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Bally v. Dreams Cabaret, LLC

United States District Court, W.D. Texas, El Paso Division

January 18, 2018

ALYSSA BALLY and COURTNEY MAHARAJ, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
DREAMS CABARET, LLC et al., Defendants.

          MEMORANDUM OPINION

          DAVID BRIONES SENIOR UNITED STATES DISTRICT JUDGE.

         On this day, the Court considered Plaintiffs Alyssa Bally and Courtney Maharaj's, on behalf of themselves and all others similarly situated, (collectively, "Plaintiffs") "Motion for Partial Summary Judgment Regarding Liability" ("Motion"), filed in the above-captioned case on October 27, 2017. Therein, Plaintiffs ask the Court to grant partial summary judgment in their favor regarding liability against Defendants Jose Fong, Dreams Cabaret, LLC, Fion Sunrise, LLC, and Fong Sunrise, LLC (collectively, "Defendants"). On November 13, 2017, Defendants filed their "Response to Plaintiffs' Motion for Partial Summary Judgment Regarding Liability" ("Response"). On November 17, 2017, Plaintiffs filed their Reply to Defendants' Response. By a short order, on December 4, 2017, the Court denied Plaintiffs' Motion. The Court will now explain the reasons for its decision.

         BACKGROUND

         This lawsuit is a collective action brought under the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201 et seq. Plaintiffs are former exotic dancers for Defendants in El Paso, Texas. Plaintiffs claim that Defendants misclassified them as independent contractors and, as a result, failed to pay them minimum wage and overtime. Plaintiffs seek to recover unpaid minimum wages, unpaid overtime wages, statutory liquidated damages, compensatory damages, punitive damages, and attorneys' fees. Defendants counter that, as a matter of economic reality, Plaintiffs were not Defendants' employees and, therefore, were exempt from the FLSA's minimum wage and overtime provisions.

         Defendants Fong Sunrise, LLC ("Fong") and Fion Sunrise, LLC ("Fion") are two adult entertainment businesses in El Paso, Texas, that own and operate Defendant Dreams Cabaret ("the nightclub"), another adult venue located in the city. Pis.' 2d Am. Compl., ECF No. 24, ¶¶ 10-11; Pis.' Mot. Partial Summ. J., ECF No. 40, Ex. 1, at 4-6. Defendant Jose Fong ("Mr. Fong") owns fifty-one percent of Fong[1] and all of Fion. Pis.' Mot. Partial Summ. J., ECF No. 40, Ex. 1, at 4-6. Plaintiff Alyssa Bally worked for Defendants as a dancer from 2014 to 2017. Pis.' 2d Am. Compl., ECF No. 24, ¶ 16. Plaintiff Courtney Maharaj worked for Defendants as a dancer from 2012 to 2016. Id. Hector Granillo ("Mr. Granillo") worked as a disk jockey and later as a general manager for Defendants from 2012 to 2017. Pis.' Mot. Partial Summ. J., ECF No. 40, Ex. 2, at 6-7.

         Plaintiffs' dancing is the only type of entertainment that the nightclub provides. Id., Ex. 1, at 52; Pis.' 2d Am. Compl., ECF No. 24, ¶ 29. While the nightclub does not require dancers to have prior experience or training to perform, dancers must pay for their costumes. Pis.' Mot. Partial Summ. J., ECF No. 40, Ex. 1, at 47; Id., Ex. 2, at 55. The amount that dancers spend on their costumes varies, but costumes typically consist of underclothing. Pis.' Mot. Partial Summ. J., ECF No. 40, Ex. 2, at 55. Further, dancers are required to sign in when they report to perform and pay the nightclub rent. Id., Ex. 1, at 11, 21-23; Pis.' 2d Am. Compl., ECF No. 24, ¶¶ 18-19. Additionally, the nightclub has a policy that calls for dancers to have a license to work. Pis.' Mot. Partial Summ. J., ECF No. 40, Ex. 2, at 54. Therefore, a dancer must pay $50 dollars and get fingerprinted to obtain a license with the sheriff. Id. El Paso County further requires that dancers' licenses be kept on the premises where they work or perform. Defs.' Resp. to Mot. Partial Summ. J., ECF No. 41, at 15.

         Defendants do not pay compensation to any dancer. Pis.' 2d Am. Compl., ECF No. 24, ¶ 30. Compensation is limited to the tips that dancers receive from customers for performing on stage and for performing private table dances. Id. However, Defendants spend between $448, 000 and $520, 000 dollars per year in maintaining and promoting the nightclub. Pis.' Mot. Partial Summ. J., ECF No. 40, Ex. 1, at 49-55. This includes the monthly $10, 000 dollars that Defendants allocate to radio and newspaper advertisements. Id. at 50. Additionally, Defendants exclusively decide the hours that the nightclub operates; the type of drinks that are provided to customers; the nightclub's location; the way the nightclub looks on the inside, including the lighting, the stage, the dressing rooms, and the furniture; the amount of the cover charge; the total price that it takes to get into the nightclub; and the method by which to advertise the nightclub. Id. at 48-51; Pis.' 2d Am. Compl., ECF No. 24, ¶ 25.

         On April 7, 2017, Plaintiffs filed their Second Amended Complaint, categorized as a collective action, on behalf of themselves and all persons similarly situated who consented to join the litigation. The Second Amended Complaint includes four causes of action: (1) violation of the FLSA by misclassifying Plaintiffs and all others similarly situated as independent contractors and not paying them minimum wages, (2) violation of the Texas Minimum Wage Act by misclassifying Plaintiffs and all others similarly situated as independent contractors and not paying them minimum wages, (3) violation of the FLSA by misclassifying Plaintiffs and all others similarly situated as independent contractors and not paying them overtime wages, and (4) retaliatory discharge. Pis.' 2d Am. Compl., ECF No. 24, ¶¶ 41-69. On October 27, 2017, Plaintiffs filed their Motion.

         SUMMARY JUDGMENT STANDARD

         "The court shall grant summary judgment if the movant shows 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). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by... citing to particular parts of materials in the record ...." Fed.R.Civ.P. 56(c)(1). "[T]he plain language of Rule 56[] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         "Initially, the moving party bears the burden of demonstrating the absence of a genuine issue of material fact." Cannata v. Catholic Diocese of Austin, 700 F.3d 169, 172 (5th Cir. 2012) (citing Celotex, 477 U.S. at 323). Where the burden of proof lies with the nonmoving party, the moving party may satisfy its initial burden by "'showing'-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325. While the moving party "must demonstrate the absence of a genuine issue of material fact, it does not need to negate the elements of the nonmovant's case." Duffie v. United States, 600 F.3d 362, 371 (5th Cir. 2010) (citing Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005)). "On the other hand, 'if the movant bears the burden of proof on an issue, either because he is the plaintiff or as a defendant he is asserting an affirmative defense, he must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor.'" Alzuraqi v. Grp. 1 Auto., Inc., 921 F.Supp.2d 648, 657 (N.D. Tex. 2013) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)).

         A fact is "material" only if it would permit "a reasonable jury ... [to] return a verdict for the nonmoving party" and "might affect the outcome of the suit." Douglass v. United Servs. Auto. Ass'n, 65 F.3d 452, 458-59 (5th Cir. 1995), aff'den banc, 79 F.3d 1415 (5th Cir. 1996) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). "If the moving party fails to meet its initial burden, the motion for summary judgment must be denied, regardless of the nonmovant's response." Duffie, 600 F.3d at 371 (internal quotation marks omitted).

         "When the moving party has met its Rule 56[] burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings." Id. The nonmovant "must identify specific evidence in the record and articulate [how] that evidence supports that party's claim." Id. (quoting Johnson v. Deep E. Tex. Reg 7 Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th Cir. 2004)) (citation omitted). "This burden is not satisfied with some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence." Id. (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)) (internal citations omitted). "In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party." Id. (citing Anderson, Ml U.S. at 255).

         ANALYSIS

         In their Motion, Plaintiffs raise two arguments: (1) that Defendants misclassified them as independent contractors and, therefore, owe them minimum and overtime wages for all hours worked under the FLSA; and (2) that Mr. Fong is an employer under the FLSA.[2] Pis.' Mot. Partial Summ. J., ECF No. 40, at 7, 18. Defendants claim that Plaintiffs' summary judgment evidence fails to establish that Plaintiffs were Defendants' employees and that Mr. Fong is an employer under the FLSA.[3] Defs.' Resp. to Mot. Partial Summ. J., ECF No. 41, at 5, 18. Since the Court finds that partial summary judgment cannot be granted because a fact issue exists regarding Plaintiffs' classification under the FLSA, the Court will not address Plaintiffs' second argument, whether Mr. Fong is an employer.

         In determining whether an individual is an "employee" within the meaning of the FLSA, the central question is "whether the alleged employee, as a matter of economic reality, is economically dependent upon the business to which she renders her services." Reich v. Circle C Invs., Inc., 998 F.2d 324, 327 (5th Cir. 1993) (citing Brock v. Mr. WFireworks Inc., 814 F.2d 1042, 1043 (5th Cir. 1993), cert, denied, 484 U.S. 924 (1987)). Stated differently, the main focus is on "whether the individual is, as a matter of economic reality, in business for herself." Id. (citing Donovan v. Tehco, 642 F.2d 141, 143 (5th Cir. 1981)). The contractual designation of a worker as an independent contractor is not necessarily controlling. Thibault v. Bellsouth Telecomms., Inc., 612 F.3d 843, 845-46 (5th Cir. 2010).

         To determine the degree of an individual's dependency, five factors must be considered: "(1) the degree of control exercised by the alleged employer; (2) the extent of the relative investments of the worker and alleged employer; (3) the degree to which the worker's opportunity for profit and loss is determined by the alleged employer; (4) the skill and initiative required in performing the job; and (5) the permanency of the relationship." Reich, 998 F.2d at 327. These factors are only guidelines in determining employee status and no single factor is independently determinative in the analysis. Id. (citing Brock, 814 F.2d at 1054).

         The Court finds that the second and fourth factors weigh in favor of employee status under the FLSA. However, partial summary judgment cannot be granted because a fact issue exists regarding the first, third, and fifth factors. The Court now addresses the five factors.

         1. Degree of Control Defendants Exercised ...


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