Landi v. 341 Hancock LLC et al
ORDER granting in part and denying in part 15 Motion for Judgment on the Pleadings; granting in part and denying in part 18 Motion for Judgment on the Pleadings (duplicate docket entry). The defendants' motion for judgment on the pleadi ngs is denied except as to Landi's third cause of action for unpaid spread-of-hours compensation, which is dismissed with leave to replead within 21 days of the date of this order. Moreover, if the defendants wish to assert a counterclaim as to the Saint James Place lien's validity, they may do so by filing an amended answer within 21 days of the date of this order. Ordered by Judge Edward R. Korman on 6/27/2017. (Park, James)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
NOT FOR PUBLICATION
MEMORANDUM & ORDER
– against –
16-cv-2655 (ERK) (PK)
341 HANCOCK LLC, 103 SAINT JAMES
PLACE, LLC, RANDOLPH CRAIG, and
This case arises out of a wage-and-hour dispute between Jose Landi and his alleged former
employers. Landi, a construction worker, filed the present lawsuit in May 2016. Under New York
Labor Law, he alleges unpaid overtime and spread-of-hours compensation, failure to provide
annual wage notices and weekly wage statements, and illegal kickback of wages. He also alleges
unpaid overtime under the Fair Labor Standards Act (“FLSA”). Lastly, he seeks foreclosure of a
New York mechanic’s lien. In September 2016, the defendants moved for judgment on the
pleadings pursuant to Fed. R. Civ. P. 12(c). In June 2017, discovery was stayed pending
determination of the defendants’ motion.
The defendants raise nine discrete arguments. The only meritorious one is addressed first.
New York Labor Law
A. Spread-of-Hours Compensation
The defendants argue that unpaid spread-of-hours compensation is insufficiently alleged.
Def. Br. at 11–12. “Spread-of-hours compensation is a scheme under which employees are entitled
to an extra hour’s worth of pay at the minimum wage if the employee works in excess of ten hours
in a day.” Ramos v. Telgian Corp., 176 F. Supp. 3d 181, 202 (E.D.N.Y. 2016) (citing N.Y. Comp.
Codes R. & Regs. tit. 12, § 142–2.4). Following guidance from the New York Department of
Labor, “the majority rule in the Eastern and Southern Districts appears to be that employees who
earn more than the minimum wage are not entitled to spread-of-hours compensation.” Id. at 202–
03 (collecting cases). In the present case, Landi’s complaint is silent as to his hourly wage.
Instead, he alleges only that he received a weekly salary of $960.00, Compl. ¶ 33, which, when
divided by 40 hours, yields an hourly rate of $24.00—greater than New York City’s minimum
wage even under the current regulations. See N.Y. Comp. Codes R. & Regs. tit. 12, § 142–2.1 (in
2017, $10.50 per hour for employers with ten or fewer employees and $11.00 per hour for
employers with eleven or more employees). Nor does he allege how many employees the
defendants have, which is necessary for determining the appropriate minimum wage. Thus,
Landi’s third cause of action for unpaid spread-of-hours compensation is dismissed with leave to
replead within 21 days of the date of this order.
B. Kickback of Wages
The defendants also argue that illegal kickback of wages is insufficiently alleged. Def. Br.
at 12–13. New York Labor Law provides that if an employer has (1) promised an employee an
“agreed rate of wages,” (2) requested, demanded, or received a portion of those wages, and
(3) done so on pain of “procuring or retaining employment,” then the employer has engaged in an
illegal kickback. N.Y. Lab. Law § 198-b(2). In the present case, Landi alleges that he received a
weekly salary of $960.00, Compl. ¶ 33, from which a reasonable inference to draw is that this was
an agreed-upon rate. Moreover, the defendants “would withhold approximately $110.00 per week
from [his] wages citing cash flow problems,” id. ¶ 34, and would require him “to pay cash to [their]
foremen in order to retain [his position] with the Defendants,” id. ¶ 79. These allegations suffice
to state a cause of action for illegal kickback of wages.
Fair Labor Standards Act
A. Horizontal Joint Employment
The defendants argue that joint employment is insufficiently alleged, which would
undermine Landi’s unpaid overtime claim because he would not be able to aggregate his hours
worked in excess of forty per week across all four defendants. See Def. Br. 9. “Horizontal joint
employment exists when two (or more) employers each separately employ an employee and are
sufficiently associated with or related to each other with respect to the employee.” Murphy v.
Heartshare Human Servs. of N.Y., No. 17-CV-1033, 2017 WL 2378024, at *5 (E.D.N.Y. June 1,
2017) (published) (internal quotation marks and citations omitted). “Courts apply the same
horizontal joint employment test under federal and New York labor law.” Id. at *11 (citation
This test is fact-intensive and multi-factored, including common ownership and
management, shared supervision of employees, and intermingling of operations. See id. at *5–7.
In the present case, Landi alleges that the corporate defendants—341 Hancock LLC and
103 Saint James Place LLC—are both involved in “real estate acquisition and management,”
Compl. ¶¶ 27–28, and “have unified and interrelated operations, centralized control of labor
relations, and interrelated business goals,” id. ¶ 17. The two individual defendants—Ethan Craig
and Tatiana Cames—each “served as a principal, officer, and/or manager of [these companies].”
Id. ¶¶ 5, 7. Indeed, the defendants concede that Cames is a principal of both companies. Def.
Answer ¶ 7. Moreover, Craig and Cames “own all the beneficial interest” and “conducted
substantially all the management functions” of these companies. Compl. ¶¶ 18–19. Lastly, Craig
and Cames both have the power to hire and fire employees of these companies, and to control work
schedules and wage rates. Id. ¶¶ 37–42. These allegations suffice to establish that Landi was
jointly employed by the defendants. Cf. Murphy, 2017 WL 2378024, at *8–11.
B. Engagement in Commerce
The defendants argue that engagement in commerce is insufficiently alleged, which would
undermine Landi’s allegation that defendants 341 Hancock LLC and 103 Saint James Place LLC
qualify as enterprises under the FLSA. Def. Br. at 10–11. This argument is without merit. Cases
discussing the engagement in commerce element “have held that it is logical to conclude that even
generic products like soap have moved in interstate commerce.” Shi v. DXN Mike Corp., No. 16CV-5185 (ERK) (JO), 2017 WL 1533540, at *1 (E.D.N.Y. Feb. 7, 2017) (citation omitted). In the
present case, Landi performed “general construction work, demolition, framing, tile work,
installing and finishing wood floors, and painting.” Compl. ¶ 30. Thus, an inference can be
reasonably drawn that Landi used products such as “paint brushes, hammers, nails, tiles, adhesives,
and wood,” Pl. Opp. at 6, and that some of these products originated outside of New York.
C. Overtime Work
The defendants argue that unpaid overtime work is insufficiently alleged. Def. Br. at 8–9.
Not so. “To plead a plausible FLSA overtime claim, Plaintiffs must provide sufficient detail about
the length and frequency of their unpaid work to support a reasonable inference that they worked
more than forty hours in a given week.” Nakahata v. N.Y.-Presbyterian Healthcare Sys., Inc., 723
F.3d 192, 201 (2d Cir. 2013). In the present case, Landi alleges the following work schedule:
(1) July 1, 2014–July 31, 2015: six days a week, 9:00 AM to 5:00 PM;
(2) December 1, 2015–January 1, 2016: six days a week, 9:00 AM–10:00 PM;
(3) January 2–January 31, 2016: seven days per week, 9:00 AM–5:00 PM; and
(4) February 1–April 8, 2016: six days a week, 9:00 AM–5:00 PM.
Compl. ¶¶ 29, 31–32.
Thus, an inference can be reasonably drawn that Landi worked more than 40 hours a week,
by an additional 8 to 38 hours a week, depending on the time of the year.
New York Lien Law
I provide some brief background as to Landi’s mechanic’s lien claim. Under New York
Lien Law, “[t]he court must adjust and determine the equities of all the parties, and also the order
of priority of the different liens. In short, the form of the action, the enforcement of the judgment
by foreclosing the rights of the parties, the awarding of a deficiency judgment against persons
liable for the debt, and all the proceedings, are in all respects the same as in the foreclosure of a
mortgage in courts of equity.” Edward Marks, Jensen on the Mechanics’ Lien Law § 333, at 342
(1963 & Supp. 1983) (citation omitted); see also Dewees Mellor, Inc. v. Weise, No. 91-CV-2518
(ERK), 1993 WL 591608, at *5–9 (E.D.N.Y. Dec. 29, 1993) (determining the order of priority of
a mechanic’s lien vis-à-vis a mortgage and a security interest). Thus, Landi seeks foreclosure of
a mechanic’s lien on 320 Macon Street, Brooklyn, NY—the alleged principal place of business of
defendant 341 Hancock LLC. Compl. ¶¶ 2, 80–87. To that end, he requests several forms of relief,
including a declaration that his lien is valid, an adjustment of equities, and a determination of lien
priorities. Compl. at 16.
A. The Saint James Place Lien
The defendants make two arguments addressed to the mechanic’s lien claim that I discuss
below. There is a threshold issue, however, relating to a mechanic’s lien not included in Landi’s
complaint. Specifically, the defendants attach to their motion a purported notice of Landi’s
mechanic’s lien on 103 Saint James Place, Brooklyn, NY—the alleged principal place of business
of defendant 103 Saint James Place, LLC, Compl. ¶ 3. ECF No. 18, Ex. D. The defendants
contend that “[a]lthough [Landi] fails to allege foreclosure of this lien in his Complaint, the Saint
James [Place] Lien is nearly identical to [the Macon Street lien that Landi wishes to foreclose on],
and should be reviewed by this Court in [an] effort to preserve judicial resources.” Def. Br. 15.
In response, Landi states that he “never moved for foreclosure of the lien on 103 Saint James Place
because no such lien was ever filed.” Pl. Opp. at 14. I am not sure what relief the defendants seek
with respect to this purported lien. If they are seeking a declaration that the Saint James Place lien
is invalid, then they should assert a counterclaim to that effect, which they may do so by filing an
amended answer within 21 days of the date of this order.
B. Eligible Lienors
Returning to the merits of the mechanic’s lien claim, the defendants argue that the Macon
Street lien is void because N.Y. Lien Law § 3 “allows only trust funds to secure wages via [a]
mechanic’s lien.” Def. Br. at 16. This argument is frivolous. The statute in question provides
that, inter alia, contractors and laborers who have performed labor “for the improvement of real
property,” and trust funds “to which benefits and wage supplements are due or payable for the
benefit of such laborers,” can attach a lien to said real property for the value of such labor, benefits,
or wage supplements. N.Y. Lien Law § 3.
C. Amount of Liens
The defendants also argue that the Macon Street lien is void because it is willfully
exaggerated under N.Y. Lien Law § 39. Def. Br. at 16–17. Specifically, the defendants point to
the lien’s inclusion of not just the value of Landi’s labor, but also liquidated damages under the
FLSA and New York Labor Law. ECF No. 18, Ex C. Although it is true that the amount sought
by a mechanic’s lien typically cannot exceed “the value or agreed price of the labor and materials
remaining unpaid,” N.Y. Lien Law § 4(1), “[t]he fact that a lien may contain improper charges or
mistakes does not, in and of itself, establish [willful exaggeration],” Blair v. Ferris, 2017 WL
1712790, at *4 (N.Y. App. Div. May 4, 2017) (published) (internal quotation marks and citation
omitted). Nor does the “inclusion of items for which a lien is improperly asserted . . . invalidate
the lien.” MXP Realty Corp. v. Angrisani, 576 N.Y.S.2d 754, 756 (N.Y. Sup. Ct. 1991). Moreover,
the defendants have failed to make any showing that “the amounts set forth [in the lien] were
intentionally and deliberately exaggerated.” Blair, 2017 WL 1712790, at *4 (internal quotation
marks and citations omitted). And absent a conclusive showing of such intent, the issue of willful
exaggeration is “one which ordinarily must be determined . . . at trial.” NY Prof’l Drywall of OC,
Inc. v. Rivergate Dev., LLC, 29 N.Y.S.3d 591, 593 (N.Y. App. Div. 2016) (internal quotation
marks and citations omitted).
Lastly, the defendants argue that Landi’s claims relating to the defendants’ failure to
provide annual wage notices and weekly wage statements, as well as his foreclosure of mechanic’s
lien claim, should be dismissed for lack of supplemental jurisdiction. Def. Br. at 13–14, 18. Not
so. Because adjudicating Landi’s unpaid overtime claim under the FLSA will necessarily require
an examination of his wage notices and statements, the claims relating to those wage documents
“form part of the same case or controversy,” 28 U.S.C. § 1367(a), as his FLSA claim. Landi’s
foreclosure of mechanic’s lien claim also “form[s] parts of the same case or controversy” as his
FLSA claim because the lien amount includes his unpaid overtime wages. ECF No. 18, Ex. C.
Thus, the enforceability of the mechanic’s lien is directly tied to the merits of Landi’s FLSA claim.
The defendants’ motion for judgment on the pleadings is denied except as to Landi’s third
cause of action for unpaid spread-of-hours compensation, which is dismissed with leave to replead
within 21 days of the date of this order. Moreover, if the defendants wish to assert a counterclaim
as to the Saint James Place lien’s validity, they may do so by filing an amended answer within 21
days of the date of this order.
Brooklyn, New York
June 27, 2017
Edward R. Korman
Edward R. Korman
United States District Judge
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