Cheng v. Via Quadronno LLC

Background

This case is a collective action under the Fair Labor Standards Act. Chunyung Cheng and Shiguang Chen alleged that they and similarly situated employees worked more than 40 hours per week at the defendants’ restaurants without receiving overtime pay at one and one-half times their regular rates.

In an earlier order, the court conditionally certified the proposed collective and authorized plaintiffs to send notices explaining the case and the right to join it. The court also ordered the defendants to provide contact information for current and former non-exempt, non-managerial employees, to the extent the information was readily accessible and in their possession, custody, or control. The defendants also had to provide an affidavit stating that the list was complete from their employment records to the best of their ability.

Motions

The defendants moved for sanctions against Troy Law PLLC, its principal John Troy, and its associate Aaron Schweitzer. They argued that plaintiffs’ counsel improperly placed the defendants’ logo and trademarks on envelopes containing the court-authorized notices without obtaining permission. The defendants contended that the practice was deceptive or misleading because it could suggest that the notices came from, or were endorsed by, the defendants. They sought sanctions under 28 U.S.C. § 1927, which permits sanctions against lawyers who unreasonably and vexatiously multiply proceedings, and under the court’s inherent authority to sanction bad-faith litigation conduct.

The plaintiffs cross-moved to compel the defendants to produce an accurate employee name list and sought sanctions against the defendants and their counsel. The plaintiffs argued that the list had only 140 non-duplicative names, that only 73 entries included apartment numbers, and that 28 mailed notices were returned as undeliverable.

Court’s analysis

The court explained that sanctions under its inherent authority require a showing that the challenged conduct lacked any reasonable legal basis and was undertaken in bad faith. Section 1927 likewise requires conduct that unreasonably and vexatiously multiplies the proceedings; bad faith may be inferred only when the conduct is so completely without merit that an improper purpose must be inferred.

The court held that the defendants had not provided sufficient evidence to show that plaintiffs’ counsel acted in bad faith. Although plaintiffs’ counsel should have checked whether the earlier filings addressed the use of the logo and should have raised the issue if they did not, the court noted that the initial request for court-authorized notice had been made by prior counsel, before the current plaintiffs’ counsel appeared. The court also considered plaintiffs’ counsel’s representation that it would expressly request permission to use logos in future filings. The court therefore denied the defendants’ sanctions motion.

The court also found no basis for the plaintiffs’ cross-motion. The defendants had certified that the list was complete from their employment records, and the list had been generated directly from their payroll system. When plaintiffs’ counsel identified missing apartment information, defendants’ counsel responded within a week and supplied the omitted information, explaining that a data column had been inadvertently left out during the original download. The court found that the defendants complied with the September 23, 2021 order and found no evidence of bad faith concerning the missing apartment numbers. The court criticized the timing of the plaintiffs’ cross-motion as, at minimum, inefficient management of the case, but denied the motion.

Disposition

The court denied the defendants’ motion for sanctions and denied the plaintiffs’ cross-motion for sanctions. In a footnote, the court also summarily denied the plaintiffs’ counsel’s additional request to sanction one of the defendants’ affiants and its request for an evidentiary hearing, finding those requests procedurally improper and lacking a legal foundation.