Washington v. Freedom of Expression LLC

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 Malaika Washington, et al., No. CV-21-01318-PHX-MTL 9 10 Plaintiffs, ORDER 11 v. 12 Freedom of Expression LLC, et al., 13 Defendants. 14 Plaintiffs are a group of twenty-two former dancers of Bones Cabaret and Skin 15 Cabaret (collectively “Defendants”) who allege minimum wage violations under the Fair 16 Labor Standards Act (“FLSA”).1 Plaintiffs and Defendants have each filed motions for 17 summary judgment (Docs. 222, 230) and motions to strike (Docs. 228, 232.) The Motions 18 are fully briefed. (Docs. 222, 227, 228, 230, 231, 232, 236.) All four Motions are denied.2 19 I. BACKGROUND 20 Defendants did not require their dancers to have any formal training or education. 21 (Doc. 222 ¶ 23; Doc. 232 ¶ 23.) Instead, they only required dancers to have a license from 22 23 1 Bones Cabaret is the trade name of Freedom of Expression LLC. (Doc. 6 ¶ 14.) Skin Cabaret is the trade name of Wisnowski Incorporated (Id.) Each entity is owned by Todd 24 Borowsky (Id. ¶ 15.) When this Order refers to “Defendants,” it is referring to Freedom of Expression LLC, Wisnowski Incorporated, and Todd Borowsky. 25 2 The foregoing analysis addresses the cross motions for summary judgment. Defendants’ 26 Motion to Strike is denied because Rule 12(f) of the Federal Rules of Civil Procedure only applies to pleadings. Fed. R. Civ. P. 7(a). With there being no other basis to support 27 Defendants’ Motion to Strike, it is not authorized under Local Rule of Civil Procedure 7.2(m)(1). Plaintiffs’ Motion to Strike is denied because Defendants’ Revised Motion for 28 Summary Judgment complied with the Court’s Scheduling Order by combining the statement of facts with its substantive argument. 1 the City of Scottsdale and the “physical characteristics and dancing skills to entertain 2 customers of the clubs.” (Doc. 222 ¶ 22; Doc. 222-12 at 3:3-6; Doc. 232 ¶ 22.) Plaintiffs 3 demonstrated that they met those requirements by doing an onstage audition in front of a 4 manager. (See Doc. 232-8 ¶¶ 4-5.) 5 After their audition, Defendants’ representatives took Plaintiffs on a tour of the 6 clubs and had them sign a “Performer Lease Agreement.” (Id. at ¶¶ 5, 7.) The agreement 7 stated Plaintiffs and Defendants “intend[ed] to create a lessor-lessee relationship” with one 8 another and that each party expressly acknowledged the status created from the agreement 9 was “that of a lease for use of the premises.” (Doc. 232-2 ¶¶ 1-2.) The Performer Lease 10 Agreement did not have a set contract length. (Doc. 222 ¶ 24, Doc. 232 ¶ 24.) Nor did it 11 prevent Plaintiffs from performing at competing clubs. (Doc. 230 ¶ 9, Doc. 230-3 12 ¶¶ 11-12.) 13 Once hired, Plaintiffs had to abide by several “house rules.” (Doc. 232-3 ¶ 21.) They 14 included a general “restriction[] on illegal, criminal, and untoward behavior,” as well as 15 more specific rules concerning the day-to-day operations of the clubs. (Id.) For example, 16 Plaintiffs had to sign-in when they entered the club and pay a “house fee” before they began 17 working. (Doc. 222-12 at 4:5-6; Doc. 232-5 ¶ 8.) The house fee ranged from $0 to $40 18 depending on Plaintiffs’ shift. (Doc. 232-4 at 16:10-13.) While working, Plaintiffs had to 19 ensure their performances “were within the bounds of decency under the law and that 20 [Plaintiffs’] conduct would not expose Defendants to criminal or civil liability or otherwise 21 interfere with the clubs’ normal operations.” (Doc. 232-3 ¶ 20.) At the end of their shift, 22 Plaintiffs had to sign a document “affirming that each of them received tips in excess of 23 the prevailing minimum wage.” (Id. ¶ 10.) That document specifically noted Plaintiffs were 24 performing at Defendants’ clubs as independent contractors. (Doc. 230 ¶ 4; Doc. 230-3 25 Ex. A.) Failure to follow any of the “house rules” could result in fines or termination. 26 (Doc. 232-3 ¶ 21.) 27 Plaintiffs were compensated through tips from customers and revenues from private 28 shows. (Doc. 222 ¶ 5; Doc. 232 ¶¶ 5, 6.) At no point did Defendants pay Plaintiffs a salary 1 or hourly wage. (Doc. 222 ¶ 5; Doc. 230 ¶ 7.) For tips, Defendants set the price for 2 customers to enter their clubs and the “guideline values” Plaintiffs charged for services. 3 (Doc. 222-9 at 5-6:25-2.) Defendants kept a percentage of any tips received by Plaintiffs, 4 and Plaintiffs took home the remaining amount in cash. (Doc. 232-4 at 6:15-17.) For private 5 shows, Defendants negotiated “[t]he amount charged for any private dances or 6 performances” and gave Plaintiffs the opportunity to perform at the scheduled shows. 7 (Doc. 222-12 at 3:24-27.) Those Plaintiffs who agreed to perform at the shows received a 8 percentage of the contract price and any additional tips paid by the customer. (Id. at 9 3-4:27-1.) Payment of the contract percentage came to Plaintiffs via a check from 10 Defendants. (Doc. 232-4 at 10:21-26.) 11 II. LEGAL STANDARD 12 Summary judgment is appropriate when the evidence, viewed in the light most 13 favorable to the non-moving party, demonstrates “that there is no genuine dispute as to 14 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 15 P. 56(a). A genuine issue of material fact exists when “the evidence is such that a 16 reasonable jury could return a verdict for the nonmoving party,” and material facts are 17 those “that might affect the outcome of the suit under the governing law.” Anderson v. 18 Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). At the summary judgment stage, “[t]he 19 evidence of the non-movant is to be believed, and all justifiable inferences are to be 20 drawn in his favor.” Id. at 255 (citations omitted); see also Jesinger v. Nev. Fed. Credit 21 Union, 24 F.3d 1127, 1131 (9th Cir. 1994) (holding that the court determines whether 22 there is a genuine issue for trial but does not weigh the evidence or determine the truth 23 of matters asserted). 24 Where, as here, the “parties submit cross-motions for summary judgment, each 25 motion must be considered on its own merits.” Fair Hous. Council of Riverside Cnty. Inc. 26 v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001) (citations and internal quotations 27 omitted). The summary judgment standard operates differently depending on whether 28 the moving or non-moving party has the burden of proof. See Celotex Corp. v. Catrett, 1 477 U.S. 317, 322-23 (1986). When the movant bears the burden of proof on a claim at 2 trial, the movant “must establish beyond controversy every essential element” of the 3 claim based on the undisputed material facts to be entitled to summary judgment. S. Cal. 4 Gas Co. v. City of Santa Ana, 336 F.3d 885, 888 (9th Cir. 2003) (citation omitted). If the 5 movant fails to make this showing, summary judgment is inappropriate, even if the 6 non-moving party has not introduced contradictory evidence in response. When, on the 7 other hand, the non-movant bears the burden of proof on a claim at trial, the movant may 8 prevail either by citing evidence negating an essential element of the non-movant’s claim 9 or by showing that the non-movant’s proffered evidence is insufficient to establish an 10 essential element of the non-movant’s claim. See Celotex, 477 U.S. at 322-23; 10A Charles 11 Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2727.1 (4th ed. 2022). 12 III. DISCUSSION 13 A. Collateral Estoppel 14 Plaintiffs argue the Court can resolve both summary judgment motions by finding 15 “Defendants are estopped from relitigating that its dancers were properly classified as 16 independent contractors since they lost on this issue in arbitration.” (Doc. 222 at 9.) 17 Plaintiffs present a document titled “Ruling on Claimant’s Partial Motion for Summary 18 Judgment” to support their argument. (Doc. 222-13.) That document is an arbitration 19 decision between Defendants and a former Plaintiff in this suit. (Doc. 17.) The decision 20 finds that the former Plaintiff was an employee of Defendants. (Doc. 222-13 at 3-4.) 21 Defendants respond that the arbitration between themselves and the former Plaintiff 22 has not concluded. (Doc. 232 at 15.) They also note the arbitration decision was based on 23 a technical admission, which Defendants claim cannot be used against them in another 24 proceeding. (Id. at 16.) 25 The burden of proving offensive nonmutual issue preclusion rests with the moving 26 party. Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1050-51 (9th Cir. 2008); see also 27 Appling v. State Farm Mut. Auto. Ins., 340 F.3d 769, 775 (9th Cir. 2003) (“District courts 28 have discretion whether to apply offensive non-mutual collateral estoppel, and we may 1 only reverse if they have abused that discretion.”). Plaintiffs do not present any evidence 2 that the arbitration decision resulted in a final award, or that any award was subsequently 3 approved by a state or federal court. Without such evidence, the arbitration decision is 4 presumably unreviewed and does not have preclusive effect in a federal court action. 5 Caldeira v. County of Kauai, 866 F.2d 1175, 1178 (9th Cir. 1989). Furthermore, Plaintiffs’ 6 contention that this motion acts as a review of the arbitration decision is incorrect. 7 (Doc. 236 at 7.) Confirmation of an arbitration decision requires a formal order. 9 U.S.C. 8 § 9. The Court will deny summary judgment on this issue. 9 B. Procedural Deficiencies 10 Next, Defendants argue there are two procedural deficiencies in Plaintiffs’ Motion 11 for Partial Summary Judgment. Because the Court finds neither argument persuasive, it 12 will only briefly address each. 13 The first supposed deficiency is “Plaintiffs’ citation to and reliance on the unverified 14 Answer filed by Defendants” to support basic background information about the case. 15 (Doc. 222 ¶¶ 1-3, ¶¶ 7-12; Doc. 232 ¶ 1.) An unverified complaint cannot be used as 16 evidence for summary judgment. See Moran v. Selig, 447 F.3d 748, 759 n.16 (9th Cir. 17 2006). But “admissions in the pleadings are generally binding on the parties,” unless they 18 “explain[] the error in a subsequent pleading or amendment.” Am. Title Ins. v. Lacelaw 19 Corp., 861 F.2d 224, 226 (9th Cir. 1988); Sicor Ltd. v. Cetus Corp., 51 F.3d 848, 859-60 20 (9th Cir. 1995). Defendants do not claim that their Answer contains any errors or requires 21 amending. As such, Plaintiffs can rely on the formal admissions Defendants made in their 22 Answer to support factual assertions. See Am. Title Ins., 861 F.2d at 226. 23 The second supposed deficiency is “Plaintiffs seek[] to use statements made in the 24 thirteen (13) Declarations attached as Exhibits 13-25 . . . as support for all twenty-two (22) 25 Plaintiffs’ claims.” (Doc. 232 ¶ 4.) Defendants’ argument attempts to limit the scope of 26 summary judgment to only those Plaintiffs who have provided a declaration. (See id.) 27 The Court granted conditional class certification on September 30, 2022. (Doc. 55.) 28 Defendants do not allege the non-declaring Plaintiffs are outside the scope of the certified 1 class. Nor do they allege that the non-declaring Plaintiffs were treated differently during 2 their employment. In fact, Defendants’ Revised Motion for Summary Judgment 3 specifically asks the Court to find Plaintiffs were independent contractors because of their 4 similar employment conditions. (See generally Doc. 230.) Therefore, Plaintiffs can rely on 5 the thirteen declarations to support the claims of all twenty-two Plaintiffs. 6 C. Employer/Employee Relationship 7 Plaintiffs must prove three elements to establish a minimum wage violation under 8 the FLSA: (1) Defendants were covered under the FLSA; (2) Plaintiffs were Defendants’ 9 employees; and (3) Plaintiffs were paid below the minimum wage. See Leyva v. Avila, 634 10 F. Supp. 3d 670, 675 (D. Ariz. 2022); 29 U.S.C. § 206(a). The cross motions at issue here 11 concern the second element. Plaintiffs argue the material facts undisputably show they 12 were employees. (Doc. 222 at 17.) Defendants argue the facts show Plaintiffs were 13 independent contractors. (Doc. 232 at 14.) 14 Deciding between the two arguments requires examining the “economic realities” 15 of Plaintiffs’ relationship with Defendants. Goldberg v. Whitaker House Coop., 366 U.S. 16 28, 32 (1961). Six factors help illuminate this inquiry: (1) “the degree of the alleged 17 employer’s right to control the manner in which the work is to be performed”; (2) “the 18 alleged employee’s opportunity for profit or loss depending upon his managerial skill”; (3) 19 “the alleged employee’s investment in equipment or materials required for his task, or his 20 employment of helpers”; (4) “whether the service rendered requires a special skill”; 21 (5) “the degree of permanence of the working relationship”; and (6) “whether the service 22 rendered is an integral part of the alleged employer’s business.” Real v. Driscoll Strawberry 23 Assocs., 603 F.2d 748, 754 (9th Cir. 1979). No single factor is dispositive in deciding 24 whether the economic realities create an employee-employer relationship. Id. Similarly, 25 while “subjective intent” and “contractual labels” may be helpful in swaying the analysis, 26 they are not conclusive and “cannot override the economic realities reflected in the factors 27 described above.” Id. at 755. 28 1 1. Degree of Control 2 The first Driscoll factor is “the degree of the alleged employer’s right to control the 3 manner in which the work is to be performed.” Id. at 754. Indicators of control include 4 “things like uniform requirements, general rules on workplace conduct, control over who 5 c[an] enter the building, and control over customers of a business.” Gilbo v. Agment, LLC, 6 831 Fed. Appx. 772, 777 (6th Cir. 2020). 7 Plaintiffs argue Defendants imposed oppressive and controlling policies on them, 8 demonstrating their employment relationship. (Doc. 222 at 12-13.) To support their 9 argument, they point to documents titled “Skin Cabaret House Rules.” (Id.; Doc. 222-3.) 10 Those documents outline comprehensive rules for workplace conduct, including dancers 11 “must wear outfits that complement [their] body type and are in good condition,” “must 12 have [m]anager approval to end their shift early or leave before closing,” and “may only 13 work the specific shifts they were hired for.” (Doc. 222-3 at 1-2.) The documents also 14 restrict how dancers perform certain services for clients. (Id.) To demonstrate that Bones 15 Cabaret implemented similar rules, Plaintiffs provide declarations explaining similar 16 restrictions. (See, e.g., Doc. 222-15 ¶ 7.) Plaintiffs believe the “Skin Cabaret House Rules” 17 demonstrate enough control to find an employer-employee relationship under the first 18 Driscoll factor. (See Doc. 222 at 13.) Plaintiffs also attempt to demonstrate control by 19 pointing to Defendants being able to hire and fire dancers, impose fines for violating club 20 rules, and require dancers to sign-in at the beginning of their shift. (See id.) 21 In response, Defendants provide a declaration from one of their managers. It says 22 the “Skin Cabaret House Rules” were “printed up by someone at Skin Cabaret, but . . . no 23 one ever enforced any of those rules on any of the dancers.” (Doc. 232-5 ¶ 7.) The 24 declaration continues by saying no similar rules were posted or enforced at Bones Cabaret. 25 (Id. ¶ 5.) Defendants argue the manager declaration demonstrates that they did not 26 promulgate the “Skin Cabaret House Rules” and did not enforce any rules beyond what 27 was required by local ordinances and state law. (Doc. 232 ¶¶ 13-15.) In addition, 28 1 Defendants argue they did not exercise control over Plaintiffs because Plaintiffs could 2 choreograph their own performances and choose their own costumes. (Id.; Doc. 230 at 7.) 3 Control can be shown through the mere existence of a rule. See Harris v. Diamond 4 Dolls of Nev., LLC, 521 F. Supp. 3d 1016, 1023 (D. Nev. 2021); McFeeley v. Jackson St. 5 Ent., LLC, 825 F.3d 235, 242 (4th Cir. 2016). A promulgated rule creates a system where 6 the threat of enforcement rests solely with the alleged employer and the risk of 7 consequences rests solely with the alleged employee. See Hart v. Rick’s Cabaret Int’l., 8 Inc., 967 F. Supp. 2d 901, 918 (S.D.N.Y. 2013). An alleged employer exercises control 9 through a promulgated rule by placing an inherent pressure on the alleged employee to 10 conform their conduct with the rule or else risk the possibility of punishment. See id. That 11 inherent pressure remains regardless of the amount of enforcement pursued by the alleged 12 employer. See id. Thus, the foremost question is whether Defendants promulgated the 13 “Skin Cabaret House Rules.” 14 Both sides present competing evidence on whether Defendants promulgated the 15 “Skin Cabaret House Rules.” Plaintiffs claim they did, presenting the documents 16 themselves and several declarations as proof. (Doc. 222-3; Doc. 222-15 ¶ 7.) Defendants 17 claim they did not, offering a declaration that says “someone” printed the rules but 18 otherwise being unclear on who that “someone” was. (Doc. 232-5 ¶ 7.) Deciding which 19 side to believe will determine who prevails under the first Driscoll factor. 20 If Defendants promulgated the “Skin Cabaret House Rules,” their conduct would 21 mirror that of the club sued in Harris, 521 F. Supp. 3d at 1023. In that case, dancers also 22 brought a minimum wage claim under the FLSA and sought to prove control by presenting 23 evidence that dancers had to receive manager approval to leave early, satisfy certain 24 appearance standards to perform, and follow the work schedules set by the club. Id. at 25 1019-20, 1023. The court held those rules “exerted a large degree of control over the 26 dancers” and weighed the first Driscoll factor in favor of an employment relationship. Id. 27 at 1023. 28 1 If, however, Defendants did not promulgate the “Skin Cabaret House Rules,” the 2 remaining evidence would weigh in favor of classifying Plaintiffs as independent 3 contractors. The remaining evidence is Defendants imposed “house rules” that followed 4 local ordinances and state law, such as requiring dancers to sign-in at the beginning of their 5 shift. (Doc. 232 ¶¶ 13-15; Doc. 232-5 ¶ 8.) Dancers who did not follow those rules could 6 be fired or fined. (Doc. 222 ¶¶ 13-15; Doc. 222-3; Doc. 232-3 ¶ 21.) Standing alone, those 7 restrictions evidence a minimal amount of control. Any business employing an independent 8 contractor would expect “to exert some control . . . over the performance of the contractor’s 9 duties and over his conduct on the company’s premises.” McFeely, 825 F.3d at 242. After 10 all, to say that a business exercises control anytime it asks a contractor to follow the law 11 would essentially require them to say “[d]o whatever you want, wherever you want, and 12 however you please” to avoid potential liability. Id. That outcome would be unsustainable 13 and would completely deprive employers of their business autonomy. 14 The outcome of this factor depends on whether a reasonable factfinder believes 15 Defendants did or did not promulgate the “Skin Cabaret House Rules.” Both sides present 16 competing evidence on that point. Therefore, a genuine issue of material fact exists under 17 the first Driscoll factor. 18 2. Opportunity for Profit or Loss 19 The second Driscoll factor is “the alleged employee’s opportunity for profit or loss 20 depending upon his managerial skill.” 603 F.2d at 754. This factor asks if the alleged 21 employee is “economically dependent on the business” or whether “he is ‘in business for 22 himself’ and hence an independent contractor.” McFeeley, 825 F.3d at 243 (citation 23 omitted). Examination should consider what influence the alleged employee has over 24 advertising, price setting, hours, and location. See Donovan v. Sureway Cleaners, 656 F.2d 25 1368, 1371 (9th Cir. 1981). 26 i. Price Setting 27 Plaintiffs argue that Defendants maintained complete control over their ability to 28 earn money. (Doc. 222 at 5.) They explain, Defendants controlled the customer volume 1 entering their clubs and the price of services charged by each dancer. (Id. at 14.) To support 2 their argument, Plaintiffs again reference the “Skin Cabaret House Rules,” which includes 3 a restriction on overcharging and says anyone caught overcharging will face “suspension 4 or termination [at] the manager’s discretion.” (Doc. 222-3 at 2.) Plaintiffs also provide 5 declarations that say dancers had to “charge customers for dances at the prices set by the 6 club,” and dancers “had no authority to negotiate with customers or charge them higher 7 prices.” (See e.g., Doc. 222-14 ¶ 7.) 8 Relevant evidence not cited by either party includes Defendants’ response to an 9 interrogatory question served by Plaintiffs. Defendants responded to the interrogatory by 10 saying they inform “patrons of prices . . . including, as a basic example, what a patron 11 needs to pay to enter the Venue.”3 (Doc. 222-9 at 5:22-23.) And that “if the guideline value 12 of an air dance is $20 . . . then this Defendant would expect that the entertainer will collect 13 at least $20 from the patron for the services provided.” (Id. at 5-6:25-1.) 14 Defendants, however, followed-up their interrogatory response by saying dancers “may 15 demand (and receive) more or accept less than that amount.” (Id. at 6:1-2.) Defendants also 16 later amended their response to say that they negotiate the prices for private dances and 17 performances with customers, and dancers would be paid an agreed-upon percentage of the 18 contract price. (Doc. 222-12 at 3:24-27.) Despite these concessions, Defendants argue that 19 they did not set prices because dancers were free to perform at other clubs and could 20 perform online without any limitation or consequence. (Doc. 230 at 10; Doc. 232 at 14.) 21 The second Driscoll factor focuses on the relationship between the alleged employer 22 and the alleged employee. See McFeeley, 825 F.3d at 243. Defendants attempt to stray the 23 Court’s focus by arguing Plaintiffs could have performed at other clubs and online. (Doc. 24 230 at 10; Doc. 232 at 14.) Even if Plaintiffs did do those things, they still could have been 25 economically dependent on Defendants’ business while working at their clubs. See 26 3 Plaintiffs attached Documents 222-9 and 222-12 to their motion for summary judgment 27 as evidence of Defendants’ hiring practices and corporate structure. (Doc. 222-9 at 7; Doc. 222-12 at 2-3.) The Court, however, also finds them relevant in determining whether 28 Defendants set prices. Fed. R. Civ. P. 56(c)(2) (“The court . . . may consider other materials in the record.”). 1 McFeeley, 825 F.3d at 243. The Court, therefore, finds Defendants’ argument 2 unpersuasive. 3 The undisputed evidence is Defendants set the price for entering their clubs, the 4 “guideline values” dancers should charge for services, and the amount charged for private 5 dances. (Doc. 222-9 at 5-6:25-2; Doc. 222-12 at 3:24-27.) While this evidence undoubtedly 6 shows Defendants had some involvement in setting prices, it does not definitively prove 7 Plaintiffs were economically dependent to the degree of becoming employees. For 8 example, Defendants admit they set “guideline values” for services, but they also state 9 dancers “may demand (and receive) more or accept less than that amount.” (Doc. 222-9 at 10 5-6:25-1.) That subsequent statement seems to suggest Plaintiffs maintain some degree of 11 control over their profits. In addition, Defendants admit they negotiate the price of private 12 dances and performances, but Defendants also state dancers could accept or deny the 13 performances and would be paid an “agreed-upon percentage of the contract price.” 14 (Doc. 222-12 at 3:24-27.) The discretion to accept or deny performances is indicative of 15 an independent contractor. And the ability to negotiate a percentage of the contract price 16 gives the dancers some ability to generate their own profits. Thus, on balance, the 17 undisputed facts are too ambiguous in their application to definitively favor one side over 18 the other. 19 That leaves the undisputed fact Defendants set the price for customers to enter their 20 clubs. Controlling the stream of clientele can affect a dancer’s ability to earn a profit. But 21 standing alone it is not so determinative to warrant summary judgment. See McFeeley, 825 22 F.3d at 243. A reasonable factfinder could conclude that Plaintiffs were not economically 23 dependent on Defendants because of the discretion given to them after clients entered the 24 clubs. 25 ii. Hours 26 Plaintiffs next argue that Defendants had ultimate control over their schedules and 27 ability to work. (Doc. 222 ¶ 15.) They support their assertion with a portion of the “Skin 28 Cabaret House Rules” that says dancers “may only work the specific shift they were hired 1 for” and cannot move to a different shift without manager approval. (Doc. 222-3 at 2.) 2 Plaintiffs’ declarations also state dancers could only work shifts they were authorized to 3 work; “for instance, a day shift dancer had to work day shifts.” (Doc. 222- 14 ¶ 7.) 4 Defendants provide a declaration that states dancers “set their own work schedules, 5 choosing if, when, and how long to dance.” (Doc. 230-3 ¶ 17.) Defendants also note that 6 Plaintiffs provided conflicting answers when responding to their written deposition 7 questions. (Doc. 232 ¶ 28.) When asked, “[a]re you claiming that any of the Defendants 8 required you to perform at specific times on specific days,” some Plaintiffs responded that 9 they made their own schedule and were “not required to work certain shifts or certain days.” 10 (Doc. 230-4 at 4:20-21.) While others responded “yes” to the question. (Id. at 10:23.) 11 Defendants argue those responses contradict the declarations provided by Plaintiffs. 12 (Doc. 232 ¶ 28.) 13 There is no undisputed evidence concerning Defendants involvement in setting 14 hours for dancers. The weight given to Plaintiffs’ differing answers to the written 15 deposition questions is best left for a jury. So too is deciding whether to believe the 16 competing declarations provided between Plaintiffs and Defendants. 17 iii. Advertising and location 18 Plaintiffs finally argue that Defendants managed “drawing customers to the club 19 through marketing, promotional, and advertising efforts.” (Doc. 222 at 14.) Their argument 20 alleges Defendants advertised the club and “decide[d] the image to portray in order to 21 attract certain customers.” (Id.) Plaintiffs offer Defendants’ websites as evidence. (Id.) 22 Defendants object to the use of their websites as evidence. (Doc. 232 ¶ 27.) They 23 claim the websites are inadmissible hearsay and lack foundation. (Id.). Defendants, 24 however, do not otherwise dispute that they handle marketing, promotional, and 25 advertising for their clubs. (See id. ¶¶ 26-27.) 26 Without addressing the merits of either Parties’ argument, two of the three 27 considerations are in dispute or otherwise too ambiguous to favor one side over the other. 28 As such, there is a genuine issue of material fact under the second Driscoll factor regardless 1 of how the advertising and location consideration pans out. 2 3. Investment 3 The third Driscoll factor is “the alleged employee’s investment in equipment or 4 materials required for his task, or his employment of helpers.” 603 F.2d at 754. This factor 5 considers the alleged employee’s “total investment in the company to ‘the company’s total 6 investment, including office rental space, advertising, software, phone systems, or 7 insurance,’ and ‘is most significant if it reveals that the worker performs a specialized 8 service that requires a tool or application which he has mastered.’” Gilbo, 831 Fed. Appx. 9 at 776 (quoting Keller v. Miri Microsystems LLC, 781 F.3d 799, 810 (6th Cir. 2015)). 10 Defendants concede their financial investment in the business is objectively greater 11 than Plaintiffs’. (Doc. 222-5; Doc. 232 ¶ 21.) Yet Defendants argue in their motion for 12 summary judgment that Plaintiffs’ investment in their costumes and makeup warrant 13 finding they were independent contractors. (Doc. 230 at 10-11.) Even assuming Plaintiffs 14 spent thousands of dollars on costumes and makeup to perform at Defendants’ clubs, that 15 amount would still presumably be less than what Defendants spend on advertising, 16 facilities, and maintenance. See e.g., Harrell v. Diamond A Ent., 992 F. Supp. 1343, 1350 17 (M.D. Fla. 1997) (finding a dancer who spent a $1,000 on costumes, $130 a month for 18 hairstyling, $100 a month for make-up, and $65 a month for shoes had only a minor 19 investment compared to the club’s operators). The Court, therefore, finds Defendants’ 20 argument unpersuasive. Defendants’ concession in their Revised Response to Plaintiffs’ 21 Motion for Partial Summary Judgment requires finding there is no genuine issue of material 22 fact under the third Driscoll factor. 23 4. Degree of Skill 24 The fourth Driscoll factor is “whether the service rendered requires a special skill.” 25 603 F.2d at 754. Relevant considerations under this factor include “the complexity of the 26 work performed, how the worker acquired their skill, and the length of the worker’s 27 training period.” Gilbo, 831 Fed. Appx. at 776. 28 1 Plaintiffs provide evidence of Defendants’ hiring practices to argue the fourth 2 Driscoll factor favors finding an employment relationship. (Doc. 222 at 15.) Specifically, 3 Plaintiffs provide declarations that say Defendants did not require dancers to have any 4 formal training, education, or dance experience. (See, e.g., Doc. 222-14 ¶ 4.) Plaintiffs also 5 point to Defendants’ response to one of their interrogatory questions: “Please state the 6 requirements to become a dancer at your business.” (Doc. 222-12 at 2:14-15.) Part of 7 Defendants’ response was “[i]ndividuals seeking to perform at Defendants’ clubs are asked 8 to briefly audition to show that they have adequate dancing skills and physical attributes 9 that give them the ability to entertain customers.” (Id. at 2:24-26.) 10 Defendants produce a declaration from another manager that says “[i]ndividuals 11 seeking to work at Skin Cabaret as dancers are asked to do an onstage audition consisting 12 of two songs.” (Doc. 232-8 ¶ 4.) The declaration continues, “if the audition is satisfactory, 13 [the manager] takes the applicant on a tour of the club.” (Id. ¶ 5.) Defendants argue this 14 declaration indicates that being an exotic dancer requires significant skill. (Doc. 230 15 ¶¶ 22-23.) 16 The undisputed evidence is dancers did not need any formal training, education, or 17 work experience to perform at Defendants’ clubs. (Id.) Defendants try to create an issue of 18 material fact by claiming that an exotic dancer needs a high degree of skill to be successful. 19 (Doc. 230 at 11.) Defendants, however, fail to present any evidence to support their point. 20 Their manager declaration only indicates that an audition must be “satisfactory” for an 21 applicant to gain employment at Defendants’ clubs. (Doc. 232-8 ¶ 5.) And their 22 interrogatory response defines the requisite level of dancing skills as “the ability to 23 entertain customers.” (Doc. 222-12 at 2:24-26.) Even assuming that standard encompasses 24 some degree of skill, it is minimal and favors classifying Plaintiffs as employees. See 25 McFeeley, 825 F.3d at 244 (“Moreover, even the skills displayed by the most accomplished 26 dancers in a ballet company would hardly by itself be sufficient to denote an independent 27 contractor designation.”). 28 1 Alternatively, Defendants try creating an issue of material fact by saying exotic 2 dancers benefit from their personal initiative. (Doc. 230 at 12.) But again, Defendants fail 3 to provide any evidence that demonstrates the initiative of their dancers goes beyond the 4 minimal skill of hustling for tips. See Harrell, 992 F. Supp. 1350-51. 5 Accordingly, there is no genuine issue of material fact under the fourth Driscoll 6 factor. 7 5. Permanency of the Relationship 8 The fifth Driscoll factor is “the degree of permanence of the working relationship.” 9 603 F.2d at 754. This factor is normally given little weight within the context of exotic 10 dancing due to the transitory nature of the work. McFeeley, 825 F.3d at 244. 11 Here, the undisputed evidence is Plaintiffs did not have set contract lengths and 12 worked for Defendants for varying periods of time. (Doc. 222-14 ¶ 2; Doc 230-2; Doc. 232 13 ¶¶ 24-25.) A reasonable fact finder could conclude the absence of an end date in the 14 Performer Lease Agreement shows an intent to create an employment relationship. 15 Donovan, 656 F.2d at 1372 (“[T]rue independent contractors have a fixed employment 16 period.”). Yet a reasonable fact finder could also conclude the varying periods of 17 employment (some as short as two months) coupled with the ability to work at competing 18 clubs indicates Plaintiffs were independent contractors. See id. (finding the fifth Driscoll 19 factor favored an employment relationship because the alleged employees worked “for 20 long periods of time” with the alleged employer). 21 Thus, there is a genuine dispute of material fact under the fifth Driscoll factor. 22 6. Integral to the Business 23 The final Driscoll factor is “whether the service rendered is an integral part of the 24 alleged employer’s business.” 603 F.2d at 754. Under this factor, “the more integral the 25 worker’s services are to the business . . . the more likely it is that the parties have an 26 employer-employee relationship.” Acosta v. Off Duty Police Servs. Inc., 915 F.3d 1050, 27 1055 (6th Cir. 2019). 28 1 Plaintiffs offer declarations that state Defendants’ clubs could not operate without 2 dancers. (See e.g., Doc. 222-14 ¶ 6.) They note Defendants advertise themselves as a strip 3 club, indicating dancers are the “product” Defendants sell to customers. (Doc. 222 at 17.) 4 Defendants argue Plaintiffs’ declarations constitute legal conclusions that lack 5 foundation. (Doc. 232 ¶¶ 26-27.) Defendants do not, however, otherwise provide evidence 6 to contradict Plaintiffs’ assertions. (Doc. 230 at 13-14.) 7 The opinion reached in Plaintiffs’ declaration was Defendants “would not be able 8 to operate if they did not have dancers.” (Doc. 222-14 ¶ 6.) The basis for that opinion was 9 the declarants’ personal experience that “dancers are the primary reason why customers go 10 to [their clubs].” (Id.) That is not a legal conclusion and has sufficient foundation. 11 Moreover, the opinion reached by Plaintiffs is within the scope of Rule 701 of the Federal 12 Rules of Civil Procedure. Range Rd. Music, Inc. v. E. Coast Foods, Inc., 668 F.3d 1148, 13 1153 (9th Cir. 2012) (noting that lay testimony derives from reasoning common in 14 everyday life.) As admissible evidence, and considering Defendants do not offer anything 15 to dispute the declarations, there is no genuine dispute of material fact under the final 16 Driscoll factor. 17 7. Consideration of all the Factors 18 In sum, three factors favor an employment relationship while three present a genuine 19 issue of material fact. Because no single factor is dispositive, and the remaining disputed 20 factors could sway the analysis in either direction, summary judgment is inappropriate for 21 either party. Driscoll Strawberry Assocs., 603 F.2d at 754; see also Narayan v. EGL, Inc., 22 616 F.3d 895, 901 (9th Cir. 2010) (“Judge Easterbrook has keenly observed in a case under 23 the Fair Labor Standards Act that if we are to have multiple factors, we should also have a 24 trial.”) (citation omitted). 25 Defendants argue the Performer Lease Agreement requires finding Plaintiffs were 26 independent contractors. (Doc. 230 at 6-7.) While “subjective intent” and “contractual 27 labels” may be helpful in swaying the analysis, they are not conclusive and “cannot 28 override the economic realities reflected in the [Driscoll] factors.” Driscoll Strawberry 1 || Assocs., 603 F.2d at 754. There remains a genuine issue of material fact on three factors, □□ and the other three weight in favor of an employment relationship. The Court rejects 3 || Defendants’ argument as trying to make the Performer Lease Agreement conclusive—an 4|| Outcome specifically forsworn in Driscoll. 5|| IV. CONCLUSION 6 Therefore, 7 IT IS ORDERED Plaintiffs’ Motion for Partial Summary Judgment on Liability g || (Doc. 222) is DENIED. 9 IT IS FURTHER ORDERED Plaintiffs’ Motion to Strike (Doc. 228) is DENIED. 10 IT IS FURTHER ORDERED Defendants’ Revised Motion for Summary || Judgment (Doc. 230) is DENIED. 12 IT IS FINALLY ORDERED Defendants’ Motion to Strike (Doc. 232) is 13|| DENIED. 14 Dated this 9th day of October, 2024. Wichal TL. Siburle Michael T. Liburdi 17 United States District Judge 18 19 20 21 22 23 24 25 26 27 28 -17-