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holding that employees could recover the costs of their equipment and repairs because such costs dropped the employees below the minimum wage.
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10 Civ. 8195 (LLS) (JLC)
05-14-2012
LEONIDES MALDONADO, ALFREDO VALDEZ, GILBERTO AMBROCIO and NATALIO DEJESUS, Plaintiffs, v. LA NUEVA RAMPA, INC. d/b/a LA NUEVA RAMPA, JESUS WONG, ROBERTO CHAO, and CHEF NO. 1 a/k/a "JAIME," Defendants.
REPORT AND RECOMMENDATION
JAMES L. COTT, United States Magistrate Judge.
To the Honorable Louis L. Stanton, United States District Judge:
On September 22, 2011, the Court granted Plaintiffs' motion for a default judgment in this wage-and-hour suit and referred the case to me to conduct an inquest into damages. For the reasons that follow, I recommend that the Court enter judgment against Defendants in the amount of $368,006.88 in damages, as apportioned below, along with pre-judgment interest, and $11,771.18 in attorneys' fees.
I. Background
A. Established Facts as a Result of Defendants' Default
It is well-settled that in light of Defendants' default, the Court is required to accept all of Plaintiffs' allegations as true, except for those pertaining to damages. See, e.g., Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (citing Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981)); Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993). Accordingly, the following facts are established as a result of Defendants' default:
La Nueva Rampa, Inc. ("LNR") is a corporation with an office at 149 West 14th Street in Manhattan, where it operates a restaurant under the same name (the "Restaurant"). (See Complaint, dated October 29, 2010 ("Compl.") ¶ 10 (Dkt. No. 1)). LNR, Jesus Wong, Roberto Chao, and Chef No. 1 a/k/a Jamie ("Chef Jaime") (collectively, "Defendants") own and manage the Restaurant in Manhattan, (Compl. ¶¶ 12-19).
At all relevant times, Leonides Maldonado, Alfredo Valdez, Gilberto Ambrocio, and Natalio DeJesus (collectively, "Plaintiffs") were employees of LNR as defined under the Fair Labor Standards Act ("FLSA") and New York Labor Law ("NYLL"). 29 U.S.C. § 203(e); NYLL § 651(5). (Compl. ¶ 23). Defendants paid Plaintiffs a salary below minimum wage. (Compl. ¶ 28). Plaintiffs regularly worked six days a week and more than forty hours a week, and were not properly compensated with the overtime rate of time and a half. (Compl. ¶¶ 30-34). Defendants also failed to pay Plaintiffs additional "spread of hours" compensation for days in which they worked more than 10 hours, as required by NYLL. (Compl. ¶¶ 37-38).
Maldonado worked for Plaintiffs from May 26, 1998 to December 15, 1999 and from August 15, 2005 to December 8, 2010. Ambrocio worked for Plaintiffs from June 17, 2005 to October 25, 2006 and from March 13, 2008 to March 26, 2009. DeJesus worked for Plaintiffs from October 26, 2005 to July 17, 2006.
For the majority of the operative time period, Defendants did not maintain adequate signs in the Restaurant that would have displayed information regarding employees' rights to minimum wage and overtime pay, the prohibition against illegal deductions from wages, and the policy on employee tips. (Compl. ¶¶ 40, 43). Defendants also failed to explain to Plaintiffs how tip wages were calculated as required by 29 U.S.C. § 203(m). (Compl. ¶ 42). When signs were posted, they were in English. (Compl. ¶ 41). Defendants were aware that Plaintiffs, who did not speak English, would be unable to read or understand the signs. (Id.).
Additionally, Defendants required employees to obtain a bicycle at their own expense and refused to pay for the bicycles' upkeep. (Compl. ¶¶ 45-48). Plaintiffs never used the bicycles when they were not at work as the bicycles were kept in the Restaurant overnight. (Compl. ¶ 49). These circumstances prompted Plaintiffs to commence this action.
B. Procedural History
Maldonado, Valdez, Ambrocio, and DeJesus filed the Complaint on October 29, 2010. (See Dkt. No. 1). Defendants failed to answer. (See Order Granting Plaintiffs' Motion for Default Judgment dated Sept. 22, 2011 ("Order Granting Def. J.") at 1 (Dkt. No. 12)). The Court scheduled a Rule 16 conference for January 7, 2011. (See Notice of Court Conference dated Nov. 16, 2010 (Dkt. No. 4)). Plaintiffs duly appeared before the Court, but Defendants failed to do so. (See Notice of Motion for Default Judgment, dated Sept. 1, 2011 ("Not. of Mot. for Def. J."), at 1-2 (Dkt. No. 5)). On September 1, 2011, with the Court's permission, Plaintiffs moved for Default Judgment. (Id.). In support of their request, Plaintiffs submitted an attorney declaration (Dkt. No. 6) and a memorandum of law (Dkt. No. 7). The Court granted the motion on September 22, 2011 with regard to Maldonado, Ambrocio, and DeJesus, and referred the case to me for an inquest into damages. (Order Granting Def. J. at 2).
On September 1, 2011, at the time they filed the default motion, The Legal Aid Society and Mendes & Mount LLP moved to withdraw as attorneys of record for Valdez pursuant to Rule 1.4 of the Local Rules of the Southern District of New York and pursuant to N.Y. Rule of Professional Conduct 1.16(c)(7). (See Dkt. No. 8). This request was made after counsel could no longer contact Valdez and thus were unable to prepare default judgment papers on his behalf. (Affirmation of Allen E. Sadler, Esq. dated Aug. 31, 2011 ¶¶ 6-14 (Dkt. No. 9)). On September 22, 2011, the motion to withdraw was denied without prejudice to renewal. (Dkt. No. 11). Therefore, this Report and Recommendation considers relief to which Maldonado, Ambrocio, and DeJesus are entitled, but does not consider any relief for Valdez (for whom no submission was made).
On September 23, 2011, I issued a Scheduling Order requiring Plaintiffs to submit an inquest memorandum by October 24, 2011 and Defendants to submit their opposition papers by November 21, 2011. (See Scheduling Order for Damages Inquest at 1-2 (Dkt. No. 13)). After an extension (Dkt. No. 14), on November 30, 2011, Plaintiffs filed as part of their inquest submission: (1) Plaintiffs' Proposed Findings of Fact ("Pls' Prop. Find. of Fact") with exhibits, including declarations from Plaintiffs and a memorandum of law (Dkt. No. 15), and (2) the Declaration of Michael J. Hinchen, Esq. in Support of Plaintiffs' Proposed Findings of Fact ("Hinchen Decl.") (Dkt. No. 16). Defendants have not filed opposition papers.
II. Discussion
A. Applicable Burden of Proof
As the district court has entered a default judgment in this case, the remaining issue is the amount of damages to which Plaintiffs are entitled. Plaintiffs bear the burden of establishing their entitlement to recovery and thus must substantiate their claims with evidence to prove the extent of their damages. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992) (citing Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974)).
Although the Court may hold a hearing to assess damages, a hearing is not required where a sufficient basis on which to make a calculation exists. See Fed. R. Civ. P. 55(b)(2); see also Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993). Indeed, the Second Circuit has approved the holding of an inquest by affidavit, without an in-person court hearing, "'as long as [the Court has] ensured that there was a basis for the damages specified in the default judgment.'" Transatl. Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (quoting Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989)). "Magistrate judges and district courts have interpreted this to mean that, even when the defendant defaults and is not present to object, damages must be based on admissible evidence." House v. Kent Worldwide Mach. Works, Inc., 359 F. App'x 206, at *1 (2d Cir. 2010) (summary order) (citations omitted). Accordingly, I will rely on Plaintiffs' declarations in determining the reasonableness of the damages requested. See Tamarin, 13 F.3d at 54.
An employee seeking to recover unpaid wages "'has the burden of proving that he performed work for which he was not properly compensated.'" Jiao v. Chen, No. 03 Civ. 165 (DF), 2007 WL 4944767, at *2 (S.D.N.Y. Mar. 30, 2007) (quoting Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946)). While an employer is required to maintain "records of the persons employed by him and of the wages, hours, and other conditions and practices of employment maintained by him[,]" 29 U.S.C. § 211(c); see also 12 N.Y. Comp. Codes R. & Regs. ("NYCRR") § 142-2.6, absent such documentation, an employee may establish his right "by relying on his recollection alone." Doo Nam Yang v. ACBL Corp., 427 F. Supp. 2d 327, 335 (S.D.N.Y. 2005). "[T]he employee should not speculate," Kolesnikow v. Hudson Valley Hosp. Ctr., 622 F. Supp. 2d 98, 118 (S.D.N.Y. 2009), but may rely on his "present memory and recollection" to carry the burden. Canela-Rodriguez v. Milbank Real Estate, No. 09 Civ. 6588 (JSR), 2010 WL 3701309, at *2 (S.D.N.Y. Sept. 20, 2010). An affidavit that sets forth the number of hours worked is sufficient. Rodriguez v. Queens Convenience Deli Corp., No. 09 Civ. 1089 (KAM) (SMG), 2011 WL 4962397, *2 (E.D.N.Y. Oct. 18, 2011).
Once an employee has presented his evidence, an employer may then "come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee's evidence." Lanzetta v. Florio's Enters., Inc., 763 F. Supp. 2d 615, 618 (S.D.N.Y. 2011) (quoting Mt. Clemens Pottery, 328 U.S. at 688). "If the employer fails to do so, the court may enter judgment in the employee's favor, using her recollection to determine damages, 'even though the result be only approximate.'" Id. (quoting Reich v. S. New England Telecomms. Corp., 121 F.3d 58, 67 (2d Cir. 1997)). Because Defendants have defaulted, Plaintiffs' representations as to the dates they worked will be credited and their damages calculated on that basis.
B. Statute of Limitations
1. Statutory Periods for Recovery under NYLL and the FLSA
Plaintiffs bring their claims pursuant to NYLL and the FLSA. The statute of limitations under NYLL is six years and, under the FLSA, is two years. See NYLL § 663(3); 29 U.S.C. § 255(a). However, if an employer's acts are found to be "willful," the statute of limitations under the FLSA increases to three years. 29 U.S.C. § 255(a). The Complaint alleges the acts of Defendants were willful (Compl. ¶¶ 58-62), a fact the Court accepts as true given their default. See, e.g., Wicaksono v. XYZ 48 Corp., 10 Civ. 3635 (LAK) (JCF), 2011 WL 2022644, at *3 (S.D.N.Y. May 2, 2011), report and recommendation adopted, 2011 WL 2038973 (S.D.N.Y. May 24, 2011) (because defendant defaulted and complaint alleged willfulness, plaintiffs entitled to willfulness finding and FLSA three-year statute of limitations applied). Therefore, the limitations period for all of the federal claims Plaintiffs have asserted is three years. See Rodriguez, 2011 WL 4962397, at *2. "The statute of limitations starts to run when the employee begins to work for the employer." Id. (citation omitted).
2. Equitable Tolling
As is described below, all three Plaintiffs in varying degrees worked beyond the limitations periods outlined above. Accordingly, to obtain damages for these periods of their employment, they argue that they are entitled to equitable tolling. (Memorandum of Law in Support of Plaintiffs' Proposed Findings of Fact dated Nov. 30, 2011 ("Pls' Mem.") at 3-4 (Dkt. No. 15-4) (citing Ke v. Saigon Grill, Inc., 595 F. Supp. 2d 240, 258 (S.D.N.Y. 2008))). "Equitable tolling allows courts to extend the statute of limitations beyond the time of expiration as necessary to avoid inequitable circumstances," Lanzetta, 763 F. Supp. 2d at 622 (quotation omitted). It is, however, applied only in "rare and exceptional" circumstances. Id. (quotation omitted). The relevant question when considering a request to equitably toll is "whether a reasonable plaintiff in the circumstances would have been aware of the existence of a cause of action, and despite all due diligence . . . was unable to obtain vital information bearing on the existence of his claim." Id. (citing Veltri v. Building Serv. 32B-J Pension Fund, 393 F.3d 318, 323 (2d Cir. 2004); Valdez ex rel. Donely v. United States, 518 F.3d 173, 182 (2d Cir. 2008)) (internal quotation marks omitted).
Plaintiffs contend that equitable tolling is appropriate here because Defendants "failed to provide notice of the governing legal requirements of the FLSA and the NYLL[,]" and their violations are deemed willful given their default. (Pls' Mem. at 3-4; see also Compl. ¶¶ 39-41 (alleging insufficient notice)). In wage-and-hour actions, "the failure to provide an employee the notice required by the FLSA 'may be a sufficient basis for tolling,' . . . but only if that failure contributed to the employee's unawareness of his rights." Lanzetta, 763 F. Supp. 2d at 622 (quoting Saigon Grill, 595 F. Supp. 2d at 259). Accordingly, the failure to inform employees "is not by itself sufficient to warrant equitable tolling; plaintiff[s] must also show that [they] had not received notice of [their] rights through any other avenue." Upadhyay v. Sethi, No. 10 Civ. 8462 (NRB), 2012 WL 260636, at *5 (S.D.N.Y. Jan. 25, 2012) (summary judgment denied as to equitable tolling because employer submitted affidavits stating he informed employee of wage laws and that she had been visited by "a workers' rights organization" and "frequently socialized with other nannies who were members of another such organization").
Plaintiffs have not pled or otherwise alleged that they were unaware of their rights. Cf. Saunders v. City of New York, 594 F. Supp. 2d 346, 363 (S.D.N.Y, 2008) ("If plaintiffs knew of the rights outlined on the required notice despite the failure to post, then equitable tolling is unavailable."). Nor have they offered evidence or even alleged that Defendants engaged in deception that "contributed to the[ir] unawareness of [their] rights." Lanzetta, 763 F. Supp. 2d at 622; see also Copantitla v. Fiskardo Estiatorio, Inc., 788 F. Supp. 2d 253, 318-19 (S.D.N.Y. 2011) (equitable tolling not warranted despite employer's alleged failure to provide notice, because "'[t]here is no allegation that defendants engaged in anything more, e.g., some sort of deception'") (quoting Cao v. Wu Liang Ye Lexington Rest., Inc., No. 08 Civ. 3725 (DC), 2010 WL 4159391, at *1 (S.D.N.Y. Sept. 30, 2010)). Rather, Plaintiffs rely solely on the allegations that Defendants failed to post notices for some periods of their employment, failed to do so in a language that employees could read when notices were posted, and failed to provide employees with pay stubs or other documentation explaining how their wages were calculated. (Pls' Mem. at 4). Notwithstanding that these failures are "an important factor in determining the propriety of equitable tolling[,]" without more they do not constitute the "rare and exceptional" circumstances that warrant equitable tolling. Upadhyay, 2012 WL 260636, at *5. Thus, having not presented a sufficient record to justify equitable toiling, Plaintiffs are not entitled to its application here.
3. Impact of Longer Statutory Period under NYLL
Plaintiffs may not recover under both NYLL and the FLSA for the same injury. See, e.g., Cao, 2010 WL 4159391, at *2 n.2. Therefore, Plaintiffs will recover under the statute that provides for the greatest relief. Wicaksono, 2011 WL 2022644, at *3; Jiao, 2007 WL 4944767, at *17. Maldonado's claim for wages earned between May 1998 and December 1999 is time- barred under both NYLL and the FLSA, Consequently, he may not seek recovery for lost wages during that time period under either statute, nor can he recover under the FLSA for his employment between August 15, 2005 and October 29, 2007. At all other relevant times during Maldonado's tenure, NYLL allowed for greater or equal recovery than provided for by the FLSA. Therefore, the Court will calculate compensatory damages under NYLL for Maldonado as of August, 2005.
Since the Complaint was filed on October 29, 2010, the earliest date under the FLSA for which he can recover is October 30, 2007.
Compare NYLL § 652 (requiring employers to pay $4.25 per hour as of April 1, 1991, $5.15 as of March 31, 2000, $6.00 as of January 1, 2005, $6.75 as of January 1, 2006, $7.15 as of January 1, 2007, and $7.25 as of July 24, 2009) with 29 U.S.C. § 206(a)(1) (setting the federal requirement of minimum wage as; $5.15 as of 1997, $5.85 as of July 24, 2007, $6.55 as of July 24, 2008, and $7.25 as of July 24, 2009).
Ambrocio's claim for wages earned between June 2005 and October 2006 is time-barred under the FLSA. Consequently, his wages for that time period will be calculated under NYLL. At all other relevant times during Ambrocio's tenure, NYLL allowed for greater or equal recovery compared to the FLSA. Therefore, the Court will also calculate compensatory damages under NYLL for Ambrocio. Likewise, DeJesus' claim for wages is time-barred by the FLSA because his employment from October 26, 2005 to July 17, 2006 falls outside the three-year limitations period. Therefore, his recovery will be pursuant to NYLL as well. Accordingly, NYLL is the governing statute for all calculations, unless otherwise noted.
C. Unpaid Wages, Overtime Wages, and Spread of Hours Compensation
1. Legal Standards for Entitlement
State and federal law requires employers to pay at least a minimum hourly rate to employees for every hour they work. See 29 U.S.C. § 206(a); 12 NYCRR § 146-1.2. When each of the Plaintiffs began working, the New York State minimum hourly wage was $6.00. NYLL § 652. The wage rate was increased to $6.75 per hour as of January 1, 2006. Id. It increased again to $7.15 on January 1, 2007. Id. It was further increased to $7.25 on July 24, 2009. NYLL § 652(1); see also 12 NYCRR § 146-1.2.
As noted above, this excludes the time period for which Maldonado cannot recover under either NYLL or the FLSA (from May 1998 to December 1999).
Although Plaintiffs do not state that they received tips during their employment explicitly, certain statements in their declarations suggest they may have. (Pls' Prop. Find. of Fact at 2 & Ex. A (Declaration of Leonides Maldonado dated Nov. 30, 2011 ("Maldonado Decl.")) ¶ 9 (Dkt. No. 15-1); Ex. B (Declaration of Gilberto Ambrocio dated Nov. 30, 2011 ("Ambrocio Decl.") ¶ 9 (Dkt. No. 15-2); Ex. C (Declaration of Natalio DeJesus dated Nov. 30, 2011 ("DeJesus Decl.") ¶ 8 (Dkt. No. 15-3)). Plaintiffs assert that any tips they did receive had no effect on the minimum wage they are owed because Defendants are not entitled to a "tip credit" under 29 U.S.C. § 203(m). (Pls' Mem. at 7-8). This provision permits an employer to pay a rate less than the minimum wage rate, meaning the minimum wage less the "tip credit," when the employer "(1) inform[s] the employee of the 'tip credit' provision of the FLSA, and (2) permit[s] the employee to retain all of the tips the employee receives." Copantitla, 788 F. Supp. 2d at 287. Here, Defendants cannot take advantage of the tip credit because they have not satisfied their burden in proving that they informed the employees of the tip credit law, a requirement that is "strictly construed." Wicaksono, 2011 WL 2022644, at *4 (citation omitted).
In addition to providing a mandatory minimum wage rate, federal and state law also require that employers pay employees one and one-half times the ordinary minimum wage rate for any time more than 40 hours that they work in a given week ("the overtime rate"). 29 U.S.C. § 207(a); 12 NYCRR § 146-1.4; see also Kolesnikow, 622 F. Supp. 2d at 118. If an employee demonstrates that he has worked more than 40 hours per week, he is entitled to recover the overtime rate for any hours in excess of 40.
Finally, under New York law, employees are also entitled to receive "spread of hours" compensation. This requires "one additional hour of pay at the basic minimum hourly rate" for any workday that lasts longer than ten hours. 12 NYCRR § 146-1.6(a). "The additional hour of pay is not a payment for time worked or work performed and need not be included in the regular rate for the purpose of calculating overtime pay." 12 NYCRR § 146-1.6(c). If an employee establishes that each workday lasted in excess of ten hours, he is entitled under New York law to a spread of hours premium for each workday worked at the minimum wage rate. See, e.g., Cao, 2010 WL 4159391, at *3.
To calculate damages owed for a spread of hours claim, one multiplies the number of days the employee worked more than 10 hours (here six days per week) by the applicable minimum wage rate. See 12 NYCRR § 146-1.6.
2. Maldonado's Wages
Maldonado worked from August 15, 2005 until December 8, 2010. (Pls' Prop. Find. of Fact at 2; Maldonado Decl. ¶ 3). He worked 72 hours a week and was paid $150 a week for the entirety of his employment. (Pls' Prop. Find. of Fact at 2; Maldonado Decl. ¶ 8). This amounts to an approximate hourly rate of $2.08 per hour, a rate far below the minimum wage. Accordingly, Maldonado is owed unpaid wages, calculated as the difference between his working rate of $2.08 and the minimum wage rate at the relevant time for the 40 hours per week of regular (non-overtime) pay under NYLL.
Maldonado worked 20 weeks when the NYLL statutory minimum wage rate was $6.00, so during this period he was deprived of $156.80 per week. He also worked 52 weeks when the minimum wage was $6.75, so for this period he was deprived of $186.80 a week. He worked 134 weeks when minimum wage was $7.15, so for this period he was deprived of $202.80 per week. Finally, Maldonado worked 72 weeks when the minimum wage was $7.25, so for this period he was deprived of $206.80 a week. Maldonado is therefore owed $54,914.40 in unpaid regular wages.
The formula for calculating the unpaid wages per week involves multiplying the number of hours worked before overtime (40) by the difference between the minimum wage at the time (e.g., $6.00) and Maldonado's actual wage rate per hour (150 divided by 72 = $2.08). Therefore, Maldonado lost $156.80 per week (40 (hours) x $3.92 (the difference between his wage and minimum wage)). See, e.g., Wicaksono, 2011 WL 2022644, at *3-4.
Maldonado's unpaid regular wages were calculated as follows: (40 (hours) x 20 (weeks) x 3.92 (difference between his wage and minimum wage rate in 2005)) + (40 x 52 x 4.67 in 2006) + (40 x 134 x 5.07 in 2007-2008) + (40 x 72 x 5.17 in 2009-2010) = $54,914.40.
Maldonado was also deprived of overtime payments. Maldonado worked 32 hours per week of overtime and received the same wage rate of $2.08 an hour. The formula for determining the amount of overtime wages owed requires multiplying the amount of hours worked above 40 hours—here 32 hours (Maldonado Decl. ¶ 7)—by the difference between the appropriate overtime rate minus the actual rate. For example, when the overtime rate was $9.00 an hour, one multiplies 32 hours by $6.92, equaling $221.44 of unpaid overtime wages per week. Using this calculation for all of Maldonado's hours worked and using all the appropriate wage rates, Maldonado is owed $75,190.40 in overtime wages. Finally, a spread of hours payment—equaling an additional hour of minimum wage pay for every day worked longer than ten hours—is appropriate. Maldonado is thus entitled to $11,706.60 in spread of hours compensation. Maldonado's total compensation for lost wages and spread of hours is $141,811.40.
The overtime rate is time and a half, so, for example, the overtime rate is $9 when the minimum wage is $6. See 12 NYCRR § 146-1.4.
Maldonado's unpaid overtime wages were calculated as follows: (32 (hours) x 20 (weeks) x 6.92 (difference between his rate and actual overtime rate in 2005)) + (32 x 52 x 8.05 in 2006) + (32 x 134 x 8.65 in 2007-2008) + (32 x 72 x 8.80 in 2009-2010) = $75,190.40.
Maldonado's spread of hours calculation is as follows: (6 (days per week worked 10 hours or more) x 6 (minimum wage rate) x 20 (weeks worked at that rate) + (6 x 6.75 x 52 in 2006) + (6 x 7.15 x 134 in 2007-2008) + (6 x 7.25 x 72 in 2009-2010) = $11,706.60.
An alternative method for computing unpaid regular wages, unpaid overtime wages, and unpaid spread of hours compensation is to calculate the total amount of unpaid compensation per week in a lump sum. For example, if Maldonado had been paid in accordance with NYLL for a week in which he worked 72 hours over six days when the minimum wage was $6 per hour, he should have received the following: (6 (minimum wage rate) x 40 (hours of regular pay) = 240) + (9 (overtime wage rate) x 32 (hours of overtime worked) = 288) + (6 (days worked over 10 hours) x 6 (minimum wage rate) = 36) = $564. One then subtracts the $150 he did receive from $564, which equals $414. There is a negligible difference between this amount and the amount calculated by the Court as follows: (156.80 (unpaid regular wages) + 221.44 (unpaid overtime wages) + 36 (spread of hours compensation) = $414.24 in unpaid wages and spread of hours compensation.
3. Ambrocio's Wages
Ambrocio is similarly entitled to unpaid wages, overtime wages, and spread of hours payment, using the same mathematical formulas. Ambrocio worked from June 17, 2005 to October 25, 2006, and again from March 13, 2008 to March 26, 2009. (Pls' Prop. Find. of Fact at 3-4; Ambrocio Decl. ¶ 3). Like Maldonado, Ambrocio was paid $150 a week while working 72 hours a week, thus again making an effective wage rate of $2.08 an hour. (Ambrocio Decl. ¶¶ 7-8). He is thus owed $23,733.60 in unpaid wages, $32,722.56 in overtime wages, and $5,145 in spread of hours compensation for a total of $61,601.16.
The figures for Ambrocio were calculated as follows: (1) regular wages (29 (weeks) x 40 (hours) x 3.92 (difference between his wage and minimum wage rate in 2005)) + (43 x 40 x 4.67 in 2006) + (55 x 40 x 5.07 in 2008-2009) = $23,733.60; (2) overtime wages (32 x 29 x 6.92 in 2005) + (32 x 43 x 8.05 in 2006) + (32 x 55 x 8.65 in 2008-2009) = $32,722.56; (3) spread of hours compensation (6 x 6 in 2005 x 29) + (6 x 6.75 in 2006 x 43) + (6 x 7.15 in 2008-2009 x 55) = $5,145.
4. DeJesus' Wages
DeJesus worked from October 26, 2005 to July 17, 2006. (Pls' Prop. Find. of Fact at 5-6; DeJesus Decl. ¶ 3). DeJesus was paid $340 a week while working 72 hours a week, making his effective wage rate $4.72 an hour. (DeJesus Decl. ¶¶ 3, 7). He is thus owed $2,866.80 in unpaid wages, $6,390.08 in overtime wages, and $1,534.50 in spread of hours compensation for a total of $10,791.38.
The figures for DeJesus were calculated as follows: (1) regular wages (10 x 40 x 1.28 in 2005) + (29 x 40 x 2.03 in 2006) = $2,866.80; (2) overtime wages (32 x 10 x 4.28 in 2005) + (32 x 29 x 5.41 in 2006) = $6,390.08; (3) spread of hours wages compensation (6 x 6 in 2005 x 10) + (6 x 6.75 in 2006 x 29) = $1,534.50.
D. Failure to Reimburse
1. Equipment and Maintenance
Maldonado and Ambrocio also seek reimbursement for bicycles, helmets, chains, and bicycle locks, which they were required to buy in order to work at the Restaurant. (Compl. ¶¶ 45-48; Pls' Prop. Find. of Fact at 2, 4; Maldonado Decl. ¶ 12; Ambrocio Decl. ¶ 6). They assert that the bicycles were left at the Restaurant overnight and used exclusively for work, and there is no evidence to the contrary. (Compl. ¶ 49; Ambrocio Decl. ¶ 6). "[I]f it is a requirement of the employer that the employee must provide tools of the trade which will be used in or are specifically required for the performance of the employer's particular work, there would be a violation of the [FLSAJ in any workweek when the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid him under the [FLSA]." 29 C.F.R. § 531.35. "The rules governing tools of the trade are similar to the rules governing uniforms: employers can require employees to bear the costs of acquiring and maintaining tools of the trade so long as those costs, when deducted from the employees' weekly wages, do not reduce their wage to below the required minimum." Lin v. Benihana Nat'l Corp., 755 F. Supp. 2d 504, 511-12 (S.D.N.Y. 2010) (internal citation omitted). Bicycles fall within the description of a tool of the trade under 29 C.F.R. § 531.35, as they are "necessary component[s] of the job of the deliverymen[,]" which "plainly fit[s] the applicable regulation." See Saigon Grill, 595 F. Supp. 2d at 257-58.
NYLL also protects an employee's right against improper deductions for the costs of required tools. NYLL § 193 ("No employer shall make any deduction from the wages of an employee . . . .").
As a result, Plaintiffs' wages were effectively diminished by the cost of the equipment and their upkeep. 12 NYCRR § 142-2.10(b) ("The minimum wage shall not be reduced by expenses incurred by an employee in carrying out duties assigned by his employer."). As each of the Plaintiffs earned below minimum wage, they are entitled to a credit for expenses for "facilities" that are "primarily for the benefit or convenience of the employer." 29 C.F.R. § 531.3(d)(1). The cost of the bicycles, other equipment, and their repairs are therefore recoverable.
Maldonado requests payment for the following costs: $270, $125, and $50 for three bicycles; $20 for a helmet; $45 for a bicycle chain; $90 total for two bicycle locks; and $150 a month for 69 months of bicycle repairs and maintenance. (Maldonado Decl. ¶ 12). However, Maldonado does not provide any detail regarding the nature of the repairs. Without a detailed account of these repair costs, I find them to be excessive. Accordingly, I reduce the amount of bicycle repairs to $500 a year for five and a half years, totaling $2,750. Cf. Cao, 2010 WL 4159391, at *5 ("Without a detailed explanation to support plaintiffs' expense estimates to enable the Court to evaluate the reasonableness of the amounts purportedly spent, I limit plaintiffs' damages for bicycle expenses to $500 per year."). Therefore, Maldonado is entitled to $3,350 as reimbursement.
Similarly, Ambrocio requests payment for the following costs; $182 and $145 for two bicycles, $45 for a bike chain, $45 for a bicycle lock, and $130 a month for 21 months of bicycle repairs and maintenance. (Ambrocio Decl. ¶ 12). Ambrocio does not support his repair expenses with any detail, and I find them to be excessive. Accordingly, I reduce the amount of bicycle repairs to $500 a year for two years, totaling $1,000. Therefore, Ambrocio is entitled to $1,417 as reimbursement.
2. Deduction from Ambrocio's Wages
Ambrocio alleges that Defendants deducted $360 from his wages after he was robbed of that amount while working for Defendants. (Ambrocio Decl. ¶ 13). He contends that this deduction, which was made without his consent, violates NYLL § 193. "Once wages are earned, deductions other than those set forth in section 193 are improper." Jankousky v. North Fork Bancorp., Inc., No. 08 Civ. 1858 (PAC), 2011 WL 1118602, at *3 (S.D.N.Y. Mar. 23, 2011) (internal citation and quotation omitted). "[T]he purpose of § 193 is to prohibit employers from making unauthorized deductions from wages . . . to place the risk of loss for such things as damaged, spoiled merchandise, or lost profits on the employer . . . ." Ireton-Hewitt v. Champion Home Builders Co., 501 F. Supp. 2d 341, 353 (N.D.N.Y. 2007) (citation omitted). "The Commissioner of Labor [and Legislature] . . . interpreted the statute to preclude not only direct wage deductions, but repayments to the company by separate transaction as well." Hudacs v. Frito-Lay, Inc., 90 N.Y.2d 342, 347-48 (1997). Although the Court was unable to find case law considering similar circumstances involving bicycle costs for delivery personnel, the deduction appears to have been intended to shift the "risk of loss" from Defendants to Ambrocio, which the law does not allow. Accordingly, Ambrocio is entitled to be reimbursed $360.
E. Liquidated Damages
1. Liquidated Damages under the Fair Labor Standards Act
In addition to compensatory damages, Plaintiffs are entitled to liquidated damages under the FLSA because they have established that Defendants failed to pay the proper minimum wage and overtime rate. Under the FLSA, an employer "shall be liable" to employees for both unpaid minimum wages and unpaid overtime in "an additional equal amount as liquidated damages." 29 U.S.C. § 216(b). "The statute provides for liquidated damages in order to compensate employees for the often obscure and hard-to-prove consequences of having been wrongfully denied pay, rather than to punish employers." Jiao, 2007 WL 4944767, at *16 (citing Reich, 121 F.3d at 71).
"While an award of liquidated damages is the norm, the FLSA provides that a court, in its discretion, may deny liquidated damages if the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith. It is the employer's burden to establish such good faith by plain and substantial evidence. Where, as here, a defendant employer has defaulted, the court plainly cannot find that it has made the showing of good faith necessary to defeat an award of liquidated damages." Solis v. Tally Young Cosmetics, LLC, No. 09 Civ. 4804 (SJ) (JO), 2011 WL 1240341, at *14 n.15 (E.D.N.Y. Mar. 4, 2011) (internal quotation marks and citations omitted).
Liquidated damages awards under the FLSA are equal to the amount owed in federal unpaid and overtime wages. See Rodriguez, 2011 WL 4962397, at *4. Although Maldonado and Ambrocio are not receiving a separate award of back wages under the FLSA—because it would duplicate the award received under NYLL, as described above—they are still entitled to an award of federal liquidated damages based on underpayment as recognized by the FLSA. See, e.g., Wicaksono, 2011 WL 2022644, at *7; Rodriguez, 2011 WL 4962397, at *4; Saigon Grill, 595 F. Supp. 2d at 262 n.44. To calculate federal liquidated damages in a case like this one where NYLL provided the greatest relief for compensatory damages, the Court calculates "the amount of actual damages that would have been awarded had the federal minimum wage rate applied." Wicaksono, 2011 WL 2022644, at *7. DeJesus' federal claim for wages is time-barred and therefore he cannot receive federal liquidated damages. (See supra page 9). Maldonado and Ambrocio, however, are entitled to federal liquidated damages for the time they worked during the three-year period prior to the filing of the Complaint, because Defendants" acts were found to be willful. 29 U.S.C. § 255(a). Maldonado is thus entitled to $71,601.20 in liquidated damages under the FLSA. Ambrocio is thus entitled to $22,242.00 in liquidated damages under the FLSA.
As noted above, Maldonado's federal liquidated damages request for wages earned prior to October 29, 2007 is time-barred by the FLSA's three-year limitation period. Considering his wages for all other periods of employment, his award under the FLSA is calculated by multiplying the number of hours worked after that date per week by the number of weeks worked by the difference between his actual wage rate and minimum wage. He always worked 40 hours a week at regular pay and 32 hours a week at time and a half. The calculation for the award is made as follows: ((40 (hours) x 39 (weeks) x (5.85 - 2.08 = 3.77) (difference between minimum wage and his actual rate)) + (40 x 52 x 4.47) + (40 x 72 x 5.17)) + ((32 (overtime hours) x 39 (weeks) x (8.78 - 2.08 = 6.70) (overtime rate minus actual rate)) + (32 x 52 x (9.83 - 2.08 = 7.75) + (32 x 72 x (10.88 - 2.08 = 8.8)) = $71,601.20.
Likewise, as noted above, Ambrocio's federal liquidated damages request for any wages earned prior to October 29, 2007 (which would include only claims related to his first period of employment from June 17, 2005 to October 25, 2006) is time-barred by the FLSA's three-year limitation period. His award under the FLSA for all other periods of employment is calculated by multiplying the number of hours worked after that date per week by the number of weeks worked by the difference between his actual wage rate and minimum wage. He always worked 40 hours a week at regular pay and 32 hours a week at time and a half. The calculation for the award is made as follows: ((40 (hours) x 20 (weeks) x (5.85 - 2.08 = 3.77) (difference between minimum wage and his actual rate)) + (40 x 35 x 4.47)) + ((32 (overtime hours) x 20 (weeks) x (8.78 - 2.08 = 6.70) (overtime rate minus actual rate)) + (32 x 35 x (9.83 - 2.08 = 7.75)) = $22,242.
2. Liquidated Damages under New York Labor Law
NYLL entitles plaintiffs to liquidated damages equaling 25 percent of the wages owed under state law if the violation is "willful." NYLL §§ 198(l-a), 663(1). As Defendants have defaulted, the allegation that their conduct was "willful" (see supra page 6) is accepted.
Plaintiffs contend that they are entitled to liquidated damages in the amount of 100 percent of their unpaid wages under NYLL § 663(1) as the statute was amended effective April 9, 2011. (Pls' Mem. at 5). Although Plaintiffs' claims relate to their employment prior to April 2011, they argue that the amendment should be applied retroactively. (Id. (citing Ji v. Belle World Beauty, Inc., No. 603228/08, 2011 N.Y. Misc. LEXIS 5032, at *6 (Sup. Ct. N.Y. Cnty. Aug. 24, 2011) (addressing NYLL § 198(1-a))). However, courts in this District to have considered the question of Section 663's retroactivity have determined that it should not be applied retroactively, in part because the statute is silent with respect to retroactivity. See, e.g., McLean v. Garage Mgmt. Corp., Nos. 10 Civ. 3950 (DLC), 09 Civ. 9325 (DLC), 2012 WL 1358739, at *9-10 (S.D.N.Y. Apr. 19, 2012) (looking to legislative history and terms of statute); Benavidez v. Plaza Mexico Inc., Nos. 09 Civ. 5076 (THK), 09 Civ. 9574 (THK) 2012 WL 500428, at *8-9 (S.D.N.Y. Feb. 15, 2012) (acknowledging but declining to adopt Ji) (citations omitted); Chenensky v. New York Life Ins. Co., Nos. 07 Civ. 11504 (WHP), 09 Civ. 3210 (WHP), 2012 WL 234374, at *2-3 (S.D.N.Y. Jan. 10, 2012) (citations omitted); Wicaksono, 2011 WL 2022644, at *6 n.2 (citations omitted). For the reasons provided in those decisions, NYLL's liquidated damages provisions will be applied as they existed at the time of Defendants' violations. Thus, Plaintiffs' claims are limited to 25 percent of the amounts owed.
As the court noted in Wicaksono, "[a]uthority is mixed regarding whether a plaintiff may recover liquidated damages under both federal and state law." Id. at 7. The majority of cases allow for "simultaneous recovery," because recovery of liquidated damages under federal and state law serves different functions. Gurung v. Malhotra, No. 10 Civ. 5086 (VM) (FM), 2012 WL 691532, at *7 (S.D.N.Y. Feb. 22, 2012) (collecting cases), report and recommendation adopted, 2012 WL 983520 (S.D.N.Y. Mar. 13, 2012); see, e.g., Lanzetta, 2011 WL 3209521 at *5; Cao, 2010 WL 4159391, at *5; Dong v. CCW Fashion Inc., Nos. 06 Civ. 4973, 07 Civ. 9741 (LAP) (DFE), 2009 WL 884680, at *4 (S.D.N.Y. Feb. 19, 2009); Saigon Grill, 595 F. Supp. 2d at 261-62. But see, e.g., 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 recommendation adopted, 2011 WL 6092309 (S.D.N.Y. Dec. 7, 2011). New York liquidated damages constitute a penalty, as opposed to federal liquidated damages, which are compensatory. Gurung, 2012 WL 691532, at *7. In any event, "by opting not to participate in this suit, [Defendants] have waived any claim" that Plaintiffs may not recover liquidated damages under both federal and state law. Gurung, 2012 WL 691532, at *8. Additionally, Plaintiffs are entitled to liquidated damages under NYLL for Defendant's failure to pay the spread-of-hours premium. Wicaksono, 2011 WL 2022644, at *7. Therefore, each Plaintiff is entitled to liquidated damages equaling 25 percent of the total unpaid wages and spread of hours compensation under NYLL. Accordingly, Maldonado is owed $36,290.35, Ambrocio is owed $15,844.54, and DeJesus is owed $2,697.85.
Maldonado's total state law claim is calculated as follows: $54,914.40 in unpaid New York state regular wages + $75,190.40 in unpaid New York state overtime wages + $11,706.60 in spread of hours compensation + $3,350 in reimbursed wages, which equals $145,161.40. Maldonado is owed 25 percent of that amount in state liquidated damages, totaling $36,290.35.
Ambrocio's total state law claim is calculated as follows: $23,733.60 in unpaid New York state regular wages + $32,722.56 in unpaid New York state overtime wages + $5,145 in spread of hours compensation + $1,777 in reimbursed wages, which equals $63,378.16. Ambrocio is owed 25 percent of that amount in state liquidated damages, totaling $15,844.54.
DeJesus' total state law claim is calculated as follows: $2,866.80 in unpaid New York state regular wages + $6,390.08 in unpaid New York state overtime wages + $1,534.50 in spread of hours compensation, which equals $10,791.38. DeJesus is owed 25 percent of that amount in state liquidated damages, totaling $2,697.85.
F. Pre-Judgment Interest
Plaintiffs also seek pre-judgment interest on all federal and state claims. (Compl. at 15 ¶ 7). However, Plaintiffs' receipt of a liquidated damages award under federal law will limit their recovery of pre-judgment interest to a degree, because it is well-established that "[f]ederal law prohibits a plaintiff from recovering prejudgment interest for FLSA violations for which the plaintiff also received liquidated damages." Paz v. Piedra, No. 09 Civ. 3977 (LAK) (GWG), 2012 WL 121103, at *13 (S.D.N.Y. Jan. 12, 2012) (citing Brock v. Superior Care, Inc., 840 F.2d 1054, 1065 (2d Cir. 1988)). This rule has developed to prevent what is in essence a double recovery given that federal liquidated damages are the "functional equivalent of prejudgment interest." Santillan v. Henao, 822 F. Supp. 2d 284, 298 (E.D.N.Y. 2011); accord Saigon Grill, 595 F. Supp. 2d at 261-62 (federal liquidated damages "serve as a form of pre-judgment interest"). In other words, just as "an award of liquidated damages under the FLSA serves . . . to compensate [plaintiffs] for the delay in receiving wages that should have been paid[,]" Paz, 2012 WL 121103, at *13, the purpose of prejudgment interest under the FLSA is "to compensate a plaintiff for the loss of use of money." Reilly v. Natwest Markets Grp. Inc., 181 F.3d 253, 265 (2d Cir. 1999) (citation omitted).
In contrast, "[p]re-judgment interest and liquidated damages under [New York] Labor Law are not functional equivalents[,]" id., because "the liquidated damages provided for in the New York Labor Law are punitive in nature" rather than compensatory. Saigon Grill, 595 F. Supp. 2d at 262 (citation omitted). Therefore, a plaintiff could recover both liquidated damages and pre-judgment interest under NYLL. Reilly, 181 F.3d at 265. However, where that plaintiff has already received an award of federal liquidated damages, the plaintiff has been compensated for some portion of the delay and "is therefore entitled to an award of prejudgment interest only on unpaid wages and spread of hours pay for which liquidated damages pursuant to the FLSA were not assessed." Santillan, 822 F. Supp. 2d at 298: see, e.g., McLean, 2012 WL 1358739, at *11 (plaintiffs "entitled to NYLL prejudgment interest . . . on unpaid overtime wages for the period during which they will not receive FLSA liquidated damages"); Gurung, 2012 WL 691532, at *8 (plaintiff not entitled to pre-judgment interest on "stand-alone FLSA claims for which liquidated damages were assessed"). Accordingly, Plaintiffs are entitled to prejudgment interest only as to their spread of hours claims and unpaid wages for which no federal liquidated damages were awarded. No federal liquidated damages were awarded: (1) for wages accruing during the longer statutory period under NYLL; (2) on the amounts attributable to the higher minimum wage rate under NYLL; or (3) on the stand-alone New York claims for reimbursements for bicycle expenses for Maldonado and Ambrocio, and the wages deducted from Ambrocio after he was robbed.
Plaintiffs are entitled under New York law to pre-judgment interest at the statutory rate of nine percent per year. See N.Y. C.P.L.R. §§ 5001, 5004; see also Reilly, 181 F.3d at 265. Pre-judgment interest applies only to the amount of compensatory damages, and excludes the amount of liquidated damages. See, e.g., Chan v. Sung Yue Tung Corp., No. 03 Civ. 6048 (GEL), 2007 WL 13731 18, at *9 (S.D.N.Y. May 8, 2007). Where unpaid wages "were incurred 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." N.Y. C.P.L.R. § 5001(b). Simple pre-judgment interest is calculated from a singular, midpoint date. See, e.g., Said v. SBS Elecs., Inc., No. 08 Civ. 3067 (RJD) (JO), 2010 WL 1265186, at *9 (E.D.N.Y. Feb. 24, 2010) (calculating interest using simple rate, not compounded rate). Simple prejudgment interest is calculated by multiplying the principal by the interest rate by the time period—from a singular, midpoint date—up until and including the date judgment is entered. See id.
In contrast to Plaintiffs' request for pre-judgment interest, to which they devote an entire section of their memorandum of law, mention of post-judgment interest is limited to the prayer for relief in the Complaint (Compl. at 15 ¶ 7) and a single reference in each of the Plaintiffs' declarations in support of the inquest. (Maldonado Decl. ¶ 13; Ambrocio Decl. ¶ 14; DeJesus Decl. ¶ 10). Plaintiffs cite to no authority for their entitlement to such relief. Examining similar facts, a court in the Eastern District of New York deemed this to be an effective withdrawal of the request for post-judgment interest. Gutman v. Klein, No. 03 Civ. 1570 (BMC) (RML), 2010 WL 4916722, at *5 (E.D.N.Y. Nov. 24, 2010) (post-judgment interest sought in passing reference in complaint and only once in factual portion of memorandum of law despite devoting an entire section of the memorandum to pre-judgment interest). Applying similar reasoning, Plaintiffs' request for post-judgment relief should be denied.
1. Maldonado's Pre-Judgment Interest
April 11, 2008 is the approximate midpoint between Maldonado's start date of August 15, 2005 and his end date of December 8, 2010. As noted above, the principal amount he is owed in unpaid wages, spread of hours compensation, and reimbursements is $73,560.20. Therefore, a nine percent annual interest rate on $73,560.20 should be applied from April 11, 2008 through the date judgment is entered.
Maldonado's principal amount recoverable for pre-judgment interest was calculated as follows: ($54,914.40 (in unpaid state wages) + $75,190.40 (in unpaid state overtime wages) + $11,706.60 (spread of hours) + $3,350 (in reimbursed wages)) - $71,601.20 (federal liquidated damages awarded as compensation for delayed payment) = $73,560.20.
2. Ambrocio's Pre-Judgment Interest
Ambrocio was employed by the Restaurant during two separate periods. Accordingly, to determine the amount of pre-judgment interest Ambrocio is owed for each of these two periods, the Court first determines the midpoint for the two periods of employment and then calculates the principal amounts owed in unpaid wages, spread of hours compensation, and any reimbursements for each period. February 22, 2006 is the approximate midpoint for his first period of employment from June 17, 2005 through October 27, 2006. The principal amount of unpaid wages, spread of hours compensation, and reimbursements for this period is $33,752.21. A nine percent annual interest rate on $33,752.21 should be applied from February 22, 2006 through the date that judgment is entered.
Ambrocio's principal amount of unpaid wages, unpaid overtime, and unpaid spread of hours for his first period of employment is calculated as follows: ((29 x 40 x 3.92) + (43 x 40 x 4.67) = $12,579.60 in unpaid state wages) + ((32 x 29 x 6.92) + (32 x 43 x 8.05) = $17,498.56 in unpaid state overtime wages) + ((6 x 6 x 29) + (6 x 6.75 x 43) = $2,785.55 for spread of hours payment)) + ((360 + 1417) / 2 = $888.50 in reimbursed wages) = $33,752.21.
September 20, 2008 is the approximate midpoint for his second period of employment from March 13, 2008 through March 26, 2009. The principal amount of unpaid wages, spread of hours compensation, and reimbursements for this period is $7,384.00. A nine percent annual interest rate on $7,384.00 should be applied from September 20, 2008 through the date that judgment is entered.
Ambrocio's principal amount of unpaid wages, unpaid overtime, and unpaid spread of hours for his second period of employment is calculated as follows: ((55 x 40 x 5.07 = $11,154 in unpaid state wages) + (32 x 55 x 8.65 = $15,224 in unpaid state overtime wages) + (6 x 7.15 x 55 = $2,359.50 for spread of hours payment) + ((360 + 1417) / 2 = $888.50 in reimbursed wages)) - $22,242 (federal liquidated damaged awarded as compensation for delayed payment) = $7,384.00.
3. DeJesus' Pre-Judgment Interest
March 7, 2006 is the approximate midpoint between DeJesus' start date of October 26, 2005 and his end date of July 17, 2006. As noted above, the principal amount he is owed in unpaid wages and spread of hours compensation is $10,791.38. Therefore, a nine percent annual interest rate on $10,791.38 should be applied from March 7, 2006 through the date judgment is entered.
DeJesus' principal amount recoverable for pre-judgment interest was calculated as follows: $2,866.80 (in unpaid state wages) + $6,390.08 (in unpaid state overtime wages) + $1,534.50 (spread of hours) = $10,791.38.
G. Attorney's Fees
Plaintiffs also seek $39,237.25 in attorneys' fees pursuant to 29 U.S.C, § 216(b) and NYLL § 198. (Hinchen Decl. ¶ 16). Under the FLSA, "[a]ny employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of . . . a reasonable attorney's fee to be paid by the defendant." 29 U.S.C. § 216(b). "Both the FLSA and NYLL are fee-shifting statutes entitling [Plaintiffs] to recover . . . reasonable attorneys' fees and costs." Gurung, 2012 WL 691532, at *10; see 29 U.S.C. § 216(b): NYLL § 198 (1-a).
As a general matter, to calculate the "reasonable amount of attorneys' fees" owed, "[b]oth [the Second Circuit] and the Supreme Court have held that the lodestar—the product of a reasonable hourly rate and the reasonable number of hours required by the case—creates a 'presumptively reasonable fee.'" Gurung, 2012 WL 691532, at *9 (citing Millea v. MetroNorth R. R. Co., 658 F.3d 154, 166 (2d Cir. 2011)). The lodestar amount is calculated by multiplying a reasonable hourly rate by the number of hours reasonably expended on the litigation. See Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 186 (2d Cir. 2008) (citing Lindy Bros. Builders, Inc. of Phila. v. Am. Radiator & Standard Sanitary Corp., 487 F.2d 161, 167 (3d Cir. 1973)). A defendant's failure either to pay the attorneys' fees awarded or take an appeal causes the portion of fees awarded for NYLL violation to increase by 15 percent. NYLL § 663(4).
Effective April 9, 2011, NYLL § 663(4) provides: "In any civil action by an employee or by the commissioner, the employee or commissioner shall have the right to collect attorneys' fees and costs incurred in enforcing any court judgment. Any judgment or court order awarding remedies under this section shall provide that if any amounts remain unpaid upon the expiration of ninety days following issuance of judgment, or ninety days after expiration of the time to appeal and no appeal therefrom is then pending, whichever is later, the total amount of judgment shall automatically increase by fifteen percent." Therefore, if Defendants fail to pay the attorneys' fees awarded by the Court or appeal them within 90 days, that portion of the judgment attributable to NYLL claims will automatically increase by 15 percent.
1. Reasonable Hourly Rate
District courts have broad discretion to determine a fee award. Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). To assess the reasonable rate, the Court considers the prevailing market rates "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, 896 n.11 (1984)). The Court may also rely on its knowledge of private firms' hourly rates. Miele v. N.Y. State Teamsters Conference Pension & Ret. Fund, 831 F.2d 407, 409 (2d Cir. 1987).
A reasonable hourly rate is the rate a "paying client would be willing to pay," bearing in mind that a "reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively." Arbor Hill, 522 F.3d at 190. The Court uses the "hourly rates employed in the district in which the reviewing court sits," which in this case is the Southern District of New York. See In re Agent Orange Prod. Liab. Litig., 818 F.2d 226, 232 (2d Cir. 1987) (deviation from district's reasonable hourly rates "only in the rare case where the 'special expertise' of non-local counsel was essential to the case.") (citation omitted). Furthermore, when a party seeks attorneys' fees, the "burden is on the fee applicant to produce satisfactory evidence—in addition to the attorneys' own affidavits—that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation," Blum, 465 U.S. at 896 n.11.
Plaintiffs are represented by Mendes & Mount LLP and The Legal Aid Society. (See Hinchen Decl. ¶ 11). There are four attorneys for whose services Plaintiffs seek to recover fees for 171.8 hours of work. (Id. at ¶¶ 11, 16). Plaintiffs seek reimbursement for two Mendes & Mount associates, Michael Hinchen and Allen Sattler, who were then fourth year associates, at the rate of $200 per hour. (Id. at ¶¶ 12-13). Additionally, they seek reimbursement at a rate of $275 per hour for Amy Hong, an associate in the Employment Law Unit, and $425 per hour for Karen Cacace, a supervising attorney, with The Legal Aid Society. (Id. at ¶¶ 14-15). In support of their application, Plaintiffs submit records of their attorneys' hours. (Id. at ¶¶ 12-16).
Courts in this District have determined that the range between $250 and $450 is generally an appropriate fee for experienced civil rights and employment law litigators. See, e.g., Allende v. Unitech Design, Inc., 783 F. Supp. 2d 509, 514-15 (S.D.N.Y. 2011) (finding rates of $450 for partners and $300 for associates at "well-known and highly respected law firm" are "consistent with rates awarded by the courts in other FLSA or similar statutory fee cases"); Wong v. Hunda Glass Corp., No. 09 Civ. 4402 (RLE), 2010 WL 3452417, at *3 (S.D.N.Y. Sept. 1, 2010) (awarding $350 per hour to attorneys with twelve years of legal experience); De Los Santos v. Just Wood Furniture, Inc., Nos. 05 Civ. 9369 (WWE), 06 Civ. 5749 (WWE), 2010 WL 445886, at *3 (S.D.N.Y. Feb. 2, 2010) (rates of $250 to $350 per hour is reasonable for an employment attorney); Chan, 2007 WL 13731 18, at * 3-4 (awarding associate director of Urban Justice Center with fifteen years experience $400 per hour).
Accordingly, Ms, Cacace's hourly rate of $425 an hour and Ms. Hong's rate of $275 are reasonable. See, e.g., Gurung, 2012 WL 691532, at *11 (finding a rate of $275 for a staff attorney at Urban Justice Center reasonable in FLSA case). Additionally, as fourth year law firm associates, Mr. Hinchen and Mr. Sattler have made a reasonable request of $200 per hour given that courts in this District have awarded fees ranging from $125 to $200 per hour for even first year attorneys. See, e.g., Anthony v. Franklin First Fin., Ltd., No. 09 Civ. 5578 (BSJ) (RLE), 2012 WL 546668, at *3 (S.D.N.Y. Feb. 21, 2012) (awarding a rate of $175 per hour for a first-year associate in FLSA case); Torres v. City of N.Y., No. 07 Civ. 3473 (GEL), 2008 WL 419306, at *2 (S.D.N.Y. Feb. 14, 2008) ("courts have awarded amounts ranging from $125 to $200 per hour for attorneys with less than three years' experience").
It does bear noting that Plaintiffs have not identified how many years Ms. Cacace has been a member of the bar, but by dint of her supervisory position the rate appears appropriate.
2. Reasonable Hours Expended
"After determining the appropriate hourly billing rate, the court calculates the hours reasonably expended." Hirsch v. Sweet N Sour Corp., No. 10 Civ. 5605 (JSR) (JLC), 2011 WL 3741008, at *5 (S.D.N.Y. Aug. 25, 2011) (citations omitted). The Court must make "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). 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) (citation omitted); accord Nike, Inc. v. Top Brand Co., No. 00 Civ. 8179 (KMW) (RLE), 2006 WL 2946472, at *5 (S.D.N.Y. Feb. 27, 2006), report and recommendation adopted, 2006 WL 2884437 (S.D.N.Y. Oct. 6, 2006). The Court should examine contemporaneous time records that identify, for each attorney, the hours expended on a task, "with a view to the value of the work product of the specific expenditures to the client's case," Luciano v. Olsten Corp., 109 F.3d 111, 116 (2d Cir. 1997); see also Scott v. City of New York, 643 F.3d 56, 57 (2d Cir. 2011); N.Y. State Ass'n for Retarded Children v. Carey, 711 F.2d 1 136, 1148 (2d Cir. 1983). The Court may also rely on its own experience with the case, as well as its experiences with similar submissions and arguments as additional support. Clarke v. Frank, 960 F.2d 1146, 1153 (2d Cir. 1992). But see Scott, 643 F.3d at 58 ("award based entirely on the district court judge's personal observation and opinions of the applying attorney . . . is contrary to Carey"). In addition, while using multiple attorneys "is not unreasonable per se," Nike, Inc., 2006 WL 2946472, at *7 (citing cases), "the moving party . . . must demonstrate the need for each attorney's expertise." Id. Ultimately, "[m]ultiple attorneys are allowed to recover fees on a case if they show that the work reflects the distinct contributions of each lawyer." Id.
As a general matter, the Court may reduce any hours that are "excessive, redundant, or otherwise unnecessary." Hensley, 461 U.S. at 434. For example, the Court can make reductions where the stated number of hours is greater than what should have been required for the work produced. See Seitzman v. Sun Life Assurance Co. of Canada, 311 F.3d 477, 487 (2d Cir. 2002); Nat'l Audobon Soc., Inc. v. Sonopia Corp., No. 09 Civ. 975 (PGG) (FM), 2010 WL 3911261, at *5 (S.D.N.Y. Sept. 1, 2010). As the Second Circuit recently observed in Millea, this is "a permissible consideration and one that a trial judge is particularly well-situated to evaluate." 658 F.3d at 167.
"In lieu of making minute adjustments to individual timekeeping entries, a court may make across-the-board percentage cuts in the number of hours claimed, 'as a practical means of trimming the fat from a fee application.'" Chan, 2007 WL 1373118, at *5 (quoting In Re Agent Orange, 818 F.2d at 237); see, e.g., Simmonds v. N.Y.C. Dep't of Corr., No. 06 Civ. 5298 (NRB), 2008 WL 4303474, at *7-8 (S.D.N.Y. Sept.16, 2008) (ordering 40 percent reduction where attorneys spent excessive number of hours drafting complaint, drafting and reviewing correspondence, preparing document requests, and preparing research memorandum).
With these principles in mind, the Court finds that the 171.8 hours expended by Plaintiffs' attorneys are excessive in this case. While the hours are documented, Plaintiffs make no attempt to explain them, citing only to the statutory authority for fees in their memorandum of law without any citation to cases justifying the number of hours sought or attorneys used in a simple default case such as this one. (Pls' Mem. at 10). As one example, approximately 20 hours were devoted to communications between the attorneys at firm and The Legal Aid Society. (Hinchen Decl. ¶¶ 12-15). Upon the Court's review of similar wage-and-hour cases, the high-end amount of hours spent on cases in a similar procedural posture (i.e., a motion for default judgment immediately following the filing of a complaint) is no more than 55 hours total. See, e.g., Wicaksono, 2011 WL 2022644, at *11 (awarding 54.4 hours of attorneys' fees with multiple plaintiffs); Callier v. Superior Bldg. Servs., Inc., No. 09 Civ. 4590 (ILG) (JMA), 2010 WL 5625906, at *7 (E.D.N.Y. Dec. 22, 2010) (awarding 53.71 hours of attorney work with an "across-the-board cut of fifteen percent."); Said, 2010 WL 1265186, at *11 (awarding 41.35 hours of attorneys' fees instead of 165.4 hours sought in wage-and-hour case in which defendant defaulted).
In light of these concerns, it is appropriate to reduce all indicated time charges by 70 percent to fall in line with the hours of similar cases (i.e., 30 percent of 171.8 hours is 51.54 hours). See In re Agent Orange, 818 F.2d at 237 ("across-the-board percentage cut[ ] in hours [is] . . . a practical means of trimming fat from a fee application"). A reduction of this degree is permitted when necessary. See Guardians Ass'n of Police Dep't of N.Y. v. City of N.Y., 133 F. App'x 785, 786 (2d Cir. 2005) (summary order) (affirming district court's 80 percent reduction of attorneys' request due to excessive hours, vague billing entries, and deficient attorney records); 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' fee by seventy-five percent when "a substantial amount of work performed . . . was redundant and unnecessarily duplicative"). Plaintiffs are therefore entitled to recover a total of $11,771.18 in attorneys' fees for services rendered by the Legal Aid Society and Mendes & Mount, as this amount equals 30 percent of the requested total amount of fees.
Although Plaintiffs claim an entitlement to costs in the Complaint and their memorandum of law (Compl. at 15 ¶ 8; Pls' Mem. at 10), in none of the inquest submissions do they state a basis for recovery, either by providing an amount incurred in costs or legal authority for reimbursement. Accordingly, Plaintiffs have waived the opportunity to recover their costs.
III. Conclusion
For the foregoing reasons, I recommend that judgment be entered in Plaintiffs' favor against Defendants as follows: Maldonado should be awarded $253,052.95 in damages, Ambrocio should be awarded $101,464.70 in damages, and DeJesus should be awarded $13,489.23 in damages, along with pre-judgment interest as set forth herein. I further recommend that Plaintiffs be awarded $11,771.18 in attorneys' fees.
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 shall have fourteen (14) days from service of this Report to file written objections. See also Fed. R. Civ. P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Louis L. Stanton and the undersigned, United States Courthouse, 500 Pearl Street, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Stanton. FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72. 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).
Dated: New York, New York
May 14, 2012
/s/_________
JAMES L. COTT
United States Magistrate Judge Copies of this Report and Recommendation are being to counsel sent via ECF
and by mail to: La Nueva Rampa, Inc.
Jesus Wong
Roberto Chao
Chef No. 1 a/k/a "Jaime"
149 West 14th Street
New York, NY 10011 Jesus Wong
3420 32nd Street, Apt. 3F
Astoria, NY 11106