Gonzalez v. ERBA Inc. et al.
MEMORANDUM OF DECISION AND ORDER - For the reasons stated above, the Defendants' 44 motion to vacate the default judgment pursuant to Rule 60 is granted. The Clerk of the Court is respectfully directed to vacate the default judgment and re open the case. The Plaintiff is directed to file records and receipts related to the costs and attorneys' fees incurred in filing his motion for default judgment, and opposing the instant motion. The Defendants are directed to immediately and fu lly comply with any and all outstanding discovery requests. This matter is respectfully referred to Magistrate Judge Anne Y. Shields for the remainder of discovery, and to ensure the payment of the attorneys' fees and costs. SO ORDERED by Judge Arthur D. Spatt on 3/8/2018. (Coleman, Laurie)
10:22 am, Mar 08, 2018
U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
LONG ISLAND OFFICE
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
DECISION AND ORDER
15-cv-6037 (ADS) (AYS)
-againstERBA INC., AND BAKKI AKKAYA
Famighetti & Weinick, PLLC
Attorneys for the Plaintiff
155 Pinelawn Road
Melville, NY 11747
Matthew Brian Weinick, Esq., Of Counsel
Criscione Ravala LLP
Attorney for the Defendants
315 Madison Avenue
New York, NY 10017
Galen Joseph Criscione, Esq.,
M. Salman Ravala, Esq., Of Counsel
SPATT, District Judge:
The Plaintiff Ednilson Gonzalez (the “Plaintiff”) commenced this case under the Fair
Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and the New York Labor Law
(“NYLL”) against the Defendants ERBA Inc. (“ERBA”), and Bakki Akkaya (“Akkaya”)
(collectively, the “Defendants”). On September 20, 2017, the Clerk of the Court entered a
default judgment against the Defendants in accordance with this Court’s September 15, 2017
Order adopting Magistrate Judge Shields’ Report and Recommendation of August 30, 2017. The
Clerk of the Court closed the case on that same day.
Presently before the Court is a motion by the Defendants to reopen the case and vacate
the default judgment against them pursuant to Federal Rule of Civil Procedure (“FED. R. CIV. P.”
or “Rule”) 60. For the following reasons, the Defendants’ motion is granted.
A. The Relevant Procedural History
On October 21, 2015, the Plaintiff filed his complaint. He sought to recover back wages,
together with liquidated damages, attorneys’ fees, and costs.
On February 19, 2016, the
Defendant ERBA Inc. answered the initial complaint. On September 27, 2016, the Plaintiff filed
an amended complaint.
On December 7, 2016, the Clerk of the Court noted the default of the Defendants. On
January 19, 2017, the Plaintiff moved for a default judgment against the Defendants.
On January 24, 2017, the Court referred the Plaintiff’s motion for default judgment to
United States Magistrate Judge Anne Y. Shields for a recommendation as to whether the motion
for a default judgment should be granted, and if so, (1) the relief to be granted; (2) whether
damages should be awarded, including reasonable attorney’s fees and costs; and (3) whether any
other relief should be granted.
On August 30, 2017, Judge Shields issued a Report and Recommendation (the “R&R”),
recommending that the Court: grant the Plaintiff’s motion for default judgment; strike the
Defendants’ answers; award the Plaintiff $30,380 in damages, and $12,370 in attorneys’ fees and
costs as against the Defendants jointly and severally.
On September 15, 2017, after receiving no objections from any party, the Court adopted
the R&R in its entirety; and directed the Clerk of the Court to enter judgment in favor of the
Plaintiff and close the case.
On September 20, 2017, the Clerk of the Court entered judgment in favor of the Plaintiff
and closed the case.
On September 21, 2017, the Defendants filed a letter motion to vacate the default
judgment. The Court denied the motion without prejudice with leave to refile as a formal
On October 5, 2017, the Defendants filed the instant motion to vacate the default
judgment. While they classify it as a motion pursuant to Rule 55, the Court must consider it
under Rule 60, as a final judgment was entered against them.
A. The Relevant Legal Standard
Rule 60(b) states, in relevant part, “[o]n motion and just terms, the court may relieve a
party or its legal representative from a final judgment, order, or proceeding for (1) mistake,
inadvertence, surprise, or excusable neglect; . . . [or] (6) any other reason that justifies relief.
FED. R. CIV. P. 60(b). As stated above, while the Defendants have moved to vacate the default
judgment under Rule 55, the Court must consider the motion under Rule 60 because the Plaintiff
seeks “relief from final a judgment [or] order. Id. Nevertheless, “[t]he same factors are
applied in the context of a Rule 60(b) motion to set aside a default judgment [as in a motion
under Rule 55], although they are applied more rigorously, and the district court must resolve
any doubts in the defaulting party’s favor. Peterson v. Syracuse Police Dep’t, 467 F. App’x 31,
33 (2d Cir. 2012) (citing Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993)).
In deciding whether to vacate a default judgment, a court must consider “(1) whether the
default was willful, (2) whether the defendant demonstrates the existence of a meritorious
defense, and (3) whether, and to what extent, vacating the default will cause the nondefaulting
party prejudice.” United States v. Chesir, 526 F. App’x 60, 61 (2d Cir. 2013) (quoting SEC v.
McNulty, 137 F.3d 732, 738 (2d Cir. 1998)); see also State St. Bank & Trust Co. v. Inversiones
Errazuriz Limitada, 374 F.3d 158, 168 (2d Cir. 2004) (stating that these criteria “should be
construed generously” in favor of party seeking relief from judgment (internal citations and
quotation marks omitted)).
1. As to the Defendants’ Willfulness
The Second Circuit has stated that willfulness is “more than merely negligent or careless”
conduct, McNulty, 137 F.3d at 738, but will be found “where the conduct of counsel or the
litigant was egregious and was not satisfactorily explained,” id. For example, “[a] default is
deemed willful where a defendant simply ignores the complaint without action.” Circuito
Cerrado, Inc. v. LV Foods, Inc., 296 F.R.D. 122, 126 (E.D.N.Y. 2013) (internal citations and
quotation marks omitted). “Thus, ‘where a party is notified that he is in default and he apparently
makes no effort to appear pro se or to explain his situation to the court, such neglect is
inexcusable.’” Arista Records, Inc. v. Musemeci, No. 03CV4465(DGT)(RML), 2007 WL
3124545, at *4 (E.D.N.Y. Sept. 18, 2007) (quoting Yan v. Bocar, No. 04 Civ. 4194, 2005 WL
3005338, at *13 (S.D.N.Y. Sept. 8, 2005)), report and recommendation adopted, No. CIV.A.
CV-03-4465(DG, 2007 WL 3145861 (E.D.N.Y. Oct. 25, 2007); cf. Kauhsen v. Aventura Motors,
Inc., No. 09-cv-4114, 2010 U.S. Dist. LEXIS 55554, at *13, 2010 WL 2301289 (E.D.N.Y. June
7, 2010) (noting that “[w]illfulness includes conduct that is ‘not satisfactorily explained’”
(internal citations and quotation marks omitted); Domond v. Great Am. Rec., Inc., 116 F. Supp.
2d 368, 374 (E.D.N.Y. 2000) (Spatt, J.) (noting that “willfulness may be inferred where a party’s
conduct was egregious and not adequately explained”); Frost Belt Int'l Recording Enters., Inc. v.
Cold Chillin' Records, 758 F. Supp. 131, 136 (S.D.N.Y. 1990) (“[U]tter failure to explain the
default effectively precludes a finding of excusable neglect.”).
Here, while the Court acknowledges that prior counsel for the Defendants failed to
respond to counsel for the Plaintiffs on numerous occasions; failed to file a responsive pleading
to the amended complaint; and failed to respond to the Plaintiff’s motion for default judgment,
the Court does not impute prior counsel for the Defendants’ inaction to the Defendants
themselves. As stated above, courts should construe the standards generously in favor of the
party seeking relief. State St. Bank & Trust, 374 F.3d at 168.
Furthermore, of importance, the Court finds that the Defendants have adequately
explained their inaction.
The Defendants’ prior counsel lead them to believe that he was
attending to the action, and he avoided the Defendants just as he avoided the Plaintiff. Prior
counsel for the Defendants never showed them the amended complaint or the motion for default
judgment. The Defendants represent that they have, and always have had, an intention to defend
themselves in this case. But for their prior counsel’s misrepresentations, they would have
responded to the Plaintiff’s amended complaint and motion.
To that end, while the Plaintiff is correct that the general rule is that clients are
considered bound by the acts or omissions of their attorneys, there is an exception when the
lawyer’s failures are “so egregious and profound that they amount to the abandonment of the
client’s case altogether, either through physical disappearance or constructive disappearance.”
Harris v. United States, 367 F.3d 74, 81 (2d Cir. 2004); see also SLC Turnberry, Ltd. v. The Am.
Golfer, Inc., 240 F.R.D. 50, 54–55 (D. Conn. 2007) (“[S]ome courts have adopted the approach
that an attorney’s gross or extraordinary negligence will not be attributed to a client.” (internal
In the Court’s view, the conduct of the Defendants’ prior counsel, viewed as a whole,
constitutes such a constructive abandonment.
The Defendants’ previous counsel accepted
service on Akkaya’s behalf, but failed to put in an order of appearance for him. He never
informed the Defendants that there was a motion for default judgment filed against them; and
ignored their text messages and phone calls after the motion was filed. Counsel’s actions were
especially egregious after the filing of the motion for default judgment, which was of the utmost
This is further demonstrated by the fact that the Defendants approached their previous
attorney again after they were served with the R&R, and hired a new attorney upon realizing that
their previous counsel had not adequately represented them. The Defendants’ new attorney filed
a notice of appearance one day after the default judgment was entered against the Defendants,
and filed a letter motion to vacate the default judgment on the same day.
As such, the Court finds that the Defendants did not act in bad faith, and did not engage
in egregious or deliberate conduct. Therefore, this factor weighs in favor of vacating the default
2. As to whether the Defendant Demonstrates the Existence of a Meritorious
“To satisfy the criterion of a ‘meritorious defense,’ the defense need not be ultimately
persuasive at this stage. ‘A defense is meritorious if it is good at law so as to give the factfinder
some determination to make.’” Am. All. Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 61 (2d Cir. 1996)
(quoting Anilina Fabrique de Colorants v. Aakash Chemicals and Dyestuffs, Inc., 856 F.2d 873,
879 (7th Cir. 1988)).
“The test of such a defense is measured not by whether there is a
likelihood that it will carry the day, but whether the evidence submitted, if proven at trial, would
constitute a complete defense.” Enron Oil, 10 F.3d at 98.
Here, the Defendants represent that they have three meritorious defenses that they would
have raised had they known that an amended complaint was filed: 1) that the Plaintiff’s
calculation of hours is incorrect; 2) that the FLSA’s good faith exceptions apply to the
Defendants; and 3) that the Plaintiff failed to exhaust his administrative remedies.
While a plaintiff is not required to exhaust his administrative remedies prior to brining an
FLSA action, the Court finds that it would have “some determination to make” on the first two
defenses. Am. All. Ins., 92 F.3d at 61. Again, “the criteria for vacating a default judgment
pursuant to Rule 60, including the meritorious defense factor, should be construed generously.”
State St. Bank & Tr., 374 F.3d at 168 (internal citation and quotation marks omitted). Akkaya
represents that the Plaintiff has miscalculated his hours, and that the Defendants should receive
the benefit of the FLSA good faith exception. As the Plaintiff admits, under the FLSA, a court
may deny liquidated damages if an employer can show that it acted in “good faith with
objectively reasonable grounds for believing that its acts or omissions did not violate the FLSA.”
Barfield v. N.Y.C. Health & Hosps. Corp., 537 F.3d 132, 150 (2d Cir. 2008).
Mindful that there is a “strong preference for resolution of disputes on their merits,”
Rodriguez v. Vill. Green Realty, Inc., 788 F.3d 31, 47 (2d Cir. 2015) (quoting Sony Corp. v. Elm
State Elecs., Inc., 800 F.2d 317, 320 (2d Cir. 1986), the Court finds that the Defendants have
made an adequate showing that the Court would have some determination to make. Therefore,
this factor weighs in favor of vacating the default judgment.
3. As to Whether the Plaintiff Will be Prejudiced by the Vacatur
Prejudice may be shown if the party’s “ability to pursue the claim has been hindered
since the entry of the judgment” or by “the loss of available evidence, increased potential for
fraud or collusion, or substantial reliance upon the judgment.” Farrell v. County Van & Storage,
Inc., 1996 WL 705276, at *3 (E.D.N.Y. Nov. 25, 1996) (quoting Feliciano v. Reliant Tooling
Co., Ltd., 691 F.2d 653, 657 (3d Cir. 1982)).
The Court acknowledges that some prejudice is inherent in the delay that has resulted
from the Defendants’ conduct. However, “delay alone is not a sufficient basis for establishing
prejudice.” See Davis v. Musler, 713 F.2d 907, 916 (2d Cir. 1983).
Moreover, the Court will attempt to mitigate this prejudice by awarding sanctions in the
form of attorneys’ fees and costs incurred by the Plaintiff in bringing the motion for default
judgment and opposing the instant motion. See Powerserve Int'l, Inc. v. Lavi, 239 F.3d 508, 515
(2d Cir. 2001) (“The imposition of conditions as part of granting a Rule 55(c) motion can be
used to rectify any prejudice suffered by the nondefaulting party as a result of the default and the
subsequent reopening of the litigation.” (internal citations omitted)); Pall Corp. v. Entegris, Inc.,
249 F.R.D. 48, 52 (E.D.N.Y. 2008) (“[C]ourts in this Circuit have ‘consistently’ permitted an
‘award of attorney’s fees incurred in bringing the default motion as a condition to vacating a
default judgment.’ Importantly, an award of attorneys’ fees and costs upon vacating an entry of
default does not require a finding of willfulness on the part of the defaulting party.” (quoting
Richardson v. Nassau County, 184 F.R.D. 497, 503 (E.D.N.Y. 1999) (further citations omitted));
SLC Turnberry, 240 F.R.D. at 56 (awarding attorneys’ fees as a result of vacating the default
Accordingly, the Plaintiff is directed to supply the Court with contemporaneous records
of the costs and attorneys’ fees incurred in bringing and opposing the above motions.
Furthermore, the Court orders that the Defendants immediately and fully comply with all
outstanding discovery requests.
Therefore, in light of the above, the Court finds that this factor weighs in favor of
vacating the default judgment.
For the reasons stated above, the Defendants’ motion to vacate the default judgment
pursuant to Rule 60 is granted. The Clerk of the Court is respectfully directed to vacate the
default judgment and reopen the case. The Plaintiff is directed to file records and receipts related
to the costs and attorneys’ fees incurred in filing his motion for default judgment, and opposing
the instant motion. The Defendants are directed to immediately and fully comply with any and
all outstanding discovery requests. This matter is respectfully referred to Magistrate Judge Anne
Y. Shields for the remainder of discovery, and to ensure the payment of the attorneys’ fees and
Dated: Central Islip, New York
March 8, 2018
__/s/ Arthur D. Spatt__
ARTHUR D. SPATT
United States District Judge
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