Kelly v. 21 Grp.

1

REANNA KELLY, SUNSHINE BONNET, LAURA BLAKE, ALEXANDRA CALFE, SHANNON PACI, SOLEIL MEISES, DOMINIQUE WILLIAMS, ASHLEY MORA, AMBERLY ALMONTE, JANICE CASSANOVA, MERCEDES ORTIZ, MYALI SANCHEZ, KATHERINE MENDEZ, FATIMA COLLINS, NAJWA ISMAIL and LEANDRA ROYER, Plaintiffs, v. 21 GROUP INC d/b/a SHOW PALACE GENTLEMEN'S CLUB, ESTATE OF LAMPROS MOUMOURIS, DOE MANAGERS 1-3 and DOES 4-10, Defendants.

21 GROUP INC d/b/a SHOW PALACE GENTLEMEN'S CLUB, Counterclaimant, v. REANNA KELLY, SUNSHINE BONNET, LAURA BLAKE. ALEXANDRA CALFE. SHANNON PACI, SOLEIL MEISES, DOMINIQUE WILLIAMS, ASHLEY MORA, AMBERLY ALMONTE, JANICE CASSANOVA, MERCEDES ORTIZ, MYALI SANCHEZ, KATHERINE MENDEZ, FATIMA COLLINS, NAJWA ISMAIL and LEANDRA ROYER, Counterclaim-Defendants.

No. 22-CV-0226 (MKB)

United States District Court, E.D. New York

September 8, 2023

MEMORANDUM & ORDER

MARGO K. BRODIE, United States District Judge:

Plaintiff ReAnna Kelly commenced the above-captioned action on January 14, 2022, against Defendants 21 Group, Inc. doing business as Show Palace Gentlemen's Club, Lampros Moumouris, Doe Managers 1-3, and Does 4-10, alleging Defendants failed to pay Kelly minimum wages for horn s worked, and failed to pay tipped employees, in violation of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (“FLSA”). (Compl., Docket Entry No. 1.) On March 15, 2022, Kelly and additional Plaintiffs Sunshine Bonnet Laura Blake, Alexandra Calfe, Shannon Paci, Soleil Meises Dominique Williams, Ashley Mora, Amberly Almonte, Janice Cassanova, Mercedes Ortiz, Myali Sanchez, Katherine Mendez Fatima Collins, Najwa Ismail and Leandra Royer filed an Amended Complaint against Defendants, alleging the FLSA claims and also alleging violations of the New York Labor Law §§190 et seq. and 650 et. seq. (“NYLL”).^[1] (Am. Compl., Docket Entry No. 22.)

On April 28, 2022, Defendants filed their Answer, and 21 Group Inc. (“21 Group”) and the Estate of Lampros Moumouris (together “Affirmative Defense Defendants”) filed fifty-two affirmative defenses against all Plaintiffs / Counterclaim-Defendants. (Affirmative Defenses, Docket Entry No. 28.) 21 Group also filed “compulsory” counterclaims against Plaintiffs / Counterclaim-Defendants. (Answer, Docket Entry No. 28.) In addition, 21 Group alleged counterclaims of legal requirement to remit entertainment fees/conversion/restitution; breach of contract; fraud in the inducement; quantum meruit and unjust enrichment; innocent misrepresentation; constructive trust; promissory estoppel; specific performance of accounting of tip income and accounting of entertainment fees (the “Compulsory Counterclaims”). (Compulsory Counterclaims ¶¶ 42-101, Docket Entry No. 28.)

On June 15, 2022, Plaintiffs / Counterclaim-Defendants filed a motion to strike Defendants' affirmative defenses, and on July 21, 2022, 21 Group filed an opposition to Plaintiffs / Counterclaim-Defendants' motion.^[2] For the reasons set forth below, the Court giants in part and denies in part Plaintiffs / Counterclaim-Defendants' motion to strike the affirmative defenses.

I. Background

The Court assumes the truth of the factual allegations in the Amended Complaint for the purpose of deciding Plaintiffs / Counterclaim-Defendants' motion to strike.

Plaintiffs / Counterclaim-Defendants were employed by Defendants as professional entertainers or exotic dancers who performed on the premises of 21 Group, doing business as Show Palace Gentlemen's Club, “an adult-oriented entertainment facility” located at 49-09 25th Avenue, Woodside, New York (the “Club”). (Am. Compl. ¶¶ 11-12, 24, 2742.) Lampros Moumouris was the owner and controlling shareholder of Show Palace and exerted day to day management over the nightclub.^[3] (Id. ¶ 13.) Doe Managers 1-3 are managers and owners who control and enforce the employment policies at Show Palace. (Id. ¶ 14.)

Plaintiffs / Counterclaim-Defendants allege that the Defendants were “employer(s)” or “joint employer(s)” of Plaintiffs / Counterclaim-Defendants. (Id. ¶ 24.) Since 2016, Defendants categorized all “dancers/entertainers” employed by them as “independent contractors” and allegedly “failed and refused to pay wages” to them. (Id. ¶ 25.)

Plaintiffs / Counterclaim-Defendants worked and performed at the adult-oriented entertainment facilities multiple shifts per week and were an integral pail of Defendants' business which operated solely as an adult-oriented entertainment facility. (Id. ¶ 45.) Plaintiffs / Counterclaim-Defendants allege that Defendants did not pay dancers/entertainers on an hourly basis but exercised significant control over Kelly during her shifts and demanded that Plaintiffs / Counterclaim-Defendants work certain days and told them at what time they were permitted to leave. (Id. ¶¶ 46-47.) Defendants “controlled the means and manner in which Plaintiffs could perform,” and had the authority to, and actually did, “suspend, fine, fire, or otherwise discipline entertainers for non-compliance” with the rules regarding dancing. (Id. ¶¶ 51-53.) Defendants also allegedly exercised significant control over Plaintiffs / Counterclaim-Defendants through written and unwritten policies and procedures. (Id. ¶ 58.)

Plaintiffs / Counterclaim-Defendants were “compensated exclusively through tips from Defendants' customers,” and Defendants “required Plaintiffs to share their tips with Defendants and other non-service employees who do not customarily receive tips, including the managers, disc jockeys, and the bouncers.” (Id. ¶¶ 55-56.) Defendants allegedly “made all hiring decisions regarding wait staff, security, entertainers, managerial and all other employees on the premises.” (7J.¶61.)

Plaintiffs / Counterclaim-Defendants allege that Defendants need dancers/entertainers to successfully and profitably operate the Show Palace. (Id. ¶ 64.) The position of dancer/entertainer, according to Plaintiffs I Counterclaim-Defendants, “requires no managerial skill[s],” and “requires little other skill or education, formal or otherwise.” (Id. ¶¶ 65-66.) The only requirements to become a dancer/entertainer at Show Palace are “physical attributes” and the “ability to dance seductively.” (Id. ¶ 67.) Defendants did not require prior experience as an entertainer or any formal dance training as a job condition or prerequisite to employment. (Id.)

Defendants allegedly failed to maintain records of “wages, fines, fees, tips and gratuities and/or service charges paid or received by dancers/entertainers.” (Id. ¶ 68.) Defendants also failed to maintain and furnish wage statements to Plaintiffs / Counterclaim-Defendants. (Id. ¶ 88.) Plaintiffs / Counterclaim-Defendants were “not paid an hourly minimum wage or any hourly wage or salary despite being present at Defendants' facility and required to work and entertain its customers at any time during an eight-plus (8+) hour work shift.” (Id. ¶ 69.) In addition, Plaintiffs Counterclaim-Defendants were “not paid overtime wages” for shifts lasting longer than eight hours, were “not paid an hourly minimum wage” for the typical half hour of time expended prior to each shift to get ready for work to comply with Defendants' dress and appearance standards, and “were not paid an hourly minimum wage for the time they were required to wait at Show Palace until the premises and the parking lot” were cleared. (Id. ¶¶ 7072.)

Plaintiffs / Counterclaim-Defendants allege that Defendants violated “the FLSA's tipped-employee compensation provision, 29 U.S.C. § 203(m), which requires employers to pay a tipped employee a minimum of $2.13 per hour” and Defendants also violated section § 203(m) when they “failed to notify Plaintiffs about the tip credit allowance (including the amount to be credited) before the credit was utilized.” (Id. ¶ 57.) Defendants “never paid” Plaintiffs / Counterclaim-Defendants “any amount as wages whatsoever,” and instead, allegedly, “required Plaintiffs ... to pay them for the privilege of working.” (Id. ¶ 75.)

IL Discussion

a. Standard of review

Rule 12(f) of the Federal Rules of Civil Procedure provides that “[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent or scandalous matter.” Fed.R.Civ.P. 12(f). Motions to strike are generally disfavored and will not be granted “unless it appears to a certainty that plaintiffs would succeed despite any state of the facts which could be proved in support of the defense.” Coach, Inc. v. Kmart Corps., 756 F.Supp.2d 421, 425 (S.D.N.Y. 2010) (quoting Salcer v. Envicon Equities Corp., 744 F.2d 935, 939 (2d Cir. 1984), vacated and remanded on other grounds, 478 U.S. 1015 (1986)); see also State of New York v. United Parcel Serv., Inc., 160 F.Supp.3d 629, 637 (S.D.N.Y. 2016) (“Motions to strike are generally disfavored.” (quoting Mayfield v. Asta Funding, Inc., 95 F.Supp.3d 685, 696 (S.D.N.Y. 2015))); Walters v. Performant Recovery, Inc., 124 F.Supp.3d 75, 78 (D. Conn. 2015) (“Motions to strike are generally disfavored, but are within the district court's sound discretion.” (quoting Lamoureux v. Anazao Health Corp., 250 F.R.D. 100, 102 (D. Conn. 2008))).

A court may strike a defense as insufficient where “(1) there is no question of fact which might allow the defense to succeed; (2) there is no question of law which might allow the defense to succeed; and (3) the plaintiff would be prejudiced by the inclusion of the defense.” Sibley v. Choice Hotels Int'l, Inc., 304 F.R.D. 125, 132 (E.D.N.Y. 2015) (citation omitted); see also United Parcel Serv., Inc., 160 F.Supp.3d at 637; Coach Inc., 756 F.Supp.2d at 425. The first two prongs of this test “examine the legal sufficiency of the asserted defense.” Walters, 124 F.Supp.3d at 78 (citing Coach, Inc., 756 F.Supp.2d at 425). “This is ‘to be determined solely upon the face of the...