Catzin v. Thank You & Good Luck Corp., 080818 FED2, 17-2497-cv

Docket Nº:17-2497-cv
Opinion Judge:BARRINGTON D. PARKER, Circuit Judge.
Party Name:LUCIA LOPEZ CATZIN, individually and on behalf of others similarly situated, SILVIA VILLANO CLEMENTE, and YADIRA AGUILAR-CANO, Plaintiffs-Appellants, v. THANK YOU & GOOD LUCK CORP. and ZENG LAN WANG, Defendants-Cross- Defendants-Appellees, IGOR BIRZH, EXCLUSIVE MANAGEMENT SOLUTION GROUP, INC., DIMITRI BEREZOVSKY, and 115th STREET AND FIRST AVE ...
Attorney:Michael Taubenfeld, Fisher Taubenfeld LLP, New York, N.Y., for appellants Lucia Lopez Catzin, Silvia Villano Clemente, and Yadira Aguilar-Cano. Mark R. Kook, Law Office of Mark R. Kook, New York, N.Y., for appellees Igor Birzh, Exclusive Management Solution Group, Inc., and Dimitri Berezovsky. Ol...
Judge Panel:Before: PARKER, HALL, and LOHIER, Circuit Judges.
Case Date:August 08, 2018
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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LUCIA LOPEZ CATZIN, individually and on behalf of others similarly situated, SILVIA VILLANO CLEMENTE, and YADIRA AGUILAR-CANO, Plaintiffs-Appellants,

v.

THANK YOU & GOOD LUCK CORP. and ZENG LAN WANG, Defendants-Cross- Defendants-Appellees,

IGOR BIRZH, EXCLUSIVE MANAGEMENT SOLUTION GROUP, INC., DIMITRI BEREZOVSKY, and 115th STREET AND FIRST AVE LAUNDROMAT INC., Defendants-Appellees,

OFF-BROADWAY LAUNDROMAT INC. and 2167 3rd AVE LAUNDROMAT LLC, Defendants-Cross- Claimants-Appellees.

No. 17-2497-cv

United States Court of Appeals, Second Circuit

August 8, 2018

Argued: February 14, 2018

Appeal from the United States District Court for the Southern District of New York No. 15 Civ. 7109 (KBF), Katherine B. Forrest, District Judge, Presiding.

Plaintiffs, several laundromat workers, brought this action against their employers under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. and the New York Labor Law,' 190 et seq., alleging that their employers failed to pay plaintiffs the minimum wage, overtime, and violated other requirements of the wage-and-hour laws. After discovery and resolution of the parties' cross motions for summary judgment, the case was proceeding to trial on various federal-law and state-law claims. The day before the final pretrial conference and one week prior to the first day of trial, the District Court (Forrest, J.) sua sponte, and without notice to the parties or any opportunity to be heard, issued an order revoking its exercise of supplemental jurisdiction, vacating the trial, and dismissing the case. We conclude the District Court erred in refusing to exercise supplemental jurisdiction under the circumstances.

Michael Taubenfeld, Fisher Taubenfeld LLP, New York, N.Y., for appellants Lucia Lopez Catzin, Silvia Villano Clemente, and Yadira Aguilar-Cano.

Mark R. Kook, Law Office of Mark R. Kook, New York, N.Y., for appellees Igor Birzh, Exclusive Management Solution Group, Inc., and Dimitri Berezovsky.

Oleg A. Mestechkin (Wing K. Chieu, on the brief), Mestechkin Law Group P.C., New York, N.Y., for appellees Off-Broadway Laundromat, Inc., 2167 3rd Ave Laundromat LLC, and 115th Street and First Ave Laundromat Inc.

Before: PARKER, HALL, and LOHIER, Circuit Judges.

BARRINGTON D. PARKER, Circuit Judge.

This appeal from an order of the United States District Court for the Southern District of New York (Forrest, J.) requires us to decide whether the District Court properly sua sponte declined to exercise supplemental jurisdiction over plaintiffs' state-law claims and dismissed the case without affording the parties notice or an opportunity to be heard.

Plaintiffs, several low-wage laundromat workers, sued their employers under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and the New York Labor Law ("NYLL"),' 190 et seq., alleging that their employers failed to pay plaintiffs the minimum wage, overtime, and failed to provide various required wage notices and statements.

The case was litigated for nearly two years, through discovery and summary judgment. The parties' cross motions for partial summary judgment were granted in part and denied in part, ultimately leaving various FLSA and NYLL claims to be resolved at trial. Three weeks prior to the start of trial and two weeks prior to the final pretrial conference, the parties filed their required pretrial submissions, which omitted mention of the FLSA and focused on the alleged NYLL violations. Shortly before the final pretrial conference, plaintiffs filed a letter that noted, among other things, that they intended to pursue only their NYLL claims at trial because they had concluded, on the basis of an intervening clarification in Second Circuit law, that any potential recovery under the FLSA would be subsumed by the recovery available under the NYLL.

For reasons that are inadequately supported by the record, the District Court concluded that plaintiffs' inclusion of the FLSA claims had all along been disingenuous and was a stratagem to manufacture federal jurisdiction. Acting on this assumption, the day before the final pretrial conference, and without affording the parties notice or an opportunity to be heard, the District Court sua sponte issued an order that deemed plaintiffs to have abandoned their federal-law claims. The District Court cancelled the pretrial conference and the trial scheduled to start the following week. The District Court then declined to exercise supplemental jurisdiction over plaintiffs' state-law claims and dismissed them without prejudice, leaving the parties to start from the beginning in state court, and ordered the case closed. Plaintiffs appeal and we vacate and remand for further proceedings.

BACKGROUND

The procedural history of this case is important for understanding the sequence of events that precipitated the District Court's order. In September 2015, plaintiffs filed their original complaint, bringing claims under the FLSA and NYLL. Plaintiffs later amended their complaint and, in June 2016, filed the operative complaint, the Third Amended Complaint ("TAC"). The TAC alleged seven claims against varying groups of defendants: (1) failure to pay minimum wages in violation of the FLSA, 29 U.S.C. § 206; (2) failure to pay overtime wages in violation of the FLSA, 29 U.S.C. § 207; (3) failure to pay minimum wages in violation of NYLL' 652; (4) failure to pay overtime wages in violation of the NYLL, see 12 N.Y.C.R.R.' 142-2.2 (incorporating the FLSA overtime definition into the NYLL); (5) failure to provide required wage notices and wage statements in violation of NYLL' 195; (6) failure to pay spread-of-hours payments in violation of the NYLL, see 12 N.Y.C.R.R.' 142-2.4; and (7) failure to properly calculate wage deductions in violation of NYLL' 193. As to each claim, plaintiffs alleged that defendants' violations were "willful" under' 255(a) of the FLSA, and' 198 of the NYLL. As damages, plaintiffs sought unpaid wages, prejudgment interest, liquidated damages, and attorneys' fees and costs.

According to the TAC and the various declarations submitted in support of the motions for summary judgment, plaintiffs worked at laundromats in New York City owned by various defendants. Plaintiffs' duties included loading and unloading laundry machines and dryers, washing, drying, and folding clothes, and occasionally working as cashiers. Plaintiffs alleged that defendants systematically underpaid them for a number of years. The three plaintiffs are seeking approximately $13, 000 in unpaid wages and other relief available under the wage-and-hour laws.

Discovery included a number of depositions (at least eight), and the production of documentary evidence, such as pay stubs, pay logs, work schedules, operating agreements, and tax returns. In January 2016, the District Court conditionally certified the case as an FLSA collective action under 29 U.S.C. § 216(b). In October 2016, the District Court denied plaintiffs' motion to...

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