Houston strip clubs settle dancers’ labor lawsuit for $1.1 million

By Michelle de Leon | Oct 6, 2016

HOUSTON – Dancers of four strip clubs in Houston are set to receive $1.1 million from their former employers as settlement to a labor case, alleging that they were incorrectly categorized as independent contractors.

The settlement agreement filed Sept. 8 in the Houston Division of the Southern District of Texas shows that the defendants reached a decision to resolve the matter by paying the plaintiffs $1.1 million. In an earlier ruling, U.S. District Judge Lee H. Rosenthal granted the motion to consolidate two underlying cases of the same nature.  

The first lawsuit was dated July 2013, while the second one was filed in May 2015.

The second case was filed by a former dancer after getting dismissed from an opt-in lawsuit. Other dancers, later on, joined her in the action.

The plaintiffs cited the Fair Labor Standards Act in their wage and hour cases against Ali and Hassan Davari, who own the four clubs in question: The Gold Cup, Cover Girls Houston, Treasures and Centerfolds.

Rosenthal noted in the order that the settlement offered was “reasonable and adequate” in accordance with the Fair Labor Standards Act. She further stated that the agreement was “in the best interest of the plaintiffs and the opt-in class members.”

“The court has reviewed the stipulations of the parties contained in their joint motion for settlement approval, and has reviewed the settlement agreement and release executed between the parties for fairness,” Rosenthal explained in her decision.

“The court finds that the settlement agreement and release has been negotiated by the parties, with the advice of counsel, after production of the relevant records underlying plaintiff's claims.”

Before the settlement amount could be divided among the plaintiffs, $473,000 will be taken out from the money to pay Kennedy Hodges LLP in fees. The CPT Group, which administered the settlement, will be paid $12,000. This leaves $579,700 as the amount to be shared by the plaintiffs. Since the public record version of the settlement has been redacted, the total number of dancers splitting the amount cannot be ascertained.

In a ruling in October 2015, Rosenthal declared that all but one of the plaintiffs could retain her claims in court and out of arbitration. The total number of the dancers at the time reached 34.

Prior to this ruling, the Davaris were set to face the wage-and-hour claims due to the arbitration agreements they signed as club owners. In the agreements, the clubs were allegedly permitted to recover fees from the dancers regardless of whoever wins in the arbitration.

No comment has been provided by any of the parties involved in the labor case following the release of the settlement agreement by Rosenthal.

Galvin B. Kennedy, Beatriz Sosa-Morris and Udyogi Apeksha Hangawatte of Kennedy Hodges LLP represented the dancers.

Casey T. Wallace and Benjamin Witten Allen of Johnson Trent West & Taylor LLP, and Martin A. Shellist, Michael Todd Slobin and James Alfred Southerland of Shellist Lazarz Slobin LLP handled the case of the Davaris. 

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