McKnight v. D. Houston, Inc.
2010 U.S. Dist. LEXIS 122357
S.D. Tex.2010Background
- Plaintiffs are former servers and bartenders at two Houston strip clubs, Treasures and Centerfolds, alleging FLSA tip-related violations.
- Defendants operate six related strip clubs through a holding company; plaintiffs allege a common policy of deducting 4–5% of tips to cover credit-card costs, exceeding actual costs.
- Plaintiffs seek conditional certification of an opt-in FLSA collective action and notice to potential members; tolling of limitations is also requested.
- Court record shows some discovery and deposition evidence; plaintiffs argue a common policy applies to Treasures and Centerfolds and possibly other clubs.
- Defendants contend no common policy or joint-employer theory is proven and urge limiting certification to Treasures and Centerfolds only.
- Court grants conditional certification for bartenders and servers at Treasures and Centerfolds from October 15, 2007 to present, and denies equitable tolling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether to conditionally certify a collective action. | McKnight asserts common policy on tip deductions exists across clubs. | Davari challenges common policy and joint-employer theory; no basis to extend beyond Treasures and Centerfolds. | Conditionally certify as to Treasures and Centerfolds; notice to eligible bartenders/servers. |
| Whether the class should extend beyond Treasures and Centerfolds to other clubs. | Evidence of common policy and related ownership suggests broader scope. | Insufficient evidence of similar policy or interest among employees at other clubs; limit to Treasures/Centerfolds. | Notice limited to Treasures and Centerfolds; broader expansion deferred pending further discovery. |
| Whether equitable tolling of the statute of limitations is proper. | Rule 23 tolling logic may apply to collective actions and avoid prejudice from certification timing. | Congress did not authorize tolling during conditional certification; no extraordinary circumstances shown. | Equitable tolling denied. |
Key Cases Cited
- Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165 (U.S. Supreme Court 1989) (notice to potential plaintiffs under §216(b) not contingent on merits)
- Mooney v. Aramco Servs. Co., 54 F.3d 1207 (5th Cir. 1995) (two-step analysis for conditional certification in FLSA actions)
- LaChapelle v. Owens-Ill., Inc., 513 F.2d 286 (5th Cir. 1975) (differences between Rule 23 and FLSA §216(b) collective actions)
- Atkins v. General Motors Corp., 701 F.2d 1124 (5th Cir. 1983) (strict view of statute of limitations in opt-in actions)
- Grayson v. K Mart Corp., 79 F.3d 1086 (11th Cir. 1996) (analysis of similarly situated for FLSA collective actions)
- Dybach v. State of Fla. Dep't of Corr., 942 F.2d 1562 (11th Cir. 1991) (purpose and scope of opt-in in FLSA collective actions)