Olivares v. 1761 Fonda Mexico Magico LLC

Background

Victor Mendez Olivares brought a putative collective action against 1761 Fonda Mexico Magico LLC, doing business as “Mexico Magico,” and Paco Paredes. The opinion states that Paredes owns and manages the restaurant. Olivares alleged that, while working as a food preparer, dishwasher, and delivery worker, he was not paid the required minimum and overtime wages. He also alleged violations involving spread-of-hours pay, wage notices, and wage statements under the Fair Labor Standards Act and New York Labor Law.

The defendants failed to appear. The court entered an order of default in July 2018 and referred the case to Magistrate Judge Kevin Fox for an inquiry into damages. Judge Fox recommended awarding no damages because Olivares had not presented sufficient evidence to determine the amount with reasonable certainty. Judge Fox also recommended that the court order Olivares’s counsel to explain why sanctions should not be imposed under Federal Rule of Civil Procedure 11 for relying on outdated law concerning liquidated damages.

Review of the Recommendation

The court reviewed the disputed portions of Judge Fox’s recommendation independently because Olivares had filed timely objections. It declined to adopt the recommendation. The court found that Olivares’s declaration, damages charts, and timesheets supplied enough information to calculate his damages and attorney’s fees without a hearing. The court also found that counsel’s use of outdated case law resulted from an outdated template and was not willful. It therefore concluded that sanctions were not appropriate.

Because of the defendants’ default, the court treated the well-pleaded allegations concerning liability as true, but it separately examined the evidence supporting the amount of damages. The court found that the defendants’ conduct could be treated as willful under the Fair Labor Standards Act, allowing recovery for three years before the complaint was filed. New York’s six-year limitations period allowed recovery for conduct dating back to February 13, 2011. The court calculated the award under New York law because it provided the greater recovery in this case, and it did not allow duplicative recovery under both federal and state wage laws.

Damages

The court found that Olivares worked approximately 72 hours per week during the first two employment periods and approximately 62 hours per week during the third. He was paid weekly amounts that resulted in hourly rates below New York’s minimum wage. The court awarded:

- $19,539.25 for unpaid minimum wages; - $25,562 for unpaid overtime compensation; - $4,805.88 for unpaid spread-of-hours wages; - $46,894.13 in liquidated damages; and - $5,500 in statutory damages for failures to provide required wage notices and wage statements.

The court awarded liquidated damages at 25 percent for the portion of the wage violations occurring before April 9, 2011, and at 100 percent for the later violations. It rejected part of Olivares’s spread-of-hours calculation because five days per week during the third employment period involved ten-hour shifts, rather than shifts exceeding ten hours.

Prejudgment Interest

The court awarded prejudgment interest at an annual rate of nine percent on unpaid wages, but not on liquidated damages or statutory damages for notice violations. Interest was calculated from February 16, 2012, on a principal amount of $42,417.50 at $10.459 per day, and from November 17, 2014, on a principal amount of $7,489.63 at $1.847 per day, through entry of final judgment.

Attorney’s Fees and Costs

The court awarded $5,380 in attorney’s fees and $400 in costs. It reduced the requested hourly rates to $400 for Michael Faillace and $250 for Colin Mulholland because the case was relatively uncomplicated and did not proceed to trial. The court compensated 4.7 hours for Faillace and 14 hours for Mulholland, but awarded no fees for 3.25 hours attributed to “PL” because the submission did not identify that person’s name and title. The court awarded only the documented $400 filing fee and denied the remaining requested costs because supporting documentation was not provided.

Disposition

The court declined to adopt Judge Fox’s Report and Recommendation, sustained Olivares’s objections, awarded the amounts described above, directed the clerk to enter judgment, and ordered the case closed. The judgment would automatically increase by 15 percent if it was not entirely paid within the stated 90-day period after judgment or the expiration of an appeal, whichever was later, provided no appeal was pending.