Strip Club Can’t Force Arbitration on Dancers

MIAMI (CN) - A strip club cannot compel its dancers to engage in arbitration over their claims they are being paid less than minimum wage, a federal magistrate ruled.

Exotic dancers at the King of Diamonds Gentlemen's Clubs in Miami filed a collective Fair Labor Standards Act case against their employer in April 2014, claiming the club and its affiliates refused "to pay the minimum wages and overtime compensation to the dancers-entertainers they employ."

After the class action was filed, the club's owners began requiring all prospective dancers to sign arbitration agreements before they would be hired. It also asked current employees to sign the agreements. Four plaintiffs did so.

Later, King of Diamonds filed a motion to compel arbitration, a motion the dancers opposed on the grounds that its filing was an "impermissible attempt to interfere with the proposed class."

U.S. Magistrate Judge Jonathan Goodman sided with the dancers, holding that King of Diamond's arbitration policy, "was clearly coercive and admittedly designed to undermine this litigation."

In explaining the rationale behind this conclusion, Goodman pointed out that the defendants "unequivocally" admitted that they imposed the arbitration requirement after the dancers' lawsuit was filed, and was done so to "dissuade entertainers from participating in this civil action."

"Based on the testimony of the witnesses at the evidentiary hearing ... including the confirmation from named Plaintiffs who refused to sign the agreement that they were, in fact, no longer provided the opportunity to work ... Defendants did in fact make the signing of the subject arbitration agreement a condition of continuing employment."

This, Goodman said, did make the defendants' action "coercive" and "abusive."

Attorney Harlan Miller, who represents the plaintiffs class, told Courthouse News that Goodman's decision is great news for people who find themselves with mandatory arbitration agreements.

"It speaks to all people who are fired and face mandatory arbitration. It's fundamental fairness. The judge did a great job explaining his rational," Miller said.

A representative of King Of Diamonds declined to comment on the decision, as did the club's attorney, Dean Fuchs of Schulten, Ward & Turner in Atlanta.

"Unfortunately I'm not in the habit of commenting on active cases, particularly before we've had the chance to appeal," Fuchs said.

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