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- 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
A SUMMARY ORDER @ ). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT O N 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 22 nd da y of September , two thousa nd twenty

. PRESENT: GERA R D 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

- Clai mants

- Appellants

.

_____________________________________ For Appellant s : J OSEPH Z ELMANOVITZ , Stahl & Zelmanovitz, New York, NY ; Elliot Ha h n , on the brief , Hahn Eisenberger PLLC, Brooklyn, NY

. For Appellee : J OHN J.P. H OWLEY , 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 G ershon , J udge )

. UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the district court ’ s declaratory judgment and injunction order s 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, Francis3 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 sum mary 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 York

based nursing homes once they immigrate here . Plaintiff

- C ounter

- Defendant

Appellee 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 th e nurse s ’ contracts that would be triggered if a nurse failed to work for Defendants for at least three years. T hat clause, Paguirigan says , was to act as an economic cudgel , designed to coerce nurses into finishing out their
term s 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, ( i i) the liquidated damages provision in the nurses’ contracts was an unenforceable penalty, and ( i ii) the use of that liquidated damages provision violat ed fede ral anti

- trafficking law s . 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 a gainst any class member. Defendants have appealed each of those decisions. In the meantime, the parties have forge d ahead in the district court on the remaining issues, chief among them damages. We assume the parties’ familiarity with the underlying fact s, 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 an5 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,
55 2 (2d Cir. 2010) ( quoting 28 U.S.C. § 1291 )

. As just noted, o ne is for orders granting injunctive relief. 28 U.S.C. § 1292(a)(1)

. Another is supp lied by what i s 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 deci sions.” 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 coul d encourage parties “ to parlay . . . [appealable] collateral orders into multi

- issue interlocutory appeal tickets,” Swint v. Chambers C n ty. Comm’n , 514 U.S. 35, 49

– 50 (1995), its use is reserved for “exceptional circumstances,” Myers , 624 F.3d at 553 ( inte rnal quotation marks omitted ). Such circumstances exist only when the unappealable6 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 5 1

. The parties do not dispute that it is proper for us to exercise pendent appellate jurisdiction over the declaratory judgment, which is clearly “inextricably
inter twined” with the injunction. See Biediger v. Quinnipiac Univ. , 691 F.3d 85, 96 (2d Cir. 2012). But other than that lone issue, n o 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 th e 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 prerequisite7 to deciding the unappealable issue

– pend e nt appellate jurisdiction is reserved for
the reverse case. See Swin t , 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 t here is simply no sound basis for us to take pend e nt jurisdiction over the district court’s interlocutory decision that several of the Defendants violated federal anti

trafficking 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 ar gue that the underpayment claim is related to the trafficking claim. S ince

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, whe ther this case is amenable to class

- wide determination has very little to do with whether the liquidated damages clause i s enforceable as a matter of law

.8 Accordingly, we grant Paguirigan’s motion to dismiss all issues raised on appeal other than Defendant s ’ challenge to the district court’s decision s 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 Lehm an 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 t he 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 liquida ted damages clause cannot act as a penalt y. 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 i s incapable or difficult of precise estimation.” Id. at 425; see also JMD Holding , 49 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 , i t 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 oth er 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
imm igration (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 sho uld she leave unexpectedly. Upon inspection, however, each of th o se10 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 “measur e 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 C ORBIN ON C ONTRACTS § 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 ti me,” 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 provisio n 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 penalt y even setting aside the fact that damages would be easily identifiable at trial.11 acknowledgement tha t $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 cost s, 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
h aving recruited Filipino nurses fo r 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 imag in e that those costs were not easily identifiable in advance . W ith its years of experience12 bringing Filipino nurses into the country, and given the ease of canvasing rental listings , Golden Gate could have estimated the cost of housing Pa guirigan 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 suggest s that this cost was capable of precise estimation

. But even if that were not the case, these housing costs would still not be
gr ounds for declaring the liquidated damages provision enforceable . T he 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 require d 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 th at the liquidated damages provision was necessary to cover the cost of recruiting Paguirigan, which included things like13 office overhead. But by their very nature, these costs had already been incurred by the time the parties signed the contract

– after a ll, 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 cos t 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, n ever actually incurred any recruitment costs for Paguirigan, n or 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 , n ot 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 lit tle to advance the
bal l , 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 amou nt 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 th at 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] recruit ing the E mployee for employment as contemplated herein, [ii] sponsoring the Employee for an Immigrant Visa, [iii] training the E mployee in practice and procedures, and [iv] orienting the Employee to living in the New York area. J. App’x at 1524. And D efe ndants’ 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 the15 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, I nc. , 76 N.Y.2d 912, 91 3

– 1 4 (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’ remain ing arguments and find them
to be without merit. Accordingly , we AFFIRM the district court’s declaratory judgment and injuncti on order s and otherwise DISMISS the appeal.
FOR THE COURT: Catherine O ’ Hagan Wolfe, Clerk of Court