Gem Financial Service, Inc. v. City of New York

District Court, E.D. New York·Decided September 8, 2023·No. 1:13-cv-01686·Unknown

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK --------------------------------------------------------- GEM FINANCIAL SERVICE, INC., d/b/a GEM PAWNBROKERS,

Plaintiff, MEMORANDUM AND ORDER 13-CV-1686 (RPK) (RER) v.

CITY OF NEW YORK,

Defendant. --------------------------------------------------------- RACHEL P. KOVNER, United States District Judge: After a two-week trial, a jury found City of New York liable for Fourth Amendment violations under 42 U.S.C. § 1983 and for malicious prosecution under New York law. The jury awarded plaintiff Gem Financial Service, Inc. $1,003,250 in compensatory damages. Verdict (Dkt. #179). Plaintiff has moved (i) to amend the judgment to include prejudgment interest pursuant to Federal Rule of Civil Procedure 59 (Dkt. #186) and (ii) for attorneys’ fees and costs (Dkt. #206). For the reasons discussed below, plaintiff’s motion for prejudgment interest is granted, and plaintiff’s motion for attorneys’ fees and costs is granted in part. BACKGROUND The Court assumes familiarity with the background and procedural history of this case, which is recounted here only as necessary to decide these motions. Plaintiff filed this lawsuit in 2013. Compl. (Dkt. #1). The Court granted in part and denied in part defendant’s motion to dismiss, Gem Fin. Serv., Inc. v. City of New York, No. 13-CV-1686 (MKB), 2014 WL 1010408, at *1 (E.D.N.Y. Mar. 17, 2014) (“Gem I”), and granted in part and denied in part its motion for summary judgment, Gem Fin. Serv., Inc. v. City of New York, 298 F. Supp. 3d 464 (E.D.N.Y. 2018), as amended (June 27, 2018) (“Gem II”). After a trial on plaintiff’s remaining claims, the jury returned a verdict of $1,003,250 in plaintiff’s favor on April 27, 2022, Minute Entry dated April 27, 2022. The award consisted of $1 million in compensatory damages for the unconstitutional searches of plaintiff’s proprietary records; $1,500 for the unconstitutional seizures of plaintiff’s merchandise and collateral; and $1,750 for malicious prosecution in violation

of New York law. Verdict (Dkt. #179). Defendants filed a motion for judgment as a matter of law and a new trial, (Dkt. #187), which the Court denied, Mem. and Order (Dkt. #211) (“Gem III”). Plaintiff filed a motion seeking prejudgment interest on the jury’s award of $1,001,500 in damages resulting from defendant’s unconstitutional searches and seizures. (Dkt. #186). Plaintiff did not seek prejudgment interest on the $1,750 that the jury awarded based on plaintiff’s malicious-prosecution claim. Plaintiff also filed a motion seeking $1,009,142 in attorneys’ fees and $15,408.46 in costs. (Dkt. #206). This sum includes: (i) $856,747.50 in fees and $14,336.25 in disbursements billed by Paul J. Solda; (ii) $34,710 in fees billed by Michael Shapiro; (iii) $33,280 in fees and $593.29

in disbursements billed by Melissa Erwin; (iv) $76,542.50 in fees and $442.42 in disbursements billed by Joel Shafferman; and (v) $7,862 in fees and $36.50 in disbursements billed by Mark Kriss. Plaintiff also seeks an additional $21,200 in fees related to the preparation of its attorney- fee motion. DISCUSSION For the reasons explained below, I grant plaintiff (i) prejudgment interest on damages awarded for unconstitutional searches and seizures, (ii) $529,414.75 in attorneys’ fees, and (iii) $15,408.46 in costs. I. Prejudgment Interest I grant plaintiff’s motion to amend the judgment to include prejudgment interest on the damages the jury awarded for unlawful searches and seizures. In a suit involving a federal right, the Court may grant prejudgment interest in its discretion, considering “(i) the need to fully compensate the wronged party for actual damages suffered, (ii) considerations of fairness and the

relative equities of the award, (iii) the remedial purpose of the statute involved, and/or (iv) such other general principles as are deemed relevant by the court.” Gierlinger v. Gleason, 160 F.3d 858, 873 (2d Cir. 1998) (citation omitted); see U.S. Sec. & Exch. Comm’n v. Ahmed, 72 F.4th 379, 403 (2d Cir. 2023) (quoting Wickham Contracting Co. v. Loc. Union No. 3, Int’l Bhd. of Elec. Workers, AFL-CIO, 955 F.2d 831, 834 (2d Cir. 1992)). On balance, these considerations favor prejudgment interest on the damages awarded for unlawful searches and seizures under Section 1983. The jury’s findings established that defendant wrongfully denied plaintiff profits that plaintiff would have been able to use—and earn money from—during the period in which this lawsuit was pending. An award of prejudgment interest on those funds therefore serves interest in “fully compensat[ing]” plaintiff “for actual damages

suffered.” Gierlinger, 160 F.3d at 873. And since “‘[t]he purpose of the [Section 1983 remedial scheme] . . . is to fully compensate individuals for harm suffered as a result of a constitutional violation,” such an award serves the interests of the statutory scheme as well. Jeanty v. City of New York, No. 18-CV-5920 (KPF), 2021 WL 276553, at *8 (S.D.N.Y. Jan. 27, 2021) (quoting Rao v. N.Y.C. Health & Hosps. Corp., 882 F. Supp. 321, 326 (S.D.N.Y. 1995)).*

*There is no indication that the jury already included prejudgment interest in the damages it awarded. “[W]hen a jury is not instructed to include [prejudgment interest] there is no presumption that a jury will act on its own to make this calculation.” Nat’l Commc’n Ass’n, Inc. v. Am. Tel. & Tel. Co., No. 92-CIV-1735 (LAP), 1999 WL258263, at *3 (S.D.N.Y. Apr. 29, 1999). Here, the jury was instructed to consider only “fair compensation for the loss, if any, that a plaintiff has suffered as a result of a defendant’s actions.” Trial Tr. 2427–29; see Chandler v. Bombardier Cap., Inc., 44 F.3d 80, 83–84 (2d Cir. 1994) (finding that nothing in the expert testimony or jury instructions suggested to the jury that it include prejudgment interest in its damages award). Giving weight to those interests, courts in this Circuit routinely award prejudgment interest on jury verdicts in cases in which “economic injury” means that a plaintiff was “deprived of money [it] would otherwise have earned but for the defendants’ wrongdoing,” Sulkowska v. City of New York, 170 F. Supp. 2d 359, 370–72 (S.D.N.Y. 2001). The Second Circuit has held in the Section

1983 context that when damages “represent compensation for lost wages, ‘it is ordinarily an abuse of discretion not to include pre-judgment interest.’” Gierlinger, 160 F.3d at 873 (quoting Saulpaugh v. Monroe Cmty. Hosp., 4 F.3d 134, 145 (2d Cir. 1993)). And while it has not articulated the same presumption for lost-profits damages—which may involve more uncertainties of proof—numerous courts in this Circuit have awarded prejudgment interest on such damages. See Tretola v. County of Nassau, No. 08-CV-3225 (DRH), 2014 WL 2866095, at *2 (E.D.N.Y. June 24, 2014) (finding that “a plaintiff may legitimately seek to recover the loss he suffered as a result of not being able to use his lost profits”); Galloping, Inc. v. QVC, Inc., 27 F. Supp. 2d 466, 469 (S.D.N.Y. 1998) (granting prejudgment interest on portion of jury award attributable to lost profits); Turley v. N.Y.C. Police Dep’t, 988 F. Supp. 675, 682 (S.D.N.Y.1997) (granting

prejudgment interest on lost profits under Section 1983), rev’d on other grounds at 167 F.3d 757 (2d Cir. 1999).

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