Nissenbaum v. NAMCAL, L.L.C., a Nevada Limited Liability Company, d.b.a., THE CAL NEVA RESORT SPA & CASINO et al, No. 3:2011cv00253 - Document 82 (D. Nev. 2013)
Court Description: ORDER granting the Canyon Entities' 69 Motion for Summary Judgment. The clerk shall enter judgment in favor of Defendants Canyon Capital and Canpartners, and against Plaintiff Nissenbaum. Signed by Judge Larry R. Hicks on 11/22/2013. (Copies have been distributed pursuant to the NEF - KR)
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Nissenbaum v. NAMCAL, L.L.C., a Nevada Limited Liability Company, d.b.a....RESORT SPA & CASINO et al Doc. 82 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF NEVADA 8 *** 9 10 11 12 13 14 15 16 17 18 19 SUSAN B. NISSENBAUM, individually, ) ) Plaintiff, ) ) v. ) ) NNH CAL NEVA SERVICES CO., LLC, a ) Delaware Limited Liability Company; ) NAMCAL, LLC, a Nevada Limited Liability ) Company, d.b.a., THE CAL NEVA RESORT ) SPA & CASINO; NAMWEST, a Nevada ) Limited Liability Company; SENTRY ) HOSPITALITY OF NEVADA, a Foreign ) Limited Liability Company; CANYON ) CAPITAL REALTY ADVISORS, a Foreign ) ) Corporation; CANPARTNERS REALTY HOLDING COMPANY IV, LLC, a Delaware ) Limited Liability Company; and DOES I-XX, ) ) ) Defendants. ) 20 3:11-CV-00253-LRH-WGC ORDER Before the Court is Defendants Canyon Capital Realty Advisors, LLC (“Canyon Capital”) 21 and Canpartners Realty Holding Company IV, LLC’s (“Canpartners”) (collectively the “Canyon 22 Entities”) Motion for Summary Judgment. Doc. #69.1 Plaintiff Susan B. Nissenbaum 23 (“Nissenbaum”) filed an Opposition (Doc. # 76), to which the Canyon Entities replied (Doc. #77). 24 /// 25 26 1 Refers to the Court’s docket number. Dockets.Justia.com 1 2 3 I. Factual Background This case concerns Nissenbaum’s employment at the Cal Neva Resort, Spa and Casino (the “Cal Neva”) in Lake Tahoe, California and Nevada. 4 A. 5 Nissenbaum began work at the Cal Neva as an employee of Sentry Hospitality of Nevada Nissenbaum’s Employment History 6 (“Sentry”) on February 16, 2005. See Doc. #70, Ex. 11; see also Doc. #70, Ex. 4. At that time, the 7 Cal Neva was owned by Namcal, LLC (“Namcal”). See Doc. #70, Ex. 11. Pursuant to the 8 Management Agreement between Namcal and Sentry, dated February 15, 2005 (the “Management 9 Agreement”), Sentry was the manager of the Cal Neva. Doc. #70, Ex. 4. In January 2008, Sentry 10 promoted Nissenbaum from Director of Human Resources to General Manager and gave her a 11 salary increase. See Doc. #71, Ex. 15. Sentry again increased Nissenbaum’s salary on June 24, 12 2008, effective retroactively to February 1, 2008. See Doc. #71, Ex. 16. On February 28, 2009, 13 Sentry replaced Nissenbaum as General Manager, moving her into the role of Hotel Manager and 14 decreasing her salary. See Doc. #71, Ex. 17. Sentry’s explanation for the change was as follows: 15 “[p]roperty in receivership; Managing Director replacing GM.” Id. Nissenbaum remained 16 employed by Sentry at the Cal Neva until April 9, 2009. See Doc. #70, Ex. 10; see also Doc. #76, 17 Ex. 14 (Nissenbaum Dep.), pp. 191-92; Doc. #76, Ex. 15 (Marcil Dep.), p. 114. 18 B. 19 On November 6, 2007, Canpartners entered into a Loan and Security Agreement (the “Loan The Canyon Entities’ Relationship to the Cal Neva 20 Agreement”) with Namcal, pursuant to which Canpartners made a $25,000,000 loan (the “Loan”) 21 to Namcal. Doc. #70, Ex. 1. The Loan was secured by the Cal Neva property. See Doc. #78, Ex. 22 5. Canyon Capital, as a member of Canpartners and a registered investment advisor, managed 23 various investments on behalf of Canpartners, including the Loan. See Doc. #70, Ex. 2 (Bosworth 24 Dep.), p. 31. In order to secure repayment of the Loan, Namcal executed and delivered to 25 Canpartners various security instruments, as is customary in commercial real estate lending 26 practice. See Doc. #69, p. 6; see also Doc. #76, p. 3. Of particular relevance here, Namcal and 2 1 Canpartners executed an Assignment of Management Agreement, Security Agreement and 2 Subordination Recognition Agreement (the “Subordination Agreement”). Doc. #70, Ex. 3. 3 Referenced therein is the Management Agreement between Namcal and Sentry. See id. 4 On December 9, 2008, following Namcal’s default on the Loan, Canpartners recorded a 5 Notice of Default and Election to Sell under the California Deed of Trust. See Doc. #69, p. 8. On 6 December 10, 2008, Canpartners recorded a similar Notice of Default and Election to Sell under 7 the Nevada Deed of Trust. See id. On December 16, 2008, Richard Bosworth (“Bosworth”), on 8 behalf of Canpartners, visited the Cal Neva for the first time since the Loan was made to Namcal in 9 order to inspect the property. See id. This was the first time that Nissenbaum met Bosworth, or 10 any other representative from Canpartners. See Doc. #70, Ex. 5 (Nissenbaum Dep.), p. 133. 11 During this December visit, Bosworth spoke with Nissenbaum about the financial condition of the 12 Cal Neva, which she characterized as a “financial mess.” See Doc. #70, Ex. 2 (Bosworth Dep.), p. 13 76. Based on Bosworth’s visit and a subsequent phone call from Nissenbaum further indicating the 14 financial decline of the Cal Neva, Canpartners sought the appointment of a receiver to oversee 15 management and control of the Cal Neva until the time of foreclosure. Id. at 76-78; see also Doc. 16 #76, Ex. 9 (Canpartners’ Motion for Appointment of Receiver). 17 On February 5, 2009, Michael McPherson (“McPherson”) was appointed by the Washoe 18 County District Court to act as Receiver of the Cal Neva. Doc. #70, Ex. 6. The receivership order 19 granted McPherson broad authority to “take possession of the [Cal Neva] and hold, manage, and 20 maintain [it] . . . , preserving it from loss, material injury, destruction, substantial waste, or loss of 21 income therefrom.” Id. at 2. Additionally, the receivership order explicitly authorized McPherson 22 to “make payroll, including employees.” Id. Finally, the receivership order specifically authorized 23 McPherson “[t]o borrow or otherwise receive funds from [Canpartners] . . . as may be necessary to 24 satisfy the costs and expenses of the receivership[.]” Id. at 4. To that end, Canpartners made 25 approximately seven (7) protective advances at McPherson’s request during the period of 26 receivership (from February 5, 2009 through April 9, 2009). See Doc. #70, Ex. 7 (emails 3 1 referencing wire transfers and Wire History Summary Reports); see also Doc. #76, Ex. 8 2 (McPherson’s time log). Bosworth testified that the protective advances were necessary to preserve 3 the value of the Cal Neva, which was the collateral for the Loan, until the foreclosure was complete 4 and ownership changed hands. Doc. #70, Ex. 2 (Bosworth Dep.), p. 146. 5 On April 8, 2009, Canpartners foreclosed on the Cal Neva, and its subsidiary, Canpartners 6 Cal Neva, became the new owner through trustee sales conducted in both California and Nevada. 7 Id. at 183; Doc. #70, Ex. 8. Later that same day, pursuant to its rights under the Subordination 8 Agreement, Canpartners terminated the Management Agreement between Namcal and Sentry, 9 effective April 9, 2009. Doc. #70, Ex. 8. Also on April 8, 2009, Canpartners Cal Neva and NHH 10 Cal Neva Services Co., LLC (“NHH”) executed the Amended and Restated Management 11 Agreement (the “NHH Management Agreement”), pursuant to which NHH took over management 12 of the Cal Neva. Doc. #70, Ex. 9. On April 9, 2009, Ernie Catanzaro (“Catanzaro”) of NHH sent a 13 letter to William Jackson (“Jackson”) of Sentry, then General Manager of the Cal Neva, informing 14 him that NHH would not be retaining him or Nissenbaum. Doc. #70, Ex. 10. 15 C. 16 On April 3, 2009, Nissenbaum, through counsel, sent a letter to Bosworth (among others) Procedural History 17 complaining of gender discrimination, unequal pay, and demanding payment for lost wages. Doc. 18 #71, Ex. 21. The letter was not addressed to any representative of NHH. See id. On April 10, 19 2009, Nissenbaum filed a complaint with the Nevada Equal Rights Commission, alleging 20 violations of Title VII of the Civil Rights Act of 1964 (“Title VII”) and the Equal Pay Act of 1963 21 (“Equal Pay Act”). See Doc. #27, ¶50. Nissenbaum’s complaint was subsequently forwarded to 22 the United States Equal Employment Opportunity Commission (the “EEOC”). See id. The EEOC 23 ultimately terminated its investigation on both claims without issuing any findings of fact or 24 conclusions of law. See id. at ¶51, ¶52. On December 20, 2011, Nissenbaum, through prior 25 counsel, filed a First Amended Complaint (“FAC”), naming the Canyon Entities as defendants. See 26 id. In the FAC, Nissenbaum alleges two causes of action—the first for equal pay discrimination in 4 1 violation of the Equal Pay Act, 29 U.S.C. § 206(d)(1), and Nevada’s Equal Pay Act, N.R.S. 2 608.017, and the second for discrimination in violation of Title VII, 42 U.S.C. § 2000e-2, and 3 Nevada’s anti-discrimination statute, N.R.S. 613.330. See Doc. #27, pp. 11-16. In addition to 4 compensatory damages, Nissenbaum also seeks punitive damages against the Canyon Entities. See 5 Doc. #27, pp. 16-17. On April 15, 2013, the Canyon Entities filed the present Motion for Summary 6 Judgment on the issue of joint employer liability. Doc. #69. 7 II. Legal Standard 8 Summary judgment is appropriate only when the pleadings, depositions, answers to 9 interrogatories, affidavits or declarations, stipulations, admissions, and other materials in the record 10 show that “there is no genuine issue as to any material fact and the movant is entitled to judgment 11 as a matter of law.” Fed. R. Civ. P. 56(a). In assessing a motion for summary judgment, the 12 evidence, together with all inferences that can reasonably be drawn therefrom, must be read in the 13 light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio 14 Corp., 475 U.S. 574, 587 (1986); Cnty. of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 15 (9th Cir. 2001). 16 The moving party bears the initial burden of informing the court of the basis for its motion, 17 along with evidence showing the absence of any genuine issue of material fact. Celotex Corp. v. 18 Catrett, 477 U.S. 317, 323 (1986). On those issues for which it bears the burden of proof, the 19 moving party must make a showing that is “sufficient for the court to hold that no reasonable trier 20 of fact could find other than for the moving party.” Calderone v. United States, 799 F.2d 254, 259 21 (6th Cir. 1986); see also Idema v. Dreamworks, Inc., 162 F. Supp. 2d 1129, 1141 (C.D. Cal. 2001). 22 On an issue as to which the non-moving party has the burden of proof, however, the moving party 23 can prevail merely by demonstrating that there is an absence of evidence to support an essential 24 element of the non-moving party’s case. Celotex, 477 U.S. at 323. 25 26 To successfully rebut a motion for summary judgment, the non-moving party must point to facts supported by the record which demonstrate a genuine issue of material fact. Reese v. 5 1 Jefferson Sch. Dist. No. 14J, 208 F.3d 736 (9th Cir. 2000). A “material fact” is a fact “that might 2 affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 3 242, 248 (1986). Where reasonable minds could differ on the material facts at issue, summary 4 judgment is not appropriate. See v. Durang, 711 F.2d 141, 143 (9th Cir. 1983). A dispute 5 regarding a material fact is considered genuine “if the evidence is such that a reasonable jury could 6 return a verdict for the nonmoving party.” Liberty Lobby, 477 U.S. at 248. The mere existence of a 7 scintilla of evidence in support of the party’s position is insufficient to establish a genuine dispute; 8 there must be evidence on which a jury could reasonably find for the party. See id. at 252. 9 III. Discussion 10 A. 11 The Fair Labor Standards Act (“FLSA”)2 prohibits employers from discriminating between 12 employees on the basis of sex. See 29 U.S.C. § 206(d)(1). To succeed on a claim under the FLSA, 13 a plaintiff must first establish the existence of an employer/employee relationship. See Bonnette v. 14 Cal. Health and Welfare Agency, 704 F.2d 1465, 1468 (9th Cir. 1983), abrogated on other grounds 15 by Garcia v. San Antonio Transit Auth., 469 U.S. 528, 539 (1985); see also Martinez-Mendoza v. 16 Champion Intern. Corp., 340 F.3d 1200, 1209 (11th Cir. 2003) (alleged employee has the burden of 17 proving joint employment by a preponderance of the evidence). The FLSA defines an “employer” 18 as “any person acting directly or indirectly in the interest of an employer in relation to an 19 employee.” 29 U.S.C. § 203(d). The FLSA defines an “employee” as “any individual employed by 20 an employer.” 29 U.S.C. § 203(e)(1). Under the FLSA, two or more employers may employ a 21 person jointly. Bonnette, 704 F.2d at 1469; 29 C.F.R. § 791.2(a). Where joint employment is 22 found, each joint employer is individually responsible for violations of the FLSA with respect to 23 the entire employment. Valdez v. Cox Communications Las Vegas, Inc., No. 2:09-CV-01797-PMP- 24 RJJ, 2012 WL 1203726, at *1 (D. Nev. April 11, 2012) (citing Bonnette, 704 F.2d at 1469; 29 Joint Employer Status Under the Fair Labor Standards Act 25 26 2 The FLSA encompasses the Equal Pay Act. See generally 29 U.S.C. § 206. 6 1 C.F.R. § 791.2(a)). “A fundamental principle behind the joint employment doctrine is that a 2 worker may be employed by more than one entity at the same time.” Guifu Li v. A Perfect Day 3 Franchise, Inc., 281 F.R.D. 373, 400 (N.D. Cal. 2012) (citing Bonnette, 704 F.2d at 1469; 4 Gilbreath v. Cutter Biological, Inc., 931 F.2d 1320, 1324 (9th Cir. 1991)). 5 The Court applies an “economic reality” test to determine whether a joint employment 6 relationship exists. Torres-Lopez v. May, 11 F.3d 633, 638 (9th Cir. 1997). Among the factors the 7 Court considers most relevant when evaluating the economic reality of an alleged joint employment 8 relationship are “whether the alleged employer (1) had the power to hire and fire employees, 9 (2) supervised and controlled employee work schedules or conditions of payment, (3) determined 10 the rate and method of payment, and (4) maintained employment records,” (collectively referred to 11 as the “Bonnette factors”). Moreau v. Air France, 356 F.3d 942, 946-47 (9th Cir. 2004) (quoting 12 Bonnette, 704 F.2d at 1470). However, no single factor is dispositive—the Court may ultimately 13 conclude that there was no joint employment, even where some factors weigh in favor of finding 14 joint employment. Zheng, 355 F.3d at 76. “Ultimately, the determination is ‘based upon the 15 circumstances of the whole activity.’” Valdez, 2012 WL 1203726, at *2 (quoting Bonnette, 704 16 F.2d at 1470). 17 Whether a party is an employer for purposes of FLSA liability is a question of law, 18 appropriate for resolution by the Court on motion for summary judgment. See Torres-Lopez, 111 19 F.3d at 638. In order to find no joint employment at the summary judgment stage, the Court 20 “would have to conclude that, even where both the historical facts and the relevant factors are 21 interpreted in the light most favorable to the plaintiffs, defendants are still entitled to judgment as a 22 matter of law.” Zheng, 355 F.3d at 76. 23 Nissenbaum admits, and the Canyon Entities do not dispute, that she was employed by 24 Sentry. See Doc. #69, Ex. 22, ¶1; Ex. 23, ¶1; see also Doc. #69, p. 20. However, she also asserts 25 that both Namcal and Canpartners were her joint employers by virtue of the Management 26 Agreement (Doc. #70, Ex. 4) and the Subordination Agreement (Doc. #70, Ex. 3). See Doc. #76, p. 7 1 15. Specifically, Nissenbaum avers that Canpartners had certain authority under the Management 2 Agreement with regard to her employment as a result of the Subordination Agreement. Doc. #76, 3 p. 4. To this end, she argues, Namcal’s status as a joint employer “is a crucial step in the analysis 4 of ‘joint employment,’ as it applies to [the Canyon Entities].” Doc. #76, p. 10. 5 However, while Nissenbaum asserts generally that “Canpartners had economic control over 6 [] Nissenbaum by virtue of its legal relationship with Namcal and Sentry, at least from the time it 7 initiated foreclosure proceedings until [] Nissenbaum was fired by Canpartners’ management 8 company” (Doc. #76, p. 9), she fails to refute the Canyon Entities’ detailed analysis of the joint 9 employment issue or provide sufficient evidentiary support for her contentions. See Fed. R. Civ. P. 10 56(e) (stating that “[i]f a party fails to properly support an assertion of fact or fails to properly 11 address another party’s assertion of fact as required by Rule 56(c), the [C]ourt may: . . . (2) consider 12 the fact undisputed for purposes of the motion”); see also Local Rule 56-1 (requiring litigants 13 opposing a motion for summary judgment to provide a “concise statement setting forth each fact 14 material to the disposition of the motion”). Instead, Nissenbaum cites a number of allegedly 15 controverted facts that she claims preclude summary judgment. See Doc. #76, pp. 8-10. 16 The Court, however, disagrees with Nissenbaum’s characterization of these facts as 17 “disputed.” The parties do not dispute the material facts on which the joint employer analysis 18 turns. Rather, the parties dispute the extent to which these facts demonstrate that the Canyon 19 Entities were Nissenbaum’s joint employer. Insofar as there are disputed facts—e.g., whether and 20 how Nissenbaum was verbally informed that she would not be retained by NHH on April 9, 2009,3 21 and whether NHH took over management of the Cal Neva on April 9, 2009 or April 10, 20094—the 22 23 24 25 26 3 Nissenbaum contends that Catanzaro and Robert Marcil (“Marcil”) “terminated” her employment on April 9, 2009. Doc. #70, Ex. 5 (Nissenbaum Dep.), pp. 191-92. Marcil does not recall a meeting with Nissenbaum on April 9, 2009. Doc. #76, Ex. 15 (Marcil Dep.), p. 114. 4 Bosworth went to great lengths in his deposition to explain that NHH took over management of the Cal Neva at midnight on the morning of April 10, 2009, as was common in the 24-hour hotel industry. Doc. #70, Ex. 2 (Bosworth Dep.), pp. 180-82. In her Opposition, Nissenbaum disputes 8 1 Court finds that they are immaterial to a determination of whether the Canyon Entities were 2 Nissenbaum’s joint employers. See Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 3 1144, 1147 (9th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986)) 4 (“substantive law determines which facts are material; only disputes over facts that might affect the 5 outcome of the suit under the governing law properly preclude the entry of summary judgment”). 6 As there are no genuinely disputed issues of material fact, the issue of whether the Canyon Entities 7 were Nissenbaum’s joint employer under the aforementioned framework is properly before the 8 Court. 9 10 B. The Bonnette Factors as Applied to the Canyon Entities (i) The Power to Hire and Fire 11 Section 4.2 of the Sentry Management Agreement expressly provides: 12 Employees. (a) [Namcal] hereby grants to Sentry the right to hire, promote, discharge and supervise the work of management staff (i.e., the hiring of the assistant managers and department heads) as well as all other operating and service employees performing services in or about the Hotel/Resort (other than spa and casino employees), all in Sentry’s name or in the name of Sentry’s Affiliate. All Executive Committee Members shall be employees of Sentry. [Namcal] retains the right to approve the hiring and/or termination of the general manager and controller. 13 14 15 16 Doc. #69, Ex. 4, p. 14. Pursuant to these terms, Sentry had the exclusive authority over hiring and 17 termination decisions and Namcal retained only the limited right to approve the hiring and 18 termination of the general manager and controller. See id. 19 Nissenbaum argues that the Subordination Agreement ultimately bestowed Namcal’s rights 20 with respect to hiring and termination onto Canpartners, thereby making it her joint employer. See 21 Doc. #27, ¶¶22, 35. Section 1 of the Subordination Agreement states: 22 23 24 [Namcal] hereby assigns the Management Agreement to [Canpartners] to secure the payment and performance of the obligations contained in the Loan Documents and [Namcal] hereby transfers and assigns to [Canpartners], and its successors and assigns, all of [Namcal’s] rights arising under the Management Agreement, as now existing and as the same may from time to time be supplemented, modified or amended and [Sentry] 25 26 Bosworth’s version of the facts, instead arguing that NHH took over management of the Cal Neva on April 9, 2009. See Doc. #76, at p. 9. 9 6 hereby acknowledges and consents to such assignment. Neither this Agreement nor any action or actions on the part of [Canpartners] shall constitute an assumption by [Canpartners] of any of [Namcal’s] obligations under the Management Agreement unless and until [Canpartners] shall have given written notice to [Sentry] of its election to exercise the right of [Namcal] under the Management Agreement following an event of default under any of the Loan Documents. . . . Prior to such notice, (I) [Namcal] shall continue to be liable for all of its obligations under the Management Agreement and [Namcal] hereby agrees to perform each and all of such obligations, and (ii) [Sentry] shall continue to fulfill its obligations to [Namcal] under the terms of the Management Agreement. . . . [Canpartners] shall have no liability for any failure to such person or entity to perform the obligations under the Management Agreement. 7 The Court finds that the aforementioned provisions—interpreted in the light most favorable 1 2 3 4 5 8 to Nissenbaum—suggest, at most, that Canpartners had limited authority to approve of Sentry’s 9 decision to hire and/or terminate Nissenbaum in her role as General Manager. In doing so, the 10 Court finds determinative the fact that the Subordination Agreement distinguishes between 11 Namcal’s “rights arising under the Management Agreement” and it’s “obligations under the 12 Management Agreement.” Contrary to the Canyon Entities’ assertion, only the assumption of 13 Namcal’s obligations was contingent upon Namcal’s default and Canpartners’ written notice of its 14 election to assume Namcal’s obligations under the Management Agreement. Namcal’s rights, on 15 the other hand, were assigned to Canpartners immediately upon execution of the Subordination 16 Agreement. One such right that Namcal transferred and assigned to Canpartners in executing the 17 Subordination Agreement was the “right to approve the hiring and/or termination of the general 18 manager and controller.” 19 Nevertheless, at the time of her termination, Nissenbaum was in the position of Hotel 20 Manager, not General Manager. Doc. #71, Ex. 17. Accordingly, neither Namcal nor Canpartners 21 had any right to approve her termination at that time. According to the Management Agreement, 22 only Sentry had that right. Moreover, the record is devoid of any indication that Canpartners ever 23 elected to exercise the limited authority it had to approve of Sentry’s hiring and/or firing 24 determinations. There is nothing in the record to indicate that Canpartners approved or 25 disapproved of Nissenbaum’s promotion to General Manager in January 2008. Nor is there 26 anything in the record to indicate that Canpartners played any role in approving or disapproving of 10 1 Nissenbaum’s demotion to Hotel Manager in February 2009. See Doc. #69, Ex. 17 (citing the fact 2 that the property was in receivership as the explanation for the change in management); see also 3 Doc. # 69, Ex. 2 (Bosworth Deposition), p. 104 (stating that the Canyon Entities were never 4 apprised of any changes in management). Following the foreclosure proceedings on April 8, 2009, Canpartners terminated the 5 6 Management Agreement between Namcal and Sentry, effective April 9, 2009. Doc. #70, Ex. 8. 7 The Subordination Agreement explicitly gave Canpartners the right to terminate Sentry as the hotel 8 management company upon a loan default by Namcal. Specifically, Section 5 provides, in relevant 9 part: 15 Notwithstanding anything to the contrary contained in the Management Agreement, this Agreement or otherwise, in the event [Canpartners] becomes the owner of the Property, whether in its own name, through its nominee, or otherwise, or if the Property is acquired by any purchaser (the “Purchaser”), pursuant to any right or remedy under the Loan Documents, by deed or assignment in lieu of such remedies or otherwise, (a “Termination Event”), then [Canpartners] shall have the right to elect at its sole option for any reason or no reason whatsoever, at any time upon and for the period ninety (90) days following such Termination Event, to terminate the Management Agreement upon written notice (the “Termination Notice”) to [Sentry]. The effective date of such termination shall be the date specified by [Canpartners] or the Purchaser in the Termination Notice . . . .” 16 Accordingly, Nissenbaum’s employment by Sentry at the Cal Neva was automatically 10 11 12 13 14 17 terminated on April 9, 2009.5 Thereafter, Canpartners and NHH executed the Amended 18 Management Agreement, effective April 8, 2009. Doc. #70, Ex. 9. NHH, as the new management 19 company, opted not to retain Nissenbaum as an employee. See Doc. #70, Ex. 10. As such, 20 Nissenbaum was never hired as an employee of either NHH or Canpartners. The Canyon Entities 21 did not terminate Nissenbaum or any other Sentry employees. See Doc. #70, Ex. 2, p. 130. Finally, 22 Nissenbaum appears to concede that she was never an employee of the Canyon Entities—she 23 testified that had she been hired by the Canyon Entities, she would not have pursued her claims 24 25 26 5 This is not to say that Nissenbaum’s employment with Sentry was automatically terminated. Rather, because Sentry no longer managed the Cal Neva, Nissenbaum no longer had employment with Sentry there either. 11 1 2 against them. See Doc. #70, Ex. 5, p. 157. (ii) Supervision and Control Over Employee Work Schedules or Conditions of Payment 3 4 First, the Management Agreement and the Subordination Agreement did not vest the 5 Canyon Entities with the authority to supervise or control Sentry’s employee’s work schedules or 6 the conditions of their payment. Nissenbaum asserts that “[a]s of the date the Subordination 7 Agreement was signed, Canpartners had ongoing control over the management and operation of the 8 Cal Neva.” Doc. #76, p. 4-5. However, Section 4.2 of the Management Agreement explicitly 9 granted Sentry the exclusive right “to supervise the work of management staff . . . as well as all 10 other operating and service employees performing services in or about the [Cal Neva].” Doc. #67, 11 Ex. 4. Section 4.8 further provides that “[a]ny right of [Namcal] to approve any aspect of services 12 hereunder shall be only to assure that the obligations and provisions of the [Management 13 Agreement] are complied with and that [Namcal’s] expenditures hereunder are not unlimited, and 14 shall not be, or be deemed to be, for the purpose of controlling the methods and manner of 15 performance of the service of Sentry.” Doc. #67, Ex. 4. Namcal simply did not have the right to 16 control the “methods and manner” by which Sentry managed the Cal Neva. Nor did Namcal have 17 the right to supervise and control Sentry’s employees. Those rights belonged exclusively to Sentry. 18 See Gilbreath v. Cutter Biological, Inc., 931 F.2d 1320, 1326-27 (finding that defendant was not a 19 joint employer of inmate workers where the contract between defendant and the department of 20 corrections vested ultimate supervisory authority with the state). And because Namcal did not have 21 these rights pursuant to the Management Agreement, it follows that the Canyon Entities did not 22 have these rights pursuant to the Subordination Agreement. 23 Second, Nissenbaum has presented no evidence that the Canyon Entities actually supervised 24 or controlled her work schedule or conditions of remuneration. Instead, the evidence strongly 25 suggests that the Canyon Entities played absolutely no role in supervising or controlling 26 Nissenbaum’s employment whatsoever. As to supervision, Nissenbaum did not report to the 12 1 Canyon Entities regarding her job responsibilities. Doc. #70, Ex. 5 (Nissenbaum Deposition), p. 2 165. The Canyon Entities did not give Nissenbaum job assignments or direct her day-to-day 3 activities. Id. at 165. The Canyon Entities did not complete any written evaluations of 4 Nissenbaum. Id. at 165-66. Nissenbaum never negotiated her salary with the Canyon Entities or 5 any representative on their behalf. Id. at 166. Nor did the Canyon Entities ever have any 6 involvement in the payroll process. Id. at 171-72. Nissenbaum did not complain about the hours 7 she was working or her salary to Bosworth or any other Canyon Entities representative. Id. at 149, 8 166-67. Finally, Nissenbaum admits that Bosworth, the only person from the Canyon Entities with 9 whom she can recall having contact, was never her supervisor. Id. at 166. 10 Still, however, Nissenbaum contends that “the facts show” that Canpartners had economic 11 control over Nissenbaum by virtue of its legal relationship with Namcal and Sentry, “at least from 12 the time it initiated foreclosure proceedings until [] Nissenbaum was fired by Canpartners’ 13 management company.” Doc. #76, p. 9. Nissenbaum further claims that “[w]hen Namcal 14 defaulted on the loan from Canparterns in November 2008, Canpartners worked closely with the 15 Receiver . . . to participate in the management and operation of the Cal Neva.” Doc. #76, p. 5. In 16 support of these contentions, Nissenbaum cites the protective advances from Canyon Capital (at 17 least one of which was used for the express purpose of meeting the Cal Neva’s payroll), 18 McPherson’s regular reports on the Cal Neva’s finances and operation to Canpartners through 19 Bosworth, and Bosworth’s emails inquiring as to the Cal Neva’s operations and maintenance as 20 proof that the Canyon Entities had a “direct effect on the management of the property, and 21 employment at the Cal Neva.” Doc. #76, p. 5; see also Doc. #76, Ex. 8 (McPherson’s time log 22 during the period of receivership at the Cal Neva); Doc. #76, Ex. 11 (email from Bosworth to 23 Nissenbaum, inquiring as to whether employees are “California or Nevada” and what payroll 24 system is used, as well as various other emails, of which Nissenbaum is not a part, that address 25 what appear to be maintenance issues). 26 /// 13 1 The Court, however, finds that none of the evidence to which Nissenbaum cites serves to 2 demonstrate that the Canyon Entities exercised any control whatsoever over Nissenbaum. At most, 3 this evidence supports a finding that McPherson, not the Canyon Entities, had authority to manage, 4 operate, protect, and preserve the Cal Neva in accordance with the court order appointing him. See 5 Doc. #70, Ex. 6 (order authorizing McPherson to, among other things, take possession of, manage, 6 operate, protect, and preserve the Cal Neva; to take possession of all accounts, including bank 7 accounts; to incur expenses necessary and prudent for the care, preservation, and maintenance of 8 the Cal Neva; to cause the property to be repaired and maintained, and in connection therewith, to 9 oversee the Property; to make payroll, including employees, security, maintenance personnel, and 10 other persons; to hire or employ any other person or entity to act as agent, clerk, property manager, 11 or otherwise needed to administer the Cal Neva and the receivership estate and to pay reasonable 12 and customary rates for those services; to hire or employ or contract with any person or entity 13 qualified to operate and manage the Cal Neva). The fact that the Canyon Entities provided the 14 funds necessary to enable McPherson to accomplish the aforementioned court-ordered tasks, 15 including making payroll, simply does not support Nissenbaum’s contention that the Canyon 16 Entities supervised or controlled her employment. See Doc. #70, Ex. 5 (court order authorizing the 17 Canyon Entities to disburse to the Receiver all sums necessary for the operation, maintenance, 18 preservation, and security of the Cal Neva); see also Guifu Li v. A Perfect Day Franchise, Inc., 19 281 F.R.D. 373, 399 (N.D. Cal. 2012) (“even though there is evidence that Schriner provided 20 financing to Perfect Day, there is no evidence that this funding in any way impacted the 21 employment relationship”). Moreover, Nissenbaum neglects to explain how any involvement that 22 the Canyon Entities may have had in the management of the Cal Neva, via communication with 23 McPherson, proves that the Canyon Entities had control over her employment. 24 Nevertheless, Nissenbaum is convinced “that by virtue of the fact that [the Canyon Entities] 25 were providing funding to the receiver for the property, that [Bosworth] had some control of [her] 26 salary.” Doc. #70, Ex. 5, p 170. She complains that “[a]lthough Canpartners argued in favor of its 14 1 vast authority with respect to the Cal Neva in the receivership action, it has downplayed and 2 recharacterized its authority in this proceeding.” Doc. #76, p. 10. However, Nissenbaum fails to 3 appreciate the distinction between Canpartners’ contractual and statutory entitlement to the 4 appointment of a receiver in the event of default and the Canyon Entities absence of authority to 5 operate and manage the Cal Neva itself prior to foreclosure proceedings. See Doc. #76, Ex. 9, p. 14 6 (citing Section 5(b) of the Nevada Assignment Agreement and Section 10.3 of the Nevada Deed of 7 Trust providing that Canpartners shall be entitled to the appointment of a receiver for all or any part 8 of the Cal Neva in the event of Namcal’s default). The fact that Canpartners had the right to obtain 9 a court-appointed receiver following Namcal’s default in no way bestowed Canpartners with the 10 authority to take over the operation and management of the Cal Neva. Indeed, if Canpartners had 11 the authority to take over management of the Cal Neva at the time of Namcal’s default, it would not 12 have sought the appointment of a receiver in the first place. Furthermore, Nissenbaum 13 misunderstands the purpose and role of a receiver. Under Nevada law, a receiver is an officer of 14 the court who exercises duties to protect and preserve the interests of all parties to the litigation. 15 See Lynn v. Ingalls, 100 Nev. 115, 120 (1984). Accordingly, Nissenbaum’s assertion that 16 McPherson was somehow acting at the behest of the Canyon Entities to control Nissenbaum’s 17 employment is entirely misplaced. 18 Finally, the date on which the Canyon Entities began searching for a management company 19 to replace Sentry has no bearing on the Court’s analysis. Indeed, the evidence indicates that 20 Canpartners was in contact with NHH and others in preparation for the transition in management 21 before the date on which NHH officially took over management of the Cal Neva. See Doc. #76, 22 Ex. 12; Doc. #76, Ex. 13; Doc. #76, Ex. 14 (Nissenbaum Dep.), pp. 189-90 (testifying as to an 23 encounter with Marcil, human resources representative from NHH, on April 9, 2009, in which he 24 asked Nissenbaum where to find certain things and other questions about the property); see also 25 Doc. #70, Ex. 2 (Bosworth Dep.), pp. 185-86 (testifying that NHH began working for the Canyon 26 Entities on April 8, 2009, in anticipation of its assignment to the Cal Neva, but noting also that 15 1 NHH did not run the property at that time). Bosworth went to great lengths to explain in his 2 deposition that “you can have a management agreement in place with a hotel management company 3 90 days before they take over . . . because they’re going to be preparing.” Doc. #70, Ex. 2 4 (Bosworth Dep.), pp. 185-86. The fact that NHH, by virtue of the NHH Management Agreement 5 with the Canyon Entities, was preparing for this transition in management simply does not indicate 6 that either NHH or the Canyon Entities exercised any supervision or control over Nissenbaum 7 during that time. Finally, Nissenbaum’s averment that “[t]he evidence shows NHH was hard at 8 work on the Cal Neva as early as April 3, 2009” is misleading at best. The email to which 9 Nissenbaum refers as “evidence” is between two NHH employees regarding general questions to 10 ask at some future time. See Doc. #76, Ex. 13. It has nothing to do with Nissenbaum and certainly 11 does not substantiate her assertion that the Canyon Entities or NHH had any supervisory or 12 economic control over her employment at that time. See id. (iii) Determination of the Rate and Method of Payment 13 14 Again, the evidence clearly reflects that the Canyon Entities played absolutely no role in 15 determining the rate and method of Nissenbaum’s compensation. Each of Nissenbaum’s paystubs 16 in the 2008 calendar year, as well as her final paystub dated April 9, 2009, identifies Sentry as her 17 employer and Paychex, Inc. as the third-party payroll company used by Sentry for payroll 18 processing. See Doc. #71, Ex. 14. Additionally, Compensation Reports from January 1, 2006, 19 through April 17, 2009, show Sentry as Nissenbaum’s employer. See Doc. #70, Ex. 12. 20 Nissenbaum’s W-2 forms from this time period also reflect that Sentry was her employer. See Doc. 21 #70, Ex. 13. 22 Nor does Nissenbaum present any other evidence to establish that the Canyon Entities were 23 at all involved in the changes to her positions or salary while employed at the Cal Neva. Rather, 24 the Personnel Action Forms documenting Nissenbaum’s promotions and demotions, and the 25 accompanying changes to her salary, were in the name of and issued by Sentry. See Doc. #71, Ex. 26 15 (documenting Nissenbaum’s promotion to General Manager and increase in pay rate); Doc. #71, 16 1 Ex. 16 (documenting a retroactive salary increase); Doc. #71, Ex. 17 (documenting Nissenbaum’s 2 demotion to Hotel Manager and decrease in pay rate). Moreover, Bosworth testified that neither of 3 the Canyon Entities were ever notified of or consulted as to any changes to Nissenbaum’s title or 4 salary. See Doc. #70, Ex. 2 (Bosworth Dep.), pp. 104, 127. 5 Finally, Nissenbaum admits that the Canyon Entities played no role in setting or negotiating 6 her salary. See Doc. #70, Ex. 5 (Nissenbaum Dep.), p. 166. Her first and only communication with 7 the Canyon Entities concerning the alleged disparity in her pay as General Manager was a demand 8 letter sent by her attorney to Bosworth and various other individuals on April 3, 2009. See Doc. 9 #71, Ex. 24, Ans. 3 and 4. In contrast, Nissenbaum had multiple communications with 10 representatives from Sentry regarding her pay as General Manager “[t]hroughout the period of 11 January 14, 2008 to April 9, 2009 (verbal, email).” Doc. #71, Ex. 24, Ans. 11. 12 13 (iv) Maintenance of Employee Records Finally, the record is entirely devoid of any evidence that the Canyon Entities or NHH kept 14 any records related to Nissenbaum’s employment during her tenure at Cal Neva. Rather, all of 15 Nissenbaum’s employment records during the relevant period were maintained by either Namcal or 16 Sentry. See Doc. #70, Ex. 11 (Nissenbaum’s application for employment with Namcal); Doc. #70, 17 Ex. 12 (Nissenbaum’s compensation reports issued by Sentry); Doc. #70, Ex. 13 (Nissenbaum’s W- 18 2 filings from 2005 to 2009 listing Sentry as employer); Doc. #71, Ex. 14 (Nissenbaum’s paystubs 19 issued by Sentry); Doc. 71, Ex. 15-17 (Nissenbaum’s personnel action forms issued by Sentry). 20 Because NHH opted not to retain Nissenbaum, she never filled out any employment paperwork 21 with NHH or the Canyon Entities. See Doc. #71, Ex. 19 (NHH’s payroll register does not list 22 Nissenbaum as an employee). Additionally, Nissenbaum admits that she never received any 23 written evaluations from Bosworth or anyone else associated with the Canyon Entities. Doc. #70, 24 Ex. 5, p. 165-66. 25 26 Considering the totality of the circumstances and the “economic reality” of the relationship between the Canyon Entities and Nissenbaum, the Court finds that the Canyon Entities were not 17 1 Nissenbaum’s joint employer for purposes of the FLSA. Rather, the Canyon Entities were 2 connected to Nissenbaum only insofar as they were a commercial real estate lender to Namcal. 3 That relationship was entirely consistent with the type of control that a secured creditor legitimately 4 may exercise over a defaulting debtor to protect the collateral property securing the loan. This 5 limited connection is simply not sufficient to establish the requisite employment relationship to 6 succeed on a claim for relief under the FLSA. See Moreau, 356 F.3d at 951 (facts evidencing 7 minimal control must be viewed in the context of the entire relationship). Accordingly, the Court 8 finds that summary judgment in favor of the Canyon Entities on Nissenbaum’s FLSA claims is 9 appropriate. 10 C. Joint Employer Status Under the Nevada Equal Pay Act 11 The Nevada Equal Pay Act provides that “[i]t is unlawful for any employer to discriminate 12 between employees, employed within the same establishment, on the basis of sex by paying lower 13 wages to one employee than the wages paid to an employee of the opposite sex who performs equal 14 work which requires equal skill, effort and responsibility and which is performed under similar 15 working conditions.” N.R.S. 608.017(1). The Act defines an employer as “every person having 16 control or custody of any employment, place of employment or any employee.” N.R.S. 608.011. 17 To the extent the Nevada Equal Pay Act’s definition of “employer” differs from that of the FLSA, 18 the Court finds that the inquiry is sufficiently encompassed by the framework set forth above. The 19 aforementioned analysis demonstrates that the Canyon Entities did not have the requisite control or 20 custody over Nissenbaum such that they were her employers for purposes of the Nevada Equal Pay 21 Act. Accordingly, the Court finds that summary judgment in favor of the Canyon Entities on 22 Nissenbaum’s Nevada Equal Pay Act claim is appropriate. 23 D. Anti-Discrimination Pursuant to Title VII and NRS 613.330 24 For the first time in her Response, Nissenbaum contends that the success of her Title VII 25 claim is not contingent on the existence of an employment relationship. Doc. #76, p. 14. Instead, 26 she argues, the Canyon Entities are amendable to liability as non-employers for interfering with 18 1 Nissenbaum’s employment opportunities with another employer.6 Id. However, the FAC does not 2 raise this as a ground for recovery. Rather, Nissenbaum predicates her Title VII claim on 3 “DEFENDANT EMPLOYERS’ unlawful gender discrimination and unequal payment of wages 4 based on [sic] her gender.” Doc. #27, p. 15. On this basis alone, the Court declines to address 5 Nissenbaum’s newly articulated theory of liability. See Wasco Prods., Inc. v. Southwall Techs., 6 Inc., 435 F.3d 989, 991 (9th Cir. 2006) (a party may not oppose summary judgment by raising 7 grounds not in issue under the pleadings). 8 9 Title VII provides that it is an unlawful employment practice for an employer to “discharge any individual, or otherwise to discriminate against any individual with respect to . . . terms, 10 conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or 11 national origin[.]” 42 U.S.C. § 2000e-2(a)(1). The statute defines an “employer” as “a person 12 engaged in industry affecting commerce who has fifteen or more employees for each working day 13 in each of twenty or more calendar weeks in the current or proceeding calendar year[.]” 42 U.S.C. 14 § 2000e(b). Additionally, “there must be some connection with an employment relationship for 15 Title VII protections to apply.” Lutcher v. Musicians Union Local 47, 633 F.2d 880, 883 (9th Cir. 16 1980). Here again, Courts inquire as to the “economic realities” of the situation, namely “the 17 extent of the employer’s right to control the means and manner of the worker’s performance.” 18 Adcock v. Chrysler Corp., 166 F.3d 1290, 1292 (9th Cir. 1999) (citing Lutcher, 633 F.2d at 833). 19 As the Court already determined that the “economic realities” of Nissenbaum’s relationship to the 20 Canyon Entities do not support a finding of an employment relationship, summary judgment in 21 favor of the Canyon Entities on Nissenbaum’s Title VII claim is appropriate. 22 Similarly, Nevada Revised Statute 613.330 applies only to employers. For all of the 23 aforementioned reasons, the Court finds that summary judgment in favor of the Canyon Entities on 24 6 25 26 Nissenbaum neglects entirely to explain how her new theory of liability applies to this case. As such, even if the Court were inclined to entertain her newly espoused theory of liability, it would be unable to do so on the basis of Nissenbaum’s submission to the Court. 19 1 Nissenbaum’s Nevada anti-discrimination claim is appropriate. 2 D. Punitive Damages 3 Because the Court finds that Nissenbaum has not established the requisite employment 4 relationship in order to prove her claims for compensatory damages under the FLSA, the Nevada 5 Equal Pay Act, Title VII, and Nevada Revised Statute 613.330, she is not entitled to punitive 6 damages. 7 IV. 8 9 Conclusion The Court finds that Nissenbaum has produced insufficient evidence to establish that the Canyon Entities were her joint employer for purposes of her equal pay and discrimination claims. 10 Because Nissenbaum failed to prove an employer/employee relationship as required under the 11 FLSA, the Nevada Equal Pay Act, Title VII, and Nevada Revised Statute 613.330, the Court grants 12 the Canyon Entities’ Motion for Summary Judgment as to all claims. 13 14 IT IS THEREFORE ORDERED that the Canyon Entities’ Motion for Summary Judgment 15 (Doc. #69) is GRANTED. The clerk of court shall enter judgment in favor of Defendants Canyon 16 Capital and Canpartners, and against Plaintiff Nissenbaum. 17 IT IS SO ORDERED. 18 DATED this 22nd day of November, 2013. 19 __________________________________ LARRY R. HICKS UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 20
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