Rosario v. Fresh Smoothies LLC

OPINION AND ORDER

LEWIS J. LIMAN, UNITED STATES DISTRICT JUDGE:

Plaintiff Yajaira Rosario (“Plaintiff” or “Rosario”) filed this action on July 27, 2020, against Fresh Frutii LLC (“Fresh Frutii”) and Fresh Smoothies LLC (“Fresh Smoothies” and, with Fresh Frutii, the “Companies”), and Robinson Capello and John Francis Rivera, who are identified as the officers, directors, shareholders and/or persons in control of the Companies (with the Companies, collectively, “Defendants”). Dkt. No. 1 (“Compl.”). Rosario was employed as a food prepper at Fresh Frutii and Fresh Smoothies. Rosario brings claims under the Fair Labor Standards Act, 28 U.S.C. § 201 et seq. (“FLSA”), the New York Labor Law (“NYLL”), and the Internal Revenue Code (“IRC”). She seeks damages, including liquidated damages, interest, attorneys' fees, and costs. Compl. at 12-13. She further seeks an order and judgment determining that Fresh Frutii and Fresh Smoothies were part of a corporate combine and that they are liable for the amounts due in this action.

Plaintiff served the Summons and Complaint on Defendants, see Dkt. Nos. 13-16, but Defendants did not answer the Complaint or appear at an initial pre-trial conference. Rosario then obtained certificates of default against the Defendants, Dkt. Nos. 21, 22 and moved for

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default judgment, Dkt. No. 23. She served Defendants with the default judgment motion and supporting documentation, but Defendants still have not appeared. See Dkt. Nos. 32-35. Rosario now moves for default judgment pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure. For the reasons discussed below, the Court orders the entry of default judgment against Defendants.

BACKGROUND

By defaulting, Defendants have admitted the well-pleaded allegations in the Complaint. City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011). The Complaint alleges as follows.

Plaintiff was employed as a food prepper at Fresh Frutii from about June 2017 until about May 2018 and at Fresh Smoothies from about October 2018 until about September 13, 2019. Compl. ¶ 26. From the beginning of her employment until in or around December 2017, Rosario worked approximately 51 hours per week. Id. ¶ 28. Then, between January 2018 and in or around May 2018, Plaintiff worked approximately 59.5 hours per week. Id. ¶ 29. From in or around October 2018 until the end of her employment on or around September 13, 2019, Plaintiff worked approximately 57 hours per week. Id. ¶ 30. During her employment, she was not afforded any meal or rest breaks. Id. ¶ 31.

Plaintiff received the following pay for her work: From the beginning of her employment in about June 2017 until about November 2017, Plaintiff was paid $9.50 per hour for each hour worked, including those over forty hours per week. Id. ¶ 32. From about December 2017 until about May 2018, Plaintiff was paid $10.00 per hour for each hour worked, including those over forty hours per week. Id. ¶ 33. From about October 2018 until about December 2018, Plaintiff was paid $11.00 per hour for each hour worked, including those over forty per week. Id. ¶ 34.

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And from about January 2019 until the end of her employment in September 2019, Plaintiff was paid $15.00 per hour for the first twenty hours worked per week by check, with withholdings for federal, state, and local tax, and then $11.00 per hour in cash, without any withholdings, for all additional hours worked, including those over forty hours per week. Id. ¶¶ 35, 36. During the time of her employment, Defendants failed to provide Plaintiff with payroll notices or wage statements, as required by NYLL §§ 195(1) and (3). Id. ¶¶ 40-42.

According to the Complaint, Robinson Capello and John Francis Rivera are officers, directors, shareholders, and/or persons in control of Fresh Smoothies and Fresh Frutti. Id. ¶¶ 13, 15, 16. The Defendants jointly supervised Plaintiff and controlled her compensation. See Id. ¶¶ 19-22. At the times relevant to Plaintiffs' claims, Fresh Smoothies and Fresh Frutti shared many of the same employees and utilized much of the same equipment and inventory. Id. ¶¶ 17, 18. Plaintiff alleges, “upon information and belief” that Fresh Frutii and Fresh Smoothies: operated as a single business operation, had records maintained by the same persons and entities, employed many of the same employees, and were each fragments of a larger business that were not maintained as separate corporate entities. Id. ¶¶ 87-91.

Plaintiff brings eight causes of action. The first cause of action is for a violation of the overtime provision of FLSA. Id. ¶¶ 43-49. The second through sixth causes of action are for violations of certain provisions of the NYLL related to: overtime, id. ¶¶ 50-56, minimum wage, id. ¶¶ 57-62, timely payment of wages, id. ¶¶ 63-70, providing payroll notices, id. ¶¶ 71-74, and providing wage statements, id. ¶¶ 75-78. The seventh cause of action is for a violation of the IRC by Defendants' willful filing of false information returns to the Internal Revenue Service. Id. ¶¶ 79-85. The eighth cause of action is for corporate combine. Plaintiff seeks a default judgment on each claim.

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LEGAL STANDARD

Federal Rule of Civil Procedure 55 sets forth a two-step procedure to be followed for the entry of judgment against a party who fails to defend: the entry of a default and the entry of a default judgment. See New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005).

The first step, entry of a default, simply “formalizes a judicial recognition that a defendant has, through its failure to defend the action, admitted liability to the plaintiff.” Mickalis Pawn Shop, LLC, 645 F.3d at 128; see also Fed. R. Civ. P. 55(a). The second step, entry of a default judgment, “converts the defendant's admission of liability into a final judgment that terminates the litigation and awards the plaintiff any relief to which the court decides it is entitled, to the extent permitted” by the pleadings. Mickalis Pawn Shop, 645 F.3d at 128; see also Fed. R. Civ. P. 55(b). Whether entry of default judgment at the second step is appropriate depends upon whether the well-pleaded allegations against the defaulting party establish liability as a matter of law. See Mickalis Pawn Shop, 645 F.3d at 137.

While a defendant who defaults admits the well-pleaded factual allegations in a complaint, because a party in default does not admit conclusions of law, “a district court need not agree that the alleged facts constitute a valid cause of action.” Id. (citation omitted); see Spin Master Ltd. v. 158, 463 F.Supp.3d 348, 367 (S.D.N.Y. 2020) (“The essence of Fed.R.Civ.P. 55 is that a plaintiff can obtain from a default judgment relief equivalent to but not greater than it would obtain in a contested proceeding assuming it prevailed on all of its factual allegations.”). Therefore, this Court is “required to determine whether the [plaintiff's] allegations are sufficient to establish the [defendant's] liability as a matter of law.” Finkel v. Romanowicz, 577 F.3d 79, 85 (2d Cir. 2009). A party later challenging the entry of a default judgment must satisfy the “good cause shown” standard in Federal Rule of Civil Procedure 55(c), which “requires a court to weigh (1) the willfulness of default, (2) the existence of any meritorious defenses, and (3)

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prejudice to the non-defaulting party.” Guggenheim Capital, LLC v. Birnbaum, 722 F.3d 444, 454-55 (2d Cir. 2013).

The legal sufficiency of a non-defaulting party's claims “is analyzed under the familiar plausibility standard enunciated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), aided by the additional step of drawing inferences in the movant's favor.” WowWee Group Ltd. v. Meirly, 2019 WL 1375470, at *5 (S.D.N.Y. Mar. 27, 2019). A default judgment entered on well-pleaded allegations does not reach the issue of damages, and Plaintiff “must therefore substantiate [her] claim for damages with evidence to prove the extent of those damages.” Hood v. Ascent Med. Corp.. 2016 WL 1366920, at *15 (S.D.N.Y. Mar. 3, 2016), report and recommendation adopted, 2016 WL 3453656 (S.D.N.Y. June 20, 2016), aff'd 691 Fed.Appx. 8 (2d Cir. 2017) (summary order).

To determine the amount of damages that should be awarded on a default judgment, Federal Rule of Civil Procedure 55(b)(2) “leaves the decision of whether a hearing is necessary to the discretion of the district court.” Lenard v. Design Studio, 889 F.Supp.2d 518, 527 (S.D.N.Y. 2012) (citation omitted). And “[w]here, on a damages inquest, the plaintiff makes a damages submission and the defaulting defendant makes no submission in opposition and does not request a hearing, the court may determine the adequacy of the plaintiff's damages claim based on its submitted proofs.” Id.

DISCUSSION

The Court concludes that Plaintiff's allegations substantiate her claimed violations of the NYLL and the IRC, 26 U.S.C. § 7434, and her claim for corporate combine.

The Court has reviewed the materials submitted by Rosario and her counsel in connection with the instant application and also believes that a further inquest would be unnecessary. See

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Dkt. Nos. 24-26.

I. Claims under the FLSA and the NYLL

As a preliminary matter, the well-pleaded allegations in the Complaint satisfy the jurisdictional prerequisites of the relevant FLSA and NYLL provisions. See 29 U.S.C. §§ 206(a), 207(a)(1); NYLL §§ 2, 190 to 199-A; see generally Marcelino v. 374 Food, Inc., 2018 WL 1517205, at *9-10 (S.D.N.Y. Mar. 27, 2018). For the reasons explained below, these allegations also support Plaintiff's claimed violations of the overtime provisions of the FLSA, see 29 U.S.C. §§...