Maung v. Paradigm DKD Group, L.L.C.

Background

Jeffery Maung brought a diversity action against his former employer, Paradigm DKD Group, L.L.C. He alleged that Paradigm breached his employment agreement by failing to pay a 10% commission on revenue collected from clients during 2016, 2017, and 2018 on business that Maung sold. His second cause of action sought a declaration that he was entitled to the same commission on future revenue collected from business he sold.

Maung’s first cause of action sought attorney’s fees and liquidated damages under New York Labor Law § 198(1-a), in amounts equal to the unpaid commissions. The opinion states that he did not bring a substantive New York Labor Law claim.

Motion and Arguments

Paradigm moved for partial summary judgment on Maung’s request for attorney’s fees and liquidated damages. It argued that the unpaid commissions were not “wages” under the New York Labor Law and that § 198 provides those remedies only for substantive violations of the Labor Law.

Maung argued that the alleged unpaid commissions were wages under New York Labor Law § 190(1). He contended that, if he prevailed on his breach-of-contract claim, he would be entitled to attorney’s fees and liquidated damages. The court noted that Maung first asserted a violation of New York Labor Law § 193 in his opposition to the motion, rather than in the Second Amended Complaint.

Court’s Analysis

The court applied New York substantive law because the action was based on diversity jurisdiction. It relied on Gottlieb v. Kenneth D. Laub & Co., in which the New York Court of Appeals held that the attorney’s-fees remedy in § 198(1-a) is limited to wage claims based on violations of substantive provisions of Article 6 of the New York Labor Law.

The court found Maung’s reliance on Ryan v. Kellogg Partners Institutional Services misplaced. That case addressed whether a vested, guaranteed, and nondiscretionary bonus qualified as wages after the plaintiff had prevailed on a New York Labor Law claim. Here, by contrast, Maung had not pleaded a substantive New York Labor Law claim. The court therefore concluded that his failure to plead a substantive Article 6 violation prevented recovery of attorney’s fees and liquidated damages under § 198.

Disposition

Judge Ona T. Wang granted Paradigm’s motion for partial summary judgment, limited to Maung’s claim under New York Labor Law § 198 for attorney’s fees and liquidated damages. The opinion states that Maung’s possible request to amend the complaint to add a claim under § 193 required him first to meet and confer with Paradigm and then submit a letter requesting a pre-motion conference by May 15, 2020. If he proceeded on the Second Amended Complaint, the parties were directed to submit a joint status letter about discovery by that date.