Liriano v. Ovadia

Background

Robert Liriano brought claims under the Fair Labor Standards Act, New York Labor Law, and related New York regulations. He alleged that he worked as a retail clerk at a Boost Mobile store from January 2019 through January 2023, was paid daily in cash, did not receive required minimum or overtime wages, and did not receive required wage notices or statements. The defendants disputed parts of his account. Menachem Ovadia and Sigalit Mizrahy stated that they were not involved with Boost Mobile, and Mohti Mizrahy disputed how many days and hours Liriano worked.

The defendants initially had counsel and filed an answer, and the parties engaged in discovery. After their lawyer withdrew, the defendants did not timely respond to court orders directing them to obtain new counsel. The Clerk entered certificates of default against the defendants. Liriano then moved for a default judgment. The Mizrahys appeared without lawyers and opposed the motion; Ovadia appeared through new counsel and also opposed it.

Legal standard

Because certificates of default had been entered but no default judgment had yet been entered, the court applied the “good cause” standard under Federal Rule of Civil Procedure 55(c). The relevant factors were whether the failure to respond was willful, whether setting aside the certificates would prejudice Liriano, and whether the defendants had presented a potentially valid defense. The court also considered the preference for deciding cases on their merits rather than by default.

Court’s analysis

The court found that the defendants’ failure to respond was not willful. They had previously answered the complaint and participated in discovery. The court also found that the warning about corporations needing lawyers was mistaken because none of the defendants was a corporation. The Mizrahys therefore could represent themselves. Ovadia’s later retention of counsel and opposition to the motion also supported the conclusion that his failure to respond was not a deliberate decision to abandon the case.

The court found no meaningful prejudice to Liriano from setting aside the certificates. Although there had been some delay, Liriano had not shown that evidence had been lost, discovery had become more difficult, or fraud or collusion had become more likely. The court also found that the defendants met the low threshold for showing potentially meritorious defenses. Their assertions that some defendants were not involved with the store and that Liriano worked fewer hours could, if proven, defeat or reduce some of the claims. The defendants’ affirmative defenses also provided an additional basis for allowing the case to proceed.

Disposition

The court VACATED the certificates of default and DENIED Liriano’s motion for entry of a default judgment as moot. It did not decide the underlying wage claims or the amount of any damages. The parties were ordered to meet and confer and file a proposed case-management plan by August 15, 2025.