Hart v. RCI Hospitality Holdings, Inc., No. 09 Civ. 3043PAE.

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: PAUL A. ENGELMAYER, District Judge
• Citation: 90 F.Supp.3d 250
• Parties: Sabrina HART and Reka Furedi, on behalf of themselves and all others similarly situated, and the New York Rule 23 Class, Plaintiffs, v. RCI HOSPITALITY HOLDINGS, INC., f/k/a Rick's Cabaret International Inc., RCI Entertainment (New York), Inc., and Peregrine Enterprises, Inc., Defendants.
• Docket Number: No. 09 Civ. 3043PAE.
• Decision Date: 11 March 2015

90 F.Supp.3d 250

Sabrina HART and Reka Furedi, on behalf of themselves and all others similarly situated, and the New York Rule 23 Class, Plaintiffs
v.
RCI HOSPITALITY HOLDINGS, INC., f/k/a Rick's Cabaret International Inc., RCI Entertainment (New York), Inc., and Peregrine Enterprises, Inc., Defendants.

No. 09 Civ. 3043PAE.

United States District Court, S.D. New York.

Signed March 11, 2015.

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Eleanor Michelle Drake, Anna Purna Prakash, John G. Albanese, Michele Renee Fisher, Paul J. Lukas, Rebekah Lynn Bailey, Steven Andrew Smith, Nichols Kaster, PLLP, Minneapolis, MN, for Plaintiffs.

Christopher John Major, Howard Scott Davis, Jeffrey A. Kimmel, Racquel Crespi Weintraub, Meister Seelig & Fein LLP, New York, NY, for Defendants.

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

Trial in this case is scheduled to start on April 27, 2015. Dkt. 621. This decision resolves a series of motions in limine filed by the parties.¹ The Court assumes familiarity

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with the facts relevant to these motions, and provides the following rulings and guidance in advance of this week's pretrial conference, set for March 13, 2015.

These motions largely, although not exclusively, call upon the Court to apply Rules 401, 402, and 403 of the Federal Rules of Evidence. In resolving motions implicating these rules, the Court has therefore been guided by the following familiar principles, which this decision applies and elaborates upon in the course of resolving particular motions.

The “standard of relevance established by the Federal Rules of Evidence is not high.” United States v. Southland Corp., 760 F.2d 1366, 1375 (2d Cir.1985) (citation omitted); see also United States v. Al–Moayad, 545 F.3d 139, 176 (2d Cir.2008) (calling the relevance threshold “very low”). Under Rule 401, “[e]vidence is relevant when ‘it has any tendency to make a [material] fact more or less probable than it would be without the evidence.’ ” United States v. White, 692 F.3d 235, 246 (2d Cir.2012), as amended (Sept. 28, 2012) (quoting Fed.R.Evid. 401 ) (footnote omitted). “A material fact is one that would affect the outcome of the suit under the governing law.” Arlio v. Lively, 474 F.3d 46, 52 (2d Cir.2007) (quoting Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., Inc., 448 F.3d 573, 579 (2d Cir.2006) ). Under Rule 402, “all ‘[r]elevant evidence is admissible’ ... unless an exception applies.” White, 692 F.3d at 246 (quoting Fed.R.Evid. 402). Irrelevant evidence is inadmissible. Fed.R.Evid. 402.

Under Rule 403, the Court may exclude relevant evidence where its probative value is substantially outweighed by the risk of “unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.” See generally United States v. Gupta, 747 F.3d 111, 131–32 (2d Cir.2014) ; Gerber v. Computer Assocs. Int'l, Inc., 303 F.3d 126, 136 (2d Cir.2002). Evidence is considered prejudicial if it “involves some adverse effect ... beyond tending to prove the fact or issue that justified its admission into evidence.” Highland Capital Mgmt., L.P. v. Schneider, 551 F.Supp.2d 173, 176–77 (S.D.N.Y.2008) (quoting United States v. Gelzer, 50 F.3d 1133, 1139 (2d Cir.1995) ).

Furthermore, “[d]istrict courts analyzing evidence under Rule 403 should consider whether a limiting instruction will reduce the unduly prejudicial effect of the evidence so that it may be admitted.” United States v. Ferguson, 246 F.R.D. 107, 117 (D.Conn.2007) (citing United States v. Downing, 297 F.3d 52, 59 (2d Cir.2002) (noting presumption that “juries understand and abide by a district court's limiting instructions” “[a]bsent evidence to the contrary”)). “As the Supreme Court has recognized, limiting instructions are often sufficient to cure any risk of prejudice.” United States v. Walker, 142 F.3d 103, 110 (2d Cir.1998) (citing Zafiro v. United States, 506 U.S. 534, 539, 113 S.Ct. 933, 122 L.Ed.2d 317 (1993) ).

“The purpose of an in limine motion is to aid the trial process by enabling the Court to rule in advance of trial on the relevance of certain forecasted evidence, as to issues that are definitely set for trial, without lengthy argument at, or interruption of, the trial.” Schneider, 551 F.Supp.2d at 176 (quoting Palmieri v. Defaria, 88 F.3d 136, 141 (2d Cir.1996) ); see generally Luce v. United States, 469 U.S. 38, 41–42, 105 S.Ct. 460, 83 L.Ed.2d 443 (1984). Evidence should not be excluded on a motion in limine unless such evidence is “clearly inadmissible on all potential grounds.” Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. L.E. Myers Co. Grp., 937 F.Supp. 276, 287 (S.D.N.Y.1996) (citation

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omitted). Courts may reserve deciding a motion in limine until trial, see id., and a court's ruling on such a motion is “subject to change when the case unfolds, particularly if the actual testimony differs from what was contained in [a party's] proffer,” Luce, 469 U.S. at 41, 105 S.Ct. 460.

I. Plaintiffs' Motion in Limine No. 1

Plaintiffs move to exclude all evidence and arguments regarding the amounts of money earned by dancers at the Club. Dkt. 643–44. The Court understands this motion to refer to the performance fees paid to the dancers by customers. Plaintiffs argue that such evidence is categorically irrelevant and is potentially inflammatory and therefore prejudicial. Dkt. 644. Defendants counter that evidence of the performance fees paid to the dancers is relevant, in particular, to whether defendants acted willfully in (1) not paying plaintiffs a minimum wage, and (2) deducting fees, fines, and “tip-outs” from these performance fees. Dkt. 693.

The Court denies plaintiffs' motion, while imposing significant restrictions on the manner in which such evidence can be elicited and on the arguments that the defense can make based on such evidence.

Contrary to plaintiffs' claim, the fact that dancers at the Club were compensated, and indeed arguably well compensated, by customers is relevant to whether defendants acted willfully, or not in good faith, in denying the dancers a minimum wage. The Court expects that Club officials will testify that they believed in good faith that the dancers were independent contractors. The fact that the dancers were receiving compensation from customers—which was not only well known to, but to some degree facilitated by, the Club, insofar as it set minimum payments for dances and facilitated such payments through the issuance of Dance Dollars—is obviously relevant to defendants' claim of non-willfulness. See Dkt. 460, reported at Hart v. Rick's Cabaret Int'l, Inc., 967 F.Supp.2d 901, 941 (S.D.N.Y.2013). Simply put, defendants' awareness that the dancers were receiving meaningful pay for their performances from a source independent of the Club makes it more reasonable for them to have concluded that the dancers were independent contractors.

The alternative account of dancers' work arrangements that plaintiffs evidently prefer, under which the fact of such customer payments to dancers would be kept from the jury, would be grossly misleading. It could lead the jury to believe, mistakenly, that the Club's dancers were receiving no pay, or only marginal pay. The misleading impression that excluding this evidence would create—to wit, that the dancers stood to (or did) earn literally nothing for their work and that the Club's officials knew this—would necessarily make it more likely that the Club acted willfully in denying the dancers a minimum wage. Excision of this central fact regarding the dancers' work arrangements at the Club would leave the jury with an impermissibly distorted understanding of the big picture.

The Court will, accordingly, permit defendants to elicit testimony about the information known to them at the time they classified the dancers as independent contractors with respect to the performance fees that dancers, in general, tended to receive from customers. The Court will permit defendants to explain their reasons for classifying the dancers as they did. Such evidence is relevant insofar as it bears on whether defendants acted willfully in not classifying the dancers as employees and in not paying them a minimum

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wage.² Similarly, because it is relevant to the element of willfulness, the Court will permit Club officials, in testifying, to explain their reasons for deducting money (including for fines, fees, and tip-outs) from the dancers' performance fees. If the fact of these performance fees were kept from the jury, defendants' practice of making those deductions would leave the jury with the incorrect, improbable, and prejudicial impression that the dancers lost money by working at the Club, insofar as they received pay neither from the Club nor its customers but were assessed deductions nonetheless.

It is no answer for plaintiffs to note that Club officials, in their depositions, apparently did not affirmatively and specifically point to dancers' receipt of customer pay as a basis for their decision to classify the dancers as independent contractors. Plaintiffs have not pointed to any deposition testimony in which a Club official denied...