Rivera v. Essex Plaza Mgmt. Assocs., CV 09-497 (DLI)(VVP)

• Decision Date: 01 September 2011
• Docket Number: CV 09-497 (DLI)(VVP)
• Parties: RAFAEL RIVERA, Plaintiff, v. ESSEX PLAZA MANAGEMENT ASSOCIATES, and LA CABANA HOUSES ASSOCIATES, Defendants.
• Court: U.S. District Court — Eastern District of New York

RAFAEL RIVERA, Plaintiff,

v.ESSEX PLAZA MANAGEMENT ASSOCIATES,and LA CABANA HOUSES ASSOCIATES, Defendants.

CV 09-497 (DLI)(VVP)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

Dated: September 1, 2011

REPORT AND RECOMMENDATION

POHORELSIKY, Magistrate Judge:

This matter was referred by the Honorable Dora L. Irizarry to the undersigned for a report and recommendation as to whether default judgment is appropriate, and if so, as to the proper relief to be awarded. The plaintiff, Rafael Rivera, brought this action against the defendants Essex Plaza Management Associates (hereafter "Essex") and La Cabana Houses Associates (hereafter "La Cabana") for unpaid overtime wages he is owed under the Fair Labor Standards Act (hereafter "FLSA" or "the Act"), 29 U.S.C. §§ 201 et seq., the New York Labor Law (hereafter "the NYLL"), § 191 et seq., and under a collective bargaining agreement. See Amended Complaint [DE 21] ¶¶ 34-53.¹ The plaintiff has submitted a memorandum of law on damages as well as affidavits and documentary evidence, in lieu of an evidentiary hearing. On the basis of the plaintiff's submissions and the prior proceedings in this action, the court makes the following recommendations regarding liability and damages.

I. LIABILITY

This suit was originally filed by Rivera on February 6, 2009. Later that month, both defendants were properly served with copies of a summons and complaint. See Docket Nos. 2, 3. The defendants did not file an answer or respond to the complaint, or otherwise appear in connection with this matter. See Affirmation of Abel L. Pierre in Support of Motion for Default Judgment, Apr. 29, 2009 [DE 9] (hereafter "Pierre Aff.") ¶¶ 6-9. Accordingly, the plaintiff moved for a default judgment and on April 30, 2009, the clerk of court entered a default under Federal Rule of Civil Procedure 55(a) against Essex and La Cabana. See Clerk's Entry of Default, Apr. 30, 2009 [DE 10]. Following a referral of the default judgment motion to me, the plaintiff's counsel was advised at a conference that the allegations of the original complaint were insufficient to establish liability. Accordingly, the motion for a default judgment was denied, but the plaintiff was afforded the opportunity to file and serve an amended complaint to cure the deficiencies.

The plaintiff took advantage of the opportunity, by filing and serving an amended complaint on February 26, 2010, to which the defendants never responded. The plaintiff then filed the present motion for a default judgment. See Second Motion for Entry of Default, Oct. 22, 2010 [DE 25]. The clerk entered the default of the defendants on June 14, 2011, and the matter was promptly referred to me.

As a consequence of the defendant's default, the well-pleaded allegations of the complaint are deemed admitted, except as to the amount of damages. See, e.g., Greyhound Exhibitgroup v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Au Bon Pain Corp. v.Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Even so, "after default . . . it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit conclusions of law." Leider v. Ralfe, No. 01-CV-3137, 2004 WL 1773330, at *7 (S.D.N.Y. July 30, 2004) (quoting In re Indus. Diamonds Antitrust Litig., 119 F. Supp. 2d 418, 420 (S.D.N.Y. 2000)). Put differently, liability does not automatically attach from the well-pleaded allegations of the complaint, as it remains the court's responsibility to ensure that the factual allegations, accepted as true, provide a proper basis for liability and relief. See Au Bon Pain, 653 F.2d at 65.

The well-pleaded allegations in the Amended Complaint establish the following facts. The defendants Essex and La Cabana own and operate real estate in Brooklyn, an apartment complex located at 391 Lorimer Street in the Williamsburg section. See Amended Complaint ¶¶ 10-13. Beginning in 2003 through 2009, Rivera was employed full-time by the defendants as a building superintendent, though the complaint does not specify his duties or responsibilities. Id. ¶¶ 15, 20-22. In addition to his regular monetary compensation, Rivera lived in an apartment in the building; he was provided with lodging and with the costs of the utilities in that apartment. Id. ¶ 26. The provision of his apartment was consideration for his employment. Id. Rivera was scheduled by the defendants to work five eight-hour shifts every week, but frequently would work more than forty hours per week. Id. ¶¶ 24-25. In such circumstances, he would receive overtime pay.

For straight-time wages, Rivera received $20.00 per hour, but his wages from week to week would depend on the number of hours assigned to him by Essex and La Cabana. Id. ¶27; Affidavit of Rafael Rivera, Feb. 26, 2010 [DE 22] ("Rivera Aff.") ¶ 12. For the overtime hours he worked, the defendants compensated Rivera at a rate of one and one-half times his regular hourly rate. See Amended Complaint ¶ 28.² However, when his overtime rate was calculated, it only took into account his hourly wage rate and did not include the value of the apartment and utilities with which he was also provided as part of his regular compensation. Id. ¶ 29. Rivera contends that this deprived him of the full extent of the overtime wages to which he was entitled, that his overtime rate should reflect the other forms of remuneration (lodging and utilities) he regularly received, and that this overtime practice violates both the FLSA and the NYLL, and breaches the collective bargaining agreement regulating his employment.

Both the FLSA and the NYLL provide for the recovery of unpaid overtime wages. The FLSA³ states, inter alia:

[N]o employer shall employ any of his employees who in any workweek is engaged in commerce, or in the production of goods for commerce, or employed in an enterprise engaged in commerce or in the production of goods for commerce, for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which [the employee] is employed.⁴

29 U.S.C. § 207(a)(1). While the Act exempts many trades and industries from these overtime requirements or alters the requirements for those industries, Rivera's employment as a building superintendent does not appear to fall within any of these exemptions. See 29 U.S.C. § 207.

As a threshold matter, the FLSA's overtime provisions apply to two classes of employees, those "engaged in commerce, or in the production of goods for commerce" and those who are "employed in an enterprise engaged in commerce or in the production of goods for commerce." 29 U.S.C. § 207(a)(1). "Commerce" is specifically defined under the FLSA to mean "trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof." 29 U.S.C. § 203(b). An "enterprise engaged in commerce or in the production of goods for commerce" is one that " has employees engaged in commerce or in the production of goods for commerce, or that has employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person" and whose annual gross volume of sales or business equals or exceeds $500,000.00. 29 U.S.C. § 203(s)(1)(A)(i)-(ii) (emphasis added).

Rivera is neither engaged in commerce, as that term is defined by the FLSA, nor in the production of goods for commerce, despite the contrary legal assertions offered by the complaint. See 29 U.S.C. § 203(b). Nor is he employed by an enterprise engaged in the production of goods for commerce. Accordingly, the only way in which he satisfies all the elements of this cause of action is if he is employed by an enterprise engaged in commerce.⁵ The complaint ultimately establishes this commerce element by alleging that "[i]n performing his duties for Defendants, Plaintiff used goods and products that had been moved or produced in interstate commerce." See Amended Complaint ¶ 17. It also alleges that the Defendants are "enterprises engaged in commerce within the meaning of the FLSA [and] have used goods and products that have been moved or produced in interstate commerce."⁶ Id. ¶¶ 18-19. While this level of factual specificity leaves the court underwhelmed with respect to the FLSA's "commerce" element, it is sufficient.

First, because Rivera, as the defendant's employee, handled or used goods and products that had moved in or been sold in interstate commerce, the defendants are an enterprise engaged in commerce. 29 U.S.C. § 203(s)(1)(A)(i); Rosso v. PI Management Associates, LLC, No. 02-CV-1702, 2005 WL 3535060, at *7-8 (S.D.N.Y. 2005); Complaint ¶¶ 15-17. Other courts have found for the same reasons that apartment complexes were enterprises engaged in commerce for FLSA purposes. See, e.g., Radulescu v. Moldowan, 845 F. Supp. 1260, 1262-64 (N.D. Ill. 1994) (examining the legislative history to find congressional intent to "extend the coverage of the FLSA to companies that use products that have moved in interstate commerce"); Marshall v. Baker, 500 F. Supp. 145, 151 (N.D.N.Y. 1980) (concludingthat "apartment complex is covered [under FLSA] because the materials used by its maintenance personnel moved in interstate commerce"); Brennan v. Jaffey, 380 F. Supp. 373 (D. Del. 1974). Secondly, the complaint establishes that the defendants' yearly gross volume of business (gross rentals) exceeds the FLSA's $500,000 floor. See Amended Complaint ¶¶ 7-8, 29 U.S.C. § 203(s)(1)(A)(ii); Brock v. Hamad, 867 F.2d 804, 809 (4th Cir. 2009). Because both prongs are met, the factual assertions in the complaint establishes that the Essex and La Cabana were enterprises engaged in commerce for FLSA purposes. See Marshall, 500 F. Supp. 2d at 148-51 (enterprise engaged in commerce "include[s] a local business whose employees use materials...