Mercedes v. Underground Liquidation Inc.

Background

Cesar Mercedes brought a putative collective action under the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL) against Underground Liquidation Inc., doing business as Magic Mattress R US. He alleged that Underground failed to pay the required minimum wage and overtime, failed to provide accurate wage notices and statements, and failed to keep required time records.

Mercedes alleged that he worked for Underground as a non-exempt machine operator from approximately April 2015 through approximately February 14, 2023. He alleged that he generally worked six days a week, about 48 hours per week, and was paid $10 per hour for all hours. The court accepted the well-pleaded liability allegations as admitted because Underground defaulted, but separately examined whether Mercedes supported his requested damages.

Default and Liability

Underground was served on October 3, 2023, but did not appear. The Clerk entered a certificate of default, and Judge Valerie E. Caproni granted a default judgment on January 30, 2024. The matter was then referred for an inquest—a proceeding to determine damages after default. Underground did not respond to the court’s orders or Mercedes’s proposed findings and did not request an in-person hearing.

The court concluded that the requirements for default judgment were satisfied. It found that Underground’s failure to respond supported an inference that the default was willful, that Mercedes would be prejudiced without judgment, and that Underground had presented no defense. The court also concluded that Mercedes’s allegations established violations of the FLSA and NYLL, including unpaid minimum wages, unpaid overtime premiums, and violations of the NYLL wage-notice and wage-statement requirements.

For damages, the court used the small-employer New York minimum-wage rates because Mercedes had not adequately shown that Underground employed 11 or more people. The court used the NYLL limitations period, extended by 228 days under New York’s COVID-related tolling orders, and calculated damages from October 21, 2016, through February 14, 2023. It found that Mercedes’s declarations and other submissions provided a sufficient basis to calculate damages without an evidentiary hearing.

Recommended Award

The report and recommendation recommended the following award:

- $54,096.00 in unpaid minimum wages; - $17,708.00 in unpaid overtime premium wages; - $71,804.00 in liquidated damages, equal to the unpaid minimum and overtime wages; - $10,000.00 in NYLL statutory penalties, consisting of $5,000 for missing wage notices and $5,000 for missing wage statements; - $29,080.62 in prejudgment interest calculated through August 12, 2024, plus $17.70 per day until the Clerk enters final judgment; - $1,232.00 in reasonable costs; and - Post-judgment interest under 28 U.S.C. § 1961.

The recommended damages total was $182,688.62. The recommendation stated that Mercedes could recover liquidated damages and prejudgment interest under the NYLL rather than duplicative liquidated damages under both the FLSA and NYLL.

Disposition and Objections

Magistrate Judge Robyn F. Tarnofsky recommended that the motion for default judgment be granted and that judgment be entered against Underground in favor of Mercedes with the listed amounts. This was a report and recommendation, not a statement that the final judgment had already been entered. The parties were given 14 days after service to file objections with the Clerk. The opinion does not state whether Judge Caproni later adopted the recommendation.