Sanchez v. First Class Home Improvement, LLC

JOSE SANCHEZ AND ANTONIO MEJIA PALACIO,, Plaintiffs, v. FIRST CLASS HOME IMPROVEMENT, LLC, FIRST CLASS ROOFING, INC., OCEANSIDE FIRST CLASS ROOFING, INC.,and ETHAN SAGE (a/k/a JESUS MANUEL TORRES CANDELARIA, a/k/a JESUS TORRES), Defendants.

16-CV-2064 (DRH)(ARL)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

September 23, 2019

MEMORANDUM & ORDER

Presently before the Court is the Report and Recommendation of Magistrate Judge Arlene R. Lindsay, dated May 9, 2019 ("R & R"), recommending that plaintiff's motion for attorneys' fees and costs pursuant to New York Labor Law §§ 663(1) and 198 be denied with leave to renew based only on the work performed in connection with the successful wage notice claim. In essence, Judge Lindsay reasoned that because plaintiffs failed to prevail on their FLSA or state labor law overtime claims, the claims against First Class Roofing, Inc. and one of their two wage notice claims, a substantial reduction should be made for their lack of success and further that the successful and unsuccessful claims are not inextricably intertwined.

Plaintiffs have filed objections to the R & R. The purpose of this Memorandum is to address those objections. For the reasons set forth below, the Court declines to adopt the recommendation of Judge Lindsay and awards Plaintiffs a total of $47,281.11 in attorneys' fees and costs.

BACKGROUND

I. The Claims Asserted

Plaintiffs Jose Sanchez ("Sanchez") and Antonio Mejia, Palacio ("Palacio"), commenced this action on April 26, 2016 against Oceanside First Class Roofing, Inc. ("Oceanside") and Ethan Sage ("Sage") to recover unpaid overtime compensation pursuant to the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., the New York Labor Law ("NYLL") Articles 6 and 19, and the New York Codes, Rules, and Regulations 142-2.2. They also asserted claims pursuant to NYLL § 195(1) and (3) alleging that defendants had failed to furnish them with wage notices and wage statements. Thereafter plaintiffs filed an Amended Complaint, on consent, joining First Class Home Improvement, LLC and First Class Roofing, Inc. as defendants.

II. The Court's Findings of Fact and Conclusion of Law

A bench trial was held on November 26, 27, and 28, 2017 to determine the merits of the plaintiffs' contentions. By Memorandum and Order dated August 28, 2018, familiarity with which is presumed, the Court set forth its Findings of Fact and Conclusions of Law as required by Federal Rule of Civil Procedure ("FRCP") 52. In that decision, the claims against First Class Roofing, Inc. were dismissed as they were not pursued at trial. With respect to the remaining defendants, the Court found that the plaintiffs' federal and state overtime claims were without merit, finding their testimony regarding same unworthy of belief and contrary to all the other trial evidence on that point. It rejected, however, defendants' claim that plaintiffs were independent contractors; it found the evidence was overwhelming that plaintiffs were employees and further that defendant Sage was an employer in his individual capacity. Addressing the claim under New York Labor Law §§ 195(1) and (3), the Court noted that defendants admitted that they had failed to provide the plaintiffs with the wage notice and wage statement required by those sections. With respect to the wage notice required by §195(1), the Court found the penalty provisions inapplicable as plaintiffs commenced working for defendants before April 9, 2011. The penalty provision for failure to provide wage statements pursuant to §195(3) was applicable resulting in the maximum statutory award available to each of them, i.e., $5000 to Sanchez and $2500 to Palacio.

III. The Motion for Attorneys' Fees and Costs

On September 10, 2018, the plaintiffs filed a motion for attorneys' fees and costs seeking $108,500.00 in attorneys' fees and $6,340.86 in costs. The motion was referred to Judge Lindsay for Report and Recommendation.

IV. Judge Lindsay's R&R

In her May 9, 2019 Report and Recommendation (the "R&R"), Judge Lindsay notes that when a party is entitled to fees, a court calculates the " 'presumptively reasonable fee' by the lodestar method, which entails determining the 'number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate'" and set forth the factors to be considered in that determination. (R&R at 5 (internal quotation marks omitted).) She goes on to state that "the most critical factor in determining the reasonableness of a fee award is the degree of success obtained and that a prevailing party is "not entitled to a fee award for unsuccessful claims that were based on different facts and different legal theories." (Id. at 6.) (internal quotation marks and citations omitted). Applying that precept, she reasoned that "a substantial reduction must be made for the plaintiffs' lack of success" because the plaintiffs did not prevail on their overtime claims and their wage notice claim. Moreover, she did not find that the successful and unsuccessful claims are inextricably intertwined as "plaintiffs could have independently sought damages relating to defendants' undisputed failure to provide wage notices." Accordingly, she recommended "that the motion for attorneys' fees and costs be denied with leave to renew based only on the work performed in connection with the successful wage notice claim."

V. Plaintiff's Objections

Plaintiff's timely filed objections to the R &R, arguing that Judge Lindsay erred in determining that the successful §195(3) claim were not inextricably intertwined with their claim forunpaid overtime by failing to consider the numerous overlapping issues and failed to sufficiently consider and apply relevant case law governing an award of attorneys' fees and costs.¹

DISCUSSION

I. Governing Law - Attorneys' Fees

As noted above, Plaintiffs did not prevail on their FLSA and state law claims for overtime; they only prevailed on their wage statement claims under the New York Labor Law § 195(3). Thus, Plaintiff's claim for attorneys' fees is to be determined in accordance with New York Law.

New York follows the American Rule whereby each party bears its own attorneys' fees unless an award of fees is authorized by agreement between the parties, statute, or court rule. See, e.g., Hooper Assoc., Ltd. V. AGS Computers, Inc., 74 N.Y.2d 487, 491 (N.Y. 1989). Here, the relevant statutory provision for an award of attorneys' fees is N.Y. Labor Law § 198 (1-d). That statute provides in pertinent part: "If any employee is not provided a statement or statements as required by subdivision three of section one hundred ninety-five of this article, he or she shall recover in a civil action damages of two hundred fifty dollars for each work day that the violations occurred or continue to occur, but not to exceed a total of five thousand dollars, together with costs and reasonable attorney's fees." (emphasis added).

The foregoing language mandates an award of attorneys' fees whenever an employee succeeds on a claim for wage statements.² This is in contrast to the language in subsection 1-bwhich provides that an employee "may recover . . . costs and reasonable attorney's fees. N.Y. Labor Law § 198(1-b).

New York courts, like federal courts, use the lodestar method to determine the presumptively reasonable attorneys' fees. See Gamero v. Koodo Sushi corp., 328 F. Supp. 3d 165, 172 (S.D.N.Y. 2018). While "New York courts have stated that, as a general rule, they will rarely find reasonable an award to a plaintiff that exceeds the amount involved in the litigation," F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1264 (2d Cir.1987), attorney's fees need not be proportional where an award of fees is needed to attract counsel or where the statute at issue vindicates important rights. See, e.g, Riordin v. Nationwide Mut. Fire Ins. Co., 977 F.2d 47, 54 (2d Cir.1992); Diaz v. Paragon Motors of Woodside Inc. , 2007 WL 2903920 (E.D.N.Y. 2007) Podhorecki v. Lauer's Furniture Stores, Inc., 201 A.D.2d 947, 607 N.Y.S.2d 818 (4th Dep't 1994) ("There is no bright [ ] line rule that a fee award [pursuant to New York General Business Law § 396] . . . must be proportional to the amount at issue . . . .) For example, in FLSA cases the attorney's fees need not be proportional to the damages plaintiffs recover, because the award of attorney's fees in such cases encourages the vindication of Congressionally identified policies and rights. See, e.g., Tucker v. City of N.Y., 704 F. Supp. 2d 347, 359 n. 10 (S.D.N.Y.2010) ("[S]ettled case law [is] that the setting of statutory [attorneys'] fees does not require proportionality between the plaintiff's recovery and the amount of the fee award.") Adorno v. Port Auth. of N.Y. & N.J., 685 F. Supp. 2d 507, 512 (S.D.N.Y.2010) ("The courts have rejected a per se proportionality rule, i.e., proportionally linking the prevailing party's attorneys' fees to the degree of monetary success achieved." ); Baird v. Boies, Schiller & Flexner LLP, 219 F.Supp.2d 510, 519-20 & n. 7(S.D.N.Y.2002) ("[A] limited monetary recovery does not preclude a substantial attorneys' fee award, for there is no requirement of proportionality .").

The lodestar figure is determined by multiplying the number of hours reasonably expended on a case by a reasonable hourly rate. See Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); see also Luciano v. Olsten Corp., 109 F.3d 111, 115 (2d Cir. 1997). [T]he 'lodestar . . . creates a 'presumptively reasonable fee.'" Millea v. Metro-N. R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011) (citing Arbor Hill Concerned Citizens Neighborhood Assoc. v. Cnty. of Albany, 522 F.3d 182, 183 (2d Cir. 2008); Perdue, 559 U.S. at 550) ("[T]he lodestar figure includes most, if not all, of the relevant factors constituting a 'reasonable' attorney's fee . . . .") (internal quotation marks omitted)). Thus, the Supreme Court has recognized that "the lodestar method produces an award that roughly approximates the...