Accosta v. Lorelei Events Group, Inc.

Background

Frank Accosta and David Rosenstock sued Lorelei Events Group, Inc. and Lorraine Totaro under the Fair Labor Standards Act (FLSA), the New York Labor Law (NYLL), the Employee Retirement Income Security Act (ERISA), and New York’s common-law claim for unjust enrichment. They moved for summary judgment, which is a request for judgment without a trial because the moving party says no important facts are genuinely disputed.

Lorelei was an event-production company solely owned by Totaro. The plaintiffs worked for Lorelei as account executives, planning dinners, conferences, and fundraising events. They were full-time employees earning annual salaries of $85,000 and had 401(k) plans with a 2% employer match. During 2016, Totaro sometimes instructed Lorelei’s payroll vendor not to issue their paychecks because Lorelei lacked sufficient funds. Accosta’s payments were late for 20 pay periods, including 17 delays longer than two weeks. Neither plaintiff was paid for work performed from January through March 2017. In April 2017, Totaro prepared agreements stating that Lorelei owed the plaintiffs unpaid wages and 401(k) contributions, but the promised payments were never made.

FLSA and NYLL wage claims

The defendants argued that the plaintiffs were exempt administrative employees. The court rejected that argument. The plaintiffs were not paid at least $684 per week in 2017, and their primary work—planning and running events for Lorelei’s clients—was the service Lorelei provided rather than administrative work related to managing the company’s general business.

The court also held that Totaro was an employer under the FLSA and NYLL. The undisputed record showed that she solely owned and managed Lorelei, hired both plaintiffs, supervised them, and managed their payments.

The court found no genuine dispute that neither plaintiff was paid for work in January, February, and March 2017. It therefore granted Accosta and Rosenstock summary judgment on their FLSA and NYLL unpaid-wage claims.

The court also granted Accosta summary judgment on his claim for late payment of 2016 wages. The record showed that 20 of his payments were late and that 17 were delayed more than two weeks. The court did not grant Rosenstock summary judgment on his late-payment claim because the plaintiffs did not provide evidence showing that his late payments occurred after the two-week period discussed by the court.

The court denied summary judgment on the plaintiffs’ NYLL wage-statement claim. Although the plaintiffs provided evidence that they were not given proper wage statements for some payments, Totaro’s testimony created a genuine dispute about whether and when they were paid without wage statements.

Unjust enrichment

The court granted the plaintiffs summary judgment on their unjust-enrichment claim against Lorelei for unpaid wages. It found that Lorelei received the benefit of the plaintiffs’ full-time work in early 2017 without paying their agreed-upon salaries. The court did not grant judgment against Totaro because the plaintiffs had not shown that they performed services for her personally or that she was specifically enriched.

The court also found that the plaintiffs had not provided evidence showing that their change from employees to independent contractors caused an actionable unjust-enrichment benefit to either defendant. That part of the claim remained unresolved.

ERISA benefits

The court granted the plaintiffs summary judgment on their ERISA claims against Lorelei. The April 2017 agreements showed that Lorelei agreed to pay the plaintiffs’ 401(k) contributions, and Lorelei did not dispute those agreements. The court concluded that the plaintiffs established the required elements of their claims: coverage by an ERISA plan, participation or beneficiary status, and wrongful denial of benefits owed under the plan. The court noted that the plaintiffs appeared to seek summary judgment only against Lorelei, making the defendants’ argument about whether Totaro was an ERISA fiduciary irrelevant to that motion.

Disposition

The court granted in part and denied in part the plaintiffs’ motion for summary judgment. It granted Accosta summary judgment on his FLSA and NYLL claims for unpaid and untimely wages and granted Rosenstock summary judgment on his FLSA and NYLL claims for unpaid wages. It also granted the plaintiffs summary judgment on their unjust-enrichment claims against Lorelei for unpaid wages and their ERISA claims against Lorelei.

The remaining claims included Rosenstock’s FLSA claim for untimely wages; the plaintiffs’ claims against Totaro for unjust enrichment and unpaid ERISA benefits; the plaintiffs’ claims against both defendants for failure to provide wage statements and compensation-change notices under the NYLL; and unjust enrichment related to the plaintiffs’ classification as independent contractors. Judge Roman directed the parties to appear for a telephonic pretrial conference on February 24, 2022, and directed the Clerk of Court to terminate the summary-judgment motion.