Court: District Court, S.D. New York; March 2, 2006; Federal District Court
Magistrate Judge Kevin N. Fox issued three reports recommending that the Court deny defendant Nam-Hi Lee's motions: one to dismiss the action under Fed. R.Civ. P. 60(b) and another to sever Lee from the case. Additionally, he recommended denying plaintiffs' motion for default judgment against the Osaka Defendants for failing to comply with a previous Court Order regarding counsel representation. No party opposed these reports.
The Court reviews Magistrate Judge Fox's recommendations and finds them factually supported and not clearly erroneous. Regarding Lee's motion to dismiss, the Court acknowledges the inapplicability of Rule 60 for this purpose and agrees with Fox’s suggestion to treat it as a motion to dismiss under Fed. R.Civ. P. 12(b)(6) or to convert it into a motion for summary judgment under Rule 56, which Lee may pursue with proper evidentiary support. On Lee's severance request, the Court concurs with Fox's assessment that the requirements for permissive joinder under Rule 20 were satisfied, negating grounds for misjoinder relief under Rule 21. Lastly, the Court adopts the recommendation to deny the requested default judgment against the Osaka Defendants, noting their retention of new counsel mitigates the need for such relief.
The court has adopted in full the Report and Recommendation of Magistrate Judge Kevin Fox concerning motions filed by defendant Nam-Hi Lee to dismiss or sever the case, as well as the plaintiffs' motion for default judgment against Osaka Health Spa, Inc. and Osaka Spa Construction, Inc. All motions are denied. Lee's motion, based on allegations of misconduct by the plaintiffs involving stolen medical records, was deemed inappropriate under Fed. R. Civ. P. 60(b), as no judgment had been entered. The court emphasized that Rule 60(b) is intended for relief from final judgments, and since this case lacks a final ruling, Lee's application under this rule was misapplied. However, the court recognized Lee’s pro se status and construed her motion liberally, suggesting it might be interpreted as a motion to dismiss under Fed. R. Civ. P. 12(b)(6). The plaintiffs argued that if viewed this way, the motion should be converted to a motion for summary judgment under Fed. R. Civ. P. 56.
Plaintiffs argue that Lee's motion to dismiss should be denied because it relies on materials outside the pleadings and does not conform to Local Civil Rule 56.1, which requires a concise statement of undisputed material facts to accompany a motion for summary judgment. Lee failed to submit this statement, and her motion does not address key facts relevant to the plaintiffs' claims regarding minimum wage and overtime violations. Additionally, plaintiffs assert that Lee has not provided admissible evidence to support her motion, as mandated by Fed. R. Civ. P. 56(e).
The plaintiffs contend that it would be inappropriate to reinterpret Lee's motion to dismiss as a motion for summary judgment without prior notice and an opportunity for Lee to present pertinent materials. Other defendants support Lee's motion but suggest it should be viewed as a request for the court to sanction the plaintiffs for allegedly using wrongfully obtained evidence. However, unlike the precedent set in Fayemi v. Hambrecht and Quist, there is currently no evidence that plaintiffs improperly removed documents needed for the defense. Therefore, there is no justification for imposing sanctions against the plaintiffs at this stage of the litigation.
The Court recommends denying Nam-Hi Lee's motion to dismiss under Fed. R. Civ. P. 60. It suggests that if the District Judge adopts the plaintiffs' recommendations, Lee's motion should be interpreted liberally as one under Fed. R. Civ. P. 12(b)(6) and converted to a motion for summary judgment. Lee must be notified of this conversion and allowed to comply with Local Rule 56.1, presenting relevant materials for the court's consideration.
Parties have ten days from the service of this Report to file written objections, which must be submitted to the Clerk of Court and courtesy copies provided to the chambers of both the District Judge and the Magistrate Judge. Failure to file objections within the ten-day period will result in waiving the right to object and preclude appellate review.
Lee contends she should be severed from the case as she is merely a physician and not a principal in any of the business entities named as defendants. She claims her inclusion is intended to intimidate her elderly mother and has harmed her professional reputation due to media contact by the plaintiffs. The plaintiffs oppose the motion, arguing it should be construed as one under Fed. R. Civ. P. 21 regarding party misjoinder, which should be denied based on the relevant factors. They suggest that if the motion is considered as a request for dismissal, it must be converted to a summary judgment motion under Fed. R. Civ. P. 56, as Lee has introduced extrinsic matters without supporting admissible evidence or complying with Local Civil Rule 56.1, which requires a concise statement of undisputed material facts.
Failure to submit a required statement may lead to denial of a motion, as emphasized by the Local Rule. The plaintiffs assert that Lee neglected to provide a memorandum of law in support of her motion to sever, violating Local Civil Rule 7.1, which can result in the dismissal of her motion. The plaintiffs argue for the denial of Lee's request based on these violations. Federal Rule of Civil Procedure (Fed. R.Civ. P.) 20 allows for the joining of defendants in an action if they are connected by the same transaction or occurrence and share common questions of law or fact. Fed. R.Civ. P. 21 permits the addition or dropping of parties at any stage and clarifies that misjoinder does not warrant dismissal. Rule 20(a) establishes a two-prong test for proper joinder: (1) the claims must arise from the same transaction or occurrence, and (2) there must be common legal or factual questions among the parties. The interpretation of these requirements should be liberal to promote judicial efficiency. Courts typically adopt a case-by-case approach to determine what constitutes a "single transaction or occurrence," often referencing Fed. R.Civ. P. 13(a) to define it as encompassing all logically related claims. At this stage, without trial or developed facts, the Court assumes the truth of the plaintiffs' allegations. The plaintiffs claim they suffered injuries due to the defendants' repeated failure to compensate them for their work hours, which the Court finds logically related and originating from the same course of alleged misconduct.
The Court finds that the first requirement of the Federal Rule of Civil Procedure (Fed. R.Civ. P.) 20(a) for permissive joinder of parties is satisfied. For the second requirement, a common question of law or fact among all defendants must exist. The complaint claims that Lee, along with other defendants, is considered the plaintiffs' employer under the Fair Labor Standards Act and New York Labor Law, and that Lee had operational control over two corporate entities employing the plaintiffs. Additionally, it is alleged that Lee had authority regarding hiring, firing, and compensation of the plaintiffs.
The Court accepts these allegations as true for the purposes of analyzing Lee's motion to be severed from the action and concludes that common questions of fact exist, such as whether the defendants were the plaintiffs’ employers and whether they determined compensation. A common question of law also exists regarding the defendants' liability under relevant labor laws. Lee's arguments for severance, asserting she is not a principal of the corporate defendants and that her inclusion is a "ploy," lack substantiation.
Fed. R.Civ. P. 21 allows for the dropping of misjoined parties, but the Court determines that the plaintiffs have met the criteria for joinder under Fed. R.Civ. P. 20(a). Consequently, Lee's motion to be severed is denied. The Court advises that objections to this recommendation must be filed within ten days, with instructions for submission to the Clerk of Court and the relevant judges' chambers.
Failure to file objections within ten days results in a waiver of objections and precludes appellate review. In a case under the Fair Labor Standards Act, plaintiffs seek a default judgment against the Osaka corporate defendants for failing to comply with court orders requiring them to obtain new counsel. The court had previously relieved their prior counsel, mandating that new counsel file a Notice of Appearance and notify all parties. The plaintiffs argue that the Osaka defendants’ repeated noncompliance justifies a default judgment, noting that a corporate entity cannot represent itself pro se. Although the Osaka defendants eventually filed a Notice of Appearance and an untimely opposition, their submission lacked legal authority.
The court acknowledges that while a default judgment is a severe sanction, it prefers cases to be resolved on their merits. Despite the Osaka defendants' failures, their recent engagement of counsel warrants allowing the case to proceed on the merits. Consequently, the court recommends denying the plaintiffs' motion for default judgment. Additionally, parties have ten days from service of the report to file objections; failure to do so will result in waiver of objections and prevent appellate review. Previous objections regarding subpoenas raised by the defendants are not addressed, as they were resolved in a prior pretrial conference.
