Clarke v. Denali Property Group LLC et al

Filing 24

ORDER re Motions Referred: For the reasons stated in the attached Order, and absent further application by plaintiff, this Court will defer any determination of damages with respect to the defaulting defendants. Plaintiff shall serve a copy of this Order on all defaulting defendants at their last known addresses. Ordered by Chief Magistrate Judge Steven M. Gold on 5/5/2011. (O'Connor, Erin)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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CLETUS ROBIN CLARKE,
:
:
Plaintiff,
:
:
-against:
:
DENALI PROPERTY GROUP LLC, et al.,
:
:
Defendants.
:
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GOLD, STEVEN M., U.S.M.J.:

ORDER
10-CV-5115 (JG)

By Order dated May 3, 2011, the Honorable John Gleeson referred plaintiff’s motion for
default judgment against defendants Denali Property Group, LLC, Joseph Scarpinito and John
Scarpinito to me to report and recommend. 1 Absent a further application by plaintiff, however, a
determination of damages should be deferred to a later stage of this litigation for several reasons.
First, in a multi-defendant case,
where some but not all defendants have defaulted, the courts have
consistently held that it is appropriate to enter judgment solely as
to liability and not as to the amount of damages to be assessed
against the defaulting party, since a separate determination of
damages would pose the prospect of inconsistent judgments.
Montcalm Publ’g Corp. v. Ryan, 807 F. Supp. 975, 978 (S.D.N.Y. 1992) (internal quotation
marks and citation omitted). This principle derives from the Supreme Court’s decision in 1872
in Frow v. De La Vega, 82 U.S. 552 (1872). The Frow holding has been narrowed to cases
involving true joint liability. Friedman v. Lawrence, 1991 WL 206308, at *2 (S.D.N.Y. Oct. 2,
1991). See also Int’l Controls Corp. v. Vesco, 535 F.2d 742, 746 n.4 (2d Cir. 1976).
Nonetheless, courts have also consistently delayed damages inquests even where a plaintiff seeks
1

Plaintiff also sought entry of default against defendants 6833 Shore Road Corp. and Denali Construction Corp.,
Docket Entries 22, 23, but the Clerk of the Court entered only the defaults of Denali Property Group, LLC, Joseph
Scarpinito and John Scarpinito because plaintiff failed to provide affidavits of service of the amended complaints on
6833 Shore Road Corp. and Denali Construction Corp.

joint and several liability in order “‘to avoid the problems of dealing with inconsistent damage
determinations.’” Lawrence v. Vaman Trading Co., 1993 WL 190266, at *2 (S.D.N.Y. May 28,
1993) (quoting In re Uranium Antitrust Litig., 617 F.2d 1248, 1261-62 (7th Cir. 1980)). See also
Bellet v. City of Buffalo, 2010 WL 3522224, at *3 (W.D.N.Y. Sept. 8, 2010) (deferring inquest
until liability of non-defaulting defendants resolved at trial); Cho v. Koam Med. Servs., P.C., 524
F. Supp. 2d 202, 205 (E.D.N.Y. 2007) (hearing a damages inquest against all defendants after the
bench trial of the appearing defendant in a FLSA action); 3947 Austin Blvd. Assocs. v. M.K.D.
Capital Corp., 2006 WL 785272 (S.D.N.Y. Mar. 24, 2006) (concluding that assessment of
damages against defaulting defendants was premature, even though defendants jointly and
severally liable); Montcalm, 807 F. Supp. at 978 (same); but see Int’l Gemmological Instit., Inc.
v. Rafaeil, 2005 WL 3880222, at *3 (S.D.N.Y. Aug. 17, 2005) (finding no reason to delay
damages assessment despite concerns of inconsistency).
Determining the damages to be imposed against the defaulting defendants at this stage of
the litigation would pose a risk of inconsistent awards for several reasons. First, it is not clear
whether all of the defendants – seven corporations and five individuals – together were joint
FLSA “employers.” Second, not all defendants have been served with the amended complaint
and additional defendants may default. See n.1 supra. Third, discovery against the nondefaulting defendants may yield evidence relevant to the calculation of plaintiff’s damages. 2
Accordingly, any damages inquest against the defaulting defendants should be stayed until all of
the defendants’ liability has been established in order to avoid inconsistent judgments.
Moreover, plaintiff brings this action on behalf of himself and others similarly situated
and may seek certification as a collective action pursuant to 29 U.S.C. § 216(b). Am. Compl.

2

As of today’s date, Rule 26(a) automatic disclosures have not yet been served. See Minute Entry for 4/21/11 Conf.
2

¶¶ 1, 2, 10, 11. If the case is certified, any damages inquest should be held after certification, so
that all opt-in plaintiffs have an opportunity to present their damages calculation to the court.
Finally, Federal Rule of Civil Procedure 54(b) provides that “a court may direct the entry
of a final judgment as to one or more but fewer than all of the . . . parties only upon an express
determination that there is no just reason for delay. . . .” If plaintiff seeks to proceed with a
damages inquest against the defaulting defendants at this stage of the litigation, as opposed to
deferring the inquest until the claims against the appearing defendants have been resolved, he
shall submit a memorandum of law explaining why this court should conclude that “there is no
just reason to delay” pursuant to Rule 54(b). See Smith ex rel. Smith v. Half Hollow Hills Cent.
Sch. Dist., 298 F.3d 168, 171 (2d Cir. 2002).
For all these reasons, and absent further application by plaintiff, this Court will defer any
determination of damages with respect to the defaulting defendants. Plaintiff shall serve a copy
of this Order on all defaulting defendants at their last known addresses.

SO ORDERED.
/s/
STEVEN M. GOLD
United States Magistrate Judge
Brooklyn, New York
May 5, 2011

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