Pareja v. 184 Food Corp.

Background

Jose Pareja sued 184 Food Corp., 231 Food Corp., DG 231 Food Corp., 0113 Food Corp., 640 Pelham Food Corp., G&G Pelham Food Corp., Rafael Montes Deoca, Rafael Montes Deoca Jr., Giovanni Marte, Jose Marte, Gustavo Marte, and Gregory Gonzalez. He alleged that the defendants owned, operated, or controlled the Bravo Supermarket and C-Town supermarkets and employed him as a fruit stocker from approximately February 2015 through June 23, 2018.

Pareja alleged that he regularly worked more than 40 hours per week. From approximately February 2015 through February 2017, he alleged that he generally worked 66 to 72 hours per week and received $550 per week. From approximately February 2017 through June 23, 2018, he alleged that he generally worked 48 to 54 hours per week and received $600 per week. He also alleged that the defendants did not provide meal breaks, did not maintain a timekeeping system, required him to sign a document falsely stating his weekly hours, failed to provide required wage notices and statements, and required him to purchase work boots costing $120.

The four defendants identified as appearing defendants were 0113 Food Corp., Giovanni Marte, Jose Marte, and Gustavo Marte. The eight defendants identified as non-appearing defendants were 184 Food Corp., 231 Food Corp., DG 231 Food Corp., 640 Pelham Food Corp., G&G Pelham Food Corp., Rafael Montes Deoca, Rafael Montes Deoca Jr., and Gregory Gonzalez. The appearing defendants initially answered and reached a settlement in principle, but the settlement was not completed. Their counsel withdrew, and the appearing defendants failed to obtain new counsel or respond to the renewed default-judgment motion. The non-appearing defendants never appeared or responded.

Default-judgment standard

Under Federal Rule of Civil Procedure 55, default judgment is a two-step process. A default recognizes that a defendant failed to defend the case. A default judgment then converts the admitted factual allegations supporting liability into a judgment for the relief the court determines is available. The court must still decide whether the admitted facts establish a valid legal claim; a defendant’s default does not admit legal conclusions.

The court found that the non-appearing defendants’ failure to respond after proper service was willful. It also found that the appearing defendants failed to otherwise defend the case after their settlement efforts ended. The court found no meritorious defenses apparent from the record and determined that Pareja would be prejudiced if default judgment were denied.

Liability findings

Pareja asserted seven causes of action: minimum-wage and overtime violations under the Fair Labor Standards Act and New York law, New York wage-notice and recordkeeping violations, New York wage-statement violations, and unlawful recovery of equipment costs.

The court found that the allegations adequately established that the non-appearing defendants were Pareja’s employers under both the federal Fair Labor Standards Act and the New York Labor Law. It found that the allegations also adequately established coverage under the Fair Labor Standards Act because Pareja handled goods that traveled in interstate commerce and the supermarkets allegedly had at least $500,000 in annual sales. The non-appearing defendants were held jointly and severally liable for the resulting judgment.

The court concluded that Pareja’s fixed weekly pay exceeded the minimum wage when treated as covering 40 hours per week. It therefore found that he did not establish a minimum-wage claim. But the court found that hours worked above 40 per week were unpaid overtime and that Pareja adequately established overtime liability. It also found that he adequately established a New York spread-of-hours claim based on workdays whose span exceeded 10 hours.

The court found the defendants liable for failing to provide the wage notices and wage statements required by New York Labor Law sections 195(1) and 195(3). It rejected the equipment-cost claim because Pareja did not show that the $120 cost of his work boots reduced his wages below the legally required minimum.

The appearing defendants acquired the supermarket where Pareja worked in or about June 2018. Applying the substantial-continuity test for successor liability, the court found that the allegations established liability against those defendants because the business continued at the same location with the same workforce, supervisory personnel, jobs, working conditions, equipment, and products. The court noted that it was not apparent whether the appearing defendants had notice of the lawsuit before acquiring the supermarket, but found that the other relevant factors supported successor liability.

Damages and fees

The court used the New York Labor Law’s six-year limitations period because it provided greater relief than the Fair Labor Standards Act’s limitations period. It accepted Pareja’s evidence about his work dates and hours because the defendants had defaulted and had not supplied contrary employment records.

The court awarded or recommended the following amounts:

- $73,940.63 in unpaid overtime wages; - $5,671.50 in spread-of-hours pay; - $79,612.13 in New York liquidated damages, equal to the unpaid overtime and spread-of-hours amounts; - $10,000 in statutory damages for wage-notice and wage-statement violations; and - $26,169.05 in attorneys’ fees and costs.

The principal damages totaled $169,224.26, excluding prejudgment interest and attorneys’ fees and costs. The court ordered, and recommended for the non-appearing defendants, prejudgment interest at 9% per year on $79,612.13 beginning October 12, 2016, through the date judgment was entered.

Disposition

Judge Aaron ordered that Pareja’s motion for default judgment be granted against 0113 Food Corp., Giovanni Marte, Jose Marte, and Gustavo Marte. The Clerk was requested to enter judgment against those defendants for $169,224.26, plus the specified prejudgment interest and $26,169.05 in attorneys’ fees and costs.

Judge Aaron separately recommended that Pareja’s motion for default judgment be granted against 184 Food Corp., 231 Food Corp., DG 231 Food Corp., 640 Pelham Food Corp., G&G Pelham Food Corp., Rafael Montes Deoca, Rafael Montes Deoca Jr., and Gregory Gonzalez, with the same principal amount, interest calculation, and attorneys’ fees and costs. Because those defendants had not consented to the magistrate judge’s jurisdiction, the recommendation was subject to objections and review by District Judge J. Paul Oetken. The opinion states that the parties had 14 days after service to object.