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Amsel v. Gerrard

United States District Court, D. Nevada

April 12, 2017

JONAH AMSEL, Plaintiff,


          GEORGE FOLEY, JR. United States Magistrate Judge.

         This matter is before the Court on Defendant Douglas Gerrard's Motion to Compel (ECF No. 89), tiled on January 16, 2017. Plaintiffs filed their Response (ECF No. 93) on January 30, 2017. Defendant filed his Reply (ECF No. 95) on February 3, 2017. The Court conducted a hearing in this matter on February 15, 2017. Defendant filed his Supplement in support of his Motion to Compel (ECF No. 97) on February 22, 2017. Plaintiffs filed their Supplement in opposition of Defendant's Motion to Compel (ECF No. 102) on March 1, 2017.


         This matter arises from allegations of failure to pay rninimum and overtime wages under the Fair Labor Standards Act ('FLSA"), 29 U.S.C § 201-208, the Nevada Constitution, and Nevada Revised Statute § 608.018. See Amended Complaint (ECF No. 1-1). On February 21, 2017, Plaintiffs withdrew their third and fourth claims for relief under Nevada law and the Court granted dismissal of those claims. See ECF No. 98. Plaintiffs allege that they were employed as promoters, doormen, drivers, and valets. The parties agree that Plaintiffs were independent contractors in the promoter positions and that they received compensation in the form of commission for work performed as promoters. Plaintiffs allege that Defendants failed to pay them rninimum and overtime wages for work performed in the doorman and valet positions. Plaintiffs allege that Defendants failed to pay them any wages and that they received only tips from patrons for work performed as doormen and valets. See Amended Complaint (ECF No. 1-1), pg. 4.

         Defendants argue that Plaintifls worked as independent contractors and, therefore, are not entitled to the protections of the FLSA. See Motion to Compel (ECF No. 89), pg. 5. In the alternative, Defendants argue that if Plaintiffs are considered employees, Defendants are entitled to a tip credit offset pursuant to 29 U.S.C. § 203(m)(2). See Supplement to Motion to Compel (ECF No. 97), pg. 2. Due to a lack of formal record keeping and in order to establish their defenses, Defendants move to compel responses to their Requests for Production Nos. 4-16. See Motion to Compel (ECF No. 89), pg. 4-5. Defendants seek the production of Plaintiffs' financial records including, tax returns, real property deeds, income statements, bankruptcy filings, financial statements, and bank account statements. Id. at pg. 5. Plaintifls argue that their private financial documents are not relevant to the determination of whether they are employees or independent contractors and that Defendants are not entitled to a tip credit offset. See Opposition (ECF No. 93), pg. 15.


         Rule 26 of the Federal Rules of Civil Procedure provides that parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, including consideration of the importance of the discovery in resolving the issues, the parties' relative access to relevant information, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Fed. R Civ. P. 26(b). Information within the scope of discovery need not be admissible in evidence to be discoverable. Id.

         In Roberts v. Clark County School District, 312 F.RD. 594, 601-4 (D. Nev. 2016), the Court discusses the intent of the 2015 amendments to Rule 26(b) and Chief Justice Roberts' 2015 Year-End Report in which he stated:

The 2015 amendments to Rule 26(b)(1) emphasize the need to impose "reasonable limits on discovery through increased reliance on the common-sense concept of proportionality." The fundamental principle of amended Rule 26(b)(1) is "that lawyers must size and shape their discovery requests to the requisites of a case." The pretrial process must provide parties with efficient access to what is needed to prove a claim or defense, but eliminate unnecessary and wasteful discovery. This requires active involvement of federal judges to make decisions regarding the scope of discovery.
Roberts, 312 F.R.D. at 603.

         Rule 26(b)(2)(C)(i) provides that on motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules if it determines that the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive. The starting point with respect to a motion to compel discovery remains the relevance of the requested information. Defendants argue that the requested documents are relevant for three reasons. First, the documents are relevant to establish that Plaintiffs are independent contractors. Second, the documents are relevant to establish that Defendants are entitled to the tip credit offset under the FLSA. Third, the documents are relevant to show credibility.

         A. Independent Contractors

         Tax returns and related documents "do not enjoy an absolute privilege from discovery." A. Farber & Partners, Inc. v. Garber, 234 F.R.D. 186, 191 (CD. CaL 2006) (quoting Premium Serv. Corp. v. Sperry & Hutchinson Co., 511 F.2d 225, 229 (9th Cir. 1975). Nevertheless, "a public policy against unnecessary public disclosure arises from the need, if the tax laws are to function properly, to encourage taxpayers to file complete and accurate returns." Premium Serv. Corp., 511 F.2d at 229. Tax returns may be discovered where the party's income or financial condition is in issue and there is a compelling need because the information sought is not otherwise available to the requesting party. Fosbre v. Las Vegas Sands Corp., 2016 WL 54202, at *5 (D. Nev Jan. 5, 2016); Aliottiv. Vessel SENORA, 217 F.RD. 496, 498 (N.D. CaL 2003). If the requesting party shows the relevance of the producing party's tax returns, then the burden shifts to the producing party to show that other sources exist from which defendants may readily obtain the information. Fosbre, 2016 WL 54202, at *5.

         Here, Defendants have not met their burden of showing the information sought is relevant to their defense that Plaintiffs are independent contractors. Defendants argue that the requested documents are the only way to show that Plaintiffs received payments from third parties, such as customers. To determine whether someone is an employee under the FLSA, courts engage in an economic realities test, which includes the consideration of factors, such as the degree of the alleged employee's right to control the manner in which the work is to be performed, the alleged employee's opportunity for profit and loss, the alleged employee's investment in equipment or materials, and whether the service rendered requires a special skill Real v. Driscoll Strawberry Assocs., Inc.,603 F.2d 748, 754-55 (9th Cir. 1979). Defendants' argument that Plaintiffs' financial documents will show payments from third party customers demonstrating their opportunity for profit and loss and their investment in equipment or materials is not convincing. Plaintiffs' financial condition is not in issue to determine whether they are considered employees under the FLS A. Further, there are alternative, less ...

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