Newman v. ASA College, Inc.

Background

Barry Newman, the former Chair of ASA College’s Massage Therapy Department, sued ASA College, its founder and owner Alexander Shchegol, and interim President Jose Valencia. He alleged violations of the Fair Labor Standards Act and New York Labor Law, along with claims for breach of an oral contract, unjust enrichment, and quantum meruit. The opinion states that ASA was a for-profit college that had gone out of business.

Newman alleged that he was promised an annual salary of $62,000 but was paid less than that from 2019 through 2022. He also alleged that he worked 45 to 50 hours per week, was not paid for work performed from December 5, 2022 through February 24, 2023, did not receive payment for 40 hours of accrued vacation, suffered a $240 deduction that was not sent to a transit-management company, and received several wage payments late. The Defendants did not answer, appear, or respond to the proceedings.

Judge Failla entered default judgment on December 20, 2023, and referred the case to United States Magistrate Judge Robert W. Lehrburger to determine damages. Because the Defendants defaulted, the court treated the well-pleaded liability allegations as true, but required Newman to provide evidence supporting the amount of damages. The court decided that a hearing was unnecessary and conducted the damages review based on the written submissions.

Liability and damages

The court concluded that ASA, Shchegol, and Valencia were jointly and severally liable as Newman’s employers under the Fair Labor Standards Act and New York Labor Law. It also concluded that Newman was not exempt from overtime protection merely because he was a department chair. The record did not show that he directed at least two employees or had hiring-and-firing authority, and although he had been promised a salary, he was actually paid hourly.

The court applied New York Labor Law for the wage calculations because it provided equal or greater recovery than the federal law. It recommended:

- $7,200 in unpaid regular wages for the approximately 12-week period when Newman received no pay; - $3,669.30 in unpaid overtime wages; - $1,087.20 for 40 hours of accrued vacation time; - $240 for the unlawful deduction; - $12,965.50 in liquidated damages for unpaid wages, vacation pay, and the unlawful deduction; and - $10,865.40 in liquidated damages for wages paid late.

The court also found liability for breach of the oral contract promising a $62,000 annual salary. Newman’s initial economic-loss calculation was $31,622.99, but the court deducted amounts it viewed as duplicative of the wage claims. It therefore recommended $25,002.39 in breach-of-contract damages. The court did not separately assess Newman’s unjust-enrichment and quantum-meruit claims because it found them duplicative of the contract claim and noted that Newman’s proposed findings argued only the contract claim.

Interest, fees, costs, and recommendation

The recommendation included nine-percent prejudgment interest on $12,196.50 in unpaid wages beginning January 15, 2023, and nine-percent prejudgment interest on $25,002.39 in contract damages beginning January 1, 2021. It also recommended $5,240 in attorney’s fees and $779.80 in costs. The fee award was based on 13.1 hours of work at a $400 hourly rate for Newman’s lawyer, Justin S. Clark.

Judge Failla’s court received Magistrate Judge Lehrburger’s recommendation that judgment be entered against the Defendants jointly and severally for the listed monetary relief. The document is a report and recommendation, not an order stating that Judge Failla adopted it. It directs the parties to file objections within 14 days and states that failing to object on time would waive objection and prevent appellate review.