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Jones v. Shac LLC

United States District Court, D. Nevada

September 6, 2019

CORISSA JONES, on behalf of herself and on behalf of all others similarly situated, Plaintiff,
v.
SHAC LLC, D/B/A SAPPHIRE GENTLEMEN'S CLUB; SHAC MT. LLC; DAVID MICHAEL TALLA; and PETER FEINSTEIN, Defendants.

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This action is brought pursuant to the Fair Labor Standards Act (“FLSA”) by Plaintiffs, a class of exotic dancers who worked at Sapphire Gentlemen's Club during the class period. Plaintiffs allege that Defendants-Shac, LLC, d/b/a Sapphire Gentlemen's Club; Shac Mt. LLC; David Michael Talla; and Peter Feinstein-misclassified them as independent contractors and therefore violated the FLSA by failing to compensate them for hours worked.

         Before the Court are several motions: Defendants' Motion to Dismiss Opt-In Plaintiffs Pursuant to FRCP 12(b)(1) (ECF No. 92); Plaintiffs' Motion to Compel Deposition of Tami Cowden (ECF No. 156); Plaintiffs' Motion to Compel Against Defendant Shac, LLC (ECF No. 159); Plaintiffs' Motion to File Supplemental and Recently Discovered Evidence (ECF No. 186); Plaintiffs' Motion for Partial Summary Judgment on Liability (ECF No. 189); Plaintiffs' Motion for Partial Summary Judgment on Individual Liability of Defendants Peter Feinstein and David Michael Talla (ECF No. 190); Plaintiffs' Motion for Partial Summary Judgment on Willfulness and Liquidated Damages (ECF No. 191); and Intervenor-Cross Claimants' Motion to Intervene (ECF No. 226).

         II. FACTUAL BACKGROUND

         a. Undisputed Facts

         The Court finds the following facts to be undisputed.

         Plaintiffs were employed as exotic dancers at Defendants' dance club, which advertises and bills itself as “the world's largest strip club.” Defendant Shac Mt. LLC is the 100% member of Defendant Shac, LLC, which operates as the Sapphire Gentlemen's Club. At all relevant times, Defendant Peter Feinstein was the manager of the club and Defendant David Michael Talla was the owner of the club.

         Plaintiffs were classified as independent contractors. Defendants did not provide Plaintiffs with wages or any other compensation.

         Plaintiffs were required to sign in and sign out to work in the club. Plaintiffs paid a house fee, a marketing fee, and a DJ fee for each sign-in. Plaintiffs paid an additional fee if they declined to dance on-stage. Defendants set a minimum price that Plaintiffs were required to charge for dances. Defendants received a 10% cut of any payments made with “dance dollars, ” though Plaintiffs could decline to dance for any customer intending to pay with dance dollars.

         Defendants distributed written rules to a number of Plaintiffs when they first contracted to perform. Defendants posted these rules in the club. The rules have several tips and guidelines regarding dancing and conduct, such as requiring toplessness after the first song, requiring dancing and no standing while on stage, and checking in and out with the DJ. ECF No. 194-6. The rules include appearance-relate prohibitions on oil, body glitter, self-tanning lotion, heels under four inches, and boots. The rules state that shifts are six hours and that dancers may not prepare to leave early without a manger's approval. According to the express language of the document, “adherence to these guidelines is mandatory.” Penalties include fines ranging from $40 to $150 and automatic termination. The rules state that dancers will be automatically terminated for offenses such as failing to clock in or declining to order a drink. Defendant Feinstein, the manager of Sapphire, testified that all dancers were required to read and acknowledge that they would comply with the rules when they first contracted to dance at the club, that the club expects dancers to comply with the rules, and that the club can terminate any dancers who violate the rules. ECF No. 192-1 at 17.

         Defendants invested significantly in the club. Defendants provided financially for marketing, overhead costs, lights, and music. Plaintiffs paid for their costumes, cosmetics, and any travel expenses.

         Defendants did not require Plaintiffs to have prior experience, formal dance training, or references.

         In 2009, a lawsuit was filed against Shac, LLC in Clark County District Court which alleged that Sapphire misclassified its exotic dancers as independent contractors under Nevada wage laws. The Clark County District Court issued an August 18, 2011 decision that the dancers were not employees under Nevada law. On appeal, the Nevada Supreme Court issued a contrary October 30, 2014 decision concluding that the dancers were independent contractors pursuant to state law. Terry v. Sapphire Gentlemen's Club, 336 P.3d 951 (Nev. 2014). The Nevada Supreme Court remanded the matter to state court for further proceedings, and a settlement between the parties was finalized on July 6, 2016. Defendants did not alter the independent contractor classification of dancers at any time during or following the Terry litigation.

         a. Disputed Facts

         The Court finds that the parties dispute whether the rules promulgated by the club were in fact enforced. Plaintiffs allege that they were closely monitored at work and that the written rules were enforced. Defendants characterize the rules as “attention getting - but empty threats.” ECF No. 215 at 14. They allege that the six-hour rule in particular is “illusory” and provide evidence of several Plaintiffs working shifts under six hours. Id. at 10, 20, 24. They further allege that no dancer has ever been automatically terminated for a rule violation.

         III. PROCEDURAL BACKGROUND

         Plaintiff filed the Complaint on July 21, 2015, alleging (1) failure to pay overtime wages in violation of the FLSA and (2) failure to pay minimum wage in violation of the FLSA. ECF No. 1. Defendants filed an Answer with five counterclaims on October 5, 2015. ECF No. 20. The Court dismissed these five counterclaims at a hearing on February 8, 2018. ECF No. 85.

         On November 25, 2015, the Court granting a stipulation staying the case pending settlement proceedings. ECF No. 30. On January 27, 2017, the Court granted a stipulation and order conditionally certifying the case as a FLSA class action and agreeing on the notice to be sent to class members. ECF No. 49. The parties also agreed to stay the case during the notice period, lasting 60 days from the commencement of mailing of the notices, and for an additional 60 days after the close of the notice period. Id. From April 2017 to June 2017, opt-in Plaintiffs filed a number of notices of consent to join the class.

         On June 11, 2018, Defendants filed three motions to dismiss: Motion to Dismiss Opt-In Plaintiffs Pursuant to Rule 12(b)(1) (ECF No. 92); Motion to Dismiss 110 Opt-In Plaintiffs and All Claims Pre-October 31, 2014 as Barred by Res Judicata (ECF No. 93); Motion to Dismiss Opt-In Plaintiffs' Claim for Fees and Fines (ECF No. 94). These motions were fully briefed by July 22, 2018. ECF Nos. 100, 101, 104, 105, 111, 112, 113.

         Discovery closed on October 30, 2018, though several discovery-related motions remained pending. ECF No. 147.

         The Court held a hearing on November 5, 2018. ECF No. 167. The Court denied the Motion to Dismiss 110 Opt-In Plaintiffs and All Claims Pre-October 31, 2014 as Barred by Res Judicata (ECF No. 93) and the Motion to Dismiss Opt-In Plaintiffs' Claim for Fees and Fines (ECF No. 94) without prejudice. The Court took the remaining Motion to Dismiss (ECF No. 92) under submission. The Court handled certain outstanding discovery motions (ECF Nos. 118, 132, 150, 152, 153), permitted three additional depositions, and stayed further discovery. The Court also unreferred, but did not decide, two motions to compel (ECF No. 156, 159).

         On January 10, 2019, Plaintiffs filed the instant Motion for Leave to File Supplemental and Recently Discovered Evidence in Relation to Defendants' Motion to Dismiss Opt-In Plaintiffs Pursuant to FRCP 12(b)(1). ECF No. 186. Defendants responded on January 24, 2019 and Plaintiffs replied on January 31, 2019. ECF Nos. 187, 188.

         On February 4, 2019, Plaintiffs filed the instant three motions for partial summary judgment: Plaintiffs' Motion for Partial Summary Judgment on Liability (ECF No. 189); Plaintiffs' Motion for Partial Summary Judgment on Individual Liability of Defendants Peter Feinstein and David Michael Talla (ECF No. 190); and Plaintiffs' Motion for Partial Summary Judgment on Willfulness and Liquidated Damages (ECF No. 191). These motions were fully briefed by April 26, 2019. ECF Nos. 204, 205, 215, 220, 221, 224.

         Ashley Amos, Jamie Asher, Samantha Baraldi, Nicole Beckwith, Samantha Christian, Oana E. Ciolacu, Cara DeBona, Amphayvon Dythavon, Susana Faas, Tiffany Francis, Linsey Gile, Unique Hairston, Markie Henderson, Sarah Henscheid, Samantha Hopkins, Jenny Knaus, Rinrada Lishnoff, Erika Luevano, Arza Mubarispur, Allison Morton, Tasha Pablo, Kamila Persse, Brandy Pisano, Leslie Scott, Brenna Sharp, Kayla Szabo, Cara Thornberry, Irina Tugui, Bonnie Turechek, and Adrienne Zager (“Intervenors”) filed the instant Motion to Intervene on May 7, 2019. ECF No. 226. Plaintiffs responded on May 21, 2019 and Intervenors replied on May 31, 2019. ECF Nos. 230, 234.

         On July 31, 2019, the Court held a hearing on all pending motions and took the motions under submission. ECF No. 238.

         IV.LEGAL STANDARD

         a. Motion to Dismiss (Mandatory Arbitration)

         “If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.” Fed.R.Civ.P. 12(h)(3). The Court lacks subject matter jurisdiction to determine matters subject to mandatory arbitration. See Ass'n of Flight Attendants, AFL-CIO v. Horizon Air Indus., Inc., 280 F.3d 901, 903 (9th Cir. 2002).

         Under previously binding Ninth Circuit case law, compelled arbitration of employees' concerted legal claims regarding wages, hours, and terms and conditions of employment was not enforceable. Morris v. Ernst & Young, LLP, 834 F.3d 975, 979 (9th Cir. 2016). However, the governing interpretation of the law changed on May 21, 2018, when the Supreme Court held that federal courts must “enforce arbitration agreements according to their terms-including terms providing for individualized proceedings” in wage and hour actions. Epic Systems Corp. v. Lewis, 138 S.Ct. 1612, 1619 (2018).

         b. Motions for Summary Judgment

         Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); accord Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When considering the propriety of summary judgment, the court views all facts and draws all inferences in the light most favorable to the nonmoving party. Gonzalez v. City of Anaheim, 747 F.3d 789, 793 (9th Cir. 2014). If the movant has carried its burden, the non-moving party “must do more than simply show that there is some metaphysical doubt as to the material facts. . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Scott v. Harris, 550 U.S. 372, 380 (2007) (citation and internal quotation marks omitted) (alteration in original).

         c. Motions to Compel

         Pursuant to Rule 37 of the Federal Rules of Civil Procedure, “[o]n notice to other parties and all affected persons, a party may move for an order compelling disclosure or discovery. The motion must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action.” Fed.R.Civ.P. 37(a)(1). In relevant part, the rule permits a party to seek an order to compelling production of documents or compelling attendance at a deposition. Sali v. Corona Reg'l Med. Ctr., 884 F.3d 1218, 1222 (9th Cir. 2018)

         d. ...


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