Two cases at the end of 2016 show that the Courts are continuing the trend in ruling against Gentlemen’s clubs. Moreover, the cases provide some fairly decent roadmaps of what to avoid when defending against wage and hour claims. Indeed, both cases cost the clubs an inordinate amount of money for the utter lack of success. The first case involves inaction by the gentlemen’s club sued with the result that the club now owes nearly six figures. The second case involves unnecessary attorneys fees incurred in filing a motion with no hope of success.
An Ignored Wage & Hour Lawsuit
The first case shows what happens when a gentlemen’s club simply tries ignoring the pending or active lawsuit. In Paige v. CD#15CL2001, Inc., which does business as X4B Luxury Club and Bazz & Crue Hall, the Court took everything the Plaintiff said as true and gave the Plaintiff almost everything she asked for. The two gentlemen’s clubs, both owned by CD#15CL2001, were served with the Complaint and simply ignored the case. The Court, in a very well thought out and articulated opinion, not only awarded damages, but also liquidated damages, and attorneys’ fees. The clubs now have a judgment against them in the amount of $73,440 plus attorneys’ fees and costs.
There are better ways to handle these cases than ignoring them. Often, Plaintiffs claim they worked 30-40 hours a week every week for a period of years. While it is unlikely that a Plaintiff actually showed up for every shift, worked a full shift, and never took time off, without evidence to the contrary the Court must take what the Plaintiff alleges as fact. Therefore, it is always a good idea to maintain accurate records, and have them available to produce if and when the gentlemen’s club gets sued. Producing these records has the effect of mitigating the damages claimed. This could result in substantial progress being made in any settlement discussions.
Knowing the actual hours worked, at least one court has recently held that a defendant may substantially mitigate attorney’s fees in a Fair Labor Standards Act, wage and hour case. Rule 68 of the Federal Rules of Civil Procedure provides that if an offer is made, and the proper language utilized in that offer, a plaintiff may not obtain attorneys’ fees incurred after the offer of judgment is made and rejected. However, the offer must contain specific language and offer all the relief demanded. In other words, if an offer of judgment is made under Rule 68 and it is rejected, if the Plaintiff does not recover in excess of that offer, post-offer attorneys’ fees may not be awarded. As such, an offer of judgment at the beginning of the litigation may result in significant reductions in litigation costs.
An Ill Conceived Motion to Dismiss
In a second case decided in December of 2016, the Court denied an ill-conceived Motion to Dismiss. In Stevens v. Oval Office, LLC, doing business as Oval Office Gentlemen’s Club, the Defendant attempted to claim that fines and fees were not deductions from wages because they were not used to recoup actual business losses, but rather a disciplinary issue. The Court stated, “[i]ndeed, Defendant’s construction makes no sense.” The Court went on to say Defendant’s argument was “patently unreasonable.” Perhaps most egregious, the Court stated,
The public policy goal of the statute is to prevent the employer from arbitrarily deducting hard earned wages at its prerogative. Defendants’ construction of the statute would run counter to this policy. It would allow employers to arbitrarily reduce their employees’ wages based on the employers’ subjective assessment of the quality of their work.
Clearly, the Court utterly rejected the defendants’ argument. Not only to the Court find the argument unpersuasive, but the Court found the arguments made no sense and were unreasonable on their face. However, the major downside to this decision is not that the defendant lost and the case allowed to continue, but rather that the defendant likely paid thousands of dollars for the Motion to Dismiss, which the Court dismissed in such a manner. The only benefit to this approach was to the law firm handling the case.
Defending Against Fair Labor Standards Act Wage & Hour Cases Involving Gentleman’s Clubs
These two cases, while very different, bring into focus two key points in defending against Fair Labor Standards Act wage and hour cases. The first point is that when a lawsuit is filed, hire counsel who can work with the gentlemen’s club to mitigate damages so that the club can continue in business. The second issue raised by these cases is that not any counsel is sufficient for these matters. It is important to hire the right counsel who will look to the long-term viability of the gentlemen’s club and come up with a solution to mitigate damages rather than increasing billable hours by filing motions the Court finds “patently unreasonable.”