Cindy Chen v. Shanghai Cafe Deluxe, Inc.

OPINION AND ORDER

VALERIE FIGUEREDO UNITED STATES MAGISTRATE JUDGE

Plaintiff Cindy Chen brought this action on behalf of herself and others similarly situated against Defendants Shanghai Cafe Deluxe, Inc. (“Shanghai Cafe”), Eile Wan, Ping Lin, and Xinsheng Gu^[1] (collectively, “Defendants”) to recover unpaid wages, overtime wages, and other damages arising from Defendants' violations of the Fair Labor Standards Act (“FLSA”), the New York Labor Law (“NYLL”), and New York state labor regulations.^[2] For the reasons that

follow, Chen is granted default judgment against Defendants and awarded damages and attorneys' fees as outlined herein.

FACTUAL AND PROCEDURAL BACKGROUND^[3]

Plaintiff Cindy Chen was employed by Shanghai Cafe as a waitress from April 15, 2012, to January 26, 2016. See Second Amended Compl. (“SAC”), ECF No. 68, ¶¶ 10, 33. Defendant Shanghai Cafe is a New York State corporation, located at 100 Mott Street in New York, New York. See SAC ¶ 12. Shanghai Cafe is a “business engaged in interstate commerce” with gross sales exceeding $500,000 per year. See id. at ¶¶ 13-14. Throughout the relevant period, the owners and operators of Shanghai Cafe-individual defendants Eile Wan, Ping Lin, and Xinsheng Gu-had the power to hire and fire Plaintiff, controlled her terms and conditions of employment, and determined her rate and method of compensation. See id. at ¶¶ 15-30.

Throughout her employment, Chen worked 57 hours per week. Id. at ¶¶ 34-35. She worked 11 hours a day, from 11 a.m. to 10 p.m., each Monday, Tuesday, and Sunday. Id. at ¶ 34. She worked 12 hours a day, from 11 a.m. to 11 p.m., each Friday and Saturday. Id. For her work, Chen was paid a flat rate of $125 per week. Id. ¶¶ 36, 38-39. During her employment, she did not receive a meal break. Id. ¶¶ 41-42. Chen was never told that Defendants would be making “tip deductions toward the minimum wage.” SAC ¶¶ 43-44. Chen was paid her wages in a combination of cash and check. SAC ¶¶ 38-40. Shanghai Cafe never provided Chen with written notice of her rate of pay. See SAC ¶¶ 43, 122-23.

Chen now seeks unpaid minimum wages under the FLSA and NYLL (SAC ¶¶ 76-84), unpaid overtime wages under the FLSA and NYLL (SAC ¶¶ 85-97), spread-of-hours pay under

the NYLL (SAC ¶¶ 98-100), compensation for unlawfully retained tips under the FLSA and NYLL (SAC ¶¶ 101-109), liquidated damages, statutory damages, prejudgment interest, postjudgment interest, and attorneys' fees and costs. Chen also seeks damages for violations of General Business Law § 349 (SAC ¶¶ 132-35) and for violations of 26 U.S.C. § 7434, based on Defendants' fraudulent filings with the Internal Revenue Service (SAC ¶¶ 129-31).

Chen filed her complaint on June 22, 2016. See ECF No. 1. On July 7, 2016, Chen filed a First Amended Complaint. ECF No. 9. Defendant Shanghai Cafe was served on July 14, 2016. See ECF No. 15. Individual defendants Wan, Lin and Gu were also all served on July 14, 2016. See ECF Nos. 16-18. On August 9, 2016, Defendants filed an answer. See ECF No. 22. On January 5, 2018, the parties consented to my jurisdiction for all proceedings. See ECF No. 55. On May 30, 2018, Chen moved for permission to file an amended complaint. ECF No. 61. Leave was granted and Chen filed a Second Amended Complaint on July 10, 2018. ECF No. 68. Defendants answered the amended complaint.^[4] See ECF No. 66.

The parties engaged in discovery, see, e.g., ECF No. 73, and trial was scheduled to commence on February 25, 2020, see ECF No. 79. On January 29, 2020, counsel for Defendants, Michael K. Chong, moved to withdraw as counsel for all Defendants. See ECF No. 88. On March 18, 2020, the Court granted Chong's motion to withdraw as counsel, and gave Defendants 30 days to obtain new counsel. See ECF No. 105, Minute Entry dated Mar. 18, 2020. By July 20, 2020, Defendants had not yet retained new counsel, and the Court instructed Plaintiff that it

could move for the entry of default judgment by September 4, 2020. See ECF Nos. 123-24. Defendants were served with a copy of the Court's order on July 24, 2020. See ECF No. 125.

The Clerk of Court issued a Certificate of Default for Shanghai Cafe and all three individual defendants on September 18, 2020. See Cert. of Default, ECF Nos. 135-138. On September 18, 2020, Plaintiff filed a motion for default judgment. See ECF Nos. 139-46. On July 7, 2021, the Court denied without prejudice Plaintiff's motion for default judgment. See ECF No. 151, Minute Entry dated July 7, 2021. On December 21, 2022, Plaintiff filed proposed findings of fact and conclusions of law, in support of the entry of default judgment and for an award of damages, and also filed a motion for attorneys' fees. See ECF Nos. 159-163. Defendants were served with these filings on December 22, 2022. See ECF No. 164. To date, Defendants have not filed any opposition to the motion for default judgment, motion for attorneys' fees, or Plaintiff's damages submissions. Defendants have also not appeared in the case since the entry of the Clerk's Certificate of Default in September 2020.

DISCUSSION

In light of Defendants' default, the Court accepts as true the well-pleaded allegations in the Second Amended Complaint, with the exception of those allegations relating to damages. See, e.g., Union of Orthodox Jewish Congregations of Am. v. Royal Food Distribs. LLC, 665 F.Supp.2d 434, 436 (S.D.N.Y. 2009) (“When the Court enters a default judgment, as regards liability it must accept as true all of the factual allegations of the complaint, but the amount of damages are not deemed true.”) (internal citations, alterations, and quotation marks omitted). As to damages, a district court must “conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.” Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999). This inquiry requires the district court to: (1) “determin[e] the proper rule for

calculating damages on . . . a claim” and (2) “assess[ ] plaintiff's evidence supporting the damages to be determined under this rule.” Id.

Federal Rule of Civil Procedure 55(b)(2) “allows but does not require” the district court to conduct a hearing on the damages amount. Bricklayers and Allied Craftworkers Local 2, Albany, N.Y. Pension Fund v. Moulton Masonry & Const., LLC, 779 F.3d 182, 189 (2d Cir. 2015) (“[T]he court may conduct such hearings or order such references as it deems necessary and proper.”) (internal quotation marks and citation omitted); see also Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found, Contractors, Inc., 699 F.3d 230, 234 (2d Cir. 2012). Chen's submissions have not been contested, and the submissions provide all the information needed to determine her damages. As such, a hearing on the damages inquest is not necessary.

A. Defendant's Liability under the Fair Labor Standards Act and New York Labor Law

1. Statute of Limitations under the FLSA and NYLL

Claims brought under the FLSA must be raised within two years of a non-willful violation, or within three years of a willful violation. See Pineda v. Masonry Const., Inc., 831 F.Supp.2d 666, 674 (S.D.N.Y. 2011) (citing 29 U.S.C. § 255(a)). Claims brought pursuant to the NYLL must be raised within six years. See Pineda, 831 F.Supp.2d at 674 (citing NYLL § 663(1), (3)). Chen commenced her employment with Shanghai Cafe on April 15, 2012. SAC ¶ 33. She filed her complaint on June 22, 2016. ECF No. 1. Under the FLSA, the applicable statute of limitations would cover claims starting on June 22, 2013, at the most. By contrast, the statute of limitations under the NYLL would cover Chen's claims from the start of her employment in

April 2012, because the six-year limitations period extends back to June 22, 2010.^[5] Because the NYLL provides greater relief relative to the FLSA, the Court awards damages, where appropriate, under the NYLL. See Schalaudek v. Chateau 20th St. LLC, No. 16 Civ. 11 (WHP)(JLC), 2017 WL 729544, at *5 (S.D.N.Y. Feb. 24, 2017).

2. Applicability of the FLSA and NYLL

To establish a claim under the FLSA, a plaintiff must show that: “(1) the defendant is an enterprise participating in commerce or the production of goods for the purpose of commerce; (2) the plaintiff is an ‘employee' within the meaning of the FLSA; and (3) the employment relationship is not exempted from the FLSA.” Pelgrift v. 335 W. 41st Tavern Inc., No. 14-CV-08934 (AJN), 2017 WL 4712482, at *7 (S.D.N.Y. Sept. 28, 2017) (citation omitted). A wage-and-hour claim under the NYLL involves a similar analysis, “except that the NYLL does not require plaintiffs to show a nexus with interstate commerce or a minimum amount of annual sales.” Tackie v. Keff Enter., Inc., No. 14-CV-2074 (JPO), 2014 WL 4626229, at *2 n.2 (S.D.N.Y. Sept. 16, 2014).

a. Employment Relationship

Under the FLSA, an “employer” is “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). The term “employer” is afforded “an expansive definition with ‘striking breadth.'” Mondragon v. Keff, 15-CV-2529 (JPO) (BCM), 2019 WL 2551536, at *7 (S.D.N.Y. May 31, 2019)

(quoting Nationwide Mut. Ins. Co. v. Darden, 503 US. 318, 326 (1992)).

To determine whether Defendants were Chen's “employer” for FLSA purposes, the Court examines the “economic reality” of the working relationship. Irizarry v. Catsimatidis, 722 F.3d 99, 104 (2d Cir. 2013). Courts in the Second Circuit consider four non-exclusive factors to assess the “economic reality” of an alleged employment relationship, including “whether the alleged employer (1) had the power to hire and fire the employees...