Opinion
No. CV-18-00490-TUC-RM (MSA)
2020-02-24
Crystal SMITH, Plaintiff, v. NOVEMBER BAR N GRILL LLC, et al., Defendants.
ORDER
On December 26, 2019, Magistrate Judge Maria S. Aguilera issued a Report and Recommendation (Doc. 99) recommending that this Court deny Plaintiff's Motion for Summary Judgment (Doc. 82), partially grant Defendants' Motion for Summary Judgment (Doc. 84) to the extent Defendants challenge Plaintiff's claims under the Fair Labor Standards Act (Counts One and Two of the Amended Complaint (Doc. 37)), and decline supplemental jurisdiction over Plaintiff's claims under the Arizona Minimum Wage Act and Arizona Wage Act (Counts Three and Four). No objections to the Report and Recommendation were filed.
A district judge must "make a de novo determination of those portions" of a magistrate judge's "report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). The advisory committee's notes to Rule 72(b) of the Federal Rules of Civil Procedure state that, "[w]hen no timely objection is filed, the court need only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation" of a magistrate judge. Fed. R. Civ. P. 72(b) advisory committee's note to 1983 addition. See also Johnson v. Zema Sys. Corp. , 170 F.3d 734, 739 (7th Cir. 1999) ("If no objection or only partial objection is made, the district court judge reviews those unobjected portions for clear error."); Prior v. Ryan , CV 10-225-TUC-RCC, 2012 WL 1344286, at *1 (D. Ariz. Apr. 18, 2012) (reviewing for clear error unobjected-to portions of Report and Recommendation).
The Court has reviewed the Report and Recommendation, the parties' briefs, and the record. The Court finds no error in the Report and Recommendation. Accordingly, the Court will adopt the Report and Recommendation in full.
IT IS ORDERED that the Report and Recommendation (Doc. 99) is accepted and adopted in full .
IT IS FURTHER ORDERED that:
(1) Plaintiff's Motion for Summary Judgment (Doc. 82) is denied .
(2) Defendants' Motion for Summary Judgment (Doc. 84) is granted as to Plaintiff's claims under the Fair Labor Standards Act. Plaintiff's claims under the Fair Labor Standards Act are dismissed with prejudice .
(3) The Court declines to exercise supplemental jurisdiction over Plaintiff's claims under the Arizona Minimum Wage Act and the Arizona Wage Act. Plaintiff's claims under the Arizona Minimum Wage Act and the Arizona Wage Act are dismissed without prejudice .
(4) The Clerk of Court is directed to enter judgment accordingly and close this case.
REPORT AND RECOMMENDATION
Honorable Maria S. Aguilera, United States Magistrate Judge
This matter is on referral pursuant to Rules 72.1 and 72.2 of the Local Rules of Civil Procedure. Pending before the Court are the parties' motions for summary judgment. (Docs. 82, 84.) For the following reasons, the Court will recommend that summary judgment be granted in favor of Defendants November Bar N Grill LLC ("November Bar"), Rosalinda Largent, and Mary Sagaya on Plaintiff Crystal Smith's federal-law claims, and that supplemental jurisdiction be declined over Plaintiff's state-law claims.
The following facts are undisputed unless otherwise noted. Citations to the record refer to the page numbers electronically generated by the Court's filing system, not to the original page numbers in the documents cited.
November Bar is owned by Rosalinda Largent and operated by Mary Sagaya. (Doc. 90, ¶ 2.) It is licensed to provide adult entertainment. (Id. ¶ 1.) The parties dispute the volume of business done by November Bar: Defendants assert that November Bar's annual gross revenue is regularly less than $40,000 and that the bar closes early on most nights due to a lack of customers. (Doc. 88 at 7, ¶¶ 52, 54, 56.) Plaintiff Crystal Smith asserts that Defendants' evidence of November Bar's revenue is inaccurate because November Bar is a cash-only business, and Defendants did not track the fees paid to them by individual dancers. (Doc. 91, ¶¶ 1, 3, 8.)
Plaintiff performed as an exotic dancer at November Bar starting in April 2016. (Doc. 90, ¶¶ 1, 8.) The parties dispute how often Plaintiff worked: Plaintiff asserts she worked six days per week for nearly two-and-a-half years, while Defendants assert she worked only sporadically and would disappear for months at a time. (Doc. 88 at 10, ¶¶ 89–90; Doc. 90, ¶¶ 16–17.) The parties' arrangement ended in August 2018, when Plaintiff was told to leave the bar. (Doc. 90, ¶ 11.)
While working at November Bar, Plaintiff solicited customers to pay for her dancing performances. (Id. ¶ 10.) The songs Plaintiff danced to at November Bar came from a jukebox. (Id. ¶ 18.) The parties dispute whether the jukebox uses the internet to play music: Plaintiff asserts that the jukebox is "internet-streaming," while Defendants assert that it is not. (Doc. 83, ¶ 32; Doc. 88 at 5, ¶ 32.) The parties also dispute whether Defendants imposed rules on their dancers: Defendants assert they have no rules for dancers other than that dancers follow the law. (Doc. 88 at 9, ¶ 81.) Plaintiff asserts that dancers are required to pay house fees, work four- to five-hour shifts at least three days per week, pay late fees for tardiness, and perform dances only in specific locations of the bar. (Doc. 83, ¶¶ 1, 5–6, 8, 11.)
Legal Standard
Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is material if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is genuine if the evidence is such that a reasonable trier of fact could resolve the dispute in favor of the nonmoving party. Id. In evaluating a motion for summary judgment, the court must "draw all reasonable inferences from the evidence" in favor of the nonmovant. O'Connor v. Boeing N. Am., Inc. , 311 F.3d 1139, 1150 (9th Cir. 2002). A reasonable inference is one which is supported by "significant probative evidence" rather than "threadbare conclusory statements." Barnes v. Arden Mayfair, Inc. , 759 F.2d 676, 680–81 (9th Cir. 1985). If "the evidence yields conflicting inferences [regarding material facts], summary judgment is improper, and the action must proceed to trial." O'Connor , 311 F.3d at 1150.
The party moving for summary judgment bears the initial burden of identifying those portions of the record, together with affidavits, if any, that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant meets this burden, the burden shifts to the nonmovant to "come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (emphasis omitted); see also Fed. R. Civ. P. 56(c)(1).
The parties' motions raise identical issues and arguments. The Court has considered the issues from the perspective of Defendants' motion—i.e., Defendants are the moving parties, and Plaintiff is the nonmoving party—so that Plaintiff is given the benefit of all reasonable inferences. The Court has considered all arguments and materials presented in connection with both motions.
Plaintiff has alleged four claims against Defendants. In count one and count two, she claims that Defendants violated the Fair Labor Standards Act ("FLSA") by not paying overtime wages and minimum wage. 29 U.S.C. §§ 206(a), 207(a). In count three, she claims that Defendants violated the Arizona Minimum Wage Act ("AMWA") by not paying minimum wage. Ariz. Rev. Stat. § 23-363(A). In count four, she claims that Defendants violated the Arizona Wage Act ("AWA") by not timely paying all wages due. Id. § 23-351(C).
I. Fair Labor Standards Act
To establish a minimum-wage or overtime violation of the FLSA, Plaintiff must establish three elements: (1) she was an employee of Defendants, (2) she was covered under the FLSA, and (3) Defendants failed to pay her minimum wage or overtime wages. 29 U.S.C. §§ 206(a), 207(a). There are two types of coverage under the FLSA: individual and enterprise. Chao v. A-One Med. Servs., Inc. , 346 F.3d 908, 914 (9th Cir. 2003). Defendants contend they are entitled to summary judgment because Plaintiff is unable to establish either type of coverage. The Court agrees.
Section 206(a) requires that employers pay their employees a minimum wage; § 207(a) requires that employers pay their employees an overtime wage. Because this is the only distinction between the elements created by each statute, subsequent citations will be only to § 206.
A. Individual Coverage
An employee has individual coverage if, during her work, she "is engaged in commerce." 29 U.S.C. § 206(a). The FLSA defines "commerce" to mean "trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof." Id. § 203(b). In determining whether an employee is engaged in commerce, the court must "focus on the activities of the employee[ ] and not on the business of the employer." Mitchell v. Lublin, McGaughy & Assocs. , 358 U.S. 207, 211, 79 S.Ct. 260, 3 L.Ed.2d 243 (1959) (citations omitted). This fact-dependent inquiry is "guided by practical considerations, not technical conceptions." Mateo v. Auto Rental Co. , 240 F.2d 831, 833 (9th Cir. 1957) (citing Mitchell v. C.W. Vollmer & Co. , 349 U.S. 427, 429, 75 S.Ct. 860, 99 L.Ed. 1196 (1955) ).
An employee also has individual coverage if she "engaged ... in the production of goods for commerce." 29 U.S.C. § 206(a). Plaintiff does not contend that she produced goods for commerce.
Defendants argue that interstate commerce is in no way implicated by Plaintiff's work as an exotic dancer. They acknowledge that Plaintiff has asserted she was required to dance to streaming music to perform her work, but they contend this assertion is without factual support. They contend further that although their jukebox is capable of downloading music, there is no evidence that Plaintiff ever downloaded a song or that she was required to do so for her work. By "pointing out through argument the absence of evidence to support plaintiff's claim," Defendants have met their initial burden to "show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial." Fairbank v. Wunderman Cato Johnson , 212 F.3d 528, 532 (9th Cir. 2000) ; Nissan Fire & Marine Ins. Co. v. Fritz Cos. , 210 F.3d 1099, 1102 (9th Cir. 2000). Therefore, the burden is Plaintiff's "to produce enough evidence to create a genuine issue of material fact." Nissan Fire , 210 F.3d at 1103.
Plaintiff responds that summary judgment is inappropriate because there is evidence she engaged in commerce by regularly using Defendants' internet jukebox. She analogizes this case to Foster v. Gold & Silver Private Club, Inc. , No. 7:14CV00698, 2015 WL 8489998, at *6 (W.D. Va. Dec. 9, 2015), a case in which dancers were found to have engaged in commerce by dancing to music streamed over the internet. She asserts that, like the Foster dancers, she was required to use an "internet-streaming jukebox" to dance and, as a result, she engaged in interstate commerce.
As is clear from Plaintiff's argument, the sole link between Plaintiff and interstate commerce is the jukebox, its internet capabilities, and Plaintiff's use of those capabilities. Thus, the first question to consider is: What are the jukebox's capabilities? The jukebox manuals, which Plaintiff obtained directly from the vendor, Eagle Vending, are the most logical starting point. (See Doc. 83, ¶ 34.) As an initial matter, the jukebox can connect to the internet. (Doc. 83-3 at 13; Doc. 83-4 at 39.) Regarding music, the manuals differentiate between music stored locally on the jukebox hard drive and music that is not. (See Doc. 83-3 at 35; Doc. 83-4 at 39.) Music that is not already on the jukebox's hard drive can be downloaded using the internet. (See Doc. 83-4 at 39 ("The Internet connectivity gives patrons more features, such as the ability to download ‘Music On Demand’ songs when their song choice is not already on the jukebox.").) There is no indication that the jukebox uses the internet to stream music.
"Downloading" refers to the "transfer (as data or files) from a usu. large computer to the memory of another device (as a smaller computer)." Download , Merriam-Webster's Collegiate Dictionary (11th ed. 2003).
"Streaming" refers to the "transfer of data (as audio or visual material) in a continuous stream esp. for immediate processing or playback." Streaming , Merriam-Webster's Collegiate Dictionary (11th ed. 2003).
Plaintiff argues that the "jukebox vendor, Eagle Vending, confirmed that the jukebox uses the internet to play songs." However, Plaintiff does not support this statement with citation to the record. See Fed. R. Civ. P. 56(c)(1)(A) (requiring on summary judgment that parties support their assertions by "citing to particular parts of materials in the record"). The record shows only that Eagle Vending produced the jukebox manuals in response to Plaintiff's subpoena. (Doc. 83-3 at 2–6 (Plaintiff's subpoena and a statement from an employee of Eagle Vending verifying the authenticity and accuracy of the manuals).) There is nothing indicating that Eagle Vending itself confirmed that the jukebox plays songs only if connected to the internet. To the contrary, the manuals show the jukebox does not require an internet connection to play music. (See id. at 35 ("Even though the jukebox is not connected to the AMI Entertainment Network [sic], local music can still be selected and played.").)
Next, Plaintiff cites to a range of pages in one of the manuals and broadly asserts that the pages contain information "about the internet connectivity of the jukebox." (Doc. 83, ¶ 35.) However, these pages merely describe how to install the jukebox wiring and internet router; there is no information about what the jukebox can do using the internet. (See Doc. 83-3 at 14–31.) Plaintiff also quotes the following sentence from one of the manuals: "In order to bring the AMI Entertainment™ Network and the Internet to each location, a broadband connection must be installed at each site." (Id. at 13.) This statement likewise says nothing about what the jukebox can do using the internet. Plaintiff also asserts that the jukebox displays the words "online download," and that Defendants' website states, "You can be the DJ. With our Internet Jukebox there are thousands of song selections." (Doc. 83-1 at 33; Doc. 83-2 at 6.) Plaintiff's observation that music can be downloaded onto the jukebox is consistent with the jukebox manuals. Defendants' website statements, however, say nothing about the jukebox's internet capabilities.
Next, Plaintiff has made at least two sworn assertions that the jukebox is capable of streaming music over the internet. (Doc. 37, ¶ 44 (stating, in the verified complaint, that "[t]he jukebox used an internet subscription for music-streaming"); Doc. 83-1 at 33 (stating, in an affidavit, that she "was required to use an internet-streaming jukebox to dance for patrons").) These assertions have not been considered in determining whether summary judgment is appropriate. During oral argument, Plaintiff's counsel conceded that the jukebox does not stream music. Moreover, an affidavit may be considered only if, among other things, it is "made on personal knowledge." Fed. R. Civ. P. 56(c)(4). Plaintiff clearly does not have personal knowledge that the jukebox streams music, since her own objective evidence (i.e., the manuals obtained from the vendor) shows it does not, and she indicated during her deposition that beyond knowing generally that the jukebox is "all internet, based off the internet," she does not specifically know how it works. (Doc. 88 at 18.) Additionally, Plaintiff's assertions are not supported with specific facts showing how she learned that the jukebox streams music over the internet. See Intermountain Fair Hous. Council v. Boise Rescue Mission Ministries , 657 F.3d 988, 997–98 (9th Cir. 2011) (rejecting a declaration as outside the declarant's personal knowledge, where the declarant failed to explain how she learned the alleged facts stated in the declaration).
Having determined what the jukebox can do (i.e., play music stored locally on its hard drive and download music using the internet), the next question to consider is: How did Plaintiff use the jukebox? In her affidavit, she asserts that she was required to use the jukebox to dance for patrons, and that she used her own money to play jukebox songs. (Doc. 83-1 at 33.) These are admissible facts that must be considered. However, in her motion briefing, Plaintiff adds that she "was required to download music from the internet to perform dances." Plaintiff fails to support this statement with citation to evidence. See Fed. R. Civ. P. 56(c)(1)(A). Consequently, it has not been considered.
Additionally, although Plaintiff is entitled to the benefit of all reasonable inferences, it would not be reasonable to infer that Plaintiff was required to download music. Plaintiff's evidence indicates she did not know how to download music, and that new music appeared only after the jukebox was serviced by an employee of the jukebox vendor. In her affidavit, she asserts that new music was "frequently uploaded" to the jukebox by a jukebox technician. (Doc. 83-1 at 33.) This is consistent with her deposition testimony:
Q: You state here that the jukebox would download songs from the internet. How do you know?
A: They would come in and service it, and new music was always up loaded [sic] to it, always, like – and it said internet. It says online, it says it right on the screen, as you're picking out songs.
Q: It says what?
A: Online download. You can like push an option to download music from the WiFi, like from the internet.
Q: So certain songs you have to download?
A: No, it just says it like on the screen. You can't download it yourself, you have to, I guess – I don't know how the jukebox works, but it's all internet, based off the internet.
Q: You just said you don't know how it works?
A: Well, I'm saying like I don't know if they come in, because I know they came in and programmed it, whatever they did to it, they'd come in once a month, do whatever to it, and then there would be more music on there. And then on the top of the screen, it would say, to download more music from internet [sic], whatever, it would go across the screen, so it was online.
Q: You don't know that the music was being downloaded from the internet?
A: No, it says online download on the screen.
Q: But what you're saying is you would see somebody come in and service the jukebox about once a month?
A: Uh-huh.
Q: And that you would notice that there would be more music on the jukebox after they came and did that?
A: Yeah. It always says online at the top of the screen on the jukebox.
(Doc. 88 at 18.)
Despite Plaintiff working at November Bar for nearly two-and-a-half years, she not only lacked knowledge about how to download music, she believed that only a jukebox technician could download music. As such, it would not be reasonable to infer that downloading music was a job requirement. See Barnes , 759 F.2d at 680–81 (explaining that the nonmoving party "is entitled to the benefit of only reasonable inferences that may be drawn from the evidence" and that an inference is reasonable only if supported by "significant probative evidence" (emphasis in original) (citation omitted)).
Nor would it be reasonable to infer that Plaintiff in fact ever downloaded music. During oral argument, Plaintiff's counsel suggested this would be a reasonable inference based on testimony that Plaintiff paid for new songs that cost two credits and other evidence that two-credit songs had to be downloaded. However, although Plaintiff was aware of a distinction between one- and two-credit songs, she has pointed to no testimony that the distinction was between locally stored music and downloadable music. (See Doc. 85-1 at 30.) Nor has she pointed to testimony that she ever paid for two-credit songs. (See id. ) Therefore, although it is conceivable that Plaintiff downloaded music, she has offered no evidence to support a reasonable inference that she in fact did so. See Cafasso v. Gen. Dynamics C4 Sys., Inc. , 637 F.3d 1047, 1061 (9th Cir. 2011) ("The evidence adduced [on summary judgment] by Cafasso establishes only that this set of events could conceivably have occurred; it does not give rise to a reasonable inference that it did in fact occur. To find liability on this evidence would require undue speculation.").
Based on the admissible facts, the Court finds that Plaintiff has not shown a genuine dispute about whether she engaged in commerce. See Fraser v. Goodale , 342 F.3d 1032, 1036 (9th Cir. 2003) (explaining that courts consider only admissible facts on summary judgment). There is evidence that Plaintiff used the jukebox and that the jukebox has internet capabilities; however, Plaintiff has offered no evidence that she ever used those capabilities, i.e., downloaded a song. Essentially, Plaintiff's work—i.e., dancing and buying jukebox songs—was confined entirely to November Bar. She did not trade, transport, transmit, or communicate anything between states. 29 U.S.C. § 203(b) ("commerce" definition). She was not employed in the "channels of interstate commerce." See McLeod v. Threlkeld , 319 U.S. 491, 493–94, 63 S.Ct. 1248, 87 L.Ed. 1538 (1943) (stating that "every employee in the ‘channels of interstate commerce’ " is engaged in commerce (quoting Walling v. Jacksonville Paper Co. , 317 U.S. 564, 567, 63 S.Ct. 332, 87 L.Ed. 460 (1943) )). Nor were her activities "so closely related to the movement of ... commerce as to be a part of it." Id. at 497, 63 S.Ct. 1248. At most, Plaintiff's activities minimally "affect[ed] or indirectly relate[d] to interstate commerce"; this, however, is not enough. See id. (explaining that individual coverage requires conduct that does more than merely "affect or indirectly relate to interstate commerce").
Plaintiff has suggested that it is enough that the jukebox connects to the internet. But the jukebox is not the instrumentality of interstate commerce, the internet is. Thus, the purely local use of an internet jukebox does not constitute interstate commerce. See Mateo , 240 F.2d at 833 (stating that the determination whether plaintiff engaged in commerce "must be guided by practical considerations, not technical conceptions"); Jian Long Li v. Li Qin Zhao , 35 F. Supp. 3d 300, 309 (E.D.N.Y. 2014) ("[T]he use of a cellular phone by Li, but not for communication between states, is strictly an intrastate activity, notwithstanding the fact that it utilizes interstate technology." (emphasis in original)). It is probably reasonable to infer that, at some point, Plaintiff danced to music that had been downloaded. However, dancing to music that was previously acquired through commerce does not qualify Plaintiff as an employee engaged in commerce. See McLeod , 319 U.S. at 494, 63 S.Ct. 1248 (explaining that employees do not engage in interstate commerce merely by handling goods that were previously in interstate commerce).
Even were it reasonable to infer that Plaintiff downloaded music, she still would not satisfy the commerce requirement. In examining an employee's activities, courts must focus on whether the employee's duties involve or relate to interstate commerce. See 29 C.F.R. § 776.10(b) (stating that an employee engages in commerce by using the instrumentalities of interstate commerce "as a regular and recurrent part of his duties " (emphasis added)). As explained above, Plaintiff's work simply involved paying for and dancing to music; there is no evidence that Plaintiff was required to download music to do her work, nor is there evidence to support an inference of that requirement. Plaintiff has offered no authority that the FLSA extends to those who use instrumentalities of interstate commerce outside the scope of their employment duties. See McLeod , 319 U.S. at 493, 63 S.Ct. 1248 ("Congress did not intend that the regulation of hours and wages should extend to the furthest reaches of federal authority.").
Next, still assuming that Plaintiff downloaded music, there is no evidence that she did so regularly and recurrently. See Dean v. Pac. Bellwether, LLC , 996 F. Supp. 2d 1044, 1047–48 (D.N. Mar. I. 2014) (stating that employees engage in commerce through "regular and recurrent" use of the instrumentalities of interstate commerce); 29 C.F.R. § 776.10(b) (same). Plaintiff relies on the following statement in Dean to argue that occasional downloads would be sufficient: "Regular and recurrent use does not actually require much use; five independent uses annually may suffice." 996 F. Supp. 2d at 1049 (citing Boekemeier v. Fourth Universalist Soc'y , 86 F. Supp. 2d 280, 283, 287–88 (S.D.N.Y. 2000) ). In a parenthetical, the Dean court summarized its understanding of the Boekemeier decision as follows: "[A]veraging between one and six purchases of supplies from out-of-state vendors for six consecutive years satisfies [the] commerce requirement." Id.
Boekemeier does not stand for that proposition. The parties in that case stipulated that documentary evidence showed the plaintiff made between one and six purchases per year from five different vendors. Boekemeier , 86 F. Supp. 2d at 283. In finding that the plaintiff had engaged in commerce, the court relied not only on that stipulation but also on testimony "that plaintiff made ‘dozens’ of purchases from only one of these vendors, and that it was a ‘normal part’ of plaintiff's duties to place orders with such vendors." Id. at 287. Contrary to what is stated in Dean , the Boekemeier court relied on more than a few sporadic purchases. Thus, the Dean court had no legal basis for asserting that "[r]egular and recurrent use does not actually require much use." 996 F. Supp. 2d at 1049. For that reason, Dean is unpersuasive and should not be followed.
Moreover, to say that something occurs "regularly and recurrently" is to say that it occurs "time after time" "at fixed, uniform, or normal intervals." Recurrent & Regular , Merriam-Webster's Collegiate Dictionary (11th ed. 2003). In other words, it occurs often. See The Concise Oxford Dictionary 1459 (9th ed. 1995) (defining "time after time" to mean "repeatedly; on many occasions"). Plaintiff's counsel effectively conceded at oral argument that if Plaintiff downloaded music, she did so without knowing it. Therefore, aside from pure speculation, Plaintiff has no way of showing a genuine dispute over whether she downloaded music on a "regular and recurrent" basis. See Cafasso , 637 F.3d at 1061 (affirming grant of summary judgment to defendant where liability could be found only with "undue speculation"); Loomis v. Cornish , 836 F.3d 991, 997 (9th Cir. 2016) ("[M]ere allegation and speculation do not create a factual dispute for purposes of summary judgment." (quoting Nelson v. Pima Cmty. Coll. , 83 F.3d 1075, 1081–82 (9th Cir. 1996) )).
There are two final matters. First, Plaintiff has pointed to evidence that Defendants receive revenue from the jukebox. For purposes of individual coverage, it does not matter if the employer is engaged in commerce, because the "focus [is] on the activities of the employee[ ] and not on the business of the employer." Lublin , 358 U.S. at 211, 79 S.Ct. 260 (citations omitted). Defendants' business activities are therefore of no consequence.
Finally, Plaintiff's primary authority, Foster , is easily distinguishable. There, the district court observed that the defendant nightclub "maintain[ed] a subscription with Rhapsody.com, an online music-streaming service." Foster , 2015 WL 8489998, at *1. In determining whether the plaintiff dancers were engaged in commerce, the court found this fact significant:
Based on the undisputed facts in the record, the court concludes that the plaintiffs qualify for individual coverage under the FLSA. Individual coverage exists for an employee who regularly use[s] the instrumentalities of interstate commerce in [her] work. It is well-settled that [t]he internet is an instrumentality of inter[state] commerce. Moreover, it is clear from the record that the Club's dancers are required to regularly use the internet to perform the dances that they are hired to perform. See, e.g. [,] Harbour Dep. 61 (confirming that the Club's dancers use the internet to stream music for their performances); Carter Dep. 37 (acknowledging that the Club's dancers perform using music that is streamed from the internet and that the dancers choose their own music). Consequently, the court concludes, as a matter of law, that the plaintiffs are individually covered under the FLSA.
Id. at *6 (internal quotation marks and some internal citations omitted); see Miller v. Centerfold Entm't Club, Inc. , No. 6:14-CV-6074, 2017 WL 3425887, at *3 (W.D. Ark. Aug. 9, 2017) (finding plaintiffs had individual coverage where "they would request songs from the DJ who would often stream the music over the Internet via YouTube").
By dancing to music streamed over the internet, the dancers in Foster and Miller "used" the internet to do their job. In contrast, here, there is no evidence that Plaintiff used the internet by dancing to streaming music or by downloading songs, let alone that she did so regularly as a part of her job duties. Therefore, Plaintiff has not met her responsive burden to demonstrate a genuine issue for trial. The Court finds that Defendants are entitled to summary judgment on the issue of individual coverage.
Neither party analyzes whether the line drawn by Foster and Miller —i.e., that dancers engage in commerce by dancing to streaming music—is correct. The Court need not decide whether these cases are correct because, assuming they are, Plaintiff has not established that she engaged in a similar use of the internet.
B. Enterprise Coverage
An employee has enterprise coverage if she works for an "enterprise engaged in commerce." 29 U.S.C. § 206(a). An enterprise is engaged in commerce if, among other things, it has annual gross revenue of at least $500,000. Id. § 203(s)(1)(A)(ii). Defendants contend there is no enterprise coverage because November Bar does not meet the threshold dollar requirement. The Court agrees.
In support of their argument, Defendants submit a declaration by Largent, who asserts that November Bar's gross sales were $36,302 in 2015, $36,986 in 2016, and $24,394 in 2017. (Doc. 85-1 at 17.) Plaintiff objects to the declaration, arguing that it violates the best-evidence rule because November Bar's profit-and-loss tax statements are the best evidence of gross receipts. Arguably, the best-evidence rule does not apply. Defendants are seeking to prove that they generate less than $500,000 in annual revenue, not that they made the specific amounts set forth in the tax statements. See Fed. R. Evid. 1002, advisory committee notes (stating that the rule applies only where "contents [of a document] are sought to be proved").
In any event, Plaintiff's objection is meritless on another ground. "To survive summary judgment, a party does not necessarily have to produce evidence in a form that would be admissible at trial, as long as the party satisfies the requirements of Federal Rules of Civil Procedure 56." Block v. City of Los Angeles , 253 F.3d 410, 418–19 (9th Cir. 2001) (citing Celotex Corp. , 477 U.S. at 324, 106 S.Ct. 2548 ). A declaration may be considered on summary judgment if it is "made on personal knowledge," "set[s] out facts that would be admissible in evidence," and "show[s] that the ... declarant is competent to testify on the matters stated." Fed. R. Civ. P. 56(c)(4). As November Bar's owner, Largent presumably is competent to testify about November Bar's revenue and would have personal knowledge about how much revenue is generated. The facts offered by Largent would be admissible at trial in the form of Defendants' tax statements. As such, Largent's declaration satisfies Rule 56 and may be considered. See Hughes v. United States , 953 F.2d 531, 543 (9th Cir. 1992) (finding it proper to consider a declaration on summary judgment although it contained hearsay and violated the best-evidence rule).
Additionally, the tax statements are already in the record. (Doc. 26-2 at 29–34.) It is within the Court's discretion to consider materials in the record outside those presented with the summary-judgment briefing. Fed. R. Civ. P. 56(c)(3) ("The court need consider only the cited materials, but it may consider other materials in the record."). And, moreover, Defendants were not required to produce evidence to shift the burden to Plaintiff: "[A] moving defendant may shift the burden of producing evidence to the nonmoving plaintiff merely by ‘showing’—that is, pointing out through argument—the absence of evidence to support plaintiff's claim." Fairbank , 212 F.3d at 532. Defendants have clearly argued that Plaintiff has no evidence that November Bar's revenue is at least $500,000 per year.
Therefore, the burden is Plaintiff's to show a genuine dispute of material fact. See Nissan Fire , 210 F.3d at 1103. Plaintiff contends that Defendants' tax statements are inaccurate because Defendants did not track the amount of fees paid to them by Plaintiff or other dancers. Plaintiff accuses Defendants of going "great lengths to destroy or hide evidence of" November Bar's revenue and accordingly requests that summary judgment be granted as a sanction for spoliation of evidence. At oral argument, Plaintiff's counsel conceded that the requested sanction is Plaintiff's only method of establishing enterprise coverage.
The Court finds that Plaintiff has not met her responsive burden to demonstrate a triable issue. First, a sanction should not be granted. "A party's destruction of evidence qualifies as willful spoliation if the party has ‘some notice that the documents were potentially relevant to the litigation before they were destroyed.’ " Leon v. IDX Sys. Corp. , 464 F.3d 951, 959 (9th Cir. 2006) (emphasis omitted) (quoting United States v. Kitsap Physicians Serv. , 314 F.3d 995, 1001 (9th Cir. 2002) ). Plaintiff has pointed to no evidence that Defendants destroyed records in anticipation of this lawsuit. Her real complaint is that Defendants failed to keep certain records in the first place. However, she has offered no authority showing that Defendants were required to keep the desired records, or that summary judgment would be an appropriate remedy for violating that obligation. Simply put, the acts complained of are not spoliation, nor has Plaintiff established that they were otherwise wrongful.
The FLSA's recordkeeping requirements apply only to employers who are subject to the FLSA. 29 U.S.C. § 211(c). To criticize Defendants for not complying with these requirements, Plaintiff must first establish that compliance was required.
Plaintiff's challenge to the accuracy of Defendants' tax statements is no more persuasive. It is undisputed that November Bar is a cash-only bar, and that all cash received is first paid into the register and subsequently deposited into a bank account. (Doc. 83, ¶¶ 40–42; Doc. 88, ¶¶ 40–42.) Contrary to Plaintiff's argument, the accuracy of the amounts paid into the register and deposited into the bank is not affected by Defendants' failure to track the precise sums paid by each dancer. To illustrate, imagine that $100 is paid into the cash register and then later deposited into the bank. If Defendants cannot recall that Plaintiff paid $75 of the register's contents and that another dancer paid $25, does that mean the bank's record of a $100 deposit is inaccurate? Clearly, the answer is no. As such, it is not reasonable to infer that Defendants' tax statements are inaccurate. Even were that a reasonable inference, it would not be reasonable to infer further that Defendants' poor recordkeeping has resulted in the underreporting of more than $450,000 per year for multiple years.
Additionally, Plaintiff's argument overlooks that Defendants were not required to produce evidence negating the annual-revenue requirement. Assuming the tax statements are inadmissible, Defendants nevertheless have shifted the burden by arguing that Plaintiff is unable to prove her claims at trial. See Fairbank , 212 F.3d at 532. Because Plaintiff has come forward with no evidence, she has not met her responsive burden to show a genuine dispute of material fact. Accordingly, the Court finds that Defendants are entitled to summary judgment on the issue of enterprise coverage.
In the verified complaint, Plaintiff asserts that Defendants' "gross annual volume of sales made or business done is greater than $500,000." (Doc. 37, ¶ 20.) It was conceded at oral argument that this statement was not based on personal knowledge. This is confirmed by Plaintiff's deposition testimony. (Doc. 88 at 19 ("Q: Do you have any reason to believe that it produces over $500,000 in annual revenue? A: I don't have any.").)
Plaintiff has not shown there is a triable issue whether she had individual or enterprise coverage. As a result, the Court will recommend that summary judgment be granted in favor of Defendants on Plaintiff's FLSA claims. II. Supplemental Jurisdiction
The district court may decline to exercise supplemental jurisdiction over state-law claims in several circumstances, including where it "has dismissed all claims over which it has original jurisdiction." 28 U.S.C. § 1367(c)(3). "In the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered under the pendent jurisdiction doctrine—judicial economy, convenience, fairness, and comity—will point toward declining to exercise jurisdiction over the remaining state-law claims." Sanford v. MemberWorks, Inc. , 625 F.3d 550, 561 (9th Cir. 2010) (brackets omitted) (quoting Carnegie-Mellon Univ. v. Cohill , 484 U.S. 343, 350 n.7, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988) ).
Pursuant to § 1367(c)(3), the Court will recommend that the district court decline supplemental jurisdiction over Plaintiff's AMWA and AMA claims. See Oliver v. Ralphs Grocery Co. , 654 F.3d 903, 911 (9th Cir. 2011) (affirming the dismissal of state-law claims under § 1367(c)(3) following the grant of summary judgment on all federal claims); City of Colton v. Am. Promotional Events, Inc.-W. , 614 F.3d 998, 1008 (9th Cir. 2010) (same).
Accordingly,
IT IS RECOMMENDED that the district court:
1. Deny Plaintiff's motion for summary judgment (Doc. 82);
2. Partially grant Defendants' motion for summary judgment (Doc. 84) to the extent Defendants challenge Plaintiff's claims under the Fair Labor Standards Act (count one and count two of the verified complaint); and
3. Decline supplemental jurisdiction over Plaintiff's claims under the Arizona Minimum Wage Act and Arizona Wage Act (count three and count four, respectively).
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. The parties shall have fourteen days from the date of service of a copy of this recommendation within which to file specific written objections with the District Court. See 28 U.S.C. § 636(b)(1) ; Fed. R. Civ. P. 72(b). The parties shall have fourteen days within which to file responses to any objections. Failure to file timely objections to this recommendation may result in the acceptance of the recommendation by the District Court without further review. See United States v. Reyna-Tapia , 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc). Failure to file timely objections to any factual determination made in this recommendation may be considered a waiver of a party's right to appellate review of the same finding in an order or judgment by the District Court which adopts the recommendation. See Fed. R. Civ. P. 72.
Dated this 26th day of December, 2019.