Summary
holding that essentially identical hourly rates were reasonable
Summary of this case from Velasquez v. U.S. 1 Farm Mkt., Inc.Opinion
Civil No. 3:08cv602 (JBA).
June 25, 2009
RULING ON DEFENDANTS' RENEWED MOTIONS TO REOPEN AND ON PLAINTIFFS' MOTION FOR ATTORNEY'S FEES
Plaintiffs, represented by clinical counsel at Yale Law School, brought this action pursuant to the Fair Labor Standards Act, 29 U.S.C. § 216(b), seeking unpaid wages and liquidated damages arising out of their employment as homemakers. Plaintiffs named several Defendants: two limited-liability companies, By Your Side Homemaker and Companion Services, LLC, and By Your Side Home Care Connecticut, LLC (collectively, "By Your Side"); and four managerial staff of those companies, Stephen O'Halloran, Lucille Juliano, Mario Molano, and Vivian Doe. O'Halloran and Juliano, having entered pro se appearances in this matter, now move to vacate the default judgment entered against them and to reopen the case. Plaintiffs object and separately seek an award of attorney's fees.
I. Background
Briefly, the procedural history of this case is as follows. The Plaintiffs' original complaint was filed April 22, 2008. The By Your Side entities were served on April 25. O'Halloran and Juliano were served on April 27 and 30, respectively, and they each submitted a pro se appearance dated May 13. Both O'Halloran and Juliano sought and received an extension of time to respond to the complaint, and so their responsive pleadings were due June 17 and 20, respectively. The Plaintiffs amended their complaint first on May 21, and again on July 9 — both of which were served on the Defendants.
On November 6, 2008, with no Defendant having submitted a responsive pleading or filing anything else since May 13, the Plaintiffs moved for default judgment. After the Court denied this motion as procedurally improper, the Plaintiffs moved for entry of default on December 9, which the Clerk granted a week later. The Plaintiffs then followed by renewing their motion for default judgment on December 19, which the Court granted on December 30. Final judgment was not entered, however, until January 23, 2009. Following this, the Plaintiffs submitted their request for fees and costs on January 30.
In the meantime, O'Halloran and Juliano submitted a Motion to Re-Open and an Answer on January 12, 2009. By a text order dated January 22, the Court granted Plaintiffs' motion to dismiss Molano and at the same time found moot the pending motion to reopen. Because this generated some confusion for the remaining parties, the Court issued another order dated February 26, vacating the January 22 order in part and, construing the motion to reopen and answer as a request for relief pursuant to Rule 60(b), denying Defendants' motion for relief from judgment. O'Halloran and Juliano again moved to reopen the case on April 3, to which the Plaintiffs objected in a brief filed April 15. Shortly thereafter, the parties met with Magistrate Judge Margolis for settlement negotiations, but the discussion was not productive. On May 14, O'Halloran and Juliano renewed their motion to reopen and also filed another answer to the amended complaint.
II. Motions to Vacate Default Judgment and to Reopen
Against this background, the issue is whether O'Halloran and Juliano have demonstrated the requisite "good cause" for setting aside a default judgment pursuant to Rule 55(c) and Rule 60(b)(1). Defendants offer several grounds: they are proceeding pro se and without legal training; the Plaintiffs had an incorrect address for O'Halloran and so he did not receive all correspondence; Juliano underwent major back surgery and is still under the care of a doctor; Defendants reached out to Plaintiffs' counsel seeking to resolve the matter; and there were separate cases pending in state and federal court.
The Second Circuit teaches that district courts should generally be guided by three factors when exercising their discretion to set aside a default judgment: whether the defendant defaulted willfully, whether the defaulting defendant has a meritorious defense, and whether vacating the default will prejudice the remaining parties. See, e.g., New York v. Green, 420 F.3d 99, 108 (2d Cir. 2005). The first inquiry is a subjective one, and serves to "distinguish[] those defaults that, though due to neglect, are excusable, from those that are not." American Alliance Ins. Co. v. Eagle Ins. Co., 92 F.3d 57, 61 (2d Cir. 1996) (explaining further that "[g]ross negligence can weigh against the party seeking relief from a default judgment, though it does not necessarily preclude relief"). As to the second factor, a possible defense is sufficient even if not "ultimately persuasive at this stage," id., so long as there is something more than mere "conclusory denials," Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 98 (2d Cir. 1993). And the prejudice inquiry encompasses not merely a delay, id., but rather greater impediments to recovery such as "loss of evidence" or "opportunity for fraud and collusion," Green, 420 F.3d at 110.
The Defendants' central argument appears to be that they should be excused from default because they are representing themselves. Although district courts often note that pro se status is not enough to justify granting Rule 60(b) relief by itself, e.g., Williams v. New York City Def't of Corr., 219 F.R.D. 78, 84 (S.D.N.Y. 2003), the Second Circuit has cautioned that a pro se litigant's request for relief from default should be "freely" granted, Enron Oil, 10 F.3d at 96. Nevertheless, applying the framework the Second Circuit has deemed appropriate in these circumstances, O'Halloran and Juliano have not provided sufficient justification to warrant setting aside the default judgment against them.
First, their claim that they didn't receive correspondence is unavailing: they appeared in this case, moved for an extension of time to respond to the complaint, and were consistently served at the same addresses they provided on their appearance forms. In their most recent submission, Defendants assert that they "responded to complaints in this case on numerous occasions prior to the Judgment being granted" and that "[c]ourt documents will show this fact." Yet what the court documents show is that O'Halloran and Juliano acknowledged this litigation by submitting formal appearances and requesting extensions of time to plead and then doing nothing for more than six months, even while Plaintiffs were moving for default judgment against them. Whether or not Defendants' efforts were impeded by medical complications, miscommunications with Plaintiffs' counsel, attempts to resolve the Plaintiffs' claims, or separate legal proceedings, Defendants had a duty to respond to the allegations in this case. That O'Halloran and Juliano sought and received extensions of time to file responsive pleadings demonstrates that they were aware of and understood this duty. On these facts, Defendants have not shown that their default was due to anything other than neglect.
There is a slight discrepancy with respect to O'Halloran's mailing address that is not explained in the record. On his pro se appearance form, O'Halloran listed his address as 44 Tappan Avenue, Babylon, New York. Most of his recent filings use that address, and, importantly, the Plaintiffs served all of the default papers at that address as well. In May 2009, however, O'Halloran consented to electronic notification in this matter by submitting a form which indicated his address was 40 Tappan Avenue. Nevertheless, there is no showing that the critical motions for default and for default judgment were sent to an incorrect address, or that O'Halloran did not actually receive them.
Second, Defendants have offered little more than a general denial of liability, not a substantive meritorious defense to the Plaintiffs' claims. O'Halloran and Juliano assert that Plaintiffs' claims are "false, erroneous, exaggerated, and fraudulent," yet they also acknowledge that there was a stipulated judgment granting the same Plaintiffs a portion of the monetary settlement in a related case before Judge Kravitz. That case, captioned Agency on Aging of South Central Connecticut v. Rockland Trust Co., et al., No. 3:08cv788, was an interpleader action involving a contracting agent of the State of Connecticut Department of Social Services, the Internal Revenue Service, Rockland Trust Co., and one of the By Your Side companies (which waived service but then defaulted after failing to respond to the interpleader complaint). According to the parties' stipulation in March 2009, the homemaker Plaintiffs — there appearing as prospective intervenors — received a portion of the subject funds, which they then divided based on the same ratio used with respect to the default judgment in this case.
Relatedly, there is the matter of the Defendants' self-representation. The returns of service show that Plaintiffs served the By Your Side companies at the same address given for Juliano. But as non-lawyers, O'Halloran and Juliano can appear only on behalf of themselves, not the By Your Side entities. Lattanzio v. COMTA, 481 F.3d 137, 139 (2d Cir. 2007) (per curiam) (confirming that a layperson cannot represent any business entity, including a corporation, partnership, or limited-liability company). Thus, although O'Halloran and Juliano can also be held individually liable under the FLSA's extremely broad definition of "employer," see, e.g., Herman v. RSR Sec. Servs., Ltd., 172 F.3d 132, 139-40 (2d Cir. 1999) (quoting Falk v. Brennan, 414 U.S. 190, 195 (1973), and "emphasiz[ing] the `expansiveness' of the FLSA's definition"), liability as to the two By Your Side companies in this case has already been established through default, in addition to the terms of the stipulated judgment in the related interpleader action.
Given all this, O'Halloran and Juliano have not shown that they have a defense to the merits of Plaintiffs' claims. Further, the prejudice to the Plaintiffs flows from the fact that vacating the default judgment with respect to O'Halloran and Juliano will prolong this litigation even though the liability of the By Your Side entities — which, based on the manner in which they were served, may be little more than alter egos of the individual Defendants — has not been contested. In other words, in light of the close relationship between the individual Defendants and the By Your Side entities, it is doubtful that granting O'Halloran and Juliano the post-judgment relief they seek will ultimately make any difference. Under these circumstances, O'Halloran and Juliano have not sustained their burden as movants. Despite the recognized preference for deciding cases on their merits, reopening the case nonetheless requires a sufficient justification for setting aside the default, which Defendants have not provided. Accordingly, the Court denies Defendants' motions to vacate default judgment and to reopen this case.
The Court, having now become aware of a stipulated judgment involving the same Plaintiffs and By Your Side in the contemporaneous interpleader case, has reason to believe that the calculation of damages awarded in this case may have contained errors. After all, entry of default traditionally serves to establish all the well-pleaded allegations in a complaint except those pertaining to damages. Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Therefore, the Court will refer this matter to Magistrate Judge Margolis for a determination of the amount of damages to be awarded.
III. Attorney's Fees
Finally, Plaintiffs seek attorney's fees for the clinical representation by law-student interns and supervising attorneys from Yale's Jerome N. Frank Legal Services Organization. The hourly rates of $80 and $350, respectively, are reasonable based on the Court's experience with fee applications. Although this case went to judgment on default, the student lawyers necessarily devoted significant time and effort to coordinating their multiple clients and responding to the pro se Defendants' submissions. However, the time records reflect a substantial duplication of effort on the default and default-judgment motions in the 75 hours of work by the student lawyers. Accordingly, 25 student hours will be disallowed. The Court therefore grants Plaintiffs' request for fees in the amount of $23,445.
IV. Conclusion
For these reasons, Defendants' motions to reopen [Doc. ## 40, 48] are denied, and Plaintiffs' Motion for Attorney's Fees [Doc. # 37] is granted. This matter will be referred to a magistrate judge for a determination of damages. Following such determination, judgment will be amended to add (a) the fee award of $23,445 and any additional fee award for work reasonably related to the hearing on damages, and (b) any adjustments to the damages award.
IT IS SO ORDERED.