Exotic Dancers Strip Back Arbitration Fee Rules

Last year, 18 exotic dancers from Rick’s Cabaret in New York City, pursuant to the arbitration provisions in their Entertainer License Agreements (ELAs) with the club, filed employment arbitration cases against the club’s parent company.  The issue was the alleged mischaracterization of the strippers as independent contractors instead of employees.  Per the AAA’s rules, they were required to pay the initial filing fee of $300 per case while Rick’s Cabaret was required to pay the rest of the AAA’s administrative fees of $1,900 per case (or, when aggregated, $34,200).

Rick’s refused and, per the AAA’s rules, it stopped administering the cases.

The basis of Rick’s’ refusal was that the dancers’ ELAs mandated that (1) the fees be split evenly and (2) if there were a contract between the ELAs and the AAA’s rules, the ELAs would prevail.

The United States Court of Appeals for the Second Circuit sided with Rick’s Cabaret.  “Accordingly, we conclude that the parties opted to arbitrate exclusively before the AAA,” the court held and further stated that “[i]n light of the clear terms of the ELAs, it cannot be said that [Rick’s] acted so inconsistently with its arbitration rights as to have waived them when it invoked contractual protections for which it had negotiated.”

Obviously, this case can have an impact on future employment arbitrations, particularly mass arbitrations. 

To read more about this, click here.  To read the opinion, click here.