Thomas v Meyers Assoc., L.P.
2013 NY Slip Op 50650(U) [39 Misc 3d 1217(A)]
Decided on April 18, 2013
Supreme Court, New York County
Kornreich, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on April 18, 2013
Supreme Court, New York County

James Thomas, on behalf of himself and all others similarly situated, Plaintiff,


Meyers Associates, L.P. and BRUCE MEYERS, Defendants.


Joseph & Kirschenbaum LLP, for plaintiff and the proposed class.

Schrader & Schoenberg, LLP, for defendants.

Shirley Werner Kornreich, J.

In this putative, employee class action against a broker-dealer in the financial industry, named plaintiff James Thomas, on behalf of himself and all others similarly situated, brings this motion for an order pursuant to CPLR 901 and 902 certifying a class (mot. seq. 003), consisting of:

[A]ll registered representatives possessing entry-level licenses who worked for Defendants in their New York office(s) at any time since June 22, 2005 ("class members" or "stockbrokers").

Defendants broker-dealer Meyers Associates, L.P. ("Meyers") and its owner and managing partner, Bruce Meyers, (together "defendants") oppose.

In this Class Action Complaint (CAC), plaintiff seeks declaratory and equitable relief and monetary damages on behalf of "all individuals who were employed by defendants as a stockbroker within six years before the filing of the [CAC] or such prior date as set by the Court due to the tolling of claims." CAC ¶ 9. Plaintiff alleges that defendants "engaged in a systemic practice of failing to properly compensate stockbrokers" in violation of the New York Labor Law § 650, et seq., by, inter alia, failing to pay overtime, making unlawful deductions from paychecks, failing to pay timely, and failing to pay minimum wage. CAC ¶¶ 10, 15.

In determining the motions, the court has reviewed the pleadings, the parties' memoranda of law, counsel's affirmations and exhibits, affidavits of the named plaintiff and two members of the proposed class, excerpts of deposition transcripts, affidavits of Bruce Meyers, Frank Monte (a Sales Manager for defendants), and of the named plaintiff's employers after termination of his employment with defendants. For the reasons stated below, the motion for class certification is granted.


By order dated November 29, 2011, the court denied defendants' motion to compel arbitration pursuant to the mandatory arbitration rules of the Financial Industry Regulatory Authority (FINRA), finding that the action, "falls within the carveout provided by Rule 10301(d) of FINRA." [FN1] [*2]

The CAC, filed June 22, 2011, includes the following five claims: violation of the NYS Minimum Wage Act, Labor Law 650, et seq, and supporting regulations (12 NYCRR 142-2.1, 142-2.4, 142.2.6); overtime violations of 12 NYCRR 142-2.2, and related minimum wage regulations; wage deductions in violation of Labor Law 193; pay and wage deductions in violation of Labor Law 198-b; and failure to timely pay wages according to the terms of employment, in violation of Labor Law 191. Plaintiff does not seek a statutory penalty of liquidated damages for any of these claims. He asserts that he will include in the Class Notice an explanation that class members may opt out and pursue all statutory remedies on an individual basis. See CPLR 901(b)(bars class action to recover statutory penalty unless statute providing for penalty specifically authorizes class action).

In a joint Answer, defendants deny the allegations and assert sixteen affirmative defenses: failure to state a claim; exemptions; barred by agreements; mandatory arbitration under FINRA; ratification; waiver and estoppel; statute of limitations; lack of individual liability; accord and satisfaction; res judicata; NYS Labor Law not controlling as to some employees; opt out by conduct; preemption; and no ascertainable class, typicality, numerosity, adequacy, superiority, or predominance of common questions.

II.Discussion and Legal Rulings

A.Prerequisites for Class Certification

CPLR 901(a) sets forth the following prerequisites to maintain a class action:

1. the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable;
2. there are questions of law or fact common to the class which predominate over any questions affecting only individual members;
3. the claims or defenses of the representative parties are typical of the claims or defenses of the class;
4. the representative parties will fairly and adequately protect the interests of the class; and
5. a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

These factors should be broadly and liberally construed in favor of granting class certification. Friar v Vanguard Holding Corp., 78 AD2d 83, 91 (1st Dept 1980). Whether the facts presented satisfy the statutory criteria is within the sound discretion of the trial court. Pludeman v Northern Leasing Sys., Inc., 74 AD3d 420, 422 (1st Dept 2010). The court in Pludeman explained:

The proponent of class certification bears the burden of establishing the criteria promulgated by CPLR 901 (a) CLC/CFI Liquidating Trust at 447; Ackerman at 191), and must do so by the tender of evidence in admissible form (Feder v Staten Is. Hosp., 304 AD2d 470, 471, 758 NYS2d 314 [2003]). Conclusory assertions are insufficient to satisfy the statutory criteria (id.; Chimenti v American Express Co., 97 AD2d 351, 352, 467 NYS2d 357 [1983]). [. . .] In determining whether an action should proceed as a class action, it is appropriate to consider whether the claims have merit (Bloom v Cunard Line, 76 AD2d 237, 240, 430 NYS2d 607 [1980]). However this "inquiry is limited" (id.) and such threshold determination is not intended to be a substitute for summary judgment or trial (Kudinov v. Kel-Tech Constr. Inc., 65 AD3d 481, 482, 884 NYS2d 413 [2009]). Class action certification is thus appropriate if on the surface there appears to be a cause of [*3]action which is not a sham (Brandon v Chefetz, 106 AD2d 162, 168, 485 NYS2d 55 [1985]).

Id. (Emphasis included.) The court will first address whether plaintiff has established that the claims he asserts on behalf of himself and of the other class members are facially valid.

B.Facial Validity of Labor Law Claims

1.Employee or Independent Contractor?

Plaintiff commenced this putative class action on behalf of himself and all other similarly situated stockbrokers employed by defendants, to recover damages for violations of Labor Law Article 6, which governs an employer's payment of wages and benefits to employees (see Labor Law § 190 et seq.) "In order to state a claim under Article 6, a plaintiff must first demonstrate that he or she is an employee entitled to its protections" (Bhanti v Brookhaven Mem. Hosp. Med. Ctr., 260 AD2d 334, 335, 687 NYS2d 667 [1995]). Defendants argue that plaintiff and the putative class members are independent contractors and, therefore, exempt from the protections of Article 6.[FN2] . The court finds that plaintiff has made a threshold showing that his claims are not a sham.

The definition of "employee" included in Labor Law 190(2) "excludes independent contractors." Akgul v Prime Time Transp., 293 AD2d 631, 633 (2d Dept 2002); see Bynog v Cipriani Group, 1 NY3d 193, 199 (2003) (discussing proof of employee vs. independent contractor status). The inquiry is fact sensitive and often presents a question for the trier of fact. See Bermudez v. Ruiz, 185 AD2d 212, 213-214 (1st Dept 1992) (summary judgment reversed where relationship issue of fact); Carrion v Orbit Messenger, 192 AD2d 366, 367 (1st Dept), affd 82 NY2d 742 (1993) (summary judgment reversed where relationship issue of fact); see also Sandrino v Michaelson Assocs., LLC, 2012 US Dist LEXIS 165143 (SDNY Nov 19, 2012) (summary judgment denied as to "factually intensive" claim that plaintiff was independent contractor and not employee).

Plaintiff has produced sufficient evidence to raise an issue of fact as to whether he and the class members were employees or independent contractors. "The critical inquiry in determining whether an employment relationship exists pertains to the degree of control exercised by the purported employer over the results produced or the means used to achieve the results . . . Factors relevant to assessing control include whether the worker (1) worked at his own convenience, (2) was free to engage in other employment, (3) received fringe benefits, (4) was on the employer's payroll and (5) was on a fixed schedule." Bynog v Cipriani Group, 1 NY3d 193, 198-199 (2003) (citations omitted.) Under New York law, an employee "'undertakes to achieve an agreed result and to accept the directions of his employer as to the manner in which the result shall be accomplished, [and an independent contractor] agrees to achieve a certain result but is not subject to the orders of the employer as to the means which are to be used.'" Chaiken v VV Publishing Corp., 119 F.3d 1018, 1033 (2d Cir 1997), cert denied, 522 US 1149 (1998), quoting In re Morton, 284 NY 167, 172 (1940).

Here, there is evidence that Meyers' stockbrokers (level 7): were expected to work full-time in the Meyers' office; had their work and trades supervised; were expected to attend meetings and perform continuing education; were provided a telephone, computer and business cards by Meyers; were not permitted to work for other employers without Meyers' written permission; were subject to discipline or termination if they failed to generate sufficient business; were prohibited from using high pressure sales tactics and had their print advertising and e-mails restricted; were on the payroll and worked pursuant to a written agreement; and had their work supervised, and their trades reviewed, processed and approved by Meyers' branch and sales [*4]managers. Affidavits of Thomas, Valois, Fiel, Meyers; depositions of Halpern, Stoneham and Meyers. In addition, plaintiff received W2 tax forms (Ex. BB) identifying him as an employee and withholding taxes for medicare and social security, and Meyers provided health insurance for the brokers to pay into, as well as unemployment insurance. Id.

Meyers' deposition testimony that the stockbrokers who worked for the company had no set hours and were independent contractors is not dispositive and serves to illustrate the parties' dispute on this factual issue. See In re Villa Maria Institute of Music, 54 NY2d 691, 693 (1981) (affirming Board finding of employment status); see also Ansoumana v Gristede's Operating Corp., 255 FSupp2d 184, 190 (SDNY 2003) (finding delivery workers to be employees and employer's characterization as independent contractors not controlling). The evidence is more than sufficient to establish prima facie that an issue of fact exists regarding the employment status of plaintiff and other class members. See In re Claim of Cohen, 112 AD2d 687 (3d Dept), affd on opinion of App Div 67 NY2d 683 (1986) (affirmed finding of employee relationship where all stockbroker sales channeled through employer, advertising approval, desk space, access to telephones, business cards identifying employer, inference of employer expectation re: business generating, instruction sessions and sales guidance).

2.Waiver of Liquidated Damages

Defendants incorrectly argue that class certification should be denied because: (1) CPLR 901(b) prohibits class certification of "an action to recover a penalty"; and (2) Plaintiff may not waive liquidated damages as they are mandatory under Labor Law 198. The correct statement of the rule in New York is that liquidated damages under Labor Law 198 are discretionary and may be waived, and certification of the class is permitted as long as class members are afforded the opportunity to opt out and pursue statutory remedies. See Pesantez v Boyle Envtl. Servs., Inc., 251 AD2d 11, 12 (1st Dept 1998) (as modified on other grounds, affirming class certification), and cases cited; see also Super Glue Corp. v Avis Rent A Car System, 132 AD2d 604, 606 (2d Dept 1987); Klein v Ryan Beck Holdings, Inc., No. 06-CV-3460-WCC, 2007 U.S. Dist. LEXIS 51465 at *14 (SDNY. July 13, 2007) (finding waiver of liquidated damages to be prerequisite to the bringing of class action under applicable provisions of New York Labor Law).

3.Entitlement to Overtime Pay

Defendants argue that plaintiff and the class members are not entitled to overtime pay because: they were paid on commission instead of a fixed salary; and they were exempt from the overtime provisions of the Labor Law. Payment on commission does not preclude an employee from receiving overtime pay. Under the regulations implementing the New York Labor Law, non-exempt employees must be paid at a rate of "not less than one and one-half times the regular rate at which he is employed" for any hours worked in excess of forty hours in a given week. 12 NYCRR 142-2.2 (adopting provisions of Federal Labor Standards Act [FLSA] and implementing New York Labor Law). Overtime pay is required "regardless of . . . whether the wage is on a commission." 12 NYCRR 142-2.9.

Defendants also argue that the evidence proves plaintiff is lying about working overtime. Plaintiff responds that the argument is a premature issue of fact that does not defeat class certification, and that the evidence relied on by defendants should be precluded because it is hearsay and was not timely produced in discovery. The court finds that the admissible evidence submitted by plaintiff is sufficient to establish that the claim is not a sham. Thomas attests in his Affidavit and Reply Affidavit that he regularly worked more than 40 hours per week at Meyers and that brokers typically worked more than nine hours per weekday and sometimes worked on weekends. Other class members attest that most brokers worked ten or more hours on weekdays. Fiel and Valois Affidavits. This evidence is sufficient at this point..

Defendants admit that they did not pay overtime to plaintiff or the putative class members. Meyers Depo. 111:16-19, 114:10-12; Stoneham Depo. 32:22-25; Halpern Depo. 43:5-7. The extent of the overtime worked by plaintiff and other brokers goes to the amount of damages, not class certification. The potential for different individual damages claims is not a valid reason for denying class action status. Lamarca v Great Atl. & Pac. Tea Co., Inc., 16 Misc [*5]3d 1115(A) (NY Sup Ct 2007) (finding defendant's course of conduct in not paying overtime main issue and that individuality of workers' damages does not defeat class certification), affd 55 AD3d 487 (1st Dept 2008); see Broder v MBNA Corp., 281 AD2d 369, 371 (1st Dept 2001) ("particular damages of each individual class member can be easily computed"); see also Globe Surgical Supply v GEICO Ins. Co., 59 AD3d 129 (2d Dept 2008). Assessing the sufficiency of each claimant's proof as to damages must wait until a later date.

Even if the court were to address this issue as one determinative of class certification, defendants' argument would fail. Defendants admit that they did not keep records of the hours worked by plaintiff or other stockbrokers. Where an employer has failed to maintain proper records, wage underpayments may be calculated by reference to the best evidence available, and the burden shifts to the employer to negate the reasonableness of the calculations. Alfaro v Vardaris Tech, Inc., 2009 NY Misc LEXIS 4738 (NY Sup Ct, Mar. 11, 2009), affd and modified on other grounds, 69 AD3d 436 (1st Dept 2010); see Gelco Builders Inc. v Holtzman, 168 AD2d 232 (1st Dept), app den 77 NY2d 810 (1991) (affirming Comptroller's decision awarding employees damages for unpaid wages).

Defendants submitted certain documents reflecting the times and duration of plaintiff's telephone calls from the Meyers office during a period of time less than the total period of his employment and claim these documents show that plaintiff is lying about the extent of his overtime. The parties dispute whether the documents are records of the telephone company or spreadsheets created from those records, but regardless, they show that on some days at least, Thomas made telephone calls from the Meyers offices before 9:00 A.M. and after 5:00 P.M. In addition, proof of overtime would not be limited to proof of the times telephone calls were made (as opposed to received, as well as other work),

Nor have defendants established, as a matter of law, that plaintiff's claims fail under additional exemptions. Overtime pay under New York law is paid subject to exemptions included in section 13(a)(4) of the FLSA. 12 NYCRR 142-3.2. "Because the FLSA is a remedial law, exemptions to the overtime pay requirement are narrowly construed against the employers seeking to assert them and . . . [t]he employer who invokes the exemption bears the burden of establishing that the employee falls within [it]." See Reiseck v Universal Commc'ns of Miami, Inc., 591 F.3d 101, 104 (2d Cir. 2010) (reversing summary judgment for employer city).

Defendants raise three possible exemptions from overtime pay: working as "outside salespersons" [12 NYCRR 142-2.14(c)(5)]; working as a "professional" [12 NYCRR 142-2.14(c)(4)(iii)]; and the "administrative" exemption [12 NYCRR 142-2.14(c)(4)(ii)]. Defendants have not met their burden to show, as a matter of law, that plaintiff comes within any of these exemptions. Plaintiff alleges and has submitted evidence that: brokers worked primarily from Meyer's offices (Thomas Affid., ¶ 8; Halpern Depo, 29-33) and not "predominantly . . . away from the premises," which is required to be an "outside salesperson"; stockbrokers' work does not require advanced knowledge or specialized intellectual instruction and study (Meyers Depo., 57-58; Thomas Affid., ¶ 4), the qualities necessary for the "professional" exemption; and stockbrokers' primary duty is to sell financial products, not to pursue functions that service the business, and they do not receive a guaranteed minimum salary, which excludes them from the "administrative" exemption [29 CFR 541.203(b)]. There were weeks when stockbrokers received no pay for their work, because there were no earned commissions, or the deductions were equal to or greater than the deductions. Reply Exh. 4, Meyers Depo.:99.

4.Timely Pay

Labor Law 191, titled "Frequency of payments", guarantees timely payment of "commissions and all other monies earned or payable in accordance with the agreed terms of employment." Labor Law 191(1)(c). Plaintiff has not submitted credible, admissible evidence that Meyers failed to pay the stockbrokers, as a class, whatever amounts they were due under their employment agreements, within the time frame set by that agreement.

The CAC includes the following allegations in support of the fifth claim for relief, the [*6]failure to pay wages timely in violation of Labor Law 191:

21.Upon information and belief, during the Class Period, Defendants were supposed to pay Plaintiff and the other Class members their earned wages/commission once a month.

22.However, Defendants often did not pay Plaintiff and the other Class

members their earned monthly wages/commissions in the agreed upon monthly

time frame.

The affidavits of Thomas and his co-workers Valois and Fiel are consistent in averring that the stockbrokers received a monthly commission, there were no base salaries, the stockbrokers were not paid overtime pay, and Meyers deducted business costs from their compensation. Thomas also testified at his deposition that he received his commission check every month, whether or not he agreed with the amount. Exh. B:162-163. There is no evidence that payment of the agreed-upon amount was untimely.

The submitted evidence shows that the gravamen of plaintiff's timeliness claim is that because Meyers' deductions and failure to pay overtime and minimum wage were contrary to statute, they should be construed as untimely payment. Thomas illustrates this point in his Reply Memorandum of Law at note 9 in which he explains that his claim for failure to timely pay wages and commissions "is also based upon the fact that Defendants took illegal deductions from stockbrokers earned commissions." Plaintiff cannot bootstrap a timeliness claim onto to a failure to pay claim. The latter is actionable because it is a violation of statutorily required payment, and not of the parties' agreement. Defendants did not agree to pay overtime or minimum wage, then fail to pay either according to an agreed-upon schedule. They simply failed to pay. See Jara v Strong Steel Door, Inc., 20 Misc 3d 1135(A) (Kings Cty Sup Ct.), affd in part, 58 AD3d 600 (2d Dept 2009) ("[T]he gravamen of plaintiffs' complaint is that the sums paid were not equal to what plaintiff claims the brokers were entitled to receive").

5.Illegal Deductions/Kick-Backs

Plaintiff claims that: defendants "routinely made improper deductions from the earned wages/commissions of Plaintiff and the other Class members," in violation of Labor Law 193 and 198-b. CAC, ¶ 48; and deductions for "administrative/operating costs . . . [and] clearing and execution charges . . . did not benefit the Class members and were not authorized by statute . . . [and] were made without the written consent of Plaintiff or, upon information and belief, the other Class Members." ¶¶ 23-25. Thomas has met his burden with respect to the 193 claim but not the 198-b claim. Section 193 provides, in pertinent part,

§ 193. Deductions from wages

[1.] No employer shall make any deduction from the wages of an employee, except deductions which: a. are made in accordance with the provisions of any law or any rule or regulation issued by any governmental agency including regulations promulgated under paragraph c and paragraph d of this subdivision; or b. are expressly authorized in writing by the employee and are for the benefit of the employee . . .. Such authorized deductions shall be limited to payments for: (I) insurance premiums [fig 1] and prepaid legal plans; (ii) pension or health and welfare benefits [fig 1] ; [*7](iii) contributions to a bona fide charitable [fig 1] organization; (iv) purchases made at events sponsored by a bona fide charitable organization affiliated with the employer where at least twenty percent of the profits from such event are being contributed to a bona fide charitable organization; (v) United States bonds [fig 1] ; (vi) dues or assessments to a labor organization [fig 1] ; (vii) discounted parking or discounted passes, tokens, fare cards, vouchers, or other items that entitle the employee to use mass transit; (viii) fitness center, health club, and/or gym membership dues; (ix) cafeteria and vending machine purchases made at the employer's place of business and purchases made at gift shops operated by the employer, where the employer is a hospital, college, or university; (x) pharmacy purchases made at the employer's place of business; (xi) tuition, room, board, and fees for pre-school, nursery, primary, secondary, and/or post-secondary educational institutions; (xii) day care, before-school and after-school care expenses; (xiii) payments for housing provided at no more than market rates by non-profit hospitals or affiliates thereof; and (xiv) similar payments for the benefit of the employee.

Since commissions are deemed to be wages when they are "earned," if the parties' Agreement included a compensation formula treating the commissions as unearned until after the deductions had been taken, then Section 193 would not apply. See Pachter v Bernard Hodes Group, Inc., 10 NY3d 609 (2008) [answer to certified question, 541 F3d 461 (2d Cir 2008)]. The court finds that disputed issues of fact exist as to the compensation formula agreed to by the parties.

Meyers testified at his deposition that he took deductions from "earned commissions." Depo.:99, Reply Exh. 4. Meyers now claims that the Company and its stockbrokers agreed on a compensation formula that reduced commissions by the amount of deductions before the commissions became earned. Thomas does not dispute that he entered into a written agreement with Meyers and they agreed to certain deductions being taken out (ticket charges, registration and express mail fees) before payment of his commission. Thomas Depo.:110-119, Meyers Affid , Exh. B. However, none of the parties has submitted a copy of the written Registered Representative Agreement with a Compensation Schedule (Agreement) that Thomas and Meyers executed. The parties have represented that they cannot locate a copy of the document, and Thomas testified that he does not recall the details. Exh. B: 110. Meyers avers that "[o]f the 210 brokers in the purported class, Meyers has only been able to locate and produce Agreements for 26 brokers thus far." Meyers Affid., ¶ 19, n.6.

Meyers did submit a "typical" Agreement with "brokers like Thomas" (Id.), and the parties do not dispute that all brokers were paid exclusively on commission in lieu of a fixed minimum salary. This "typical" Agreement allowed for deductions, including: "any taxes, withholding payments, license fees, registration fees, ticket charges, bonding fees, or such other expenses, fees or costs payable or chargeable"; and "amounts sufficient to indemnify and reimburse the Company, in whole or in part, against chargebacks, claims, awards, lawsuits, complaints, arbitrations, refunds, or other debits due, or which may become due, from Representative to the Company and the expenses incurred in connection therewith." Exh. EE, § 2. Thomas testified as well that: at some point Meyers started double-charging ticket charges to both the clients and the brokers; Meyers informed the brokers that the clearing agent had changed how commissions would be calculated; and he could not recall receiving anything in writing about the change. Depo.:116-117. [*8]

At this early stage, the court will not resolve the obvious factual disputes as to the policies and practices of the Company, terms of the agreements and their meaning, the actual deductions taken, if the original terms were changed, and if they were, whether the brokers were notified of those changes. See e.g. Summa v Hofstra Univ., 2008 US Dist LEXIS 62591 (EDNY Aug. 14, 2008) ("At the initial assessment stage, before discovery is completed, the court does not resolve factual disputes, decide substantive issues going to the ultimate merits or make credibility determinations").

The claim under Labor Law 198-b is different. Section 198-b(2) provides,

2. Whenever any employee who is engaged to perform labor shall be promised an agreed rate of wages for his or her services, be such promise in writing or oral, or shall be entitled to be paid or provided prevailing wages or supplements pursuant to article eight or nine of this chapter, it shall be unlawful for any person, either for that person or any other person, to request, demand, or receive, either before or after such employee is engaged, a return, donation or contribution of any part or all of said employee's wages, salary, supplements, or other thing of value, upon the statement, representation, or understanding that failure to comply with such request or demand will prevent such employee from procuring or retaining employment.

The evidence establishes that Thomas and other class plaintiffs were not promised an "agreed rate of wages." As Meyers averred, "Thomas had discretion to charge between a low of $50.00 and a high of 5% of the transaction as a commission." Meyers Affid., ¶ 6. Thomas concurs with this representation of their arrangement. Meyers Affid., Exh. B, Thomas Dep.: 139. The parties also agree that when the stockbrokers did not make sales, they did not make any money. The claim under 198-b does not qualify as a class claim.

6.Minimum Wage

Plaintiff makes two claims under Labor Law 650, et seq., and the supporting regulations, including 12 NYCRR 142-2.1, 142-2.4, and 142-2.6: (1) that defendants failed to pay the minimum wage for all hours worked; and (2) when plaintiff and the other class members did not earn commissions, defendants failed to give them a "spread of hours" premium for every day in which they worked more than 10 hours. The parties agree that when the brokers did not succeed in making sales, they did not receive any pay. The issue then is whether the minimum wage provisions of the Labor Law and the regulations implementing those provisions protect employees paid wholly on commission. This appears to be a novel issue under New York State law. The court concludes that it does.

An analogous issue was resolved by the Eastern District of New York in the context of the FSLA. In deciding that commission-only employees are covered under the Federal minimum wage law, the district court in Morangelli v Chemical Corp., 2013 US Dist LEXIS 14873 (EDNY Feb 1, 2013), held: "[I]n order to meet the requirements of [the FLSA's minimum wage provisions], an employee compensated wholly or in part on a commission basis must be paid an amount not less than the statutory minimum wage for all hours worked in each workweek without regard to his sales productivity." The court concludes that the New York Labor Law requires the same result.

Article 6 (§ 190 et seq.) requires the payment of wages for work. Section 190 defines wages as "the earnings of an employee for labor or services rendered, regardless of whether the amount of earnings is determined on a time, piece, commission or other basis." 12 NYCRR 142-2.9 provides that overtime pay is required "regardless of . . whether the wage is on a commission." There is no language in the New York State minimum wage provisions requiring a narrower definition of the word "wage." Article 19 (Minimum Wage Act), Section 652, requires the payment of a specified minimum wage "for each hour worked." 12 NYCRR § 142-[*9]2.4 provides that "[a]n employee shall receive one hour's pay at the basic minimum hourly wage rate, in addition to the minimum wage required in this Part for any day in which: (a) the spread of hours exceeds 10 hours." Plaintiff has met his burden on this claim.

B.CPLR 901(a) Factors


There is no " mechanical test'" to determine whether the numerosity requirement has been met, and "(e)ach case depends upon the particular circumstances surrounding the proposed class." Id. at 96. However, it has been held that "the threshold for impracticability of joinder seems to be around forty." Dornberger v Metropolitan Life Ins. Co., 182 FRD 72, 77 (SDNY 1999); see also Klakis v Nationwide Leisure Corp., 73 AD2d 521, 522 (1st Dept 1979) (class certification properly denied where putative class consisted of only 21 individuals); Galdamez v Biordi Construction Corp., 13 Misc 3d 1224A (Sup Ct, New York County 2006), affd 50 AD3d 357 (1st Dept 2008) (affirming class certification where class consisted of between 30 and 70 former workers); Caesar v Chemical Bank, 118 Misc 2d 118, 119 (Sup Ct, New York County 1983) (certifying class consisting of 39 bank employees), affd 106 AD2d 353 (1st Dept 1984); Pesantez v Boyle Environmental Services, Inc., Index No. 128988/93 (Sup Ct, New York County 1995) (Cahn, J.) (Class of between 44 and 125 construction workers certified), affd 251 AD2d 11 (1st Dept 1998);[FN3] Cannon v Equitable Life Assur. Soc. of U. S., 106 Misc 2d 1060, 1065 (Sup. Ct., Queens County 1980), revd on other gds 87 AD2d 403 (2d Dept 1983) (there has been trend "to regard classes of approximately 30 or less as not being sufficiently numerous, although there are exceptions") (citations and internal quotations omitted).

The CAC estimates that the Class will exceed 50 individuals. ¶ 11. The admissible evidence shows that: forty-five (45) stockbrokers work for Meyers at any one time. Meyers Depo.:55; and with turnover, over 200 stockbrokers have worked for defendants during the class period of August 2004 until July 2009. Palmer Affid., ¶ 3 (averring that defendants produced records for over 200 stockbrokers who worked during class period). Thomas averred that he "consistently worked over forty (40) hours per week," "typically worked at least fifty (50) hours per week," "virtually all - Meyers stockbrokers worked over 40 hours per week," and "[i]t was common for brokers to work on the weekend." Thomas Affid., ¶¶ 20-21; Reply Affid., ¶¶ 16-17. Thomas also testified at his deposition that "more than half the firm," or "20-plus" stockbrokers worked past 6:00 P.M.. Depo.:165. Two other members of the Class, Richard Fiel and Anthony Valois, averred that they "typically worked around sixty (60) hours per week [and] that the other brokers also regularly worked more than forty (40) hours per week." Fiel Affid., ¶¶ 16-17; Valois Affid., ¶¶ 17-18. This evidence is sufficient at this point to establish that at least 40 stockbrokers worked overtime during the class period. The numerosity factor has been met. Defendants' attack on the credibility of Thomas is premature.

2.Common Questions of Law or Fact

"Commonality cannot be determined by any mechanical test' and the fact that questions peculiar to each individual may remain after resolution of the common questions is not fatal to the class action' . . . Rather, it is predominance, not identity or unanimity,' that is the linchpin of commonality." City of New York v. Maul, 14 NY3d 499, 514 (2010), quoting Friar v Vanguard Holding Corp., 78 AD2d 83, 97-98 (2d Dept 1980). The CAC alleges that "[a]ll the Class members were subject to the same corporate practices of Defendants . . . of failing to pay overtime compensation, and illegal retention of wages." ¶ 12. Common questions of law include: (1) whether the class members were employees; (2) whether they were entitled to receive overtime pay or whether they came under the exemptions for outside salespersons, professional or administrative workers; (3) whether commission-only employees are protected under the New York Minimum Wage Law; and (4) whether the class members' agreements established that commissions were earned after deductions were taken. [*10]

Common questions of fact include: (1) the degree of control exercised by Meyers over the results produced by the members of the class or the means used to achieve the results; (2) whether class members worked overtime; (3) the policies, plans and practices of Meyers with respect to payment of wages to stockbrokers; (4) terms in the class members' agreements with Meyers, whether the terms created a compensation formula , whether the compensation formula was changed, and whether the class members were notified; (5) amount, nature and timing of the deductions taken by Meyers from commissions; (6) whether Meyers had, retained and will produce the agreements or payroll records; and (6) whether Meyers paid overtime, minimum wages, a spread-of-hours premium, or a base salary.

Defendants argue that certification should be denied because the number of hours worked by each class member must be assessed on an individual basis and there could be different agreements. The potential for different individual damages claims is not a valid reason for denying class action status. Lamarca v Great Atl. & Pac. Tea Co., Inc., 16 Misc 3d 1115(A) (NY Sup Ct 2007) (finding defendant's course of conduct in not paying overtime main issue, and that individuality of workers' damages does not defeat class certification), affd 55 AD3d 487 (1st Dept 2008); see Broder v MBNA Corp., 281 AD2d 369, 371 (1st Dept 2001). Additionally, the evidence that Meyers had a "typical" agreement with stockbrokers is sufficient at this point. Besides, the heart of the CAC is the claim that Meyers did not pay overtime and classified the brokers as exempt, which Meyers does not dispute. If Meyers can show that some agreements differed as to the compensation formula, then it is likely that the differences would concern the amount of deductions taken, an issue of damages, and not the determination of when a commission was deemed to be earned. Common questions clearly predominate.


Since plaintiff's claims derive from "the same course of conduct as the class members' claims and [are] based on the same cause of action," Pruitt v Rockefeller Ctr. Props., Inc., 167 AD2d 14, 22 (1st Dept 1991), the factor of typicality is satisfied. See Friar v Vanguard holding Corp., 78 AD2d 83, 99 (2d Dept 1980). Plaintiff and the other class members seek to vindicate rights accorded them by statute and regulation, and allegedly violated by uniform policies and practices, including, but not limited to, Meyers' admitted failure to pay overtime. See City of New York v Maul, 14 NY3d 499, 514 (2010) (answering in affirmative certified question whether Appellate Division properly affirmed order certifying class action)

4.Adequacy of Representation

"The factors to be considered in determining adequacy of representation are whether any conflict exists between the representatives and the class members, the representative's familiarity with the lawsuit and his or her financial resources, and the competence and experience of class counsel." Ackerman v PriceWaterhouse, 252 AD2d 159, 202 (1st Dept 1998), quoted by Rebibo v Axton Owners, Inc., 2012 NY Misc LEXIS 4948 (New York Sup Ct, Oct 11, 2012)(certifying class). Here, defendants repeat their unfounded argument that plaintiff is not an adequate representative because he waived liquidated damages in order to pursue the action. See, supra, II.B.2.

Thomas' Affidavit and additional evidence supports the conclusion that he is an adequate representative. He has no known conflicts, is knowledgeable of the facts surrounding the case, is familiar with the lawsuit, and is ready, willing, and able to assist class counsel. Thomas Affid., ¶¶ 2, 26-29. Thomas' qualities of being "hard working" and "intelligent," as his former supervisor at Meyers testified (Stoneham Depo.:33), further support the adequacy of his representation. Defendants' attack on his credibility serves only to raise disputed issues of fact, an insufficient basis to deny class certification.

Counsel for plaintiff and the purported class also is adequate. The lawfirm of Joseph, Herzfeld, Hester & Kirschenbaum LLP specializes in employment law, has handled "a multitude of class/collective actions for unpaid wages," twenty-nine (29) of which are listed in the Affirmation of Michael Palmer, a lawyer associated with the firm. Palmer Aff., ¶¶ 11-12. Palmer further avers that the firm has sufficient resources to prosecute the action. Adequacy is [*11]found.

5.Superiority of Class Action

Lastly, there is no question that a class action is the superior method to pursue this litigation. The alternative of requiring possibly hundreds of individual actions is an ineffective and inefficient method, which could lead to conflicting determinations. According to plaintiffs, given the relatively small size of each claim, as well as fear of retaliation, many members of the class would be reluctant and unable to afford to pursue redress of their claims absent class certification. A class action here furthers the "collateral public benefits" of the class action, "a means of inducing socially and ethically responsible behavior on the part of large and wealthy institutions which will be deterred from carrying out policies or engaging in activities harmful to large numbers of individuals." Friar v Vanguard Holding Corp., supra, 78 AD2d at 94.

C.CPLR 902 Factors

Once the court finds that the prerequisites of CPLR 901 have been satisfied, CPLR 902(a) requires the court to consider, in pertinent part:

1. The interest of members of the class in individually controlling the prosecution or defense of separate actions;

2. The impracticality or inefficiency of prosecuting or defending separate actions;

3. The extent and nature of any litigation concerning the controversy already commenced by or against members of the class;

4. The desirability or undesirability of concentrating the litigation of the claim in the particular forum;

5. The difficulties likely to be encountered by the management of a class action.

All of the above factors favor maintaining the instant litigation as a class action. There have been no allegations that any potential class member has commenced a separate action against defendants for nonpayment of overtime, minimum wages, spread-of-hours premiums, or for improper deductions. This forum is appropriate, as the Meyers firm is located in Manhattan. The discussion above regarding satisfaction of the CPLR 901 prerequisites equally addresses the concerns expressed in CPLR 902(2) and (5). The size alone of the putative class, potentially as large as 200 stockbrokers, demonstrates "the impracticability or inefficiency of prosecuting or defending separate actions." See CPLR 902(2). Accordingly, it is

ORDERED that plaintiff's motion for class certification is granted and leave is granted, pursuant to CPLR 901 and 902, for plaintiff to prosecute their action on behalf of a class consisting of plaintiff and all registered representatives possessing entry-level licenses who worked for defendant Meyers Associates, L.P. and Bruce Meyers in their New York office(s) at any time since June 22, 2005; and it is further

ORDERED that the Fourth and Fifth Claims for Relief in the Class Action Complaint seeking damages for violations of New York Labor Law 191(1)(c) and 198-b are dismissed, except that class members may pursue these claims on an individual basis in the proper forum after exercising their right to "opt out" of the class action; and it is further

ORDERED that, within 30 days of the date of this order, counsel for defendants shall furnish to plaintiff's counsel a list of the names and last known addresses of all registered representatives possessing entry-level licenses who worked for defendants at any time since June 22, 2005, to the present; and it is further

ORDERED that: plaintiffs shall send a notice to all of the individuals identified by defendants, within 60 days of the date of this order; the notice to be provided shall be comprised of the proposed notice submitted by plaintiff with the motion, revised to update the relevant dates, and (1) specifying the specific provisions of the New York Labor Law and the regulations under which the court has allowed the case to proceed as a class action, and (2) specifying that liquidated damages are not sought, the amount such damages constitute, that are awarded only on a finding that the employer's failure to pay was willful and that class members may opt out and pursue these, as well as other, claims; and it is further [*12]

ORDERED that the parties shall appear for a compliance conference on May 14, 2013 at 10:00 A.M. in Room 228 at 60 Centre Street, New York, New York 10007.


Date: April 18, 2013_______________________________New York, NYJ.S.C.


Footnote 1:The FINRA Code explicitly carves out claims brought as a class action as non-arbitrable. See FINRA Rule 13204 and theprior NASD version of the rule, NASD Rule 10301(d).

Footnote 2:Plaintiff counters that defendants waived this argument by failing to include it as an Affirmative Defense. At the argument on the class certification motion, the court granted defendants leave to amend the complaint to add the defense of independent contractor status.

Footnote 3:A copy of the trial court's decision is attached as Exh. 14 to the 10/19/10 Lusher Affirm.