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Kesley v. Entertainment U.S.A. Inc.

United States District Court, D. Arizona

December 17, 2014

Allyson Kesley, et al., Plaintiffs,
Entertainment U.S.A. Incorporated, et al., Defendants

For Holly Brooke, on Behalf of herself and on Behalf of All Others Similarly Situated, La'shaunta Cooper, on Behalf of herself and on Behalf of All Others Similarly Situated, Plaintiffs: David Wayne Hodges, LEAD ATTORNEY, Don J Foty, Kennedy Hodges LLP, Houston, TX; Michelle Ray Matheson, LEAD ATTORNEY, Matheson & Matheson PLC, Scottsdale, AZ.

For Entertainment U.S.A. of Cleveland Incorporated, doing business as Christie's Cabaret, J.L. Spoons Incorporated, Christie's Cabaret of Glendale LLC, Steve C Cooper, Individually, Defendants: David J Don, LEAD ATTORNEY, Law Offices of David J Don PLLC, Phoenix, AZ; J Michael Murray, LEAD ATTORNEY, Steven D Shafron, Berkman Gordon Murray & DeVan, Cleveland, OH.

For Sunset Entertainment Incorporated, Out West Ventures Incorporated, Giovani Carandola LTD, Defendants: J Michael Murray, LEAD ATTORNEY, Steven D Shafron, Berkman Gordon Murray & DeVan, Cleveland, OH.

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Neil V. Wake, United States District Judge.

Before the Court are Plaintiff's Amended Motion for Conditional Certification and Court-Supervised Notice of Pending Collective Action (Doc. 71), Defendants' Brief in Opposition (Doc. 73) and the Reply (Doc. 84). For the reasons that follow, the Motion will be granted in part and denied in part.

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Plaintiff Allyson Kesley filed this action in May 2014, seeking damages, on behalf of herself and a group of similarly situated exotic dancers, for alleged violations of the Fair Labor Standards Act (" FLSA" ), the Arizona Minimum Wage Act and the Arizona Wage Law. On November 21, 2014, the Court granted Kesley's Motion for Leave to File Second Amended Collective and Class Action Complaint (Doc. 67). In addition to dropping two of the original named Defendants, the Second Amended Complaint (Doc. 74) substitutes Holly Brooke and La'Shaunta Cooper as the class representatives (" Plaintiffs" ). Kesley, as well as Kim Jones and Deyonna Wallace, who filed consent forms in October 2014, are listed as opt-in plaintiffs (" Opt-in Plaintiffs" ).

Plaintiffs seek damages from one individual and six corporate Defendants: (1) Entertainment USA, Inc. of Cleveland d/b/a Christie's Cabaret, " a foreign for-profit corporation doing business in Cleveland, Ohio," (2) J. L. Spoons, Inc., " a foreign forprofit corporation doing business in Brunswick, Ohio," (3) Christie's Cabaret of Glendale, LLC, " a domestic for-profit company doing business in Glendale, Arizona," (4) Sunset Entertainment, Inc. (FN), " a foreign for-profit company doing business in Phoenix, Arizona," (5) Out West Ventures, Inc., " a domestic for-profit company doing business in Guadalupe, Arizona and Tempe, Arizona," (6) Giovani Carandola, Ltd., " a foreign for-profit company doing business in Greensboro, North Carolina," and (7) Steve C. Cooper, " an individual who resides in Tennessee" and " is an owner of the corporate Defendants." Doc. 74 at 4-5. According to the Second Amended Complaint, Defendants operate adult entertainment clubs in Greensboro, North Carolina, three Ohio towns--Brunswick, Canton and Cleveland--and three Arizona cities--Phoenix, Tempe and Glendale--all under the name of " Christie's Cabaret." Id. at 9. Plaintiffs allege, " [u]pon information and belief," that " the Defendants are affiliated corporate entities under common ownership and control and are related organizations through, for example, common membership, governing bodies, trustees, and/or officers and benefit plans." Id. at 5.

Plaintiffs Brooke and Cooper allege they were previously employed as exotic dancers at Defendants' clubs, in Phoenix and Tempe, respectively. Id. at 10; Doc. 71-4 at 1; Doc. 71-5 at 1. Opt-in Plaintiffs also allegedly worked for Defendants as exotic dancers. Doc. 74 at 10. Defendants concede that Jones at one time worked at the Phoenix club, Doc. 73 at 7, where Kesley claims she, too, was formerly employed, Doc. 71-3 at 1. But neither the Second Amended Complaint nor any declarations submitted to the Court make clear where Wallace danced.

The Second Amended Complaint alleges that Plaintiffs had to pay Defendants a " house fee" in order to be allowed to perform on any given shift. Doc. 74 at 10. When they did perform, Plaintiffs allege they received no wages directly from Defendants and instead had to rely exclusively on tips from Defendants' customers. Id. Plaintiffs were allegedly forced to share those tips with " other non-service employees who do not customarily receive tips, including the 'house mom,' disc jockeys, and the bouncers." Id. To enforce this arrangement, Defendants sold customers " Christie's Cabaret Certificates," which patrons could use to purchase dances from Plaintiffs. Id. Plaintiffs would return these certificates to Defendants, who would allegedly remit to Plaintiffs a cash sum less than the full value of the certificates; the cut retained by Defendants " grossly exceed[ed] the fee paid by the club as a merchant fee to the credit card companies." Id. at 10-11. Taken

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together, Plaintiffs allege, these practices pushed their total compensation well below both the federal and state minimum wages. In addition, Plaintiffs were often required to work more than 40 hours in a week but were not compensated at one-and-a-half times their usual salary for those extra hours. Id. at 12. According to Plaintiffs, Defendants justified these alleged willful violations of federal law by classifying Plaintiffs as independent contractors rather than employees. Id.; see also Pfohl v. Farmers Ins. Grp., NO. CV 03-3080 DT (RCx), at *11 (C.D. Cal. Mar. 5, 2004) (" Independent contractors are not covered by the FLSA; that is, there must be an employer-employee relationship for liability to accrue for alleged unpaid overtime." (citation omitted)). Defendants admit in their Answer to the Second Amended Complaint that " dance performers do not receive either regular or time-and- a-half wages, or any other compensation from them," but " deny, in any way, that they have violated the FLSA." Doc. 83 at 9.

Plaintiffs filed the instant Motion on November 4, 2014, seeking certification under the FLSA of a class defined as " [a]ll current and former exotic dancers who worked at any of the seven Christie's Cabarets at any time during the three year period before the granting of this Motion up to the present." Doc. 71 at 4. The putative collective seeks wages and overtime compensation allegedly denied as a result of Defendants' willful FLSA violations. Although Plaintiffs have also alleged violations of Arizona law, they do not at this time seek certification of a Rule 23 class action on those claims. Id. at 3 n.3.


A. Fair Labor Standards Act

" The FLSA provides that a covered employer shall not employ any employee 'for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.'" Wood v. TriVita, Inc., No. CV-08-0765-PHX-SRB, at *3-4 (D. Ariz. Jan. 22, 2009) (quoting 29 U.S.C. § 207(a)(1)). The law also mandates that " [e]very employer shall pay to each of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, wages" that are " not less than" specified statutory rates. 29 U.S.C. § 206(a)(1). " Any employer who violates the provisions of [§ 206 or § 207] shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages." Id. § 216(b). An action to recover these damages " may be maintained against any employer ... in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated." Id. " The FLSA requires class members who are not named in the complaint to affirmatively opt in to the class by filing a written consent with the Court." Wood, at *5 (citing 29 U.S.C. § § 216(b), 256). " The district court has discretion to determine whether a collective action is appropriate." Id. at *6 (citation and internal quotation marks omitted).

" Section 216(b) does not define 'similarly situated,' and the Ninth Circuit has not

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construed the term. Federal district courts have taken at least three approaches to determining whether plaintiffs are 'similarly situated' for purposes of § 216(b): (1) a two-tiered case-by-case approach, (2) the incorporation of the requirements of Rule 23 of the current Federal Rules of Civil Procedure, or (3) the incorporation of the requirements of the pre-1966 version of Rule 23 for 'spurious' class actions. However, district courts within the Ninth Circuit generally follow the two-tiered or two-step approach for making a collective action determination." Colson v. Avnet, Inc., 687 F.Supp.2d 914, 925 (D. Ariz. 2010) (citations and some internal quotation marks omitted).

" Under the two-step approach, the court determines, on an ad hoc case-by-case basis, whether plaintiffs are similarly situated. This requires the court to first make an initial 'notice stage' determination of whether plaintiffs are 'similarly situated.' At this first stage, the court require[s] nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan. If a plaintiff can survive this hurdle, the district court will conditionally certify the proposed class and the lawsuit will proceed to a period of notification, which will permit potential class members to opt-into the lawsuit. Once the notification period ends, the Court moves on to the second step of the certification process. At the second step, in response to a motion to decertify the class filed by a defendant, the court makes yet another determination whether the proposed class members are similarly situated; this time, however, the court utilizes a much stricter standard to scrutinize the nature of the claims." Id. (alteration in original) (citations and internal quotation marks omitted).

" While conditional certification at the first stage is by no means automatic, Plaintiffs' burden is light. All that need be shown by the plaintiff is that some identifiable factual or legal nexus binds together the various claims of the class members in a way that hearing the claims together promotes judicial efficiency and comports with the broad remedial policies underlying the FLSA. Given the light burden, motions to conditionally certify a class for notification purposes are 'typically' granted. To proceed to the notification stage of the litigation, Plaintiffs' allegations need neither be 'strong [n]or conclusive.'" Id. at 925-26 (alteration in original) (citations and some internal quotation marks omitted). " Courts recognize that collective action notification normally occurs before the Parties have had the chance to engage in extensive fact discovery. That is why in making a determination in whether to conditionally certify a proposed class for notification purposes only, courts do not review the underlying merits of the action." Id. at 926 (citations omitted). The court's determination at this first step is " based primarily on the pleadings and any affidavits submitted by the parties." Hutton v. Bank of Am., No. CV 03-2262-PHX-ROS, at *2 (D. Ariz. Mar. 31, 2007) (citations and internal quotation marks omitted).

B. Plaintiffs' Case

Like virtually every other district court in the Ninth Circuit, this Court will apply the two-step approach to FLSA certification. ...

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