Asfaw v. BBQ Chicken Don Alex No. 1 Corp. et al

Filing 22

MEMORANDUM AND ORDER ADOPTING REPORT AND RECOMMENDATIONS: The Clerk of Court is directed to enter judgment against the named defendants, jointly and severally, and in favor of Asfaw for $12,750.00, plus $6,548.80 in attorney's fees an d costs, $831.08 in pre-judgment interest, and post-judgment interest calculated pursuant to 28 U.S.C. § 1961. The only remaining defendants in this case are John Does. Within 14 days of the date of this Order, Asfaw is directed to show go od cause for her failure timely to serve the John Doe defendants. Failure to demonstrate such cause will result in the claims against the John Doe defendants being dismissed without prejudice. Ordered by Chief Judge Carol Bagley Amon on 3/29/2016. (fwd for judgment) (Fernandez, Erica)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

BROOKLYi J OFFICE

------------------------------------------------------){
PAOLA ASFAW, on behalf of herself and
others similarly situated,
Plaintiff,
-against-

NOT FOR PUBLICATION
MEMORANDUM & ORDER
14-CV-5665 (CBA) (RML)

BBQ CHICKEN DON ALEX NO. 1 CORP.
d/b/a DON ALEX RESTAURANT, DIAVI
OSORES, OSVALDO YALLI CO, and JOHN
DOES 1-10,jointly and severally,
Defendants.

------------------------------------------------------){

AMON, Chief United States District Judge:

Plaintiff Paola Asfaw claims her former employers, defendants BBQ Chicken Don Ale){
No. 1 Corp. ("Don Ale){"), Diavi Osores, Osvaldo Yallico, and John Does 1-10, failed to pay her
adequately under, and otherwise comply with, the Fair Labor Standards Act of 1938, 29 U.S.C.
§ 201 et seq. ("FLSA") and the New York Labor Law, N.Y. Lab. Law§ 650 et seq. ("NYLL").
Asfaw allegedly worked as a server at one of the Don Ale){ restaurants. (Inquest Hr' g Tr. 4:3-8,
5:23-24.) None of the defendants have appeared in these proceedings, and the Clerk of Court noted
the default of the named defendants on January 14, 2015. (D.E. # 9.) Plaintiff moved for a default
judgment on March 5, 2015. (D.E. # 11.) This Court referred the motion to Magistrate Judge
Marilyn D. Go for a Report and Recommendation ("R&R"), (D.E. dated Mar. 9, 2015), and the
case was subsequently reassigned to Magistrate Judge Robert M. Levy, (D.E. dated Mar. 30, 2015).
Thereafter, Judge Levy issued an R&R recommending entry of a default judgment against
defendants. (D.E. # 20, R&R.)

DISCUSSION
I.

Standard of Review
When deciding whether to adopt an R&R, a district court "may accept, reject, or modify,

in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C.
§ 636(b)(l). To accept those portions of the R&R to which no timely objection has been made, "a
district court need only satisfy itself that there is no clear error on the face of the record." Jarvis v.
N. Am. Globex Fund. L.P., 823 F. Supp. 2d 161, 163 (E.D.N.Y. 2011) (internal quotation marks
and citation omitted). When specific objections are made, however, "[t]he district judge must
determine de novo any part of the magistrate judge's disposition that has been properly objected
to." Fed. R. Civ. P. 72(b)(3).

II.

Plaintiff's Recovery
Here, no party has raised an objection to the R&R, which the Court has therefore reviewed

for clear error. Upon careful consideration of the record, the Court adopts Judge Levy's R&R as
the opinion of the Court with respect to Asfaw's recovery-subject to the following modification.
Judge Levy recommends that Asfaw recover liquidated damages under both the FLSA and
the NYLL. (R&R at 13.) Although that position is supported by a significant body of case law,
(see id. at 12), there is no appellate authority on the matter, and this Court finds that legislative
developments have decisively eroded the justification typically offered for simultaneously
awarding damages under both statutes.
The original rationale for permitting plaintiffs to recover double liquidated damages was
that the FLSA provided for liquidated damages as compensatory damages while under the NYLL
they were punitive in nature, and therefore it was not duplicative to award both at once. See Yu G.
Kev. Saigon Grill. Inc., 595 F. Supp. 2d 240, 261-62 (S.D.N.Y. 2008) ("Liquidated damages

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under the FLSA are ... compensation to the employee occasioned by the delay in receiving wages
caused by the employer's violation of the FLSA.... In contrast, the liquidated damages provided
for in the New York Labor Law are punitive in nature." (internal quotation marks and citations
omitted)); see also Reilly v. Natwest Markets Oro. Inc., 181 F.3d 253, 265 (2d Cir. 1999)
(describing the punitive nature ofNYLL liquidated damages under an older version of the statute).
That distinction is no longer compelling. To justify an award of damages, the NYLL long
required a plaintiff to demonstrate that the employer's violations of the statute were willful, but
that requirement was removed in 2009. Compare N.Y. Lab. Law 198(1-a) (amended 1997) with
N.Y. Lab. Law 198(1-a) (amended 2009); see also Inclan v. New York Hosp. Gm .. Inc., 95 F.
Supp. 3d 490, 506 (S.D.N.Y. 2015). And in 2010, the NYLL was further modified to permit
damages equivalent to 100%---rather than the previous 25o/o--of unpaid wages. Compare N.Y.
Lab. Law 198(1-a) (amended 2009) withN.Y. Lab. Law 198(1-a) (amended 2010); see also Inclan,
95 F. Supp. 3d at 506. As a result, damages under the NYLL now appear to be compensatory,
much like damages under the FLSA.
Some courts have recognized this apparent realignment in the respective purposes of
damages under the FLSA and NYLL while also suggesting that double damages may remain
appropriate in the case where a defendant defaults. See Gortat v. Capala Bros., 949 F. Supp. 2d
374, 382 (E.D.N.Y. 2013); Herrera v. Tri-State Kitchen & Bath. Inc., No. 14-CV-1695 (ARR)
(MDG), 2015 WL 1529653, at *12 (E.D.N.Y. Mar. 31, 2015). Ifboth FLSA and NYLL liquidated
damages are compensatory, however, whether a defendant defaults is irrelevant; plaintiff would
still stand to be compensated twice. The Court therefore modifies Asfaw' s award so that she
recovers liquidated damages only under one statute. In the instant case, the larger recovery is

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available under the NYLL, so the Court awards that amount-$5,250.00, as calculated by Judge
Levy-in liquidated damages.
Asfaw is therefore entitled to $12,750.00, 1 plus $6,148.80 in attorney's fees and $400.00
in costs, $831.08 in pre-judgment interest, 2 and post-judgment interest as prescribed by 28 U.S.C.
§ 1961, see Fermin v. Las Delicias Peruanas Rest., Inc., 93 F. Supp. 3d 19, 23 (E.D.N.Y. 2015)
(awarding post-judgment interest in an FLSA default case even where plaintiff has not requested
it). The R&R does not fully address the liability of the various defendants, however, necessitating
the following discussion.

III.

Defendants Don Alex, Osores, and Yallico
Judge Levy recommends granting Asfaw's motion for a default judgment as to those

defendants who have been served-defendants Don Alex, Osores, and Yallico. (R&R at 4.) The
Court adopts that position. First, with respect to defendant Don Alex, the Court follows Judge
Levy in crediting Asfaw's allegations that the company qualifies as an employer under the FLSA

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As determined by Judge Levy, this amount comprises $2,550.00 in unpaid minimum wages, $2,340.00 in unpaid
overtime wages, $360.00 in unpaid spread-of-hours compensation, $5,250.00 in liquidated damages, and $2,250.00
in damages for wage-and-hour-notice violations.
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Pre-judgment interest is compensatory under the NYLL. See Reilly, 181 F.3d at 265. As a result, pre-judgment
interest and liquidated damages now appear to serve similar functions under the NYLL. The statute, however,
explicitly provides both for "prejudgment interest as required under the civil practice law and rules" and liquidated
damages. See N.Y. Lab. Law 198(1-a) (amended 2015); N.Y. Lab. Law 198(1-a) (amended 2010). Therefore the
Court awards both here. A "[p]laintiffis []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." Sautillan v. Henao, 822
F. Supp. 2d 284, 298 (E.D.N.Y. 2011). Because the Court has not assessed any liquidated damages under the FLSA,
Asfaw can recover pre-judgment interest, calculated at 9% per year, on all $5,250.00 of her unpaid wages. The
Court adopts Judge Levy's recommended start date for calculating pre-judgment interest, which is June 26, 2014.

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because it was directly engaged in interstate commerce and had an annual gross volume of sales
exceeding $500,000. (R&R at 2; see also Comp!. iii! 17, 20.)
With respect to defendants Osores and Ya1lico, Asfaw a11eges that both individuals owned
or managed corporate defendant Don Alex. (Comp!.

ft

13-15.) When considering whether an

individual is an "employer" under the FLSA, courts apply the "economic reality" test, for which
the Second Circuit has identified at least four relevant factors: "whether the alleged employer
(1) had the power to hire and fire the employees, (2) supervised and contro11ed employee work
schedules or conditions of employment, (3) determined the rate and method of payment, and
(4) maintained employment records." Herman v. RSR Sec. Servs. Ltd., 172 F.3d 132, 139 (2d Cir.
1999). This test "encompasses the totality of circumstances, no one of which is exclusive." Id.
Although these factors are not necessarily the only relevant ones, they are sufficient to demonstrate
that an individual qualifies as an employer under the FLSA. 3 Zheng v. Libertv Aooarel Co. Inc.,
355 F.3d 61, 69 (2d Cir. 2003).
Here, Asfaw a1leges that at least the first three factors apply to Osores and Yal Iico. First,
she claims that Yallico hired her, (Inquest Hr'g Tr. 6:20), and that Osores fired her,

fuh 14:12-

19). Second, she claims that both Osores and Yallico supervised her work and gave her orders, and
that Yallico set her schedule initia11y when she was hired. (IQ,_ 5:25--6:14.) Third, she a11eges that
both individuals had control over payro11 policy at Don Alex. (Comp!. iii! 13-14.) With respect to
the fourth factor, there is no clear indication that Osores or Ya11ico maintained employment
records, but the absence of the fourth factor is not dispositive. See Herman, 172 F.3d at 140

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A similar analysis applies under the NYLL. See Saigon Grill, 595 F. Supp. 2d at 264 n.48 (S.D.N.Y. 2008) ("New
York law parallels that of the FLSA in defining the scope of the term 'employer."').

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("[T]here is no evidence that [the defendant] was involved in maintaining employment records.
But that this fourth factor is not met is not dispositive. ").
The Court accepts as true Asfaw's well pleaded allegations of the respective supervisory
roles of Osores and Yallico. Greyhound Exhibitgroup. Inc. v. E.L.U.L. Realty Coro., 973 F.2d
155, 158 (2d Cir. 1992) ("[A] party's default is deemed to constitute a concession of all well
pleaded allegations of liability."). On the basis of those allegations, the Court concludes that
Osores and Yallico qualify as Asfaw's former "employers" under the FLSA and NYLL.
In FLSA and NYLL defaults, courts routinely hold corporate and individual employers
jointly and severally liable. See Pineda v. Masonry Const.. Inc., 831 F. Supp. 2d 666, 686
(S.D.N.Y. 2011) (collecting cases). As a result, all three named defendants are liable jointly and
severally for the judgment awarded here, as well as for the post-judgment interest on that sum.
IV.

John Doe Defendants
In addition to the three named defendants, Asfaw' s complaint also lists John Doe

defendants 1-10. Asfaw has moved for a "default judgment as to Defendants," (see D.E. # ll);
Asfaw's motion does not distinguish between the named and John Doe defendants, nor is there
any indication that Asfaw has sought to dismiss the John Doe defendants from the case. The Court
can therefore only interpret Asfaw as moving for a default as to all defendants.
The John Doe defendants were never identified or served in this case, so they cannot have
defaulted. In any event, they are also omitted from the Clerk of Court's entry of default. (See D.E.
# 9.) See also Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981) ("The procedural steps
contemplated by the Federal Rules of Civil Procedure following a defendant's failure to plead or
defend as required by the Rules begin with the entry of a default by the clerk upon a plaintiff's
request. Then, pursuant to Rule 55(c), the defendant has an opportunity to seek to have the default

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set aside. If that motion is not made or is unsuccessful, and if no hearing is needed to ascertain
damages, judgment by default may be entered by the court or, if the defendant has not appeared,
by the clerk." (internal citations omitted)). The motion for a default judgment as to those
defendants is denied.
Further, Asfaw filed the complaint approximately a year and a half ago, on September 26,
2014. (See D.E. # 1.) Because Asfaw failed to serve the unidentified defendants within 120 days
of filing the complaint, she is in violation of Federal Rule of Civil Procedure 4(m) with respect to
those defendants. 4

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The Rule was amended as of December 1, 2015, and now sets the presumptive time for service of defendants at
within 90 days of filing the complaint. Fed. R. Civ. P. 4(m). Given the timing of Asfaw's complaint, the previous,
120-day deadline is applicable.

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CONCLUSION

The Clerk of Court is directed to enter judgment against the named defendants, jointly and
severally, and in favor of Asfaw for $12,750.00, plus $6,548.80 in attorney's fees and costs,
$831.08 in pre-judgment interest, and post-judgment interest calculated pursuant to 28 U.S.C.
§ 1961.
The only remaining defendants in this case are John Does. Within 14 days of the date of
this Order, Asfaw is directed to show good cause for her failure timely to serve the John Doe
defendants. Failure to demonstrate such cause will result in the claims against the John Doe
defendants being dismissed without prejudice. See Thompson v. Maldonado, 309 F.3d 107, 110
(2d Cir. 2002) ("As indicated by the plain language of Rule 4(m), notice to the plaintiff must be
given prior to a sua sponte dismissal.") Alternatively, Asfaw may seek voluntary dismissal of the
John Doe defendants.
SO ORDERED.
Dated: March c7f , 2016
Brooklyn, New York

s/Carol Bagley Amon
- Car-;;! Bagle;~;/ -- . . >Chief United States District Judge

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