19-3494

Paguirigan v. Prompt Nursing Employment Agency, LLC

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 

ASUMMARY ORDER@). A PARTY CITING TO 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 22nd day of September, two thousand twenty.

PRESENT:

GERARD E. LYNCH,

RICHARD J. SULLIVAN,

MICHAEL H. PARK,

Circuit Judges.

_____________________________________

Rose Paguirigan, individually and on 

behalf of all others similarly situated,

Plaintiff-Counter-Defendant-Appellee,

v. No. 19-3494

Prompt Nursing Employment Agency, 

LLC, DBA Sentosa Services, Sentosacare, 

LLC, Sentosa Nursing Recruitment Agency, 

Benjamin Landa, Bent Philipson, Berish 

Rubenstein, AKA Barry Rubenstein, 
2

Francis Luyun, Golden Gate Rehabilitation 

& Health Care Center LLC, Spring Creek 

Rehabilitation and Nursing Center,

Defendants-Counter-Claimants-Appellants.

_____________________________________

For Appellants: JOSEPH ZELMANOVITZ, Stahl & 

Zelmanovitz, New York, NY; Elliot 

Hahn, on the brief, Hahn Eisenberger 

PLLC, Brooklyn, NY.

For Appellee: JOHN J.P. HOWLEY, The Howley Law 

Firm P.C., New York, NY.

For Amicus Curiae American 

Association of International 

Healthcare Recruitment:

Tracy L. Cole, Baker & Hostetler LLP, 

New York, NY; Caroline M. Landt, 

Baker & Hostetler LLP, Orlando, FL.

Appeal from the United States District Court for the Eastern District of New 

York (Nina Gershon, Judge).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, 

ADJUDGED, AND DECREED that the district court’s declaratory judgment and 

injunction orders are AFFIRMED and that the appeal is otherwise DISMISSED.

Defendants-Counter-Claimants-Appellants Prompt Nursing Employment 

Agency, LLC (“Prompt Nursing”), SentosaCare, LLC, Sentosa Nursing 

Recruitment Agency, Benjamin Landa, Bent Philipson, Berish Rubenstein, Francis 
3

Luyun, Golden Gate Rehabilitation & Health Care Center LLC (“Golden Gate”), 

and Spring Creek Rehabilitation and Nursing Center (“Spring Creek”)

(collectively, “Defendants”) appeal a judgment of the district court (Gershon, J.), 

granting partial summary judgment in favor of the plaintiff class.

Defendants are a collection of companies (and their owners) that both 

recruit Filipino nurses to come to the United States and employ them in New Yorkbased nursing homes once they immigrate here. Plaintiff-Counter-DefendantAppellee Rose Paguirigan was one of those nurses. After starting the visa process 

in 2007, Paguirigan finally began working at Spring Creek nursing home in 

June 2015. But just nine months later, she quit. The following year, Paguirigan 

filed a class action suit against Defendants, alleging that they underpaid their 

nurses and, more troublingly, violated federal human trafficking laws. 

Specifically, she alleged that Defendants inserted an illegal liquidated damages 

clause into each of the nurses’ contracts that would be triggered if a nurse failed 

to work for Defendants for at least three years. That clause, Paguirigan says, was

to act as an economic cudgel, designed to coerce nurses into finishing out their 

terms of employment.
4

In 2018, the district court certified a class of similarly situated nurses and 

appointed Paguirigan’s counsel as class counsel. Then, one year later, the district 

court granted partial summary judgment in favor of that class, determining, 

among other things, that (i) the nurses were paid below their contractually 

guaranteed amount, (ii) the liquidated damages provision in the nurses’ contracts 

was an unenforceable penalty, and (iii) the use of that liquidated damages 

provision violated federal anti-trafficking laws. In addition, the district court 

entered a declaratory judgment that the liquidated damages clause was 

unenforceable and an injunction preventing Defendants from enforcing or 

threatening to enforce the liquidated damages clause against any class member. 

Defendants have appealed each of those decisions. In the meantime, the parties 

have forged ahead in the district court on the remaining issues, chief among them 

damages.

We assume the parties’ familiarity with the underlying facts, procedural 

history, and issues on appeal.

Appellate Jurisdiction

It is undisputed that we have jurisdiction to review the district court’s 

decision concerning the liquidated damages provision, since it resulted in an 
5

injunction. See 28 U.S.C. § 1292(a)(1); Panzella v. Sposato, 863 F.3d 210, 217 (2d Cir. 

2017). But what about the other issues raised by Defendants? After all, this case 

is before us on an interlocutory basis.

Although this Court’s jurisdiction is typically limited to “final decisions” by 

a district court, there are some exceptions. See Myers v. Hertz Corp., 624 F.3d 537, 

552 (2d Cir. 2010) (quoting 28 U.S.C. § 1291). As just noted, one is for orders 

granting injunctive relief. 28 U.S.C. § 1292(a)(1). Another is supplied by what is 

known as pendent appellate jurisdiction.

Under pendent appellate jurisdiction, if a court of appeals has jurisdiction 

over at least one issue, it has discretion “to exercise jurisdiction over other, 

otherwise unappealable interlocutory decisions.” Atlantica Holdings, Inc. v. 

Sovereign Wealth Fund Samruk-Kazyna JSC, 813 F.3d 98, 116–17 (2d Cir. 2016) 

(internal quotation marks omitted). Naturally, though, that discretion is not 

without its limits. Because pendent appellate jurisdiction could encourage 

parties “to parlay . . . [appealable] collateral orders into multi-issue interlocutory 

appeal tickets,” Swint v. Chambers Cnty. Comm’n, 514 U.S. 35, 49–50 (1995), its use 

is reserved for “exceptional circumstances,” Myers, 624 F.3d at 553 (internal 

quotation marks omitted). Such circumstances exist only when the unappealable 
6

issue is either “inextricably intertwined with” or must be decided to “ensure 

meaningful review of” the appealable issue. Freeman v. Complex Computing Co., 

119 F.3d 1044, 1049 (2d Cir. 1997) (internal quotation marks omitted); see also Swint, 

514 U.S. at 51.

The parties do not dispute that it is proper for us to exercise pendent 

appellate jurisdiction over the declaratory judgment, which is clearly “inextricably 

intertwined” with the injunction. See Biediger v. Quinnipiac Univ., 691 F.3d 85, 96 

(2d Cir. 2012). But other than that lone issue, no exceptional circumstances exist 

here that would justify the exercise of pendent appellate jurisdiction.

To start, Paguirigan’s federal trafficking claim is neither inextricably 

intertwined with, nor necessary to decide, the liquidated damages issue. 

Defendants are, of course, correct that the topics are related, since the illegality of 

the liquidated damages provision was the catalyst for the district court’s decision 

that several of the Defendants had violated anti-trafficking laws. A

determination that the liquidated damages provision was in fact lawful, then,

would no doubt have at least some impact on the trafficking claim. But the 

relationship between the two issues is the inverse of what would need to exist for 

us to take pendent jurisdiction. Here, it is the appealable issue that is a prerequisite
7

to deciding the unappealable issue – pendent appellate jurisdiction is reserved for 

the reverse case. See Swint, 514 U.S. at 51. And even then, the parties each offer 

alternative arguments for why we should rule in their favor on the trafficking 

claim regardless of the outcome of the liquidated damages issue. So there is 

simply no sound basis for us to take pendent jurisdiction over the district court’s 

interlocutory decision that several of the Defendants violated federal antitrafficking laws.

Compared to the human trafficking issue, the wage underpayment claim 

and the class certification decision present even weaker cases for pendent 

appellate jurisdiction. As to the former, Defendants do not argue that the 

liquidated damages provision is bound up with the underpayment issue; instead, 

they argue that the underpayment claim is related to the trafficking claim. Since 

we have already decided not to take jurisdiction over that claim, however, 

Defendants’ attempt at jurisdictional bootstrapping fails. And as for the class 

certification issue, whether this case is amenable to class-wide determination has 

very little to do with whether the liquidated damages clause is enforceable as a 

matter of law.
8

Accordingly, we grant Paguirigan’s motion to dismiss all issues raised on 

appeal other than Defendants’ challenge to the district court’s decisions

concerning the liquidated damages provision.

Liquidated Damages Provision

Whether a liquidated damages provision is enforceable “is a question of 

law, giving due consideration to the nature of the contract and the circumstances.” 

JMD Holding Corp. v. Congress Fin. Corp., 4 N.Y.3d 373, 379 (2005). We review such 

questions of law de novo. See Lehman XS Tr., Series 2006-GP2 by U.S. Bank Nat’l 

Ass’n v. GreenPoint Mortg. Funding, Inc., 916 F.3d 116, 123 (2d Cir. 2019).

“[A] liquidated damages provision is an estimate, made by the parties at the 

time they enter into their [contract], of the extent of the injury that would be 

sustained as a result of [a] breach of the agreement.” Truck Rent-A-Ctr., Inc. v. 

Puritan Farms 2nd, Inc., 41 N.Y.2d 420, 424 (1977). While these provisions are 

sometimes enforced by courts, that is not always the case – a liquidated damages 

clause cannot act as a penalty. Consequently, “[a] contractual provision fixing 

damages in the event of breach will be sustained [only] if the amount liquidated 

bears a reasonable proportion to the probable loss and the amount of actual loss is 

incapable or difficult of precise estimation.” Id. at 425; see also JMD Holding, 4 
9

N.Y.3d at 380; U.S. Fid. & Guar. Co. v. Braspetro Oil Servs. Co., 369 F.3d 34, 70–71 (2d 

Cir. 2004). In making this assessment, courts consider the facts as they existed “at 

the time [the parties] enter[ed] into their agreement.” JMD Holding, 4 N.Y.3d

at 380. Moreover, it is the party seeking to invalidate the liquidated damages 

clause that bears the burden of demonstrating that it is unenforceable. See 172 

Van Duzer Realty Corp. v. Globe Alumni Student Assistance Ass’n, Inc., 24 N.Y.3d 528, 

536 (2014).

Defendants argue that although a precise figure was difficult if not 

impossible to estimate ahead of time, the $25,000 liquidated amount was a 

reasonable prediction of the damages that Golden Gate, the contractual 

counterparty, would suffer if Paguirigan (or any of the other nurses in the class)

left her position before her three-year term was up. Defendants point to the 

following expenditures that would be unrecouped in the event of Paguirigan’s 

early departure from the nursing home: (i) costs related to Paguirigan’s 

immigration (including visa fees, travel, and legal fees); (ii) the cost of training 

Paguirigan; (iii) the cost of housing her when she first arrived in the country;

(iv) the costs spent recruiting her; and (v) the cost of replacing her with another 

nurse should she leave unexpectedly. Upon inspection, however, each of those 
10

costs either was capable of precise estimation at the time the contract was executed 

or is (for one reason or another) beyond the scope of the parties’ liquidated 

damages clause.1

First, the immigration costs incurred by Defendants were ascertainable, and 

in fact were already calculated, at the time of contracting. On the very day that 

the parties executed the contract, Golden Gate required Paguirigan to sign an 

1 Some New York courts have indicated that a liquidated damages provision should not be 

enforced if the amount of actual losses is capable of “precise[]” determination at trial. Evangelista 

v. Ward, 764 N.Y.S.2d 705, 706 (2d Dep’t 2003) (internal quotation marks omitted); see also Irving 

Tire Co. v. Stage II Apparel Corp., 646 N.Y.S.2d 528, 530 (2d Dep’t 1996) (holding that “when the 

damages flowing from a breach of a contract are easily ascertainable . . . the stipulated sum will 

be treated as a penalty” (internal quotation marks omitted); LG Cap. Fund. LLC v. CardioGenics 

Holdings, Inc., No. 16-cv-1215 (AMD) (SJB), 2018 WL 1521861, at *8 (E.D.N.Y. Feb. 20, 2018) 

(distinguishing between the ability to predict the precise “quantum” of damages and the 

“measure of actual damages” (emphasis omitted)), adopted by 2018 WL 2057141 (E.D.N.Y. Mar. 8, 

2018), aff’d in part and vacated in part on other grounds, 787 F. App’x 2 (2d Cir. 2019). And indeed, 

that would seem to track the traditional role played by liquidated damages clauses. See 11 

CORBIN ON CONTRACTS § 58.7 (2020) (noting that “a liquidated damages clause is . . . most likely 

to be upheld in cases where actual damages are most difficult to prove”). But that approach is 

somewhat difficult to square with the holding of the New York Court of Appeals in JMD that the 

appropriate assessment is whether damages “were readily ascertainable at the time [the parties] 

entered into their . . . agreement.” 4 N.Y.3d at 380; see also Leasing Serv. Corp. v. Justice, 673 F.2d 

70, 74 (2d Cir. 1982) (upholding a liquidated damages provision because “[t]he value of the 

lessor’s interest in the equipment at the termination of the lease would depend upon the physical 

condition of the equipment and the market conditions at that time,” which “value is incapable of 

precise estimation and may in fact fluctuate radically over time” (internal citation omitted)); 

Wenger Const. Co. v. City of Long Beach, 59 N.Y.S.3d 404, 407 (2d Dep’t 2017) (noting that a valid 

liquidated damages provision controls in the event of a breach even if actual damages are 

determinable and are greater than the liquidated sum). Fortunately, we need not wade into this 

dispute, since it is clear that the parties’ liquidated damages clause is an unenforceable penalty 

even setting aside the fact that damages would be easily identifiable at trial.
11

acknowledgement that $3,685.50 in immigration-related costs were incurred on 

her behalf, consisting of attorney’s fees, filing fees, visa fees, screening fees, airfare, 

and other miscellaneous expenses. Since the parties themselves put a specific 

dollar figure on those costs, it is beyond question that they were identifiable at the 

time the contract was executed.

Second, while Defendants say that the cost of training Paguirigan was not 

knowable ahead of time, the parties’ contract again says otherwise. Section IV(2) 

of the agreement states that Paguirigan would be compensated at $12 per hour for 

the time she spent training – well below her normal hourly rate (which, though a 

topic of dispute in this litigation, was at least $29 per hour). If training costs were 

not possible to accurately predict, how were the parties able to arrive at this 

reduced hourly rate? Surely, Golden Gate determined the appropriate reduction 

in Paguirigan’s pay by calculating how much her training would cost. And 

having recruited Filipino nurses for years, it would be surprising if Golden Gate 

did not know ahead of time what its training expenses would be.

Third, Paguirigan was guaranteed rent-free housing for the first two months 

after her arrival. As with the training costs, it is difficult to imagine that those

costs were not easily identifiable in advance. With its years of experience 
12

bringing Filipino nurses into the country, and given the ease of canvasing rental 

listings, Golden Gate could have estimated the cost of housing Paguirigan for two 

months with a fair degree of accuracy. In fact, Defendants executed a lease on an 

apartment for Paguirigan only weeks after she signed her employment contract. 

While Golden Gate did not have that lease in hand when the parties agreed to the 

liquidated damages provision, the proximity between the execution of the 

employment contract and the lease strongly suggests that this cost was capable of 

precise estimation.

But even if that were not the case, these housing costs would still not be 

grounds for declaring the liquidated damages provision enforceable. The 

potential cost of housing Paguirigan for those two months was unlikely to ever be 

close to $25,000. So unless there were tens of thousands of dollars in other 

damages that also required a liquidated damages provision (and the record before 

us reflects that there were not), then the provision would still be unenforceable as 

grossly disproportionate to possible losses. See U.S. Fid. & Guar., 369 F.3d at 70–

71.

Fourth, Defendants argue that the liquidated damages provision was 

necessary to cover the cost of recruiting Paguirigan, which included things like 
13

office overhead. But by their very nature, these costs had already been incurred 

by the time the parties signed the contract – after all, Defendants no longer had to 

expend funds recruiting Paguirigan once she had signed on the dotted line. As a 

result, it would be eminently reasonable to expect that Golden Gate could have 

reviewed its expenses (averaging them to provide a per-nurse cost if necessary) so 

as to arrive at a figure for the cost they incurred to recruit Paguirigan.

More troubling still is the fact that Golden Gate, the contractual 

counterparty to Paguirigan, never actually incurred any recruitment costs for 

Paguirigan, nor was it obligated to reimburse other entities for such costs. And 

under New York law, a liquidated damages provision must predict potential

damages that could be borne by the contracting party, not other related parties. 

See id. at 73 & n.31; see also Rubin v. Napoli Bern Ripka Shkolnik, LLP, 118 N.Y.S.3d 4,

7 (1st Dep’t 2020). Defendants’ response – that Prompt Nursing did incur such 

costs and was assigned the contract by Golden Gate – does little to advance the 

ball, since Prompt Nursing could only be assigned rights that Golden Gate itself 

possessed under the contract. Cf. Gramatan Home Invs. Corp. v. Lopez, 46 N.Y.2d 

481, 487 (1979).
14

Finally, Defendants argue that the liquidated damages amount was 

reasonable in light of the high cost of replacing nurses should they leave their

position early. According to Defendants, regulations require that there always be 

a certain ratio of nurses to patients, so a sudden departure can result in significant 

expenses. While that may well be true, Defendants’ assertion that those costs fall 

within the scope of the parties’ liquidated damages provision is again contradicted 

by the plain language of the contract.

The agreement lists numerous costs that are encompassed in the liquidated 

damages amount, none of which is the cost to hire a replacement nurse:

[T]he Employer and/or its designee/assignee has or will 

incur substantial expenses and has or will expend 

enormous resources and time in [i] recruiting the 

Employee for employment as contemplated herein, 

[ii] sponsoring the Employee for an Immigrant Visa, 

[iii] training the Employee in practice and procedures, 

and [iv] orienting the Employee to living in the New 

York area. 

J. App’x at 1524. And Defendants’ assertion that this list was not meant to limit 

the universe of covered costs is unavailing. The contract does not suggest that 

this is a non-exhaustive list. It does not, for instance, use the phrase “including” 

or “for example” before reciting these costs. So, because the plain text of the 
15

damages provision is unambiguous, and because liquidated damages clauses are 

construed “strictly,” U.S. Fid. & Guar., 369 F.3d at 71 (citing City of Elmira v. Larry 

Walter, Inc., 76 N.Y.2d 912, 913–14 (1990)), Defendants’ preferred interpretation of 

this list as non-exhaustive is unpersuasive.

In sum, then, we agree with the district court that the liquidated damages 

provision is an unenforceable penalty.

Conclusion

We have considered all of Defendants’ remaining arguments and find them 

to be without merit. Accordingly, we AFFIRM the district court’s declaratory 

judgment and injunction orders and otherwise DISMISS the appeal.

FOR THE COURT: 

Catherine O’Hagan Wolfe, Clerk of Court