Goldberg v. Jacquet

SUMMARY ORDER Plaintiff Marc Goldberg appeals from the judgment of the United States District Court for the Southern District of New York (Crotty, J.), granting summary judgment in favor of defendant Ernest K. Jac-quet. The plaintiff argues that the district *314 court erred by ruling that his claims are outside the scope of New York Labor Law (“NYLL”) §§ 193 and 198-b. We review a grant of summary judgment de novo. See Delaney v. Bank of Am. Corp., 766 F.3d 163, 167 (2d Cir. 2014). We assume the parties’ familiarity with the underlying facts, the procedural history, and the issues presented for review. 1. Under NYLL § 193(l)(b), “[n]o employer shall make any deduction from the wages of an employee, except deductions which ... are expressly authorized in writing by the employee and are for the benefit of the employee.” In order to state a claim for a violation of NYLL § 193, a plaintiff must allege a specific deduction from wages and not merely a failure to pay wages. See Kletter v. Fleming, 32 A.D.3d 566, 567, 820 N.Y.S.2d 348 (N.Y. App. Div. 3d Dep’t 2006). A “ ‘deduction’ is more targeted and direct than the wholesale withholding” of wages and “New York courts recognize that the purpose of section 193 is to ‘place the risk of loss for such things as damaged or spoiled merchandise on the employer rather than the employee.’ ” Gold v. Am. Med. Alert Corp., 2015 WL 4887525, at *5 (S.D.N.Y. Aug. 17, 2015) (quoting Hudacs v. Frito-Lay, Inc., 90 N.Y.2d 342, 349, 660 N.Y.S.2d 700, 683 N.E.2d 322 (1997)). The district court correctly ruled that although Goldberg did not receive wages to which he was entitled, his wages were not reduced in the manner prohibited by NYLL § 193. 1 2. Goldberg argues that because he was under threat of termination if he refused to accept lower wages, his employer violated NYLL § 198-b(2), which provides that it is “unlawful for any person ... to request, demand, or receive ... a return, donation or contribution of any part or all of [an] employee’s wages [or] salary, ... upon the statement, representation, or understanding that failure to comply with such request or demand will prevent such employee from procuring or retaining employment.” As the district court recognized, this is a novel application of the so-called “kickback” statute because the threatened termination was not coercive in the usual sense; rather, it was a result of the company’s financial trouble. The company’s distress caused the company to ask the management team, including the plaintiff, to accept a pay cut, and they agreed to do so. The company was never able to secure additional funding to pay back its employees, and eventually ceased all business operations. The “threat of termination” was not a threat as such, but instead was the obvious consequence of what would happen if the company folded due to its financial trouble. Under these circumstances, it cannot be expected that the reach of NYLL § 198-b would extend to the conduct at issue. 2 For the foregoing reasons, and finding no merit in the plaintiffs other arguments, we hereby AFFIRM the judgment of the district court. Footnotes [1] Wholesale withholding of wages is covered by NYLL § 191, which the parties agree does not apply to the plaintiff because he was an executive and therefore exempt from this provision. [2] Notably, the defendant was not the plaintiffs employer; rather, the defendant was a majority investor in, and non-executive Chairman of, Passport Brands, Inc., which was the plaintiff's actual employer. The parties do not address whether the economic realities of the defendant’s role at Passport were such that he qualified as the plaintiff's "employer” for NYLL purposes. See, e.g., Bonito v. Avalon Partners, Inc., 106 A.D.3d 625, 626, 967 N.Y.S.2d 19 (N.Y. App. Div. 1st Dep’t 2013).