Catzin v. Thank You & Good Luck Corp.

899 F.3d 77
CourtCourt of Appeals for the Second Circuit
DecidedAugust 8, 2018
DocketNo. 17-2497-cv; August Term 2017
StatusPublished
Cited by270 cases

This text of 899 F.3d 77 (Catzin v. Thank You & Good Luck Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Catzin v. Thank You & Good Luck Corp., 899 F.3d 77 (2d Cir. 2018).

Opinion

BARRINGTON D. PARKER, Circuit Judge:

*79This appeal from an order of the United States District Court for the Southern District of New York (Forrest, J. ) requires us to decide whether the District Court properly sua sponte declined to exercise supplemental jurisdiction over plaintiffs' state-law claims and dismissed the case without affording the parties notice or an opportunity to be heard.

Plaintiffs, several low-wage laundromat workers, sued their employers under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., and the New York Labor Law ("NYLL"), § 190 et seq ., alleging that their employers failed to pay plaintiffs the minimum wage, overtime, and failed to provide various required wage notices and statements.

The case was litigated for nearly two years, through discovery and summary judgment. The parties' cross motions for partial summary judgment were granted in part and denied in part, ultimately leaving various FLSA and NYLL claims to be resolved at trial. Three weeks prior to the start of trial and two weeks prior to the final pretrial conference, the parties filed their required pretrial submissions, which omitted mention of the FLSA and focused on the alleged NYLL violations. Shortly before the final pretrial conference, plaintiffs filed a letter that noted, among other things, that they intended to pursue only their NYLL claims at trial because they had concluded, on the basis of an intervening clarification in Second Circuit law, that any potential recovery under the FLSA would be subsumed by the recovery available under the NYLL.

For reasons that are inadequately supported by the record, the District Court concluded that plaintiffs' inclusion of the FLSA claims had all along been disingenuous and was a stratagem to manufacture federal jurisdiction. Acting on this assumption, the day before the final pretrial conference, and without affording the parties notice or an opportunity to be heard, the District Court sua sponte issued an order that deemed plaintiffs to have abandoned their federal-law claims. The District Court cancelled the pretrial conference and the trial scheduled to start the following week. The District Court then declined to exercise supplemental jurisdiction over plaintiffs' state-law claims and dismissed them without prejudice, leaving the parties to start from the beginning in state court, and ordered the case closed. Plaintiffs appeal and we vacate and remand for further proceedings.

BACKGROUND

The procedural history of this case is important for understanding the sequence *80of events that precipitated the District Court's order. In September 2015, plaintiffs filed their original complaint, bringing claims under the FLSA and NYLL. Plaintiffs later amended their complaint and, in June 2016, filed the operative complaint, the Third Amended Complaint ("TAC"). The TAC alleged seven claims against varying groups of defendants: (1) failure to pay minimum wages in violation of the FLSA, 29 U.S.C. § 206 ; (2) failure to pay overtime wages in violation of the FLSA, 29 U.S.C. § 207 ; (3) failure to pay minimum wages in violation of NYLL § 652; (4) failure to pay overtime wages in violation of the NYLL, see 12 N.Y.C.R.R. § 142-2.2 (incorporating the FLSA overtime definition into the NYLL); (5) failure to provide required wage notices and wage statements in violation of NYLL § 195; (6) failure to pay spread-of-hours payments in violation of the NYLL, see 12 N.Y.C.R.R. § 142-2.4 ; and (7) failure to properly calculate wage deductions in violation of NYLL § 193. As to each claim, plaintiffs alleged that defendants' violations were "willful" under § 255(a) of the FLSA, and § 198 of the NYLL. As damages, plaintiffs sought unpaid wages, prejudgment interest, liquidated damages, and attorneys' fees and costs.

According to the TAC and the various declarations submitted in support of the motions for summary judgment, plaintiffs worked at laundromats in New York City owned by various defendants. Plaintiffs' duties included loading and unloading laundry machines and dryers, washing, drying, and folding clothes, and occasionally working as cashiers. Plaintiffs alleged that defendants systematically underpaid them for a number of years. The three plaintiffs are seeking approximately $13,000 in unpaid wages and other relief available under the wage-and-hour laws.

Discovery included a number of depositions (at least eight), and the production of documentary evidence, such as pay stubs, pay logs, work schedules, operating agreements, and tax returns. In January 2016, the District Court conditionally certified the case as an FLSA collective action under 29 U.S.C. § 216(b). In October 2016, the District Court denied plaintiffs' motion to certify the case as a class action under Federal Rule of Civil Procedure 23(b)(3).1

Following discovery, plaintiffs and two subsets of defendants filed cross motions for partial summary judgment. The District Court granted these motions in part and denied them in part. The District Court granted summary judgment to plaintiffs on the issue of whether the conduct of certain defendants was willful, entitling them to liquidated damages under the FLSA and NYLL (if they later proved their underlying wage-and-hour claims). The District Court also granted summary judgment to plaintiffs on whether one of the defendants was an individual employer under the FLSA and NYLL and on plaintiffs' claim of wage notice and statement violations under NYLL §§ 195(1) and 195(3). The District Court granted summary judgment to defendants Thank You & Good Luck Corp., Zeng Lan Wang, 115th Street and First Avenue Laundromat Inc., Exclusive Management Solution Group, Inc., and Dimitri Berezovsky on plaintiffs' FLSA claims on the ground that those defendants were not covered by the FLSA or could not be liable under a theory of successor liability. Finally, the District Court determined that it would maintain supplemental jurisdiction over plaintiffs' NYLL claims over those defendants. The District Court otherwise *81denied the parties' summary judgment motions.

After considerable back and forth over scheduling, the District Court set August 2, 2017, as the trial date, with pretrial materials due July 13, motions in limine due July 14, and oppositions due July 21. A final pretrial conference was set for July 27, 2017, roughly one week before the first day of trial.

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Bluebook (online)
899 F.3d 77, Counsel Stack Legal Research, https://law.counselstack.com/opinion/catzin-v-thank-you-good-luck-corp-ca2-2018.