Gulston v. Le Verde Group LLC et al

1
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------------------------------X
BRENDAN GULSTON,
REPORT AND
RECOMMENDATION
24 CV 4155 (EK) (CLP)
Plaintiff,
-against-
LE VERDE GROUP LLC d/b/a Noise NYC
and MANHAL IBRAHIM,
Defendants.
----------------------------------------------------------X
POLLAK, United States Magistrate Judge:
On June 11, 2024, plaintiff Brendan Gulston commenced this action against defendants
Le Verde Group LLC, d/b/a Noise NYC (“Le Verde”) and Manhal Ibrahim, alleging claims
under the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”). (ECF No.
1). On March 20, 2025, plaintiff filed a First Amended Complaint alleging failure to pay
overtime compensation in violation of the FLSA, 29 U.S.C. §§ 216(b) and 255(a) (First Cause of
Action); failure to pay the applicable minimum wage and overtime compensation in violation of
the NYLL and N.Y. Comp. Codes R. & Regs. tit. 12 §§ 142-2.1 and 142-2.2 (Second and Third
Causes of Action); failure to furnish wage notice and wage statements as required by NYLL
§§ 195(1) and (3) (Fourth Cause of Action); and failure to pay spread-of-hours pay as required
by the NYLL (Fifth Cause of Action). (FAC1).
Despite proper service,2 defendants failed to respond to plaintiff’s First Amended
Complaint, and a default was entered by the Clerk of Court on June 16, 2025. (ECF No. 21).
1 Citations to “FAC” refer to the plaintiff’s First Amended Complaint, filed March 20, 2025. (ECF No.
14). 2 According to the Affidavits of Service filed with the Court, defendant Ibrahim was served by personal
service on an individual of suitable age and discretion residing in defendant’s usual place of abode (ECF No. 17),
and Le Verde was served on April 1, 2025, by service upon the New York Secretary of State (ECF No. 18).
Case 1:24-cv-04155-EK-PCG Document 27 Filed 01/03/26 Page 1 of 9 PageID #:
<pageID>

2
Currently pending before this Court is plaintiff’s motion for default judgment filed June 26, 2025
(ECF No. 22), which was referred to the undersigned for a report and recommendation by United
States District Judge Eric R. Komitee (Order, dated July 2, 2025).
FACTUAL BACKGROUND
Plaintiff alleges that he was employed by defendants as a retail worker from around
January 11, 2023 to March 1, 2024. (FAC ¶¶ 4, 12). Defendant Le Verde is a limited liability
company with its principal place of business located at 4612 Fifth Avenue, Brooklyn, N.Y.
11220. (Id. ¶ 5). Defendant Ibrahim is alleged to be an owner or member of Le Verde, who
exercises sufficient control over Le Verde’s day-to-day operations to be considered an employer
under the FLSA and NYLL. (Id. ¶ 8). 	Defendant Ibrahim is also alleged to have the ability to
hire and fire employees, set their pay, and set their work schedules. (Id. ¶¶ 9-11).
According to plaintiff, he generally worked seven days a week from 9:00 a.m. to 9:00
p.m. with no breaks, for a total of 84 hours per week. (Id. ¶ 15). He claims that he was paid
$1,500 per week, and was never provided with a wage notice or wage statement. (Id. ¶¶ 14, 16,
18). Plaintiff alleges that he was never paid one and a half times his regular rate of pay or the
applicable minimum wage for hours worked in excess of 40 in a week. (Id. ¶ 17). When
plaintiff asked for documentation from defendants regarding his wages, defendants retaliated by
terminating plaintiff’s employment. (Id. ¶ 19).
DISCUSSION
I. 	Legal Standard
Rule 55(a) of the Federal Rules of Civil Procedure provides that “[w]hen a party against
whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that
failure is shown by affidavit or otherwise, the clerk must enter the party’s default.” Fed. R. Civ.
P. 55(a). Rule 55 sets forth a two-step process for an entry of default judgment. See Enron Oil
Case 1:24-cv-04155-EK-PCG Document 27 Filed 01/03/26 Page 2 of 9 PageID #:
<pageID>

3
Corp. v. Diakuhara, 10 F.3d 90, 95-96 (2d Cir. 1993). First, the Clerk of Court enters the default
pursuant to Rule 55(a) by notation of the party’s default on the Clerk’s record of the case. Id.
Second, after the Clerk of Court enters a default against a party, if that party fails to appear or
otherwise move to set aside the default pursuant to Rule 55(c), the court may enter a default
judgment. See Fed. R. Civ. P. 55(b).
The Second Circuit has cautioned that since a default judgment is an “extreme sanction,”
it should only be entered as a last resort. See Meehan v. Snow, 652 F.2d 274, 277 (2d Cir.
1981); see also Sheet Metal, Air, Rail & Transp. Workers Loc. Union No. 137 v. Frank Torrone
& Sons, Inc., No. 15 CV 2224, 2018 WL 4771897, at *4 (E.D.N.Y. Oct. 3, 2018), adopting
report and recommendation, 2018 WL 6161655 (E.D.N.Y. Sept. 4, 2018). While the Second
Circuit has recognized the “push on a trial court to dispose of cases that, in disregard of the rules,
are not processed expeditiously [and] . . . delay and clog its calendar,” it has held that the district
court must balance that interest with its responsibility to “afford[] litigants a reasonable chance to
be heard.” Enron Oil Corp. v. Diakuhara, 10 F.3d at 95-96. Thus, considering the “oft-stated
preference for resolving disputes on the merits[,]” default judgments are “generally
disfavored[,]” and doubts should be resolved in favor of the defaulting party. Id. Accordingly,
plaintiffs are not entitled to a default judgment as a matter of right simply because a party is in
default. See Erwin DeMarino Trucking Co. v. Jackson, 838 F. Supp. 160, 162 (S.D.N.Y. 1993)
(noting that courts must “supervise default judgments with extreme care to avoid miscarriages of
justice”).
The Court has significant discretion to consider a number of factors in deciding whether
to grant a default judgment, including: (1) whether the claims were adequately pleaded in the
complaint, thereby placing the defendant on notice, see Fed. R. Civ. P. 54(c) (stating “[a] default
Case 1:24-cv-04155-EK-PCG Document 27 Filed 01/03/26 Page 3 of 9 PageID #:
<pageID>

4
judgment must not differ in kind from, or exceed in amount, what is demanded in the
pleadings”); King v. STL Consulting, LLC, No. 05 CV 2719, 2006 WL 3335115, at *4-5
(E.D.N.Y. Oct. 3, 2006) (holding that Rule 54(c) is not violated in awarding damages that
accrued during the pendency of a litigation, so long as the complaint put the defendant on notice
that the plaintiff may seek such damages); (2) “whether the grounds for default are clearly
established,” Jeremiah v. 5 Towns Jewish Times, Inc., No. 22 CV 5942, 2023 WL 6593997, at
*2 (E.D.N.Y. Aug. 9, 2023) (quoting Hirsch v. Innovation Int’l, Inc., No. 91 CV 4130, 1992 WL
316143, at *2 (S.D.N.Y. Oct. 19, 1992)), report and recommendation adopted, 2023 WL
5703698 (E.D.N.Y. Sept. 5, 2023); and (3) the amount of money potentially involved – “the
more money involved, the less justification for entering the default judgment,” id. Additionally,
“the Court may consider whether material issues of fact remain, whether the facts alleged in the
complaint state a valid cause of action, whether plaintiff has been substantially prejudiced by the
delay involved, and whether the default judgment might have a harsh effect on the defendant.”
Pacific M. Int’l Corp. v. Raman Int’l Gems, Ltd., 888 F. Supp. 2d 385, 393 (S.D.N.Y. 2012)
(internal citations omitted).
The burden is on the plaintiff to establish his entitlement to recovery. See Greyhound
Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992), cert. denied, 506
U.S. 1080 (1993). When a default judgment is entered, the defendant is deemed to have
admitted all well-pleaded allegations in the complaint pertaining to liability, but not as to
damages. Id. Thus, the plaintiff must first establish the defendant’s liability as a matter of law,
for a defaulting defendant is not considered to have admitted to any legal conclusions. Advanced
Capital Commercial Grp., Inc. v. Suarez, No. 09 CV 5558, 2013 WL 5329254, at *3 (E.D.N.Y.
Sept. 20, 2013). It remains the plaintiff’s burden to demonstrate that the uncontroverted facts
Case 1:24-cv-04155-EK-PCG Document 27 Filed 01/03/26 Page 4 of 9 PageID #:
<pageID>

5
establish the defendant’s liability on each cause of action asserted. See Finkel v. Romanowicz,
577 F.3d 79, 84 (2d Cir. 2009). In doing so, however, the Court draws “all reasonable inferences
from the evidence offered” in plaintiff’s favor. Id. (quoting Au Bon Pain Corp. v. Artect, Inc.,
653 F.2d 61, 65 (2d Cir. 1981)).
After demonstrating the defendant’s liability, the plaintiff must also establish his
entitlement to damages to a “reasonable certainty.” Gunawan v. Sushi Sake Rest., 897 F. Supp.
2d 76, 83 (E.D.N.Y. 2012) (quoting Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d
151, 155 (2d Cir. 1999)). While “the court must ensure that there is a basis for the damages
specified in a default judgment, it may, but need not, make the determination through a hearing.”
Fustok v. Conticommodity Servs., Inc., 122 F.R.D. 151, 156 (S.D.N.Y. 1988) (collecting cases),
aff’d, 873 F.2d 38 (2d Cir. 1989). In the context of a default judgment brought for violations of
the FLSA and the NYLL, “the plaintiff’s recollection and estimates of hours worked are
presumed to be correct.” Gunawan v. Sushi Sake Rest., 897 F. Supp. 2d at 83-84.
In this case, while it is beyond dispute that defendants are in default, the Court has
reviewed the allegations in the First Amended Complaint and concludes that the facts alleged in
the complaint are insufficient to state a valid cause of action under the FLSA, and fail to
establish the facts necessary to assert standing under the Wage Theft Prevention Action.
II. 	FLSA Claims
To establish a claim under the FLSA, a plaintiff must prove the following: (1) the
defendant is an enterprise participating in commerce or the production of goods for the purpose
of commerce; (2) the plaintiff is an “employee” within the meaning of the FLSA; and (3) the
employment relationship is not exempted from the FLSA. Edwards v. Community Enters., Inc.,
251 F. Supp. 2d 1089, 1098 (D. Conn. 2003) (citing 29 U.S.C. §§ 206(a), 207(a)); see also Tony
& Susan Alamo Found. v. Secretary of Lab., 471 U.S. 290, 295 (1985).
Case 1:24-cv-04155-EK-PCG Document 27 Filed 01/03/26 Page 5 of 9 PageID #:
<pageID>

6
As to the first requirement, a defendant is an “[e]nterprise engaged in commerce or in the
production of goods for commerce” if the defendant is an enterprise that:
has employees engaged in commerce or in the production of goods
for commerce, or that has employees handling, selling, or
otherwise working on goods or materials that have been moved in
or produced for commerce by any person; and . . . whose annual
gross volume of sales made or business done is not less than
$500,000 . . . .
29 U.S.C. § 203(s)(1)(A).
In the Complaint, plaintiff alleges that the defendants are employers within the meaning
of the FLSA. (FAC ¶¶ 5, 8). Plaintiff further alleges that at all relevant times, the corporate
defendant maintained multiple locations and employed eleven (11) or more employees. (Id. ¶ 7).
However, the only allegation with respect to the annual gross volume of sales or the defendants’
involvement with interstate commerce is paragraph No. 6, which alleges: “Upon information
and belief, S.C. Management has an annual gross volume of sales in excess of $500,000, and
engaged [sic] in interstate commerce.” (Id. ¶ 6 (emphasis added)).
Nowhere else in the First Amended Complaint is there any mention of “S.C.
Management” or what relationship, if any, it has with the named defendants. There is also no
other allegation in the First Amended Complaint that would establish the interstate nexus, which
is a required element of a claim under the FLSA, as to the named defendants. Cf. Fermin v. Las
Delicias Peruanas Rest. Inc., 93 F. Supp. 3d 19, 33 (E.D.N.Y. 2015) (finding a complaint which
simply restated the statutory definition of FLSA enterprise coverage to be sufficient to establish
the interstate nexus because in that case, it was “reasonable to infer that the myriad goods
necessary to operate a . . . restaurant with an eat-in dining area and over $500,000.00 in annual
sales do not exclusively come from New York State”).
Case 1:24-cv-04155-EK-PCG Document 27 Filed 01/03/26 Page 6 of 9 PageID #:
<pageID>

7
In Fermin, the fact that the defendant operated a restaurant was critical to the court’s
decision that it engaged in interstate commerce for FLSA purposes. The restaurant context is
distinguishable from the retail context: whereas Fermin and its progeny have established that
restaurants necessarily engage in interstate commerce, whether or not a retail store engages in
interstate commerce depends on what sorts of goods and products it handles. While it is
extremely unlikely that all of the ingredients and machinery used in a professional kitchen are all
sourced from within New York state, it is conceivable that a retail store might only sell goods
made in the state.
Here, even were the Court to substitute “Le Verde” for “S.C. Management,” the FAC
fails to allege enough facts for the Court to ascertain what sorts of goods or products the
corporate defendant handles and, relatedly, whether the corporate defendant engaged in interstate
commerce. At the inquest hearing, plaintiff stated that the corporate defendant operated a
cannabis dispensary where plaintiff was employed as a retail worker. Given the federal
restrictions on the possession, movement, and sale of cannabis, it is conceivable that defendants’
products were all sourced from within New York state. However, none of these details can be
found in the FAC. While the pleadings may set forth claims under the NYLL, plaintiff’s failure
to allege the interstate nexus raises jurisdictional questions as to whether plaintiff can proceed in
federal court.
Thus, the Court respectfully recommends that the motion for default judgment be denied
and that, in the absence of an amended pleading sufficiently alleging the requisite element of
interstate commerce, the case should be dismissed for lack of subject matter jurisdiction.
III. 	Wage Theft Prevention Act Claims
The Court further notes that there are deficiencies in plaintiff’s pleadings with respect to
the Wage Theft Prevention Act claims – namely, plaintiff has failed to allege facts necessary to
Case 1:24-cv-04155-EK-PCG Document 27 Filed 01/03/26 Page 7 of 9 PageID #:
<pageID>

8
establish standing to bring such claims. The Supreme Court explained in TransUnion LLC v.
Ramirez, that “Congress’s creation of a statutory prohibition or obligation and a cause of action
does not relieve courts of their responsibility to independently decide whether a plaintiff has
suffered a concrete harm under Article III.” 594 U.S. 413, 426 (2021). The Supreme Court
clarified that “[o]nly those plaintiffs who have been concretely harmed by a defendant’s
statutory violation may sue that private defendant over that violation in federal court.” Id. at 427
(emphasis in original). Applying TransUnion to WTPA claims, the Second Circuit in Guthrie v.
Rainbow Fencing Inc. recently declared that in order to bring a claim under Section 195 of the
NYLL, “a plaintiff must show some causal connection between the lack of accurate notices and
the downstream harm.” 113 F.4th 300, 308 (2d Cir. 2024); see, e.g., Roma v. David Carmili,
Physician, P.C., 761 F. Supp. 3d 481, 490 (E.D.N.Y. 2024) (finding standing under the WTPA
where plaintiff alleged defendants’ failure to provide her with accurate wage statements meant
she did not know about and could not correct deductions and discrepancies in her pay until years
later). Thus, after Guthrie, alleging only a statutory violation of the WTPA is insufficient. See,
e.g., Jaramillo v. Latino Regal Corp., No. 19 CV 3104, 2024 WL 4648135 (E.D.N.Y. Sept. 4,
2024).
Here, plaintiff has simply alleged facts demonstrating a statutory violation but has not
alleged any injury-in-fact flowing from that violation. If permitted to file a further amended
pleading, the Court recommends that plaintiff be allowed to amend the factual allegations
relating to the WTPA.
CONCLUSION
As set forth above, the Court respectfully recommends that plaintiff’s motion for default
judgment be denied and that, in the absence of an amended pleading sufficiently alleging the
element of interstate commerce required to state a valid cause of action under the FLSA, the case
Case 1:24-cv-04155-EK-PCG Document 27 Filed 01/03/26 Page 8 of 9 PageID #:
<pageID>

9
should be dismissed for lack of subject matter jurisdiction. Should plaintiff be permitted to file a
further amended pleading, plaintiff should also be allowed to amend the factual allegations
relating to the WTPA to explain how he suffered an injury-in-fact flowing from the statutory
violation.
Any objections to this Report and Recommendation must be filed with the Clerk of the
Court by January 19, 2026. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(2); see also Fed. R.
Civ. P. 6(a), (e) (providing the method for computing time). Failure to file objections within the
specified time waives the right to appeal the district court’s order. See, e.g., Caidor v. Onondaga
Cty., 517 F.3d 601, 604 (2d Cir. 2008) (explaining that “failure to object timely to a . . . report
[and recommendation] operates as a waiver of any further judicial review of the magistrate
[judge’s] decision”).
Plaintiff shall serve a copy of this Report and Recommendation on the defendants and
file proof of such service on the record within one week of the date of this Report.
SO ORDERED.
Dated: Brooklyn, New York
January 3, 2026
/s/ Cheryl L. Pollak
Cheryl L. Pollak
United States Magistrate Judge
Eastern District of New York
Case 1:24-cv-04155-EK-PCG Document 27 Filed 01/03/26 Page 9 of 9 PageID #:
<pageID>