Hosseini v. Miilkiina LLC

Background

Maryam Davani Hosseini sued Miilkiina LLC and Nadia Azmy, individually, under the Fair Labor Standards Act (FLSA), the New York Labor Law (NYLL), and, alternatively, for breach of contract. She sought unpaid compensation, overtime, statutory penalties, interest, costs, and attorney’s fees. The Clerk entered defaults against both defendants after they failed to defend the case. The court had previously denied Hosseini’s first motion for default judgment without prejudice because the original complaint did not adequately plead an FLSA overtime claim. Hosseini filed an amended complaint, and the defendants did not respond to her renewed motion.

The amended complaint alleged that Hosseini worked as Miilkiina’s Head of Strategy. Her employment agreement called for 30 hours of work per month in exchange for shares with a stated cash value of $3,750 per month, and she received a $500 incentive payment. She alleged that she worked 40 hours per week from June through September 2020 without compensation other than the incentive payment, and an average of 50 hours per week from October 2020 through June 2021. During the latter period, Miilkiina paid her $4,432.62 in cash but allegedly did not provide the promised share compensation or vesting schedule.

Liability

For purposes of default judgment, the court accepted the amended complaint’s well-pleaded factual allegations as true but independently determined whether those allegations established legal liability. The court found that Hosseini qualified as an employee under both the FLSA and NYLL. Her equity-based compensation did not make her a co-owner because she allegedly never received the promised shares, their cash value was guaranteed, and she did not bear the risks of ownership or share in management.

The court found that Miilkiina and Azmy were employers under the FLSA and NYLL. Miilkiina had the right and practical ability to direct Hosseini’s work, while Azmy hired her, supervised her strategic proposals, and determined her pay. The court held that both defendants violated the FLSA and NYLL overtime requirements because Hosseini alleged that she worked at least 50 hours per week during each week of February 2021 and received no overtime compensation.

The court also held that both defendants violated NYLL requirements concerning wage notices and wage statements because Hosseini alleged that she received neither. It rejected Hosseini’s argument that NYLL § 191(1)(d) entitled her to the compensation promised in her employment agreement, explaining that the provision concerns the timing of wage payments rather than a substantive entitlement to a particular wage.

The court nevertheless held Miilkiina liable for breach of contract. It found that the employment agreement was formed when Hosseini accepted Miilkiina’s offer by beginning work, that Hosseini performed her obligations, and that Miilkiina failed to provide the agreed compensation. The court rejected the contract claim against Azmy because Hosseini did not allege that Azmy entered the agreement in her individual capacity or otherwise agreed to personal liability. The court also ruled that Hosseini’s attempt to impose liability on Azmy under New York Business Corporation Law § 630(a) was premature because that statute required a judgment against the corporation and a separate action within the statutory period.

Damages and Disposition

The court determined damages from Hosseini’s affidavits and documentary evidence without holding another hearing. It awarded $73,125 in unpaid FLSA overtime wages, calculated from 390 overtime hours at $187.50 per hour. Because the FLSA and NYLL overtime remedies could not both be recovered for the same work, the court calculated the overtime award under the FLSA. It also awarded $73,125 in FLSA liquidated damages.

The court awarded $10,000 in NYLL statutory penalties: $5,000 for the wage-notice violations and $5,000 for the wage-statement violations. It awarded $6,079.70 in attorney’s fees and $717 in costs, for a combined fees-and-costs award of $6,796.70. The court did not award the additional $5,865.54 invoice because the submitted materials did not provide enough detail to determine whether that amount was reasonable or warranted.

For the contract claim against Miilkiina, the court used a $125 hourly rate for the first 40 hours of each week of Hosseini’s 56 weeks of employment, producing $280,000 before subtracting the $4,432.62 in cash wages she received. The opinion’s calculation therefore states contract damages of $275,567.38. However, an earlier sentence says the award is $275,067.38; the opinion later repeats $275,567.38 in its summary of the judgment.

Judge Liman granted the motion for default judgment and directed the Clerk to close the motion. He directed Hosseini to file a proposed judgment consistent with the opinion by November 6, 2023. The stated awards were against both defendants for the FLSA and NYLL overtime and wage-document violations, and against Miilkiina alone for contract damages.