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finding that presumption was not rebutted when employee-employer agreement that salary covered more than 40 hours of weekly work meant that, for part of Plaintiff's employment, his hourly regularly rate failed to comply with FLSA's minimum wage requirements
Summary of this case from Saldarriaga v. IND Glatt, Inc.Opinion
11 Civ. 3133 (LGS) (FM)
05-27-2014
MILTON GUALLPA, Plaintiff, v. NY PRO SIGNS INC., and DAVID RAFAELI, Defendants.
REPORT AND RECOMMENDATION TO THE HONORABLE LORNA G. SCHOFIELD FRANK MAAS, United States Magistrate Judge.
This is an overtime and wage and hours case brought under the Fair Labor Standards Act ("FLSA") and New York Labor Law ("NYLL"). Plaintiff Milton Guallpa ("Guallpa") alleges that defendants NY Pro Signs Inc. ("Pro Signs"), and David Rafaeli ("Rafaeli") (together, the "Defendants") paid him inadequate wages, made unlawful deductions from those wages, and later retaliated against him. (ECF No. 1) ("Complaint" or "Compl."). For the reasons set forth below, I recommend that Guallpa be awarded judgment against the Defendants in the amount of $119,720, plus prejudgment interest on the sum of $38,280 at the rate of nine percent per annum from February 28, 2008, to the date judgment is entered, attorneys' fees in the amount of $138,522.13, and costs in the amount of $5,608.84.
I. Procedural History
Guallpa commenced this action on May 9, 2011. (ECF No. 1). On May 4, 2012, Judge P. Kevin Castel, to whom this action then was assigned, struck Pro Signs' answer, (ECF No. 29), leaving only Rafaeli, Pro Signs' principal, to defend the action. Subsequently, Judge Castel referred the case to me for general pretrial supervision. (ECF No. 30). On April 9, 2013, after Rafaeli failed to comply with two orders of the Court and to respond to an order to show cause, I recommended that his answer also be stricken, that the Clerk of the Court be directed to enter both Defendants' default, and that Guallpa be directed to submit proof of his damages on notice to the Defendants. (See ECF Nos. 32, 36, 40, 44). On May 17, 2013, Your Honor adopted my recommendation. (ECF No. 49). On June 14, 2013, Guallpa filed inquest papers, which he amended on June 24, 2013, to correct an error. (ECF Nos. 52-58). Then, on July 2, 2013, Your Honor referred the matter to me to conduct an inquest. (ECF No. 59). Despite the passage of many months, neither of the Defendants has submitted any papers opposing Guallpa's inquest submission.
II. Standard of Review
In light of the Defendants' default, the Plaintiff's well-pleaded allegations concerning issues other than damages must be accepted as true. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Time Warner Cable of N.Y.C. v. Barnes, 13 F. Supp. 2d 543, 547 (S.D.N.Y. 1998).
Additionally, although a plaintiff seeking to recover damages against a defaulting defendant must prove its claims through the submission of admissible evidence, the Court need not hold a hearing so long as (a) the Court has determined the proper rule for calculating damages, see Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999), and (b) the plaintiff's evidence establishes, with reasonable certainty, the basis for the damages specified in the default judgment, see Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997).
Here, as set forth below, both requirements have been met. Accordingly, a hearing is unnecessary.
III. Relevant Facts
The uncontested Complaint and inquest papers establish as follows:
Pro Signs is a New York corporation that "designs, constructs and installs signs . . . , awnings and canopies, and other promotional display items." (Compl. ¶¶ 8, 14). Pro Signs installs these items at locations throughout the New York area, including in Connecticut and New Jersey. (See id. ¶ 16). Rafaeli is Pro Signs' President and Chief Executive Officer. (Id. ¶ 10).
Guallpa worked for Pro Signs from approximately May 2006 to December 27, 2009. (Id. ¶¶ 7, 18, 21). Rafaeli hired Guallpa, set his pay rate and hours, and exercised control over Guallpa's working conditions. (Id. ¶¶ 12, 18).
Guallpa routinely worked more than forty hours per week. (Id. ¶¶ 24-25). His regular hours were from 9 a.m. to 7 p.m. six days per week (a 60-hour work week), but he sometimes worked as late as 10 p.m. to finish an installation. (Id. ¶¶ 24-25). Guallpa estimates that he worked an average of 66 hours per week from the start of his employment through February 2009. (ECF No. 55 (Affirm. of Milton Guallpa, dated June 14, 2013 ("Guallpa Affirm."), ¶ 8)). In March 2009, Pro Signs reduced Guallpa's regular shift to 9 a.m. to 6 p.m., but he still worked six days per week (a 54-hour work week). (Compl. ¶ 24). Guallpa estimates that he worked an average of 60 hours per week from March 2009 to the end of his employment in December 2009. (Guallpa Affirm. ¶ 9). From the start of his employment to the end of 2008, Pro Signs did not have a time clock for Guallpa to record his time. (Compl. ¶ 28). Instead, he would record his time on a company calendar if he returned late from a work site. (Id.). In 2009, the company provided Guallpa with a punch card. (Id. ¶ 27).
Throughout his employment, the company paid Guallpa in cash. (Id. ¶ 19). When he started, Guallpa earned $350 per week. (Id. ¶ 29). He received periodic pay raises and was earning $540 per week when he left Pro Signs. (Id.). Pro Signs did not provide Guallpa the statutorily required overtime or spread of hours pay. (Id. ¶¶ 31-35). In fact, Pro Signs deducted approximately $100 from Guallpa's pay when a drill that Guallpa was using broke. Pro Signs claimed that additional deductions from his pay totaling approximately $135 constituted a "deposit" for future broken items. (Id. ¶¶ 38-39). Pro Signs did, however, pay Guallpa an additional minor sum (apparently averaging approximately $15) in weeks that he worked more than sixty hours. (Guallpa Affirm. ¶ 18).
Guallpa estimates that his pay raises were as follows: March 1, 2007, $420; January 1, 2008, $480; December 1, 2008, $600; and March 1, 2009, $540. (Guallpa Affirm. ¶ 15).
Pro Signs did not post notices regarding overtime or minimum wage in its workplace. (Id. ¶ 37). The Defendants' failure to comply with this and other requirements of the FLSA and NYLL was both knowing and willful. (See id. ¶¶ 26, 33, 36).
In April 2011, long after Guallpa left Pro Signs' employ, Rafaeli informed Guallpa's current employer that Guallpa was "pursuing legal claims against Rafaeli." (Id. ¶ 40). This caused Guallpa to fear that he might lose his job. (Guallpa Affirm. ¶ 23).
IV. Discussion
In Gurung v. Malhotra, 851 F. Supp. 2d 583, 591-92 (S.D.N.Y. 2012), I applied the holding of Fisher v. Vassar Coll., 70 F.3d 1420, 1452 (2d Cir. 1995), to find that, by their default, the defendants had waived any statute of limitations defense. Courts in this Circuit, however, generally have limited a plaintiff's recovery in the event of a defendant's default to the time period covered by the FLSA statute of limitations. See Vinas v. Pullini Subsurface Contractors, Inc., No. 11 Civ. 2765 (FB) (LB), 2012 WL 6641662, at *4 (E.D.N.Y. Oct. 5, 2012) (collecting cases). Because the Plaintiff in this action assumes that the statute of limitations applies to his claims, (see Pl.'s Mem. at 5), the Court should limit his recovery accordingly.
Under the NYLL, a plaintiff is afforded six years from the date of a violation to institute an action. NYLL § 663(3). Since Guallpa filed this action on May 9, 2011, he may recover damages under the state law dating back to May 9, 2005.
Under the FLSA, claims are subject to a two-year statute of limitations unless the employer's conduct was "willful," in which event the period is extended to three years. 29 U.S.C. § 255(a). In this case, the Defendants' default entitles Guallpa to a finding that they acted willfully. See, e.g., Wicaksono v. XYZ 48 Corp., No. 10 Civ. 3635 (LAK) (JCF), 2011 WL 2022644, at *3 (S.D.N.Y. May 2, 2011), report and rec. adopted, 2011 WL 2038973 (S.D.N.Y. May 24, 2011) (Kaplan, J.) (collecting cases). Guallpa therefore may recover damages under the FLSA dating back to May 9, 2008.
B. Liability
1. Covered Employee
Guallpa alleges that he was a covered employee under the FLSA on both individual and enterprise theories of liability. For an individual to qualify as an "employee" under the FLSA, he must be "in any workweek . . . engaged in commerce or in the production of goods for commerce." 29 U.S.C. §§ 206(a), 207(a). Commerce is defined as "trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof." Id. § 203(b). Since Guallpa installed signs not only in New York, but also in Connecticut and New Jersey, (Compl. ¶¶ 16, 22-23), he is covered individually; consequently, there is no need to consider whether he also would be covered under the enterprise theory of FLSA liability.
2. Employer
It also is clear that both Pro Signs and Rafaeli were "employers" within the meaning of the FLSA. Even if Pro Signs were not a small corporation, the "overwhelming weight of authority is that a corporate officer with operational control . . . is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages." Moon v. Kwon, 248 F. Supp. 2d 201, 237 (S.D.N.Y. 2002) (quoting Donovan v. Agnew, 712 F.2d 1509, 1511 (1st Cir. 1983)). As the President and Chief Executive Officer of Pro Signs, Rafaeli is a "corporate officer with operational control." (See Compl. ¶ 10). Indeed, he hired Guallpa and controlled his work schedule, rate of pay, and other work conditions. (Id. ¶¶ 12, 18).
3. Hours Worked and Wages Paid
"[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). Here, Guallpa claims that he worked more than forty hours per week throughout his employment, receiving a salary of between $350 and $600 per week. Guallpa concedes that he entered into an agreement with his employer that these wages would cover a sixty-hour work week for the period from May 2006 to February 2009, and a fifty-four-hour work week thereafter. (ECF No. 56 ("Pl.'s Mem.") at 11). Under both the FLSA and NYLL, however, there is a presumption that such a weekly salary covers only the first forty hours, unless the parties "intend and understand the weekly salary to include overtime hours at the premium rate." Giles v. City of N.Y., 41 F. Supp. 2d 308, 317 (S.D.N.Y. 1999) (emphasis added); see also Francois v. Mazer, 09 Civ. 3275 (KBF), 2012 WL 653886, at *4 (S.D.N.Y. Feb. 28, 2012) ("Under neither statute will a fixed salary be deemed to include an overtime component in the absence of an express agreement."); Amaya v. Superior Tile and Granite Corp., 10 Civ. 4525 (PGG), 2012 WL 130425, at *6, *9 (S.D.N.Y. Jan. 17, 2012) (agreement regarding weekly salary for more than forty-hour work week does not comply with statutes without explicit agreement as to inclusion of overtime premium); Wirtz v. Harper Buffing Mach. Co., 280 F. Supp. 376, 381 (D. Conn. 1968) ("The important objective is assurance that the employees and the employer are aware that overtime compensation in a specific amount is included in the contract. Unless both sides clearly understand this to be so, it cannot be said with any certainty that the purposes of the law in requiring additional pay for overtime work are being achieved.") (internal citations omitted).
Guallpa claims that his agreement with Pro Signs is unenforceable because it would result in an hourly wage below the minimum wage. (Pl.'s Mem. at 11). Guallpa's pay during various periods would have compared to the minimum wage as follows:
New York's minimum wage requirements may be found at New York State Department of Labor, Labor Statistics, History of the Hourly Minimum Wage, http://www.labor.ny.gov/stats/minimum_wage.asp (last visited May 20, 2014).
| Period | WeeklyRate | HourlyWage(60 Hours) | HourlyWage(40 Hours) | MinimumWage |
|---|---|---|---|---|
| May 1 - Dec. 31, 2006 | $350 | $5.83 | $8.75 | $6.75 |
| Jan. 1 - Feb. 28, 2007 | $350 | $5.83 | $8.75 | $7.15 |
| March 1 - Dec. 31, 2007 | $420 | $7.00 | $10.50 | $7.15 |
| Jan. 1 - Nov. 30, 2008 | $480 | $8.00 | $12.00 | $7.15 |
| Dec. 1, 2008 - Feb. 28, 2009 | $600 | $10.00 | $15.00 | $7.15 |
| Period | WeeklyRate | HourlyWage(54 Hours) | HourlyWage(40 Hours) | MinimumWage |
| March 1 - July 23, 2009 | $540 | $10.00 | $13.50 | $7.15 |
| July 24 - Dec. 27, 2009 | $540 | $10.00 | $13.50 | $7.25 |
C. Damages
1. Minimum Wage
As noted above, if Guallpa's pay is measured against a forty-hour work week, the weekly wage he received throughout his employment complied with the then-existing minimum wage requirements. Accordingly, Guallpa is not entitled to any unpaid minimum wages even though his complaint sought such damages.
2. Overtime
Employees covered by the FLSA and NYLL are entitled to overtime pay at one and one-half times their regular rate for every hour worked over forty hours per week. See 29 U.S.C. § 207(a)(1); 12 N.Y. Comp. Codes R. & Regs. tit. 12, § 142-2.2. The employee's regular rate is calculated by dividing the wage he received by the hours that wage was intended to cover. See Cuzco v. Orion Builders, Inc., 262 F.R.D. 325, 329 (S.D.N.Y. 2009); Giles, 41 F. Supp. 2d at 316-17. As noted above, the Court should calculate Guallpa's rate as though his weekly wage was intended to cover a forty-hour work week.
A plaintiff may not recover under both statutes for the same injury. Maldonado v. La Nueva Rampa, Inc., No. 10 Civ. 8195 (LLS) (JLC), 2012 WL 1669341, at *5 (S.D.N.Y. May 14, 2012). He may, however, elect to recover damages under the statute that provides for the greater recovery. Wicaksono, 2011 WL 2022644, at *3. Because the NYLL statute of limitations is longer, it provides Guallpa damages for the entirety of his employment. The Court therefore should calculate Guallpa's overtime damages under the NYLL.
The NYLL provides that "[a]n employer shall pay an employee for overtime . . . in the manner and methods provided in and subject to the exemptions of [the FLSA]." 12 N.Y. Comp. Codes R. & Regs. tit. 12, § 142-2.2. Accordingly, the only result of applying the NYLL in this case is that Guallpa benefits from the longer statute of limitations.
Guallpa claims that he worked more than forty hours per week throughout the period at issue. Specifically, Guallpa recalls working 66 hours per week from May 2006 to February 28, 2009, and 60 hours per week for the remainder of his employment. (Compl. ¶ 24; Guallpa Affirm. ¶¶ 8-9). In light of the Defendants' default, Guallpa's recollection controls. See Liu, 2004 WL 33412, at *3. Guallpa also recalls receiving extra pay for weeks in which he worked over 60 hours per week, but has factored this modest extra pay into his damages calculations by assuming a payment of $15 per week for each week he worked for Pro Signs. (ECF No. 54 (Decl. of Jennifer Pine, dated June 14, 2013 ("Pine Decl.")), ¶ 7, Ex. 10). Guallpa also has credited the Defendants for Christmas, New Year's Day, and the approximately three additional non-Sunday vacation days that he took each year. (Id. ¶ 6, Ex. 10). Finally, Guallpa contends that, on average, he took approximately one half-hour off each day for lunch. (Guallpa Affirm. ¶ 10; see Pine Decl. ¶ 5, Ex. 10). When these adjustments are made, Guallpa's unpaid overtime pay is as follows:
| Period | WeeklyRate | OvertimeRate | Approx.WeeksWorked | OvertimeHoursper Week | Approx.OvertimePaid | AmountOwed |
|---|---|---|---|---|---|---|
| May 1, 2006- Feb. 28,2007 | $350 | $13.13 | 42 | 23 | $634 | $12,050 |
| March 1 -Dec. 31,2007 | $420 | $15.75 | 43 | 23 | $639 | $14,938 |
| Jan. 1 - May8, 2008 | $480 | $18.00 | 18 | 23 | $276 | $7,176 |
| May 9 -Nov. 30,2008 | $480 | $18.00 | 29 | 23 | $426 | $11,580 |
| Dec. 1, 2008- Feb. 28,2009 | $600 | $22.50 | 13 | 23 | $193 | $6,535 |
| March 1 -Dec. 27,2009 | $540 | $20.25 | 42 | 17 | $632 | $13,827 |
| TOTAL: | $66,106 |
3. Spread of Hours
Under the NYLL, an employer must compensate an employee who works more than ten hours in one day for an additional hour at the minimum wage rate. N.Y. Comp. Codes R. & Regs. tit. 12, § 142-2.4. Guallpa contends that he never received this spread of hours pay, despite working more than ten hours "between three and four days per week between May 2006 and February 28, 2009, and one day per week between March 1, 2009 and December 27, 2009." (Pl.'s Mem. at 14-15; Guallpa Affirm. ¶ 19). He therefore claims that he is owed a total of $3,881 in spread of hours pay. (See Pine Decl. Ex. 11). Without rebuttal from the Defendants, Guallpa's recollection controls. See Liu, 2004 WL 33412, at *3. Accordingly, the Court should award Guallpa spread of hours damages in the amount of $3,881. (See Pine Decl. Ex. 11).
4. Unlawful Deductions
Guallpa claims that Pro Signs improperly deducted a total of $235 from his wages, consisting of $100 for a broken drill, and an additional $135 as a "deposit" for future broken equipment, which was not returned to him when he stopped working for Pro Signs. (Compl. ¶¶ 38-39). Under New York law, such a deduction is unlawful if not expressly authorized. See NYLL § 193(1)(b). Accordingly, the Court should award Guallpa $235.
5. Liquidated Damages
Both the FLSA and NYLL provide for the recovery of liquidated damages. Under the FLSA, liquidated damages in an amount equal to compensatory damages are mandatory, unless an employer demonstrates that it acted in good faith. 29 U.S.C. §§ 216(b), 260. During the period Guallpa worked for the Defendants, liquidated damages also were available to him in an amount equaling twenty-five percent of any underpayments for willful violations of the NYLL.
Effective April 9, 2011, Sections 198(1-a) and 663(1) of the NYLL were amended to provide for liquidated damages equal to one-hundred percent of the amounts underpaid. See NYLL §§ 198(1-a), 663(1). Guallpa argues that the Court should apply this amendment retroactively and award him one hundred percent liquidated damages. (Pl.'s Mem. at 16-17). Courts in this Circuit, however, have consistently declined to apply the amendment retroactively. See Maldonado, 2012 WL 1669341, at *9 n.19 (collecting cases). Accordingly, the Court should assess liquidated damages at the twenty-five percent rate applicable during the period Guallpa worked for the Defendants.
By virtue of their default, the Defendants have admitted that they acted willfully and in bad faith, thus entitling Guallpa to liquidated damages under both statutes. (See, e.g., Compl. ¶¶ 33, 36).
District courts in this Circuit have disagreed as to whether a plaintiff can recover liquidated damages simultaneously under both the FLSA and the NYLL. The majority view is that such a simultaneous recovery is permissible because liquidated damages under the FLSA and the NYLL serve different purposes. As those cases accurately state, while liquidated damages under the FLSA are considered compensatory, essentially serving as a form of prejudgment interest, liquidated damages under the NYLL are punitive. See, e.g., Yu G. Ke v. Saigon Grill, Inc., 595 F. Supp. 2d 240, 262 (S.D.N.Y. 2008) ("[A] prevailing plaintiff who can justify both [FLSA] liquidated damages and state-law [liquidated] damages should be eligible to recover both, since they . . . serve fundamentally different purposes.") (internal quotation marks omitted); accord Lanzetta v. Florio's Enters., Inc., No. 08 Civ. 6181 (DC), 2011 WL 3209521, at *5 (S.D.N.Y. July 27, 2011); Callier v. Superior Bldg. Servs., Inc., No. 09 Civ. 4590 (ILG) (JMA), 2010 WL 5625906, at *4 (E.D.N.Y. Dec. 22, 2010); Jin M. Cao v. Wu Liang Ye Lexington Rest., No. 08 Civ. 3725 (DC), 2010 WL 4159391, at *5 (S.D.N.Y. Sept. 30, 2010).
Other courts have disagreed, holding that "a plaintiff is not entitled to both federal and state liquidated damages because they serve the same practical purposes in compensating the plaintiff and deterring wage violations." Li Ping Fu v. Pop Art Int'l Inc., No. 10 Civ. 8562 (DLC) (AJP), 2011 WL 4552436, at *5 (S.D.N.Y. Sept. 19, 2011), report and rec. adopted as modified on other grounds, 2011 WL 6092309 (S.D.N.Y. Dec. 7, 2011); see Jin v. Pac. Buffet House, Inc., No. 06 Civ. 579 (VVP), 2009 WL 2601995, at *9 (E.D.N.Y. Aug. 24, 2009) ("Regardless of the purpose, the award under the FLSA is four times the award under state law, and thus is more than sufficient to satisfy any punitive purpose the state law is intended to serve."); Chun Jie Yin v. Kim, No. 07 Civ. 1236 (DLI) (JO), 2008 WL 906736, at *7 (E.D.N.Y. Apr. 1, 2008) ("[T]o the extent the 'liquidated damages' available under the FLSA can properly be characterized as compensation, it is apparent that the 'liquidated damages' available under the state statute compensates the exact same harm - namely, the harm caused by the defendant's culpable state of mind.").
Although there are similarities in the "practical purposes" of both statutes, Li Ping Fu, 2011 WL 4552436, at *5, the Second Circuit has impliedly recognized that the liquidated damages provisions serve different goals. See Reich v. S. New England Telecomm. Corp., 121 F.3d 58, 71 (2d Cir. 1997) ("Liquidated damages under the FLSA are considered compensatory rather than punitive in nature."). Consistent with that majority view, Guallpa should be permitted to recover liquidated damages under both the FLSA and NYLL. Indeed, by not participating in this suit, the Defendants have waived any claim to the contrary.
Because Guallpa is limited by the FLSA's three-year statute of limitations for cases involving willful conduct, Guallpa's FLSA liquidated damages total $31,942, which is one hundred percent of the amount he is owed in overtime pay for the period after May 9, 2008. The base on which the Court must calculate Guallpa's NYLL liquidated damages includes unpaid wages for the entire period during which he worked for Pro Signs due to the NYLL's longer statute of limitations, as well as the amount owed to him for spread of hours pay and unlawful deductions. See Galeana v. Lemongrass on Broadway Corp., No. 10 Civ. 7270 (GBD) (MHD), 2014 WL 1364493, at *10 (S.D.N.Y. Apr. 4, 2014) (plaintiffs entitled to liquidated damages on spread of hours underpayment under state law); Greathouse v. JHS Sec. Inc., No. 11 Civ. 7845 (PAE) (GWG), 2012 WL 5185591, at *3 (S.D.N.Y. Oct. 19, 2012) (liquidated damages calculation under NYLL must include unlawful deductions). As previously discussed, Guallpa is owed $66,106 in unpaid wages, $3,881 in spread of hours pay, and $235 in unlawful deductions under the NYLL, for a total of $70,222. Guallpa is entitled to twenty-five percent of that amount, or $17,556, as state law liquidated damages.
The Court therefore should award Guallpa a total of $49,498 in liquidated damages ($31,942 + $17,556).
6. Prejudgment Interest
Guallpa also is entitled to prejudgment interest on his state law claims at the rate of nine percent per annum. N.Y. C.P.L.R. §§ 5001, 5004. Guallpa is not entitled to prejudgment interest on his FLSA claims because the liquidated damages that have been assessed under the FLSA are the "functional equivalent of prejudgment interest on the overtime pay." See Santillan v. Henao, 822 F. Supp. 2d 284, 298 (E.D.N.Y. 2011) (Both prejudgment interest and liquidated damages awarded under the FLSA are "designed to compensate employees for delay in payment."). Guallpa suggests that prejudgment interest on his state overtime and spread of hours claims be awarded using the midpoint of his employment as the basis for calculation. (See Pl.'s Mem. at 18; N.Y.C.P.L.R. § 5001(b)). Given the length of his employment, this is an appropriate way to calculate interest. See Liu, 2004 WL 33412, at *5 (approving midpoint as basis for calculation of interest). The midpoint date of Guallpa's employment is February 28, 2008. Prejudgment interest on Guallpa's NYLL claims should therefore be calculated from that date forward at the rate of nine percent per annum.
The sum of Guallpa's NYLL claims is $70,222 (unpaid NYLL overtime ($66,106) + unpaid spread of hours ($3,881) + unlawful deductions ($235)). Guallpa has already recovered prejudgment interest for the three-year FLSA period through the award of FLSA liquidated damages. See Saigon Grill, 595 F. Supp. 2d at 261; Maldonado, 2012 WL 1669341, at *10. Therefore prejudgment interest should be awarded on his NYLL claims based on the principal amount of $38,280, the difference between the total ($70,222) and the amount already paid in FLSA liquidated damages ($31,942).
7. Retaliation Damages
Finally, Guallpa claims that Rafaeli retaliated against him for asserting his wage claims, in violation of NYLL § 215, by informing his current employer about this action, and by threatening Guallpa through his uncle that Rafaeli would report Guallpa to the immigration authorities. (Compl. ¶¶ 61-65; Pl.'s Mem. at 18-22; Guallpa Affirm. ¶ 24). Guallpa asserts that he feared he would lose his current job, and that the threats regarding immigration caused him to become "anxious, scared, and . . . to lose sleep." (Guallpa Affirm. ¶ 24).
Under New York law, an employer may not "discharge, threaten, penalize, or in any other manner discriminate or retaliate against any employee . . . because such employee has made a complaint to his or her employer." NYLL § 215(1)(a). "To establish a prima facie claim of retaliation . . . , a plaintiff must show: '[a] participation in protected activity known to the defendant, like the filing of a FLSA lawsuit; [b] an employment action disadvantaging the plaintiff; and [c] a causal connection between the protected activity and the adverse employment action.'" Kassman v. KPMG LLP, 925 F. Supp. 2d 453, 472 (S.D.N.Y. 2013) (quoting Mullins v. City of N.Y., 626 F.3d 47, 53 (2d Cir. 2010)). "An employment action disadvantages an employee if 'it well might have dissuaded a reasonable worker from making or supporting [similar] charge[s].'" Mullins, 626 F.3d at 53 (quoting Burlington N. & Santa Fe Ry. Co. v. White, 548 U.S. 53, 68 (2006) (internal quotation marks and citations omitted)).
In his Complaint, Guallpa alleges only that Rafaeli retaliated against him by contacting his current employer regarding Guallpa's legal claims. (Compl. ¶ 40). He made no mention of Rafaeli's threats regarding immigration until he filed his affidavit in support of his inquest papers.
By defaulting, a party is considered to have admitted only the well-pleaded allegations of the complaint relating to liability. See Cotton, 4 F.3d at 181; Greyhound, 973 F.2d at 158; Barnes, 13 F. Supp. 2d at 547. The defaulting party cannot be deemed to have admitted factual allegations that never appeared in the complaint. Furthermore, Rule 54(c) of the Federal Rules of Civil Procedure mandates that a "default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." The rationale behind this rule has been described as follows:
[T]he defending party should be able to decide on the basis of the relief requested in the original pleading whether to expend the time, effort, and money necessary to defend the action. It would be fundamentally unfair to have the complaint lead defendant to believe that only a certain type and dimension of relief was being sought and then, should defendant attempt to limit the scope and size of the potential judgment by not appearing or otherwise defaulting, allow the court to give a different type of relief or a larger damage award. In a similar vein, unless all the parties in interest have appeared and voluntarily litigated an issue not within the pleadings, the court should consider only those issues presented in the pleadings. In sum, then, a default judgment may not extend to matters outside the issues raised by the pleadings or beyond the scope of the relief demanded.10 Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure, § 2663 (3d ed. 1998) (footnotes omitted).
In reviewing the Complaint in this action, a defendant would not reasonably have been aware that Guallpa sought damages for retaliation based on threats to report Guallpa and his family to immigration authorities. Accordingly, the Court should not consider these allegations in its calculation of the default judgment.
Although the Complaint includes Guallpa's allegation that Rafaeli informed Guallpa's current employer of his legal action, this allegation is insufficient to support a retaliation claim under NYLL § 215 because it fails to establish the second element, an employment action disadvantaging Guallpa. Guallpa alleges only that Rafaeli "told the new employer that [Guallpa] was pursuing legal claims against Rafaeli." (Compl. ¶ 40). He makes no allegation that Rafaeli attempted to have him fired, said anything untrue, or even said anything negative. Cf. Memnon v. Clifford Chance US, LLP, 667 F. Supp. 2d 334, 342-43 (S.D.N.Y. 2009) (The "spreading of negative information or references to a prospective employer is sufficient to constitute an adverse employment action in the retaliation context."). Accordingly, in the absence of any evidence that Guallpa was disadvantaged, the Court should not award him damages based on this aspect of his retaliation claim.
8. Attorneys' Fees and Costs
To determine the reasonable attorneys' fees to which a party is entitled, a court must calculate the "presumptively reasonable fee," which has often previously been referred to as the "lodestar." Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 183, 189-90 (2d Cir. 2008). The presumptively reasonable fee is calculated by multiplying the number of hours reasonably expended by the reasonable hourly rate. Millea v. Metro-North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011).
a. Reasonable Hourly Rate
Guallpa seeks to recover fees for legal services rendered by the firm of Vladeck, Waldman, Elias & Engelhard, P.C. ("Vladeck") and by Brandworkers, a workers' rights organization.
In assessing the reasonableness of the hourly rates sought by Guallpa's counsel, the court may consider the "market rates 'prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.'" Gierlinger v. Gleason, 160 F.3d 858, 882 (2d Cir. 1998) (quoting Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984)). Additionally, the Court may rely on its own knowledge of private firm hourly rates. Miele v. N.Y. State Teamsters Conference Pension & Ret. Fund, 831 F.2d 407, 409 (2d Cir. 1987). The "relevant community" is "normally the forum district." Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 369 F.3d 91, 96 (2d Cir. 2004).
There is no question that Vladeck is highly regarded in the field of employment law. See, e.g., Merino v. Beverage Plus Am. Corp., No. 10 Civ. 0706 (ALC) (RLE), 2012 WL 4468182, at *2 (S.D.N.Y. Sept. 25, 2012); Allende v. Unitech Design, Inc., 783 F. Supp. 2d 509, 514 (S.D.N.Y. 2011). In this case, Guallpa seeks to recover for services rendered by three attorneys at that firm, whose names and proposed billing rates are as follows: Jeremiah Iadevaia ($400/hour), Valdi Licul ($600/hour), and Maia Goodell ($550/hour).
Iadevaia, the principal timekeeper, is a 2006 graduate of Northeastern University School of Law who became associated with Vladeck in 2007. (ECF No. 53 (Decl. of Jeremiah Iadevaia, dated June 14, 2013) ("Iadevaia Decl.") ¶ 19). He became a partner in the firm in January 2013. (Id.).
Licul is a 1995 graduate of Brooklyn Law School. He worked from 1996 to 2001 with the Special Litigation and Appeals Unit of Mental Hygiene Legal Services for the Appellate Division, Second Department. He joined Vladeck in 2003, and became a partner in 2007. (Id. ¶ 22).
Goodell joined Vladeck in 2006 and became a partner in 2009. She received her J.D. from the University of Michigan in 2001 and an L.L.M. from Yale Law School in 2006. (Id. ¶ 21). Goodell supervised Iadevaia's work on Guallpa's case until her departure in September 2012. (Id. ¶¶ 18, 21). After her departure, Licul assumed the supervisory role. (Id. ¶ 18).
In addition, Guallpa seeks to recover fees for services rendered by three Vladeck paralegals at the rate of $150 per hour and numerous Vladeck student law clerks at the rate of $125 per hour.
There were two timekeepers at Brandworkers: Daniel Gross, the organization's executive director, who graduated from law school in 2007, and Diana Marino, a "staff employee" who billed for less than ten hours of time. Guallpa seeks compensation for Gross's time at the rate of $325 per hour for work performed between March and September 2011, and $375 per hour for work performed after October 2011. He seeks compensation for Marino's time at the rate of $100 per hour.
The rates charged by Vladeck and Brandworkers have been addressed in several relatively recent decisions. See, e.g., DeCurtis v. Upward Bound Int'l, Inc., No. 09 Civ. 5378 (RJS), 2013 WL 3270357, at *6 (S.D.N.Y. June 3, 2013); Merino, 2012 WL 4468182, at *2; Allende, 783 F. Supp. 2d at 514-15; DeCurtis v. Upward Bound Int'l, Inc., No. 09 Civ. 5378 (RJS), 2011 WL 4549412, at *7-8 (S.D.N.Y. Sept. 27, 2011). The rates approved in those decisions may be summarized as follows:
| DeCurtis(2013) | Merino(2012) | Allende(2011) | |
|---|---|---|---|
| Iadevaia | $350 | ||
| Licul | $600 | ||
| Goodell | $450 | $450 | |
| Gross | $300 | $300 | |
| Law Clerks | $150 | $125 | $125 |
| Paralegals | $125 | $100 | $100 |
In light of these approved rates, and with due consideration for the passage of time, I conclude that the following hourly billing rates should be approved:
| Timekeeper | Rate |
|---|---|
| Iadevaia | $350 |
| Licul | $600 |
| Goodell | $500 |
| Gross | $325 |
| Law Clerks | $150 |
| Paralegals | $125 |
| Marino | $100 |
b. Hours Reasonably Expended
Chief Judge Preska has summarized the steps a court must take to determine the reasonableness of the hours reported by counsel as follows:
[T]he court must look first to the time and work as they are documented by the attorney's records. See Forschner Group, Inc. v. Arrow Trading Co., Inc., No. 92 Civ. 6953 (LAP), 1998 WL 879710, at *2 (S.D.N.Y. Dec. 15, 1998). Next the court looks to "its own familiarity with the case and its experience generally. . . . Because attorneys' fees are dependent on the unique facts of each case, the resolution of the issue is committed to the discretion of the district court." AFP Imaging Corp. v. Phillips Medizin Sys., No. 92 Civ. 6211 (LMM), 1994 WL 698322, at *1 (S.D.N.Y. Dec. 13, 1994) (quoting Clarke v. Frank, 960 F.2d 1146, 1153 (2d Cir. 1992) (quoting DiFilippo v. Morizio, 759 F.2d 231, 236 (2d Cir. 1985))).Santa Fe Natural Tobacco Co. v. Spitzer, Nos. 00 Civ. 7274 (LAP), 00 Civ. 7750 (LAP), 2002 WL 498631, at *3 (S.D.N.Y. Mar. 29, 2002).
. . . .
Finally, billing judgment must be factored into the equation. Hensley, 461 U.S. at 434; DiFilippo, 759 F.2d at 235-36.
If the court determines that the fees requested are excessive, the "district court may exercise its discretion and use a percentage deduction as a practical means of trimming fat." McDonald ex rel. Prendergast v. Pension Plan of the NYSA-ILA Pension Trust Fund, 450 F.3d 91, 96 (2d Cir. 2006) (internal quotations omitted). Using this form of "rough justice," judges in this District have imposed varying percentage reductions. See, e.g., Romeo and Juliette Laser Hair Removal, Inc. v. Assara I, LLC., No. 08 Civ. 442 (TPG) (FM), 2013 WL 3322249, at *6-*8 (S.D.N.Y. July 2, 2013) (reducing fees of principal biller, an associate, by seventy-five percent because her time charges were "grossly excessive relative to the nature of the work performed"); Days Inn Worldwide. Inc. v. Amar Hotels, Inc., No. 05 Civ. 10100 (KMW) (KNF), 2008 WL 2485407, at *10 (S.D.N.Y. June 18, 2008) (reducing attorneys' fees by seventy-five percent because "a substantial amount of work performed . . . was redundant and unnecessarily duplicative"); Lide v. Abbott House, No. 05 Civ. 3790 (SAS), 2008 WL 495304, at *1-*2 (S.D.N.Y. Feb. 25, 2008) (reducing attorney fee award by thirty percent for various reasons, including "excessive and unnecessary hours spent on indisputably straightforward tasks"); Winkler v. Metro. Life Ins. Co., No. 03 Civ. 9656 (SAS), 2006 WL 2347826, at *2 (S.D.N.Y. Aug. 10, 2006) (reducing lodestar figure by twenty percent for "excessive charges and lack of delegation").
Guallpa seeks reimbursement for approximately 523 hours of billable time for a total of $178,750.75. (Iadevaia Decl. ¶ 31; ECF No. 58). This, of course, is nearly double the amount that I have concluded Guallpa should recover in actual and liquidated damages. Nevertheless, the legal fees to be awarded need not be proportional to the plaintiff's recovery in FLSA cases because the award of a reasonable fee vindicates "Congressionally identified policies and rights." E.g., Merino, 2012 WL 4468182, at *1; Allende, 783 F. Supp. 2d at 511. That said, the time spent on this relatively straightforward matter was excessive, and some entries are vague and block-billed. For example, on two occasions in January and February 2012, a paralegal spent one-half hour performing unspecified "research." (Iadevaia Decl. Ex. 8 at 4). On February 14, 2012, Iadevaia spent more than five hours on work described as "[d]rafted deficiency letter, research re: same; revised email to def. re: deficiency letter; emails and calls to Brandworkers re: discovery and settlement; conferences w/ MG re: same; call to potential witnesses. (Id.). On March 21, 2012, a law clerk billed six hours researching whether Guallpa had a basis "to oppose as premature defendant counsel's request to be paid fees by defendant" and "to request expedited discovery about defendant's finances." (Id. at 5). In November 2012, Iadevaia spent more than twenty hours drafting a pretrial order and proposed jury charges. (Id. at 9). Licul also spent more than ten hours on the same task. (See id. at 8-9). Finally, in May 2013, Iadevaia again spent more than twenty hours drafting a reply to Rafaeli's two-page objection to the Court's April 10, 2013, report and recommendation. (Id. at 11).
Since the hours billed by the Brandworkers timekeepers were very modest, I conclude that only the Vladeck hours require adjustment, in the form of a fifteen percent reduction. Guallpa therefore should recover attorneys' fees as follows:
| Timekeeper | HoursRequested | HoursReduced by15% | Hourly Rate | Total |
|---|---|---|---|---|
| Jeremiah Iadevaia | 313.25 | 266.3 | $350 | $93,191.88 |
| Valdi Licul | 28.5 | 24.2 | $600 | $14,535.00 |
| Maia Goodell | 26.5 | 22.5 | $500 | $11,262.50 |
| Daniel Gross | 5.07 | -- | $325 | $1,647.75 |
| Law Clerks | 86 | 73.1 | $150 | $10,965.00 |
| Paralegals | 56 | 47.6 | $125 | $5,950.00 |
| Staff Employee | 9.7 | -- | $100 | $970.00 |
| Total: | $138,522.13 |
c. Costs and Expenses
The Court also has the discretion to award a prevailing party its costs. See Fed. R. Civ. P. 54(d)(1). Although the items recoverable as statutory costs are limited, see 28 U.S.C. § 1920, a party may also recover as part of a fee award "those reasonable out-of-pocket expenses incurred by attorneys and ordinarily charged to their clients." Marisol A. ex rel. Forbes v. Giuliani, 111 F. Supp. 2d 381, 401 (S.D.N.Y. 2000) (internal quotation mark omitted). Here, Guallpa has submitted an itemization of the following costs and expenses:
| Service of Process: | $356.20 |
| Postage: | $98.41 |
| Transcripts: | $2,654.58 |
| Express Mail: | $113.31 |
| Photocopies: | $905.40 |
| Filing Fees: | $350.00 |
| Messenger: | $78.75 |
| Miscellaneous: | $43.00 |
| Lexis/Pacer: | $23.52 |
| Fax: | $16.00 |
| Witness/Subpoena Fee: | $49.80 |
| Westlaw: | $139.37 |
| Asset Search: | $350.00 |
| Translation Services: | $473.50 |
|---|---|
| Total: | $5,651.84 |
V. Conclusion
For the foregoing reasons, I recommend that Guallpa be awarded judgment in the amount of $119,720, plus prejudgment interest on the sum of $38,280 at the rate of nine percent per annum from February 28, 2008, to the date judgment is entered, attorneys' fees in the amount of $138,522.13, and costs and expenses in the amount of $5,608.84.
VI. Notice of Procedure for Filing of Objections to this Report and Recommendation
The parties are hereby directed that if they have any objections to this Report and Recommendation, they must, within fourteen days from today, make them in writing, file them with the Clerk of the Court, and send copies to the chambers of the Honorable Lorna G. Schofield, United States District Judge, and to the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed. R. Civ, P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be directed to Judge Schofield. Any failure to file timely objections will result in a waiver of those objections for purposes of appeal. See Thomas v. Arn, 474 U.S. 140 (1985); 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b). Dated: New York, New York
May 27, 2014
/s/_________
FRANK MAAS
United States Magistrate Judge Copies to: Plaintiff's Counsel via ECF David Rafaeli (via U.S. Mail)
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