Ghosh v. Neurological Services of Queens, P.C. et al
Filing
16
MEMORANDUM & ORDER denying 15 Motion for Default Judgment and dismissing 1 Complaint. For the reasons set forth herein, plaintiff's federal cause of action is patently meritless, and the amount in controversy in this case never reached $ ;75,000.00, which divests this Court of jurisdiction over his remaining state and common law claims. His motion is therefore DENIED and his Complaint DISMISSED without prejudice to the refiling of the claims over which this Court lacks jurisdiction in state court. The Clerk of Court is directed to close this case. Ordered by Judge I. Leo Glasser on 2/3/2015. (Carey, Charles)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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SIDDHARTH N. GHOSH,
Plaintiff,
MEMORANDUM & ORDER
- against NEUROLOGICAL SERVICES OF QUEENS,
P.C. and DR. JATINDER S. BAKSHI, M.D.,
13-CV-1113 (ILG) (CLP)
Defendants.
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GLASSER, Senior United States District Judge:
On March 4, 2013, plaintiff Siddharth N. Ghosh commenced this action against
Neurological Services of Queens, P.C. (“Neurological Services”) and Dr. Jatinder S.
Bakshi, M.D. (“Dr. Bakshi”; together, “defendants”), alleging violations of the Fair Labor
Standards Act (“FLSA”), 29 U.S.C. § 201, et seq.; multiple sections of the New York
Labor Law (“NYLL”), Art. 6 § 190, et seq. and Art. 19 § 650, et seq.; and common law.
Defendants have not responded to the Complaint, and plaintiff now moves for a default
judgment, pursuant to Rule 55(b) of the Federal Rules of Civil Procedure, seeking
compensatory, liquidated, and punitive damages, along with interest, costs, and
attorney’s fees. For the following reasons, that motion is DENIED and this case is
DISMISSED.
BACKGROUND
Except where otherwise noted, the following facts are taken from the Complaint
(Dkt. No. 1) and plaintiff’s affidavit in support of this motion (Dkt. No. 15-1), as well as
their accompanying exhibits. Plaintiff is a citizen of India and a resident of New Jersey
who holds a Master of Science degree from Long Island University and is certified to
practice as a physical therapist in New York. On January 18, 2010, Neurological
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Services hired plaintiff as a physical therapist, offering him a one-year contract with a
yearly salary of $70,000.00, eight hours of paid vacation for every four hundred hours
worked in a six-month period, and a stipend of up to $1,000.00 per year (plus expenses)
for continuing education classes or seminars (contingent on Neurological Service’s
approval of the course content). Neurological Services also assisted plaintiff in applying
for and obtaining an H-1B work visa. Plaintiff’s employment agreement with
Neurological Services was counter-signed by Dr. Bakshi, who was the sole shareholder
and operator of the company. Although that agreement expired in January of 2011,
Neurological Services continued to employ plaintiff and pay him the same salary.
In May of 2011, Neurological Services began to delay paying plaintiff regularly.
The last paycheck he received was dated December 30, 2011, but issued for the pay
period between July 16, 2011 and July 30, 2011. Plaintiff nevertheless continued to
work for the company until mid-March of 2012, when he arrived for work only to find
the office doors locked and the space completely empty. Plaintiff called Dr. Bakshi, who
acknowledged that he had closed down Neurological Services without notifying plaintiff.
Had plaintiff received checks during the period between August 1, 2011 and
March 15, 2012 for the usual amount that Neurological Services had paid him, he would
have earned $47,788.05 before taxes and withholdings. Additionally, plaintiff never
received vacation pay or a stipend for any continuing professional education classes at
any time during the two years he worked for the defendants. Although plaintiff made
repeated requests of Dr. Bakshi for the amount he believed he was owed after
Neurological Services unexpectedly closed down, his requests were ignored and this
litigation ensued. The Clerk of Court noted defendants’ default on January 22, 2014
(Dkt. No. 11) and plaintiff filed this motion on November 6, 2014 (Dkt. No. 15).
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LEGAL STANDARD
Rule 55 of the Federal Rules of Civil Procedure sets forth a two-step process for
obtaining a default judgment: first, the clerk of court enters the party’s default pursuant
to Rule 55(a), and second, if the defaulting party fails to set aside the entry of default
pursuant to Rule 55(c), the plaintiff must apply for a default judgment pursuant to Rule
55(b). See Finkel v. Universal Elec. Corp., 970 F. Supp. 2d 108, 118 (E.D.N.Y. 2013)
(citing Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95-96 (2d Cir. 1993)).
The plaintiff has the burden of establishing entitlement to a default judgment,
which is not obtained as a matter of right. See id. at 119 (citing, inter alia, Erwin
DeMarino Trucking Co. v. Jackson, 838 F. Supp. 160, 162 (S.D.N.Y. 1993)). Courts must
“supervise default judgments with extreme care to avoid miscarriages of justice.”
DeMarino Trucking, 838 F. Supp. at 162. Thus, while the defaulting defendant is
deemed to have admitted all well-pleaded allegations in the complaint pertaining to
liability, “a district court has discretion . . . to require proof of necessary facts and need
not agree that the alleged facts constitute a valid cause of action.” Au Bon Pain Corp. v.
Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Additionally, allegations in the complaint
pertaining to damages are not deemed admitted and require an independent evidentiary
determination. E.g., id.; Greyhound ExhibitGroup, Inc. v. E.L.U.L. Realty Corp., 973
F.2d 155, 158 (2d Cir. 1992).
DISCUSSION
Plaintiff demands $47,775.00 in unpaid salary, $1,918.00 in unpaid vacation pay,
$2,000.00 in unpaid continuing professional education stipends, and any other
statutory liquidated damages or interest available to him. See Pl.’s Ex. H at 1-3. He
believes he is entitled to that money pursuant to four separate theories of recovery, and
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asks the Court for relief under “only one” of them, be it the FLSA’s minimum-wage
provisions, or the NYLL’s unpaid-wage provisions, or breach of contract, or quantum
meruit. Pl.’s Mem. at 21-22. While plaintiff is “not entitled to recover twice for the same
injury, . . . to the extent [his] allegations allow recovery under both state and federal law,
the law providing for the greatest recovery will govern the calculation of damages.”
Wicaksono v. XYZ 48 Corp., No. 10 Civ. 3635, 2011 WL 2022644, at *3 (S.D.N.Y. May 2,
2011) (internal quotation marks and citations omitted), rep’t & rec. adopted, 2011 WL
2038973 (S.D.N.Y. May 24, 2011). The Court must therefore determine whether the
theories plaintiff relies upon actually support his claims, and, if more than one does,
which among them provides for the greatest recovery.
I. Federal Claims & Jurisdictional Concerns
This Court has subject-matter jurisdiction over claims that arise under the
“Constitution, laws or treaties of the United States” pursuant to 28 U.S.C. § 1331’s
“federal question” authority. The sole federal question this case presents is whether
plaintiff is entitled to recover under the FLSA. If he is, the Court may exercise
supplemental jurisdiction over his remaining state and common law claims pursuant to
28 U.S.C. § 1367(a).
A. The FLSA
The FLSA requires employers to pay certain employees who engage in commerce
or are “employed in an enterprise engaged in commerce or in the production of goods
for commerce” a minimum wage ($7.25 an hour at all times relevant to this litigation).
29 U.S.C. § 206(a). Employees covered by the FLSA may sue employers who fail to
provide that minimum wage, recovering “the amount of their unpaid minimum wages”
along with liquidated damages, costs and fees as the circumstances dictate. Id. § 216(b).
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The FLSA’s minimum-wage provisions do not apply, however, to bona fide
“professional” employees, a group that includes employees compensated on a salary
basis at a rate of not less than $455.00 per week and whose primary duties require
advanced knowledge in a field of science or learning. See 29 U.S.C. § 213(a)(1); 29
C.F.R. §§ 541.300(a), 541.301. The question of what an employee’s primary duties are is
factual, while the issue of whether such duties render the employee exempt from the
FLSA’s minimum-wage provisions is a question of law. See McBeth v. Gabrielli Truck
Sales, Ltd., 768 F. Supp. 2d 383, 387 (E.D.N.Y. 2010) (citing Icicle Seafoods, Inc. v.
Worthington, 475 U.S. 709, 714 (1986)).
Plaintiff’s own submissions describe him as a licensed physical therapist with a
master’s degree in science and a $70,000.00 yearly salary that was to be paid bi-weekly.
He is clearly a bona fide professional as the FLSA defines the term, and not covered by
the statute’s minimum-wage protections. See 29 C.F.R. §§ 541.301(e)(1), (2), (4), & (8)
(expressly but not exclusively exempting similar professionals such as medical
technologists, registered nurses, physician assistants, and athletic trainers). His federal
minimum-wage claims are denied accordingly.
B. Jurisdiction After Dismissal of Plaintiff’s FLSA Claim
Where, as here, the sole federal cause of action in a case is “patently meritless,”
its dismissal deprives a district court of supplemental jurisdiction over any remaining
state law claims it may have otherwise had pursuant to 28 U.S.C. § 1367(a). See Dunton
v. Cnty. of Suffolk, 729 F.2d 903, 910-11 (2d Cir. 1984), amended on other grounds, 748
F.2d 69 (2d Cir. 1984). Plaintiff, however, has also invoked this Court’s diversity
jurisdiction pursuant to 28 U.S.C. § 1332(a). See Compl. ¶ 4. That statute provides
federal courts with jurisdiction over cases between citizens of a state and citizens of a
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foreign state where the “matter in controversy” is $75,000.00 or more, exclusive of
interest and costs. See 28 U.S.C. § 1332(a)(2).
Diversity of citizenship exists here, but the Court must determine whether the
damages sought satisfy the jurisdictional requirement. The Second Circuit disfavors
dismissal of actions maintained pursuant to diversity jurisdiction merely because “a
plaintiff’s ultimate recovery is less than [the statutory minimum] amount.” See Zacharia
v. Harbor Island Spa, Inc., 684 F.2d 199, 202 (2d Cir. 1982).
The jurisdictional determination is to be made on the basis
of the plaintiff’s allegations, not on a decision on the merits.
Moreover, even where those allegations leave grave doubt
about the likelihood of a recovery of the requisite amount,
dismissal is not warranted. . . . Rather, it must appear to a
legal certainty from the complaint that the plaintiff cannot
recover sufficient damages to invoke federal jurisdiction.
Id. (citing, inter alia, St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289
(1938); Deutsch v. Hewes Street Realty Corp., 359 F.2d 96, 98-99 (2d Cir. 1966)).
Additional evidence submitted by the parties may be used to clarify or “amplify the
meaning of” the allegations in a complaint in determining whether diversity jurisdiction
exists. See id. (citing Givens v. W.T. Grant Co., 457 F.2d 612, 613 (2d Cir. 1972), vacated
on other grounds, 409 U.S. 56 (1972)). Yet even a complete defense that is plain from
the face of the pleadings does not deprive a federal court of jurisdiction, “for who can
say in advance that that defen[s]e will be presented by the defendant, or, if presented[,]
sustained by the court?” Schunk v. Moline, Milburn & Stoddart Co., 147 U.S. 500, 505
(1893); see also Scherer v. Equitable Life Assur. Soc’y of U.S., 347 F.3d 394, 398 (2d Cir.
2003) (applying this “affirmative defense rule” in a case where res judicata applied to
the amount in controversy, but noting it seemed “paradoxical” to do so when it appeared
“to a legal certainty” that the defense would be successful).
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Ultimately, therefore, while a court must accept plaintiffs’ assurances that their
“uncertain money damages” will exceed the statutory minimum without applying any
affirmative defenses to their claims, it cannot ignore subsequently-discovered facts
which reveal that, “from the outset,” it was or should have been certain that plaintiffs
could not recover $75,000.00 or more. See Tongbrook Am. v. Shipton Sportswear Co.,
14 F.3d 781, 785 (2d Cir. 1994). For the reasons set forth below, it is certain that
plaintiff here fails to meet the statutory minimum amount in controversy required for
this Court to exercise diversity jurisdiction over his claims.
II. State and Common Law
Plaintiff’s own allegations make it clear that none of his state or common law
causes of action entitles him to recover $75,000.00 or more. See Zacharia, 684 F.2d at
202. This Court therefore lacks jurisdiction over those claims, and this case must be
dismissed.
A. The NYLL
It is well settled that a plaintiff cannot assert a statutory claim for unpaid wages
under the NYLL “if he has no enforceable contractual right to those wages.” E.g.,
Tierney v. Capricorn Investors, L.P., 592 N.Y.S.2d 700, 703 (App. Div. 1993). Plaintiff’s
original contract expired in January of 2011, but he continued to work for, and be paid
at the same rate by, Neurological Services. See Pl.’s Ex. D. “The general rule is that
where one enters the employment of another for a fixed period at a stated annual salary,
and the employment continues beyond that period, the presumption is continuance of
the relationship for another year at the same salary.” Shenn v. Fair-Tex Mills, Inc., 273
N.Y.S.2d 876, 877 (App. Div. 1966) (per curiam) (citing, inter alia, Adams v. Fitzpatrick,
125 N.Y. 124, 129-30 (1891)). This common-law rule, however, “cannot be used to imply
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that there was mutual and silent assent to automatic contract renewal when an
agreement imposes an express obligation on the parties . . . to extend the term of
employment.” Goldman v. White Plains Ctr., 11 N.Y.3d 173, 178 (2008).
The terms of plaintiff’s employment contract state that “both parties will have the
option to renew this agreement annually.” Pl.’s Ex. D at 1 (emphasis added). This
language clearly “impose[d] an express obligation on the parties” to “extend the term of
employment” if they wished to do so. See Goldman, 11 N.Y.3d at 178. They did not, and
plaintiff became an at-will employee when his contract expired on January 18, 2011. See
id. at 175. He can therefore only invoke the NYLL to recover unpaid wages which he was
contractually entitled to receive between January 18, 2010 and January 17, 2011.
Plaintiff admits that he was paid his full regular salary during the year his
contract was in force. While he was not compensated for his unused vacation time that
was to be paid “at year end of contract” (Pl.’s Ex. D at 3), he cannot prevail on his claim
for that money under the NYLL because it expressly prohibits “professional” employees
who make more than $900.00 a week (such as plaintiff) from recovering vacation pay.
N.Y. Lab. Law § 198-c; N.Y. Comp. Codes R. & Regs. tit. 12, § 142-2.14(c)(4)(iii); see also
Galasso v. Eisman, Zucker, Klein & Ruttenberg, 310 F. Supp. 2d 569, 575 (S.D.N.Y.
2004). Finally, plaintiff’s $1000.00 stipend for continuing education was “entirely
discretionary and subject to the non-reviewable determination of his employer,” and
thus did not constitute “wages” as the NYLL defines them. See Truelove v. Ne. Capital &
Advisory, Inc., 95 N.Y.2d 220, 224 (2000).
Given the foregoing, plaintiff cannot (and could never) recover any wages by
invoking the NYLL, and his claims pursuant to that statute are denied.
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B. Breach of Contract
Since plaintiff was paid all of his regular salary for the year his employment
contract was in force, the most he could potentially recover under a breach-of-contract
cause of action would be his unpaid vacation time and continuing education stipend for
that year. He can recover far more in quantum meruit for the reasons discussed below,
and so his decision to pursue only whichever cause of action allows him to recover the
largest amount of unpaid wages waives his breach-of-contract claim.
C. Quantum Meruit
Quantum meruit, which means “as much as he deserved,” is an equitable
“measure of liability” awarded when a defendant is unjustly enriched by services
provided by a plaintiff who performed them without a contract to do so. See Seiden
Assocs., Inc. v. ANC Holdings, Inc., 768 F. Supp. 89, 96 (S.D.N.Y. 1991), rev’d on other
grounds, 959 F.2d 425 (2d Cir. 1992). In order to recover in quantum meruit under
New York law, a plaintiff must establish “(1) the performance of services in good faith,
(2) the acceptance of the services by the person to whom they are rendered, (3) an
expectation of compensation therefor, and (4) the reasonable value of the services.”
Revson v. Cinque & Cinque, P.C., 221 F.3d 59, 69 (2d Cir. 2000) (internal quotation
marks and citation omitted). Plaintiff has satisfied all four of the above elements here.
Since he seeks to recover only $47,775.00 in damages under that theory of liability,
however, he still falls short of the $75,000.00 matter-in-controversy jurisdictional bar.1
Plaintiff does not seek to recover his unpaid vacation time and continuing education stipend as part of
his quantum meruit claim, but even if he did, he still would not reach $75,000.00 in damages. See Pl.’s
Mem. at 30.
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D. Compensatory & Punitive Damages for Wrongful Termination
Plaintiff devotes considerable space in his memorandum of law to the final two
causes of action in his complaint, which seek compensatory and punitive damages under
an unspecified theory of liability for the “mental agony, torture and stress” defendants
caused him when Neurological Services shut down, thereby effectively terminating his
employment. See Compl. ¶¶ 58-67; Pl.’s Mem. at 36-42. New York “does not recognize
a cause of action for the tort of abusive or wrongful discharge of an at-will employee”
such as plaintiff, however, which makes it legally certain that he never could have
prevailed on those claims. E.g., Barcellos v. Robbins, 858 N.Y.S.2d 658, 660 (App. Div.
2008) (collecting cases).2 Plaintiff’s request for damages under the fifth and six causes
of action in his Complaint is therefore denied.
E. Interest, Costs, & Fees
As previously noted, 28 U.S.C. § 1332(a) specifically excludes interest and costs
from the matter in controversy. While an exception to that rule exists for interest that
“is owed as part of an underlying contractual obligation,” no such obligation exists here,
as plaintiff’s sole claim with any hope of success sounds in quantum meruit. See
Grunblatt v. UnumProvident Corp., 270 F. Supp. 2d 347, 350 (E.D.N.Y. 2003) (quoting
Transaero, Inc. v. La Fuerza Area Boliviana, 24 F.3d 457, 461 (2d Cir. 1994)).
As for attorney’s fees, the Second Circuit has held that they may be treated as part
of the matter in controversy “only where they are recoverable as of right pursuant to
statute or contract.” In re Ciprofloxacin Hydrochloride Antitrust Litig., 166 F. Supp. 2d
740, 755 (E.D.N.Y. 2001) (citing Givens, 457 F.2d at 614). Plaintiff points no statute or
2 Plaintiff also claims that the FLSA entitles him to compensatory and punitive damages, but the section
he cites, 29 U.S.C. § 216(b), provides for such damages only for violations of 29 U.S.C. § 215(a)(3), which
concerns retaliation, not failure to pay wages. See Solis v. SCA Rest. Corp., 938 F. Supp. 2d 380, 403
(E.D.N.Y. 2013).
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contract that would permit him to recover fees here, and the Court is aware of none. His
attorney’s fees, therefore, cannot be used to satisfy the matter-in-controversy
requirement.
CONCLUSION
For the foregoing reasons, plaintiff’s federal cause of action is patently meritless,
and it is clear that the amount in controversy in this case never reached $75,000.00,
which divests the Court of jurisdiction over plaintiff’s remaining state and common law
claims. His motion for a default judgment is therefore DENIED, and his Complaint is
DISMISSED without prejudice to the refiling of the claims over which this Court lacks
jurisdiction in state court. The Clerk of Court is directed to close this case.
SO ORDERED.
Dated:
Brooklyn, New York
February 3, 2015
/s/
I. Leo Glasser
Senior United States District Judge
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