Horrocks v. Keepers, Inc.

• Decision Date: 04 January 2016
• Docket Number: CV156054684S
• Court: Connecticut Superior Court
• Parties: Crystal Horrocks et al. v. Keepers, Inc. et al

Crystal Horrocks et al. v. Keepers, Inc. et al

No. CV156054684S

Superior Court of Connecticut, Judicial District of New Haven, New Haven

January 4, 2016

UNPUBLISHED OPINION

MEMORANDUM OF DECISION RE MOTION FOR STAY OF PROCEEDINGS (#101)

Robin L. Wilson, J.

FACTS

On May 18, 2015, the plaintiffs, Crystal Horrocks, Yaritza Reyes Dina Danielle Caviello, Jacqueline^[1] Green, Sugeily Ortiz, and Zuleyma Bella Lopez, filed an eight-count complaint against the defendants, Keepers, Inc. and Joseph Regensburger. The plaintiffs allege the following facts in their complaint. The plaintiffs are a class of self-described exotic dancers who worked at Keepers Gentlemen's Club. Keepers Gentlemen's Club is a business of defendant Keepers Inc., of which defendant Regensburger is the president and director. The plaintiffs began their employment as exotic dancers with the defendants in or about January 2011. Between 2011 and 2014, the plaintiffs regularly worked approximately forty hours or more per weekly pay period for the defendants' business. The plaintiffs provided adult entertainment and earned tips and/or gratuities from customers for dances they performed on stage or for personal dances they performed in common areas of the club and in semi-private rooms.

Throughout the plaintiffs' employment, the plaintiffs had no real opportunity to profit from the success of the defendants' business. The plaintiffs were not shareholders or officers of the defendants' business nor did they have any direct or indirect financial investment in the business. Because the plaintiffs depended solely on the customers' tips and gratuities, they relied on the defendants to advertise the business and attract customers so the plaintiffs could perform their services. Accordingly, the plaintiffs were under the control of the defendants to earn any payment for their services. The defendants also controlled the plaintiffs' work schedule, conduct, dress, songs they danced to, and the rates they charged for dances. Further the defendants had the ability to hire and fire the plaintiffs. In light of these working conditions, the plaintiffs contend that they should be classified as " employees" and that the defendants are " employers" under General Statutes § § 31-58(e)^[2] and 31-222(a)(1), ^[3] as well as the Fair Labor Standards Act, 29 U.S.C. § 203(e)(1) (2014).^[4]

The defendants, however, classified the plaintiffs as independent contractors, such that the plaintiffs have not received the benefits that are required from an employment relationship including but not limited to workers' compensation and unemployment benefits. Additionally, the defendants violated the plaintiffs' legal rights as employees in the following ways: failing to pay minimum wage; failing to pay time and a half for work done in excess of forty hours per week; improperly retaining plaintiffs' gratuities; improperly deducting fees from the plaintiffs' wages; requiring plaintiffs to pay fines for violating the defendants' rules; requiring plaintiffs to share their tips and gratuities with the defendants; and requiring plaintiffs to pay a fee to the disc jockey and other employees. As a result, the plaintiffs request damages sustained for not receiving employee benefits and other violations to their legal rights. Further, the plaintiffs bring forth their claims as members of a class action.

On May 25, 2015, the defendants filed a motion for stay of proceedings on the ground that the plaintiffs signed an entertainment lease agreement providing for exclusive binding arbitration in accordance with the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (2006) (FAA). In support of the motion, the defendants filed a memorandum of law. On September 14, 2015, the plaintiffs filed an objection to the defendants' motion to dismiss. Oral argument was heard on the motion at short calendar on October 13, 2015.^[5]

DISCUSSION

General Statutes § 52-408 provides in relevant part that " [a]n agreement in any written contract . . . to settle by arbitration any controversy thereafter arising out of such contract, or out of the failure or refusal to perform the whole or any part thereof . . . shall be valid, irrevocable and enforceable, except when there exists sufficient cause at law or in equity for the avoidance of written contracts generally." " [O]ur courts have wholeheartedly endorsed arbitration as an effective alternative method of settling disputes intended to avoid the formalities, delay expense and vexation of ordinary litigation." MSO, LLC v. DeSimone, 313 Conn. 54, 63, 94 A.3d 1189 (2014). " [A]rbitration is a creature of contract . . . It is designed to avoid litigation and secure prompt settlement of disputes . . . [A] person can be compelled to arbitrate a dispute only if, to the extent that, and in the manner which, he has agreed so to do . . . No one can be forced to arbitrate a contract dispute who has not previously agreed to do so." (Internal quotation marks omitted.) State v. Philip Morris, Inc., 279 Conn. 785, 796, 905 A.2d 42 (2006). " [A]n agreement to arbitrate must meet the requirements of [General Statutes § 52-408], including the requirement that the agreement be in writing, or it is invalid." Bennett v. Meader, 208 Conn. 352, 364, 545 A.2d 553 (1988).

" General Statutes § 52-409 provides that where an action is brought by any party to a written agreement to arbitrate, the court shall stay the action upon motion by any party to the agreement, provided that the issue involved is referable to arbitration and that the person seeking the stay is ready and willing to proceed with arbitration." KND Corp. v. Hartcom, Inc., 5 Conn.App. 333, 336, 497 A.2d 1038 (1985). " When parties have a valid arbitration agreement, the courts are empowered to direct compliance with its provisions . . . To this end, General Statutes § 52-409 provides relief when a party to a contract that contains an arbitration clause desires arbitration of a dispute and the other party, instead of proceeding with arbitration, institutes a civil action to resolve the dispute. The party desiring arbitration can then seek a stay of the civil action." (Citation omitted; internal quotation marks omitted.) MSO, LLC v. DeSimone, supra, 313 Conn. 63.

The defendants argue that the court should grant a stay of this action pursuant to § 52-409 until the arbitration is concluded. Specifically, the defendants argue that the plaintiffs signed entertainment lease agreements committing to exclusive binding arbitration in accordance with the FAA. Further, the defendants argue that the plaintiffs agreed not to participate or bring class action suits and that they signed releases and waivers acknowledging they are independent contractors and not employees.^[6]

In opposition, the plaintiffs first argue that the arbitration agreement cannot be severed from the entertainment lease agreement. Second, the plaintiffs argue that the entertainment lease agreement is void because it seeks to implement an illegal employment scheme with a purpose to violate labor laws and undermine public policy considerations. And third, the plaintiffs argue that the arbitration agreement itself is void as unconscionable because the cost and fee shifting provisions and the class action waivers are illegal. Specifically, the plaintiffs argue that the arbitration agreement is procedurally unconscionable because the defendants presented an adhesion contract that they knew was a misrepresentation of employment law, violating their duty of good faith and fair dealing as an employer. The plaintiffs also argue that the arbitration agreement is substantively unconscionable because the class action waiver is unilateral: the defendants can sue the plaintiffs as a class but not vice-versa. Lastly, the plaintiffs argue that the defendants improperly seek a stay of the proceedings because they failed to first file a motion to compel arbitration pursuant to General Statutes § 52-410.^[7]

I SEVERABILITY OF THE ARBITRATION AGREEMENT

The court will first address whether the arbitration agreement can be severed from the entertainment lease agreement to address the challenges to both agreements separately. " Arbitration is a creature of contract. It is the province of the parties to set the limits of the authority of the arbitrators, and the parties will be bound by the limits they have fixed . . . The arbitration provision in an agreement is, in effect, a separate and distinct agreement. Courts of law can enforce only such agreements as the parties actually make . . . No one is under a duty to submit any question to arbitration except to the extent that he has signified his willingness." (Internal quotation marks omitted.) Success Centers, Inc. v. Huntington Learning Centers Inc., 223 Conn. 761, 772, 613 A.2d 1320 (1992). " Accordingly, because an arbitrator's jurisdiction is rooted in the agreement of the parties . . . a party who contests the making of a contract containing an arbitration provision cannot be compelled to arbitrate the threshold issue of the existence of an agreement to arbitrate." (Emphasis in original; internal quotation marks omitted.) MBNA America Bank N.A. v. Boata, 283 Conn. 381, 386-87, 926 A.2d 1035 (2007). Our Supreme Court has acknowledged three propositions regarding arbitration agreements: " First, as a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract. Second, unless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator in the first instance. Third, this arbitration law applies in state as well as federal courts." C.R. Klewin Northeast, LLC v. Bridgeport, 282 Conn. 54, 75, 919 A.2d 1002 (2007).

In the present...