United States District Court, S.D. Mississippi, Northern Division
ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO
T. WINGATE UNITED STATES DISTRICT JUDGE.
the court is the Motion for Partial Summary Judgment as to
Successor Liability filed by the Plaintiff, United States
Equal Opportunity Commission (hereafter “EEOC”)
[doc. no. 79]. Defendant, Danny's of
Jackson LLC (hereafter “Danny's of Jackson”
or “Defendant”) opposes the motion. The parties
have completed their briefing on the motion and this court is
prepared to rule.
lawsuit is an enforcement action brought by the EEOC under
the auspices of Title VII of the Civil Rights Act of
1964, as amended, and the Civil Rights Act of
1991, to correct allegedly unlawful employment practices of
the Defendant based on race. The suit seeks relief on behalf
of Ashley Williams and a class of Black female exotic dancers
(hereafter referred to collectively as
‘complainants') who worked at Danny's Downtown
Cabaret and allegedly were subjected to disparate terms and
conditions of employment based on their race.
insists that it is not liable for the alleged violations of
Title VII, because, inter alia, the complainants did
not work at its club during the time it (Danny's of
Jackson) owned and operated the business. Defendant
Danny's of Jackson claims that Baby O's Restaurant,
Inc. (hereafter Baby O's”), operated the
establishment in 2013, around the time period complained of
in the EEOC charge, and that Danny's of Jackson only
began operating the club after that period, upon purchasing
the assets from Baby O's in April of 2016.
EEOC, disagreeing, brings this motion asking the court for
partial summary judgment in its favor on that key question:
whether Danny's of Jackson is the successor in interest
and liability to Baby O's, the predecessor entity which
operated the strip club prior to April 11, 2016. Plaintiff
asserts that no genuine issue of fact exists regarding any of
the predicates necessary for the imposition of successor
liability. Additionally, Plaintiff contends that in a prior
judicial proceeding, Danny's of Jackson actually conceded
that it is the successor in interest to Baby O's for
Title VII purposes and is, therefore, judicially estopped
from contending otherwise.
FACTUAL AND PROCEDURAL BACKGROUND
McGee Owens (hereafter “Owens”) is presently the
only member of Danny's of Jackson, LLC, Defendant herein.
Owens, who was the owner of a similar club featuring adult
entertainement in Memphis, Tennessee, brought that concept to
the Jackson, Mississippi area, and opened
“Danny's”, a strip club located on Lakeland
Drive. The club moved from Lakeland Drive to its current
downtown Jackson location, according to the deposition
testimony of Lesli Stovall, who identified herself as
Owens' girlfriend during that time. “It was - the
original one was Danny's on Lakeland Drive. And then
there was a dispute with the city about, you know, the
location and it being able to be an adult entertainment. And
that's when we moved to the downtown building where it is
right now.” Stovall Dep. [doc. no. 79-3 at p.
result of a felony conviction for, in Owens' own words,
“money laundering, for gambling, racketeering, I
don't know, I guess.” Owens
Dep.23:5-7[doc. no. 79-1 at p.14], Owens was
incarcerated from around 1992 until 2016. While he was in
prison, the corporations that owned the strip club went
through several name changes, but the strip club, itself,
continued to operate in the same way, at the same location
and under the same name, “Danny's Downtown
Cabaret.” The names of the corporations changed, the
incorporators changed, and the officers changed; but all of
these incorporators and officers had close personal ties with
Owens. See Owens Dep. 73-74 [doc. no. 79-1 at pp.
Street and Rankin Street Restaurants of Jackson, Inc.,
” incorporated in 1998, is one of the many such
companies that Owens and his family incorporated. James
Cooper, Owens' stepfather, was listed as the incorporator
and registered agent of Southwest Street and Rankin Street
Restaurants of Jackson, Inc, Articles of
Incorporation, [doc. no. 79-6] and Owens' former
girlfriend, Lesli Stovall, was president. Articles of
Amendment, [doc. no. 79-7]. As previously discussed,
Owens, himself, was in prison during this time. Under the
corporate ownership of Southwest Street and Rankin Street
Restaurants of Jackson, Inc., ” “Danny's
Downtown Cabaret” continued to operate as a strip club
in downtown Jackson, at 995 S. West Street, which is on the
corner of S. West Street and Rankin Street.
2005, the corporation changed its legal name from
“South West Street and Rankin Street Restaurants of
Jackson, Inc.” to “Baby O's Restaurant,
Inc.” hereafter (“Baby O's”).
Articles of Amendment [doc. no. 79-8 at p.5]. The
newly formed corporation, Baby O's, continued to operate
the strip club at 995 S. West Street in Jackson, Mississippi,
as “Danny's Downtown Cabaret, ” commonly
referred to as “Danny's” or
former girlfriend, Lesli Stovall, testified in her deposition
that Baby O's was formed to hold the club for Owens while
he was in prison. Stovall Dep., pp.38-39 [doc. no.
79-3 at pp.12-13]. In her deposition, Stovall stated that she
was named as president because she could be trusted to turn
the company back over to Owens upon his release from prison.
Based on the evidence provided, Stovall appears to have been
only a straw owner. She did not pay any money or contribute
any assets to the corporation Stovall Dep. 94:6-20
[doc. no. 79-3 p.34]; nor did she receive any compensation
from the corporation. Stovall Dep. 121-22 [doc. no.
79-3 pp. 40-41].
also testified to not having any role in the corporate
decision-making and her role at the club was that of a
dancer. She stated the following in her deposition:
A: .... But as far as like business of the club, I was just a
dancer ..... well I did manage one night a week because we
were short a manager, so I did manage one night a week....
but I mean as far as anything else, I mean, the people that
pretty much ran the day to day, I would say was his
[Owens'] mother, Shirley Cooper, and Blake's
[Owens' son's] mother....Pat Owens. I'm just
saying they're the ones that did all the paperwork, all
the banking, filed taxes.
Stovall Dep. [doc. no. 79-3 pp.18-19].
O's owned and operated the strip club beginning in 2005,
when the corporate name was changed to Baby O's.
Owens' son, Danny “Dax” Owens, (hereafter
“Dax”), acted as general manager during much of
this time, including the period relevant to the complaints of
discrimination that are the genesis of this lawsuit. Although
Owens was incarcerated from about 1992 until 2016, several
former managers and employees testified by deposition that
Owens remained deeply involved in the operations of the club.
Alison Wade and Brittany Rayner, former dancers at the club
and complainants herein, both testified that while he was
incarcerated, Owens was emailed nightly reports and that
Owens called the “door girls” every night to
inquire as to how many black people were in the club, how
many dancers were there, etc. B. Raynor
Dep. 62:25-63:1 [doc. no. 79-15 pp.18-19]. Wade
Dep. Exhibit N, 24:11-24 [doc. no. 79-14 at pp. 8-9].
April of 2016, Lesli Stovall and Baby O's purportedly
transferred the assets of Baby O's Restaurant, Inc., to
Danny's of Jackson, LLC and Danny M. Owens. Bill of
Sale and Assignment and Assumption Agreement [doc. no.
79-12]. Danny's of Jackson continues to operate the strip
club as “Danny's Downtown Cabaret”, at the
same West Street address in downtown Jackson today.
alleges that Danny's of Jackson LLC, the current owner of
Danny's is the successor in interest to Baby O's
Restaurant, Inc., the former owner of Danny's. As earlier
stated, these Defendants quarrel with this contention.
August 2, 2013, Ashley Williams filed with the EEOC her
accusatory charge alleging discrimination. Williams EEOC
charge Exhibit Q [doc. no. 79-17]. Dax acknowledges that
he informed his father of the charge of discrimination.
Dax Owens Affidavit, Exhibit R. [doc. no. 81-11].
EEOC issued a Letter of Determination on June 2, 2016, finding
reasonable cause to believe that the Defendants had violated
Title VII [doc. no. 81-13]. Efforts at conciliation failed
and on July 29, 2016, the EEOC issued to Defendants a Notice
of Failure of Conciliation. On behalf of the complainants,
the EEOC filed the instant lawsuit on September 30, 2016.
suit initially was brought against Danny's Restaurant,
LLC as well as against Danny's of Jackson, LLC.
Danny's Restaurant, LLC did not file an answer nor enter
an appearance in this cause, however, and the Clerk of Court
entered default against it on August 24, 2017 [doc. no. 41].
alleges that Baby O's was formerly doing business as
Danny's Downtown Cabaret and that Danny's of Jackson
continues to own and operate Danny's Downtown Cabaret.
Plaintiff seeks, inter alia, injunctive relief; back
pay for Ashley Williams, the complainant terminated by the
Defendants; compensation for past and future pecuniary and
non-pecuniary losses; and other affirmative relief to make
all of the complainants whole. Plaintiff also asks for
punitive damages for what it alleges to be malicious and
SUMMARY JUDGMENT STANDARD
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 to any
material fact exists, all of the evidence in the record must
be 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 is to “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
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).
LAW OF SUCCESSOR LIABILITY
successorship doctrine derives from labor law principles. The
policy protects employees in cases involving the purchase of
assets by one corporate entity from another. The United
States Supreme Court has held that the acquiring company will
be obligated to negotiate under a preexisting collective
bargaining agreement if “substantial continuity”
in the business enterprise is proven before and after the
change in ownership. John Wiley & Sons, Inc. v.
Livingston, 376 U.S. 543, 551, 84 S.Ct. 909, 915 (1964).
In finding “substantial continuity, ” the Supreme
Court, in Fall River Dyeing & Finishing Corp. v.
NLRB, 482 U.S. 27 (1987), said that where the second
company had acquired most of the seller's real property,
machinery and equipment, as well as much of its inventory and
materials, had introduced no new product line, and the
employees' jobs did not change, that evidence was
sufficient to prove “substantial continuity”,
such that the second company was successor to the first and
thereby obligated to bargain with the union representing its
predecessor's employees. Id. 482 U.S. at 40,
43-47, 107 S.Ct. at 2234, 2236-38. See generally,
Southward v. South Central Ready Mix Supply Corp., 7
F.3d 487, 493-96 (6th Cir. 1993).
successor liability doctrine was first applied in the
employment discrimination context by the Sixth Circuit Court
of Appeals in Equal Employment Opportunity Comm'n v.
MacMillan Bloedel Containers, Inc., 503 F.2d 1086, 1093
(6th Cir. 1974). An employee of the Flintkote
Company filed charges with the EEOC alleging race and sex
discrimination. At some point after the EEOC had notified
Flintkote that EEOC had reasonable cause to believe that
Flintkote had engaged in unlawful employment practices,