Saucedo v. On the Spot Audio Corp.

• Decision Date: 21 December 2016
• Docket Number: 16 CV 00451 (CBA) (CLP)
• Parties: JORGE SAUCEDO, Plaintiff, v. ON THE SPOT AUDIO CORP., d/b/a ON THE SPOT MOTO, and OSCAR TORRES, Defendant.
• Court: U.S. District Court — Eastern District of New York

JORGE SAUCEDO, Plaintiff,
v.
ON THE SPOT AUDIO CORP.,
d/b/a ON THE SPOT MOTO, and OSCAR TORRES, Defendant.

16 CV 00451 (CBA) (CLP)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

December 21, 2016

REPORT AND RECOMMENDATION

POLLAK, United States Magistrate Judge:

On January 28, 2016, plaintiff Jorge Saucedo commenced this action against defendants On the Spot Audio Corp., d/b/a On the Spot Moto ("OTSM"), and Oscar Torres, seeking unpaid overtime and minimum wages pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and New York Labor Law ("NYLL") § 650 et seq., as well as unpaid spread of hours wages and damages stemming from defendants' unlawful retention of gratuities and alleged failure to comply with the wage notice requirements under the NYLL. Despite proper service, defendants failed to answer or otherwise respond to the Complaint for several months. On May 17, 2016, plaintiff requested entry of a certificate of default, and on May 18, 2016, the Clerk of Court entered a certificate of default against both defendants. Thereafter, on June 2, 2016, plaintiff moved for a default judgment against the defendants, which motion was referred to the undersigned to issue a Report and Recommendation as to damages.

For the reasons set forth below, the Court respectfully recommends that the motion for default judgment be granted, and that plaintiff Saucedo be awarded $141,045.73 in damages and interest and $11,266.00 in counsel fees and costs for a total of $152,311.73.

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FACTUAL BACKGROUND

Defendant OTSM is an auto detailing, motorcycle repair shop and carwash, located at 41-16 35^th Avenue, Long Island City, N.Y. (Compl.¹ ¶¶ 1, 19). Defendant Torres is alleged to be the president and/or owner of OTSM. (Id. ¶¶ 16, 18). According to the Complaint, Torres had the power to hire and fire employees, controlled and supervised employee work schedules and conditions of employment, and determined the rate and method of payment for the employees. (Id.) In addition, Torres is alleged to have been responsible for maintaining employment records. (Id.) Plaintiff alleges that OTSM and Torres were employers within the meaning of the FLSA. (Id. ¶¶ 18, 36, 37). See 29 U.S.C. § 203(d).

Plaintiff Saucedo is a resident of the State of New York who began working for defendants in or around December 2013. (Compl. ¶¶ 15, 21; Saucedo Decl.² ¶ 1). According to the Complaint, Saucedo worked at OTSM through October 2015, primarily performing work painting, sanding and polishing cars in the OTSM shop. (Compl. ¶¶ 3, 4; Saucedo Decl. ¶¶ 1, 4).

Plaintiff alleges that he was required to work for defendants six days per week, approximately 66 to 72 hours per week, inclusive of a half hour meal break. (Compl. ¶ 22; Saucedo Decl. ¶ 9). For this work, the Complaint alleges that Saucedo was paid a fixed daily wage in cash, in the range of $60 to $80, regardless of the number of hours he actually worked. (Compl. ¶ 23; Saucedo Decl. ¶ 10). Despite regularly working more than 40 hours a week, plaintiff claims that he was never paid overtime or time and a half his regular hourly rate.

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(Saucedo Decl. ¶ 13). Saucedo also claims that even though he was required to work for more than 10 hours per day whenever he reported to work, he was never paid spread-of-hours pay. (Compl. ¶ 22; Saucedo Decl. ¶ 14).

Plaintiff further alleges that defendants unlawfully retained approximately 70% of his tips and that they failed to compensate him for his work at the applicable minimum wage. (Compl. ¶¶ 24, 25; Saucedo Decl. ¶ 15). Finally, the Complaint alleges that defendants failed to properly document and record the actual hours plaintiff worked and the amount he was paid in wages. (Compl. ¶ 28). In addition, defendants failed to provide plaintiff with the annual wage notices and accurate wages statements required by NYLL. (Id. ¶¶ 29, 30; Saucedo Decl. ¶ 12). Indeed, in his Declaration, Saucedo claims that he was paid in cash by Torres, typically on Saturdays, and he not only never received any paystubs, but he claims that Torres did not even record the hours that Saucedo worked. (Saucedo Decl. ¶ 12).

The Complaint contains seven causes of action: 1) claims for FLSA minimum wage and overtime compensation violations (First and Second Causes of Action, respectively, ¶¶ 33-41, 42-46); 2) claims for minimum wage and overtime violations under the NYLL (Third and Fourth Causes of Action, respectively, ¶¶ 47-58, 59-65); 3) a claim for unpaid spread of hours wages (Fifth Cause of Action ¶¶ 66-72); 4) a claim under NYLL §196-d for withholding plaintiff's tips (Sixth Cause of Action ¶¶ 73-78); and 5) a claim under NYLL §§ 195(1) and (3) for failing to provide plaintiff with a proper wage notice and for failing to provide a wage statement with every payment of wages. (Seventh Cause of Action ¶¶ 79-97).³

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PROCEDURAL BACKGROUND

On January 28, 2016, plaintiff filed this action; defendant OTSM was served on February 2, 2016 through personal service on the New York Secretary of State pursuant to Section 306 of the Business Corporation Law. (See Coyle Aff.,⁴ Ex. C). Defendant Torres was served on February 4, 2016 by personal service on a person of suitable age and discretion at Torres' residence; the individual who was served identified himself as Torres' co-tenant. (See id., Ex. D). On March 7, 2016, when neither of the defendants had responded to the Complaint, plaintiff's counsel sent a letter to the address of OTSM, addressed to defendant Torres, advising the defendants of the filing of this instant lawsuit and indicating that if defendants continued to ignore their obligation to respond by April 15, 2016, plaintiff would be forced to take action to obtain a default judgment. (Id., Ex. E). On May 18, 2016, when defendants still had not responded, plaintiff's counsel requested entry of a certificate of default against both defendants. The Clerk of Court entered default against the defendants on May 18, 2016. Plaintiff then filed the instant motion for default judgment on June 2, 2016.

On June 16, 2016, the Honorable Carol B. Amon referred the motion to the undersigned to prepare a Report and Recommendation as to damages. As such, the Court makes its recommendations based on the documents filed in conjunction with the initial motion for default judgment.

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DISCUSSION

I. Default Judgment

Rule 55 of the Federal Rules of Civil Procedure sets forth a two-step process for entry of a default judgment. See Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95-96 (2d Cir. 1993). First, the Clerk of Court enters the default pursuant to Rule 55(a) by notation of the party's default on the Clerk's record of the case. See id.; FED R. CIV. P. 55(a) (providing that "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default"). Second, after the Clerk of Court enters a default against a party, if that party fails to appear or otherwise move to set aside the default pursuant to Rule 55(c), the court may enter a default judgment. See FED. R. CIV. P. 55(b).

The Second Circuit has cautioned that since a default judgment is an extreme remedy, it should only be entered as a last resort. See Meehan v. Snow, 652 F.2d 274, 277 (2d Cir. 1981). While the Second Circuit has recognized the "push on a trial court to dispose of cases that, in disregard of the rules, are not processed expeditiously [and] . . . delay and clog its calendar," it has held that the district court must balance that interest with its responsibility to "[afford] litigants a reasonable chance to be heard." Enron Oil Corp. v. Diakuhara, 10 F.3d at 95-96. Thus, in light of the "oft-stated preference for resolving disputes on the merits," default judgments are "generally disfavored," and doubts should be resolved in favor of the defaulting party. Id. Accordingly, a plaintiff is not entitled to a default judgment as a matter of right simply because a defendant is in default. See Erwin DeMarino Trucking Co. v. Jackson, 838 F. Supp. 160, 162 (S.D.N.Y. 1993) (noting that courts must "supervise default judgments with extreme

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care to avoid miscarriages of justice").

The Court has significant discretion to consider a number of factors in deciding whether to grant a default judgment, including: (1) whether the grounds for default are clearly established; (2) whether the claims were pleaded in the complaint, thereby placing the defendants on notice, see FED. R. CIV. P. 54(c) (stating "[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings"); Enron Oil Corp. v. Diakuhara, 10 F.3d at 95-96; cf. King v. STL Consulting, LLC, No. 05 CV 2719, 2006 WL 3335115, at *4-5 (E.D.N.Y. Oct. 3, 2006) (holding that Rule 54(c) is not violated in awarding damages that accrued during the pendency of a litigation, so long as the complaint put the defendant on notice that the plaintiff may seek such damages); and (3) the amount of money potentially involved - the more money involved, the less justification for entering the default judgment. Hirsch v. Innovation Int'l, Inc., No. 91 CV 4130, 1992 WL 316143, at *2 (S.D.N.Y. Oct. 19, 1992). Additionally, "the Court may consider whether material issues of fact remain, whether the facts alleged in the complaint state a valid cause of action, whether plaintiff[s] ha[ve] been substantially prejudiced by the delay involved, and whether the default judgment may have a harsh effect on the defendant[s]." Pacific M. Int'l Corp. v. Raman Int'l Gems, Ltd., 888 F. Supp. 2d 385, 393 (S.D.N.Y. 2012) (internal citations omitted).

The burden is on the plaintiff to establish its entitlement to recovery. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992), cert. denied, 506 U.S. 1080 (1993). When a default judgment is entered, the defendants are deemed to have...