19-2705-cv (L) Ayinola v. Lajaunie

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 13th day of May, two thousand twenty-one.

PRESENT: DENNIS JACOBS, DENNY CHIN, Circuit Judges, J. PAUL OETKEN, District Judge. * - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

NYAMKA AYINOLA, RAUL CARDENAS, AND LUCERO PALEMON, ON BEHALF OF THEMSELVES AND OTHERS SIMILIARLY SITUATED, EFRAM RAMIREZ, ELISEO SOLANO, ROBERTO PEREZ, EDGAR OCTOXTLE, ELENO OCOTOXTLE, RONY OCOTOXTLE, ALAN URBINA, ISIDORO VENTURA, OSIEL BRAVO, JORDAN CORTEZ, LUIS VARONA, REN ESPINOZA ROSAS, NERY CHAVEZ, ELIZA BALDI COSTABILE, MOHAMMAD KHALIK, JEAN-

* Judge J. Paul Oetken, of the United States District Court for the Southern District of New York, sitting by designation. RENE MONGE, DOUMBIA MOYAKABI, LARBI OUFKIR, CATALINO RAMIREZ PEREZ, RICARDO XICOHTENCATL MANZANO, FRANCISCO AQUINO, ROBIN WILSON-JAYARAMAN, LOREN ESCANDON, NICOLE CLOUSE, ABDIAS PEREZ, TARAX SANTOS, JAMES W. HULIHAN, REZWANUL CHOWDURY, EDWARD SNYDER, LUIS ROMERO, LAZARO TARAX, ZENON CAMARILLO, NOE REMIREZ, FRANCISCO SOLANO, DANIEL TITO, VALENTE MARTINEZ, LANDRY UZZLE, VICTOR BONILLO, HERIBERTO VAZQUEZ, FERNANDO ROA, TIM SIEMERS, CRISTINA FLOAREA, JOSE MIZHQUIRI, KURT ROEDIGER, RENE ROMERO, SOLANO JUAN NAVA, EDWARD LANE, JUAN VINANZACA, TROY HEDIEN, ALBERT Q. TAYLOR, REJINO MEJIA, RAPHAEL MYRON HEDJAZI, NEFTALI OSORIO, JOHN PAUL CRUCIANELLI, BARUN CHAKRABORTY, IAN EDWARD MALLOY, VALERIA OLMOS, JOWEL CHOWDHURY, CHRISTOPHER DAVIS, PAOLA BETANCES, PHILIPPE VERNER, NATALIA BAINDURISHUILI, BRANDON RAGAN, SHARIF CHOUDHURY, ALEXANDER HARPER, CRAIG WATSON, JOSEPH GUARINO, CHANNON SIMMONS, SUZANNE MEYERS, SREBRINA BALOVA, KAISER AHMED, TAHER AHMED, TUFAIL AHMED, Plaintiff-Appellees,

ETHAN MURPHY, STEPHANIE CASTILLO, CHRISTOPHER L. SCOTT, LOGAN SCOTT, AND NICOLE CLOUSE, ON BEHALF OF THEMSELVES AND OTHERS SIMILIARLY SITUATED, NYAMKA AYINDE, EFRAIN RAMIREZ, 2 Plaintiffs-Appellees- Cross-Appellants,

-v- 19-2705-cv L 19-2872-cv XAP PHILIPPE LAJAUNIE, Defendant-Appellant- Cross-Appellee,

LA BOUCHERIE INC., 15 JOHN CORPORATION, LHLM GROUP, CORPORATION, AKA BRASSERIE LES HALLES NEW YORK, XYZ CORPORATION, Defendants. †

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FOR PLAINTIFFS-APPELLEES: DENISE A. SCHULMAN, Joseph & Kirschenbaum LLP, New York, New York.

FOR DEFENDANT-APPELLANT: MICHAEL S. DEVORKIN, Golenbock Eiseman Assor Bell & Peskoe LLP, New York, New York.

Cross-appeals from the United States District Court for the Southern

District of New York (Sullivan, J.).

UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is VACATED, the cross-appeal is

DISMISSED, and the case is REMANDED.

† The Clerk of Court is respectfully directed to amend the caption as set forth above. 3 Plaintiffs are former servers, bussers, and bartenders who worked at the

two Les Halles restaurants in New York City. They allege that defendant-appellant

Philippe Lajaunie 1 and defendants La Boucherie, Inc. ("La Boucherie"), 15 John Corp.,

and LHLM Group, Corp., a/k/a Brasserie Les Halles New York (together with Lajaunie,

"defendants"), the owners and operators of the restaurants, violated the Fair Labor

Standards Act ("FLSA") and the New York Labor Law ("NYLL") by inappropriately

distributing tip payments to maître d's and failing to pay plaintiffs proper minimum

wages or overtime.

In an opinion and order entered March 22, 2016, the district court granted

defendants' summary judgment motion in part, dismissing plaintiffs' claims against

Lajaunie under the NYLL and otherwise permitting plaintiffs' claims to proceed against

all defendants, including Lajaunie. Thereafter, defendants failed to meet their discovery

obligations, and the district court held defendants in contempt and entered a default

judgment against them. The district court also reconsidered its grant of summary

judgment in favor of Lajaunie on the NYLL claims, and eventually entered judgment

against Lajaunie and La Boucherie, jointly and severally, in the amount of $6,091,040.40.

The two restaurants went out of business and the corporate defendants

are judgment proof, and thus Lajaunie is the only defendant participating in these

1 The record is inconsistent as to the capitalization of Lajaunie's name; as Lajaunie's brief on appeal gives his name as "Lajaunie," Appellant's Br. at 1, we use that capitalization here. 4 appeals. Lajaunie appeals from the entry of judgment against him, and plaintiffs cross-

appeal from the (later reversed) dismissal of the NYLL claims against Lajaunie. We

assume the parties' familiarity with the underlying facts, the procedural history of the

case, and the issues on appeal.

I. Sanctions

"We review the imposition of sanctions for noncompliance with discovery

orders for abuse of discretion." Shcherbakovskiy v. Da Capo Al Fine, Ltd.,

(2d Cir. 2007). A district court abuses its discretion "if it based its ruling on an

erroneous view of the law or on a clearly erroneous assessment of the evidence."

(quoting Cooter & Gell v. Hartmarx Corp.,

(1990) (internal quotation

marks omitted)).

Rule 37(b) provides that a court may impose sanctions on a party for

disobedience of a discovery order. Fed. R. Civ. P. 37(b)(2). District courts possess "wide

discretion" in imposing sanctions under Rule 37. Daval Steel Prods. v. M/V Fakredine,

, 1365 (2d Cir. 1991). However, "[t]he sanction of dismissal should not be

imposed under Rule 37 unless the failure to comply with a pretrial production order is

due to 'willfulness, bad faith, or any fault' of the [sanctioned party]." Salahuddin v.

Harris,

(2d Cir. 1986) (quoting Societe Internationale Pour

Participations Industrielles et Commerciales v. Rogers,

(1958)).

5 We consider the following factors in examining whether a district court

properly exercised its discretion in entering a default judgment: "(1) the willfulness of

the non-compliant party or the reason for noncompliance; (2) the efficacy of lesser

sanctions; (3) the duration of the period of noncompliance, and (4) whether the non-

compliant party had been warned of the consequences of noncompliance." Agiwal v.

Mid Island Mortg. Corp.,

(2d Cir. 2009) (alteration and internal

quotation marks omitted).

On April 15, 2016, the district court held a conference with both parties,

set a trial date of September 12, 2016, and entered an order (the "April 15 order")

requiring defendants, including Lajaunie, to produce (1) a class list to plaintiffs by June

1, 2016 and (2) other discovery, including, for example, time records, payroll records,

and dates of employment for all maître d's by June 16, 2016.

On May 31, Kaufman Dolowich & Voluck, LLP ("KDV"), the law firm then

representing defendants, sought to withdraw as counsel, citing defendants' failure to

pay over $100,000 in legal fees. On June 21, 2016, the district court denied KDV's

motion to withdraw. Because Lajaunie had failed to comply with the production

deadlines of June 1 and June 16, the court warned Lajaunie that he would be in danger

of being held in default or otherwise sanctioned if he continued to fail to comply with

the court's orders.

6 By June 27, Lajaunie produced a class list, 2.4 gigabytes of un-redacted tip

sheets spanning the class period, and five boxes of documents. On June 28, Lajaunie

produced an additional five boxes of documents. KDV then wrote a letter to the district

court stating that defendants had advised KDV that "all responsive documents in their

possession have been produced to [p]laintiffs," but that KDV "cannot confirm if

[d]efendants' representation is accurate." App. at 665. The record reveals, however,

that Lajaunie first told KDV that he produced what he "could find" as of June 28 and

that more documents would be forthcoming but later advised that he had "fully

complied with the court's order, as of today." Appellant's Reply Br. at 12. It is also

worth noting that, at this time, the relationship between KDV and Lajaunie was strained

by Lajaunie's failure to pay KDV and KDV's attempt to withdraw as counsel.

On June 29, plaintiffs informed the district court that the documents

produced by defendants were mostly irrelevant or unresponsive. On July 1, KDV wrote

to the district court denying that KDV had facilitated any of defendants' alleged

misconduct and arguing that KDV should not be sanctioned. On or about July 6,

Lajaunie produced twelve more boxes of documents. Notwithstanding the volume of

raw documents produced, the plaintiffs represented that much of the discovery ordered

on April 15 remained outstanding.

On July 14, the Court issued its first order imposing contempt sanctions

on defendants for their failure to comply with the discovery orders. Although it denied

7 plaintiffs' request for a default judgment, the district court warned defendants that it

would likely hold them in default if they did not comply in the following two weeks.

On July 20, KDV renewed its motion to withdraw.

On August 10, 2016, the district court issued a memorandum opinion (1)

ordering defendants to pay a $7,000 sanction for failing to comply with its discovery

orders; (2) granting plaintiffs' motion for reconsideration of the partial summary

judgment order in Lajaunie's favor, finding that there were genuine issues of material

fact regarding Lajaunie's employer status under the NYLL; (3) granting default as to

liability against all defendants on all remaining claims; (4) referring the case to a

Magistrate Judge for a damage inquest; and (5) granting KDV's renewed motion to

withdraw. On August 1, 2019, the district court entered a judgment awarding damages

of $6,091,040.40 to plaintiffs.

Lajaunie contends that the district court abused its discretion in ordering

these sanctions. We agree with respect to the entry of a default judgment against

Lajaunie in the amount of $6,091,040.40. While Lajaunie's failure to comply with his

discovery obligations was not acceptable, it is not apparent from this record that his

noncompliance was willful or the result of bad faith, and a sanction in excess of $6

million was unduly harsh in the circumstances here. Lajaunie produced the class list by

June 27, and the only deadline that Lajaunie had failed to meet at that point was the

June 16 deadline. Therefore, as of August 10, when the district court imposed the

8 sanctions, Lajaunie had been noncompliant for less than two months. While the time

period of noncompliance is not determinative, the short period here weighs against the

issuance of severe sanctions. See Funk v. Belneftekhim,

(2d Cir. 2017) (a

three-month period of noncompliance is "not inordinately long"). Cf. Embuscado v. DC

Comics,

(2d Cir. 2009) (upholding sanction of dismissal where

plaintiff "violated a series of court orders" over period of three months). Further,

Lajaunie faced numerous challenges: the reduction of his administrative staff to one

remaining member, the March 2016 closure of the restaurant that housed many of the

requested documents, and strained relations with his attorneys. Moreover, Lajaunie in

fact produced some documents (although many apparently were non-responsive) and

apparently was making an effort to comply with the district court's orders.

We have previously held that a district court abuses its discretion in

issuing harsh sanctions where lesser efficacious alternatives are available. See Funk, 861

F.3d at 372–73 (stripping defendant of jurisdictional defense was unduly harsh where

district court could have imposed "lesser efficacious sanctions"). While Lajaunie failed

to fully comply with the court's orders, he made several efforts between April 15 and

August 10 to produce documents notwithstanding significant impediments. The

existing record does not establish that Lajaunie's failure to comply for two months was

a result of willfulness or bad faith. See Va. Props., LLC v. T-Mobile Ne. LLC,

(2d Cir. 2017) ("[W]e require a high degree of specificity in the factual findings of

9 lower courts upon which sanctions for bad faith are based." (internal quotation marks

omitted)).

Accordingly, we conclude that the district court abused its discretion in

entering a default judgment against Lajaunie and imposing what amounted to sanctions

of $6,091,040.40.

II. Summary Judgment

In their cross-appeal, plaintiffs challenge the district court's March 22,

2016 order granting in part and denying in part defendants' motion for summary

judgment "to the extent" it dismissed the NYLL claims against Lajaunie, Appellee's Br.

at 55, and additionally appeal the district court's April 14, 2016 denial of the plaintiffs'

first motion for reconsideration. On August 10, 2016, however, the district court

granted plaintiffs' renewed motion for reconsideration and reinstated the NYLL claims

against Lajaunie. Indeed, the district court's final judgment included an award to

plaintiffs for damages under the NYLL. Therefore, plaintiffs' "attack on the denial of

summary judgment has been overtaken by subsequent events," namely, the order

granting plaintiffs' renewed motion for reconsideration and entry of judgment in their

favor on this claim. Pahuta v. Massey-Ferguson, Inc.,

(2d Cir. 1999)

(internal quotation mark and citation omitted). "A party who receives all that he has

sought generally is not aggrieved by the judgment affording relief and cannot appeal

from it." Deposit Guar. Nat. Bank v. Roper,

(1980); see Fort Knox Music

10 Inc. v. Baptiste,

(2d Cir. 2001) (concluding that an appeal is moot when

"[t]he judgment originally challenged . . . has been vacated").

We therefore decline to review the district court's March 22, 2016 order

granting in part and denying in part defendants' motion for summary judgment and the

district court's April 14, 2016 denial of the plaintiffs' motion for reconsideration, and

dismiss the cross-appeal.

* * *

For the foregoing reasons, we VACATE the judgment of the district court,

we DISMISS plaintiffs' cross-appeal, and we REMAND the case for proceedings

consistent with this order.

FOR THE COURT: Catherine O'Hagan Wolfe, Clerk

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