit has explained that an award of postjudgment interest is mandatory. See Schipani v. McLeod, 541 F.3d 158, 165 (2d Cir. 2008); see also Suriel, 2022 WL 1750232, at *17 (awarding postjudgment interest). Given the mandatory nature of postjudgment interest, the Court respectfully recommends that Zak be awarded postjudgment interest in an amount consistent with 28 U.S.C. § 1961.
5. Automatic Increase of Judgment
Under the NYLL,
if any amounts remain unpaid upon the expiration of ninety days following the issuance of judgment, or ninety days after expiration of the time to appeal and no appeal is then pending, whichever is later, the total amount of judgment shall automatically increase by fifteen percent.NYLL § 198(4). This “increase applies only to damages awarded under state law.” Rosa v. La Oficina of Queens, Inc., No. 18 Civ. 6915 (FB) (PK), 2023 WL 2745214, at *14 (E.D.N.Y. Mar. 17, 2023) (collecting cases), adopted by, 2023 WL 2736237 (E.D.N.Y. Mar. 31, 2023). “Accordingly, if [Five Tier] fail[s] to satisfy the judgment within the stated deadlines, then [Zak] is entitled to a fifteen percent increase in the amount of damages owed to him” under the NYLL. Id.; accord Marvici, 2023 WL 5810500, at *11.
6. Attorneys' Fees
Zak seeks an award of attorneys' fees in the amount of $33,545.70. (ECF No. 72 ¶ 48). The NYLL permits a successful plaintiff to recover reasonable attorneys' fees. NYLL §§ 198, 663. “Whether an attorneys' fee award is reasonable is within the discretion of the court.” De Jesus v. Sea Crest Diner-Rest., No. 17 Civ. 275 (ADS) (SIL), 2018 WL 3742778, at *11 (E.D.N.Y. May 7, 2018), adopted by, 2018 WL 6418893 (E.D.N.Y. Dec. 6, 2018) (citing De Jesus Galindo v. BLL Rest. Corp., No. 15 Civ. 5885 (HBP), 2018 WL 1684412, at *3 (S.D.N.Y. Apr. 6, 2018)). To determine a “presumptively reasonable fee,” the Court multiplies the hours counsel reasonably spent on the litigation by a reasonable hourly rate. Millea v. Metro-North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011). “The presumptively reasonable fee boils down to what a reasonable, paying client would be willing to pay, given that such a party wishes to spend the minimum necessary to litigate the case effectively.” Simmons v. N.Y.C. Transit Auth. 575 F.3d 170, 174 (2d Cir. 2009).
a. Reasonable Hourly Rate
Zak was represented by four attorneys with the firm of Danny Grace PLLC (the “Firm”), Grace, Mace, Li, and Athena Pantelopoulos (“Pantelopoulos”). (ECF Nos. 67; 67-1 at 2; 69; 70). Zak requests that the Court award hourly rates as follows: $450 for Grace, $380 for Mace, and $230 for Li and Pantelopoulos. (ECF No. 72 ¶ 41).
To determine whether an hourly rate is reasonable, the Second Circuit has instructed district courts to “apply the prevailing rate within the district for similar services by lawyers of comparable experience and skill.” Galeana v. Lemongrass on B'way Corp., 120 F.Supp.3d 306, 323 (S.D.N.Y. 2014) (citing Gierlinger v. Gleason, 160 F.3d 858, 882 (2d Cir. 1998)). A court may also adjust the hourly rate to account for case-specific variables such as:
[i] the time and labor required; [ii] the novelty and difficulty of the questions; [iii] the skill requisite to perform the legal service properly; [iv] the preclusion of employment by the attorney due to acceptance of the case; [v] the customary fee; [vi] whether the fee is fixed or contingent; [vii] time limitations imposed by the client or the circumstances; [viii] the amount involved and the results obtained; [ix] the experience, reputation, and ability of the attorneys; [x] the “undesirability” of the case; [xi] the nature and length of the professional relationship with the client; and [xii] awards in similar cases.Gamero v. Koodo Sushi Corp., 328 F.Supp.3d 165, 173 (S.D.N.Y. 2018) (quoting Hensley v. Eckerhart, 461 U.S. 424, 430 n.3 (1983)).
In this district, courts generally award experienced wage-and-hour attorneys between $250.00 to $450.00 per hour. See Belliard v. Tarnovsky, No. 20 Civ. 1055 (GBD) (KHP), 2023 WL 3004963, at *7 (S.D.N.Y. Mar. 6, 2023) (collecting cases), adopted by, 2023 WL 3304723 (S.D.N.Y. May 8, 2023); Surdu v. Madison Glob., LLC, No. 15 Civ. 6567 (HBP), 2018 WL 1474379, at *10 (S.D.N.Y. Mar. 23, 2018) (collecting cases regarding litigators with one or more decades of experience); Pastor v. Alice Cleaners, Inc., No. 16 Civ. 7264 (JLC), 2017 WL 5625556, at *7-8 (S.D.N.Y. Nov. 21, 2017) (noting fees between $250 and $450 for experienced litigators in wage-and-hour cases in this District); but see Williams v. Epic Sec. Corp., No. 15 Civ. 5610 (SDA), 2019 WL 1322384, at *3 (S.D.N.Y. Mar. 25, 2019) (awarding $600 per hour to lead attorney with 32 years of experience and $350 per hour to junior partner with eleven years of non-wage-and-hour experience).
Grace has been admitted to the bar since 2011 and has ten years of experience litigating employment actions. (ECF No. 69 ¶¶ 3-4). Mace, managing attorney at the Firm, has over 18 years of litigation experience. (ECF No. 70 ¶¶ 2-3). Li and Pantelopoulos are associates with less than five years' experience in employment litigation. (ECF Nos. 67 ¶¶ 11-13; 69 ¶ 7). The requested rates are in fact lower than what other courts in the Second Circuit have deemed reasonable for two of the attorneys at the Firm. See Jones v. BH Naturals, LLC, No. 19 Civ. 432 (CLP), 2019 WL 13409843, at *2 (E.D.N.Y. Oct. 18, 2019) (finding rates for Grace and Li higher than those requested here to be reasonable). Accordingly, the Court respectfully recommends that fees be calculated at the requested hourly rates of $450 for Grace, $380 for Mace, and $230 for Li and Pantelopoulos.
In Jones, the Eastern District found the total proposed fee award to be reasonable, which it found to be “less than the amount of [the] firm's hourly fees.” Id. Even adjusting down the hourly rates proposed in that case for Grace ($550) and Li ($350) to conform to the lesser amount in requested fees the Jones court approved, the approved hourly rates for both attorneys were greater in Jones than they are here.
b. Hours Reasonably Expended
To determine the reasonable number of hours required by a case, the critical inquiry is “whether, at the time the work was performed, a reasonable attorney would have engaged in similar time expenditures.” Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992). Courts must perform “a conscientious and detailed inquiry into the validity of the representations that a certain number of hours were usefully and reasonably expended.” Lunday v. City of Albany, 42 F.3d 131, 134 (2d Cir. 1994). “If the Court finds that some of the claimed hours are ‘excessive, redundant or otherwise unnecessary,' it may reduce the number of reasonable hours accordingly.” Bumble & Bumble, LLC v. Pro's Choice Beauty Care, Inc., No. 14 Civ. 6911 (VEC) (JLC), 2016 WL 658310, at *9 (S.D.N.Y. Feb. 17, 2016), adopted by, 2016 WL 1717215 (S.D.N.Y. Apr. 27, 2016) (quoting Hensley, 461 U.S. at 434).
The contemporaneous time records for the four attorneys at the Firm reflect that Grace expended 28.59 hours representing Zak in this action, Mace 28.25 hours, Li 36.59 hours, and Pantelopoulos 6.65 hours, a total of 100.8 hours. (ECF Nos. 67 ¶ 14; 67-1; 69 ¶¶ 5, 7; 70 ¶ 5). Having reviewed the time records, the Court finds that some the entries are problematic. First, Grace, Mace, and Pantelopoulos each have multiple entries for “draft legal documents,” which lack sufficient specificity to permit meaningful review of the work performed. See Cajero Torres v. Sushi Sushi Holdings Inc., No. 19 Civ. 2532 (PAE) (RWL), 2022 WL 2788655, at *18 (S.D.N.Y. July 15, 2022) (discounting hours where entries were “frequently opaque, to the point where the Court cannot understand or meaningfully appraise the work that was done, let alone whether the time claimed to have been expended on it was reasonable”); Rosso v. Pi Mgmt. Assocs., L.L.C., No. 02 Civ. 1702 (KNF), 2006 WL 1227671, at *4 (S.D.N.Y. May 3, 2006) (applying 15% percent reduction due to “vague or perfunctory explanations of the work performed”). Second, Grace and Li have numerous entries for service and filing, functions that would have been more efficiently performed by a paralegal rather than an attorney. See Agureyev, 2021 WL 847977, at *12 (applying percentage reduction to hours attorney expended on tasks “that could have been done at a lower rate by a law clerk or secretary”); cf. Perez v. Rossy's Bakery & Coffee Shop, Inc., No. 19 Civ. 8683 (SLC), 2021 WL 1199414, at *11 (finding that attorney's delegation of tasks to paralegals demonstrated efficiency). Finally, each attorney has entries for emailing clients and other non-compensable clerical work. See Montalvo v. Paul Bar & Rest. Corp., No. 22 Civ. 1423 (JLR) (SN), 2023 WL 6519717, at *11 (S.D.N.Y. Aug. 11, 2023) (“Montalvo I”) (discounting hours performed for organizing files, reviewing pretrial procedures, and reviewing emails), adopted as modified by, 2023 WL 5928361 (S.D.N.Y. Sept. 13, 2023) (“Montalvo II”); Agudelo v. E&D LLC, No. 12 Civ. 960 (HB), 2013 WL 1401887, at *3 (S.D.N.Y. Apr. 4, 2013) (explaining that “downloading documents, transmitting correspondence and filing” were non-compensable clerical work). Finally, the Court notes that this is a single-plaintiff wage-and-hour action involving relatively straightforward claims and non-complex damages calculations and in which the defendant defaulted, preventing a finding that over 100 attorney hours was reasonable. See Montalvo II, 2023 WL 5928361, at *6 (finding that 75% reduction in paralegal hours was reasonable “given that this was a straightforward employment dispute, for a single plaintiff, regarding less than two months of employment, for which defendants did not appear and defaulted”).
To account for the problematic entries, the Court finds that an across-the-board percentage reduction of 15% is warranted. See Kirsch v. Fleet St., Ltd., 148 F.3d 149, 173 (2d Cir. 1998) (explaining that district court has discretion to apply percentage discount to reduce “[h]ours that are excessive, redundant, or otherwise unnecessary”); Agureyev, 2021 WL 847977, at *13 (applying 15% reduction to hours expended and collecting wage-and-hour cases applying similar discount); Blackwell v. Actor's Playhouse, No. 14 Civ. 603 (LGS) (FM), 2016 WL 11483834, at *10 (S.D.N.Y. Apr. 4, 2016) (applying 15% reduction for problematic billing entries), adopted by, 2016 WL 5239623 (S.D.N.Y. Sept. 22, 2016); Rosso, 2006 WL 1227671, at *4 (same). Accordingly, the Court respectfully recommends that attorneys' fees be awarded as follows:
7. Costs
An employee who prevails in a wage-and-hour action is entitled to recover costs. See NYLL § 663(1). Recoverable costs are “those reasonable out-of-pocket expenses incurred by attorneys and ordinarily charged to their clients.” LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 763 (2d Cir. 1998). “[O]nly those costs that are tied to identifiable, out-of-pocket disbursements are recoverable.” Valdez v. H & S Rest. Operations, Inc., No. 14 Civ. 4701 (SLT) (MDG),2016 WL 3079028, at *9 (E.D.N.Y. Mar. 29, 2016) (awarding costs to a plaintiff seeking recovery of the “court filing fee, service of process fees, postage and on-line research”), adopted by, 2016 WL 3087053 (E.D.N.Y. May 27, 2016); see Sanchez v. Jyp Foods Inc., No. 16 Civ. 4472 (JLC), 2018 WL 4502008, at *17 (S.D.N.Y. Sept. 20, 2018) (noting that adequate substantiation is required for an award of costs).
Zak seeks an award of costs in the amount of $889.53, comprised of the court filing fee and service costs. (ECF Nos. 67-1 at 2; 72 ¶ 50). The Court may take judicial notice of the amount of the court filing fee. See, e.g., Victor v. Sam's Deli Grocery Corp., No. 19 Civ. 2965 (SLC), 2022 WL 3656312, at *16 (S.D.N.Y. Aug. 25, 2022) (taking judicial notice of $400 filing fee in FLSA case and awarding costs in that amount). In addition, Zak has submitted contemporaneous receipts for the service costs. (ECF No. 67-1 at 17-22). The Court finds that Zak has adequately substantiated these costs and that they are reasonable, see Nash v. Countywide Carting, Ltd., No. 19 Civ. 9138 (AEK), 2022 WL 602998, at *4 (S.D.N.Y. Mar. 1, 2022) (finding receipts for service of process sufficient to substantiate request for costs), and, accordingly, the Court respectfully recommends that he be awarded costs in the amount of $889.53.
IV.CONCLUSION
For the reasons set forth above, the Court respectfully recommends that a default judgment in favor of Zak and against Five Tier be entered in the following amounts:
(1) Unpaid wages under the NYLL in the amount of $15,750.00;
(2) Liquidated damages in the amount of $15,750.00;
(3) Prejudgment interest calculated at a rate of nine (9) percent on the amount of $15,750.00 from August 17, 2019 until the date of entry of judgment;
(4) Postjudgment interest calculated pursuant to 28 U.S.C. § 1961;
(5) Attorneys' fees in the amount of $28,511.30; and
(6) Costs in the amount of $889.53.
The Court further recommends that an automatic increase of judgment be applied to damages awarded under the NYLL that remain unpaid upon the expiration of 90 days following issuance of judgment, or 90 days after expiration of the time to appeal, and no appeal is then pending, whichever is later. Finally, the Court respectfully recommends that breach of contract and promissory estoppel claims be deemed abandoned and dismissed with prejudice. * * *
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D) or (F)). A party may respond to another party's objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b). Any request for an extension of time for filing objections must be addressed to Judge Daniels.
FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).