Jordan et al v. Entertainment of the Eastern Panhandle, Inc. et al
ORDER Granting in Part and Denying in Part 76 Motion for Reconsideration re 74 Order on Motion and 73 Order on Motion for Partial Summary Judgment. The Court hereby REINSTATES the defendants counterclaims for breach of contract and unjust enrichment to the extent that they seek an offset of performance fees against any award of minimum wages. Signed by Chief Judge John Preston Bailey on 4/25/2012. (cmd)
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF WEST VIRGINIA
PATRICE RUFFIN, a/k/a “KARMA,”
Civil Action No. 3:11-CV-19
ENTERTAINMENT OF THE EASTERN
PANHANDLE, d/b/a THE LEGZS CLUBS, et al.,
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION FOR RECONSIDERATION
Pending before this Court is the defendants’ Motion for Reconsideration [Doc. 76],
filed March 19, 2012. The plaintiff responded on April 5, 2012 [Doc. 78]. The defendants
did not reply. The Court has reviewed the record and the arguments of the parties and, for
the reasons set out below, concludes that the motion should be GRANTED IN PART and
DENIED IN PART.
In this action, plaintiff Patrice Ruffin a/k/a “Karma” (“Ruffin”), an exotic dancer, has
sued her former exotic dance club, Entertainment of the Eastern Panhandle, Inc., d/b/a The
Legz Clubs, among others (the “defendants”), for violations of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201, et seq., and West Virginia Wage Payment and Collection Act
(“WPCA”), W.Va. Code § 21-5-1, et seq. [Doc. 48]. Regarding the FLSA, Ruffin claims that
though she was treated as an employee, she was not paid a minimum wage.
On November 23, 2011, this Court entered an Order Granting in Part and Denying
in Part Plaintiff’s Motion to Dismiss Defendants’ Counterclaims [Doc. 53]. In that Order, this
Court allowed to proceed the defendants’ claims for breach of contract and unjust
enrichment “to the extent that they seek an offset of performance fees against any award
of minimum wages, assuming the defendants can prove that those performance fees
constituted service charges as opposed to tips.” (Id. at 10).
At a status conference held December 16, 2011, this Court inquired as to the effect
of a potential setoff on the plaintiff’s minimum wage claim brought pursuant to the Fair
Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et seq. Counsel agreed that a setoff could
have an impact on the viability of the FLSA claim. As a result, the Court concluded that the
setoff issue should be decided prior to any determination of whether an FLSA collective
action should be conditionally certified. Accordingly, upon the suggestion of Ruffin’s
counsel, the Court directed that the issue be briefed. Consequently, the parties filed cross
motions for summary judgment on the setoff issue [Docs. 65 & 71].
In granting Ruffin summary judgment, this Court first outlined the undisputed
The uncontroverted evidence presented by the parties discloses that
the defendants treated their exotic dancers as independent contractors and
had them execute crude agreements wherein the dancers agreed to such an
The defendants paid no wages to the dancers.
defendants set minimum fees for various types of activity, as follows:
for private dances at $30.00 for a table side dance, $100.00 for
a shower dance, and $150.00 for a champagne dance
The dancers were allowed to charge whatever amount they desired
for the above activities, so long as the amount equaled or exceeded the
minimum set by the defendants. The defendants then required that each
dancer pay a portion of the amount recovered to the defendants, as follows:
“$10 for each table-side dance, $30.00 for each shower dance, and $75.00
for each Champagne Room dance.”
The dancers retained the balance of amounts that they received for
([Doc. 73] at 2). Next, this Court identified Doe v. Cin-Lan, Inc., 2010 WL 726710 (E.D.
Mich. Feb. 24, 2010) as “the most analogous and persuasive authority” on the FLSA setoff
issue, outlined its relevant facts, and applied its logic:
Based upon the logic of Cin-Lan, this Court finds that were this Court
to hold that the plaintiff is an employee and entitled to the minimum wage, the
defendant would likely be entitled to a set off or credit for that portion of the
mandatory minimum dance fees which she retained. This Court, as the
Court in Cin-Lan does not accept the plaintiff’s argument that the fees had
to enter [the defendants’] gross receipts.
The fly in the ointment for the defendants, however is the fact that,
unlike Cin-Lan, they kept no records of the amounts paid to them as a result
of the plaintiff’s efforts. Since the defendants bear the burden of proving the
amount of the mandatory minimum dance fees retained by the plaintiff, their
claim fails, not from the lack of entitlement, but from the lack of adequate
(Id. at 3-5). Accordingly, this Court granted Ruffin summary judgment on the defendants’
counterclaims. (Id. at 5). The same day, this Court granted conditional certification and
ordered Ruffin to submit a revised proposed notice without the need of any mention of the
defendants’ counterclaims [Doc. 74]. On March 15, 2012, Ruffin submitted a Revised
Collective Action Notice [Doc. 75-1] and a Revised Return Consent to Join Lawsuit Card
On March 19, 2012, the defendants filed the instant Motion for Reconsideration
[Doc. 76] asking this Court to “reconsider its Orders granting summary judgment against
[their] counterclaims for breach of contract and unjust enrichment, as to potential opt-in
plaintiffs only (Docket No. 73), and permitting the opt-in notice to be sent to potential
plaintiffs to omit any reference to those counterclaims (Docket No. 74).” ([Doc. 76] at 1).
In other words, the defendants “move for an Order permitting those counterclaims to
proceed against any opt-in plaintiff for whom records exist to support the set-offs the
Defendants claim, and further move that the requirements for the notice to be sent to
putative opt-in plaintiffs be amended accordingly.” (Id.). In support of their request, the
defendants first highlight that this Court based its decision to grant summary judgment on
their counterclaims “not from the lack of entitlement [to a setoff], but from the lack of
adequate records.” (Id. at 2). Next, the defendants allege that, after entry of this Court’s
Orders, they discovered “considerable documentation regarding the number and the sort
of private dances performed by numerous adult entertainers at the clubs they operate,
going back in some cases to July 2009.” (Id. at 3). The defendants describe the discovery
and content of this documentation as follows:
During the week of March 4, 2012, the Defendants uncovered a large
additional quantity of documents – including Daily [Cash] Sheets and Private
Dance Records from the cabarets in Ridgeley and Martinsburg, and the
cabaret once located in Morgantown. Those records, which were presumed
to have been lost or destroyed, were discovered quite by surprise. The
documents in question were found inside a filing cabinet and a box, that were
in turn located within a forty-eight foot Conex trailer being used as a storage
shed adjacent to Legz Martinsburg.
Fixtures, furniture and kitchen equipment from three nightclubs and
two pizza restaurants were stored in the Conex trailer. [The defendants’
principal] found the documents in question while searching the storage trailer
for idle equipment he could sell at auction to raise money to defend the
The records in question include Daily [Cash] Sheets for the Legz Club
in Martinsburg (24 months of data), additional Daily [Cash] Sheets for Legz
Gold in Ridgeley (12 months), and Daily [Cash] Sheets for the now-closed
Legz Morgantown (31 months). They also include Private Dance Sheets for
Martinsburg (14 months) and Morgantown (23 months), as well as a handful
of additional Private Dance Sheets for Ridgeley. These records were sent
to counsel for the Plaintiff on March 16, 2012, as soon after their receipt by
undersigned counsel as they could be sorted, evaluated and copied.
(Id. at 5-6) (footnotes omitted). The defendants previously explained that Daily Cash
Sheets were “used in all [their] cabarets to track a variety of information, including which
dancers performed on a given night,” were “completed nightly, usually by a manager or
bartender,” and were “retained until the data they contained was put on a spreadsheet for
the benefit of an outside accountant.” (Id. at 4). Likewise, the defendants explained that
Private Dance Sheets “documented the number and types of private dances performed on
any given day, and who performed them,” and that “those dancers initialed the entries
recording every such transaction of the three clubs.” (Id.).
On April 5, 2012, Ruffin filed a Response [Doc. 78] opposing reconsideration. First,
Ruffin questions the defendants’ alleged discovery of new evidence as “strategically
convenient, at best,” and argues that due diligence on the defendants’ part would have
uncovered the documents in question. Second, Ruffin contends that the new evidence is
inadmissible hearsay. Finally, Ruffin argues that the new evidence should not change this
The defendants did not reply.
Pursuant to Federal Rule 54(b) of Civil Procedure, “any order or other decision,
however designated, that adjudicates fewer than all the claims . . . may be revised at any
time before the entry of judgment adjudicating all the claims.” Thus, Rule 54(b) empowers
a district court to “amend interlocutory orders to achieve complete justice.” Shrewsbury
v. Cyprus Kanawha Corp., 183 F.R.D. 492, 493 (S.D. W.Va. 1998) (citing Fayetteville
Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1469 (4th Cir. 1991)). In
reviewing a motion under Rule 54(b), a district court is “guided by the general principals”
of Rule 59(e). Id. “There are three circumstances in which the district court can grant a
Rule 59(e) motion: (1) to accommodate an intervening change in controlling law; (2) to
account for new evidence not available at trial; or (3) to correct a clear error of law or
prevent manifest injustice.” United States ex rel. Becker v. Westinghouse Savannah
River Co., 305 F.3d 284, 290 (4th Cir. 2002) (quoting Pac. Ins. Co. v. Am. Nat’l Fire Ins.
Co., 148 F.3d 396, 403 (4th Cir. 1998)). However, this three-part test is “not applied with
the same force” when analyzing an interlocutory order. Beyond Sys., Inc. v. Kraft Foods,
Inc., 2010 WL 3059344, *2 (D. Md. Aug. 4, 2010) (citing Am. Canoe Assn. Inc. v. Murphy
Farms, Inc., 326 F.3d 505, 514 (4th Cir. 2003)).
The defendants seek the entry of an Order reconsidering this Court’s March 7, 2012,
Order Regarding Claimed Set-Offs [Doc. 73] and Order Granting in Part and Denying in
Part Plaintiff’s Motion to Facilitate Identification and Notification of Similarly Situated
Employees [Doc. 74]. In support of their motion, the defendants neither identify an
intervening change in controlling law, nor contend that this Court committed a clear error
of law. Instead, the defendants present evidence which they assert was not available at
the time of disposition, e.g., the Daily Cash Sheets and Private Dance Sheets. Below, this
Court will consider the effect of this evidence on each of the Court’s rulings.
Order Regarding Claimed Set-Offs
The defendants argue that the Daily Cash Sheets and Private Dance Sheets
discovered during the week of March 4, 2012, remedy the “lack of adequate records”
identified by this Court as the sole deficiency precluding the defendants from receiving a
setoff. This Court agrees.
To secure a Rule 54(b) reconsideration based upon newly discovered evidence, the
movant must make four showings, namely: (1) that the evidence is of facts existing at the
time of disposition, (2) that the movant was excusably ignorant of the facts despite using
due diligence to learn about them, (3) that the evidence is admissible, and (4) that the
evidence produces a different result. See generally Randolph v. ADT Security Servs.,
Inc., 2012 WL 273722 (D. Md. Jan. 30, 2012). This Court will consider each element in
Evidence of Facts Existing at Time of Disposition
Ruffin does not dispute that the Daily Cash Sheets and Private Dance Sheets
discovered during the week of March 4, 2012, existed on March 7, 2012, when this Court
entered the two Orders for which the defendants seek reconsideration. Accordingly, the
first element is satisfied.
Excusable Ignorance Despite Due Diligence
Ruffin argues that the Daily Cash Sheets and Private Dance Sheets “were in
Defendants’ sole possession at all times” and that “[e]ven the basic due diligence on
Defendants’ part would have uncovered the documents in question at the time [her]
document requests were made [in August and November 2011].” ([Doc. 78] at 4). This
This Court cannot find that the defendants’ failure to discover the documents in
question was the result of a lack of due diligence. According to the uncontroverted sworn
testimony of the defendants’ principal, (1) the documents were found during the week of
March 4, 2012, in a box, in a filing cabinet, in a trailer next to the defendants’ Martinsburg
cabaret; (2) the trailer contained fixtures, furniture, and kitchen equipment; and (3) he only
entered the trailer to search for items to auction for legal fees. In addition, the defendants
represent that they had no policy regarding the retention of the documents found. Ruffin
does not attempt to dispute these representations, instead challenging the discovery as
“strategically convenient, at best.” ([Doc. 78] at 4). Based upon these undisputed facts,
this Court finds that the defendants’ failure to present the documents in question prior to
disposition is excusable. Accordingly, the second element is satisfied.
Ruffin challenges the admissibility of the Daily Cash Sheets and Private Dance
Sheets, arguing that they are hearsay and do not fall within the business records exception
contained in Federal Rule of Evidence 803(6).
The business records exception provides that the following is not excluded by the
rule against hearsay:
A memorandum, report, record, or data compilation, in any form, of acts,
events, conditions, opinions, or diagnoses, made at or near the time by, or
from information transmitted by, a person with knowledge, if kept in the
course of a regularly conducted business activity, and if it was the regular
practice of that business activity to make that memorandum, report, record,
or data compilation, all as shown by the testimony of the custodian or other
qualified witness . . . unless the source of the information or the method or
the circumstances of preparation indicate a lack of trustworthiness.
Fed. R. Evid. 803(6).
Here, Ruffin argues that the business records exception is inapplicable because the
defendants admit that “[they] had no policy regarding the retention of those records, prior
to this litigation, because they did not believe the information contained in the records was
useful after it was summarized for their accountant.” ([Doc. 78] at 7) (quoting [Doc. 76] at
5). This Court is unpersuaded.
Ruffin conflates the defendants’ statement that they had no policy regarding the
retention of the Daily Cash Sheets and Private Dance Sheets with a statement that those
documents were not kept in the course of a regularly conducted business activity and that
it was the regular practice of that business activity to make those documents. Obviously,
the documents in question were retained or they would not be attached to the defendants’
motion. More importantly, the principal of the defendants testified at his deposition that the
Daily Cash Sheets and the Private Dance Sheets were kept in the course of their business
and that it was their regular practice to make those documents. (See Ericson Depo. at 1920, 30-31, & 65-66). Accordingly, the third element is satisfied.
Evidence Produces Different Result
Ruffin contends that the Daily Cash Sheets and Private Dance Sheets should not
produce a different result for two primary reasons, namely: (1) the documents are
insufficiently specific, identifying the entertainers only by their stage names or barely-legible
initials and (2) the documents do not track the money the entertainers received from private
dances, only the money the clubs received.1 This Court is unconvinced by either argument.
First, on March 21, 2012, the defendants disclosed to Ruffin the identifying
information for every exotic dancer for whom they possessed such information [Doc. 77].
That information included the name and/or stage name of over 150 dancers. As such, this
Court is unpersuaded that the Daily Cash Sheets and Private Dance Sheets are rendered
immaterial or lack probative value because they contain only the stage names of the
Second, Ruffin does not dispute that the defendants set minimum fees for the
various types of dances offered ($30.00 for a table side dance, $100.00 for a shower
dance, and $150.00 for a champagne dance). Taken in conjunction with the undisputed
Ruffin also attempts to reargue that the defendants are not entitled to a setoff as
a matter of law. However, relitigating decided issues of law is not proper on a Rule 54(b)
motion for reconsideration nor in opposing such a motion. See 11 Charles Allen Wright et
al., Federal Practice and Procedure § 2810.1, at 127-28 (2d ed. 1995).
existence of those standard fees, therefore, this Court is unpersuaded that the Daily Cash
Sheets and Private Dance Sheets lack probative value. Accordingly, the fourth and final
element is satisfied.
For these reasons, this Court hereby REINSTATES the defendants’ counterclaims
for breach of contract and unjust enrichment to the extent that they seek an offset of
performance fees against any award of minimum wages.
Order Granting in Part and Denying in Part Plaintiff’s Motion to
Facilitate Identification and Notification of Similarly Situated Employees
The defendants also argue that this Court should reconsider its decision not to
require the Notice to reference their counterclaims. Specifically, the defendants propose
two additional paragraphs for inclusion in the Notice. First, the defendants argue that the
following paragraph should be added to Section II:
The Defendants have claimed that many exotic dancers were permitted to
share in the minimum fees patrons of the Defendant nightclubs paid dancers
in exchange for certain private dancers. The Defendants have claimed that
it would be a breach of contract, and unjustly enrich those dancers if the
dancers were awarded a minimum wage and permitted to keep their share
of those fees. If the Plaintiff wins, the Court will allow the Defendants to
reduce the minimum wage payment owed to any dancer by the amount of
minimum fees which the Defendants can show that she earned for
performing private dances at that club.
([Doc. 76] at 7-8). In addition, the defendants propose that Ruffin add a Subpart (5) to
Section IV that reads as follows:
You may be required to disclose information regarding your income. If it is
found that you earned private dance fees at the club, any award of unpaid
minimum wages you are found to be due may be offset by the amount of fees
that you earned. This may reduce your total award to zero, but in no event
will you be required to pay money to the Defendants, even if your fee income
exceeds the minimum wage payment owed to you.
(Id. at 8).
Upon careful consideration, this Court concludes that neither proposed addition to
the Notice is appropriate. First, this Court notes that in every case a plaintiff faces the
possibility that he or she will not be awarded any damages.
That the defendants’
counterclaims are the vehicles here that could preclude recovery is not significant. Second,
this Court observes that uncertainty still exists as to which entertainers the defendants have
adequate records to support their counterclaims. Therefore, the very limited value of
requiring reference to the defendants’ counterclaims in the Notice is outweighed by the
potential chilling effect it could cause for putative plaintiffs asked to decide whether to join
this collective action. As such, this Court will not require any additions to the Notice.
Accordingly, the Notice [Doc. 75-1] and the Consent to Join Lawsuit Card [Doc. 75-2] are
hereby APPROVED for distribution to potential collective action class members.
For the foregoing reasons, the Court finds that the defendants’ Motion for
Reconsideration [Doc. 76] should be, and hereby is, GRANTED IN PART and DENIED IN
It is so ORDERED.
The Clerk is directed to transmit copies of this Order to any counsel of record herein.
DATED: April 25, 2011.
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