12-1845 Chen v. Chan 

## UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT 

# AMENDED SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JA NUARY 1, 2007, IS PE RMITTED AND IS GOVERNE D 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 (W ITH THE NOTATION A SUMMARY 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 2 nd day of July, two thousand fifteen.

PRESENT: PIERRE N. LEVAL, GERARD E. LYNCH, CHRISTOPHER F. DRONEY, Circuit Judges.

_____________________________________ YONG KUI CHEN, on behalf of themselves and others similarly situat ed, GUO REN HUANG, JIAN HUI LIN, Plaintiffs-Appellees , HAO CHEN, on behalf of themselves and others similarly situated, YOU HUANG ZHU, on behalf of themselves and others similarly situated, ZU GUANG ZHU, on behalf of themselves and others similarly situated, SHUI BING ZHU, GUO REN HUANG, Plaintiffs-Counter- Defendants-Appellees , v. No. 12-1845 WAI YIN CHAN, Defendant-CounterClaimant-Appellant ,WAI ? CAFE INC., Defendant-CounterClaimant.

_____________________________________ FOR PLAINTIFF-APPELLEES: Yong Kui Chen, pro se, New York, NY; Guo Ren Huang, pro se , New York, NY; Jian Hui Lin, pro se , New York, NY.

FOR PLAINTIFFS-COUNTERDEFENDANTS-APPELLEES: Hao Chen, pro se , Brooklyn, NY; You Huang Zhu, pro se , Yonkers, NY; Zu Guang Zhu, pro se , New York, NY; Shui Bing Zhu, pro se , New York, NY; Guo Ren Huang, pro se , New York, NY.

FOR DEFENDANT-APPELLANT: BRIAN D. NETTER (Matthew A. Waring, on the brief ), Mayer Brown LLP, Washington, D.C.

Appeal from a judgment of the United States Di strict Court for the Southern District of New York (James C. Francis, IV, M.J. ).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED in part and VACATED in part,

and the case is REMANDED for further proceedings. Appellant Wai Yin Chan appeals from a judgm ent of the district court awarding damages to the plaintiffs on their claims under the New Yo rk Labor Law (“NYLL”). Chan asserts that the district court erred by (1) excl uding evidence of a purported settle ment agreement between Chan and the plaintiffs at trial; (2) relying on the federal minimu m wage instead of the lower corresponding New York wage in calculating da mages for certain periods of the plaintiffs’ employment; (3) failing to incorporate a tip a llowance or meal allowance against the general minimum wage in calculating the plaintiffs’ damage s; and (4) failing to offs et Chan’s liability by payments of $2,000 to each of four plaintiffs who conceded that such payments had been made.3 We assume the parties’ familiarity with the underlyi ng facts, the procedural history of the case, and the issues on appeal. First, we address the scope of our jurisdicti on over this appeal. Rule 3(c)(1)(B) of the Federal Rules of Appellate Proce dure requires an appellan t to “designate the judgment, order, or part thereof being appealed” in hi s notice of appeal. Fed. R. App. P. 3(c)(1)(B). Our jurisdiction over the subsequent proceedings is “limited by the wording of the notice.” New Phone Co. v. City of N.Y., 498 F.3d 127, 130 (2d Cir. 2007). Nevert heless, we have long held that “a notice of appeal filed by a pro se litigant must be viewed liberally.” Grune v. Coughlin, 913 F.2d 41, 43 (2d Cir. 1990). “As long as the pro se party’s notice of appeal evinces an intent to appeal an order or judgment of the district court and appellee has not been prejudiced or mi sled by the notice, the notice’s technical deficiencies will not bar appell ate jurisdiction.” Marmolejo v. United States, 196 F.3d 377, 378 (2d Cir. 1999) (internal quotation marks omitted); see also Phelps v. Kapnolas, 123 F.3d 91, 93 (2d Cir. 1997) (construing pro se notice of appeal of fina l disposition to create jurisdiction over earlier orders). While Chan’s notice of appeal specifies that he appeals from “the Judgment of a damages calcula tion” entered against him, Docket No. 1 at 1, we construe his notice liberally as an appeal from the final judgment that confers jurisdiction over Chan’s challenges to the district court’s evidentiary rulings at trial that are subsumed in that judgment. As to the merits of those arguments, Chan clai ms that the district court violated his due process rights by excluding documen tary evidence and testimony rega rding a purported settlement agreement between Chan and the plaintiffs. Specifi cally, Chan argues that the district court erred by excluding the evidence as a discovery sanc tion, based solely on a representation by the plaintiffs’ counsel that Chan’s former lawyer never produced a copy of the agreement during4 discovery, without providing Chan an opportunity to contact his former attorney to verify that representation. Had Chan been permitted such an opportunity, he argues, he would have been able to establish that his former attorney included a copy of the settlement agreement as part of his Rule 26(a)(1) Initial Disclosures. Although “district courts generally have wide discretion in deciding when sanctions are appropriate . . . , the manner in which sancti ons are imposed must comport with due process requirements.” Sanko S.S. Co. v. Galin, 835 F.2d 51, 53 (2d Cir. 1987). At a minimum, this means “that the delinquent party be provided with notice of the possibility that sanctions will be imposed and with an opportunity to present ev idence or arguments against their imposition.” Satcorp Int’l Grp. v. China Nat’l Silk Imp. & Ex p. Corp., 101 F.3d 3, 6 (2d Cir. 1996) (internal quotation marks omitted); see also Reilly v. Na twest Mkts. Grp. Inc., 181 F.3d 253, 270 (2d Cir. 1999) (requiring notice and opportunity to argue ag ainst imposition of sanctions for failure to produce documents during discovery). In this ca se, even though Chan had been left to proceed

pro se on the eve of trial, insisted that he had pr ovided a copy of the agreement to his former attorney, and requested an opportu nity to call his attorney to check whether the documents had been produced, the district court refused to pause the proceedings to accommodate Chan’s request. It thus prevented him from obt aining potentially compelling evid ence to refute the plaintiffs’ representations. In such circumstances, and taking particular heed of Chan’s unexpected pro se status, the district court’s refusal to allow Chan to contact his former attorney denied Chan a meaningful opportunity to defend himself agai nst the imposition of discovery sanctions. Accordingly, the case must be remanded with instru ctions for the district co urt to conduct a further inquiry into whether Chan produced the contes ted evidence, as part of his Rule 26(a)(1)5 disclosures or otherwise. Should the district court determine that the document was never produced, the original judgment, corrected as set forth below, will be reinstated. Should the court determine that Chan in fact provided the settleme nt agreement to the plaintiffs’ counsel, however, the erroneous exclusion of evidence of that agreem ent from the proceedings below entitles Chan to

a new trial. 1 In addition to his evidentiary challenge, Chan raises numerous objections to the district

court’s calculation of the plaintiffs’ damages. If the district court determines that Chan is entitled to a new trial, these challenges may of course be come moot. Because the district court’s initial judgment might yet be reinstated, however, a nd because our discussion may provide useful guidance for a new damages calculation following a s econd trial, we briefly review his objections. As a general matter, we review a district court’s com putation of compensatory damages for clear error. Jimico Enters., Inc. v. Lehigh Gas Cor p., 708 F.3d 106, 110 (2d Cir. 2013). To the extent that Chan’s objections raise pur e questions of law, including the “measure of damages upon which the factual computation is base d,” we review those claims de novo . Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1029 (2d Cir. 1995) (internal quotation marks omitted).

1 The district court alternately f ound that Chan’s proffered copy of the settlement agreement was inadmissible because it was unsigned. However, th e mere fact that an agreement is unsigned does not make it per se inadmissible. Such a document may be authenticated by other means, see, e.g., United States v. Tin Yat Chin, 371 F.3d 31, 37-38 (2d Ci r. 2004) (observing that Fed. R. Evid. 901 only requires “sufficient proof . . . so that a reasonable juror coul d find in favor of authenticity or identification,” which is not “a pa rticularly high hurdle”) (interna l quotation marks omitted), and may be relevant to demonstrate the existence of an agreement between the parties, see 10 Ellicott Square Court Corp. v. Mountain Valley Inde m. Co., 634 F.3d 112, 124 (2d Cir. 2011) (recognizing that under New York law “[a]n unsigned contract may be enforceable, provided there is objective evidence establishing that the parties intended to be bound”) (internal quotation marks omitted). If the district court grants Chan a new trial, he should have the opportunity to demonstrate the document’s admissibility.6 First, Chan argues that the di strict court erred by calculati ng damages for the plaintiffs’ periods of employment after June 24, 2009 base d on the federal minimum wage of $7.25, rather than New York’s prevailing minimum wage of $7.15. Because New York’s minimum wage rate, like the federal rate, increased to $7.25 on July 24, 2009, see i d. § 137-1.2(e); N.Y. Lab. Law § 652(1) (providing minimum wage of $7.15 for pe riods on and after January 1, 2007, “or, if greater, such other wage as may be established by federal law pursuant to 29 U.S.C. section 206”),

the district court did not err by using the higher amount. Second, Chan argues that the magistrate judge’s damages calculation was erroneous because it relied simply on the minimum wage rate, without giving him a “tip allowance” by crediting the plaintiffs’ tips agai nst the required minimum wage, see N.Y. Comp. Codes R. & Regs. tit. 12, § 137-1.5 (July 24, 2009) (repealed e ff. Jan. 1, 2011), or a “meal allowance” for meals provided to the plaint iffs by his restaurant, see id. § 137-1.9(a). Chan argues that, unlike the federal Fair Labor Standards Act, at the time of the events of this lawsuit the NYLL imposed no notice requirements before lettin g an employer take advantage of either allowance. In fact,

numerous courts in this Circui t have held that New York St ate regulations during this time imposed notice requirements on employers intending to claim a tip allowance. 2 Yet the point is

2 See, e.g., Hicks v. T.L. Cannon Corp., 35 F. Supp. 3d 329, 340-41 (W.D.N.Y. 2014), reconsideration denied, N o. 13-CV-06455, 2014 WL 5088879 (W.D.N .Y. Oct. 8, 2014); He v. Home on 8th Corp., No. 09 Civ. 5630, 2014 WL 3974670, at *1 (S.D.N.Y. Aug. 13, 2014); Cuzco v. F & J Steaks 37th St. LLC, No. 13-CV- 1859, 2014 WL 2210615, at *2 (S.D.N.Y. May 28, 2014); Hernandez v. Punto y Coma Corp., N o. 10-CV-3149, 2013 WL 4875074, at *4 (E.D.N.Y. Sept. 11, 2013); Mendez v. Pizza on Stone, LLC, No. 11 Civ. 6316, 2012 WL 3133547, at *4 (S.D.N.Y. Aug. 1, 2012); Copant itla v. Fiskardo Estiatorio, Inc., 788 F. Supp. 2d 253, 290 (S.D.N.Y. 2011); Lanzetta v. Florio’s Enters., Inc., 763 F. Supp. 2d 615, 623 (S.D.N.Y. 2011), on reconsideration, No. 08 Civ. 6181, 2011 WL 3209521 (S .D.N.Y. July 27, 2011); Jin M. Cao v. Wu Liang Ye Lexington Rest., Inc., No. 08 Ci v. 3725, 2010 WL 4159391, at *2 (S.D.N.Y. Sept. 30, 2010); Padilla v. Manlapaz, 643 F. Supp. 2d 302, 313 (E.D.N.Y. 2009).7 not free from doubt. Other courts have held that, prior to a series of amendments in 2011, New York’s regulations required no such notice as a prer equisite to claiming a tip allowance. See Jin v. Pac. Buffet House, Inc., No. CV-06- 579, 2009 WL 2601995, at *4 (E.D.N.Y. Aug. 24, 2009); Yan v. 520 Asian Rest. Corp., No. 13-CV-2417, 2014 WL 7177259, at *10 (S.D.N.Y. Dec. 17, 2014). Because Chan, proceeding pro se below, did not claim either a tip or a meal allowance before the district court, the di strict court never had a chance to consider his compliance with the procedural prerequisites for claiming those cred its under the New York State regulations. Nor did the district court make the factual findings necessary to resolve the question of Chan’s eligibility for those credits, even assuming that Chan is correct that he is not barred from claiming them by any procedural requirements. Under th ese circumstances, we consider it prudent to

allow the district court to consider Chan’s ar gument in the first instan ce on remand. See Huli v. I.R.S., 872 F.2d 22, 24 (2d Cir. 1989); cf. Tocker v. Philip Morris Cos., 470 F.3d 481, 490 (2d Cir. 2006). If the issue remains contested below, the di strict court will have occasion both to address the merits of Chan’s interpretation of the New Yo rk State regulations and to make any appropriate factual findings. See United States v. Adeniji, 31 F.3d 58, 65 (2d Cir. 1994). Finally, Chan argues that the di strict court should have offset its damages calculation by $8,000 because plaintiffs Zu Guang Zhu, Shui Bing Zhu, You Huang Zhu, and Guo Ren Huang admitted that they each receive d a payment of $2,000 from Chan. The record confirms that the plaintiffs’ counsel admitted those payments duri ng a sidebar and agreed that they should be deducted from Chan’s ultimate liability. In light of this stipulation, the dist rict court’s failure to credit those payments in the damages calculation was error.8 Accordingly, we VACATE the judgment of the district court and REMAND for

determinations as to whether the district court properly excluded Chan’s proposed evidence of a settlement agreement from trial, and as to whet her Chan was entitled to a tip or meal allowance

under the NYLL. Based on the results of district court’s determinations , Chan may be entitled

either to a new trial or to a recalc ulation of damages for all plaintiffs . In any event, if the district

court determines that neither form of relief is warr anted, the district court is directed to recalculate damages for plaintiffs Zu Guang Zhu, Shui Bing Zhu, You Huang Zhu, and Guo Ren Huang.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk