Opinion
21 Civ. 9946 (GHW) (GWG)
11-15-2022
JONELLE HARRIS, individually and on behalf of all others similarly situated, Plaintiff, v. OLD NAVY, LLC, Defendant.
REPORT & RECOMMENDATION
GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE
Plaintiff Jonelle Harris, suing individually and on behalf of all others similarly situated, brings this case against defendant Old Navy, LLC (“Old Navy”), alleging violations of the New York Labor Law, Article 6, §§ 190 et seq. (“NYLL”). See Complaint, filed Nov. 24, 2021 (Docket # 1); Amended Complaint, filed Mar. 5, 2022 (Docket # 7) (“Compl.”). Old Navy has moved to dismiss the complaint.For the following reasons, Old Navy's motion should be denied.
Motion to Dismiss, filed Apr. 14, 2022 (Docket # 23) (“Mot.”); Memorandum of Law in Support of Motion to Dismiss, filed Apr. 14, 2022 (Docket # 24) (“Def. Mem.”); Memorandum of Law in Opposition to Motion to Dismiss, filed May 16, 2022 (Docket # 26) (“Pl. Mem.”); Reply Memorandum of Law in Support of Motion to Dismiss, filed June 1, 2022 (Docket # 27) (“Def. Reply”).
I. BACKGROUND
According to the complaint, Old Navy hired Harris as an hourly worker. Compl. ¶ 9. While the complaint is not clear as to Harris's job title, it appears she was a “sales representative.” Id. ¶ 1. Over twenty-five percent of her job duties consisted of “physical tasks,” such as “stocking shelves and clothing racks,” “cleaning and organizing fitting rooms.” “folding clothes,” “sorting clothing racks,” “hanging clothes,” “opening, moving, stacking and lifting boxes,” and “standing for long periods of time.” Id. ¶ 31. Based on her performance of these tasks, Harris asserts that she was a “manual worker.” Id. ¶ 3. While New York law requires manual workers to be paid on a weekly basis, NYLL § 191(1)(a), Old Navy paid Harris on a biweekly basis, Compl. ¶¶ 32-33.
Harris's employment began in 2018 and ended in January 2021. Compl. ¶ 9. She purports to bring claims on behalf of herself and “[a]ll persons who work or have worked as Hourly Workers for Old Navy, LLC between April 10, 2015 and the date of final judgment in this matter.” Compl. ¶ 20.
Old Navy raises three arguments in support of its motion to dismiss the complaint. First, Old Navy argues that Harris does not have Article III standing, and thus that the Court lacks subject matter jurisdiction, because the complaint fails to allege that she suffered an actual injury. See Def. Mem. at 4-8. Second, Old Navy argues that Harris cannot serve as the named plaintiff for the putative class because she did not work for Old Navy during the entire class period. See id. at 8-9. Third, Old Navy argues that NYLL §191(1)(a) cannot be enforced through a lawsuit by a private party. See id. at 10-22.
II. LEGAL STANDARD
“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994). A case must be dismissed for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) “when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (citing Fed.R.Civ.P. 12(b)(1)). The plaintiff carries “the burden of proving by a preponderance of the evidence that [subject matter jurisdiction] exists.” Id. When deciding a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction based exclusively on the face of the complaint, “the district court must take all uncontroverted facts in the complaint (or petition) as true, and draw all reasonable inferences in favor of the party asserting jurisdiction.” Tandon v. Captain's Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014) (citation omitted). If the parties dispute jurisdictional facts, “the court has the power and obligation to decide issues of fact by reference to evidence outside the pleadings, such as affidavits.” APWU v. Potter, 343 F.3d 619, 627 (2d Cir. 2003) (punctuation omitted) (quoting LeBlanc v. Cleveland, 198 F.3d 353, 356 (2d Cir. 1999)).
“Where, as here, the defendant moves for dismissal under Rule 12(b)(1), as well as on other grounds, the court should consider the Rule 12(b)(1) challenge first since if it must dismiss the complaint for lack of subject matter jurisdiction, the accompanying defenses and objections become moot and do not need to be determined.” Rhulen Agency, Inc. v. Alabama Ins. Guar. Ass'n, 896 F.2d 674, 678 (2d Cir. 1990) (citation and punctuation omitted).
A party may move to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) when the opposing party's complaint “fail[s] to state a claim upon which relief can be granted.” While a court must accept as true all of the factual allegations contained in a complaint, that principle does not apply to legal conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (“[A] plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”) (punctuation omitted). In other words, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice,” Iqbal, 556 U.S. at 678, and a court's first task is to disregard any conclusory statements in a complaint, id. at 679.
Next, a court must determine if the complaint contains “sufficient factual matter” which, if accepted as true, states a claim that is “plausible on its face.” Id. at 678 (punctuation omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (punctuation omitted). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct,” a complaint is insufficient under Fed.R.Civ.P. 8(a) because it has merely “alleged” but not “‘show[n]' . . . that the pleader is entitled to relief.” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).
III. DISCUSSION
A. Subject Matter Jurisdiction
Old Navy maintains that the Court must dismiss the complaint for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) because Harris “does not (and cannot) show that Old Navy's alleged violation of the NYLL actually caused her concrete harm.” Id. at 4.
“Article III of the Constitution grants the Judicial Branch authority to adjudicate ‘Cases' and ‘Controversies.'” Already, LLC v. Nike, Inc., 568 U.S. 85, 90 (2013). To establish Article III standing, and thus to establish subject matter jurisdiction, “a plaintiff must show (1) an injury in fact, (2) a sufficient causal connection between the injury and the conduct complained of, and (3) a likelihood that the injury will be redressed by a favorable decision.” Susan B. Anthony List v. Driehaus, 573 U.S. 149, 157-58 (2014) (punctuation omitted). “The ‘case or controversy' requirement is not satisfied by a ‘difference or dispute of a hypothetical or abstract character.'” Nike, Inc. v. Already, LLC, 663 F.3d 89, 94 (2d Cir. 2011) (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240 (1937)), aff'd, 568 U.S. 85 (2013). Harris, “as the party invoking federal jurisdiction, bears the burden of establishing these elements.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016).
Of the three standing requirements, Old Navy argues that Harris's claim fails the first element: that is, that Harris did not suffer “an injury in fact” when Old Navy paid her wages on a biweekly rather than on a weekly basis. See Def. Mem. at 4-6.
“[T]he injury-in-fact requirement . . . helps to ensure that the plaintiff has a personal stake in the outcome of the controversy.” Susan B. Anthony List, 573 U.S. at 158 (punctuation omitted). “To demonstrate injury in fact, a plaintiff must show the invasion of a [1] legally protected interest that is [2] concrete and [3] particularized and [4] actual or imminent, not conjectural or hypothetical.” Strubel v. Comenity Bank, 842 F.3d 181, 188 (2d Cir. 2016) (punctuation omitted). “[I]n suits for damages plaintiffs cannot establish Article III standing by relying entirely on a statutory violation or risk of future harm.” Maddox v. Bank of N.Y. Mellon Tr. Co., 19 F.4th 58, 64 (2d Cir. 2021); see TransUnion LLC v. Ramirez, 141 S.Ct. 2190, 2205 (2021) (“an important difference exists between (i) a plaintiff's statutory cause of action to sue a defendant over the defendant's violation of federal law, and (ii) a plaintiff's suffering concrete harm because of the defendant's violation of federal law.”). “[H]istory and tradition offer a meaningful guide to the types of cases that Article III empowers federal courts to consider.” Sprint Commc'ns Co. v. APCC Servs., Inc., 554 U.S. 269, 274 (2008). Accordingly, “courts should assess whether the alleged injury to the plaintiff has a ‘close relationship' to a harm ‘traditionally' recognized as providing a basis for a lawsuit in American courts.” TransUnion LLC, 141 S.Ct. at 2204.
The amended complaint alleges that Old Navy, by paying Harris biweekly rather than weekly, effectively denied her the timely payment of her wages every other week. See Compl. ¶¶ 36-39. Harris alleges that she “was denied the time value of her money” because she was “unable to invest, save, or purchase utilizing the wages she earned and was owed” for each of these weeks without timely pay. Id. ¶ 40.
In Old Navy's view, these allegations are insufficient to satisfy the standing requirement because they do not show the late payments “actually and concretely harmed her.” Def. Mem. at 5. Old Navy suggests that Harris' allegations lack “a specific plan for her money (e.g., how she would have invested her wages, what she would have invested in, or in what way her investments would have increased the value of her funds).” Id. at 5-6. The result, in its view, is that the harm to plaintiff is “purely hypothetical.” Id.
Courts have commonly held that the “temporary deprivation of money to which a plaintiff has a right constitutes a sufficient injury in fact to establish Article III standing.” Porsch v. LLR, Inc., 380 F.Supp.3d 418, 424 (S.D.N.Y. 2019); accord Van v. LLR, Inc., 962 F.3d 1160, 1161 (9th Cir. 2020) (“the temporary deprivation of money gives rise to an injury in fact for purposes of Article III standing”); MSPA Claims 1, LLC v. Tenet Fla., Inc., 918 F.3d 1312, 1318 (11th Cir. 2019) (“The inability to have and use money to which a party is entitled is a concrete injury.”); Dieffenbach v. Barnes & Noble, Inc., 887 F.3d 826, 828 (7th Cir. 2018) (“The plaintiffs have standing . . . because unauthorized withdrawals from their accounts cause a loss (the time value of money) even when banks later restore the principal”). This reasoning has led courts to hold that “the late payment of wages can constitute a concrete harm sufficient to confer standing on a plaintiff who seeks relief under Sections 191 and 198 of the NYLL.” Rosario v. Icon Burger Acquisition LLC, 2022 WL 198503, at *3 (E.D.N.Y. Jan. 21, 2022); accord Levy v. Endeavor Air Inc., 2022 WL 16645829, at * 3 (E.D.N.Y. Nov. 1, 2022); Elhassa v. Hallmark Aviation Servs., L.P., 2022 WL 563264, at *2 (S.D.N.Y. Feb. 24, 2022); Caul v. Petco Animal Supplies, Inc., 2021 WL 4407856, at *4 (E.D.N.Y. Sept. 27, 2021). As Levy pointed out, “the loss of the time value of the money owed to plaintiff is not a harm that might occur, but one that has occurred; it is not a harm that might materialize, but one that has materialized.” 2022 WL 16645829 at *4 (emphasis in original). This Court agrees. While the harm Harris suffered may be difficult to measure or approximate, the harm is real, not hypothetical.
Although Rosario held in a suit invoking § 191 that the plaintiff's “barebones Amended Complaint contains no facts from which the Court could plausibly conclude that Plaintiff actually suffered the sort of harm that would entitle him to relief,” 2022 WL 198503 at *3, the complaint in Rosario differed from Harris' complaint inasmuch as it alleged only that “Defendant failed to pay Plaintiff and the Class on a timely basis as required by the NYLL,” id., without ever describing what the harm was. Similarly, in Rath v. Jo-Ann Stores, LLC, 2022 WL 3701163 (W.D.N.Y. Aug. 26, 2022), the court found a lack of standing where a party alleged only the failure to make weekly payments, without any statement about the consequences of that failure. Id. at *7-8 (“[W]hat is left unstated is how Plaintiff was harmed by the up to one week delay while being paid biweekly.”). Here, by contrast, Harris has alleged that she was harmed because of her the inability to use the wages she earned and because the delay in payment deprived her of the ability to invest, save, or spend that money. Compl. ¶ 40. This allegation distinguishes this matter from cases where a plaintiff failed to plead any injury at all from delayed payment.
In any event, Harris need not describe the particularity of her alleged injury at length at the pleading stage, because “general factual allegations of injury resulting from the defendant's conduct may suffice.'” Lujan, 504 U.S. at 561; accord Whole Foods, 858 F.3d at 736; see also Gillett v. Zara USA, Inc., 2022 WL 3285275, at *7 (S.D.N.Y. Aug. 10, 2022) (“This Court does not read TransUnion or any other binding precedent to require a plaintiff to specify how he intended to take advantage of the time value of his wages if they had not been improperly withheld for a period of time.”).
Thus, although Harris has not identified specific interest-bearing accounts in which she would have invested her weekly earnings or articulated specific purchases she would have made rather than foregone had her pay been timely, at this stage it is enough that Harris has pled injury through the allegation that she was denied the ability “to invest, save, or purchase” using the wages she was owed. Courts have declined to dismiss a § 191 claim based on standing at the pleading stage “[e]ven if Plaintiff's allegations currently are on the light side and do not contain detail on how the late payment specifically harmed her.” Elhassa, 2022 WL 563264, at *2.
Old Navy cites Kawa Orthodontics, LLP v. Secretary, U.S. Dep't of the Treasury, 773 F.3d 243 (11th Cir. 2014), a declaratory judgment action where no concrete injury was found despite the plaintiff's claim that it lost the time value of its money. See Def. Mem. at 7-8. There was no standing in that case, however, because the complaint had “not mention[ed] the word ‘interest,'” and the court declined to “hypothesize or speculate about the existence of an injury [the plaintiff] did not assert.” Kawa, 773 F.3d at 246. Here, however, the amended complaint expressly alleges that Harris's inability to invest, save, or purchase with the wages Old Navy owed Harris harmed her. See Compl. ¶ 40.
The same pleading defect is present in other cases Old Navy cited. See Barber v. Lincoln Nat'l Life Ins. Co., 260 F.Supp.3d 855, 862 (W.D. Ky. 2017) (“the Court cannot find injury via implication”), aff'd, 722 Fed.Appx. 470 (6th Cir. 2018); Epstein v. JPMorgan Chase & Co., 2014 WL 1133567, at *7 n.6 (S.D.N.Y. Mar. 21, 2014) (“Plaintiff does not make this claim in his papers and the Court will not make arguments for him”).
Old Navy argues that the Second Circuit's decision in Maddox has undermined the reasoning of cases that find standing based on the late payment of wages. See Def. Mem. at 5-6. Maddox involved a New York statute that created an individual cause of action permitting collection of a penalty of up to $1,500 for the delayed filing of a mortgage satisfaction. 19 F.4th at 59-60. Maddox found the plaintiffs lacked standing on the ground that the plaintiffs had not suffered a concrete harm from the delay, which had lasted almost a year. See id. at 64. Although the New York statute provided for collection of a penalty of up to $1,500 for the delayed filing, Maddox found no standing because the plaintiffs had not alleged that they had suffered injuries resulting from the bank's delay. Id. at 64-65. We do not view Maddox as relevant to this case, however, since nothing in it undermines the notion that the lost time value of money could be an injury that gives rise to standing.
Old Navy argues that the infirmity of Harris' complaint is clear if one considers what would have happened had Old Navy paid Harris two hours late, instead of a week late, suggesting that it would be impossible to show concrete injury from such a short delay in payment. Def. Reply at 2. Here, of course, Harris alleges an inability to invest, save, or purchase, see Compl. ¶ 40, over the course of a full week, not mere hours. It is plausible that she could lose such opportunities during a one-week time period.
That being said, we recognize that the extent of Harris's injury may ultimately be difficult to prove. Thus, while we conclude that Harris has pled injury sufficient to give rise to standing to bring her claim, we emphasize that we do not necessarily conclude that Harris will ultimately be able to prove damages resulting from any failure to receive timely wage payments (whether considered singly or cumulatively). Certainly, we reject the proposition that the injury to plaintiff from a one-week late payment is the full amount of the salary that was paid late. This is because standing is dependent on the “actual harm” the plaintiff suffered, see e.g., Escobar v. Midland Credit Mgt., 2019 WL 3751486, at *3 (D. Conn. Aug. 8, 2019), and where wages are ultimately paid in full - even if a week late - the harm to the plaintiff is not the full amount of the wage that was paid late, but rather whatever loss specifically resulted to plaintiff from the delay in payment. In sum, all that we have determined as a result of this standing analysis is that Harris has pled that she suffered some concrete and particularized injury, even the injury is later found to be minimal.
B. Harris' Standing for the Class Period
Old Navy argues that Harris does not have “standing” to represent the putative class of Old Navy hourly workers employed between April 10, 2015, through final judgment, see Compl. ¶ 20, because “she only worked for Old Navy from ‘in or around 2018 through approximately January 2021,'” Def. Mem. at 9 (quoting Compl. ¶ 9). Old Navy seeks to “strike any class claims beyond that period.” Id. But Old Navy did not cite to the rule applicable to a motion to strike, Fed.R.Civ.P. 12(f), in its Notice of Motion. See Mot. More significantly, case law has held that a “proposed class definition is not properly adjudicated at the Rule 12(b)(6) stage, and should be raised in connection with any Rule 23 motion for class certification.” Rojas v. Triborough Bridge & Tunnel Auth., 2020 WL 1910471, at *3 (S.D.N.Y. Apr. 17, 2020) (citing Petrosino v. Stearn's Prod., Inc., 2018 WL 1614349, at *5 (S.D.N.Y. Mar. 30, 2018) (collecting cases)); accord Levy, 2022 WL 16645829, at *6. Even if there resides some discretion in a court to strike class allegations, see Maddison v. Comfort Sys. USA (Syracuse), Inc., 2018 WL 679477, at *7 (N.D.N.Y. Feb. 1, 2018) (a court “may” grant motion to strike class allegations if “it would be impossible to certify the alleged class”), that discretion should not be exercised here, see generally Wang v. Hearst Corp., 2012 WL 2864524, at *3 (S.D.N.Y. July 12, 2012) (a “motion to strike class allegations . . . is . . . disfavored because it requires a reviewing court to preemptively terminate the class aspects of . . . litigation . . . before plaintiffs are permitted to complete the discovery to which they would otherwise be entitled on questions relevant to class certification”).
C. Whether Plaintiff Has a Cause of Action For Violations of NYLL § 191(1)(a)
Old Navy argues (1) that the New York Labor Law does not expressly provide a private right of action for violations of NYLL § 191, and (2) that courts may not imply a private right of action. See Def. Mem. at 10-11. It argues that only the New York Commissioner of Labor can prosecute such violations. See id.
The Second Circuit has held as follows on how federal courts should decide issues of state law:
When deciding a question of state law, we . . . look to the state's decisional law, as well as to its constitution and statutes.... Where state law is unsettled, we are obligated to carefully . . . predict how the state's highest court would resolve the uncertainty or ambiguity.... Absent a clear directive from a state's highest court, federal authorities must apply what they find to be the state law after giving proper regard to relevant rulings of other courts of the State.Chufen Chen v. Dunkin' Brands, Inc., 954 F.3d 492, 497 (2d Cir. 2020) (punctuation omitted); accord Phansalkar v. Andersen Weinroth & Co., 344 F.3d 184, 199 (2d Cir. 2003) (“Where the substantive law of the forum state is uncertain or ambiguous, the job of the federal courts is carefully to predict how the highest court of the forum state would resolve the uncertainty or ambiguity.” (punctuation omitted)).
We address each of Old Navy's arguments as to whether there is a private right of action next.
1. Express Right of Action
§ 191(1) of the New York Labor Law provides that “[e]very employer shall pay wages in accordance with the following provisions.” One of the provisions is entitled “Manual worker” and provides in pertinent part that “[a] manual worker shall be paid weekly and not later than seven calendar days after the end of the week in which the wages are earned.” § 191(1)(a)(i). The statute does not contain any text providing for a private right of action, but Harris does not rely on § 191 for this purpose.
Instead, Harris relies on § 198(1-a) of the New York Labor Law, which provides in relevant part:
In any action instituted in the courts upon a wage claim by an employee or the commissioner in which the employee prevails, the court shall allow such employee to recover the full amount of any underpayment, all reasonable attorney's fees, prejudgment interest as required under the civil practice law and rules, and, unless the employer proves a good faith basis to believe that its underpayment of wages was in compliance with the law, an additional amount as liquidated damages equal to one hundred percent of the total amount of the wages found to be due, except such liquidated damages may be up to three hundred percent of the total amount of the wages found to be due for a willful violation of section one hundred ninety-four of this article.In Vega v. CM & Assocs. Constr. Mgmt., LLC, 175 A.D.3d 1144 (1st Dep't 2019), the First Department held that NYLL §198(1-a) provides an express private right of action to enforce the weekly wage requirement because the term “underpayment” in the statute encompasses the late payment of wages. See id. at 1145-46. Vega reasoned that the word “underpay” means “to pay less than what is normal or required” and that “[t]he moment that an employer fails to pay wages in compliance with section 191(1)(a), the employer pays less than what is required.” 175 A.D.2d at 1145.
The Court accepts that the term “underpayment” might in some circumstances encompass a nonpayment. But here, the complaint does not allege a nonpayment - that is, a claim that wages were never paid. Rather, the complaint alleges that all wages have been paid in full, albeit late. The term “underpayment” in common usage does not easily embrace the notion of a late payment of a properly paid wage. We thus doubt that a worker who was fully paid her wages, even if late, may later claim to have received an “underpayment” of those wages. The complaint is devoid of any allegation that there was a single period of work that was not ultimately compensated within one week of its due date. While Vega suggests that any claim that a wage was paid late must be asserted via an “affirmative defense,” 175 A.D.3d at 1145, we do not find that reasoning persuasive. There is no need to assert an affirmative defense of payment where the complaint itself concedes that full payment was actually made. Here, Harris does not allege that a single penny of wages due to her went unpaid, and thus there is no underpayment. Indeed, she alleges the opposite: namely, that the allegedly required salary payments were actually fully paid to her, but that some payments were not timely.
Nonetheless, we do not address this issue in a vacuum. “Although we are not strictly bound by state intermediate appellate courts, rulings from such courts are a basis for ‘ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.'” DiBella v. Hopkins, 403 F.3d 102, 112 (2d Cir. 2005) (quoting West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237 (1940)). Here, the First Department in Vega interpreted NYLL § 198(1-a) to “expressly provide[] a private right of action for a violation of Labor Law § 191.” 175 A.D.3d at 1146. While we would likely not reach this conclusion ourselves if the issue were presented afresh, for reasons explained further below, we feel bound to follow Vega's holding on this point.
2. Implied Private Right of Action
Vega found that even if there were no express right of action, NYLL also contains an implied right of action for manual workers to enforce the weekly pay requirement. See 175 A.D.3d at 1146. Vega seems to suggest that the implied action is brought under § 191, though it also refers to the action somehow being implied under § 198 as well. Id.
With respect to an implied cause of action under § 191, Vega found that such an action was available. See 175 A.D.3d at 1146. Old Navy asks this Court to reject that finding and examine the factors New York law provides for determining whether a private right of action exists absent express statutory authorization. See Def. Mem. at 10-11.
New York courts find private rights of action through implication using a three-factor test:
In New York, where a statute does not make express provision for a private remedy, such a remedy may be had “only if a legislative intent to create such a right of action is ‘fairly implied' in the statutory provisions and their legislative history” (Brian Hoxie's Painting Co. v. Cato-Meridian Cent. School Dist., 76 N.Y.2d 207, 211, 557 N.Y.S.2d 280, 556 N.E.2d 1087 [1990]). To evaluate whether the legislative intent favors such implied private rights of action, we have identified three relevant factors: “(1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme” (Sheehy v. Big Flats Community Day, Inc., 73 N.Y.2d 629, 633, 543 N.Y.S.2d 18, 541 N.E.2d 18 [1989], citing CPC Intl. Inc v. McKesson Corp., 70 N.Y.2d 268, 276-277, 519 N.Y.S.2d 804, 514 N.E.2d 116 [1987], and Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 329-331, 464 N.Y.S.2d 712, 451 N.E.2d 459 [1983]). “Critically, all three factors must be satisfied before an implied private right of action will be recognized” (Haar v. Nationwide Mut. Fire Ins. Co., 34 N.Y.3d 224, 229, 115 N.Y.S.3d 197, 138 N.E.3d 1080 [2019]).Ortiz v. Ciox Health LLC, 37 N.Y.3d 353, 360 (2021).
As to the first point, Old Navy argues that the weekly payment provision “is to protect a class of workers from being deprived wages in the event that their employer became insolvent.”
Def. Mem. at 11. It notes that § 191 empowers the Commissioner of the Department of Labor to grant exemptions to employers where it determines the employer has shown it will be able to meet its payroll responsibilities. § 191; Def. Mem. at 11-12. It thus argues that the statute was designed to protect only manual workers who work for “financial insolvent or unstable employers.” Id. at 12. Because Old Navy apparently contends it is not such an employer, it concludes that Harris cannot be in the group the statute sought to benefit.
We disagree, however, that the class of workers to be benefited by § 191 may be parsed so finely. While the statute permits the Department of Labor to exempt solvent employers, the overarching purpose of the statute is to protect manual workers, not to give solvent employers an exemption from weekly payments. Plaintiff here alleges she was a manual worker, Compl. ¶ 3, and the complaint is devoid of allegations regarding the solvency of Old Navy. We thus conclude that plaintiff is within the class § 191 sought to benefit.
The second factor requires “an analysis of what the Legislature was seeking to accomplish when it enacted the statute and a determination of whether a private right of action would promote that objective.” Konkur v. Utica Acad. of Sci. Charter Sch., 38 N.Y.3d 38, 41 (2022) (quotations omitted). This factor looks to “what indications there are in the statute or its legislative history of an intent to create (or conversely to deny) such a remedy.” Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 325 (1983). Old Navy, Def. Mem. at 13-14, notes that the earliest iteration of the NYLL regarding wage timing requirements provided that only the state (not individuals) could enforce the statute or seek penalties. See 1897 N.Y. Laws ch. 415 §§ 10-11. The 1966 revision of state labor law moved the weekly wage requirement to a new section, § 191, which was separate from the section containing a private right of action for “underpayment” of wage claims, § 198. See 1966 N.Y. Laws ch. 548 §§ 191, 198. Old Navy argues this movement and separation is instructive because it “indicates an intent to treat pay frequency claims as non-wage claims that are not actionable under” § 198. Def. Mem. at 15.
We agree that the deliberate separation of the statutes governing “underpayment” of wages (which we have suggested does not include late payments) and the requirement regarding frequency of payment suggests that the Legislature intended to treat the two types of claims differently. And we also agree that the state legislature did not appear to be trying to create a new private cause of action for frequency of payment claims in its re-arranging of these sections. Thus, there is no evidence that the New York legislature was attempting to create a remedy in § 191. On the other hand, while we have already found that § 198 was not explicitly written to encompass a late payment of wage claim, it is not so clear that there was an intention to deny manual workers the right to enforce § 191 through some means, even if that means was not the means provided in § 198. In the end, we view the intentions of the legislature to be unclear.
The Court of Appeals considers the third factor - compatibility with the legislative scheme - as the “most critical.” Carrier v. Salvation Army, 88 N.Y.2d 298, 302 (1996). A key consideration is whether the legislature “specifically considered and expressly provided for enforcement mechanisms” in the statute at issue. Cruz v. TD Bank, N.A., 22 N.Y.3d 61, 71, (2013) (citation omitted). The Court of Appeals has declined to recognize a private right of action in cases “where the statutes in question already contained substantial enforcement mechanisms, indicating that the legislature considered how best to effectuate its intent and provided the avenues for relief it deemed warranted.” Id. While Old Navy points to the Department of Labor's general powers to enforce the labor laws and administrative rulings specifically as to their power to enforce the frequency of pay statute, Def. Mem. at 16, there is no indication that the Legislature specifically considered the Department of Labor's role in taking enforcement action against frequency of payment violators. On the other hand, New York case law appears to recognize that the availability of general enforcement mechanisms may counsel against finding a private right of action. See Ortiz, 37 N.Y.3d at 359-60 (finding an implied private right of action was inconsistent with a law that already provides for “overarching enforcement mechanisms” including civil penalties sought by the state, injunctive relief by the New York attorney general, and C.P.L.R. Article 78 proceedings); Sheehy, 73 N.Y.2d at 635 (no implied private action where the statute provides for criminal penalties, a separate law articulating civil damages, and specifically limited private actions); CPC Int'l Inc., 70 N.Y.2d at 276-277 (no implied cause of action under state securities law because, among other things, the purpose of the statute at issue “was to create a statutory mechanism” where the state attorney general has regulatory and enforcement powers, so a private right of action would not be consistent “with this enforcement mechanism”).
While the analysis of these factors likely shies away from creating a remedy under § 191, once again, however, we do not write on a clean slate with respect to these issues (as described in the next section). We note, however, that even if a cause of action was implied under § 191, it would not provide for any of the remedies listed in § 198 (such as liquidated damages and attorneys' fees) and demanded in Harris's complaint. See Compl. ¶ 45. Instead, the cause of action would be under § 191 itself.
While, as noted, Vega could be construed as referring to the possibility of an implied cause of action under § 198, we do not understand how there could be an “implied” cause of action under that provision, given that § 198 is a statute providing for an express cause of action and, unlike § 191, was not specifically enacted for the benefit of manual workers.
3. Obligation to Follow Vega
“Although we are not strictly bound by state intermediate appellate courts, rulings from such courts are a basis for ‘ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.'” DiBella, 403 F.3d at 112 (quoting West, 311 U.S. at 237). Here, the Appellate Division in Vega interpreted NYLL § 198(1-a) to “expressly provide[] a private right of action for a violation of Labor Law § 191.” 175 A.D.3d at 1146. Vega further held that, if NYLL did not supply an express private right of action, the court would imply one. Id.
In addition to the five justices sitting on the First Department panel, three justices sitting on a panel of the Appellate Term in the Second Department followed Vega. See Phillips v. Max Finkelstein, Inc., 73 Misc.3d. 1 (App. Term. 2021). Phillips, however, indicated that it was “bound by principles of stare decisis to follow precedents set by the Appellate Division of another department until the Court of Appeals or the Appellate Division, Second Department, pronounces a contrary rule,” and thus concluded that Vega “is controlling on the issue of whether plaintiff stated a cause of action for damages, pursuant to Labor Law §§ 191(1)(a) and 198(1-a).” Id. at 752.
As described above, while we find Old Navy's arguments against finding a private right of action - whether express or implied - to be cogent, our doubts about the correctness of the holding in Vega do not constitute sufficiently “persuasive data” to cause us to believe that the New York Court of Appeals would reject Vega's conclusions. If the questions raised had clear cut or obvious answers, we would not hesitate to find that our own reasoning provided the “persuasive data” needed to ignore Vega's definitive ruling. But the answers are not clear cut or obvious, and this uncertainty causes us to defer to the holding in Vega.
We are not alone in reaching this conclusion. “Since Vega, every court in this Circuit to consider that decision appears to have followed its construction of the New York Labor Law.” Rodrigue v. Lowe's Home Centers, LLC, 2021 WL 3848268, at *5 (E.D.N.Y. Aug. 27, 2021).
Examples of such cases - most of which cite many other cases - are legion. See, e.g., Levy, 2022 WL 16645829, at *5 (E.D.N.Y. Nov. 1, 2022); Gillett, 2022 WL 3285275, at *11-12; Katz v. Equinox Holdings, Inc., 2022 WL 1292262, at *5 (S.D.N.Y. Apr. 29, 2022); Mabe v. WalMart Assocs., Inc., 2022 WL 874311, at *8 (N.D.N.Y. Mar. 24, 2022); Carrera v. DT Hosp. Grp., 2021 WL 6298656, at *10 (S.D.N.Y. Nov. 1, 2021), adopted, 2021 WL 6298654 (S.D.N.Y. Dec. 7, 2021); Sorto v. Diversified Maint. Sys., LLC, 2020 WL 7693108, at *2-3 (E.D.N.Y. Dec. 28, 2020); Duverny v. Hercules Med. P.C., 2020 WL 1033048, at *5 (S.D.N.Y. Mar. 3, 2020).
One postVega federal court decision reached the opposite result, see Arciello v. Cnty. of Nassau, 2019 WL 4575145, at *8-9 (E.D.N.Y. Sept. 20, 2019). However, Arciello was issued only ten days after Vega, and there is no indication that the Arciello court was aware of that ruling.
Old Navy argues that the Court of Appeals' decision in Konkur, 38 N.Y.3d 38, provides reason to doubt the holding in Vega. See Def. Mem. at 19-20; Def. Reply at 10-12. Konkur held that a private right of action was unavailable for NYLL § 198-b, which prohibits wage kickbacks. See 38 N.Y.3d at 39. After concluding that the statute did not provide for an express private right of action, see id. at 40, the Court considered whether “a legislative intent to create such a right of action is fairly implied in the statutory provisions and their legislative history,” id. at 40-41 (punctuation omitted). Because the legislature had considered enforcement mechanisms and expressly provided for an “already comprehensive [enforcement] scheme,” the Court declined “to find another enforcement mechanism.” Id. at 42-43.
Although the reasoning of Konkur does echo issues raised here, we cannot say that it provides the level of “persuasive data” that we need to conclude that the Court of Appeals would reject the result in Vega. DiBella, 403 F.3d at 112. Most importantly, Vega held that the NYLL expressly provided for a private right of action to enforce NYLL § 191(1)(a) in § 198(1-a), which contemplates an “action instituted in the courts upon a wage claim by an employee.” See 175 A.D.3d at 1146. Nothing in Konkur undermines this statutory interpretation, because Konkur addresses an implied cause of action. Konkur also dealt with a different and unrelated statute. Other federal courts have specifically rejected the argument that Konkur undermines the holding in Vega. See Mabe, 2022 WL 874311, at *7 (“[T]he Court does not read Konkur as establishing that the New York Court of Appeals would reject the conclusions reached in Vega.”); Elhassa, 2022 WL 563264, at *2 (S.D.N.Y. Feb. 24, 2022) (noting that Konkur was not inconsistent with Vega's holding that the NYLL expressly permitted private rights of action for § 191(1)(a)).
Other decisions that Old Navy argues provide reason not to follow Vega are similarly unpersuasive. For example, Old Navy cites language in Accosta v. Lorelei Events Group Inc., 2022 WL 195514 (S.D.N.Y. Jan. 21, 2022), that “NYLL does not appear to provide a . . . remedy” for a delay in payment of wages, Def. Mem. at 22 (quoting 2022 WL 195514, at *4). However, there is no indication that Accosta dealt with a claim under NYLL § 191(1)(a), and it makes no reference to the ruling in Vega. Although Grant v. Global Aircraft Dispatch, Inc., 2021 WL 6777500, at *3 (N.Y. Sup. Ct. Apr. 20, 2021), held that there was no “private right of action under NYLL § 198(1-a) for a frequency of pay violation of NYLL § 191(1)(a)(i),” Grant did not acknowledge the existence of Vega. Other decisions Old Navy cited were from federal courts relying on New York law prior to Vega. See Def. Mem. at 22.
In sum, the First Department's decision in Vega provides a definitive ruling on the question of whether a private right of action is available under NYLL § 191(1)(a). While we are not bound by Vega inasmuch as it comes from an intermediate appellate state court, we cannot say that Old Navy's arguments overcome the presumption requiring us to acquiesce in Vega's result.
IV. CONCLUSION
For the foregoing reasons, Old Navy's motion to dismiss (Docket # 23) should be denied.
PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file any objections. See also Fed.R.Civ.P. 6(a), (b), (d). A party may respond to any objections within 14 days after being served. Any objections and responses shall be filed with the Clerk of the Court. Any request for an extension of time to file objections or responses must be directed to Judge Woods. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).