Esedebe v. Circle 2, Inc., Civil Action No. 3:20-cv-8-HEH

SONYA ESEDEBE, et al., Plaintiffs, v. CIRCLE 2, INC., et al., Defendants.

Civil Action No. 3:20-cv-8-HEH

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division

January 22, 2021

MEMORANDUM OPINION

(Resolving Motions)

Plaintiffs¹ filed suit in this Court on January 7, 2020, against Defendants,² for failing to provide adequate wages as required by the Fair Labor Standards Act ("FLSA"). On January 30, 2020, Defendants filed a Motion to Dismiss, both for failing to state a claim and for lack of jurisdiction, and a Motion to Strike Plaintiffs' Complaint as to the FLSA Collective Action. After filing an Amended Complaint on February 27, 2020, (ECF No. 17), Plaintiffs filed a Motion to Certify Class Conditional Collective ActionCertification and Judicial Notice on March 4, 2020 (ECF No. 18). Defendants have renewed their Motion to Dismiss on March 12, 2020 (ECF No. 25) and also filed an Amended Motion to Dismiss on August 12, 2020 (ECF No. 49).³ The parties have filed memoranda in support of their positions on the Motions, and the Court heard oral argument on October 23, 2020. The Motions are now ripe for review. For the foregoing reasons, the Court will deny the Motions to Dismiss and will grant the Motion to Certify Conditional Class Action.⁴

I. BACKGROUND

Plaintiffs worked for Defendants in two primary roles: as exotic dancers ("Entertainer Plaintiffs") and managers ("Manager Plaintiffs"). (Am. Compl. ¶¶ 70-72.) Plaintiffs allege that, while working for Defendants, they were not properly compensated under the FLSA. (Id. ¶1.) Defendants Pyliaris and Pyliaris Corporation purportedly own and manage the other Defendants. (Id. ¶¶ 27, 82-84.) Entertainer Plaintiffs worked in the clubs and danced, performed, and interacted with Defendants' customers. (Id. ¶ 31.) Defendants supposedly exerted ample control over much of Entertainer Plaintiffs' work, such as what music they danced to, how they dressed, what shoes they wore, how they interacted with customers, and the amount they charged for dances. (Id. ¶ 32.) Moreover, Entertainer Plaintiffs were allegedly never paid by Defendants and were onlycompensated based upon the tips earned and sales made, with Defendants deducting various fees from Entertainer Plaintiffs' earnings. (Id. ¶¶ 40-41.)

Manager Plaintiffs, by contrast, were paid hourly for performing numerous duties including hiring, scheduling, and supervising the entertainers, reviewing inventory, bookkeeping, preparing reports, and other duties as assigned by Michael Dickinson, the CEO of Pyliaris Corporation and Pyliaris. (Id. ¶ 53.) Manager Plaintiffs frequently worked hours in excess of forty hours per week and were purportedly not compensated for the overtime worked. (Id. ¶ 56.) Defendants are alleged to have often manipulated the hours reported by managers to ensure that they were not compensated fairly for overtime. (Id. ¶¶ 61-63.) Plaintiffs claim that Defendants willfully violated the FLSA by knowingly failing to compensate Plaintiffs for the hours worked. (Id. ¶¶ 51, 67.) Accordingly, Plaintiffs seek money damages for the unpaid wages as well as other relief permitted under the FLSA. (Id. at 16.) Plaintiffs also request class certification with two subclasses, one for Entertainer Plaintiffs and one for Manager Plaintiffs. (Id. ¶ 70.)

In the Motions to Dismiss, Defendants aver that Plaintiffs do not have standing to sue Pyliaris Corporation or Pyliaris as they were employed by the other Defendant entities and, thus, Pyliaris or Pyliaris Corporation could not have caused Plaintiffs' injuries. (Mem. Supp. Mot. Dismiss at 6, ECF No. 26.) Defendants also assert that Plaintiffs have not adequately pled with sufficient specificity a claim for overtime wages. (Id. at 10-11.) However, Plaintiffs contend that, as Defendants are joint employers, Plaintiffs have standing against Pyliaris Corporation and Pyliaris. (Opp'n Mot. Dismissat 7-8, ECF No. 29.) Plaintiffs maintain that, under the lenient pleading standard, they have presented adequate facts to support the overtime wage claims. (Id. at 12-13.)

In Plaintiffs' Memorandum in Support of the Motion to Certify Conditional Class Action, they argue that they are sufficiently similarly situated to be conditionally certified as a class because all Plaintiffs worked similar positions for Defendants with similar terms and conditions of employment. (Mem. Supp. Mot. Certify Class at 6-10, ECF No. 19.) Defendants maintain, however, that because the Court will have to make individualized damage calculations based upon each Plaintiff's hours worked, there are not sufficient factual and legal similarities to certify a class. (Opp'n. Mot. Certify Class at 7-8, ECF No. 28.) Moreover, Defendants argue that the scope of proposed class is too broad under the FLSA's statute of limitations of two to three years. (Id. at 12.)

II. DISCUSSION

A. Motions to Dismiss - Lack of Standing

A motion made pursuant to Fed. R. Civ. P. 12(b)(1) challenges the Court's jurisdiction over the subject matter of the case. Plaintiffs bear the burden to establish such jurisdiction throughout the proceeding. Kerns v. United States, 585 F.3d 187, 194 (4th Cir. 2009); see also Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). "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).

A critical element of federal subject matter jurisdiction is standing. To establish standing, a plaintiff must demonstrate three irreducible constitutional minima: an injury-in-fact that is concrete and particularized, and actual or imminent, not conjectural orhypothetical; an injury that is fairly traceable to the challenged action of the defendant; and that it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). The second prong, causation, requires that the plaintiff's injury be caused by the defendant and is not "the result of the independent action of some third party not before the court." Id. at 560 (alterations omitted) (quoting Simon v. E. Ky. Welfare Rts. Org., 426 U.S. 25 41-42 (1976)). The third prong, redressability, ensures that courts only have jurisdiction to intervene when a court can address and provide a remedy for a particular injury. See Crutchfield v. U.S. Army Corps. of Eng'rs, 230 F. Supp. 2d 687, 694-95 (E.D. Va. 2002) (quoting Friends of the Earth, Inc. v. Gaston Copper Recycling Corp., 204 F.3d 149, 162 (4th Cir. 2000)). A plaintiff bears the burden of establishing that she has standing for each type of relief sought. City of Los Angeles v. Lyons, 461 U.S. 95, 105 (1983).

Because Plaintiffs did not work directly for Pyliaris Corporation, Defendants contend that Plaintiffs lack standing to pursue their claims. Plaintiffs disagree. First, Plaintiffs point to the fact that they have presented a clear injury; they were allegedly paid inadequate wages and were uncompensated for overtime worked. If proven, the FLSA provides an adequate remedy. Whether all of Defendants caused Plaintiffs' injuries is an issue to be decided.

Defendants argue that Plaintiffs improperly seek standing under the "juridical link doctrine." Under this doctrine, "the representative of a properly certified class may sue defendants against whom the representative has no direct claims. Those defendants, however, must be linked by way of some 'conspiracy or converted scheme' with adefendant against whom the representative does have a direct claim." Faircloth v. Fin. Asset Sec. Corp. Mego Mortg. Homeowner Loan Tr., 87 F. App'x 314, 318 (4th Cir. 2004). In Faircloth, the United States Court of Appeals for the Fourth Circuit explicitly stated that "we have yet to recognize this [doctrine] in this circuit." Id. There is no precedent from within the Fourth Circuit that adopts the juridical link doctrine. See, e.g., Popoola v. Md-Individual Prac. Ass'n Inc., 230 F.RD. 424, 431 (D. Md. 2005) (stating that the court was "skeptical" of the doctrine); see also Zacyer v. Sturm Foods, Inc., 896 F. Supp. 2d 399, 406 (D. Md. 2012). Accordingly, Plaintiffs cannot seek standing via the "juridical link" doctrine in this circuit. However, Plaintiffs maintain that they do not seek standing via the juridical link doctrine. Rather, Plaintiffs argue that, as Defendants are joint employers under the FLSA and, because Pyliaris Corporation and William Pyliaris exert control over the other Defendants, they are responsible for Plaintiffs' injuries.

This Court is governed by the Fourth Circuit's decision in Hall v. DIRECTV, 846 F.3d 757 (4th Cir. 2017). There, the court explained that there are two parts to the joint employer analysis. The first prong requires the court to "determine whether the defendant and one or more additional entities shared, agreed to allocate responsibility for, or otherwise codetermined the key terms and conditions of the plaintiff's work." Id. at 767. The second prong "asks whether a worker was an employee or independent contractor for the purposes of the FLSA." Id. A court must look to six non-exclusive factors when determining if two or more defendants jointly controlled the terms and conditions of a plaintiff's employment. Id. at 769. These factors include: (1) whether the putative joint employers jointly control or supervise the employees; (2) whether theputative joint employers could jointly hire or fire the employee; (3) the duration and permanency of the relationship between the employers; (4) whether one putative employer controls the other putative employers; (5) whether employees work at premises owned or controlled by one or more of the putative joint employers; (6) whether the putative joint employers jointly determine or share responsibility over functions such as insurance, paying payroll taxes, providing facilities for work, et cetera. Id.

Under the second prong, a...