DETROIT, Mich.—Earlier this week, U.S. District Judge Stephen J. Murphy III gave final approval to a settlement reached between the Deja Vu chain of adult nightclubs and various of its current and former dancers, who had sued Deja Vu and other adult nightclubs, claiming that the dancers were employees rather than independent contractors, and that therefore, Deja Vu owed them back pay amounting to minimum wages for hours worked, and some other benefits which the club gave to its other employees.
The settlement totals $6.5 million, which will be distributed to two settlement funds which, according to an article on Law360.com, would consist of "a $2 million pool for dancers who choose ... to take a single cash payment for their troubles, and a $4.5 million secondary pool that covers 60 percent of the dancers’ rent-credit or dance-fee payments for a year." However, half of the secondary pool would also go to paying regulatory fees under California’s Private Attorneys General Act and other costs, and Deja Vu will also pay $1.2 million in attorneys' fees to the class plaintiffs' attorneys.
The controversy that led to the settlement began in 2008, when a dancer at a Michigan club run by CinLan, Inc., and which had Deja Vu as a "joint employer," sued CinLan and Deja Vu, claiming that she and dancers at eight other CinLan-managed clubs in Michigan had been improperly classified as independent contractors when they should have been considered employees, paid a minimum wage and received other employment-related benefits. It's a claim that has dogged adult nightclubs for more than 20 years, and the current settlement recognizing the dancers as employees will apply to all Deja Vu locations in the U.S., settling similar claims brought in several states.
The settlement that was approved on June 19 also covers the objections raised by attorneys representing other class members, who argued that the value of the deal hadn't been properly calculated, and that as a result, class members were being "vastly undercompensated." Judge Murphy ruled that considering the U.S. Supreme Court's recent rulings on class action suits, the objectors' claims were on such shaky legal ground that approving the settlement was the best way to deal with all of the issues raised.
Under the settlement, two of the primary class representatives will receive between $30,000 and $50,000 from the $2 million pool, depending on "settlement notice and administration costs," while the rest of the class members who opt for cash payments will divide $935,000. Also, $100,000 will be set aside for Private Attorney General Act payments.
The $4.5 million sum will be split into credits toward dancers' rent for stage time at the clubs where they work, and other fees dancers pay the club for the right to perform there. Dancers who have worked at a club for less than a year will receive $200 in such credits, while dancers who have worked for 18 months or longer will receive credits of $2,000 each.
The settlement also sets out rules for determining whether a dancer should be considered an employee or an independent contactor, which status will be determined by a meeting with Deja Vu management where the dancer will "answer an economic realities test-based questionnaire aimed at determining whether an individual worker is better classified as an independent contractor or an employee," an article by legal reporter Braden Campbell stated. "Dancers classified as independent contractors will have more freedom to set their hours and pick their costumes, while employees will receive a minimum wage and take home their tips, minus the legal costs of their employment and other fees."
Deja Vu is represented by prominent Michigan-based First Amendment attorney Brad Shafer of Shafer & Associates PC, who told Law360 that he considered the settlement to be a win for both sides, since "it clears up the employment status issue and potentially steers both the workers and the company clear of future litigation."
