United States District Court, D. Colorado
RHONDA NESBITT, individually, and on behalf of all others similarly situated, Plaintiff,
FCNH, INC., VIRGINIA MASSAGE THERAPY, INC., MID-ATLANTIC MASSAGE THERAPY, INC., STEINER EDUCATION GROUP, INC., STEINER LEISURE LTD., SEG CORT LLC, d/b/a as the “Steiner Education Group”, Defendants.
Brooke Jackson United States District Judge.
matter is before the Court on two motions filed by
defendants: (1) defendants' Motion for Summary Judgment,
ECF No. 62; and (2) defendants' Motion to Dismiss the
Claims of Opt-In Plaintiffs Soliz, Alfisi, Sprague and
Williams and to Exclude Evidence from Certain Other Opt-In
Plaintiffs, ECF No. 64, which remains pending after being
granted in part on November 1, 2016. This Order solely
addresses defendants' motion for summary judgment. For
the reasons below, the Court GRANTS IN PART and DENIES IN
PART that motion. In addition, because the Court dismisses
plaintiffs' FLSA claim, the Court orders the parties to
show cause within 14 day as to why the Court should not
dismiss without prejudice the remainder of the action for
lack of subject matter jurisdiction.
are massage therapy students who attended defendants'
massage therapy vocational schools. ECF No. 46-1 at
¶¶5-21 (Amended Complaint); ECF No. 62 at 1 n.1.
These schools are collectively run by defendant Steiner
Education Group (“SEG”) in the following states:
Arizona, Colorado, Connecticut, Florida, Maryland,
Massachusetts, Illinois, Nevada, New Jersey, Pennsylvania,
Texas, Utah, Virginia, and Washington. Id. at
¶¶13-15. Although they enrolled as students at
SEG's institutions, plaintiffs argue here that during
SEG's clinical massage curriculum they functioned as
defendants' “employees” under the Fair Labor
Standards Act (“FLSA”), 29 U.S.C. § 201,
et seq., as well as their respective state's
laws. See Id. at ¶¶57-81. Accordingly,
they assert claims for unpaid wages under those laws for the
time they performed clinical massages for paying customers at
defendants' institutions. Id.
at the SEG's Institutions.
enrolling at an SEG massage therapy vocational school,
students are required to sign an “Enrollment
Agreement” wherein they acknowledge that they will pay
tuition in exchange for classroom and clinical training in
massage therapy. ECF No. 62-2 at ¶¶12-15 (Decl. of
Melissa Wage). This Agreement likewise discloses to students
that it is illegal under the respective state's laws to
perform massage therapy for compensation without a license,
and that students are not guaranteed employment with their
school or otherwise upon graduation from the program.
Id. Students also receive a Student Catalog and
Handbook upon enrolling at one of defendants' schools.
Id. at ¶¶12-17. Though these documents
differ to some degree at defendants' different
institutions, they all generally describe SEG's clinical
requirement to graduate. See Id. They also inform
students that as unlicensed student massage therapists, they
could not and would not receive compensation during this
clinical component of their education. Id.
first few weeks after they enroll at one of SEG's
schools, which are all accredited and licensed by the states
in which they operate, see id. at ¶¶3-10,
students engage exclusively in classroom education and
practice, see ECF No. 62-8 at ¶4 (Decl. of Matthew
Rodgers). During that time, students learn about the
practice of massage therapy. See Id. They also have
the opportunity to occasionally practice the massage therapy
skills they learn in the classroom on other students and
instructors. Id. Once they complete their
school's requisite initial amount of classroom education,
students can then begin SEG's clinical curriculum.
Id. at ¶5. While they complete this clinical
curriculum, students continue to receive classroom education.
Clinical Training Program.
to giving their first clinical massages, students must
undergo orientation for SEG's clinical program.
Id. at ¶7. Though plaintiffs dispute the extent
of this orientation, see ECF No. 71-2 at 56:9-14 (Dep. of
Sara Alexandra Tan, August 3, 2016), defendants describe it
as consisting of a discussion with students about the
clinical course's objectives and the expectations of
student massage therapists, ECF No. 62-8 at ¶7. As
defendants explain, these “expectations include that
students will greet a client” receiving a massage,
“perform a 50-minute massage, and return the client to
the waiting room, all within approximately one hour” in
order “to mimic the general timing of a massage at a
spa or other professional massage therapy business.”
Id. at ¶8. During orientation instructors also
explain to students that they are expected to maintain their
booths and tables as if they were professional massage
therapists. Id. at ¶17. Students therefore must
apparently “move desks, tables, etc., and set up
privacy curtains” during their scheduled massage
clinic. ECF No. 71 at 5.
general, students perform roughly 100 massages (lasting
approximately 50 minutes each) during SEG's clinical
program. ECF No. 62-8 at ¶12. They perform these
massages at their respective schools in cordoned off, empty
classrooms. See ECF No. 71-16 at 34:3-11 (Dep. of
Matthew Rodgers, July 26, 2016). Their clients are paying
customers from the public to whom defendants'
institutions publicly advertise discounted massages at their
respective schools. ECF No. 62-8 at ¶2; ECF No. 71-18
(Advertisements). Because customers pay some amount of money
to receive their clinical massages, defendants generate
revenue from SEG's clinical curriculum. See ECF
No. 62-14 at ¶¶3-6 (Decl. of James Wharton). It is
disputed, however, whether these schools actually profit from
running these clinics. Compare Id. at ¶8
with ECF No. 71 at 6-7. Regardless of whether
students' massages generate profit, the Enrollment
Agreement, Student Catalog and Handbook inform students that
they will not receive compensation for providing massage
services during their clinical training. ECF No. 62-2 at
¶¶12-17. Defendants contend that it would be
illegal under the laws in every state in which they operate
to pay students as unlicensed massage therapists for
performing these massages. ECF No. 62 at 3 (citing C.R.S.
§ 12-35.5-107; 3 C.C.R. § 722-1:2).
event, because this training is a “clinical”
massage program, after each massage the student's client
has the opportunity to provide the student with feedback.
See ECF No. 62-8 at ¶15. How often feedback is
given is disputed. See ECF No. 71-4 at 21:23-35,
22:1-5 (Dep. of Amanda Camacho, July 14, 2016). Nevertheless,
if a customer provides a student massage therapist with
feedback, the student and his or her instructors discuss
those comments and criticisms during classroom instruction
later in the week. ECF No. 62-8 at ¶18. Furthermore,
although it is once again disputed how much this occurs,
students also are apparently required to perform a certain
number of massages on their instructors or licensed massage
therapists during these clinics in order to receive
additional feedback from a source “more knowledgeable
than the general public” about massage therapy. ECF No.
62-8 at ¶16.
one last disputed issue about defendants' clinics that is
relevant in this case is how much SEG supervises its
programs. Defendants contend that they comply with all state
regulations pertaining to this issue, as they are required to
do in order to become accredited, and that students
performing massages at all defendants' institutions are
“supervised by a clinic manager and teaching
assistants, who are there to facilitate the clinic process,
provide feedback to the students, and are available to answer
any student questions that may arise.” ECF No. 62-8 at
10. This “clinic manager is a licensed and experienced
massage therapists, as generally are the teaching
assistants.” Id. For their part, plaintiffs
counter that these supervisors did not provide direct or
individualized supervision during the clinics. See,
e.g., ECF No. 71-2 at 40:3-13.
Rhonda Nesbitt initiated this suit against SEG and various
additional defendants on April 7, 2014. ECF No. 1
(Complaint). She sues individually but also purportedly on
behalf of all those similarly situated. Id. She
seeks certification of a class or collective action on behalf
of all those whom attended SEG's schools in fourteen
states within the past three years. See generally
Id. Plaintiffs' Complaint included five claims for
relief, including a claim under the FLSA, a claim to declare
unlawful certain terms of the parties' Arbitration
Agreement, and claims for wages under several state statutes.
Id. at ¶¶57-81. After failing to
compel arbitration, defendants moved for judgment on the
pleadings on March 7, 2016. ECF No. 44. The Court, however,
denied that motion as moot at a March 10, 2016 status
conference during which it granted plaintiffs' oral
motion to amend the Complaint. ECF No. 45. Plaintiffs then
filed their Amended Complaint on April 28, 2016. ECF No.
August 19, 2016 defendants filed two more motions: (1) a
motion for summary judgment, ECF No. 62; and (2) a motion to
dismiss several plaintiffs who had opted-in and to exclude
evidence from other opt-in plaintiffs, ECF No. 64. The Court
held oral arguments on defendants' motion for summary
judgment on November 1, 2016, during which time it granted in
part defendants' motion to dismiss several opt-in
plaintiffs. ECF No. 89. Defendants' pending motion for
summary judgment is the subject of this Order.
STANDARD OF REVIEW
Court may grant summary judgment if “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). The moving party has the burden to show that there is
an absence of evidence to support the nonmoving party's
case. Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). The nonmoving party must “designate specific
facts showing that there is a genuine issue for trial.”
Id. at 324. A fact is material “if under the
substantive law it is essential to the proper disposition of
the claim.” Adler v. Wal-Mart Stores, Inc.,
144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A
material fact is genuine if “the evidence is such that
a reasonable jury could return a verdict for the nonmoving
party.” Anderson, 477 U.S. at 248. The Court
will examine the factual record and make reasonable
inferences therefrom in the light most favorable to the party
opposing summary judgment. Concrete Works of Colo., Inc.
v. City & Cnty. of Denver, 36 F.3d 1513, 1517 (10th
dispositive issue before the Court on summary judgment is
whether the plaintiffs qualified as “employees”
under the FLSA during defendants' clinical programs. This
is a question of law to be decided by a “totality of
the circumstances” approach that looks at six factors
to assess the economic realities of the parties'
relationship. See Reich v. Parker Fire Protection
Dist., 992 F.2d 1023, 1025-26 (10th Cir. 1993). Using
that test here, I find that, although there are various
disputes of fact as noted above, the disputed facts are not
material to the decision. I conclude as a matter of law that
these plaintiffs do not qualify as “employees”
under the FLSA. The Court therefore grants defendants'
motion for summary judgment as it pertains to the FLSA claim
and enters judgment dismissing it. However, because I find
that the parties do not adequately brief plaintiffs'
state law claims, I decline to grant defendants' motion
as to those claims. I address both issues, as well as my
sua sponte decision to question subject matter
jurisdiction in light of these decisions, in turn.
FLSA: The Tenth Circuit's Six-Factor “Totality of