MCFEELEY v. JACKSON ST. ENTM’T., LLC, NO. 15-1583

Decided: June 8, 2016

The Fourth Circuit determined that the Plaintiffs were employees, and therefore affirmed the judgment of the district court.

Plaintiffs, exotic dancers who worked at Fuego Exotic Dance Club (“Fuego”) and Extasy Exotic Dance Club (“Extasy”), alleged on behalf of themselves and others similarly situated that defendant clubs and Uwa Offiah—the owner and manager of both clubs—misclassified them as independent contractors and accordingly failed to pay them the minimum wage required by the Fair Labor Standards Act (“FLSA”).  They sued defendants for both unpaid wages and liquidated damages, and on January 3, 2014 plaintiffs filed a motion for partial summary judgement.  The district court granted plaintiffs’ motion in part, finding that plaintiffs were employees, not independent contractors. Reserving various disputes over monetary recovery for the jury, the jury ultimately found in favor of the plaintiffs and awarded them damages for unpaid wages.  On the matter of liquidated damages, the court awarded liquidated damages to each of the plaintiffs only for the period prior to September 2011—in September 2011 the defendants consulted an attorney regarding classifying dancers as independent contractors and therefore, after that time defendants reasonably believed the were not violating the FLSA.  After denial of motion for judgment as a matter of law and/or for a new trial, defendants appealed.

On appeal, defendants sought review on five questions. The first was whether plaintiffs were employees or independent contractors under the FLSA and related state laws.  Applying the same “economic realities” test as the lower court, the Fourth Circuit agreed, based on the totality of the circumstances presented, that plaintiffs were employees covered by the FLSA and analogous state laws.  Defendants next questioned whether defendants acted in good faith prior to September 2011, making them not liable for to pay liquidated damages for that time—the trial court had already determined defendant were not liable for liquidated damages after September 2011.  When defendant Offiah took over management of Fuego and Extasy in 2007 and 2009, respectively, he changed nothing about the way the clubs had been operating, including the classification of the dancers as independent contractors.  It was not until he faced a lawsuit in 2011, that he made an effort to educate himself on the governing law.  Thus, the Court held that the district court did not err in rejecting defendants’ good faith defense for the period prior to September 2011.  When defendants questioned whether it was an error to bar defendants from presenting evidence of plaintiffs’ income taxes, the Court again agreed with the district courts view that that plaintiffs’ earning were irrelevant.  Lastly, when defendants questioned whether the district court erred in formulating its jury instruction and verdict sheet, as well as whether the trial court erred in denying the defendants motion for judgment as a matter of law and/or a new trail, the Fourth Circuit determined that no errors had been made.  Thus, the Court affirmed the judgment of the district court.

Full Opinion

Aleia M. Hornsby

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