United States District Court, D. Connecticut
STEVEN J. EDELSTEIN
LUCAS BRAND EQUITY, LLC, HYD USA, LLC, and JAY LUCAS CIV.
RULING ON PLAINTIFF'S APPLICATION FOR PREJUDGMENT
REMEDY AND TO DISCLOSE PROPERTY AND ASSETS
GLAZER MARGOLIS UNITED STATES MAGISTRATE JUDGE.
August 9, 2016, plaintiff Steven J. Edelstein, a resident of
Connecticut, commenced this action against New York
defendants Lucas Brand Equity, LLC, HYD USA, LLC
[“HYD”], and Jay Lucas (Dkt. #1), which Complaint
was superseded by an Amended Complaint on September 27, 2016.
(Dkt. #14). In his Amended Complaint, plaintiff alleges that
defendants failed to pay plaintiff in violation of federal
and state wage and hour laws. (Id.). Specifically,
plaintiff, who was employed as the Chief Operating Officer of
defendants Lucas Brand Equity, LLC and HYD, alleges that
defendants improperly characterized plaintiff as an
independent contractor, and in doing so, failed to pay him
wages in violation of the Connecticut Minimum Wage Act
[“CMWA”](Count One); breached the employment
contract defendants had with plaintiff (Count Two); failed to
pay plaintiff in violation of the Fair Labor Standards Act
[“FLSA”](Count Three); failed to pay plaintiff
overtime compensation in violation of the FLSA (Count Four);
and wrongfully terminated plaintiff in violation of the FLSA
(Count Six). (Id.). Plaintiff also seeks declaratory
and injunctive relief against all defendants (Count Five).
(Id.). On October 11, 2016, defendants filed
their Answer and Affirmative Defenses. (Dkt. #16).
December 20, 2016, plaintiff filed the pending Motion for
Prejudgment Remedy and for Disclosure of Assets. (Dkt.
#21). One week later, the pending motion was
referred from Senior United States District Judge Warren W.
Eginton to this Magistrate Judge (Dkt. #22), and a telephonic
scheduling conference was held on January 11, 2017. (Dkts.
hearing on plaintiff's Motion for Prejudgment Remedy and
Motion for Disclosure of Assets was held on February 23, 2017
(Dkt. #37; see Dkts. ##26, 35, 38, 39),
which plaintiff, Steven Edelstein, testified. (Dkt. #38). On
April 6, 2017, plaintiff filed his brief in support (Dkt.
#47),  and on April 20, 2017, defendants filed
their brief in opposition. (Dkt. #50). Six days later,
defendant filed a letter with the Court regarding evidence
related to the prejudgment remedy motion. (Dkt.
#52). On May 4, 2017, plaintiff filed his reply
brief to address defendant's letter. (Dkt. #54).
reasons stated below, plaintiff's Motion for Prejudgment
Remedy and for Disclosure of Property and Assets (Dkt. #21)
is granted in large part in the amount of $140, 000.
was hired as the Chief Operating Officer [“COO”]
of HYD for Men, a portfolio company of Lucas Brand Equity,
LLC on September 1, 2015 for a salary of $120, 000 plus
healthcare benefits and expenses. (Exh. 1). Plaintiff was
offered his position as an employee of both Lucas Brand
Equity, LLC and HYD for Men, LLC, which name changed to HYD
USA, LLC (Exh. 2).
title was initially Chief Executive Officer, but later
changed to COO. (Dkt. #47, Exh. A at 20). He was responsible
for entering into manufacturing agreements with third
parties, for distribution of the products, for vendor
relationships, and for overseeing all development and growth
of the business. (Id. at 22). Plaintiff needed to
obtain approval or authority from members of Lucas Brand
Equity, LLC and specifically from Karen Ballou, a senior
partner and co-CEO of Lucas Brand Equity, LLC (id.
at 15, 24), in order to carry out his job duties and
responsibilities as the COO of HYD. (Id. at 25).
testified that in his position as COO, he worked on average
more than forty hours a week. (Id. at 135-36 (he did
not keep time sheets but his responsibilities warranted
working over forty hours a week; he considered himself a
“professional”)). Plaintiff was paid twice a
month in installments of $5, 000 on the eighth and
twenty-second day of each month. (Id. at 43). At
some point, plaintiff became aware that his income was being
reported as 1099-Miscellaneous income, such that taxes were
not withheld from his pay. (Id. at 46-47). Plaintiff
testified that he was concerned about being paid as a
“1099 employee, ” and he raised his concerns with
Jay Lucas, the Managing Director of Lucas Brand Equity, LLC
(see Exh. 1), Michael Lanzaro, who was responsible
for all accounting for the business, and Karen Ballou. (Dkt.
#47, Exh. A at 12, 46-48). According to plaintiff, Lanzaro
told him that he was being paid as a “1099
employee” because the accounting system “was not
set up properly and they did not have a payroll
service.” (Id. at 47).
testified that he received his compensation checks from both
entities, Lucas Brand Equity, LLC and HYD. (Id. at
14, 35). He testified that worked for HYD for four months,
earning $40, 000 from September to December 2015.
(Id. at 45). Plaintiff's 2015 1099-MISC reflects
payment of $15, 000 from Lucas Brand Equity LP, and payment
of $25, 000 from HYD. (Exh. 4; see also Dkt. #47,
Exh. A at 43). The confirmations of wire payments paid
directly to plaintiff's bank account reflect several
payments from HYD between January 8, 2016 and May 27, 2016,
and then from Lucas Brand Equity LP on June 29, 2016. (Exh.
17). Plaintiff explained that he received late payments in
2015, and the last payment he received was for work at the
end of May 2016. (Exh. 17; see Dkt. #47, Exh. A at
52, 111, 113). Specifically, on April 25, 2016, he received
$750, and over a month later, he received $4, 250. (Exh. 17).
On June 29, 2016, plaintiff was paid $5, 000, which was the
remainder of what he expected to receive in May. (Exh. 17;
see Dkt. #47, Exh. A at 52, 111-13).
to plaintiff, he pressed Karen Ballou, Michael Lanzaro, and
Jay Lucas for his outstanding payments, and was assured that
he would be paid what he was owed. (Dkt. #47, Exh. A at
65-66, 110-11). Specifically, he was told that monies were
being generated and he would be made whole and paid what was
owed. (Id. at 49-51, 116-17). Despite not receiving
another payment after the June 29, 2016 deposit, plaintiff
continued to work. (Id. at 65-66, 114; see
took legal action in August 2016 as a “last
resort” in order to be paid for his services. (Dkt.
#47, Exh. A at 56). On August 9, 2016, when he filed the
initial complaint in this action (Exh. 5), he was still
working, and he continued to have interactions with Ballou
and Lanzaro. (See Exhs. 7-14 (reflecting
plaintiff's business communications with parties)).
Plaintiff brought his claims against Lucas Brand Equity, LLC,
HYD and Jay Lucas. (Exh. 5).
learned from an email dated September 12, 2016 between
Lawrence Piekes, defendants' former counsel, and William
Madsen, plaintiff's counsel, that “[i]t would
behoove [plaintiff] to discontinue the activities he claims
to have been engaged in on HYD's behalf.” (Exh. 6;
see Dkt. #47, Exh. A at 56-57, 59-60, 62-64, 65).
Attorney Piekes' email also contended that defendants
stopped paying plaintiff in May 2016 “due to the fact
that he was not providing the services he was retained to
provide.” (Exh. 6).
testified that he has been unemployed since September 12,
2016 (Dkt. #47, Exh. A at 138), but he does not consider
himself terminated; in his words, he “left the company
[on] September 12th.” (Id. at
148-49). Plaintiff receives unemployment compensation
benefits. (Id. at 105-06). Plaintiff testified that
he was not paid for the period of May 9 through September 12,
2016, and based on his salary of $120, 000, he is owed $45,
000 for that time period. (Id. at 115).
LEGAL STANDARD FOR A PREJUDGMENT REMEDY
prejudgment remedy “is generally intended to secure the
satisfaction of a judgment should plaintiff prevail.”
Cendant Corp. v. Shelton, No. 3:06 CV 854 (JCH),
2007 WL 1245310, at *2 (D. Conn. Apr. 30, 2007)(citation
omitted). Federal Rule of Civil Procedure 64 permits a
plaintiff to utilize the state prejudgment remedies available
to secure a judgment that might ultimately be rendered in an
action. See Granny Goose Foods, Inc. v. Brotherhood of
Teamsters & Auto Truck Drivers Local No. 70 of Alameda
County, 415 U.S. 423, 436, n.10 & 437 (1974);
Dill v. Ron's Golf Car Rental, Inc., No. 12 CV
137 (JBA)(JGM), 2013 WL 275690, at *8 (D. Conn. Jan. 24,
2013). Pursuant to the Connecticut Prejudgment Remedy
statute, Conn. Gen. Stat. § 52-278d(a), the standard for
issuing a prejudgment remedy is probable cause, so that a
prejudgment remedy is appropriate
[i]f the court, upon consideration of the facts before it and
taking into account any defenses, counterclaims or set-offs,
claims of exemption and claims of adequate insurance, finds
that the [movant] has shown probable cause that such a
judgment will be rendered in the matter in the [movant's]
favor in the amount of the prejudgment remedy sought . . .
.Conn. Gen Stat. § 52-278d(a). In the words of United
States District Judge Alvin W.
The legal idea of probable cause is a bona fide belief in the
existence of the facts essential under the law for the action
and such as would warrant a man of ordinary caution, prudence
and judgment, under the circumstances, in entertaining it.
Probable cause is a flexible common sense standard. It does
not demand that a belief be correct or more likely true than
Qualitative Reasoning Sys., Inc. v. Computer Scis.
Corp., No. 3:98 CV 554 (AWT), 2000 WL 852127, at *10 (D.
Conn. Mar. 31, 2000)(internal quotations & multiple
prejudgment remedy proceeding is “only concerned with
whether and to what extent the plaintiff is entitled to have
property of the defendant held in the custody of the law
pending adjudication of the merits of that action.”
Benton v. Simpson, 78 Conn.App. 746, 751-52, 829
A.2d 68, 72-73 (App. Ct. 2003)(citation & internal
quotations omitted). Further, while a prejudgment remedy
hearing “is not contemplated to be a full scale trial
on the merits of the plaintiff's claim[, ]”
Roberts v. TriPlanet Partners, LLC, 950 F.Supp.2d
418, 421 (D. Conn. 2013)(internal quotations & citation
omitted), a plaintiff is “bound to furnish proof of his
damage with reasonable probability, and not leave the trial
court to speculation and conjecture.” Mullai v.
Mullai, 1 Conn.App. 93, 95, 468 A.2d 1240, 1242 (App.
Ct. 1983)(per curiam). After a hearing, the Court
must “consider not only the validity of the
plaintiff's claim but also the amount that is being
sought.” Calfee v. Usman, 224 Conn. 29, 38,
616 A.2d 250, 254 (1992)(citation & internal quotations
omitted). Additionally, the Court must "evaluate not
only the plaintiff's claim but also any defenses raised
by the defendant." Balzer v. Millward, Civ. No.
3:10 CV 1740(SRU)(HBF), 2011 WL 1547211, at *1 (D. Conn. Apr.
21, 2011), quoting Haxhi v. Moss, 25 Conn.App. 16,
20, 591 A.2d 1275, 1277 (1991)(citation omitted). See
also Corey v. Hawes, No. 14 CV 1266 (JAM)(JGM), 2015 WL
5472507, at *7-8 (D. Conn. Sept. 17, 2015)(multiple citations
application for prejudgment relief turns upon whether
plaintiff has shown “probable cause” that a
judgment will enter in his favor. Conn. Gen. Stat. §
52-278(d)(a)(1). “Probable cause” has been
defined by the Connecticut courts as “‘a bona
fide belief in the existence of the facts essential under the
law for the action and such as would warrant a man of
ordinary caution, prudence and judgment, under the
circumstances, in entertaining it.'” Walpole
Woodworkers, Inc. v. Atlas Fencing, Inc., 218 F.Supp.2d
247, 249 (D. Conn. 2002), quoting Three S. Development
Co. v. Santore, 193 Conn. 174, 175, 474 A.2d 795
(1984)(citation omitted). The standard of “probable
cause” is less demanding than the “preponderance
of the evidence” or the “likelihood of
success” standards. Cendant Corp., 2007 WL
1245310 at *3 (citation omitted). Plaintiff need not
“prove its case by a preponderance of the evidence, but
must show that there is probable cause to sustain the
validity of its claim.” Walpole Woodworkers,
218 F.Supp.2d at 249 (citation omitted). "In ordering a
prejudgment remedy or attachment, the court must only find
that 'there is probable cause that a judgment in the
amount of the prejudgment remedy sought, or in an amount
greater . . . will be rendered in the matter in favor of the
plaintiff.'" Metal Mgmt., Inc. v.
Schiavone, 514 F.Supp.2d 227, 237 (D. Conn. 2007),
quoting Conn. Gen. Stat. § 52-278d(a)(1).
post-hearing brief, plaintiff contends that he has
established probable cause with respect to his claim for a
violation of the Connecticut Minimum Wage Act (Count One);
breach of his employment contract (Count Two); and ...