VERMA v. 3001 CASTOR, INC. et al
MEMORANDUM AND/OR OPINION SIGNED BY HONORABLE ANITA B. BRODY ON 11/29/2016. 11/29/2016 ENTERED AND COPIES VIA ECF.(mo, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
PRIYA VERMA, on behalf of
herself and all others similarly
3001 CASTOR, INC., d/b/a
THE PENTHOUSE CLUB
CLUB @ PHILLY, et al.,
November _29, 2016
Anita B. Brody, J.
Plaintiff Priya Verma, on behalf of herself and all others similarly situated, brings this
collective action and class action lawsuit against Defendant 3001 Castor, Inc. d/b/a The
Penthouse Club and/or The Penthouse Club @ Philly (collectively, the “Penthouse Club” or the
“Club”). Verma alleges that the Penthouse Club violated the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201 et seq., the Pennsylvania Minimum Wage Act (“MWA”), 43 Pa.
Cons. Stat. § 333.101 et seq., the Pennsylvania Wage Payment and Collection Law (“WPCL”),
43 Pa. Cons. Stat. § 260.1 et seq., and Pennsylvania common law.1
The Penthouse Club is an adult nightclub where Verma formerly worked as an exotic
dancer. Verma claims that the Penthouse Club improperly classified its dancers as independent
contractors instead of employees, and, as a result, the Penthouse Club failed to pay her and all
other dancers statutory minimum wages and premium overtime compensation. Verma also
I have subject matter jurisdiction over Verma’s FLSA claims pursuant to 28 U.S.C. § 1331 and
29 U.S.C. § 201 et seq. I have supplemental jurisdiction over Verma’s state law claims pursuant to 28
U.S.C. § 1367 because those claims derive from a common nucleus of operative facts.
claims that the Penthouse Club improperly took a percentage of the compensation that dancers
earned from performing dances on the Club’s stage and in private rooms for individual
On June 30, 2014, I granted Verma’s motion for conditional certification of an FLSA
collective action class composed of individuals who had worked as dancers at the Penthouse
Club from May 31, 2010 to present, pursuant to Section 216(b) of the FLSA. ECF No. 46. I
also denied the Penthouse Club’s motion for summary judgment, and, applying the economic
realities test, I ruled that the dancers are employees rather than independent contractors under
both the FLSA and Pennsylvania state law. See Verma v. 3001 Castor, Inc., No. 13-3034, 2014
WL 2957453, at *4-*10 (E.D. Pa. June 30, 2014), ECF No. 45.
Verma now moves for final certification of the conditionally certified FLSA collective
action, and the Penthouse Club moves for decertification.2 In addition, Verma moves for Rule
23 class certification of her claims brought under Pennsylvania law. 3 On October 11, 2016, I
held oral argument on the pending motions. Additionally, I requested and received supplemental
briefing from the parties.
For the reasons explained below, I will grant Verma’s motion for final collective action
certification, and I will deny the Penthouse Club’s motion to decertify the conditionally certified
FLSA collective action. I will grant in part and deny in part Verma’s motion for Rule 23 class
Verma’s Motion for Final Collective Action Certification and the Penthouse Club’s Motion to
Decertify are effectively cross-motions on the issue of final certification of the FLSA collective action.
On February 5, 2014, Verma moved for class certification of her state law claims under Rule 23
for all dancers who worked at the Penthouse Club from May 31, 2010 to present. ECF No. 32. I denied
Verma’s motion for Rule 23 Class Certification of her state law claims without prejudice to Verma to
refile the motion for class certification at the close of discovery. ECF No. 45. Verma filed a Renewed
Motion for Rule 23 Class Certification on September 1, 2015. ECF No. 87. I denied that motion without
prejudice to Verma to refile at the same time as she moved for final certification of her FLSA collective
action. ECF No. 102.
The Penthouse Club is an adult nightclub located at 3001 Castor Avenue, Philadelphia,
Pennsylvania. The Penthouse Club’s name references the well-known and similarly-titled
pornographic magazine; the Club has styled itself as the place “where the magazine comes to
life.” First Lenahan Dep. at 90:1-2. The Penthouse Club employs topless female dancers to
perform for the Club’s customers. Dancers perform in two locations: on the Club’s main stage
and in private dance rooms. Verma worked as one of these dancers from August 2009 through
October 2009, and again from August 2012 through May 2013.
A. Private Dance Fees
The Penthouse Club pays dancers no hourly wage, and the Club pays dancers nothing to
perform on stage. A dancer’s compensation depends entirely on her interactions with the Club’s
customers. The only way a dancer can earn money is either to perform dances on the Club’s
stage, where patrons may compensate the dancer with tips,5 or to give a private dance to a
customer in one of the Club’s private dance rooms. When a customer requests a private dance,
he first accompanies the dancer to the podium host and selects the length of his dance. The
Penthouse Club sets uniform, non-negotiable prices for these private dances: a four-minute dance
costs $30, of which the dancer receives $20 and the Club retains $10; a half-hour dance costs
$300, of which the dancer receives $175 and the Club retains $125; a one-hour dance costs $500,
of which the dancer receives $300 and the Club retains $200. After the dance, the podium host
For additional facts, see my prior opinion of June 30, 2014. ECF No. 45.
Verma has maintained throughout this litigation that all compensation received by a dancer from
customers of the Club should be classified as tips or gratuities. See, e.g., Pl.’s R. 23 Br. at 24
(categorizing alleged damages as “deductions from tips”). The Penthouse Club has conceded in its
supplemental briefing that the money received by a dancer from patrons of the Club during or after a
dancer’s stage performance is properly classified as a tip or gratuity. See Def.’s Resp. to Pl.’s Supp.
Mem. 2, ECF No. 115.
divides the cash received from the customer between the dancer and Club. 6 The Penthouse Club
designates the amounts retained by the Club as “room rental fees.” The Penthouse Club
contends that a successful dancer can earn up to $1,600 per shift by booking private dances
continuously. But, if a dancer fails to perform any private dances and receives no money directly
from the Club’s customers for her stage dances, she earns nothing for her time spent at the Club.
In fact, because of the additional fees and policies described below, she may incur a loss.
B. Stage Rental Fees
To perform at the Penthouse Club, a dancer must rent stage time from the Club for each
shift that she works. The Penthouse Club classifies each dancer as either an “Entertainer” or a
“Freelancer,”7 and a dancer’s classification dictates the amount she must pay the Club to rent
stage time during her shifts. Dancers may choose from five different shifts: (1) a “day shift”
lasting from noon to 6:00 p.m.; (2) a “mid shift” lasting from 3:00 p.m. to 9:00 p.m.; (3) a
“preferred shift” lasting from 6:00 p.m. to midnight; (4) a “premium shift” lasting from 8:00 p.m.
to 2:00 a.m.; and (5) a “power shift” lasting from 10:00 p.m. to 2:00 a.m. Entertainers pay no
stage rental fee for the three earlier shifts and pay $35 to work the premium shift or $85 to work
the power shift. Freelancers pay no stage rental fee for the day shift, but must pay $35 to work a
mid shift, $60 to work a preferred shift, $60 to work a premium shift, or $85 to work a power
shift. If a dancer fails to appear for her scheduled shift, the Club may fine her.
C. Mandatory Tip-outs
Dancers are also required to “tip-out” certain individuals who work at the Club. For each
The customer initially pays the full amount either to the podium host or directly to the dancer.
There is a dispute in the record as to which of these practices has been the Club’s standard procedure. It
appears that both arrangements may have been followed at times. Regardless of whom the customer
initially pays, the amount and division of the fee is always the same.
Entertainers must commit to working at least four days per week, including a specified number
of weekend shifts each month, and must submit a weekly schedule. Freelancers may set their own
schedule and work as many or as few shifts as they choose.
shift, a dancer must pay $15 to the Club’s disc jockey, $10 to the “house mom,”8 and $5 to the
podium host. The Club also encourages, or in some cases requires, dancers to tip the valet
attendant. These charges, like the stage rental fees, must be paid, regardless of how much money
a dancer earns during her shift.
The Penthouse Club has a set of rules that the dancers must follow. Upon arrival, dancers
must check in with the podium host and the house mom, both of whom keep records of the time
that dancers enter the Club. The Penthouse Club charges a dancer a $10 fine for every 30
minutes she is late. Each dancer must stay at the Club for the entire duration of her scheduled
shift. If a dancer leaves the Club before the end of her scheduled shift, the Penthouse Club may
charge her a $100 fine. The Penthouse Club also charges a $25 fine if a dancer is late to the
stage or leaves the stage early. In addition, the Club fines dancers for other rules violations, such
as chewing gum on stage ($25), using a cell phone on stage ($50), or smoking in the Club
($100). The Penthouse Club has intermittently kept records of these fines.
A. Final Certification of the FLSA Collective Action
During the opt-in period, twenty-two additional current or former dancers joined the
collective action, pursuant to the procedures of section 216 of the FLSA. Verma now moves for
final certification of the collective action class that was conditionally certified on June 30, 2014.
The Penthouse Club moves to decertify the conditionally certified collective action class.
1. Legal Standard
Under the collective action provision of the FLSA, an employee alleging an FLSA
The house mom keeps track of the dancers’ schedules and assists dancers with “feminine
issues.” Compl. ¶ 30, ECF No. 1.
violation can bring a suit on behalf of himself . . . and other employees similarly situated.” 29
U.S.C. § 216(b). To be included in a collective action, the plaintiffs must be “similarly situated”
and give written consent to participate, i.e., opt in. Id.
The Third Circuit has prescribed a two-step process for determining whether plaintiffs are
“similarly situated.” The first step occurs at the conditional certification stage. The named
plaintiff must make a “modest factual showing,” which requires that a plaintiff “produce some
evidence, ‘beyond pure speculation,’ of a factual nexus between the manner in which the
employer’s alleged policy affected her and the manner in which it affected other employees.”
Zavala v. Wal Mart Stores Inc., 691 F.3d 527, 536 n.4 (3d Cir. 2012) (quoting Symczyk v.
Genesis Healthcare Corp., 656 F.3d 189, 193 (3d Cir. 2011), rev’d on other grounds, 133 S. Ct.
1523 (2013)). On June 30, 2014, I found that Verma had made such a showing and granted
conditional certification. See Verma, 2014 WL 2957453, at *12.
The second step occurs at the final certification stage. “[W]ith the benefit of discovery,
‘a court following this approach then makes a conclusive determination as to whether each
plaintiff who has opted in to the collective action is in fact similarly situated to the named
plaintiff.’” Camesi v. Univ. of Pittsburgh Med. Ctr., 729 F.3d at 243 (quoting Symczyk, 656 F.3d
at 193); see also Zavala, 691 F.3d at 536 (“It is clear from the statutory text of the FLSA that the
standard to be applied on final certification is whether the proposed collective plaintiffs are
‘similarly situated.’”). The plaintiffs bear the burden of making this showing by a preponderance
of the evidence. Zavala, 691 F.3d at 537. A district court’s decision to grant or deny final
certification is not discretionary and must depend only on the court’s factual findings as to
whether the plaintiffs are in fact “similarly situated.” Id. at 535. Once this factual finding is
made in the affirmative, the statute mandates that the district court grant final certification. Id.
(“We do not believe that the statute gives the district court discretion to deny certification after it
has determined that plaintiffs are similarly situated.”).
Verma asserts that she is similarly situated to each of the opt-in plaintiffs, and that I
should grant final certification. The Penthouse Club does not directly contest this argument.
Instead, as a defense, the Club argues that private dance fees should be credited as an offset to
the Club’s minimum wage and overtime obligations under the FLSA. The Club also argues that
I should exercise discretion to deny final certification because of the number of plaintiffs who
have opted in. I address each of these issues below.
2. Plaintiffs Are Similarly Situated Under Zavala
Being similarly situated “means that one is subjected to some common employer practice
that, if proved, would help demonstrate a violation of the FLSA.” Zavala, 691 F.3d at 538. The
Third Circuit has adopted an “ad hoc approach” for determining at the final certification stage
whether the plaintiffs are in fact “similarly situated.” Factors a court may consider include: (1)
whether the plaintiffs are employed in the same corporate department, division, and location; (2)
whether they advance similar claims; (3) whether they seek substantially the same form of relief;
(4) whether they have similar salaries and circumstances of employment. Id. at 536-37. The
inquiry extends to questions of liability and damages. Cf. id. at 538 (denying final certification
because “[l]iability and damages still need[ed] to be individually proven”). “Plaintiffs may also
be found dissimilar based on the existence of individualized defenses.” Id. at 537. I address
each factor in turn.
a. All plaintiffs are employed in the same department, division, and
The first Zavala factor directs a court to consider whether each of the plaintiffs are
employed in the same department, division, and location. An affirmative finding weighs in favor
of final certification. Differences in location and position of employment indicate that opt-in
plaintiffs may not be similarly situated. See Zavala, 691 F.3d at 538 (denying final certification
where “putative class members worked in 180 different stores in 33 states throughout the county
and for 70 different contractors and subcontractors”). In this case, it is clear that Verma and all
opt-in plaintiffs work or worked at the same location—the Penthouse Club’s single facility
located at 3001 Castor Avenue. Although the Club does not have the departments and divisions
found in a traditional corporate office, all plaintiffs work or worked in the position of “dancer,”
with the same job duties and responsibilities. See Silva Dep. at 64:16-65:24. Therefore, this
factor weighs in favor of finding that the opt-in plaintiffs are similarly situated.
b. All plaintiffs advance similar claims
The second Zavala factor directs a court to consider whether the plaintiffs advance
similar claims. In this case, each plaintiff alleges that she worked as a dancer at the Penthouse
Club, that the Club misclassified her as an independent contractor rather than as an employee,
and that, as a result of that misclassification, the Club failed to pay her minimum wages and
overtime compensation as required under the FLSA. Each plaintiff’s FLSA claims are legally
identical and rest on a common set of facts. Cf. e.g., Bell v. Reading Hosp. & Med. Ctr., No. 10cv-592, 2011WL 4351631, at *12 (E.D. Pa. Sept. 16, 2011) (denying final certification where the
plaintiff’s claims were “legally similar” but “factually divergent”). This factor clearly weighs in
favor of finding that the opt-in plaintiffs are similarly situated.
c. All plaintiffs seek the same form of relief
The third Zavala factor directs a court to consider whether the plaintiffs seek the same
form of relief. In this case, all plaintiffs seek money damages for the minimum and overtime
wages that the Penthouse Club failed to pay them. Courts applying Zavala have indicated that
plaintiffs may satisfy this factor even where individual plaintiffs ultimately seek different dollar
amounts of relief for their claims. See, e.g., Adami v. Cardo Windows, Inc., No. 12-2804, 2016
WL 1241798, at *6 (D.N.J. Mar. 30, 2016) (finding this factor satisfied where “[p]laintiffs all
bring claims for unpaid overtime compensation and seek the same type of monetary and
injunctive relief, although for vastly different amounts of compensation”). While plaintiffs may
have individualized amounts of damages for their minimum wage and overtime claims, the form
of relief sought by each opt-in plaintiff is the same. Thus, this factor also weighs in favor of
finding that the opt-in plaintiffs are similarly situated.
d. All plaintiffs have similar salaries and circumstances of
The fourth Zavala factor directs a court to consider whether plaintiffs have similar
salaries and circumstances of employment. In Zavala, The Third Circuit found that this factor
was not satisfied where the putative class members “worked varying hours and for different
wages.” 691 F.3d at 538.
Here, by contrast, it is clear that Verma and all of the opt-in plaintiffs
have the same salary—they are paid nothing by the Club. Dancers receive compensation only
from the Club’s patrons, in the form of private dance fees and tips for stage dances. Other
relevant circumstances of employment are also similar among all opt-in plaintiffs. All dancers
work at the same facility, share the same responsibilities, and are subject to the same rules and
policies. Dancers maintain some flexibility in setting their own schedules, but when they work
they must work one of five designated shifts over the course of the day. This factor weighs
squarely in favor of finding that the opt-in plaintiffs are similarly situated.
3.Private Dance Fees Do Not Offset the Club’s FLSA
The inquiry into whether plaintiffs are similarly situated applies to questions of damages
as well as questions of liability. See Zavala, 691 F.3d at 538. The Penthouse Club asserts that
the private dance fees received by dancers from the Club’s patrons should be credited toward the
dancers’ wages. The Club argues that, because of these fees, the dancers are not similarly
situated with regard to damages; instead, damages are either overwhelmingly individualized or
nonexistent. The Club, therefore, moves for decertification. Verma argues that these private
dance fees cannot be counted toward the Club’s minimum wage and overtime obligations under
The FLSA requires that an employer pay a minimum wage to each employee. 29 U.S.C.
§ 206(a) (“Every employer shall pay to each of his employees . . . wages at the following rates . .
. .”). Private dance fees are paid by customers, not the Penthouse Club, and thus the fees are not
wages. Courts have generally concluded that, for purposes of the FLSA, these fees may be either
tips or service charges. See, e.g., McFeeley v. Jackson St. Entm’t, LLC, 825 F.3d 235, 246 (4th
Cir. 2016); Hart v. Rick’s Cabaret Int’l, LLC, 967 F. Supp. 2d 901, 926-34 (S.D.N.Y. 2013). An
employer must comply with applicable regulations in order to credit private dance fees paid by
customers toward his or her minimum wage and overtime obligations under the FLSA. I address
each possibility in turn.
a. The Penthouse Club is not eligible for a tip credit
Department of Labor regulations define a tip, for purposes of the FLSA, as “a sum
presented by a customer as a gift or gratuity in recognition of some service performed for him.”
29 C.F.R. § 531.52. An employer must follow the requirements of the FLSA to credit tips
toward an employee’s minimum wage. Two requirements are particularly important here. First,
the employer must pay the employee the minimum wage required for tipped employees,
currently $2.13 per hour. 29 U.S.C. § 203(m). Second, the employer must notify the employee
of the FLSA tip credit provision. Id. In this case, the Penthouse Club paid its dancers no wages
whatsoever. See, e.g., First Lenahan Dep. at 201:25-202:4. In addition, there is no evidence that
the Penthouse Club ever informed any of the dancers of the FLSA tip credit provision. Thus, if
the private dance fees are tips under the FLSA, they cannot be credited toward the Penthouse
Club’s minimum wage and overtime obligations.
b. The Penthouse Club is not eligible for a service charge offset
Department of Labor regulations define a service charge as a “compulsory charge for
service . . . imposed on the customer by an employer’s establishment.” 29 C.F.R. § 531.55(a).
Several federal courts have considered the question specifically at issue here: whether private
dance fees can be credited toward a club’s minimum wage and overtime obligations as service
charges. Courts have consistently found that the law imposes two requirements for an employer
to claim this credit. First, the employer must include the service charge in its gross receipts.
Second, the employer must distribute the service charge to its employees. See, e.g., McFeeley,
825 F.3d at 246 (“There are at least two prerequisites to counting ‘service charges’ as an offset to
an employer’s minimum-wage liability. The service charge ‘must have been included in the
establishment’s gross receipts,’ . . . and it must have been ‘distributed by the employer to its
employees.’” (citations omitted)); Henderson v. 1400 Northside Drive, Inc., 110 F. Supp. 3d
1318, 1322 (N.D. Ga. 2015) (“Thus, at minimum, for a fee to constitute a “service charge,” it
must be (1) recorded in a company’s gross receipts, and (2) distributed by the company to the
employee.”); Hart, 967 F. Supp. 2d at 929 (concluding the FLSA requires that a service charge
be included in an employer’s gross receipts and distributed by the employer). As Judge J. Harvie
Wilkinson explained in his recent opinion, “[t]hese requirements are necessary to ensure that
employees actually received the service charges as part of their compensation as opposed to
relying on the employer’s assertion or say-so.” McFeeley, 825 F.3d at 246.
The Penthouse Club has not satisfied either of the requirements. The Club did not
include private dance fees in its gross receipts or otherwise make note of these fees in its
financial records. See Second Lenahan Dep. at 81:20-82:8. The Club also did not distribute the
private dance fees to the dancers. Instead, the record indicates that private dance fees were often
paid by customers directly to the dancers, who then remitted a designated portion to the Club.
See Second Lenahan Dep. at 46:9-12. As a result, the Penthouse Club cannot claim that private
dance fees are service charges that can offset the Club’s minimum wage and overtime
obligations under the FLSA.
4. The Number of Opt-in Plaintiffs is Not Relevant to Final
The Penthouse Club also argues, in passing, that the “extremely low number of opt-ins
relative to the number of potential class members weighs against certification.” Def.’s Mot. to
Decert. 3, ECF No. 106.
The Penthouse Club relies on a single out-of-circuit district court case
to support the proposition that, where a limited number of plaintiffs have opted in, a court may
“exercise its discretion and conclude an FLSA action is inappropriate.” Keef v. M.A.
Mortenson Co., No. 07-cv-3915 (JMR), 2009 WL 465030, at *3 (D. Minn. Feb. 24, 2009). This
argument is unavailing. There are a number of reasons why employees, particularly in a case
such as this, may decide not to opt in to a collective action. For example, dancers still employed
at the Club may fear that they will suffer negative consequences for choosing to opt in. More
importantly, the number of plaintiffs who have opted in has no direct bearing on the
determinative question—whether those plaintiffs who have opted in are, in fact, similarly
situated to Verma. In the Third Circuit, once a court finds that the opt-in plaintiffs are similarly
situated, the court lacks discretion to deny final certification. Zavala, 691 F.3d at 535.
For the reasons stated above, Verma has established, by a preponderance of the evidence,
that she is similarly situated to the opt-in plaintiffs. Every factor listed in Zavala weighs in favor
of that finding. The Penthouse Club’s argument that the plaintiffs have suffered no damages is
simply incorrect. Whether the private dance fees earned by dancers are classified as tips or
service charges, the Club has not met the requirements to claim them as an offset. I will
therefore grant Verma’s motion for final certification and deny the Penthouse Club’s motion for
B. Rule 23 Class Certification
Verma also moves for Rule 23 certification of her state law claims brought under the
MWA, WPCL, and Pennsylvania common law. Verma claims damages under Pennsylvania law
for: (1) minimum wages; (2) overtime compensation;9 (3) deductions for mandatory tip-outs; (4)
deductions for stage rental fees; (5) deductions for fines; and (6) deductions for room rental fees.
Verma’s proposed class consists of: “All persons who during the period of May 31, 2010 and
continuing through the entry of judgment in this case, performed as a dancer at Defendant’s adult
entertainment club in Philadelphia, Pennsylvania.” Pl.’s Br. Supp. Sec. Rnwd. Mot. Class Cert.
4, ECF No. 104 [hereinafter Pl.’s R. 23 Br.]. The Penthouse Club opposes class certification.
1. Legal Standard
To warrant certification, a “class action must satisfy the four requirements of Rule 23(a)
and the requirements of either Rule 23(b)(1), (2), or (3).” Marcus v. BMW of N. Am., LLC, 687
Verma’s minimum wage and overtime claims are brought under the MWA and mirror her FLSA
claims. The MWA, unlike the FLSA, does not include its own procedural mechanism for class
certification. The class certification requirements of Rule 23 apply. In similar lawsuits, federal courts
have ruled on collective action certification for FLSA claims and also ruled on Rule 23 certification for
comparable state law minimum wage and overtime claims. See, e.g., Hart v. Rick’s Cabaret Int’l, LLC,
No. 09 CIV 3043 JGK, 2010 WL 5297221, at *1-*2 (S.D.N.Y. Dec. 20, 2010).
F.3d 583, 590 (3d Cir. 2012). To meet the requirements of Rule 23(a): “(1) the class must be ‘so
numerous that joinder of all members is impracticable’ (numerosity); (2) there must be
‘questions of law or fact common to the class’ (commonality); (3) ‘the claims or defenses of the
representative parties' must be ‘typical of the claims or defenses of the class’ (typicality); and (4)
the named plaintiffs must ‘fairly and adequately protect the interests of the class' (adequacy of
representation, or simply adequacy).” In re Cmty. Bank of N. Va., 622 F.3d 275, 291 (3d Cir.
2010) (quoting Fed. R. Civ. P. 23(a)(1)-(4)). In this case, Verma seeks certification under Rule
23(b)(3), which imposes the additional requirements that “(i) common questions of law or fact
predominate (predominance), and (ii) the class action is the superior method for adjudication
(superiority).” Cmty. Bank, 622 F.3d at 291. Plaintiffs seeking certification pursuant to Rule
23(b)(3) must also demonstrate that the proposed class is ascertainable. See Byrd v. Aaron’s
Inc., 784 F.3d 154, 163 (3d Cir. 2015).
Plaintiffs must affirmatively demonstrate compliance with Rule 23. Wal-Mart Stores,
Inc. v. Dukes, 131 S.Ct. 2541, 2551-52 (2011). Rule 23 is not a pleading standard; each
requirement must be “satisf[ied] through evidentiary proof.” Comcast Corp. v. Behrend, 133
S.Ct. 1426, 1432 (2013). “Factual determinations necessary to make Rule 23 findings must be
made by a preponderance of the evidence. To certify a class the court must thus find that the
evidence more likely than not establishes each fact necessary to meet the requirements of Rule
23.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 307 (3d Cir. 2008) (citation
omitted). In Behrend, the Supreme Court “emphasized that it ‘may be necessary for the court to
probe behind the pleadings before coming to rest on the certification question,’ and that
certification is proper only if ‘the trial court is satisfied, after a rigorous analysis, that the
prerequisites of Rule 23(a) have been satisfied.’” 133 S.Ct. at 1432 (citing Dukes, 131 S.Ct. at
Verma contends that each Rule 23 factor is satisfied. The Penthouse Club contests the
requirements of commonality, adequacy, and predominance. I address each of the Rule 23
requirements below, with particular attention to the contested factors. Because I find the
predominance requirement of Rule 23(b)(3) to be determinative of some of Verma’s claims, I
address that factor first. I discuss the remaining Rule 23(b)(3) factors and all of the Rule 23(a)
factors only as applied to Verma’s three claims that survive the predominance inquiry.
2. Rule 23(b)(3) Factors
To satisfy the first requirement of Rule 23(b)(3), a plaintiff must show that “questions of
law or fact common to class members predominate over any questions affecting only individual
members.” Fed. R. Civ. P. 23(b)(3); see also Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353,
370 (3d Cir. 2015) (“[The] predominance test asks whether common issues of law or fact in the
case predominate over non-common individualized issues of law or fact.”). A plaintiff “must
demonstrate that each essential element of his claim is capable of proof at trial through evidence
that is common to the class rather than individual to its members.” Malack v. BDO Seidman,
LLP, 617 F.3d 743, 746 n.5 (3d Cir. 2010). If proof of an essential element of the cause of action
requires “individual treatment,” then class certification is “unsuitable.” In Re: Hydrogen
Peroxide Antitrust Litigation, 552 F.3d at 311.
In Behrend, the Supreme Court confirmed that the same “rigorous analysis” standard that
applies to the class certification requirements under Rule 23(a) applies to the predominance
requirement under Rule 23(b)(3). 133 S. Ct. 1426, 1432 (2013) (“The same analytical principles
govern Rule 23(b). If anything, Rule 23(b)(3)’s predominance criterion is even more demanding
than Rule 23(a).”). Performing a rigorous analysis may require courts to examine the evidence
presented in the entire case at the class certification stage to determine whether questions of law
or fact—including liability, affirmative defenses, and damages—“will inevitably overwhelm
questions common to the class.” Behrend, 133 S. Ct. at 1433. Predominance may be
established, however, even where the plaintiffs cannot prove damages on a class-wide basis.
Neale, 794 F.3d at 375 (“[I]t is ‘a misreading of Comcast’ to interpret it as ‘preclud[ing]
certification under Rule 23(b)(3) in any case where the class members’ damages are not
susceptible to a formula for classwide measurement.’” (quoting In re Deepwater Horizon, 739
F.3d 790, 815 & n.104 (5th Cir. 2014))).
Verma has brought claims under the MWA, WPCL, and Pennsylvania common law and
seeks damages for: (1) minimum wages; (2) overtime compensation; (3) deductions for
mandatory tip-outs; (4) deductions for stage rental fees; (5) deductions for fines; and (6)
deductions for room rental fees.10 For each of these claims, the key inquiry is whether common
questions of law and fact predominate with regard to damages. For each category of damages,
Verma has proposed a methodology for calculating classwide damages and a common
methodology for calculating a dancer’s individual damages. The Penthouse Club’s main
contention relating to class certification is that Verma cannot satisfy the predominance
Verma’s Complaint asserts violations of the MWA for failure to pay minimum wages (Claim 3)
and overtime compensation (Claim 4). Compl. at 20-21, ECF No. 1. In addition to these claims, the
Complaint asserts one claim for violations of the WPCL (Claim 5) and one claim for unjust enrichment
under Pennsylvania common law (Claim 6). Compl. at 21-23, ECF No. 1. It is not precisely clear from
Verma’s pleadings and briefs whether the damages for tip-outs, stage rental fees, fines, and room rental
fees are asserted under Claim 5, Claim 6, or both. For purposes of Rule 23 certification, I will assume
that all four categories of damages are asserted under both Claims 5 and 6.
In order to prevail on her WPCL claim, Verma will need to prove that, as a result of any or all of
the Club’s deduction policies, the Club has deducted or failed to pay the dancers wages that are due and
owing to them. See 43 Pa. Cons. Stat. § 260.3. To prevail on her unjust enrichment claim, Verma will
need to prove that any or all of the Club’s deduction policies have resulted in a benefit conferred on the
Club, which the Club has appreciated and retained under inequitable circumstances. See, e.g., Schenck v.
K.E. David, Ltd., 666 A.2d 327, 328 (Pa. Super. Ct. 1995) (discussing elements of unjust enrichment
under Pennsylvania law).
requirement for any of her alleged damages. I address each category of damages below.
Verma alleges that the Penthouse Club violated the MWA by failing to pay dancers a
minimum wage. It is uncontested that the Club classified all dancers as independent contractors
and that the Club continues to pay dancers nothing to perform. I already found that this is legally
improper—the dancers are employees. To calculate damages of the dancers as employees,
Verma’s expert has relied on records produced by the Club that list the total number of hours
worked by all dancers for each day during a 25-month period. See Pl.’s R. 23 Br. at Ex. F.
Verma’s expert proposes that classwide damages can be determined by multiplying the total
number of hours worked by all dancers by the minimum wage of $7.25. See Id. at 24. For a
two-year period from November 2011 to November 2013, Verma’s expert has calculated that
classwide minimum wage damages equal $688,125.63. Id. at Ex. F. Verma’s expert proposes
that he can then use the house mom records and entertainer time sheets to compile the total
number of hours worked by each individual dancer. See Id. at 31. Applying this common
methodology, an individual dancer’s minimum wage damages can be calculated by multiplying
the total number of hours she worked by $7.25.11 Id. at 30-31. To the extent that the Club’s
records are incomplete, Verma’s expert proposes that class members may provide testimony
regarding individual shifts and hours worked. Id. at 25.
Common issues of law and fact predominate. To prevail on her claim, Verma must show
that the dancers are nonexempt employees of the Club, that the Club had a uniform policy of
paying dancers no wages, and that the dancers therefore failed to receive minimum wage. Every
element of the claim can be proven on a classwide basis, and Verma’s proposed damages model
The federal minimum wage is $7.25. 29 U.S.C. § 206. Under the MWA, the Pennsylvania
minimum wage is currently equivalent to the federal minimum wage. See 43 Pa. Cons. Stat. §
matches her theory of liability. The only individualized question is the precise apportionment of
damages among the class members. This, alone, does not defeat predominance. See, e.g., Neale,
794 F.3d at 375 (noting that “individual damages calculations do not preclude class
certification”). The Penthouse Club argues that “on a classwide basis there are no damages.”
Def.’s Mem. Opp. Class Cert. 6, ECF No. 110 [hereinafter Def.’s R. 23 Mem.]. This is the same
argument that the Club propounded in defense of Verma’s FLSA minimum wage claim, and it
fails for the same reason—private dance fees paid by the Club’s customers do not offset the
Club’s minimum wage obligations.12 Verma has shown, by a preponderance of the evidence,
that common issues of fact and law predominate in her MWA minimum wage claim.
Verma alleges that the Penthouse Club also violated the MWA by failing to pay dancers
time-and-a-half for every hour worked in excess of forty per week. As previously noted, the
Club did not pay dancers wages for any hours worked, including overtime hours. Verma’s
expert proposes to use the house mom records (Ex. H), which contain the hours worked by each
dancer for each shift, as well the Club’s records that list the total number of hours worked by all
dancers for each day (Ex. F), to tabulate the total number of shifts and hours worked by each
dancer during each week of the class period. See Pl.’s R. 23 Br. at 26. From this tabulation,
Verma’s expert will then aggregate each individual dancer’s overtime hours, i.e., the number of
hours worked in excess of forty per week. Because the Club failed to pay dancers any wages,
each dancer’s overtime damages can be calculated by multiplying her total number of overtime
Although it appears that Pennsylvania courts have never directly addressed the question of
whether private dance fees are wages under the MWA, much of the MWA’s definition of wages is
identical to the FLSA definition. The MWA definition adds the additional clarification that “‘wages’
mean compensation due to any employe[e] by reason of his or her employment.” 43 Pa. Cons. Stat. §
333.103 (emphasis added). Private dance fees are clearly not due to the dancers by reason of their
employment. A dancer may work a full shift without receiving any private dance fees. The fees are paid
to the dancer by a customer of the Club only if she performs a specific service for that customer.
hours by the minimum overtime wage of $10.875.13 Id. at 26.
As with Verma’s minimum wage claim, common issues of law and fact predominate. To
establish liability, Verma must prove that the dancers are nonexempt employees of the Club, that
dancers sometimes worked in excess of forty hours per week, and that the Club uniformly failed
to pay dancers any overtime compensation. Although the Club asserts that no dancer ever
worked more than 40 hours in a given week, this contested issue of fact can be resolved through
the common methodology that Verma has proposed. If Verma is able to establish liability,
individual damages can be calculated formulaically using the common methodology Verma has
proposed. Verma has shown, by a preponderance of the evidence, that common issues of fact
and law predominate in her MWA overtime claim.
Deductions for Mandatory Tip-outs
Verma alleges that the Penthouse Club violated the WPCL and Pennsylvania common
law by requiring dancers to “tip out” to other individuals who worked at the Club. Verma has
provided evidence—in particular, a schedule of mandatory tip-outs that was posted in the Club—
indicating that, for each shift, regardless of time or length, dancers are required to pay $15 to the
disc jockey, $10 to the house mom, and $5 to the podium host. See Pl.’s R. 23 Br. at 27 & Ex.
D. She has also alleged that dancers are required or strongly encouraged to tip out at least $6 to
the valet. Id. at 27. Thus, the alleged minimum tip-out for each shift is $36. Based on the
records produced by the Club, Verma’s expert has calculated that dancers worked a total of
16,745 shifts during a 2-year period from November 2011 to November 2013.14 Verma’s expert
Under the MWA, an employee’s minimum overtime wage is equivalent to one and one-half
times the regular wage. Therefore, employees who earn or are entitled to earn the minimum wage of
$7.25 per hour are also entitled to earn a minimum overtime wage of $10.875 per hour.
Although Verma has not described precisely how this number was calculated, it appears that
Verma’s expert divided the total number of hours worked during this period (as listed in Exhibit F) by the
average shift length. A more conservative estimate of the number of shifts worked may require that
proposes that classwide damages can be calculated by multiplying the total number of shifts
worked during the class period by the $36 minimum tip-out per shift.15 See Pl.’s R. 23 Br. at 26.
The house mom records and entertainer time sheets could then be used to tabulate the number of
shifts worked by each dancer. An individual dancer’s tip-out damages would be equal to her
total number of shifts multiplied by $36, or some other established minimum tip-out amount.
To prevail on this claim, Verma must prove that the Club enforces the mandatory tip-out
requirement for all dancers during all shifts, and that the imposition of this requirement
constitutes an unlawful deduction under the WPCL or unjust enrichment under Pennsylvania
law. These questions of liability can be resolved on a classwide basis. The Penthouse Club has
not asserted any individualized defenses. Verma’s proposed damages methodology matches her
theory of liability. If liability is proven, apportioning individual damages from classwide
damages will be formulaic; an individual dancer’s tip-out damages would be equal to her total
number of shifts worked multiplied by the minimum tip-out amount. Verma has shown, by a
preponderance of the evidence, that common issues of fact and law predominate.
Deductions for Stage Rental Fees
Verma alleges that the Penthouse Club violated the WPCL and Pennsylvania common
law by requiring dancers to pay a stage rental fee in order to work at the Club. The amount of
the fee varies depending on the dancer’s status as an Entertainer or Freelancer and the shift
worked. See Pl.’s R. 23 Br. at 6 & Ex. D. For certain shifts, the Club charges no stage rental fee
at all, but for others the fee may be as much as $85. Id. Verma proposes that classwide damages
Verma divide the total number of hours worked by the longest shift worked.
The precise amount of the mandatory tip-out is a question of fact properly resolved at trial. For
purposes of class certification, the relevant question is whether Verma has proposed a common
methodology for calculating damages, based on the facts that are proven at trial. For this claim she has.
For example, if it is proven at trial that the minimum mandatory tip-out is $30 instead of $36, Verma
could still accurately calculate damages using her proposed methodology.
can be determined from the Club’s records showing total stage rental fees collected from all
dancers for each day over a two year period. See Pl.’s R. 23 Br. at 26-27 & Ex. G. Verma
asserts that individual damages “can be determined by considering the number of shifts worked
in conjunction with the class members’ classification as either an ‘Entertainer’ or ‘Freelancer.’”
Id. at 32.
As with Verma’s prior claims, the legal questions underlying this claim can be resolved
on a classwide basis. The factual questions, however, are far more individualized. For any given
shift, the stage rental fee paid by a dancer depends on both her classification and the shift she has
chosen to work. For certain shifts, the Club does not charge any fee. In addition, the Club has
provided some evidence that stage rental fees were not always collected, particularly if a dancer
failed to make money from customers during her shift. See, e.g., Silva Dep. at 219:11-25. Given
the individualized nature of these critical facts, it is unclear that Verma would be able to prove
liability or damages on a classwide basis. In addition, Verma has not offered a workable
common methodology for calculating individual damages. Individual damages would depend on
not only a dancer’s classification and the number of shifts worked, but also the timing of each
shift and, potentially, whether the Club actually charged a stage rental fee for each shift.
Because Verma has not shown, by a preponderance of the evidence, that common questions of
fact predominate, I will deny class certification of this claim.
Deductions for Fines
Verma alleges that the Penthouse Club violated the WPCL and Pennsylvania common
law by requiring dancers to pay fines. Verma alleges that the Club charges a dancer a $10 fine
for every 30 minutes she is late and imposes various fines for other violations of Club rules.
Verma notes that there is some documentation of these fines, covering a portion of the class
period. She states, “To the extent the Defendant’s records are complete with regard to the fines
it imposed upon the dancers, this element of damages can be proven directly on a classwide
basis.” Pl.’s R. 23 Br. at 26-27. Verma’s expert asserts that, based on class member interviews,
the average fine paid by each dancer was $24 per shift. Id. at 31-32. Verma, however, has
offered little information to substantiate this calculation. In his report, Verma’s expert simply
states that the $24 average fine was “established based on interviews with Collective Action
Members.” See Pl.’s R. 23 Br., Ex. E at 7. Verma has offered no further suggestion for
calculating damages through a common methodology.
As Verma’s own allegations reveal, the Club assessed these fines on an individual basis,
in response to conduct by a particular dancer. In that regard, they differ significantly from a
uniform, mandatory tip-out assessed to every dancer at the end of each shift. Although Verma
may be able to prove that the Club established general policies regarding the assessment of fines,
Verma would need to offer evidence that these policies were uniformly enforced in order to
establish liability on a classwide basis. Damages depend entirely on the individual conduct of
each dancer. These factual inquiries cannot be resolved on a classwide basis. Because Verma
has not shown, by a preponderance of the evidence, that common questions of fact predominate,
I will deny class certification of this claim.
Deductions for Room Rental Fees
Verma alleges that the Penthouse Club violated the WPCL and Pennsylvania common
law by requiring dancers to pay room rental fees for private dances. The Penthouse Club sets
uniform, non-negotiable prices that customers must pay for these private dances: a four-minute
dance costs $30, of which the dancer receives $20 and the Club retains $10; a half-hour dance
costs $300, of which the dancer receives $175 and the Club retains $125; a one-hour dance costs
$500, of which the dancer receives $300 and the Club retains $200. In order to calculate
classwide damages, Verma’s relies on records produced by the Club showing the aggregate
amount of money retained by dancers for private room dances for each day over a 2-year period.
Using the $20/$10 ratio, Verma proposes that classwide damages for this period are equal to one
half of the aggregate amount of money retained by dancers for private room dances. Pl.’s R. 23
Br. at 28-29. Verma claims that individual damages can then be determined from the limited
podium records that exist, or from the testimony of individual dancers. Id. at 32.
Similar to Verma’s stage rental fees claim, common questions of law may predominate,
but common questions of fact do not. The existence and amount of a class member’s damages
depends on a highly individualized factual inquiry. A class member must establish whether,
during each of her shifts, she performed any private dances and, if so, how many and of what
length. These facts are necessary to prove the claim. Because Verma has not shown, by a
preponderance of the evidence, that common questions of fact predominate, I will deny class
certification of this claim.
Verma has shown that common questions of law and fact predominate for her minimum
wage, overtime, and tip-out claims. Verma has failed to show, by a preponderance of the
evidence, that common questions of law and fact predominate with regard to her claims for stage
rental fees, fines, and room rental fees. I will therefore deny class certification for those claims.
To satisfy the second requirement of Rule 23(b)(3), a plaintiff must show “that a class
action is superior to other available methods for fairly and efficiently adjudicating the
I address both superiority and ascertainability only as applied to Verma’s three claims that
survive the predominance inquiry: minimum wages, overtime, and tip-outs.
controversy.” Fed. R. Civ. P. 23(b)(3). A plaintiff must demonstrate that a class action will
“achieve economies of time, effort, and expense, and promote . . . uniformity of decision as to
persons similarly situated without sacrificing procedural fairness or bringing about other
undesirable results.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997); see also
Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 187 (3d Cir. 2001)
(“Superiority calls for a determination that a class action is the best method of achieving a fair
and efficient adjudication of the controversy.”).
Verma argues that a class action is a superior means of maintaining this action because
(1) the class members do not have a strong interest in individually controlling their claims
because, for many of them, the damages will be relatively modest; and (2) the class action will
promote judicial economy while providing a local forum for the action. The Penthouse Club has
not contested superiority.
Both of Verma’s arguments weigh in favor of superiority. In particular, it appears that
there may be a number of putative class members who worked at the Penthouse Club for only a
brief period of time. For these dancers, the costs of pursuing an individual action would almost
certainly outweigh any potential recovery. A class action may also be superior for putative class
members who continue to work at the Penthouse Club. See, e.g., Hart, 2010 WL 5297221, at *7
(noting, in a similar case, that “the fact that members of the putative class who currently work as
entertainers for the defendants may be reluctant to pursue any claims against the source of their
current income” weighs in favor of superiority). Verma has shown, by a preponderance of the
evidence, that a class action is the superior method of resolving her claims.
In addition to satisfying the explicit requirements of Rule 23(b)(3), a plaintiff seeking
class certification must prove by a preponderance of the evidence that the proposed class is
ascertainable. See Byrd v. Aaron’s Inc., 784 F.3d 154, 163 (3d Cir. 2015). “The ascertainability
inquiry is two-fold, requiring a plaintiff to show that: (1) the class is defined with reference to
objective criteria; and (2) there is a reliable and administratively feasible mechanism for
determining whether putative class members fall within the class definition.” Id. (internal
quotation marks omitted). This requirement “does not mean that a plaintiff must be able to
identify all class members at class certification—instead, a plaintiff need only show that class
members can be identified.” Id.
In this case, Verma’s proposed class includes all dancers who performed at the Penthouse
Club between May 2010 and the entry of judgment. The class definition is objective; an
individual’s membership in the class depends only on whether she worked as a dancer at the
Penthouse Club during the specified time period. Verma has identified records maintained by
the Club—specifically, an index of dancer performance contracts—as a reliable and
administratively feasible means of identifying class members. Pl.’s R. 23 Br. at Ex. M. Verma
has shown, by a preponderance of the evidence that the proposed class is ascertainable.
3. Rule 23(a) Factors17
To satisfy the first requirement of Rule 23(a), a plaintiff must show that the proposed
class is “so numerous that joinder of all members is impracticable.” Fed. R. Civ. P. 23(a)(1).
“No minimum number of plaintiffs is required to maintain a suit as a class action, but generally if
the named plaintiff demonstrates that the potential number of plaintiffs exceeds 40,” the
numerosity requirement “has been met.” Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir.
I address each of the Rule 23(a) factors only as applied to Verma’s three claims that survive the
predominance inquiry: minimum wages, overtime, and tip-outs.
2001). In this case, Verma has presented evidence that at least 318 dancers are members of the
proposed class. Pl.’s R. 23 Br. at Ex. M. Verma has shown, by a preponderance of the evidence,
that the proposed class is sufficiently numerous.
To satisfy the second requirement of Rule 23(a), a plaintiff must show “that there are
questions of law or fact common to the class.” Fed. R. Civ. P. 23(a)(2). The commonality
inquiry asks whether class members’ claims depend upon a common contention and whether
“[t]hat common contention . . . [is] of such a nature that it is capable of classwide resolution—
which means that determination of its truth or falsity will resolve an issue that is central to the
validity of each one of the claims in one stroke.” Dukes, 131 S. Ct. at 2551. The commonality
requirement is generally considered to be less stringent than the predominance requirement of
Rule 23(b)(3). See Baby Neal ex rel. Kanter v. Casey, 43 F.3d 48, 56 (3d Cir. 1994) (“The
commonality requirement will be satisfied if the named plaintiffs share at least one question of
fact or law with the grievances of the prospective class. Because the requirement may be
satisfied by a single common issue, it is easily met . . . .” (internal citations omitted)).
Verma asserts that her claims depend on several common questions of law and fact,
including whether dancers are employees rather than independent contractors. Although the
Penthouse Club challenges commonality, it does so only by folding the inquiry into
predominance. For the reasons described in my analysis of predominance, I find that Verma has
shown, by a preponderance of the evidence, that there are questions of law and fact that are
common to the class.
To satisfy the third requirement of Rule 23(a), a named plaintiff must show that his or her
claims and defenses are “typical of the claims and defenses of the class.” Fed. R. Civ. P.
23(a)(3). The typicality inquiry asks “whether the named plaintiffs’ claims are typical, in
common-sense terms, of the class, thus suggesting that the incentives of the plaintiffs are aligned
with those of the class.” Beck v. Maximus, Inc., 457 F.3d 291, 295-96 (3d Cir. 2006). “If the
claims of the named plaintiffs and putative class members involve the same conduct by the
defendant, typicality is established regardless of factual differences.” Newton, 259 F.3d at 18384.
In this case, the Penthouse Club classified all dancers as independent contractors, paid all
dancers no minimum and overtime wages, and subjected all dancers them to the same common
rules regarding tip-outs. All of Verma’s claims “arise from the same . . . practice or course of
conduct.” Baby Neal, 43 F.3d at 58. Verma has shown, by a preponderance of the evidence, that
her claims are sufficiently typical of the class.
To satisfy the fourth requirement of Rule 23(a), a named plaintiff must show that he or
she “will fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). This
requirement includes “two components: (1) concerning the experience and performance of class
counsel; and (2) concerning the interests and incentives of the representative plaintiffs.” Dewey
v. Volkswagen Aktiengesellschaft, 681 F.3d 170, 181-82 (3d Cir. 2012). The adequacy
requirement “assures that the named plaintiffs’ claims are not antagonistic to the class and that
the attorneys for the class representatives are experienced and qualified to prosecute the claims
on behalf of the entire class.” Baby Neal, 43 F.3d at 55.
Verma asserts that she is an adequate representative of the proposed class because she
shares that same claims as the class members, she has worked to advance the interests of the
class, and each class member is likely to benefit from the litigation. See Pl.’s R. 23 Br. at 20.
The Penthouse Club claims that Verma is an inadequate class representative because of a conflict
of interest. Specifically, the Club argues that the prospective class members, in total, earned
more from private dance fees ($3,322,032.86) than they would have were they simply paid
minimum wage ($688,125.63). See Def.’s R. 23 Mem. at 4.
In order for a class representative to meet the adequacy requirement, the representative
“must be part of the class and ‘possess the same interest and suffer the same injury’ as the class
members.” Amchem Prods., 521 U.S. at 626-27 (citations omitted). The Third Circuit has
clarified that “the linchpin of the adequacy requirement is the alignment of interests and
incentives between the representative plaintiffs and the rest of the class,” and that only a
“fundamental” conflict violates the adequacy requirement of Rule 23(a)(4). Dewey, 681 F.3d at
183. “A fundamental conflict exists where some [class] members claim to have been harmed by
the same conduct that benefitted other members of the class.” Id. at 184 (quoting Valley Drug
Co. v. Geneva Pharms., Inc., 350 F.3d 1181, 1189 (11th Cir. 2003)). “A conflict that is unduly
speculative, however, is generally not fundamental.” Id.
The Penthouse Club asserts that “[p]rospective class members actually benefit from the
challenged conduct.” See Def.’s R. 23 Mem. at 3. The Club appears to imply that dancers
would receive less money from patrons were the Club required to pay minimum wage. This
assertion, however, appears to rest upon a fundamental misunderstanding of Verma’s claims and
relies upon the type of speculation the Third Circuit has expressly rejected. It is irrelevant that
the putative class members may have received more compensation from the Club’s customers, in
the aggregate, than they would have received were they compensated only through minimum
wage. Under the terms of the MWA, if the putative class members are non-exempt employees of
the Penthouse Club, they are entitled to be paid minimum wage by the Club, regardless of any
compensation received from the Club’s customers. See 43 Pa. Cons. Stat. §§ 333.103(d)(1),
333.113. Thus, all putative plaintiffs suffered the same injury (failure to receive minimum wage)
due to the Club’s uniform policy of classifying all dancers as independent contractors and not
paying minimum wage. At this stage, any assertion that the imposition of a minimum wage
requirement would alter the amount of compensation that the putative class members receive
from the Club’s customers would be unduly speculative. There is not a conflict between Verma
and the putative class members.
The Club has not contested the adequacy of class counsel. Verma’s counsel has been
involved in numerous class actions, including wage and hour class actions such as this one. See
Pl.’s R. 23 Br. at Exs. N & O. Verma has shown, by a preponderance of the evidence, that both
she and her counsel are adequate representatives of the class.
For the preceding reasons, Verma has shown that she is similarly situated to the opt-in
plaintiffs. I will therefore grant Verma’s motion for final certification of the FLSA collective
action and deny the Penthouse Club’s motion for decertification of the FLSA collective action.
Verma has also satisfied each of the requirements of Rule 23 for her minimum wage, overtime,
and tip-out claims brought under Pennsylvania state law. I will grant Verma’s motion for Rule
23 class certification for those claims only and will deny class certification for Verma’s claims
for stage rental fees, fines, and room rental fees.
s/Anita B. Brody
ANITA B. BRODY, J.
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