Smith v. Akela Contracting LLC

Background

Anthony Smith brought this wage case on behalf of himself and others similarly situated against Akela Contracting LLC and the other named defendants. Smith alleged that he and others worked as flagpersons on public construction projects and were entitled to prevailing-wage rates because their actual work fell within the New York Labor Law definition of “laborers.” The City of New York had awarded Akela contracts for the projects, and those contracts required Akela to comply with New York Labor Law and pay prevailing wages.

Akela brought third-party claims against the City in case Akela became liable for higher prevailing-wage payments to the flagpersons. The City moved to dismiss those claims, arguing, among other things, that the contract expressly placed responsibility for proper payment on Akela. Smith and the other plaintiffs later settled with the defendants for $340,000, and the court approved the settlement. Akela continued its third-party claims against the City to recover what it paid in settlement. The parties had completed some document production, but additional discovery would involve numerous project documents, physical inspection, and depositions.

Motion to Stay Discovery

The City moved for a protective order staying, or pausing, further discovery until the court ruled on the motion to dismiss. The motion was unopposed. The court applied the rule that discovery may be stayed for good cause while a motion to dismiss is pending. It considered the breadth of the requested discovery, the burden of responding, possible prejudice, and the strength of the motion to dismiss. The court noted that filing a motion to dismiss alone is not enough to justify a stay.

Court’s Analysis

The court found that the factors favored a stay. It considered the motion to dismiss strong because of the contract language and a recent New York County Supreme Court decision involving nearly identical claims against the City. That decision concluded that a similar contract placed the risk of prevailing-wage violations on the contractor rather than the City. The court also noted sworn testimony favorable to Akela’s position that it had properly paid the plaintiffs and that they had not performed laborer work, which undercut Akela’s third-party claims against the City.

The court further found that the proposed discovery was extensive. It would require physical inspection of voluminous paper records, as well as depositions of resident engineers and plaintiffs. Collecting and scanning the records would itself be costly and time-consuming. The court also found that Akela would not be prejudiced by a stay because Akela would save litigation costs that could exceed the value of its claim.

Disposition

Judge Katharine H. Parker granted the City’s motion to stay discovery pending resolution of the motion to dismiss. The court directed that, if the motion to dismiss is denied, the parties must submit a proposed schedule for completing discovery within 30 days after the denial. The opinion did not decide the motion to dismiss itself.