Law360, New York (June 26, 2015, 9:21 PM ET) By Daniel Siegal — The operators of Florida and Ohio strip club chain Scarlett’s Cabaret have agreed to pay up to $6 million to end a wage-and-hour class action brought by current and former exotic dancers, according to filings made in Florida federal court.
Named plaintiffs Adonay Encarnacion, Andrewa Wong, Rachel Stephenson and Brittney Roberts had alleged that Scarlett’s Cabaret operators J.W. Lee Inc., J.W. Lee Properties LLC, Ybor Operations LC and several related entities shorted them on their wages by unlawfully classifying them as independent contractors when they were actually employees.
Under the terms of the deal, outlined in an unopposed motion filed by the plaintiffs, the J.W. Lee entities will make the funds available to some 4,709 current and former “entertainers” who worked at the chain’s clubs — there are two in Florida, and one in Ohio — from December 2009 through February 2015.
Attorneys for the dancers said in their motion for preliminary settlement approval that the dancers alleged Scarlett’s violated the Fair Labor Standards Act and Florida and Ohio labor laws by not paying legally mandated minimum wages and overtime, but recognized that the club had several arguments against their claims that made the decision to settle a reasonable one.
“While plaintiffs believe that they would ultimately have defeated each of defendants’ aforementioned arguments, this would require significant factual development and favorable outcomes at trial and on appeal, regarding issues of first impression within the Eleventh Circuit, all of which is inherently uncertain and lengthy,” the motion states. “The proposed settlement alleviates this uncertainty.”
The settlement, which requires federal court approval, was reached after an all-day mediation in Fort Lauderdale, Florida, while the defendants were awaiting a response to their motion to compel arbitration, according to court filings.
The case is the latest example of exotic dancers taking on the adult entertainment industry and nightclub operators for what they claim has been standard industry practice of flouting basic worker protection statutes for dancers.
Clubs in New York, Louisiana, Arkansas, California and Nevada — including Las Vegas’ Sapphire Gentleman’s Club, billed as the world’s largest — have all faced lawsuits claiming they misclassified dancers.
In the case of Scarlett’s Cabaret, the dancers filed suit in August 2014, claiming in their operative amended complaint that the strip club had the power to hire and fire dancers, held auditions for them, required them to work certain numbers of days during the weeks and otherwise controlled their schedule, making the dancers employees, not contractors, under an “economic reality test.”
On Friday, the parties ended the suit, with the club maintaining in the settlement that the dancers were not misclassified as independent contractors, and contended that if they were in fact employees, the tips they received from patrons would be “service charges” that could be used to satisfy the wage and hour claims.
Representatives for the parties did not immediately respond to requests for comment on Friday.
The plaintiffs are represented by Andrew R. Frisch of Morgan & Morgan PA and Galvin B. Kennedy and Beatriz Sosa-Morris of Kennedy Law Firm LLP.
Scarlett’s Cabaret is represented by Benjamin E. Olive and Helaina Bardunias of Hackleman Olive & Judd PA.
The case is Adonay Encarnacion v. J.W. Lee Inc. et al., case number 0:14-cv-61927 in the U.S. District Court for the Southern District of Florida.
— Additional reporting by Matthew Bultman and Linda Chiem. Editing by Ben Guilfoy.