Tassy v. Lindsay Entertainment Enterprises, Inc.
Filing
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MEMORANDUM OPINION & ORDER denying 18 Motion to Strike ; Telephone Conference set for 7/22/2016 at 10:30 AM before Senior Judge Thomas B. Russell. Signed by Senior Judge Thomas B. Russell on 7/8/2016. cc: Counsel(KJA)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:16-CV-00077-TBR
GLORIA TASSY, individually and on
behalf of all similarly situated,
Plaintiff,
v.
LINDSAY ENTERTAINMENT
ENTERPRISES, INC.,
Defendant.
MEMORANDUM OPINION AND ORDER
Gloria Tassy, individually and on behalf of all other similarly-situated persons,
filed this action against Lindsay Entertainment Enterprises, Inc. in an effort to recover
unpaid minimum wages, a violation of the Fair Labor Standards Act of 1938 (FLSA), ch.
676, § 6(a), 52 Stat. 1060, 1062–63 (codified as amended at 29 U.S.C. § 206(a)). Now,
Lindsay Entertainment Enterprises seeks to stay these proceedings pending arbitration
pursuant to the parties’ written agreement and the Federal Arbitration Act (FAA), 9
U.S.C. § 3. Because there are disputed questions of fact concerning the formation of that
agreement, however, the Court SHALL hold an evidentiary hearing before resolving
Lindsay Entertainment Enterprises’ request.
I.
A.
Lindsay Entertainment Enterprises, Inc. operates The Godfather, a gentleman’s
club in Louisville, Kentucky. R. 1 at 1, ¶¶ 1–2 (Complaint). The Godfather employees a
number people, including “wait staff, bartenders, security personnel and kitchen staff,” to
provide food, drink, and music to its patrons “in an adult setting.” R. 9-2 at 1, ¶ 2
(Lindsay’s Declaration); see also R. 1 at 3, ¶¶ 27–28. The “main attraction” at The
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Godfather, though, remains its many “dancers,” R. 1 at 3, ¶ 29, among them Gloria “Mia”
Tassy, id. at 1, ¶¶ 1–3.
Tassy worked as a dancer at The Godfather from May 2014 to January 2016. Id.
During that time, she says, Lindsay Entertainment Enterprises never paid her a “direct
wage.” Id., ¶ 5. Instead, she and other dancers worked for tips, id., ¶ 6, less Lindsay
Entertainment Enterprises’ cut, id. at 1, 4, ¶¶ 7, 35.
While Tassy considered herself to be an employee at The Godfather, see id. at 2, ¶
16, Lindsay Entertainment Enterprises classified her and other dancers as independent
contractors, see R. 9-2 at 1, ¶ 3. According to Douglas “Scott” Lindsay, the President
and Chief Executive Officer of Lindsay Entertainment Enterprises, id., ¶ 1, dancers
“lease” space at The Godfather “to offer personal dances, entertainment and personal
conversations to individual customers,” id., ¶ 3. In exchange for that access, dancers pay
a fee to Lindsay Entertainment Enterprises. Id.
Lindsay Entertainment Enterprises requires, without exception, all dancers to sign
a preprinted Entertainment Lease to that effect. See id. at 2, ¶ 4. The Entertainment
Lease includes, in pertinent part, the following provision:
EXCEPT FOR ANY ADMINISTRATIVE PROCEEDINGS
THAT ARE NOT LEGALLY BARRED BY THIS PARAGRAPH,
ANY CONTROVERSY, DISPUTE, OR CLAIM ARISING OUT OF
THIS LEASE OR RELATING IN ANY WAY TO ENTERTAINER
PERFORMING AND/OR WORKING AT THE CLUB AT ANY
TIME (IN THIS PARAGRAPH 21, COLLECTIVELY “CLAIM”),
WHETHER CONTRACTUAL, IN TORT, OR BASED UPON
COMMON LAW OR STATUTE, SHALL BE EXCLUSIVELY
DECIDED BY BINDING ARBITRATION HELD PURSUANT TO
THE FEDERAL ARBITRATION ACT (THE “F.A.A.”). . . . THE
PARTIES WAIVE ANY RIGHT TO LITIGATE SUCH CLAIMS IN
A COURT OF LAW, AND WAIVE THE RIGHT TO TRIAL BY
JURY. . . .
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ENTERTAINER AND THE CLUB AGREE THAT ANY AND
ALL CLAIMS SHALL BE BROUGHT AND MAINTAINED
INDIVIDUALLY; THAT THEY WILL NOT CONSOLIDATE
THEIR CLAIMS WITH THOSE OF ANY OTHER PERSON OR
ENTITY, THAT THEY WILL NOT SEEK CLASS OR
COLLECTIVE ACTION TREATMENT FOR ANY CLAIM; AND
THAT THEY WILL NOT PARTICIPATE IN ANY CLASS OR
COLLECTIVE ACTION AGAINST THE OTHER.
Id. at 7, ¶ 21.A–B (Entertainment Lease). “If [a dancer] does not want to agree” to the
Entertainment Lease, Scott Lindsay says, “she is free to do so, but she is not allowed to
provide personal entertainment at [The Godfather].” Id. at 2, ¶ 5; see also R. 13-1 at 1–2,
¶ 3 (Sloss’s Declaration).
It unclear, however, whether Tassy signed a copy of the Entertainment Lease
during her time at The Godfather. Scott Lindsay and Tammy Sloss, a waitress (and
former dancer), claim to have witnessed her sign the Entertainment Lease, see R. 9-2 at 2,
¶ 5; R. 13-1 at 1-2, ¶¶ 1–2, 5, but Tassy has denied ever seeing or receiving a copy of the
Entertainment Lease prior to bringing this action, see R. 17-1 at 3, ¶¶ 22–24 (Tassy’s
Declaration). Lindsay Entertainment Enterprises concedes its inability to produce an
executed copy. See R. 13 at 4 (Reply in Support of Motion for Stay Pending Arbitration).
B.
Gloria Tassy, on behalf of herself and all others similarly situated, filed this action
against Lindsay Entertainment Enterprises, Inc. seeking to recover unpaid minimum
wages, a violation of the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 206(a).
See R. 1 at 1, ¶ 1. She asks the Court to conditionally certify a class of current and
former dancers who worked at The Godfather, to approve notice to advise putative class
members of their rights under the FLSA, and to furnish them an opportunity to opt-in to
this action pursuant to 29 U.S.C. § 216(b). See R. 5 at 17–18 (Motion for Conditional
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Certification and Notice). In lieu of a response to Tassy’s motion, Lindsay Entertainment
Enterprises seeks to stay this proceeding pending arbitration under the Federal
Arbitration Act (FAA), 9 U.S.C. § 3.
See R. 9 at 1 (Motion for Stay Pending
Arbitration).
II.
The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1–16, “embodies [a] national
policy favoring arbitration and places arbitration agreements on equal footing with all
other contracts.” Richmond Health Facilities v. Nichols, 811 F.3d 192, 195 (6th Cir.
2016) (quoting Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d 967, 972 (6th Cir.
2007)). Under the Act, a written agreement to arbitrate disputes arising out of a contract
or transaction “shall be valid, irrevocable, and enforceable, save upon such grounds as
exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. There are “two
parallel devices for enforcing an arbitration agreement: a stay of litigation in any case
raising a dispute referable to arbitration, 9 U.S.C. § 3, and an affirmative order to engage
in arbitration, § 4.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
22 (1983).
Before granting a stay under 9 U.S.C. § 3, the Court “must engage in a limited
review to determine whether the dispute is arbitrable,” meaning “[1] that a valid
agreement to arbitrate exists between the parties and [2] that the specific dispute falls
within the substantive scope of the agreement.” Richmond Health Facilities, 811 F.3d at
195 (quoting Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003)); see
also Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 627 (6th Cir. 2004).
In
performing its task, the Court approaches factual questions as it would at the summary
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judgment stage. See Great Earth Cos. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002);
Yaroma v. Cashcall, Inc., 130 F. Supp. 3d 1055, 1062 (E.D. Ky. 2015). If the Court is
satisfied that the parties formed a valid agreement to arbitrate, it must stay litigation
involving such a dispute until the parties resolve it in the contracted-for manner. See 9
U.S.C. § 3. If there are disputed questions of fact concerning the formation of such an
agreement, then the Court should hold an evidentiary hearing to resolve the question. See
Todd v. Oppenheimer & Co., 78 F.R.D. 415, 425 (S.D.N.Y. 1978); Marshall v. Green
Giant Co., No. 4-83-578, 1985 WL 2458, at *2–3 (D. Minn. Aug. 7, 1985); cf. Commerce
Park at DFW Freeport v. Mardian Constr. Co., 729 F.2d 334, 340 (5th Cir. 1984)
(holding no evidentiary hearing to be necessary in the absence of “disputed factual
questions going to the legal issue of arbitrability”).
III.
In this case, there is no dispute about the scope of the arbitration provision.
Instead, the principal issue is whether a valid agreement to arbitrate exists in the first
place.1 Because arbitration agreements are, in essence, contracts, Kentucky law guides
the Court’s inquiry into the question of contract formation. See Arthur Andersen LLP v.
Carlisle, 556 U.S. 624, 630–31 (2009); Seawright, 507 F.3d at 972. In Kentucky, like in
all jurisdictions, a contract is enforceable only if both parties agree to be bound by it. See
Ally Cat, LLC v. Chauvin, 274 S.W.3d 451, 456 (Ky. 2009) (citing Courtney Shoe Co. v.
E.W. Curd & Son, 134 S.W. 146 (Ky. 1911); Henry Clay Fire Ins. v. Denker’s Ex’x, 290
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Gloria Tassy makes two other alternative arguments. First, she asserts that the unexecuted
Entertainment Lease (including the arbitration clause) is unenforceable in light of Kentucky’s codification
of the Statute of Frauds, Ky. Rev. Stat. § 371.010. See R. 10 at 5–6 (Response to Motion for Stay Pending
Arbitration). Second, she stresses that the arbitration provision in the Entertainment Lease is illegal since it
prohibits an arbitrator from presiding over a collective action. See R. 21 at 4–5 (Response to Motion to
Strike) (discussing Lewis v. Epic Sys. Corp., ––– F.3d –––, 2016 WL 3029464 (7th Cir. 2016)). Because
both points depend upon whether Tassy manifested her assent to the Entertainment Lease, the Court
reserves passing judgment on them for another day.
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S.W. 1047 (Ky. 1927)). Typically, contracting parties “manifest their agreement by
signing the contract.” Braxton v. O’Charley’s Rest. Props., LLC, 1 F. Supp. 3d 722, 726
(W.D. Ky. 2014).
Yet, Kentucky courts will still enforce “unsigned arbitration
agreements where the parties have indicated acceptance of the contract through their
actions.” Id. (quoting Polly v. Affiliated Comput. Servs., Inc., No. 10-135-ART, 2011
WL 93715, at *2 (E.D. Ky. Jan. 11, 2011)).
Here, Tassy maintains, in essence, that she never signed the Entertainment Lease
or otherwise agreed to arbitrate any dispute with Lindsay Entertainment Enterprises. See
R. 10 at 2, 5–6 (Response to Motion for Stay Pending Arbitration); R. 17 at 1 (Demand
for Jury Trial); R. 21 at 4 (Response to Motion to Strike).
According to Lindsay
Entertainment Enterprises, though, Tassy indicated her acceptance of the Entertainment
Lease as a matter of law by her signature and through her conduct. See R. 9-1 at 6
(Memorandum in Support of Motion for Stay Pending Arbitration); R. 13 at 2–4; R. 18 at
3–5 (Motion to Strike). Viewing the sparse record in the light most favorable to Tassy,
the Court finds a genuine dispute of material fact concerning whether Tassy manifested
her assent to the Entertainment Lease and its arbitration provision. Accordingly, the
Court must conduct an evidentiary hearing before resolving Lindsay Entertainment
Enterprises’ motion.
A.
Contrary to Lindsay Entertainment Enterprises’ suggestion, see R. 13 at 3, it is far
from undisputed that Tassy signed the Entertainment Lease.
The copy of the
Entertainment Lease attached to Lindsay Entertainment Enterprises’ papers is not signed
by Tassy or, for that matter, by a representative of Lindsay Entertainment Enterprises,
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despite the presence of blank “signature blocks” for both. See R. 9-2 at 9. Though
Lindsay Entertainment Enterprises concedes that no executed copy of the Entertainment
Lease is still around, see R. 13 at 4, it offers no further explanation on that point. The
omission is at least “curious, seeing as it ‘is the custodian of such records.’” Stearman v.
Ferro Coals, Inc., No. 3:15-CV-31-DJH-DW, 2015 U.S. Dist. LEXIS 121768, at *7
(W.D. Ky. Sept. 14, 2015); see also McNair v. Monsanto Co., 279 F. Supp. 2d 1290,
1303–05 (M.D. Ga. 2003) (observing that such contracts “should be a part of the
[d]efendant[’s] business records and contain a valid signature”).
The closest Lindsay Entertainment Enterprises comes to demonstrating Tassy’s
assent is through the sworn statements of Scott Lindsay and Tammy Sloss, each of whom
claim to have witnessed her execute the Entertainment Lease in May 2014. See R. 9-2 at
2, ¶ 6; R. 13-1 at 2, ¶ 5. Yet, Tassy swears she had not seen or received a copy of the
Entertainment Lease prior to bringing this action. See R. 17-1 at 3, ¶¶ 23–24. Though
she has not explicitly denied signing the Entertainment Lease, see R. 18 at 3–5, viewing
the record in the light most favorable to her, such is a reasonable inference to draw. In
short, Tassy’s unequivocal denial raises a genuine issue of material fact as to whether she
signed the Entertainment Lease. See Braxton, 1 F. Supp. 3d at 727.
B.
Even without a signature, though, Lindsay Entertainment Enterprises argues that
Tassy’s actions signal her assent to the Entertainment Lease and its arbitration provision.
See R. 13 at 3–4; R. 18 at 4–5. To be sure, parties can bind themselves to a contract,
even absent a signature, through actions indicating acceptance of the contract’s terms.
See Spears v. Carhartt, Inc., 215 S.W.3d 1, 9 (Ky. 2006); Braxton, 1 F. Supp. 3d at 727–
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28; Aldrich v. Univ. of Phoenix, Inc., No. 3:15-CV-00578-JHM, 2016 WL 915287, at *9–
10 (W.D. Ky. Mar. 4, 2016), appeal docketed, No. 16-5276 (6th Cir. Mar. 10, 2016). The
question, therefore, becomes whether Tassy’s conduct evidenced her acceptance of the
Entertainment Lease. The record reveals no conclusive answer.
There is no dispute that Tassy performed at The Godfather. See R. 1 at 1, ¶ 3.
True enough, Scott Lindsay testified that, “without exception,” all dancers must sign the
Entertainment Lease as a precondition to providing “personal entertainment” services
there, R. 9-2 at 2, ¶¶ 4–5, a practice Tammy Sloss confirmed too, see R. 13-1 at 1–2, ¶ 3.
It is possible, then, that by performing at The Godfather, Tassy acted in such a way as to
signal her assent to the terms of the Entertainment Lease. See R. 9-2 at 2, ¶ 7. Yet, Tassy
has denied ever seeing or receiving a copy of, or being advised about, the Entertainment
Lease prior to bringing this action. R. 17-1 at 3, ¶¶ 23–24. It is also possible, then, that
Tassy merely performed at the Godfather without knowing about the Entertainment
Lease at all. In these circumstances, there is a genuine issue of material fact as to
whether Tassy manifested acceptance of the Entertainment Lease and its arbitration
provision through her conduct too.2
2
None of the authorities upon which Lindsay Entertainment Enterprises relies, see R. 13 at 4
(Reply in Support of Motion for Stay Pending Arbitration); R. 18 at 4–5 (Motion to Strike), are to the
contrary. Take, for example, Honig v. Comcast of Georgia I, LLC, 537 F. Supp. 2d 1277 (N.D. Ga. 2008).
There, a subscriber filed suit against a cable television provider to resolve a billing dispute. Id. at 1280.
The provider sought to resolve the squabble through arbitration as allowed under its subscriber agreement.
Id. at 1282. The subscriber denied agreeing to arbitrate, however, since she could not remember receiving
a copy of the agreement. Id. at 1283. But the subscriber came forward with nothing (not even an affidavit
or declaration) to support her story, and the provider introduced a signed work order where the subscriber
acknowledged receipt of the agreement. Id. Faced with uncontroverted evidence of receipt, the district
court held the subscriber’s continued use of the provider’s services manifested her assent to the agreement
and the arbitration clause. Id. at 1283–84.
Honig bears little resemblance this case. Unlike the subscriber in Honig, Tassy has denied, in a
sworn declaration, ever seeing or receiving a copy of, or being advised about, the Entertainment Lease prior
to filing this action. R. 17-1 at 3, ¶¶ 23–24 (Tassy’s Declaration). Consequently, her declaration is not, as
Lindsay Entertainment Enterprises would suggest, a “bald conclusory assertion that she did not agree to
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C.
Though Tassy maintains that a jury trial must be held to resolve any questions of
fact surrounding the issue of contract formation, see R. 17 at 1; R. 21 at 4, she is
mistaken.
Unlike a motion to compel arbitration under 9 U.S.C. § 4, a motion to stay
proceedings pending arbitration under 9 U.S.C. § 3 affords no right to a jury trial. See
Oasis Oil & Ref. Corp. v. Armada Transp. & Ref. Co., 719 F.2d 124, 126 (5th Cir. 1983);
J & R Sportswear & Co. v. Bobbie Brooks, Inc., 611 F.2d 29, 30 (3d Cir. 1979); Griffen
v. Alpha Phi Alpha, Inc., No. 06-1735, 2007 WL 707364, at *3 n.7 (E.D. Pa. Mar. 2,
2007); Marshall, 1985 WL 2458, at *2–3; see also Matterhorn, Inc. v. NCR Corp., 763
F.2d 866, 837–74 (7th Cir. 1985) (Posner, J.). The plain language of 9 U.S.C. § 3 refers
to the Court “the decision on an application for a stay.” J & R Sportswear & Co., 611
F.2d at 30. “By means of an evidentiary hearing,” then, the Court will pass on any
disputed questions of fact necessary to resolve Lindsay Entertainment Enterprises’
motion. Fyrnetics (Hong Kong) Ltd. v. Quantum Grp., Inc., 293 F.3d 1023, 1027 (7th
Cir. 2002); see also Todd, 78 F.R.D. at 425; Ventimiglia v. Gruntal & Co., No. 88 CIV.
1675 (RJW), 1989 WL 251402, at *7 (S.D.N.Y. Nov. 1, 1989); Marshall, 1985 WL
2458, at *2–3.
VI.
IT IS HEREBY ORDERED that a Telephonic Scheduling Conference regarding
Lindsay Entertainment Enterprises, Inc.’s Motion to Stay Proceeding Pending
Arbitration, R. 9, is SET for July 22, 2016 at 10:30 a.m. EST. The Court shall place the
call.
arbitrate based solely on her failure to remember” signing the Entertainment Lease “insufficient” to create a
question of fact. R. 18 at 5.
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IT IS FURTHER ORDERED that Lindsay Entertainment Enterprises, Inc.’s
Motion to Strike, R. 18, is DENIED.
IT IS SO ORDERED.
Date:
cc:
July 8, 2016
Counsel of Record
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