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Priya Verma v. 3001 Castor Inc, 18-2462 (2019)

Court: Court of Appeals for the Third Circuit Number: 18-2462 Visitors: 16
Filed: Aug. 30, 2019
Latest Update: Mar. 03, 2020
Summary: PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 18-2462 _ PRIYA VERMA, On behalf of herself and All others similarly situated v. 3001 CASTOR, INC., d/b/a The Penthouse Club and/or The Penthouse Club@Philly; ABCDE PENNSYLVANIA MANAGEMENT, LLC; DOE DEFENDANTS 1-10 3001 Castor, Inc., Appellant _ Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil Action No. 2-13-cv-03034) District Judge: Honorable Anita B. Brody _ Argued April 17
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                                       PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT
              ________________

                    No. 18-2462
                 ________________

      PRIYA VERMA, On behalf of herself and
           All others similarly situated

                          v.

 3001 CASTOR, INC., d/b/a The Penthouse Club and/or
The Penthouse Club@Philly; ABCDE PENNSYLVANIA
               MANAGEMENT, LLC;
              DOE DEFENDANTS 1-10

                 3001 Castor, Inc.,
                           Appellant
                ________________

     Appeal from the United States District Court
       for the Eastern District of Pennsylvania
       (D.C. Civil Action No. 2-13-cv-03034)
      District Judge: Honorable Anita B. Brody
                 ________________

               Argued April 17, 2019

        Before: AMBRO, GREENAWAY, JR.,
            and SCIRICA, Circuit Judges
              (Opinion filed: August 30, 2019)

John F. Innelli (Argued)
Two Penn Center, Suite 1300
Philadelphia, PA 19102

      Counsel for Appellant

Jamisen A. Etzel (Argued)
Gary F. Lynch
Carlson Lynch Kilpela & Carpenter
1133 Penn Avenue, 5th Floor
Pittsburgh, PA 15222

Gerald D. Wells, III
Connolly Wells & Gray
2200 Renaissance Boulevard, Suite 275
King of Prussia, PA 19406

      Counsel for Appellee

                     ________________

                OPINION OF THE COURT
                   ________________

AMBRO, Circuit Judge

       A jury in the District Court awarded more than $4.5
million to a class of dancers at the Penthouse Club, an “adult
gentleman’s club” in Philadelphia owned and operated by
3001 Castor, Inc., for unpaid minimum wages and unjust




                              2
enrichment under Pennsylvania law. The Court denied the
motion of Castor to set aside the verdict, and it appeals to us.
We join our District Court colleague, Judge Brody, in
concluding that, as a matter of “economic reality,” the dancers
were employees of Castor, not its independent contractors, and
we reject Castor’s novel argument that the federal Fair Labor
Standards Act (“FLSA”) precludes the class’s claims for unjust
enrichment. We also conclude that Castor is not entitled to any
credit or offset against the jury award for payments already
received by the dancers. We thus affirm across the board and
sustain the jury’s verdict.

I.     Background

       Priya Verma was a dancer at the Penthouse Club, a
nightclub in Philadelphia operated by Castor. As Judge Brody
explained, the Club provides “topless female dancers” who
“entertain [Castor’s] customers by performing seductive
dances.” Verma v. 3001 Castor, Inc., 
2014 WL 2957453
, at *1
(E.D. Pa. June 30, 2014). As the Club’s owner and operator,
Castor controlled its atmosphere, policies, operations, and
marketing.

       Dancers at the Club were classified into two categories:
“Entertainers” and “Freelancers.” It required Entertainers to
commit to working at least four days per week and submit a
weekly schedule. Freelancers had no such commitments.
Castor required each dancer in both categories to sign an
agreement stating that she is an independent contractor.
        Dancers at the Club worked in shifts. They could
choose among five: a “day shift” lasting from noon to 6:00
p.m.; a “mid shift” from 3:00 p.m. to 9:00 p.m.; a “preferred
shift” from 6:00 p.m. to midnight; a “premium shift” from 8:00
p.m. to 2:00 a.m.; and a “power shift” from 10:00 p.m. to 2:00




                               3
a.m. A dancer had to “rent” stage time for each shift she
worked. The rates for these “stage-rental fees” varied
depending on the shift and were lower for Entertainers than for
Freelancers. Dancers performed in two locations: on the
Club’s main stage and in private dance rooms.
       The Club did not pay dancers a wage; their
compensation consisted entirely of (1) “tips” they received
when dancing on stage or (2) fixed “dance fees” at rates
established by the Club, which they received from giving
“private dances” in the private dance rooms. The Club also
took a fee, called a “room-rental fee,” for each private dance.
Castor also required the dancers to “tip out” certain individuals
who worked at the Club. These “mandatory tip-outs” had to
be paid for each shift regardless how much money the dancer
made in the shift. They included $15 to the Club’s disc jockey,
$10 to the “house mom” (who kept track of the dancers’
schedules and assisted them in other ways), and $5 to the
podium host, for a total of $30 per shift.

      The Club provided training to the dancers and closely
reviewed their attendance, appearance, demeanor, and
customer service. It also had a strict set of rules the dancers
must follow. When they violated those rules, they were fined
amounts ranging from $10 to $100.
       In 2013 Verma filed this action against Castor on behalf
of herself and similarly situated current and former dancers at
the Club. She alleged claims for minimum wages and overtime
under the FLSA, 29 U.S.C. §§ 206(a), 207(a), 216(b),
analogous claims for minimum wages and overtime under the
Pennsylvania Minimum Wage Act (“PMWA”), 43 Pa. Stat.
§§ 333.104 & .113, a claim for non-payment of wages under
the Pennsylvania Wage Payment and Collection Law, 43 Pa.
Stat. § 260.9a, and a claim for unjust enrichment under
Pennsylvania common law.




                               4
        On the FLSA claims, Verma alleged an “opt-in”
collective action under 29 U.S.C. § 216(b). See Knepper v.
Rite Aid Corp., 
675 F.3d 249
, 258–59 (3d Cir. 2012).1 On the
state-law claims, she pursued a damages class action under
Federal Rule of Civil Procedure 23(b)(3).2 The case proceeded

1
  29 U.S.C. § 216(b) provides that private claims under the
FLSA may be pursued collectively “by any one or more
employees for and in behalf of himself or themselves and other
employees similarly situated.” Unlike class actions under the
Federal Rules of Civil Procedure, FLSA collective actions
under § 216(b) are “opt in” actions—that is, “[n]o employee
shall be a party plaintiff to any such action unless he gives his
consent in writing to become such a party and such consent is
filed in the court in which such action is brought.” 29 U.S.C.
§ 216(b). The procedures for these collective actions, which
are not disputed here, have been described in prior cases. See,
e.g., Zavala v. Wal Mart Stores Inc., 
691 F.3d 527
, 534 (3d Cir.
2012).
2
  Rule 23(b)(3) provides that a class action may be maintained
if the requirements of Rule 23(a) are met and “the court finds
that the questions of law or fact common to class members
predominate over any questions affecting only individual
members, and that a class action is superior to other available
methods for fairly and efficiently adjudicating the
controversy.” The requirements of Rule 23(a) are having
(1) so many class members that joinder is impractical,
(2) questions of law or fact that are common to the class, (3)
one or more representatives whose claims or defenses are
typical of those in the class, and (4) representatives who will
fairly and adequately protect the interests of the class. See Fed.
R. Civ. P. 23(a)(1)–(4).




                                5
along two tracks: one under the collective-action provisions of
the FLSA, and another under the class-action procedures of
Rule 23. We and other circuits have endorsed this dual-track
procedure, which is used widely to pursue wage-and-hour
cases in federal court simultaneously under federal and state
law. See 
Knepper, 675 F.3d at 262
(collecting cases).

        After some discovery, the District Court entered an
order conditionally certifying a collective action under the
FLSA comprising current and former dancers of the Club
during the covered time period. 3001 Castor, 
2014 WL 2957453
, at *13. A notice was sent to potential members of
the collective action, and 22 dancers filed consent forms to join
the action as “opt-in” plaintiffs. (For convenience, Verma and
the opt-in plaintiffs are described as “plaintiffs.”) The District
Court also ruled, as a matter of law, that plaintiffs and the other
dancers were “employees” of Castor under the FLSA and the
PMWA. 
Id. at *4–10.
       After further discovery, the Court entered an order
granting final certification of the FLSA collective action
(covering both the minimum-wage and overtime claims) and
granting in part Verma’s motion for class certification under
Rule 23. See Verma v. 3001 Castor, 
2016 WL 6962522
, at *6,
*14 (E.D. Pa. Nov. 29, 2016). The Court certified a Rule
23(b)(3) class with respect to the following claims under
Pennsylvania law: (i) a claim for minimum wages under the
PMWA, (ii) a claim for overtime under the PMWA, and (iii) a
claim for unjust enrichment based on deductions for mandatory
tip-outs. (It denied class certification to the extent plaintiffs
sought to recover deductions for stage-rental fees, fines, and
room-rental fees. 
Id. at *10–11.)
        A couple weeks before trial, plaintiffs and Castor
purportedly reached an agreement in principle to settle an aspect
of plaintiffs’ FLSA claims. The terms of that alleged settlement




                                6
are not in the record, and there appears to be disagreement
between counsel concerning what those terms are and whether an
agreement was actually reached. What we know is this: plaintiffs
were to receive $109,000 in exchange for not presenting at trial
some portion of their FLSA claims.
        Shortly after the alleged settlement, Castor filed a
motion to dismiss the action for lack of subject matter
jurisdiction. It argued that a settlement concerning the FLSA
claims—the only federal claims involved—deprived the
District Court of jurisdiction over the case. The Court denied
that motion because, in its view, it retained supplemental
jurisdiction over the state claims under 28 U.S.C. § 1367(a).

       The remaining claims—class claims for minimum wages
under the PMWA, overtime under the PMWA, and unjust
enrichment—went to trial. The jury returned a verdict awarding
the class more than $4.5 million: $2,610,322.61 for its
minimum wage claims and $1,948,400.12 for its unjust
enrichment claims. Castor filed post-trial motions asking the
Court to dismiss the suit for lack of jurisdiction, to reconsider
its summary-judgment rulings, and to enter judgment for
Castor as a matter of law. The Court denied those motions and
entered final judgment on the verdict. Castor appeals to us.

II.    Discussion
       We have jurisdiction to review the final judgment of the
District Court under 28 U.S.C. § 1291. Stecyk v. Bell
Helicopter Textron, Inc., 
295 F.3d 408
, 412 (3d Cir. 2002).
Castor challenges on several grounds the District Court’s
judgment entering the $4.5 million jury verdict. We address
each in turn.




                               7
       A. The District Court’s Jurisdiction
         Castor contends the District Court did not have
jurisdiction to try this case. It claims the Court should have
granted its motion to dismiss for lack of jurisdiction after the
parties reached an agreement in principle to settle an aspect of
plaintiffs’ FLSA claims. According to Castor, once those
claims were excised from the case, the Court should not have
exercised supplemental jurisdiction under § 1367(a). Instead,
it should have dismissed plaintiffs’ state-law claims because
(i) they presented “novel or complex issue[s] of State law,”
28 U.S.C.       § 1367(c)(1),      (ii)    they    “substantially
predominate[d]” over the federal claims, 
id. § 1367(c)(2),
and
(iii) it was improper to try the state-law claims on their own.

        We need not review the decision to exercise
supplemental jurisdiction in these circumstances. Irrespective
whether the District Court had that jurisdiction, it no doubt had
jurisdiction over plaintiffs’ state-law claims under the Class
Action Fairness Act of 2005 (“CAFA”), Pub. L. No. 109–2,
119 Stat. 4 (codified in scattered sections of Title 28 of the U.S.
Code). That statute gives district courts original jurisdiction
over class actions that (i) involve more than 100 class
members, (ii) have an aggregate amount in controversy greater
than $5 million, and (iii) have diversity of citizenship between
any class member and any defendant. 28 U.S.C. § 1332(d).
Those criteria clearly were met here: the complaint alleged a
class of more than 300 dancers, an aggregate amount in
controversy more than $5 million, and the requisite diversity
of citizenship.
       Castor contends that CAFA’s amount-in-controversy
requirement was not satisfied because the maximum damages
the dancers could recover was only around $700,000. We
disagree for two reasons. First, because Castor did not raise a
factual challenge to the complaint’s CAFA allegations until the




                                8
eve of trial, the jurisdictional allegations in the complaint are
controlling. See Neale v. Volvo Cars of N.A., LLC, 
794 F.3d 353
, 357 n.1 (2015) (where no factual challenge is raised to
CAFA allegations, they are controlling unless “it is clear to a
legal certainty that the plaintiff cannot recover the amount
claimed”); see also Dart Cherokee Basin Operating Co., LLC
v. Owens, 
135 S. Ct. 547
, 553 (2014) (“When a plaintiff
invokes federal-court jurisdiction, the plaintiff’s amount-in-
controversy allegation is accepted if made in good faith.”);
Auto-Owners Ins. Co. v. Stevens & Ricci Inc., 
835 F.3d 388
,
395–96 (3d Cir. 2016) (“[U]nder a long-standing rule, federal
diversity jurisdiction is generally determined based on the
circumstances prevailing at the time the suit was filed.”
(quotation and brackets omitted)).

       Second, even if we were to consider Castor’s belated
factual challenge to the District Court’s jurisdiction under
CAFA, we would easily conclude from the record—including
the approximately $4.5 million jury verdict—that the amount
in controversy exceeded $5 million all along. The verdict does
not include attorneys’ fees, which do count for CAFA’s
amount-in-controversy threshold, see 
Neale, 794 F.3d at 357
n.1, and was entered based on a narrower scope of issues (and
thus a smaller amount in controversy) than were initially pled
in the complaint, see Verma Br. at 17–18 (summarizing the
additional categories of alleged damages the District Court
excluded from class certification). As we recently explained,
a putative class action’s qualification for CAFA jurisdiction is
determined based on the class action that is “filed” under Rule
23—in other words, the class action that is alleged. Coba v.
Ford Motor Co., --- F.3d ---, 
2019 WL 3367573
, at *3 (3d Cir.
July 26, 2019). We thus conclude that CAFA’s amount-in-
controversy requirement was met here in any event. In short,
the District Court had jurisdiction under CAFA to determine
the class’s state-law claims.




                               9
       We also believe the Court acted within its discretion to
exercise jurisdiction over those claims under § 1367(a).
Before the FLSA claims were dropped, the overlap between
the federal and state-law claims was substantial. Allowing
Verma to pursue them through the customary “dual-track”
procedure we endorsed in Knepper was 
reasonable. 675 F.3d at 262
. And although the federal claims were not presented at
trial, the Court may have reasonably concluded that
“considerations of judicial economy, convenience, and fairness
to the parties provide[d] an affirmative justification for”
exercising jurisdiction. Hedges v. Musco, 
204 F.3d 109
, 123
(3d Cir. 2000) (quotation omitted).

       B. The District Court’s Pre-trial “Employee”
          Ruling

       As noted, before trial the District Court ruled as a matter
of law that plaintiffs and the other dancers were “employees”
of Castor under the FLSA and the PMWA. Castor claims that
ruling erred and asks us to reverse it. But before reaching this
issue, we address a threshold argument made by the class.

              1. Appellate Jurisdiction

       Verma contends we lack jurisdiction to review the
District Court’s classification of the dancers as employees.
She claims that ruling is unreviewable either because (a) it was
part of an unappealable order denying a motion for summary
judgment, or (b) Castor forfeited any challenge to that ruling
by not objecting at trial when the Court instructed the jury that
“[the Court] ha[s] already determined that Verma and the other
Dancers were employees, not independent contractors.”
Verma Br. at 24–25.

       Both contentions miss the mark. Regardless how it was
labeled, the Court’s ruling that Verma and the other dancers by




                               10
law are employees was in substance a partial grant of summary
judgment in favor of plaintiffs on each of their claims that was
premised on the existence of that employer–employee
relationship. As such, we can review it under the “merger
rule,” which provides that interlocutory orders, such as partial
grants of summary judgment, “merge with the final judgment
in a case, and the interlocutory orders (to the extent that they
affect the final judgment) may be reviewed on appeal from the
final order.” Pineda v. Ford Motor Co., 
520 F.3d 237
, 243 (3d
Cir. 2008) (quoting In re Westinghouse Sec. Litig., 
90 F.3d 696
, 706 (3d Cir. 1996)); see also Roberts v. Ferman, 
826 F.3d 117
, 121 n.3 (3d Cir. 2016) (“[B]ecause interlocutory orders
such as partial grants of summary judgment merge with the
final judgment, they can be challenged on appeal.”).

        As an aside, we note that Castor did not explicitly
identify the District Court’s partial grant of summary judgment
in its notice of appeal; instead it identified the Court’s order
denying the motion to reconsider its grant of partial summary
judgment. But that does not bar our review. We exercise
appellate jurisdiction over orders “that are not specified in the
notice of appeal where: (1) there is a connection between the
specified and unspecified orders; (2) the intention to appeal the
unspecified order is apparent; and (3) the opposing party is not
prejudiced and has a full opportunity to brief the issues.”
Trzaska v. L’Oreal USA, Inc., 
865 F.3d 155
, 163 (3d Cir. 2017)
(quotation omitted). These requirements are all met here: the
specified and unspecified orders were both related to Castor’s
opposition       to     summary         judgment      on      the
employee/independent-contractor issue, Castor’s intention to
appeal that issue is evident from the 15 pages it devoted to the
issue in its opening brief, and plaintiffs took their full
opportunity to brief it on appeal.




                               11
              2. Merits
        That brings us to the merits of the District Court’s
“employee” ruling. Whether a worker is an employee or an
independent contractor under the FLSA or PMWA is a mixed
question of fact and law. See Martin v. Selker Bros., 
949 F.2d 1286
, 1292 (3d Cir. 1991). The fact component is the
combination of disputed and undisputed facts that comprise the
economic relations between the worker and the alleged
employer. The law component is the conclusion of whether
those facts make a worker an “employee” or “independent
contractor.” In some cases, one or more genuine issues of fact
concerning the relevant economic relations may preclude a trial
court from drawing a conclusion as a matter of law on the
“employee” or “independent contractor” issue. In those cases
the issue would go to trial, with the jury resolving it through
either special interrogatories or by deciding the classification
issue. See Fed. R. Civ. P. 49. But in other cases, as here, the
district court may resolve the issue before trial based on
undisputed facts in the record. In those cases we do a fresh
review on appeal of the court’s determination. Selker 
Bros., 949 F.2d at 1292
.

        We use a six-factor test to determine whether a worker is
an “employee” or an “independent contractor” under the FLSA.
See 
id. at 1293.
Pennsylvania courts use the same test under the
PMWA. Pa. Dep’t of Labor & Indus. v. Stuber, 
822 A.2d 870
,
873 (Pa. Commw. Ct. 2003), aff’d sub nom. Pennsylvania v.
Stuber, 
859 A.2d 1253
(Pa. 2004). Those factors are:

       (1) the degree of the alleged employer’s right to
       control the manner in which the work is to be
       performed;

       (2) the alleged employee’s opportunity for profit
       or loss depending upon [her] managerial skill;




                               12
       (3) the alleged employee’s investment in
       equipment or materials required for [her] task, or
       [her] employment of helpers;

       (4) whether the service rendered requires a special
       skill;
       (5) the degree of permanence of the working
       relationship; [and]

       (6) whether the service rendered is an integral part
       of the alleged employer’s business.

Selker 
Bros., 949 F.2d at 1293
; accord Donovan v.
DialAmerica Mktg., Inc., 
757 F.2d 1376
, 1379 (3d Cir. 1985).

        Notably, none of these factors asks whether the worker
signed an agreement stating that she is an “independent
contractor,” as Castor required of the dancers here. That is not
surprising. The whole point of the FLSA and the PMWA is to
protect workers by overriding contractual relations through
statute. See Brooklyn Sav. Bank v. O’Neil, 
324 U.S. 697
, 706
(1945) (“The [FLSA] statute was a recognition of the fact that
due to the unequal bargaining power as between employer and
employee, certain segments of the population required federal
compulsory legislation to prevent private contracts . . . .”); 43
Pa. Stat. § 333.101 (declaring that employees covered by the
protections of the PMWA “are not as a class on a level of
equality in bargaining with their employers in regard to
minimum fair wage standards, and ‘freedom of contract’ as
applied to their relations with their employers is illusory”).
       In any event, no one factor is dispositive. Rather, a
court should consider them together in the “circumstances of
the whole activity” to determine whether the worker is
“dependent upon the business to which [she] render[s] service”




                               13
or is, “as a matter of economic reality,” operating an
independent business for herself. Selker 
Bros., 949 F.2d at 1293
(quoting 
DialAmerica, 757 F.2d at 1382
(internal
quotation omitted)).
                     i.   Employer’s right to control the
                          manner in which the work is to be
                          performed

        Castor contends the dancers had substantial control over
their work. It emphasizes that they (i) set their own hours,
(ii) could opt among different shifts with varying stage-rental
fees, (iii) decided whether to be Entertainers (requiring a
weekly four-shift commitment for lower stage-rental fees) or
Freelancers (no weekly commitment but higher stage-rental
fees), (iv) determined whether to stay beyond the end of their
shifts to continue working, and (v) chose whether to accept or
reject requests for private dances.

        But beyond these narrow choices made by the dancers,
which primarily relate to the shifts they selected, the Club
exerted overwhelming control over the performance of their
work. It (i) established the available shift times, (ii) checked
the dancers’ shift attendance and fined them $10 for every 30
minutes they were late, (iii) instructed the dancers on their
physical appearance and dictated their choice of dress, hair,
and makeup, (iv) determined the songs and number of songs
that play when a dancer is dancing, (v) forbade them from
smoking, chewing gum, or using their cellphones while on the
dance floor, (vi) banned changing into their street clothes
before the end of their shifts, and (vii) set the price and duration
of all private dances.

       On balance, the control factor weighs strongly in favor
of “employee” status. See 
id. at 1294
(employer’s control over
gas station operators shown by findings that owner “set the




                                14
price[s] of cash sales,” visited the gas stations regularly “to
oversee its operations,” and “controlled the hours of operation
and the appearance of the stations”); see also McFeeley v.
Jackson Street Entm’t, LLC, 
825 F.3d 235
, 241–42 (4th Cir.
2016) (nightclub owner’s pervasive control over exotic dancers
shown by findings that nightclub reviewed attendance,
imposed guidelines on dancers’ appearance, set the fees for
private dances, instructed dancers on their demeanor and
performance, and managed the club’s atmosphere and
clientele).

                   ii.   Employee’s opportunity for profit
                         or loss depending upon her
                         managerial skill

        Castor places significant weight on this factor.
Throughout its brief it characterizes the dancers as
“entrepreneurs” who “invested” their time and money in shifts
at the Club in exchange for the opportunity to make money. It
emphasizes that, in a given shift, dancers could make anywhere
from profits in excess of $1,600 to a loss (due to paying stage-
rental fees and mandatory tip-outs). It argues that each dancer
had control over her own profits and losses based on her
attraction of followers (through social media platforms, for
example) along with “her dancing skills . . . and her skills at
creating a fantasy.”

       But this factor also weighs in favor of employee status.
Although each dancer had some degree of control over her
profits and losses, “managerial skill”—the relevant factor
here—had minimal influence on them. It was the Club, not the
dancers, that determined its hours, decided whether to charge
admission fees, set the price for drinks and food, determined
the length and price of dances on stage and in private rooms,
and managed its atmosphere, operations, and advertising.
Further, the dancers’ skills in “dancing” and “creating a




                              15
fantasy” are not the kinds of “managerial skills” that can weigh
in favor of independent-contractor status. See Selker 
Bros., 949 F.2d at 1294
; Reich v. Circle C. Investments, Inc., 
998 F.2d 324
, 328 (5th Cir. 1993) (rejecting argument that exotic
dancers’ control over their profits through “initiative, hustle,
and costume” weighed in favor of independent-contractor
status); 
McFeeley, 825 F.3d at 243
(observing that courts have
“almost universally rejected” the argument that dancers control
their opportunities for losses and profits because they can
“hustle” to increase their tips and dance fees).

                  iii.   Employee’s        investment    in
                         equipment or materials required
                         for her task, or her employment of
                         helpers

        Castor argues weakly that dancers “invest” in their trade
by paying the Club’s stage-rental fees each shift. But this falls
in favor of “employee” status. Castor owns and maintains the
Club’s premises, pays its licensing fees, purchases alcohol for
it, and manages, pays and trains its personnel. As Judge Brody
noted, courts that have considered similar economic
arrangements have all concluded that “a dancer’s investment is
minor when compared to the club’s investment.” 3001 Castor,
2014 WL 2957453
, at *8 (quotation omitted) (collecting
cases). We reach the same conclusion.

                  iv.    Whether the service          rendered
                         requires a special skill
        As noted, Castor maintains that dancers have control
over the quality of their performance through their “dancing
skills” and “skills at creating a fantasy.” The District Court
aptly described the skills that contribute to dancers’
performance of their “primary job responsibilities [of] topless
dances on stage and . . . private dances [for] the club’s




                               16
customers”: they should be “fluid” dancers and have good
“appearance[,] . . . social skills, [and] hygiene.” 
Id. at *9.
We
refuse to recognize these as “special skills” that weigh in favor
of independent-contractor status. Although we have not drawn
a bright line between “special” and other skills for purposes of
our six-factor test, we do not believe “appearance,” “social
skills,” and “hygiene” qualify. See 
Reich, 998 F.2d at 328
(nude dancers “do not exhibit the skill or initiative indicative
of persons in business for themselves”); see also Hopkins v.
Cornerstone Am., 
545 F.3d 338
, 345 (5th Cir. 2008) (holding
that managers’ “skills to effectively manage their offices and
teams . . . are not specialized skills . . . [because] they are
abilities common to all effective managers” (emphasis in
original)).

                   v.    The degree of permanence of the
                         working relationship

       The permanence factor is Castor’s strongest. It
submitted attendance data showing that dancers at the Club
typically are a transient group. The average dancer in the class
worked for the Club in only 14 of the 109 workweeks in the
class period, and none of the dancers who rented stage time at
the Club during the class period rented time slots totaling more
than 40 hours in a given week. In addition, throughout the class
period the dancers were free to work at other venues, including
for Castor’s competitors. The District Court was correct to
conclude this factor tips to an independent-contractor
relationship. Notably, however, the two Circuits who have
considered similar circumstances—the Fourth and the Fifth—
both assigned little weight to this factor. See 
McFeeley, 825 F.3d at 244
; 
Reich, 998 F.2d at 328
–29. Castor gives no
persuasive reason for us to diverge from those Circuits.




                               17
                     vi.   Whether the service rendered is an
                           integral part of the alleged
                           employer’s business

       The last factor weighs clearly in favor of an employee
relationship. Castor markets the Club as an “adult gentleman’s
club.” Its primary offering to customers is topless female
dancers who dance on stage and give lap dances in private
rooms. (To its credit, Castor does not argue that anyone comes
to the Club for the food, drinks, or any reason other than to see
the dancers.) They are the providers of that offering. There is
no question they render a service that is integral to the Club’s
business.

                 *         *    *      *      *

       Having reviewed the six factors, we perform a holistic
assessment. Although our judgment is binary—that is, either
employee        or       independent         contractor—“the
employee/independent contractor distinction is not a bright line
but a spectrum.” 
McFeeley, 825 F.3d at 241
. As the economy
evolves, courts continue to grapple with the challenge of
placing novel economic relations on the correct point in the
spectrum. In many cases that judgment is difficult, and we
express sympathy for the district judges making these fact-
intensive judgments under such a flexible standard.
        But the case before us is not a hard one. Here the
dancers’ relationship to the Club falls well on the “employee”
side of the line. Five of the six factors weigh in favor of
concluding the dancers are Castor’s “employees.” The only
factor in Castor’s favor—the permanence of the relationship—
does not cut so strongly in that direction as to come close to
outweighing the other five. Thus we easily conclude the
dancers were “dependent upon the business to which they
render service.” Selker 
Bros., 949 F.2d at 1293
(quotation




                                18
omitted). They were not, as a matter of economic reality,
operating independent businesses for themselves. The District
Court correctly ruled they were employees as a matter of law.

       C. Castor’s Preemption Argument
        Castor asks us to hold, as a matter of first impression,
that the class claims for unjust enrichment under Pennsylvania
law are preempted by regulations promulgated by the U.S.
Department of Labor under the FLSA. Its arguments,
however, underwhelm. Castor does not cite any authority for
the proposition that the FLSA preempts common-law claims
like these. Nor does it contend with the “congressional intent
not to preempt state standards” we have recognized in the
FLSA. 
Knepper, 675 F.3d at 259
. We have rejected similar
preemption arguments before, see 
id. at 263,
and Castor does
not provide any reason to deviate from the general presumption
that the FLSA is a parallel regime of wage-and-hour
protections that works in cooperation with, not to the exclusion
of, other laws protecting workers. See 
id. at 263.
        Congress’s recent amendment of the FLSA does not
change the analysis. That occurred in 2018. Through the
amendment, Congress added a cause of action under the FLSA
for employees whose tips are taken by their employers. See
29 U.S.C. § 203(m)(2)(B); 29 U.S.C. § 216(b) (“Any
employer who violates section 203(m)(2)(B) of this title shall
be liable to the employee or employees affected in the amount
of the sum of any tip credit taken by the employer and all such
tips unlawfully kept by the employer, and in an additional
equal amount as liquidated damages.”). Not only was that
cause of action unavailable at the time of plaintiffs’ trial, but
Castor gives us no reason to believe it precludes a similar claim
for unjust enrichment. As with the other provisions of the
FLSA, nothing in these new provisions undermines the
presumption that the FLSA is meant to supplement, not




                               19
supplant, state laws protecting workers. We thus reject
Castor’s contention that the FLSA preempts plaintiffs’ claims
for unjust enrichment.

       D. Castor’s Request for a Credit or Offset
        Castor claims the jury award should have been reduced
by the amount of money plaintiffs received directly from
customers in the form of dance fees. It concedes that, for the
class claims under the PMWA, it does not get a credit or offset
for those fees. But Castor maintains an offset should have been
applied to plaintiffs’ unjust enrichment claims because “it
would be unjust and inequitable” to allow them to recover
monies for the tips they were forced to pay other Castor
employees without giving Castor a credit for the dance fees
they retained. In essence, Castor asks us to remake the jury’s
verdict on damages for unjust enrichment.

        We decline. First, Castor does not support its argument
with any citations to the record nor any explanation of how we
would calculate the amount of credit or offset; by not doing so,
it arguably has waived this argument on appeal. See Norman
v. Elkin, 
860 F.3d 111
, 129 (3d Cir. 2017) (“For an argument
to be preserved on appeal it must be presented together with
supporting arguments and citations.” (quotation marks
omitted)). Second, the argument is not persuasive from an
equitable standpoint. The jury and the District Court
concluded that Castor was unjustly enriched because it
obtained the benefit of the tip-outs that plaintiffs were forced
to make to other employees of Castor. It provides no
persuasive reason to disturb that conclusion. That Castor did
not divert all the money plaintiffs received from customers—
namely, the dance fees—does not undermine the jury and the
District Court’s conclusion that plaintiffs were equitably
entitled to more than they received. Accordingly, we affirm




                              20
the District Court’s denial of Castor’s post-trial request for an
offset or credit.
                 *       *      *       *      *

        The District Court had CAFA jurisdiction to try the
class’s claims under the PMWA and Pennsylvania common
law. It also correctly ruled before trial that, as a matter of law,
plaintiffs were Castor’s employees. We are not persuaded the
class’s claims for unjust enrichment are preempted by the
FLSA, nor is Castor entitled to a credit or an offset of damages
for the dance fees the class members earned and received.
Hence we affirm in full the challenged rulings of the District
Court and sustain the jury’s verdict.




                                21

Source:  CourtListener

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