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Equal Employment Opportunity Commission v. Danny's Restaurant, LLC

United States District Court, S.D. Mississippi, Northern Division

September 24, 2018

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION PLAINTIFF
v.
DANNY'S RESTAURANT, LLC AND DANNY'S OF JACKSON, LLC F/K/A BABY O'S RESTAURANT, INC. D/B/A DANNY'S DOWNTOWN CABARET DEFENDANTS

          ORDER DENYING SUMMARY JUDGMENT

          HENRY T. WINGATE UNITED STATES DISTRICT JUDGE.

         Before the court is the Motion for Summary Judgment filed by the Defendant, Danny's of Jackson LLC (hereafter “Danny's of Jackson” or “Defendant”). [doc no. 73]. The Plaintiff United States Equal Employment Opportunity Commission (hereafter “EEOC” or “Plaintiff”) opposes the motion.

         FACTUAL AND PROCEDURAL BACKGROUND

         This lawsuit is an enforcement action brought by the EEOC under the auspices of Title VII of the Civil Rights Act of 1964[1], as amended, and the Civil Rights Act of 1991, to correct allegedly unlawful employment practices based on race and seeking relief on behalf of five Black female exotic dancers who allegedly were subjected to disparate terms and conditions of employment based on their race. The suit initially was brought against Danny's Restaurant, LLC, as well as against Danny's of Jackson, LLC (hereafter Danny's of Jackson). Danny's Restaurant, LLC did not file an answer nor enter an appearance in this cause. Resultantly, the United States Clerk of Court for this Division entered default against this defendant on August 24, 2017 [doc. no. 41].

         Danny's of Jackson is the current owner of a strip club, “Danny's Downtown Cabaret, ” located at 995 South West Street, in the downtown area of Jackson, Mississippi. Danny's of Jackson is a limited liability company formed in March of 2016, by Danny McGee Owens (hereafter “Owens) and his son, Daniel Daxon Owens (hereafter “Dax”), who were the only members. Certificate of Formation [doc. no. 79-24]. At present, Danny McGee Owens claims to be the sole member of the limited liability company. According to Danny's of Jackson, the previous owner of Danny's Downtown Cabaret was “Baby O's Restaurant, Inc., ” (hereafter Baby O's). Baby O's, says Danny's of Jackson, owned the strip club in 2013, the period during which the Title VII violations at issue here, allegedly occurred. Owens was incarcerated during this time, having been sentenced to federal prison in 1992 and released in 2016.

         Baby O's was incorporated in April, 1998, and its principal office address was 995 S. West Street, Jackson, Mississippi, the same address as the location of Danny's Downtown Cabaret. The officers and directors of Baby O's included: Owens' best friend, Dwight Easley, vice president; Owens' girlfriend at that time, Lesli Stovall, president; Owens' step father, James C. Cooper, incorporator, and Owens' son, Dax, registered agent.

         On August 2, 2013, Ashley Williams, a dancer working at Danny's Downtown Cabaret, lodged a charge of discrimination with the EEOC [doc. no. 81-10]. Following the requisite investigation, EEOC issued a Letter of Determination on June 2, 2016 [doc. no. 81-13], finding reasonable cause to believe that the Defendants had violated Title VII. Efforts at conciliation failed and on July 29, 2016, the EEOC issued to Defendants a Notice of Failure of Conciliation, and filed the instant lawsuit on September 30, 2016.

         Plaintiff seeks, inter alia, injunctive relief, damages and other affirmative relief to make the complainants whole, as well as back pay for Ashely Williams, who alleges retaliation and wrongful termination. Plaintiff also asks for punitive damages for what it alleges to be malicious and reckless conduct.

         SUMMARY JUDGMENT STANDARD

         Summary judgment is appropriate if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Copeland v. Nunan, 250 F.3d 743 (5th Cir. 2001); see also Wyatt v. Hunt Plywood Company, Inc., 297 F.3d 405, 408-09 (2002). When assessing whether a dispute as to any material fact exists, all of the evidence in the record is considered, but the court must refrain from making credibility determinations or weighing the evidence. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000); instead, the court must “draw all reasonable inferences in favor of the nonmoving party.” Id.; Wyatt, 297 F.3d at 409. All evidence and the reasonable inferences to be drawn therefrom must be viewed in the light most favorable to the party opposing the motion. United States v. Diebold, Inc. 369 U.S. 654, 655 (1962).

         A party, however, cannot defeat summary judgment with conclusory allegations, unsubstantiated assertions, or “only a scintilla of evidence.” TIG Ins. Co. v. Sedgwick James of Wash. 276 F.3d 754, 759 (5th Cir. 2002); S.E.C. v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1997); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994). Summary judgment is appropriate if a reasonable jury could not return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

         DISCUSSION

         1. Danny's of Jackson claims it is entitled to summary judgment because it was not the owner/employer during the period of the alleged violations.

         In support of its Motion for Summary Judgment, Danny's of Jackson makes four arguments. First, says this Defendant, it is not responsible for any discriminatory acts prior to the date that Danny's of Jackson purchased the assets of the strip club from Baby O's, on or about April 11, 2016. Around the time Owens was about to be released from prison, he formed the limited liability company, Danny's of Jackson, with his son Dax. According to Owens, the company then purchased the assets of Danny's Downtown Cabaret from Baby O's, which had owned the club during Owens' imprisonment. Attached to this Defendant's memorandum brief is a bill of sale entered into between Danny's of Jackson, LLC, as buyer, and Baby O's Restaurant, Inc., as the seller, on April 11, 2016[2] [doc. no. 74-6].

         The Defendant, Danny's of Jackson, contends that, as purchaser of the club's assets in 2016, it cannot be held liable for acts committed under the ownership of Baby O's that occurred three years earlier. Relying on well-settled authority, EEOC argues that Danny's of Jackson, the new owner of the strip club, is liable for the Title VII infractions that occurred under the previous owner, Baby O's, under the successor liability doctrine. Danny's of Jackson does not cite a single case, statute, regulation or legal authority of any kind to support its contentions to the contrary.

         The successor liability doctrine is derived from labor law principles. It was first applied to employment discrimination cases in Equal Employment Opportunity Comm'n v. MacMillan Bloedel Containers, Inc., 503 F.2d 1086, 1093 (6th Cir. 1974) (considerations that justify use of the successor doctrine to remedy unfair labor practices apply equally to unfair employment practices under the Civil Rights Act of 1964). “[T]he purpose of the doctrine is to ensure that an employee's statutory rights are not “vitiated by the mere fact of a sudden change in the employer's business.” The doctrine allows the aggrieved employee to enforce against the successor a claim he could have secured against the predecessor.” Rojas v. TK Commc'ns, Inc., 87 F.3d 745, 750 (5th Cir. 1996) (quoting Brennan v. Nat'l Tel. Directory Corp., 881 F.Supp. 986, 992 (E.D. Pa. 1995)).

         Rojas, supra, is the leading case on this issue from the United States Court of Appeals for the Fifth Circuit. Rojas delineates nine factors that the court should consider in deciding whether successor liability applies to the purchasing company. The first two factors are: (1) whether the successor company had notice of the charge or pending lawsuit before acquiring the assets of the predecessor; and (2) the ability of the predecessor to provide relief. The other seven factors help to establish whether there was a “substantial continuity” of business operations between the two entities. As more thoroughly discussed in the court's Order and Opinion on EEOC's Motion for Summary Judgment as to Successor Liability, this court is persuaded that Danny's of Jackson is liable as the successor in interest, for Title VII violations that allegedly occurred during the period that Baby O's was the owner of Danny's Downtown Cabaret.

         The primary argument made by Danny's of Jackson to avoid successor liability is that Danny McGee Owens [hereafter “Owens”], the sole member of Danny's of Jackson LLC, was incarcerated during the time of the violations alleged by the complainants here, and that Owens did not participate in operating the business while in prison. Owens was incarcerated for a federal felony conviction from approximately 1992 to 2016. Defendant does not explain how this argument assists the court's evaluation of the successor liability issue ...


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