United States: Sixth Circuit Affirms Complex Settlement Of FLSA Claims Involving Exotic Dancers

An FLSA collective action involving exotic dancers is brought in 2008 and settles in 2011. Five years later, the same attorneys file essentially the same case with many of the same dancers as class members against some of the same defendants. And one of those defendants has the name "Déjà vu." What are the odds?

Whatever the odds are, that's what happened in Jane Does 1-2 v. Déjà vu Consulting Inc., Case Nos. 17-1801/1802/1827 (6th Cir. June 3, 2019). And in addition to the naming coincidence, the case presents a number of issues of broader importance relating to class action settlement.

Numerous cases have been brought over the employment status of exotic dancers. Often, the dancers are characterized as independent contractors living off of tips paid by customers. Frequently, disputes arrive out of whether the degree of control exercised by the dance clubs is sufficient for them to become employees.  Related issues include entitlement to the minimum wage and challenges to various financial policies, such as tip sharing, mandated by the clubs. In many cases, the club will charge the dancers what is sometimes called a "stage fee" to perform. These were the issues in the first case, Doe v. Cin-Lan, Inc., Case No. 08-CV-12719 (E.D. Mich., July 15, 2011). That case settled in 2011 with the payment of money, but no requirement that the dancers be reclassified as employees.

In 2016, the same lawyers filed the same FLSA and related state law claims against many of the same defendants. That case involved over 28,000 potential class members nationwide. It, too, was settled, but under very different terms. First, of course, the settlement involved the payment of money, in this case a total sum of $6.55 million. Of that amount, a total of $5.5 million was attributed to one of two settlement funds, and $900,000 went directly toward attorney fees. The class members' entitled to amounts from the settlement funds depended on whether the individuals accepted only a cash payment, or whether they participated in a larger "credit" scheme that would result in more funds being paid for work in the future. These credits could be used to offset the "rent" or "stage fee" the dancers had to pay or to earn additional "dance fees." The two funds were subject to various formulas, caps and requirements, and permitted up to an additional $300,000 to be paid from the larger fund to the attorneys to encourage them to urge participation in the "credit" pool.

To avoid what would likely have been (and may still be) yet another suit, the settlement also created a mechanism to evaluate the independent contractor or employment status of each dancer. Central to this mechanism was the use of an "Entertainer Assessment Form". The agreement also laid out additional sums to be paid to class members, such as a 20% commission on drinks the dancers persuaded customers to buy for them.

About 19% of the class opted in to the settlement. Fewer than 0.2% opted out of the settlement, and there were only six objections. The district court approved the settlement over the objections, and four of the objectors appealed.

In a 2:1 decision, the Sixth Circuit approved the settlement. It noted difficulties the plaintiffs would have had in prosecuting their claims based on genuine questions about whether they could prove employment status, questions about the available damages and the impact of arbitration agreements the defendants had implemented. It similarly rejected challenges to the attorney fees, and specifically found that a "clear sailing provision" under which the defendant agreed not to oppose an attorney fee award was not per se illegal.

We don't usually discuss dissents, but the one here raised the interesting question of whether participation in the larger credit pool of $4.5 million made the agreement a "coupon settlement" as contemplated by the Class Action Fairness Act (CAFA), 28 U.S.C. 1712. While the dissent agreed that the attorneys were entitled to a fee, it would have remanded to recalculate the fee based on the actual value of the pool to the class members.

While the case involves a colorful subject matter, it does reveal several things. First, we are increasingly seeing repeat litigation when the policies or structures that lead to a first lawsuit are not changed, or are minimally changed, resulting in later copycat lawsuits, as happened here. Second, objections to FLSA settlements are relatively infrequent, but the parties in the Déjà vu litigation did their homework and were able to defend their settlement to the satisfaction of both the district court and the court of appeals. Third, while the settlement here had innovative components, those can create their own issues, as shown by the dissent's ultimate concern over the application of CAFA's coupon settlement rules.

The bottom line: Settlement of a wage and hour suit may not be the end if the underlying employment policies remain the same. Even creative changes my entail their own litigation risks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions