Opinion
6:22-cv-00639-MK
02-06-2024
HEYLI WOORDRUFF, Plaintiff, v. TOEZPECUNIA, INC., Defendants.
FINDINGS AND RECOMMENDATION
MUSTAFA T. KASUBHAI, UNITED STATES MAGISTRATE JUDGE
Plaintiff Heyli Woodruff filed this action (ECF No. 1) alleging violations of the Fair Labor Standards Act (FLSA) against Defendants Toezpecunia, Inc., and Wayne Vajgert (“Defendants”) on May 2, 2022. ECF No. 1. Before the Court is Defendants' Motion for Summary Judgment (ECF No. 34), Plaintiff's Motion for Summary Judgment as to Defendants' counterclaims and affirmative defenses (ECF No. 36), and Plaintiff's Motion for Partial Summary Judgment. ECF No. 57. For the reasons below, Defendants' Motion for Summary Judgment should be denied. Plaintiff's motions should be granted.
BACKGROUND
From 2019-2020, Plaintiff performed as a dancer at Toezpecunia, Inc., also known as “Sweet Illusions,” a club owned by Defendant Wayne Vajgert. Compl., ECF No. 1. Plaintiff was not paid a wage or provided a written contract. Id. Plaintiff first began working at Sweet Illusions in 2012, after she first turned 18. Deposition of Heyli Woodruff (“Woodruff Dep.”) 12:18-13:2, ECF No. 48-2. She had no prior adult entertainment experience. Id. During the period at issue in this case, Plaintiff worked almost exclusively for Sweet Illusions, with an occasional trip to perform out of town for a weekend. Woodruff Dep. 65:21-66:1. When Plaintiff returned to work at the club in 2019, she was not asked to sign a contract. Deposition of Sonia Rahimi (“Rahimi Dep.”) 72:6-8, ECF No. 48-1; Woodruff Dep. 42:8-14.
The workday at Sweet Illusions is divided into a day shift and a night shift, and dancers perform 15 to 18 dances per shift. Sweet Illusions managed dancers' shifts based on dancers' requests and club's availability. Rahimi Dep., 16:16-17:20. None of the dancers are paid a wage. Rahimi Dep. 57:16-18. Defendants also require dancers to give up fifteen to twenty percent of their earnings to the DJ, bartender, and bouncer, a payment known as a “tip-out”. Woodruff Dep. 48:14-49:16. Defendants also charged the dancers mandatory house fees for performing, for missing shifts, and for using the “Champagne Room,” an enclosed location within Sweet Illusions reserved for private dances. Woodruff Dep. 40:22-25, 22:21-25, 34:24-35:1-11.
Plaintiff filed this action on May 2, 2022 along with fellow claimants Hannah Thornton, Kayleigh Benzie, Raven Garcia, and Kimberly Meraz. See Compl. Plaintiff alleges that Defendants misclassified her as an independent contractor after she returned to Sweet Illusions in 2019. See Compl. The Complaint alleges that Plaintiff is entitled to minimum wages owed pursuant to 29 U.S.C §216(b), along with the return of any monies or tips improperly taken by Defendant, liquidated damages, interest, and attorney fees and costs. Compl.; see also Pl.'s Resp. 11-12, ECF No. 48.
STANDARD OF REVIEW
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, affidavits, and admissions on file, if any, show “that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Substantive law on an issue determines the materiality of a fact. T.W. Elec. Servs., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). Whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party determines the authenticity of the dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324.
Special rules of construction apply when evaluating a summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec., 809 F.2d at 630.
DISCUSSION
I. Defendants' Motion for Summary Judgment
Defendants argue that they are entitled to summary judgment on all of Plaintiffs' claims because (1) Plaintiff lacks standing; (2) her claims are time-barred because she cannot make a showing of willfulness to toll the FLSA's statute of limitations; and (3) Plaintiff was not an employee pursuant to the FLSA under the “economic realities” test. ECF No. 34. Plaintiff moves for summary judgment on Defendants' counterclaims and affirmative defenses (ECF No. 36), arguing that these claims and defenses must fail because Plaintiff did not have a contract with Defendants. Plaintiff also moves for summary judgment as to her employee status and the issue of Defendants' willfulness. ECF No. 57. For the reasons that follow, Defendants' motion should be denied. Plaintiff's motion for summary judgment on Defendant's counterclaims and defenses should be granted. Plaintiff's motion for summary judgment as to employee status and willfulness should be granted.
1. Standing
The Court first considers Defendants' standing argument. Defendants contend that summary judgment is appropriate because Plaintiff lacks standing to bring an FLSA claim because (1) she did not pay taxes to the IRS and (2) she did not keep records of her compensation.
i. Failure to Pay Taxes
Defendants argue that Plaintiff lacks “prudential standing” because “any wages that may be found to be owed to Plaintiff would instead be the property of the federal, state, and/or local governments.” Def. Mtn. at 18, ECF No. 34, citing City of Los Angeles v. Cnty. of Kern, 581 F.3d 841, 848 (9th Cir. 2009). To establish standing, a claimant must (1) have suffered an injury in fact, that (2) is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Env't Servs., Inc., 528 U.S. 167, 180-81 (2000). Here, it is undisputed that Plaintiff performed at Defendants' club. See Def. Mtn. It is undisputed that Defendants did not pay Plaintiff minimum wage for the hours plaintiff performed there. Id. If Plaintiff was an “employee” under the FLSA, then Defendants are required to pay a minimum wage. See 29 U.S.C. § 216(b) (“Any employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages[.]”). Thus, Plaintiff has established constitutional standing.
Judge You addressed an identical argument in a recent case in this District, Hollis v. R&R Restaurants, 3:21-cv-00965-YY (D. Or. Nov. 2, 2023). As Judge You explained:
Defendants' position would require a plaintiff in an FLSA suit to prove that the plaintiff was current on federal tax obligations in order to sue for failing to pay a minimum wage. Taken to its furthest extremes, defendants' view of standing would potentially exclude a plaintiff with any debt larger than the prayer for damages from suing in federal court. Defendants cite no case to support such a strained reading of standing jurisprudence. Whatever issues plaintiff may have with the Internal Revenue Service or other tax collecting agency- which are, of course, not parties to this suit-as a result of plaintiff's past earnings and tax filings, or that may result from any recovery from defendants in this case, defendants have not adequately shown the relevance of those issues for determining constitutional standing to sue in this context. See Beltran v. Maxfield's, LLC, No. 2:13-cv-01043-LA, 2014 WL 7139808, at *2 (E.D. Wis. Dec. 12, 2014) (rejecting argument that FLSA plaintiffs lacked standing because they “would have taken home less . . . had [the defendant] paid minimum wage and withheld the appropriate taxes”).Id. at 7. The Court agrees with Judge You's reasoning. While tax obligations may at some point become relevant to this litigation - with respect to the issue of damages, for example -Defendants have failed to establish that potential tax issues deprive Plaintiff of constitutional standing to bring her FLSA claim.
ii. Failure to Keep Records
Defendants also argue that Plaintiff lacks standing to bring this action because she failed to keep records of her compensation and therefore cannot recover damages. In advancing this argument, Defendants again conflate the issue of constitutional standing with issues related to calculating damages, the latter of which is not presently before this Court. Further, and contrary to Defendants' assertions, courts within the Ninth Circuit may award back wages despite imprecisions arising from the employer's failure to keep records as required by the FLSA. Brock v. Seto, 790 F.2d 1446, 1448 (9th Cir. 1986). Defendants' motion for summary judgment based on lack of standing should be denied.
2. Willfulness
Defendants next argue that Plaintiff's claims are time-barred because Plaintiff did not bring her claim within the FLSA's two-year statute of limitations and cannot make the requisite showing of “willfulness” that would extend the statute of limitations to three years. FLSA claims must be commenced within “two years after the cause of action accrued . . . except that a cause of action arising out of a willful violation may be commenced within three years[.]” 29 U.S.C. § 255(a); Alvarez v. IBP, Inc., 339 F.3d 894, 908-09 (9th Cir. 2003), aff'd, 546 U.S. 21 (2005) (internal quotation marks and citation omitted). An employer's violation of the FLSA is willful if “the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute.” McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988); see also Flores v. City of San Gabriel, 824 F.3d 890, 906 (9th Cir. 2016). When a court finds that conduct violating the FLSA was willful, the FLSA's standard two-year statute of limitations is extended to a three-year period. Alvarez v. IBP, Inc., 339 F.3d 894, 908 (9th Cir. 2003), aff'd, 546 U.S. 21 (2005).
The plaintiff bears the burden of establishing willfulness for statute of limitations purposes. McLaughlin, 486 U.S. at 135. An employer need not violate the statute knowingly for its violation to be considered “willful” under § 255(a), although “merely negligent” conduct will not suffice. Id. at 133. The three-year statute of limitations may be applied “where an employer disregarded the very ‘possibility' that it was violating the statute,” Alvarez, 339 F.3d at 908- 09 (citing Herman v. RSR Sec. Services Ltd., 172 F.3d 132, 141 (2nd Cir. 1999)). Where an employer knew its employees were working without wages and knew or at least recklessly disregarded the fact that a contract label cannot waive the requirements of the FLSA, the employer acted willfully. Ackler v. Cowlitz County, 7 Fed.Appx. 543, 545 (9th Cir. 2001).
Here, Defendants allege that they took action to comply with the FLSA by entering into independent contractor agreements with performers after conducting legal research and consulting with legal counsel. ECF No. 48-1, 78:18-79:19. It is thus uncontested that Defendants were aware of the FLSA requirements. Co-plaintiff Raven Garcia testified that in 2021, after Sweet Illusions was sued by another dancer for misclassifying her as an independent contractor under the FLSA, the club owner asked the dancers to either agree to keep working as independent contractors without wages, or to accept a minimum wage and forfeit their additional earnings from tips, lap dances, and other performance fees. Accordingly, Garcia signed the paperwork to continue working and keep her tips. Declaration of Raven Garcia (“Garcia Decl.”) ¶ 11, ECF No. 57-1. The non-negotiable terms of this choice, and the putative independent contractor agreement, were read aloud to the dancers, and Defendants did not provide copies of the contract to the dancers. Id.
Employers cannot contract around FLSA requirements. See Brooklyn Savings Bank v. O'Neill, 324 U.S. 697 (1945) (“The (FLSA) was a recognition of the fact that due to the unequal bargaining power as between employer and employee, certain segments of the population required federal compulsory legislation to prevent private contracts on their part which endangered national health and efficiency and as a result the free movement of goods in interstate commerce.”). “FLSA rights cannot be abridged by contract or otherwise waived because this would ‘nullify the purposes' of the statute and thwart the legislative policies it was designed to effectuate.” Barrentine v. Arkansas-Best Freight System, 450 U.S. 728, 101 S.Ct. 1437, 1444, 67 L.Ed.2d 641 (1981). As noted above, Defendants knew their employees were working without wages and attempted to contract around the requirements of the FLSA by forcing dancers to choose between the status quo and a wage far below market rate. See Garcia Decl. ¶ 11. Other courts have found willfulness based on similar, uncontroverted testimonial evidence. See Chao v. A-One Medical Services, Inc., 346 F.3d 908, 918 (9th Cir. 2003) (testimony from former employees revealed that A-One knowingly denied overtime wages, using the excuse that employees worked for two separate companies and would have to work 80 hours a week between the two before overtime was given. A-One “did not sufficiently controvert this evidence to create a genuine issue of fact.” A-One never denied presenting this excuse to the employees and therefore, “even viewed in the light most favorable to [A-One], support a finding of willfulness.”). On this record, the Court finds that Defendants' actions were willful for the purposes of extending the FLSA's statute of limitations to three years. Plaintiff's motion for summary judgment as to the issue of willfulness (ECF No. 57) should be granted.
3. Economic Realities Test
Because Plaintiff has established standing and willfulness for the purposes of tolling the FLSA's statute of limitations to three years, the Court proceeds to determine whether Plaintiff was improperly classified as an independent contractor under the FLSA. “Neither the common law concepts of ‘employee' and ‘independent contractor' nor contractual provisions purporting to describe the relationship are determinative of employment status.” Nash v. Resources, Inc., 982 F.Supp. 1427, 1433 (D. Or. 1997), citing Real v. Driscoll, 603 F.2d 748, 754-55 (9th Cir. 1979). The FLSA is a federal statute and courts across the country employ the “economic realities” test to determine if a person is an employee and thereby entitled to FLSA's protections. Real, 603 F.2d at 754; see also Mathis v. Housing Authority of Umatilla County, 242 F.Supp.2d 777, 782 (D. Or. Sept. 19, 2002). The economic realities test evaluates a non-exhaustive list of factors including (1) the degree of control an employer wields over putative employees; (2) the relative financial investment; (3) opportunities for profit or loss; (4) degree of skill and independent initiative required; (5) permanence and duration of the working relationship; and (6) integrity to the business. Iontchev v. AAA Cab Servs., 685 Fed.Appx. 548, 550 (9th Cir. 2017). The parties dispute the application of each of these factors to the facts of this case.
A. Control
The parties first dispute the degree of control exercised by Defendants over Plaintiff and her fellow dancers. Here, Defendants hired dancers through an audition process to be approved by Vajgert, who was the only person with authority to hire or fire a dancer. Rahimi Dep. 51:2252:2. Dancers were able to request shifts, but Defendants ultimately decided who could work and when, posting the schedule for the following week every Sunday. Rahimi Dep. 16:16-17:20.
Plaintiff was required to pay a “house fee” for each shift she worked, along with being fined at least $20 each time she wanted to leave a shift early. Woodruff Dep. 40:22-25, 22:2323:2. Defendants appointed a scheduler who kept a logbook of which dancers showed up for their shifts, sent reminder texts to the dancers prior to their shifts, and sent check-in texts when a dancer failed to show up. Rahimi Dep. 29:13-15, 61:1-2. If Plaintiff did not show up for a shift, Defendants charged her another house fee. Woodruff Dep. 71:5-11.
Defendants set a minimum fee for private dances within the club at $20, as well as setting the price and time limits for use of the Champagne room, a private room within Sweet Illusions. Rahimi Dep. 39:3-14; Woodruff Dep. 34:22-35:4. Defendants required customers to give money directly to the bartender prior to entering the Champagne room. Rahimi Dep. 39:19-40:6.
Defendant's implementation of fines, house fees, set room charges, the monitoring of Plaintiff's schedules, and the hiring process all point to a substantial level of control that Defendants exercised over Plaintiff. Indeed, while the parties dispute how to characterize the degree of control exercised over dancers, there is little factual conflict in the evidentiary record. To the extent that Defendants present evidence that Plaintiff was not fined or punished for missing shifts (See Rahimi Dep. 30:2-7), the Court finds this evidence not credible based on the weight of multiple Plaintiffs' testimony. See, e.g., Garcia Decl. ¶ 5; Woodruff Dep. 71:5-11; see also Perez v. Oak Grove Cinemas, Inc., 68 F.Supp.3d 1234, 1242-43 (D. Or. 2014) (weighing conflicting evidence based on the Court's assessment of the factual record to reasonably determine that plaintiffs were employees under the economic realities test). The Court finds that the relative degrees of control exercised by the parties weighs in favor of finding that Plaintiff was an employee. See Iontchev, 685, Fed.Appx. at 550.
B. Relative Financial Investment
The parties also dispute whether the parties' relative financial investments weigh in favor of employee status. Here, Sweet Illusions' investment in the business was far greater than Plaintiff's. Plaintiff invested in outfits, hair, and makeup (Woodruff Dep. 44:13-45:12), while Sweet Illusions invested in property, food, liquor and other beverages, marketing, and contracted employees such as bartenders and bouncers. Rahimi Dep. 40:20-23, 42:17-21, 32:7-12, 41:2-22. Defendants' ownership of the Sweet Illusions business shows a substantial investment over that of the Plaintiff's. As owners, Defendants were responsible for paying utility bills and for regular maintenance of the building, such as upkeep of the landscape (ECF No. 48-2) and facilities. Rahimi Dep. 41:2-16. Defendants' substantial financial investment in Sweet Illusions also weighs in favor of employee status. See Iontchev, 685, Fed.Appx. at 550.
C. Opportunity for Profit or Loss
Defendants argue that because Plaintiff received significant amounts of money in tips from customers at Sweet Illusions, the third factor of the economic realities test weighs against the Plaintiff's employee status. The Court disagrees. The amount Plaintiff was able to earn in tips is irrelevant to the economic realities analysis because Plaintiff's opportunity for profit was dependent upon the customers attracted to Sweet Illusions, not the general client base for exotic dancers in Plaintiff's geographic market (as it would be for an independent contractor). Moreover, Defendants' claim that Plaintiff substantially invested in marketing her performances to bring customers to the club is unsupported by evidence in the record. See Woodruff Dep. 31:28. Even if Plaintiff's use of social media could be considered a “financial investment,” it would be neutral as to the Court's economic realities calculus because Defendants also marketed the club on their website, on Facebook, and on Instagram using pictures of performers. ECF 48-4.
Defendants also exhibited control over Plaintiff's profit and losses by scheduling as many as seventeen girls on a given night, which allowed Plaintiff to dance to only one song each hour. This limited Plaintiff's potential profits on any given night and, if wanting to make more money, required her to work the room in search of private dances. Woodruff Dep. 23:22-24:9. Further, at the end of each shift, Defendants required Plaintiff to give up fifteen to twenty percent of her earnings to the DJ, bartender, and bouncer, a payment known as a “tip-out”. Woodruff Dep. 48:14-49:16. Defendant's control over the use and pricing of the Champagne room also evidences Defendants' influence over Plaintiff's relative opportunities for profit and loss. Rahimi Dep. 39:10-14. On this record, Defendants exercised substantial control over Plaintiff's opportunities for profit and loss.
In their briefing, Defendants rely repeatedly on Matson, a District of Oregon case decided over 20 years ago, to argue that the economic realities in this case weigh against a finding that Plaintiff was an employee. Matson v. 7455 Inc., 2000 WL 1132110 (D. Or. Jan 14, 2000). In that case, the court granted defendant club owner's motion for summary judgment on the plaintiff's FLSA claims, reasoning that the fact that the claimant, an exotic dancer who performed at the defendant's club, had signed a written agreement that classified her as an independent contractor was “the most telling indicator of her status as an independent contractor.” Id. at *4. As noted above, long-established law dictates that employers cannot contract around FLSA requirements. See Brooklyn Savings Bank, 324 U.S. 697. The Matson court went on to dispose of the claimant's FLSA claim in a dismissive sentence that focused on the fact that the claimant was “paid exclusively through fees and tips for table dances” (which would be true whether or not she was misclassified as an independent contractor) and that therefore the claimant's ability to earn a living was “largely dependent on [her] own skill to attract customers and not on any salary or wage set by the defendants” (which was also true and the basis for the claimant's lawsuit). Id. at *4. Yet the Matson court concluded from these obvious facts that the claimant “was in control of her opportunity for profit.” Id.
Matson is not instructive. The fact that the claimant was forced to rely on customer tips to make a living from her work at the defendant's club is not determinative of her status as an independent contractor; rather, it simply results from the fact that the defendant failed to pay plaintiff a wage. The reasoning in Matson would preclude any misclassified independent contractor from advancing an FLSA claim against their employer.
Defendants also rely on Roberts v. Acropolis, an Oregon Appellate court case from 1997, to advance their argument that Plaintiff is not an employee under the “economic realities” analysis. State ex rel. Roberts v. Acropolis McLoughlin, Inc., 150 Or.App. 180 (1997). In that case, the Oregon court affirmed a lower court's ruling that the claimants, exotic dancers who performed at the defendant's club in Portland, were not employees entitled to minimum wage because they were hired through a temp agency. Because Plaintiff was hired directly by Sweet Illusions and not through an agency, Roberts is inapposite to this case. In sum, because Defendants exercised control over Plaintiff's shifts as well as her access to tips by requiring mandatory tip-outs and fees to use the Champagne room, this factor also weighs in favor of Plaintiff. See Iontchev, 685, Fed.Appx. at 550.
D. Degree of Skill and Independent Initiative Required
The parties also dispute the degree of skill and independent initiative required by Plaintiff to perform as an exotic dancer at Sweet Illusions. While Defendants characterize Plaintiff as a “highly skilled” performer, Plaintiff presented evidence that she was first hired at Sweet Illusions with no prior experience, and that the only requisite for the position was that she show her body. Woodruff Dep. 14:1-11. While it is likely true that, as Defendants argue, Plaintiff's degree of skill and initiative grew with time and experience, the amount of skill and initiative required to perform as a dancer - essentially, none - weighs in favor of finding that Plaintiff was an employee. See Iontchev, 685, Fed.Appx. at 550.
E. Permanence and Duration of the Working Relationship
Regarding the permanence and duration of the working relationship between Plaintiff and Defendants, Defendants argue that Plaintiff was free to work at other clubs and cease her relationship with Sweet Illusions at any time. To the extent that this is true, it is true of any waged employee who is forced to work multiple jobs to make ends meet. For the majority of the relevant period, Sweet Illusions was Plaintiff's primary source of income (Woodruff Dep. 65:21-66:5), which weighs in favor of classifying Plaintiff as an employee. See Iontchev, 685, Fed.Appx. at 550.
F. Integrity to the Employer's Business
Finally, there is no question that performers like Plaintiff were integral to Defendants' business. Defendants' website prominently features female performers and even includes archives of photos of dancers who no longer perform at the club. ECF No. 48-2. The Court concludes that the majority of Sweet Illusions' business is derived from patrons of the dancers. See Woodruff Dep. 79:16-19. There was never a time while the club was open that dancers were not performing. Rahimi Dep. 40:10-12. Because Plaintiff and her fellow performers were integral to the Defendants' business, this factor weighs in favor of classifying Plaintiff as an employee, not an independent contractor. See Iontchev, 685, Fed.Appx. at 551.
Based on the totality of the economic realities, the Court concludes that Plaintiff was an employee. See Tony & Susan Alamo Found. V. Sec. of Labor, 471 U.S. 290, 296-97 (1985) (noting that courts construe the FLSA expansively in favor of coverage, recognizing that broad coverage is essential to accomplish the goals of this remedial legislation); Mathis v. Housing Authority of Umatilla County, 242 F.Supp.2d 777, 782 (D. Or. Sept. 19, 2002). For this reason, Defendants' motion for summary judgment should be denied. Plaintiff's motion for summary judgment as to the issue of employee status should be granted.
II. Motion for Summary Judgment on Defendants' Counterclaims and Defenses
Plaintiff also moves for summary judgment on Defendants' counterclaims of breach of contract and unjust enrichment, and on Defendants' affirmative defenses of equitable estoppel, unclean hands or bad faith, lack of standing, waiver, duty to arbitrate, and contribution. Answer, ECF No. 5.
Defendants' first counterclaim alleges that Plaintiff breached an oral agreement with them to perform as an independent contractor by claiming to be an employee pursuant to the FLSA. Id. ¶¶ 41-48 (counterclaim for unjust enrichment); 49-54 (counterclaim for breach of contract). Defendants' breach of contract counterclaim is premised on Defendants' contention that Plaintiff entered into a valid independent contractor agreement with Defendants. Because any oral agreement by Plaintiff to perform as an independent contractor would be an impermissible waiver of Plaintiff's rights under the FLSA, however, Plaintiff's should be granted summary judgment on Defendants' breach of contract counterclaim. See Desio v. Russell Rd. Food & Beverage, 2016 WL 4721099 at *7-8 (D. Nev. Sept. 9, 2016) (employees cannot waive their rights under the FLSA). For the same reasons, summary judgment should be granted on Defendants' affirmative defenses of “Plaintiff's own conduct” and “independent contractor status.” See Answer ¶¶ 31, 32. Finally, because employees cannot waive their rights under the FLSA, summary judgment should be granted as to Defendants' affirmative defenses of “waiver” and “waiver of class and collective claims.” Id. ¶¶ 37, 40.
Defendants' counterclaim of unjust enrichment also fails. This claim is based on Defendants' assertion that if Plaintiff was an employee, she would not be able to keep her “private dance fees” and other fees Plaintiff received from customers. ECF No. 49 at 8. Defendants, however, have presented no evidence that Plaintiff was subject to a contractual agreement that would obligate her to pay fees and tips to Defendants, and have cited no law that would require an employee to pay monies back to their employer. Because there is no genuine issue of material fact in the record before the Court regarding Defendants' counterclaim of unjust enrichment, Plaintiff's motion for summary judgment on this claim should be granted.
With respect to Defendants' remaining affirmative defenses, the Court finds as follows. First, summary judgment on Defendants' affirmative defense of “failure to state a claim” should be granted because, as discussed above, Plaintiff has stated a FLSA claim. Answer ¶ 27. Summary judgment should also be granted on the affirmative defenses of lack of standing, laches, good faith, and statute of limitations (Id. ¶¶ 30, 33, 34, 35) because, for the reasons discussed above, the Court finds that Plaintiff has constitutional standing and has made a showing of willfulness sufficient to toll the FLSA's statute of limitations.
Regarding Defendants' affirmative defense of equitable estoppel, defendants have not provided any evidence that Plaintiff “represented that there [sic] were independent contractors by entering into independent contractor agreements with the intent to initiate a civil action under the [FLSA].” Id. ¶ 28. Similarly, Defendants have provided no evidence that Plaintiff agreed to an arbitration clause. Summary judgment should be granted on Defendants' affirmative defenses of equitable estoppel and duty to arbitrate. Id. ¶¶ 28, 39.
Defendants' third affirmative defense of “unclean hands/bad faith” is based on Defendants' argument that “Plaintiff reaped substantial benefits from her agreement to perform as an independent contractor by failing to report any of the monies she received from her performances at Sweet Illusions to either federal or state tax authorities.” Answer ¶ 29; ECF No. 49 at 14. Defendants, however, provide no legal argument for their implicit claim that failure to report tips to the IRS bars Plaintiff from advancing a FLSA claim against Defendants.
Defendants' tenth affirmative defense of “intentional/negligent spoliation” alleges that Plaintiff failed to keep records of her earnings while performing at Sweet Illusions. Answer ¶ 36. Defendants again cite no legal basis for asserting that Plaintiff was required to keep records of her earnings on behalf of Defendants. Summary judgment should therefore be granted on Defendants' tenth affirmative defense. Finally, because Defendants have not provided evidence that the parties had a contract that would entitle Defendants to an offset from Plaintiff's earnings, summary judgment should be granted as to Defendants' twelfth affirmative defense. See Answer ¶ 38. Plaintiff's motion for summary judgment as to Defendants' counterclaims and affirmative defenses should be granted.
RECOMMENDATION
For the reasons above, Defendants' motion for summary judgment (ECF No. 34) should be DENIED. Plaintiffs' motion for summary judgment as to Defendants' counterclaims and affirmative defenses (ECF No. 36) should be GRANTED. Plaintiff's motion for summary judgment as to the issues of willfulness and employee status (ECF No. 57) should be GRANTED.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Federal Rule of Appellate Procedure 4(a)(1) should not be filed until entry of the district court's judgment or appealable order. The Findings and Recommendation will be referred to a district judge. Objections to this Findings and Recommendation, if any, are due fourteen (14) days from today's date. See Fed.R.Civ.P. 72. Failure to file objections within the specified time may waive the right to appeal the district court's order. Martinez v. Ylst, 951 F.2d 1153, 1157 (9th Cir. 1991).