City of Industry Strippers Win $6.5-Million Class-Action Suit over Club Fees

Friday, May 01, 2015

The tiny 12-square-mile City of Industry in Los Angeles County is famously home to a multitude of businesses and fewer than 400 residents, fitting for a town that is zoned 92% industrial and 8% commercial.

Companies with a hefty footprint there include FedEx, Alta Dena, DirecTV, Hot Topic, Yum-Yum Donuts, Health One Pharmaceuticals, Micro-Star International and a bunch of strip clubs, including Miss Kitty’s, Hawaii Theater, Bliss Showgirls, Déjà Vu Showgirls, Monarch’s Gentlemen’s Club, Satin Gentlemen’s Club, Synn Gentlemen’s Club, Spearmint Rhino and Paradise Show Girls.

Last week, one of the clubs was punished for behavior that may reflect badly on the strip club community.

A Los Angeles County Superior Court jury awarded 249 exotic dancers at Paradise Show Girls $6.5 million as compensation for lost wages. The class-action lawsuit alleged that the girls were employees, not independent contractors, and were illegally forced to fork over a portion of their earnings to the club. That is generally called wage theft.

The club claimed that it was due a percentage of tips received by the dancers to cover rent, staffing, security and advertising. “It's just like renting stage time,” club attorney Ernest Francheschi told ABC Los Angeles. “We operate kind of like a theatre, so that's what it is.”

The judge and jury disagreed. The law allows dancers to keep all the tip money handed to them by customers. “Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for,” according to the state labor code. “No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages.”

Some of the jurors said afterward that they sympathized with the argument about the girls having to pay rent, but the law was clear. “They didn't have a contract that would say that they had to pay the rent,” juror Linda Robbins told Laist. “Because there were contracts missing, that made it very difficult to prove anything.”

Francheschi told the Los Angeles Times that the club would take $14 out of a dancer’s $40 fee for a lap dance, and $100 out of a $300 fee for a “VIP” dance in a private room.

Last November, U.S. District Judge Paul Engelmayer in New York awarded $10.9 million to 2,000 dancers who were unfairly classified as contractors. The dancers worked at Rick’s Cabaret in Manhattan since 2005. The dancers asked for $18.8 million, and the judge said the balance could be adjudicated down the road.

Englemayer said he determined the girls were employees because they had to obey the club’s rules and couldn’t make independent decisions about their job.

The jury awarded the Paradise dancers half the $13.1 million they sought, according to Francheschi, who said the club would appeal the verdict.

–Ken Broder


To Learn More:

Jury Awards $6.5 Million to Strippers in City of Industry Club Lawsuit (by Robert Holguin, ABC Los Angeles)

California Strippers Win $6.5M Payout in Private Dance Tip Dispute (by Lee Moran, New York Daily News)

Jury Awards $6.5 Million to Exotic Dancers over Tip Dispute (by Veronica Rocha, Los Angeles Times)

Attorney: Strip Club Should Pay Strippers $13.1M for Alleged Tip Theft (City News Service)

Audit Questions Why Tiny City of Industry Paid Ex-Mayor’s Companies $326 Million (by Ken Broder, AllGov California)

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