Stevenson et al v. The Great American Dream, Inc. et al
OPINION AND ORDER granting 126 Motion for Partial Summary Judgment. Signed by Judge Thomas W. Thrash, Jr on 5/14/15. (dr)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
Individually and on behalf of others
similarly situated, et al.,
CIVIL ACTION FILE
THE GREAT AMERICAN DREAM,
INC. doing business as
Pinups, et al.,
OPINION AND ORDER
This is an FLSA minimum wage and overtime case. It is before the Court on the
Defendants James W. Lee, Sr. and The Great American Dream, Inc.’s Motion for
Partial Summary Judgment [Doc. 126]. For the reasons set forth below, the
Defendants’ Motion for Partial Summary Judgment [Doc. 126] is GRANTED.
The Plaintiffs – current and former adult entertainers at Pin Ups Nightclub –
brought suit alleging that they were entitled to minimum wage and overtime
compensation under the FLSA. In particular, the Plaintiffs claimed that they were
improperly classified as “independent contractors,” rather than “employees,” and so
were wrongfully deprived of certain benefits mandated by the FLSA. On December
17, 2012, they moved for conditional certification of a collective action class,1 which
was granted on August 14, 2013.2 On September 11, 2013, the Plaintiffs moved for
partial summary judgment on the issue of whether the entertainers were “employees”
under the FLSA.3 The Court granted the Plaintiffs’ motion for partial summary
judgment on December 31, 2013.4
The Defendants James W. Lee, Sr. and The Great American Dream, Inc.
(“GAD”) now move for partial summary judgment on two issues. First, the
Defendants argue that there is no genuine issue of fact concerning whether James W.
Lee, Sr. – President of GAD – may be personally liable to the Plaintiffs under the
FLSA. Second, the Defendants also argue that there is no genuine issue of fact
concerning whether the alleged FLSA violations were willful or committed in good
II. Legal Standard
Summary judgment is appropriate only when the pleadings, depositions, and
affidavits submitted by the parties show that no genuine issue of material fact exists
and that the movant is entitled to judgment as a matter of law.5 The court should view
the evidence and any inferences that may be drawn in the light most favorable to the
nonmovant.6 The party seeking summary judgment must first identify grounds that
show the absence of a genuine issue of material fact.7 The burden then shifts to the
nonmovant, who must go beyond the pleadings and present affirmative evidence to
show that a genuine issue of material fact does exist.8 A “mere ‘scintilla’ of evidence
supporting the opposing party’s position will not suffice; there must be a sufficient
showing that the jury could reasonably find for that party.”9
FED. R. CIV. P. 56(c).
Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970).
Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).
Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.1990).
A. James W. Lee, Sr.’s Liability
Lee – the President of GAD, which in turn owns Pin Ups – claims that he may
not be individually liable for the FLSA violations alleged by the Plaintiffs. An officer
“cannot be held individually liable for violating the . . . [provisions] of the FLSA
unless he is an ‘employer’ within the meaning of the Act.”10 To be considered an
“employer” under the FLSA, “an officer must either be involved in the day-to-day
operation or have some direct responsibility for the supervision of the employee.”11
Here, Lee is not an “employer” under the FLSA, and so he is not liable to the
Plaintiffs for the alleged FLSA violations. To be sure, from 1993 until 2010, Pin Ups
was managed by General Manager Terry Stephenson.12 Stephenson had day-to-day
control over the operations of Pin Ups, which included “matters pertaining to the work
and compensation” of the entertainers.13 Kelly Campbell then performed these duties
from 2010 to 2012, when Cary Adams took over as Chief Operating Officer.14 Lee
Alvarez Perez v. Sanford-Orlando Kennel Club, Inc., 515 F.3d 1150,
1160 (11th Cir. 2008).
Patel v. Wargo, 803 F.2d 632, 638 (11th Cir. 1986).
Lee Aff. ¶ 6.
Lee Aff. ¶ 7.
Lee Aff. ¶¶ 6, 10.
testified that he “never had any involvement in the day-to-day operations of Pin
Ups.”15 Lee further testified that he has “never had any involvement of any kind with
regard to the terms and conditions of work performed by” the entertainers,16 and that
he never supervised them.17 He played no role in the hiring decisions18 nor did he play
any role in forming the regulations governing the entertainers’ conduct during their
shifts.19 Based on these undisputed facts, it is clear that Lee was not involved in the
day-to-day operations of Pin Ups and did not have direct responsibility for the
supervision of the entertainers. Consequently, Lee is not an “employer” under the
In response, the Plaintiffs first argue that Lee, as the President, possessed
supervisory authority.20 But that does not mean he exercised such authority, and the
Eleventh Circuit has made clear that “unexercised authority is insufficient to establish
liability as an employer.”21 The Plaintiffs then argue that Lee admitted he made the
Lee Aff. ¶ 11.
Lee Aff. ¶ 9.
Lee Aff. ¶ 11.
Lee Aff. ¶ 14.
Lee Aff. ¶ 9.
Pls.’ Br. in Resp. to Defs.’ Mot. for Partial Summ. J., at 2.
Alvarez Perez, 515 F.3d at 1161.
decision to classify the Plaintiffs as “independent contractors.”22 But the evidence
cited by the Plaintiffs – paragraph four of Lee’s Affidavit – does not support this
assertion. Indeed, paragraph four of Lee’s Affidavit merely states that GAD “opened
for business July 4, 1993.”23 Accordingly, the Defendants’ Motion for Partial
Summary Judgment, insofar as it applies to claims brought against Lee individually,
should be granted.
B. Willfulness and Good Faith
The Defendants move for summary judgment on two related issues. First, the
Defendants assert that there is no genuine issue of fact concerning whether they
willfully committed the alleged FLSA violations. Although “the ordinary statute of
limitations in cases brought under the FLSA is two years, a cause of action arising out
of a willful violation of the FLSA may be commenced within three years after the
cause of action accrued.”24 A violation is “willful” if “the employer either knew or
showed reckless disregard for the matter of whether its conduct was prohibited by the
[FLSA].”25 The “burden rests with the employee to prove by a preponderance of the
Pls.’ Br. in Resp. to Defs.’ Mot. for Partial Summ. J., at 2.
Lee Aff. ¶ 4.
Allen v. Board of Pub. Educ. for Bibb Cnty., 495 F.3d 1306, 1323 (11th
Cir. 2007) (citing 29 U.S.C. § 255(a)) (emphasis added).
McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988).
evidence that her employer acted willfully.”26 Second, the Defendants assert that there
is no genuine issue of fact concerning whether they committed the alleged FLSA
violations in good faith. Parties “who prevail under the FLSA are entitled to recover
liquidated damages unless the employer makes an affirmative showing that it acted
in good faith.”27 To “establish its good faith, [an employer] must prove both that it
acted with a good faith belief that its procedures did not violate the law [subjective
component] and that it had reasonable grounds for believing this [objective
component].”28 The employer “bears the burden of establishing both the subjective
and objective components of that good faith defense against liquidated damages.”29
In assessing both of these issues – willfulness and good faith – the Court is
“answer[ing] what is essentially the same question for two different purposes.”30
Here, given the Plaintiffs’ failure to submit any evidence on the issue, GAD is
entitled to judgment as a matter of law on the issue of whether it committed the
Davila v. Menendez, 717 F.3d 1179, 1185 (11th Cir. 2013) (internal
quotation marks omitted).
Ojeda-Sanchez v. Bland Farms, LLC, 499 Fed. Appx. 897, 902 (11th Cir.
2012); see also 29 U.S.C. § 260.
Ojeda-Sanchez, 499 Fed. Appx. at 903; see also 29 U.S.C. § 260.
Alvarez Perez, 515 F.3d at 1163.
Id. at 1162.
alleged FLSA violations in good faith. To begin, based on the undisputed facts, it is
clear that GAD believed, in good faith, that its compensation structure was consistent
with the FLSA. Generally, “[t]o satisfy the subjective ‘good faith’ component, the
[employer has the burden of proving] that [it] had an honest intention to ascertain
what [the Act] requires and to act in accordance with it.”31 In making its decision to
classify the dancers as independent contractors, GAD “relied upon the advice of
accountants, consultants, including wage and hour experts, attorneys, and business
Additionally, GAD’s evidence also supports the conclusion that its belief was
reasonable. According to Lee, classifying adult entertainers as “independent
contractors” – with their compensation coming exclusively from tips – has been the
industry standard for decades,33 and “an employer’s reliance on industry practice may
be relevant to a willfulness or good faith inquiry.”34 Moreover, as the Court noted in
Dybach v. State of Fla. Dep’t of Corr., 942 F.2d 1562, 1566 (11th Cir.
1991) (internal quotation marks omitted).
Lee Aff. ¶ 5.
Lee Aff. ¶¶ 19, 26. And to be clear, the Eleventh Circuit has stated that
“officers” may “testify as lay witnesses about the reasonableness of their corporation’s
pricing in light of industry standards” under Rule 701 of the Federal Rules of
Evidence. United States v. Hill, 643 F.3d 807, 841 (11th Cir. 2011).
Wajcman v. Investment Corp. of Palm Beach, 620 F. Supp. 2d 1353,
1361 (S.D. Fla. 2009). However, the Court acknowledges that conforming to an
its Order ruling that the Plaintiffs are “employees” under the FLSA, the test for
determining employee-status “is not one which allows for a simple resolution of close
cases.”35 Because the FLSA does not provide a clear definition of “employee,” courts
must utilize a multi-factor balancing test.36 Consequently, given the amorphous nature
of the term “employee,” the Court is reluctant to conclude that GAD’s belief – that the
entertainers were not “employees” under the FLSA – was objectively unreasonable.
In response, the Plaintiffs make one argument: that there are contradictions in Lee’s
Affidavit.37 But the Plaintiffs never point out what those contradictions are, and how
they demonstrate that the alleged FLSA violations were not committed in good faith.
Accordingly, GAD is entitled to summary judgment on the issue of whether it acted
in good faith. Consequently, it follows that GAD is also entitled to summary judgment
on the willfulness issue.
industry standard, in itself, is often not enough to establish objective reasonableness.
Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1311 (5th Cir. 1976).
See Stevenson v. Great Am. Dream, Inc., No. 1:12-CV-3359-TWT, 2013
WL 6880921, at *2-3 (N.D. Ga. Dec. 31, 2013).
Pls.’ Br. in Resp. to Defs.’ Mot. for Partial Summ. J., at 5.
For these reasons, the Court GRANTS the Defendants’ Motion for Partial
Summary Judgment [Doc. 126].
SO ORDERED, this 14 day of May, 2015.
/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge
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