Hart v. Rick's NY Cabaret International, Inc.
967 F. Supp. 2d 955
S.D.N.Y.2014Background
- Plaintiffs (exotic dancers) brought FLSA and NYLL class claims against Rick’s Cabaret entities and Peregrine; the Court earlier found dancers were employees and granted some summary judgment on liability issues.
- The Court signaled it might resolve FLSA claims first and then decide whether to keep NYLL claims via supplemental jurisdiction; plaintiffs instead moved to confirm original federal jurisdiction over NYLL claims under CAFA.
- The certified Rule 23 class contained 1,752 members as of the Third Amended Complaint; defendants’ business records listed 1,217 with New York addresses at that time.
- Plaintiffs alleged the amount in controversy exceeded $5,000,000; defendants’ Rule 68 offer to a named plaintiff (Hart) produced an extrapolated class estimate supporting that figure.
- Defendants challenged CAFA jurisdiction, invoking the local-controversy, home-state, and interests-of-justice exceptions; plaintiffs bore the burden to establish CAFA jurisdiction, defendants the burden to prove exceptions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CAFA grants original jurisdiction over NYLL claims (numerosity, minimal diversity, amount in controversy) | Plaintiffs: class size, minimal diversity, and reasonable probability aggregate damages exceed $5M (supported by complaint and extrapolation from defense offer) | Defendants: plaintiffs have not shown amount in controversy meets $5M; allegations speculative | Held: CAFA jurisdiction exists on the present record; amount-in-controversy presumption plus extrapolation satisfy reasonable-probability standard |
| Whether the local-controversy exception applies (two-thirds of class are NY citizens and other elements) | Plaintiffs: defendants’ last-known address data insufficient to prove >2/3 are NY citizens; data may be stale or not indicate domicile | Defendants: their business records show ~69–71% NY addresses, meeting the >2/3 threshold | Held: Local-controversy exception does not apply on present record — last-known addresses insufficient to prove domicile by preponderance; percentage barely meets threshold and may be unreliable |
| Whether an earlier suit (Imbeault) qualifies as an "other class action" within §1332(d)(4)(A)(ii) and blocks remand | Plaintiffs: Imbeault appears to qualify as an "other class action" filed within three years against same defendants | Defendants: either dispute Imbeault’s significance or rely on other arguments for remand | Held: Court did not resolve definitively because plaintiffs failed to meet the two-thirds citizenship requirement; notes statute’s plain language could encompass Imbeault and expects focused briefing if remand is later sought |
| Whether home-state or interests-of-justice exceptions justify declining CAFA jurisdiction | Plaintiffs: at least one defendant (RCII) is a Texas citizen, so exceptions don't apply; discretionary remand is not warranted now | Defendants: RCII is not a primary defendant and CAFA exceptions (home-state, interests of justice) apply to warrant remand | Held: Home-state exception fails for same reason as local-controversy (two-thirds not established); Court declines to invoke interests-of-justice remand at this time but leaves open future motion after a fuller record |
Key Cases Cited
- Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345 (Sup. Ct. 2013) (CAFA jurisdictional elements and aggregation rule)
- DiTolla v. Doral Dental IPA of New York, 469 F.3d 271 (2d Cir. 2006) (party asserting federal jurisdiction bears burden)
- Blockbuster, Inc. v. Galeno, 472 F.3d 53 (2d Cir. 2006) (minimal diversity and CAFA aggregation; reasonable-probability standard discussion)
- Colavito v. N.Y. Organ Donor Network, Inc., 438 F.3d 214 (2d Cir. 2006) (presumption that complaint’s amount-in-controversy allegation is in good faith)
- Mondragon v. Capital One Auto Fin., 736 F.3d 880 (9th Cir. 2013) (citizenship requires proof of domicile; address alone may be insufficient)
- In re Sprint Nextel Corp., 593 F.3d 669 (7th Cir. 2010) (discussion of burden/standard for proving CAFA exceptions)
- Reich v. Circle C. Investments, Inc., 998 F.2d 324 (5th Cir. 1993) (recognition of transient/itinerant nature of exotic dancer workforce)