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STEPHENS v. SEVEN SEVENTEEN HB PHILADELPHIA CORP. NO. 2

United States District Court, E.D. Pennsylvania


July 28, 2004.

MATTHEW STEPHENS, et al.
v.
SEVEN SEVENTEEN HB PHILADELPHIA CORP. NO. 2 t/a ADAM'S MARK HOTEL, et al.

The opinion of the court was delivered by: RICHARD B. SURRICK, District Judge

MEMORANDUM & ORDER

Plaintiffs*fn1 filed this class action lawsuit on behalf of themselves and all others similarly situated alleging that the Defendants Seven Seventeen HB Philadelphia Corp. No. 2 t/a Adam's Mark Hotel and HBE Corporation d/b/a Adam's Mark Hotels & Resorts violated their civil rights by engaging in practices and policies designed to discriminate against current and potential African-American patrons. Defendants operate several hotels and nightclubs in different parts of the country. Plaintiffs claim that Defendants instituted a policy of discouraging African-American individuals from patronizing their hotels and nightclubs. Plaintiffs assert claims under 42 U.S.C. § 1981, 1982, 1985 and 1986,*fn2 and seek compensatory damages, punitive damages, and injunctive relief. Presently before the Court is Plaintiffs' Motion for Class Certification. (Doc. No. 74.) For the following reasons, we will deny Plaintiffs' Motion.

I. BACKGROUND

  Defendants operated a nightclub called Quincy's in the first floor of the Philadelphia Adam's Mark Hotel from at least 1995 until January 1, 1999. (Doc. No. 76 at 5 n. 2, Ex. A ¶ 16.) The nine named Plaintiffs are African-American and former patrons of Quincy's.*fn3 They frequently attended events at Quincy's on Monday and Friday nights, when Quincy's played primarily R&B music and attracted a predominately African-American crowd. (Doc. No. 74, Ex. 1 at 20; Ex. 2 at 29-31; Ex. 3 at 22-23; Ex. 4 at 20-21.) In January, 1994, Quincy's began holding promotional events on Monday nights, called Motown Mondays, to boost attendance on a traditionally slow night. (Id. Ex. 16 at 93, 95.) Motown Mondays was a successful event, attracting a large number of patrons. (Id.) Plaintiffs allege that in 1995 Defendants' owner Frank Kummer instituted a policy to discriminate against African-American patrons after visiting the nightclub at the Indianapolis Adam's Mark Hotel on a Monday night and discovering that the Motown Mondays promotion attracted African-American individuals to the nightclub. (Id. at 100-101.) Kummer allegedly expressed concerns that having African-American individuals in the nightclub and hotel lobby on Mondays would give white guests who were checking into the hotel a negative impression of the hotel and would result in decreased revenue. (Id. Ex. 17 at HBE00811.) Kummer directed the general manager of the Philadelphia hotel to cancel the Motown Mondays promotion and implement new directives to attract fewer African-American patrons to the hotel. (Id. Ex. 16 at 100-101). Plaintiffs have produced evidence, including testimony, internal memoranda, and the company's Mission Statement, that Defendants instituted a policy to change the demographics of Quincy's to match the demographics of the predominantly white overnight hotel guests.*fn4 (Id. Exs. 30, 32, 33, 34.)

  Plaintiffs allege that Defendants used a variety of techniques to implement their discriminatory policy. For example, Defendants hired a new promoter for Quincy's and instructed him to change the race of Quincy's clientele by changing the music in the club, the advertising strategies, and raising the cover charge. (Id. Ex. 17 at HBE00849-856.) In addition, Plaintiffs allege that Defendants (1) cancelled Motown Mondays to send a message to African-American patrons of Quincy's that they were not welcome, (id. Ex. 2 at 119, Ex. 3 at 73-74, Ex. 6 at 14-18, Ex. 7 at 13-14); (2) enforced a dress code that was stricter for African-American patrons than for white patrons, (id. Ex. 1 at 23-25, Ex. 4 at 34-36, Ex. 8 at 49-51, Ex. 9 at 27-29; Ex. 10 at 36-38); (3) required African-American patrons to show identification at the door, while white patrons were permitted to enter without identification, (id. Ex. 4 at 134); (4) provided inferior service to African-American patrons, (id. Ex. 1 at 29-34; Ex. 2 at 105-106, 132; Ex. 3 at 25; Ex. 8 at 46-47; Ex. 9 at 22-24); (5) required customers on nights when the clientele was predominately African-American to check their coats and pay a fee, even though customers were not required to check their coats on Saturdays when the patrons were primarily white, (id. Ex. 1 at 42, 82); (6) collected a cover charge on nights when the clientele was predominately African-American, but not on nights when the patrons were primarily white, (id. Ex. 1 at 42-43; Ex. 2 at 32, 39, 102); (7) removed the sofas from the hotel lobby on Friday and Monday nights to discourage the primarily African-American crowd from loitering there, and asked African American individuals not to spend time in the lobby, (id. Ex. 1 at 117-18; Ex. 2 at 105-107; Ex. 3 at 70; Ex. 4 at 39-41; Ex. 9 at 24-26); (8) served inferior food at the Quincy's buffet on Fridays when the customers were predominately African-American, (id. Ex. 1 at 44-45; Ex. 2 at 80, Ex. 4 at 49-50); (9) served inferior, watered down drinks on Friday nights, but not on Saturday nights, when the customers were predominately white, (id. Ex. 2 at 82-83,105-108); (10) failed to properly clean, staff, and service the restrooms on nights when the clientele was primarily African-American, but cleaned and serviced the restrooms with an attendant on nights when the customers were mostly white, (id. Ex. 2 at 105-106, 111); (11) charged a parking fee on Friday nights, but not on Saturday nights, (id. Ex. 1 at 45-46; Ex. 2 at 92-96, Ex. 4 at 44-45); and (12) provided inferior air conditioning on nights when the customers were predominately African-American, (id. Ex. 4 at 137). Plaintiffs allege that they have sustained damages in the forms of economic loss, humiliation, embarrassment, and mental and emotional distress. (Pl. Sec. Am. Compl. ¶ 29.)

  Plaintiffs describe their proposed class as: "all African American and Black patrons who were discriminated against by Defendants at any time from three years before the filing date of the complaint to the present (the "Class Period") who continue to be, or may in the future be adversely affected by Defendants' racially discriminatory and harassing policies and practices complained of herein (the "Class")."*fn5 (Doc. No. 74 at 37.) II. DISCUSSION

  The prerequisites for maintaining a class action are set forth in Fed.R.Civ.P. 23. To be certified, a class must satisfy the four prerequisites set forth in Rule 23(a), and must fit within at least one of the three categories of class actions in Rule 23(b). FED. R. CIV. P. 23; Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613-14 (1997). Rule 23(a) requires that "(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class." Plaintiffs claim that the proposed class meets all of the requirements of Rule 23(a), and that it fits within at least two of the three categories set forth in Rule 23(b). First, Plaintiffs claim that we may certify the class pursuant to Rule 23(b)(2), which permits certification when:

(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole. . . .
In the alternative, Plaintiffs ask that we certify the class pursuant to Rule 23(b)(3), which permits certification when:
(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.
  Plaintiffs bear the burden of proof to show that the requirements in Rules 23(a) and (b) are met. Davis v. Romney, 490 F.2d 1360, 1366 (3d Cir. 1974). "A class certification decision requires a thorough examination of the factual and legal allegations." Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 166 (3d Cir. 2001). When faced with "potentially cumbersome or frivolous" classes, Rule 23 grants district courts broad power and discretion in determining whether to certify a class and how to manage a certified class. Reiter v. Sonotone Corp., 442 U.S. 330, 345 (1979). However, when a court has doubts, it should ensure that "`any error, if there is to be one, should be committed in favor of allowing a class action.'" Eisenberg v. Gagnon, 766 F.2d 770, 785 (3d Cir. 1985) (quoting Kahan v. Rosenstiel, 424 F.2d 161, 169 (3d Cir. 1970)).

  We will deny Plaintiffs' motion for class certification because the class does not meet the requirements set forth in either Rules 23(b)(2) or (b)(3). We note that the statute of limitations on the class's claims have been tolled during the time this matter has been pending in this Court. McKowan Lowe & Co., Ltd. v. Jasmine, Ltd., 295 F.3d 380, 382 (3d Cir. 2002) ("[T]he filing of a class action complaint tolls the statute of limitations for all members of the putative class who, following the denial of certification, intervene or file an independent action.") (citing American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974)). Therefore, absent class members are not prejudiced by our ruling. While a court has discretion to redefine the class, Finberg v. Sullivan, 634 F.2d 50, 64 n. 9 (3d Cir. 1980), we decline to do so here because, as we explain below, the deficiencies in the instant petition cannot be cured by redefining the class. A. Rule 23(b)(2)

  Even if Plaintiffs' proposed class met the numerosity, commonality, typicality, and adequacy of representation requirements in Rule 23(a), we could not certify the class pursuant to Rule 23(b)(2) because Plaintiffs are not seeking primarily injunctive or declaratory relief. See Barnes v. American Tobacco Co., 161 F.3d 127, 142 (3d Cir. 1998) ("Subsection (b)(2) class actions are `limited to those class actions seeking primarily injunctive or corresponding declaratory relief.'") (quoting 1 NEWB ERG ON CLASS ACTIONS § 4.11, at 4-39). Plaintiffs filed their initial complaint in this matter on September 10, 1999. (Doc. No. 1.) However, on January 1, 1999, Defendants closed Quincy's, converting it into meeting room space. (Doc. No. 76 at 5 n. 2.) Moreover, each of the named Plaintiffs has testified that he or she has no interest in returning to the nightclub, even if it were still open. (Id. Ex. N.) Thus, there is no possibility that the named Plaintiffs will again be exposed to the discriminatory practices that allegedly occurred. There is also no possibility that future patrons will be subject to those alleged discriminatory practices so long as Quincy's remains closed. Under the circumstances, we cannot conclude that Plaintiffs filed this action seeking primarily injunctive relief.*fn6 See Glenn v. Daddy Rocks, Inc., 203 F.R.D. 425, 431 (D. Minn. 2001) (denying class certification under Rule 23(b)(2) in a case presenting similar facts). Accordingly, we cannot grant class certification under Rule 23(b)(2).*fn7 B. Rule 23(b)(3)

  In the alternative, Plaintiffs ask that we certify the class pursuant to Rule 23(b)(3). As we have explained, to obtain certification under Rule 23(b)(3), Plaintiffs must prove that the "questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." The purpose of the predominance inquiry is to test "whether the proposed classes are sufficiently cohesive to warrant adjudication by representation." Windsor, 521 U.S. at 623. The predominance requirement is more stringent than Rule 23(a)'s commonality requirement that the class members have a shared experience. Id. It focuses on whether the class members' shared legal and factual questions regarding liability are more numerous and more significant than those individual questions of each class member. Id. at 624.

  Several courts have commented on the difficulties in certifying a class action in a nonemployment civil rights case especially when, as here, the class members seek compensatory and punitive damages. See, e.g., Rutstein v. Avis Rent-A-Car Sys., Inc., 211 F.3d 1228, 1235 (11th Cir. 2000); Jackson v. Motel 6 Multipurpose, Inc., 130 F.3d 999, 1006 (11th Cir. 1997); Glenn v. Daddy Rocks, 203 F.R.D. 425, 429 (D. Minn. 2001); Gilliam v. HBE Corp., 204 F.R.D. 493, 498 (M.D. Fla. 2000) ("[C]ertification under Rule 23(b)(3) is inappropriate where, as here, class members in a civil rights case not involving employment discrimination seek compensatory and punitive damages."); cf. Allison, 151 F.3d at 419-20 (noting the difficulties in certifying a class of employees in a civil rights case who have individualized claims for damages); Barabin v. Aramark Corp., 210 F.R.D. 152, 162 (E.D. Pa. 2002) (same), aff'd, No. 02-8057, 2003 WL 355417 (3d Cir. Jan 24, 2003); Hygrade Food Prods., 198 F.R.D. at 644 (same). These courts have pointed out that to prove liability in non-employment civil rights cases, "the plaintiffs' claims will [often] require distinctly case-specific inquiries into the facts surrounding each alleged incident of discrimination." Motel 6, 130 F.3d at 1006. Such issues often predominate over the only issue arguably common to the class, namely, whether the defendant has a practice or policy of discrimination. Id. Furthermore, each member of the plaintiff class will have to prove that they suffered actual damages, raising yet another issue that must be determined on an individual basis. One court explained the problem with certifying a class action when the class members have individualized claims of damages:

Every member of the putative class seeks compensatory and punitive damages. The idea that proof of a policy or practice of discrimination could establish that every member of the class is entitled to such damages is, given the substantive elements of the underlying cause of action, untenable. Similarly, given that every member of the class will have to prove actual damage in order to receive compensation for their loss, the policy or practice issue cannot possibly predominate over all the other issues in the case that are necessarily capable of only individualized resolution.
Rutstein, 211 F.3d at 1241.

  We conclude that the problems outlined in the above cases are present in this case and preclude us from certifying the class pursuant to Rule 23(b)(3). First of all, Plaintiffs' claim that Defendants instituted a practice or policy of discouraging African-American individuals from patronizing Quincy's does not eliminate the need to examine the facts surrounding each alleged act of discrimination. Thus, even if the trier of fact concluded that Defendants employed a discriminatory policy, to find liability the trier of fact would still have to determine for each class member whether they were subject to that discriminatory policy. Even if Plaintiffs could prove that Defendants had a policy of collecting a parking fee only from African-American patrons, they would still have to establish which class members paid that fee. Similarly, even if Plaintiffs could prove that Defendants had a policy of serving African-American patrons watered-down drinks, they would still have to show which of the class members suffered the effects of that policy. Defendants would also be entitled to rebut any inference of discrimination by showing that an alleged act of discrimination was actually taken for reasons unrelated to race. See Rutstein, 211 F.3d at 1239. For example, there could be reasons why Defendants charged a parking fee only on certain nights that are unrelated to the alleged discriminatory policy. We could go on, but we think the point is made. Because the viability of each of the class member's claims would predominantly depend on a number of individual determinations, this case is not appropriate for certification pursuant to Rule 23(b)(3).

  When we consider that Plaintiffs seek to recover for the individual injuries of each class member, the problems in certifying this class pursuant to Rule 23(b)(3) become even more apparent. Each of the class members seeks recovery for economic loss, humiliation, embarrassment, and mental and emotional distress, as well as an award of punitive damages. As the court in Rutstein noted, claims for individual injuries in discrimination cases often raise individual issues that predominate over any common issues. See id. ("The idea that individual injury could be settled on a class-wide basis is preposterous. Plaintiffs' claims for damages must `focus almost entirely on facts and issues specific to individuals rather than the class as a whole: what kind of discrimination was each plaintiff subjected to[, and] how did it affect each plaintiff emotionally and physically, at work and at home.'") (quoting Allison, 151 F.3d at 419); Barabin, 210 F.R.D. at 162 (concluding that predominance requirement was not met because "[t]he circumstances under which [defendants'] acts of discrimination were committed and the resultant injuries are unique to each individual plaintiff. The plaintiffs' individual claims for damages would therefore require individualized evaluations and findings of the facts and defenses.") (footnote omitted); Hygrade Food Prods., 198 F.R.D. at 642 ("[C]alculating compensatory and punitive damages, as opposed to simply back pay, of 200 persons would prove to be quite an individualized task."). The same holds true in this case. Accordingly, we must also deny class certification pursuant to Rule 23(b)(3) because individual issues relating to damages will predominate over any common issues.

  Plaintiffs argue that the Supreme Court's decision in International Bhd. of Teamsters v. United States, 431 U.S. 324 (1977), compels a different result. We do not agree. Teamsters was a pattern or practice employment discrimination case brought by the government in which the government proved that "racial discrimination was the company's standard operating procedure — the regular rather than the unusual practice." Id. at 336. The Supreme Court further held that:

The proof of the pattern or practice supports an inference that any particular employment decision, during the period in which the discriminatory policy was in force, was made in pursuit of that policy. The Government need only show that an alleged individual discriminatee unsuccessfully applied for a job and therefore was a potential victim of the proved discrimination. . . . [T]he burden then rests on the employer to demonstrate that the individual applicant was denied an employment opportunity for lawful reasons.
Id. (citing Franks v. Bowman Transp. Co., 424 U.S. 747, 751 (1976)).*fn8 The Court envisioned that a pattern or practice discrimination trial could proceed in two stages. During the initial, "liability" stage, the burden is on the plaintiff to establish a prima facie case that a discriminatory policy exists. The burden then shifts to the defendant to rebut that prima facie showing. If the defendant fails to meet its burden, the court may conclude that a discriminatory act has occurred and determine an appropriate equitable remedy. See id. at 360-61. If individual relief is sought for the victims of the discriminatory policy, the trial moves to a second, "remedial" stage. During this stage, in an employment discrimination case, the individual class members need only show that they unsuccessfully applied for a job. The burden then shifts to the employer to show that the applicant was denied the employment opportunity for lawful reasons. Id. at 362. Importantly, the Court held that "individual proof concerning each class member's specific injury was appropriately left to proceedings to determine individual relief." Id. at 343 n. 24. Plaintiffs seize upon this language and argue that here, too, whether Defendants implemented a discriminatory policy can be determined on a class-wide basis, with the determination of each class member's specific injury left to later proceedings.

  As noted above, we are not persuaded by Plaintiffs' arguments. In Teamsters, the Court stated that "not all class actions will necessarily follow the Franks model. . . ." Teamsters, 431 U.S. at 360. The model worked well in Teamsters. There, the issues to be decided in the second, "remedial" stage were relatively few, namely (1) whether each class member unsuccessfully applied for a job, and if so, (2) whether the applicant was denied an employment opportunity for lawful reasons. In contrast, in this case, the issues requiring an individualized determination are more numerous: whether each class member paid a parking fee, received a watered-down drink, ate inferior food from the buffet, was ordered not to loiter in the hotel lobby, and so on. Furthermore, with respect to each alleged discriminatory act, it must be determined whether Defendants can negate any inference of discrimination by showing that they acted for lawful reasons. Also, in Teamsters, the issues relating to damages were relatively simple. Each class member in Teamsters sought an adjustment to his or her seniority status, which in turn affected their employee benefits. Here, however, each class member seeks, among other things, recovery for economic loss, humiliation, embarrassment, and mental and emotional distress. Thus, in this case, the determination of each class member's damages will involve a highly fact-specific and individualized determination that was not required in Teamsters. In sum, we conclude that this case is readily distinguishable from Teamsters and can not be certified pursuant to Rule 23(b)(3).*fn9 In addition, we fail to see how any of the obstacles to certification that we have outlined can be cured. Accordingly, we decline any attempt to fix these deficiencies by redefining the class.

  D. Plaintiffs' Request for Additional Discovery

  Finally, we address Plaintiffs' request that we delay our decision on class certification until Plaintiffs can conduct adequate class action discovery. We will decline Plaintiffs' request. The record in this case reveals that Plaintiffs have had the opportunity to conduct adequate discovery. Plaintiffs have taken at least thirty-four depositions. (Doc. No. 76, Ex. F ¶¶ 9-12.) In addition, Plaintiffs have received in excess of 10,890 pages of documents from Defendants in response to their document requests. (Id. ¶ 3.) Using these documents, Plaintiffs were able to point to evidence that Defendants instituted a discriminatory policy to discourage African-American individuals from patronizing Quincy's. In addition, we allowed Plaintiffs to obtain discovery from three of Defendants' twenty-three other hotels. After reviewing this discovery, Plaintiffs apparently decided to pursue their discrimination claims only on behalf of patrons of Quincy's. Under the circumstances, we reject Plaintiffs' claim that they have been denied adequate class action discovery. Accordingly, Plaintiffs' request for additional discovery is denied.

  III. CONCLUSION

  For all of the above reasons, we are compelled to conclude that Plaintiffs' proposed class does not meet the requirements in either Rules 23(b)(2) or (b)(3). Accordingly, we will deny Plaintiffs' motion for class certification.

  An appropriate Order follows. ORDER

  AND NOW, this ____ day of July, 2004, upon consideration of Plaintiffs' Motion for Class Certification (Doc. No. 74), and all papers filed in support thereof and opposition thereto, it is ORDERED that Plaintiffs' Motion is DENIED.

  IT IS SO ORDERED.


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