Exotic Dancers Get Class Cert. In Texas Wages Suit

This article came out in Law360 just before the Fifth Circuit Court of Appeals issued the Swales opinion, which requires some legwork in discovery before certification. So, we have to do a little more work. That’s what we do every day. I expect the coverage of the court’s ruling on our renewed motion for notice/certification to look very similar.

Exotic Dancers Get Class Cert. In Texas Wages Suit

By Michael Joe · October 28, 2020, 10:43 PM EDT

Exotic dancers suing the strip club they say misclassified them as independent contractors and failed to pay hourly wages got their collective action conditionally certified by a Texas federal judge, despite the fact that the dancers had signed arbitration agreements.

U.S. Magistrate Judge Andrew M. Edison, in an order Tuesday, addressed whether there are situations in which potential collective members who signed binding arbitration agreements can receive notice of a pending collective action.

According to Judge Edison, because the club’s operator and owners have not moved to compel arbitration, and the underlying arbitration agreement only waives the dancers’ right to pursue a class action, their collective action under the Fair Labor Standards Act can move to the opt-in notice phase.

“In short, I find nothing in the independent contractor/license agreement that indicates that the signatories agreed to waive their right to proceed collectively,” Judge Edison wrote.

He added, “Granted, it is going to be the rare case in which a district court issues notice to a group of plaintiffs who have executed agreements calling for arbitration. But this is one of those atypical cases. Although the plaintiffs have executed arbitration agreements, defendants have not moved to compel arbitration. That is their choice.”

Judge Edison said a Fifth Circuit Court of Appeals ruling last year in In re: JPMorgan Chase gives guidance on whether district courts can give written notice of a pending FLSA collective action to potential members who signed binding arbitration agreements.

Judge Edison noted the Fifth Circuit panel held that trial courts “may not send notices to an employee with valid arbitration agreements unless the record shows that nothing in the agreement would prohibit that employee from participating in the collective action.”

“Had the Fifth Circuit meant to simply say that notice may not be sent to an individual with a valid arbitration agreement, it could have easily done so,” Judge Edison wrote. “Instead, it carefully explained that there are limited situations in which a putative class member who signed an arbitration agreement may receive notice of a collective action.”

Judge Edison added that the Fifth Circuit recently reaffirmed its principle in In re: Sipros Partners, Ltd., which also addressed the issue of arbitration agreements in collective actions involving exotic dancers.

In recent years, dancers at strip clubs have filed similar suits across the nation alleging they were misclassified as independent contractors to deny them employee rights under the FLSA.

Stacey Kibodeaux, lead plaintiff in the instant suit, worked five eight-hour shifts a week at Heartbreakers Gentleman’s Club in Dickinson, Texas, where the club tracked the number of dances they performed, set prices for dances and controlled when and how they were expected to perform, according to her complaint.

She also said that she and other dancers did not receive hourly wages, only tips, and that they were required to pay a house fee to work a shift, tip out to disc jockeys and bartenders and stay past their shifts off the clock.

Kibodeaux’s suit was joined by three other former dancers, Hailey Chapman, Jean Hoffmeister and Roxanne Murillo.

The dancers claim violations of FLSA statutes against failure to pay minimum and overtime wages and unlawful taking of tips and of federal regulations barring Illegal kickbacks and forced tipping.

They seek to represent a collective of potentially hundreds of current and former dancers who worked at Heartbreakers in the last three years prior to the filing of the suit, according to their counsel, Jarrett L. Ellzey.

“We believe Judge Edison made the correct ruling on this matter, and his thoughtful opinion reveals it was well-reasoned and stands on solid legal ground. This decision will ensure the FLSA properly applies to employees similarly situated to plaintiffs in the future,” Ellzey told Law360 on Wednesday.

The club’s owners, Mike A. Armstrong and Peggy A. Armstrong, were also named in the suit.

Counsel for Heartbreakers and the Armstrongs did not immediately return a request for comment.

The dancers are represented by Jarrett Lee Ellzey, Leigh S. Montgomery and William Craft Hughes of Hughes Ellzey LLP and Jesenia A Martinez of Kristensen LLP

A&D Interests Inc. and Mike and Peggy Armstrong are represented by Casey T. Wallace and William Xander King of Wallace & Allen LLP.

The case is Kibodeaux et al. v. A&D Interests, Inc. et al., case number 3:20-cv-00008, in U.S District Court for the Southern District of Texas.