U.S. Equal Employment Opportunity Commission v. Danny's Restaurant, LLC et al
Filing
119
ORDER denying 73 Motion for Summary Judgment by Defendant. Signed by District Judge Henry T. Wingate on 9/24/2018 (CGC)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION
v.
PLAINTIFF
Civil Action No. 3:16-CV-00769-HTW-LRA
DANNY’S RESTAURANT, LLC AND
DANNY’S OF JACKSON, LLC F/K/A
BABY O’S RESTAURANT, INC. D/B/A
DANNY’S DOWNTOWN CABARET
DEFENDANTS
______________________________________________________________________________
ORDER DENYING SUMMARY JUDGMENT
Before the court is the Motion for Summary Judgment filed by the Defendant, Danny’s of
Jackson LLC (hereafter “Danny’s of Jackson” or “Defendant”). [doc no. 73]. The Plaintiff
United States Equal Employment Opportunity Commission (hereafter “EEOC” or “Plaintiff”)
opposes the motion.
FACTUAL AND PROCEDURAL BACKGROUND
This lawsuit is an enforcement action brought by the EEOC under the auspices of Title
VII of the Civil Rights Act of 19641, as amended, and the Civil Rights Act of 1991, to correct
allegedly unlawful employment practices based on race and seeking relief on behalf of five
Black female exotic dancers who allegedly were subjected to disparate terms and conditions of
employment based on their race. The suit initially was brought against Danny’s Restaurant,
LLC, as well as against Danny’s of Jackson, LLC (hereafter Danny’s of Jackson). Danny’s
1
42 U.S.C. §2000e, et seq
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Restaurant, LLC did not file an answer nor enter an appearance in this cause. Resultantly, the
United States Clerk of Court for this Division entered default against this defendant on August
24, 2017 [doc. no. 41].
Danny’s of Jackson is the current owner of a strip club, “Danny’s Downtown Cabaret,”
located at 995 South West Street, in the downtown area of Jackson, Mississippi. Danny’s of
Jackson is a limited liability company formed in March of 2016, by Danny McGee Owens
(hereafter “Owens) and his son, Daniel Daxon Owens (hereafter “Dax”), who were the only
members. Certificate of Formation [doc. no. 79-24]. At present, Danny McGee Owens claims to
be the sole member of the limited liability company. According to Danny’s of Jackson, the
previous owner of Danny’s Downtown Cabaret was “Baby O’s Restaurant, Inc.,” (hereafter
Baby O’s). Baby O’s, says Danny’s of Jackson, owned the strip club in 2013, the period during
which the Title VII violations at issue here, allegedly occurred. Owens was incarcerated during
this time, having been sentenced to federal prison in 1992 and released in 2016.
Baby O’s was incorporated in April, 1998, and its principal office address was 995 S.
West Street, Jackson, Mississippi, the same address as the location of Danny’s Downtown
Cabaret. The officers and directors of Baby O’s included: Owens’ best friend, Dwight Easley,
vice president; Owens’ girlfriend at that time, Lesli Stovall, president; Owens’ step father, James
C. Cooper, incorporator, and Owens’ son, Dax, registered agent.
On August 2, 2013, Ashley Williams, a dancer working at Danny’s Downtown Cabaret,
lodged a charge of discrimination with the EEOC [doc. no. 81-10]. Following the requisite
investigation, EEOC issued a Letter of Determination on June 2, 2016 [doc. no. 81-13], finding
reasonable cause to believe that the Defendants had violated Title VII. Efforts at conciliation
failed and on July 29, 2016, the EEOC issued to Defendants a Notice of Failure of Conciliation,
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and filed the instant lawsuit on September 30, 2016.
Plaintiff seeks, inter alia, injunctive relief, damages and other affirmative relief to make
the complainants whole, as well as back pay for Ashely Williams, who alleges retaliation and
wrongful termination. Plaintiff also asks for punitive damages for what it alleges to be malicious
and reckless conduct.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate if “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a); Copeland v. Nunan, 250 F.3d 743 (5th Cir. 2001); see also Wyatt
v. Hunt Plywood Company, Inc., 297 F.3d 405, 408–09 (2002). When assessing whether a
dispute as to any material fact exists, all of the evidence in the record is considered, but the court
must refrain from making credibility determinations or weighing the evidence. Reeves v.
Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000);
instead, the court must “draw all reasonable inferences in favor of the nonmoving party.” Id.;
Wyatt, 297 F.3d at 409. All evidence and the reasonable inferences to be drawn therefrom must
be viewed in the light most favorable to the party opposing the motion. United States v. Diebold,
Inc. 369 U.S. 654, 655 (1962).
A party, however, cannot defeat summary judgment with conclusory allegations,
unsubstantiated assertions, or “only a scintilla of evidence.” TIG Ins. Co. v. Sedgwick James of
Wash. 276 F.3d 754, 759 (5th Cir. 2002); S.E.C. v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1997);
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994). Summary judgment is appropriate
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if a reasonable jury could not return a verdict for the nonmoving party. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
DISCUSSION
1. Danny’s of Jackson claims it is entitled to summary judgment because it was not the
owner/employer during the period of the alleged violations.
In support of its Motion for Summary Judgment, Danny’s of Jackson makes four
arguments. First, says this Defendant, it is not responsible for any discriminatory acts prior to the
date that Danny’s of Jackson purchased the assets of the strip club from Baby O’s, on or about
April 11, 2016. Around the time Owens was about to be released from prison, he formed the
limited liability company, Danny’s of Jackson, with his son Dax. According to Owens, the
company then purchased the assets of Danny’s Downtown Cabaret from Baby O’s, which had
owned the club during Owens’ imprisonment. Attached to this Defendant’s memorandum brief
is a bill of sale entered into between Danny’s of Jackson, LLC, as buyer, and Baby O’s
Restaurant, Inc., as the seller, on April 11, 20162 [doc. no. 74-6].
The Defendant, Danny’s of Jackson, contends that, as purchaser of the club’s assets in
2016, it cannot be held liable for acts committed under the ownership of Baby O’s that occurred
three years earlier. Relying on well-settled authority, EEOC argues that Danny’s of Jackson, the
new owner of the strip club, is liable for the Title VII infractions that occurred under the previous
owner, Baby O’s, under the successor liability doctrine. Danny’s of Jackson does not cite a
single case, statute, regulation or legal authority of any kind to support its contentions to the
contrary.
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The document actually identifies the restaurant/nightclub operated by the seller as “Black Diamonds, LLC”, but
this court presumes this is a typographical error, since the address stated, 995 S. West Street, Jackson, Mississippi, is
the correct address for Danny’s Downtown Cabaret, [doc. no. 74-6 at p. 1], and because this Defendant, in its brief,
identifies this bill of sale as the document by which Owens purchased the restaurant/nightclub “Danny’s Downtown
Cabaret.” [doc no.74 at p.2] from Baby O’s.
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The successor liability doctrine is derived from labor law principles. It was first applied
to employment discrimination cases in Equal Employment Opportunity Comm’n v. MacMillan
Bloedel Containers, Inc., 503 F.2d 1086, 1093 (6th Cir. 1974) (considerations that justify use of
the successor doctrine to remedy unfair labor practices apply equally to unfair employment
practices under the Civil Rights Act of 1964). “[T]he purpose of the doctrine is to ensure that an
employee's statutory rights are not “vitiated by the mere fact of a sudden change in the
employer's business.” The doctrine allows the aggrieved employee to enforce against the
successor a claim he could have secured against the predecessor.” Rojas v. TK Commc'ns, Inc.,
87 F.3d 745, 750 (5th Cir. 1996) (quoting Brennan v. Nat’l Tel. Directory Corp., 881 F. Supp.
986, 992 (E.D. Pa. 1995)).
Rojas, supra, is the leading case on this issue from the United States Court of Appeals for
the Fifth Circuit. Rojas delineates nine factors that the court should consider in deciding whether
successor liability applies to the purchasing company. The first two factors are: (1) whether the
successor company had notice of the charge or pending lawsuit before acquiring the assets of the
predecessor; and (2) the ability of the predecessor to provide relief. The other seven factors help
to establish whether there was a “substantial continuity” of business operations between the two
entities. As more thoroughly discussed in the court’s Order and Opinion on EEOC’s Motion for
Summary Judgment as to Successor Liability, this court is persuaded that Danny’s of Jackson is
liable as the successor in interest, for Title VII violations that allegedly occurred during the
period that Baby O’s was the owner of Danny’s Downtown Cabaret.
The primary argument made by Danny’s of Jackson to avoid successor liability is that
Danny McGee Owens [hereafter “Owens”], the sole member of Danny’s of Jackson LLC, was
incarcerated during the time of the violations alleged by the complainants here, and that Owens
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did not participate in operating the business while in prison. Owens was incarcerated for a
federal felony conviction from approximately 1992 to 2016. Defendant does not explain how this
argument assists the court’s evaluation of the successor liability issue utilizing the Rojas factors;
nor does Defendant provide sufficient evidentiary support that Owens did not, in fact, operate the
business while in prison.
Defendant submits Owens’ affidavit [doc. no. 74-4] denying that he ran the business from
prison; but such a conclusory affidavit, without factual specifics is insufficient to create a
genuine issue of material fact. Orthopedic & Sports Injury Clinic v. Wang Lab. Inc., 922 F.2d
220, 224 (5th Cir. 1991). The Defendant also submits copies of the prison policies and handbook
in an attempt to establish that Owens was unable to conduct business from the prison because
that would violate prison policies. Owens, however, acknowledged operating another business
while he was incarcerated. Owens described in his deposition how he and his son, Blake Owens,
purchased real estate during the “real estate bubble,” beginning around 2007 or 2008, a period
during which he was incarcerated. Owens stated:
A: And luckily I had a little bit of cash and so we started buying. I had no idea
things got as cheap as they did, and we just kept buying, and we got stuff real, real,
real cheap. If you didn’t have any cash, you couldn’t get any financing. We got
some financing on the phone in my personal name on the first 10 or 11 houses, and
we paid it off, and --- and then we went back, and we were paying 30 percent down,
and we came back and wanted to buy some more, and the bank, of course, at that
time, they just froze. . . .
...
Q: Do you remember what bank you were financing for those first couple of
houses?
A: Renasant Bank.
Q: Renasant Bank?
A: Yes.
Q: And you said that you personally got the loan for that?
A: Yes.
...
Q: Okay. So he would tell you that this is a property that I’m interested in?
A: Yes.
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Q: And you would give him the –
A: And we would talk about it, and, you know, we would go from there.
Q: Okay. And then once he had your approval, he would go forward and purchase
the property?
A: Right. . . .
Owens Dep. 56:8 - 58:8.[doc. no. 79-1 at p.31-33].
The prison policies relied on by Defendant are not probative of the issue as to whether
Owens operated the strip club at issue from prison and Owens’ own testimony shows that he did
have that ability.
Danny’s of Jackson references the testimony of three deponents, presumably in an
attempt to support its position that it is not liable as a successor in interest for the Title VII
violations alleged. Defendant, however, does not direct this court to specific statements made
by these witnesses nor provide the excerpts of that deposition testimony. Only the following
information was provided, which appears in a footnote to Danny’s memorandum brief.
The depositions of Brittany Rayner, taken on September 20, 2017, Alison Wade,
taken on October 13, 2017, and of Mike Raynor taken on October 25, 2017, cannot
be located for purposes of providing the Court with page and line number
references. This Defendant request[sic] the Court additional time to obtain copies
of the depositions and supplement the page and line references.
Memorandum in Support of Defendant’s Motion for Summary Judgment [doc. no. 74 at p. 2,
fn.2].
The United States Court of Appeals for the Fifth Circuit has stated the following. “[R]ule
56 [of the Federal Rules of Civil Procedure] does not impose upon the district court a duty to sift
through the record in search of evidence to support a party’s opposition to summary judgment.”
Adams v. Travelers Indem. Co. of Connecticut, 465 F.3d 156, 164 (5th Cir. 2006). Rule 56 also
does not require the district court to sift through the record in search of evidence to support a
party’s motion for summary judgment, and this court is not willing to do so. Since the
Defendant does not cite to any specific pages of the depositions referenced, nor provide copies of
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the deposition testimony to this court, this court is unable to consider, on its behalf, any
statements that the Defendant attributes to these deponents.
Finally, Defendant provides the “Bill of Sale and Assignment and Assumption
Agreement” [doc. no. 74-6], which purports to be the bill of sale by which Danny’s of Jackson
purchased the assets of Danny’s Downtown Cabaret from Baby O’s Restaurant, Inc.
The moving party bears the initial burden of “informing the Court of the basis of its
motion” and identifying those portions of the record “which it believes demonstrate the absence
of a genuine issue of material fact.” Id. at 163. See also Celotex Corp. v. Catrett, 477 U.S. 317,
323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Defendant here, has not met its initial burden.
Danny’s has not provided any legal authority nor any factual basis for its position. Defendant
failed to show that there is no genuine issue of material fact; Fed. R. Civ. P. 56(a); Copeland v.
Nunan, 250 F.3d 743 (5th Cir. 2001); Wyatt v. Hunt Plywood Company, Inc., 297 F.3d 405, 408–
09 (2002); thus Danny’s is not entitled to summary judgment in its favor on this issue.
On the other hand, EEOC has also filed a motion for partial summary judgment in its
favor on the issue of successor liability [doc. no. 79]. This court has reviewed EEOC’s motion
and the response by Danny’s of Jackson, the record and relevant authorities in connection with
that motion. This court has concluded that EEOC is entitled to summary judgment in its favor on
this issue, as more thoroughly discussed in the Opinion and Order resolving that motion.
2. Danny’s of Jackson, LLC claims that it did not have at least fifteen employees each
day for twenty calendar weeks.
The provisions of Title VII apply to employers with fifteen or more employees for each
working day in each of twenty or more calendar weeks. Title 42 U.S.C. 2000e (b). Danny’s
says that it does not meet that threshold requirement of fifteen or more employees. The
Defendant seems to be of the opinion that fifteen employees must actually be present on each
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day of the twenty weeks; but, that is not the case. The threshold is met when there is an
employment relationship with fifteen or more persons for each working day for twenty or more
weeks. Walter v. Metro. Educ. Enterprises, Inc., 519 U.S. 202,206 (1997).
On this matter, the EEOC has presented the deposition testimony of former Danny’s
managers, who described with specificity, the staff required to operate the business for each
shift. That number amounted to more than fifteen employees per day over a twenty-week period.
Defendant has not filed a reply brief to refute the matters raised in Plaintiff’s Opposition
Memorandum [doc. no. 85].
Danny’s of Jackson also contends that the dancers are not ‘employees’, but ‘independent
contractors’, and should not be counted as part of the fifteen employees. EEOC’s proof shows,
that even without counting the dancers as employees, the club employed at least eighteen persons
each day. In Reich v. Circle C Investments, Inc., the Fifth Circuit Court of Appeals, in deciding
whether the exotic dancers in that case were employees, said “our focal inquiry in determining
employee status is whether the individual is, as a matter of economic reality, in business for
herself.” Id., 998 F.2d 324, 327 (5th Cir. 1993) (citing Donovan v. Tehco, 642 F.2d 141, 143 (5th
Cir. 1981)). Reich listed factors to be reviewed in making this determination. Id. at 327. See
also, Brock v. W Fireworks, Inc., 814 F.2d 1042 (5th Cir. 1987) cert denied, 484 U.S. 924 (1987).
Consistent with those Reich factors, EEOC’s unrefuted proof consists of documents, such
as Danny’s Dance Sheets [doc. no.75-10] and the deposition testimony of past and current
dancers and former managers. That testimony shows that the alleged employer: a) decides who
can work on a given night and who can be sent home; b) sets the amount of fees the dancers can
charge customers for private dances; c) takes and holds the dancers’ licenses to work as adult
entertainers; d) fines workers for leaving before the end of a shift and for other reasons; e) has to
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approve the music used by the dancers; and f) has a major investment in the business as
compared to the dancer whose investment is minimal, consisting mainly of costumes. Also
tending to show the dancers are employees is the fact that little skill or training is required to
perform the job.
Further, this court previously has made the determination that the dancers at issue were
“employees” of the club, and not “independent contractors”. The club controls all aspects of the
dancers’ work, such that under the Reich criteria, this court concludes that as a matter of
economic reality, the dancers are not in business for themselves. This court entered its order
granting partial summary judgment to EEOC [doc. no. 118] on this point. Therefore, this court is
persuaded that the number of persons employed by the club was well in excess of fifteen per day.
Having reviewed the briefs on this issue, including the briefs on Plaintiff EEOC’s
motion, the record and relevant authority, this court is persuaded that Danny’s of Jackson, LLC
employed the requisite fifteen employees each day for twenty calendar weeks; thus, this court
finds that Danny’s of Jackson is not entitled to summary judgment on this issue.
3. Danny’s of Jackson, LLC claims there are no genuine issues of material fact
concerning whether any adverse job action was taken against any of the
complainants.
For its third point, the Defendant makes a two-sentence argument, without any legal
authority or factual support, that the employer took no adverse action against these complainants.
This is the factual issue at the heart of this lawsuit. EEOC has provided evidence in the form of
deposition testimony that, among other things, the claimants were subject to a “black quota”
which placed a cap on the number of Black dancers who could work on a given shift. White
dancers were not subjected to any quota. M. Rayner Deposition, [doc. no. 84-2 at pp. 115-16,
118]; B. Rayner Deposition [doc. no. 84-3 at p. 70]; A. Wade Deposition, [doc. no. 84-4 at pp.
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77-78]. Defendant has presented nothing to show that there is no genuine issue of material fact.
Danny’s of Jackson LLC is not entitled to summary judgment on this issue.
4. Danny’s of Jackson, LLC contends it should have been provided an opportunity for
corrective action in this disparate treatment case.
Finally, Defendant contends that the complainants did not report complaints of disparate
treatment to Owens, depriving the employer of the opportunity to take corrective action.
Defendant relies on Jansen v. Packaging Corp. of America in support of this proposition. Id., 123
F.3d 490 (7th Cir. 1996). Jansen is not applicable, however. That case deals with hostile work
environment sexual harassment. An employer’s defense that an employee unreasonably failed to
take advantage of preventive or corrective opportunities provided by the employer, is limited to
vicarious liability sexual harassment cases. See Casiano v. AT&T Corp., 213 F.3d 278,284 (5th
Cir. 2000). It does not apply to the case sub judice. Defendant is not entitled to summary
judgment on this issue.
CONCLUSION
This court has viewed the evidence in the light most favorable to the non-movant, and for
all the reasons stated, the motion for summary judgment filed by Danny’s of Jackson, LLC [doc.
no. 73] is denied.
SO ORDERED, this, the 24th day of September, 2018.
__s / HENRY T. WINGATE___________
UNITED STATES DISTRICT JUDGE
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