Hosseini v. Miilkiina LLC

Background

Maryam Davani Hosseini sued Mulkiina LLC and Nadia Azmy under the Fair Labor Standards Act (FLSA), the New York Labor Law, and New York common law. Her claims included unpaid wages, unpaid overtime, missing wage notices and wage statements, breach of contract, breach of the duty of good faith and fair dealing, and breach of fiduciary duty. She also asserted the claims against Azmy individually.

Hosseini alleged that she accepted an offer to serve as Head of Strategy and that she was initially expected to work 30 hours per month for compensation paid entirely in company shares. She alleged that she instead worked about 30 hours per week through October 2020 and more than 40 hours per week afterward, without receiving the compensation she expected. She alleged that she received $4,432.62 in total, including an initial $500 payment, and never received the monetary value of the promised shares.

The defendants did not answer or otherwise respond. The Clerk of Court entered certificates of default against both defendants. Hosseini moved for default judgment under Federal Rule of Civil Procedure 55(b), but the defendants did not appear at the default-judgment hearing.

Court’s analysis

A default judgment is not automatic. Even when a defendant fails to respond, the court must determine whether the complaint’s well-pleaded facts establish legal liability and whether the requested damages are supported by evidence. A default admits properly pleaded factual allegations, but it does not admit legal conclusions.

The court denied default judgment on Hosseini’s FLSA unpaid-wages claim because the FLSA requires minimum wages and overtime wages; it does not provide a general federal claim for unpaid compensation promised in an employment contract. The complaint did not allege that Hosseini was seeking unpaid minimum wages or damages based on a minimum-wage violation. Instead, it sought the compensation allegedly required by the Employment Agreement, including an alleged hourly rate substantially above the federal minimum wage. The court therefore concluded that the claim was not a valid FLSA minimum-wage claim.

The court also denied default judgment on the FLSA overtime claim. To plead that claim, Hosseini needed to provide enough detail to support a reasonable inference that she worked more than 40 hours in at least one particular workweek and that the defendants knew she was working those hours. The complaint alleged only that she worked approximately 40 to 50 hours per week after October 2020. The court found that allegation too vague and conclusory. It also noted inconsistencies among the complaint, Hosseini’s declaration, and the proposed damages calculation. A declaration supporting a default-judgment motion could not amend the complaint’s factual allegations.

The court noted, but did not resolve, questions about whether Hosseini had adequately alleged that she was an employee rather than an independent contractor and whether her position might have been exempt from the FLSA’s overtime requirements. Because the FLSA claims were inadequately pleaded, the court did not need to decide those issues.

Because the court denied default judgment on the federal claims, it declined at that time to exercise supplemental jurisdiction—the federal court’s authority to hear related state-law claims—over Hosseini’s New York Labor Law and other state-law claims. The court explained that the case was still at an early stage and that resolving adequately pleaded federal and state claims together could better serve judicial economy.

Disposition

Judge Lewis J. Liman denied the motion for default judgment without prejudice. The court gave Hosseini 30 days to file an amended complaint addressing the issues identified in the opinion and to move again for default judgment. The order did not enter a judgment awarding damages and did not decide the ultimate merits of Hosseini’s wage, overtime, contract, or other claims.