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Hogan v. Cleveland Ave Restaurant Inc.

United States District Court, S.D. Ohio, Eastern Division

December 10, 2019

JESSICA HOGAN, et al., Plaintiffs,
v.
CLEVELAND AVE RESTAURANT INC. d/b/a SIRENS, et al., Defendants.

          Deavers Magistrate Judge

          OPINION & ORDER

          ALGENON L. MARBLEY CHIEF UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This matter is before the Court on Plaintiff's Motion for Preliminary Approval of Class Action Settlement (ECF No. 223), Defendant's Separate Motion for Preliminary Approval of Class Action Settlement (ECF No. 228), a Joint Motion for Leave to File Under Seal Class Member Claim Distribution Protocol (ECF No. 224), and Plaintiff's Unopposed Motion to File the Parties' Joint Proposed Claim Form for Entertainer Subclass Members (ECF No. 225). For the reasons stated below, the Court GRANTS all four motions.

         II. BACKGROUND

         The Court incorporates the relevant background facts and settlement terms set forth in Plaintiff's Motion, which read as follows[1]:

2. Background of the Lawsuit and Claims
2.2. The Parties
Sirens is a Columbus-area strip club. Plaintiffs allege that the individual defendants (Chad Sullivan, Francis Sharrak, Michael Sharrak, Dominick Alkammo, and Jay Nelson) are Sirens' owners, managers, or other individual “employers, ” as defined by wage and hour laws. Jessica Hogan is a former Sirens bartender. She also occasionally worked there as an exotic dancer. Ms. Hogan worked at Sirens from approximately August 2013 until June 10, 2015. DeJha Valentine is a former Sirens exotic dancer. She worked at Sirens from approximately October 2015 until the summer of 2017.
2.3. The Claims at Issue
Plaintiffs bring claims on behalf of two subclasses of Sirens' workers- bartenders and entertainers. Each subclass has separate claims.
2.3.1. Bartender Claims
Plaintiff Jessica Hogan brings several claims on behalf of herself and similarly situated bartenders. First, she alleges that Sirens overcharged the bartenders to process credit card tips. Specifically, Hogan alleges that Sirens paid approximately a fee of 2-5% to process credit card tips, but Sirens kept 10% of all of the bartenders' credit card tips. See Amended Complaint, Doc. 74, ¶ 56; Amended Answer, Doc. 100, ¶ 56(a); Nelson Dep., p. 66. Second, Hogan alleges that Sirens required bartenders who performed three or more dances in a night to tip out non-tipped employees, including security guards and disc jockeys. See Amended Complaint, Doc. 74, ¶ 56. Third, Hogan alleges that Sirens required bartenders to use their tips to pay Sirens for any drawer shortages or overages. See Amended Complaint, Doc. 74, ¶ 56. Fourth, Hogan alleges that Sirens required bartenders to purchase uniforms and outfits to work at the club, id., and that because Sirens paid the bartenders tipped minimum wage, these purchases necessarily dropped the bartenders' wages below minimum wage. See 29 C.F.R. 531.35. Fifth, Hogan alleges that Sirens required bartenders to attend mandatory, unpaid company meetings. See Amended Complaint, Doc. 74, ¶ 56.
Plaintiffs contend that the first three pay policies violate the FLSA's “tip credit” requirements, see 29 U.S.C. 203(m), and that if Hogan proved any one of these violations, she and her fellow bartenders would be entitled to the difference between full minimum wage and the tipped minimum wage that Sirens paid. If Hogan proved that Sirens unlawfully required her and other bartenders to purchase uniforms, Sirens could be liable for the cost of the uniforms. Finally, if Hogan proved that Sirens required employees to work off-the-clock by attending mandatory, unpaid company meetings, Sirens would be liable for those unpaid wages. Both the FLSA and Ohio law allow prevailing workers to also recover additional damages and attorney's fees.
2.3.2. Entertainer Wage Claims
Both Plaintiffs bring straightforward claims on behalf of Sirens' entertainers. Instead of the club paying the entertainers to work there, it is undisputed that the 2 club charged entertainers various fees and “rent” to work at Sirens.2 Like many clubs in Ohio, Sirens enshrined this practice in a document called a “lease agreement” and referred to the practice as the “tenant system” or the “entertainer tenant system.”
Although the lease agreement outlines Sirens' pay practices, it is the practices, not the agreement itself, that give rise to Plaintiffs' claims. In other words, Plaintiffs contend it does not matter whether someone signed the agreement. What matters, they contend, is that a woman worked for Sirens and was not paid for her work-a policy Sirens concedes that it applied to all entertainers. See, e.g., Sirens 30(b)(6) dep., pp. 58, 60-62, 69-70. Sirens also applied these practices to employees who occasionally danced, like Plaintiff Jessica Hogan. Id., at pp. 116-120.
Like other clubs that employ this practice, Sirens' defense is that the entertainers are “tenants, ” not employees. Plaintiffs counter that, nearly without exception, “courts have found an employment relationship and required the nightclub to pay its dancers a minimum wage.'” Hart v. Rick's Cabaret Int'l, Inc., 967 F.Supp.2d 901, 912 (S.D.N.Y. 2013). If Plaintiffs proved that Sirens' practices violated the law, the entertainers would be entitled to full minimum wage for every hour they worked, plus additional FLSA and Ohio law damages, attorney's fees, and costs.
2.3.3. Entertainer Spoliation and Sanctions Claims
A subclass of entertainers also raised spoliation claims against Sirens. Plaintiffs raised those claims in two contexts, sanctions and the Ohio tort of spoliation. The Court already granted Plaintiffs' sanctions request, see Doc. 165, which the Sirens Defendants moved to reconsider. The spoliation claim would be left for trial or summary judgment, absent the settlement. Although no specific monetary allocation is made for these claims, they will be released by this settlement.
. . . .
2.4 Summary of Settlement Terms
This settlement encompasses both monetary and non-monetary relief for the entertainer subclass. Defendants purport to have fixed their pay practices with respect to the bartenders, so the Agreement provides the bartenders with only monetary relief.
2.4.1 Monetary Terms
Sirens has agreed to pay a total of $600, 000 to settle Plaintiffs' claims. See Agreement § 3. This amount is inclusive of fees, service awards, and most costs. Id. Note that the discussion below on the money allocated to bartenders and dancers is prior to the deductions for fees, expenses, and service awards. Before delving into how the money is divided and distributed under the Settlement Agreement, it is necessary to address the amount of the settlement fund. Plaintiffs contend that Sirens paid the vast majority of its workers nothing for the relevant time frame, about 6.5 years. Payroll records for entertainers do not exist, thus, Plaintiffs are left to guess at the potential damages. Still, Plaintiffs contend this might provide a reasonable estimate:
20 entertainers at any one time × 20 hours worked per week per entertainer × 52 weeks per year × 6.5 years × approximate minimum wage of $8.20 = $1, 108, 640 in unpaid wages
The damages do not stop there, however, because Ohio wage law (Art. II, Sec. 34a) and the FLSA impose additional multipliers on unpaid wages. If combined, Plaintiffs contend that those multipliers would add another $3, 325, 920 in liquidated/additional damages and that Ohio's Prompt Pay Act could add even more ($200 per person per pay period). Plaintiffs' antitrust claims also include damages multipliers. None of this accounts for the fees and rent Plaintiffs and the Entertainer Subclass members paid to Defendants, which would act as a negative wage and, thus, would also be recoverable (with FLSA/Ohio ...

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