Holick v. Cellular Sales

48 F.4th 101
Court of Appeals for the Second Circuit·Decided September 7, 2022·No. 21-948-cv·Published·Cited by 24 cases

Opinion

21-948-cv Holick v. Cellular Sales 1 2 3 4 UNITED STATES COURT OF APPEALS 5 FOR THE SECOND CIRCUIT 6 ____________________ 7 8 August Term, 2021 9 10 (Argued: April 25, 2022 Decided: September 7, 2022) 11 12 Docket No. 21-948-cv 13 ____________________ 14 15 JAN P. HOLICK, JR., on behalf of themselves and all others similarly situated, 16 STEVEN MOFFITT, on behalf of themselves and all others similarly situated, 17 JUSTIN MOFFITT, on behalf of themselves and all others similarly situated, 18 GURWINDER SINGH, on behalf of themselves and all others similarly situated, 19 JASON MACK, on behalf of themselves and all others similarly situated, 20 TIMOTHY M. PRATT, on behalf of themselves and all others similarly situated, 21 WILLIAM BURRELL, 22 23 Plaintiffs-Appellees, 24 25 v. 26 27 CELLULAR SALES OF NEW YORK, LLC, CELLULAR SALES 28 OF KNOXVILLE, INC., 29 30 Defendants-Appellants. 31 32 ____________________ 33 34 Before: POOLER, WESLEY, and CARNEY, Circuit Judges.

2 Cellular Sales of New York, LLC and Cellular Sales of Knoxville, Inc. 3 (collectively “Cellular”) appeal from the March 15, 2021 order of the United 4 States District Court for the Northern District of New York (Stewart, M.J.) 5 granting attorney’s fees to plaintiffs. Cellular argues that (1) the district court 6 abused its discretion in finding that Plaintiffs’ successful minimum wage and 7 overtime claims were sufficiently intertwined with their unsuccessful unfair 8 wage deduction, unpaid compensable work, and untimely commissions claims 9 under the Fair Labor Standards Act and New York Labor Law; and (2) regardless 10 of whether the claims were intertwined, that the district court abused its 11 discretion in reducing the attorney’s fees award by only 40 percent given 12 Plaintiffs’ relative lack of success. We disagree, and affirm for the reasons set 13 forth below. 14 Affirmed. 15 ____________________

16 C. LARRY CARBO, III, Chamberlain, Hrdlicka, White, 17 Williams & Aughtry, P.C. (Julie R. Offerman, on the 18 brief), Houston, TX, for Appellants. 19 20 RONALD G. DUNN, Gleason, Dunn, Walsh & O’Shea, 21 Albany, NY, for Appellees.

2 POOLER, Circuit Judge: 3 Cellular Sales of New York, LLC and Cellular Sales of Knoxville, Inc. 4 (collectively “Cellular”) appeal from the March 15, 2021 order of the United 5 States District Court for the Northern District of New York (Stewart, M.J.) 6 granting attorney’s fees of $576,870.30 to name plaintiffs Jan Holick, Steven 7 Moffitt, Justin Moffitt, Gurwinder Singh, Jason Mack, William Burrell, and 8 Timothy Pratt (“Plaintiffs”). The parties reached a settlement on the merits 9 claims, leaving only the issue of the attorney’s fee award to be settled on appeal. 10 See Holick v. Cellular Sales of N.Y., LLC, No. 1:12-CV-584 (DJS), 2021 WL 964206 11 (N.D.N.Y. Mar. 15, 2021) (“Holick III”). 12 Cellular argues that (1) the district court abused its discretion in finding 13 that Plaintiffs’ successful minimum wage and overtime claims were sufficiently 14 intertwined with their unsuccessful unfair wage deduction, unpaid compensable 15 work, and untimely commissions claims under the Fair Labor Standards Act 16 (“FLSA”) and New York Labor Law; and (2) regardless of whether the claims 17 were intertwined, that the district court abused its discretion in reducing the

1 attorney’s fees award by only 40 percent given Plaintiffs’ relative lack of success. 2 We disagree, and affirm for the reasons set forth below. 3 BACKGROUND 4 Plaintiffs were owners of companies that sold cellular service plans and 5 devices to customers through contracts with Cellular , an authorized Verizon 6 Wireless dealer that operates retail stores in upstate New York. Holick v. Cellular 7 Sales of N.Y., LLC, No. 1:12-CV-584 (DJS), 2019 WL 1877176, at *1 (N.D.N.Y. April 8 26, 2019) (“Holick I”). 9 The specifics of the compensation model between Plaintiffs and Cellular 10 are complex and not relevant to this appeal, but in broad strokes Cellular paid 11 Plaintiffs commissions for every cellular service plan they sold. However, if a 12 customer canceled their cell service plan within 180 days of purchasing it, then 13 Cellular would deduct the sale from its following check to the Plaintiffs. Id. at *1- 14 2; J. App’x at 336 ¶¶ 22-23. Plaintiffs were not paid an hourly wage or a salary. 15 Holick I, 2019 WL 1877176, at *2. 16 Plaintiffs brought a class action complaint against Cellular for unfair wage 17 deductions, unpaid compensable work, untimely commissions, unjust 18 enrichment, and failure to pay minimum wage and overtime under the FLSA

1 and New York Labor Law. “Essentially, Plaintiffs claim that Defendants 2 misclassified them as independent contractors instead of employees as defined 3 by the FLSA and [New York Labor Law], thus depriving them of employee 4 benefits required by law.” Id. at *2 (internal quotation marks omitted). Plaintiffs 5 sought more than $4 million in class damages, and roughly $700,000 in damages 6 for the name Plaintiffs. Holick III, 2021 WL 964206, at *4. 7 In April 2019, the district court denied Plaintiffs’ motion for class 8 certification, finding that:

9 Plaintiffs have failed to demonstrate that they are 10 similarly situated to the degree necessary to maintain 11 an FLSA collective action, or to certify a Rule 23 class 12 action. The Court finds that Plaintiffs’ disparate and 13 highly individualized experiences with the Defendants 14 are not conducive to the production of representative 15 evidence required to proceed collectively. Plaintiffs’ 16 inability to present common proof demonstrating the 17 nature of their employment relationship with 18 Defendants frustrates the possibility of collective 19 resolution and militates against considerations of 20 fairness and procedure. 21 22 Holick I, 2019 WL 1877176, at *1. Plaintiffs appealed the district court’s decision.

23 Plaintiffs then moved for partial summary judgment and Cellular cross- 24 moved for summary judgment. The district court denied Plaintiffs’ motion in

1 full, and granted Cellular’s motion as to Plaintiffs’ claims for wage deductions, 2 untimely commissions, and unpaid compensable work. Holick v. Cellular Sales of 3 N.Y., LLC, No. 1:12-CV-584 (DJS), 2019 WL 3253941, at *1 (N.D.N.Y. July 19, 2019) 4 (“Holick II”). It found questions of material fact as to whether the Plaintiffs were 5 employees or independent contractors under the FLSA and New York Labor 6 Law, as well as on the minimum wage and overtime claims. Id. 7 The case proceeded to a bench trial. The district court determined that the 8 Plaintiffs were employees of Cellular and granted them judgment of $11,121 for 9 unpaid minimum wages and overtime, plus liquidated damages and 10 prejudgment interest. Holick III, 2021 WL 964206, at *1. Cellular appealed from 11 the district court’s decision. 12 While the merits appeals were pending, the district court proceeded to the 13 issue of fees and costs, to which Plaintiffs were entitled as the prevailing party. 14 Plaintiffs sought $961,450 in attorney’s fees and costs of $46,065. Id. at *2. 15 The district court noted that “the degree of success obtained by the plaintiff” was 16 “the most critical factor” in determining reasonable attorney’s fees. Id. at *2-3 17 (internal quotation marks omitted). Cellular argued that the fee needed to be 18 drastically reduced, in relevant part, because Plaintiffs were unsuccessful on

1 their unlawful wage deduction, untimely commission and compensable work 2 claims. Id. at *4. The district court disagreed, finding that the unsuccessful claims 3 were inextricably intertwined with the successful claims:

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Holick v. Cellular Sales, 48 F.4th 101 (2d Cir. 2022).

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