A settlement was reached on Dec. 16 in a class action lawsuit involving Spearmint Rhino strip clubs, including the one in Santa Maria, awarding $3.65 million to exotic dancers allegedly underpaid by the company.
The class action lawsuit was brought by four plaintiffs — Adriana Avalar, Adriana Ortega, Roberta Friedman and Sheyenne McCrea — who sued Spearmint Rhino clubs in California, alleging that the company violated the Fair Labor Standards Act and California labor laws after misclassifying them as independent contractors.
Spearmint Rhino operates a chain of clubs throughout Southern California, including the one in Santa Maria, and the settlement includes dancers who performed at them.
In the complaint filed in February 2017 in the U.S. District Court for the Central District of California, the plaintiffs allege that Spearmint Rhino failed to pay dancers minimum wage and instead compensated them only in the form of tips.
Despite that, according to the lawsuit, the dancers were required to pay significant “house fees” and pay a portion of their tips back to employees not eligible to receive them, including managers.
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Additionally, the plaintiffs accuse Spearmint Rhino of requiring them to pay for expenses related to their jobs, such as wardrobe requirements; failing to provide them with itemized wage statements; and failing to pay them on time.
The lawsuit lists defendants Spearmint Rhino Consulting Worldwide Inc., Midnight Sun Enterprises Inc. and The Spearmint Rhino Companies Worldwide Inc., which is based in Nevada.
The defendants agreed to pay the settlement amount to dancers that “provided nude, seminude, and/or bikini entertainment” for customers between Oct. 30, 2017, through the date of the settlement’s preliminary approval, according to the lawsuit.
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Of the $3.65 million, according to the lawsuit, $75,000 will go to the California Labor and Workforce Development Agency; $10,000 will be split among the four originating plaintiffs as incentive payments for bringing the lawsuit; $912,500 will go to attorney’s fees; and approximately $2.6 million will be put in a fund to be paid to class members who submit a claim.
Dancers who performed at the Santa Maria club could be eligible for a claim by submitting a claim form. Payments are based on the number of “dance days” each individual performed at the club.
Class notices will be mailed, emailed, placed on a settlement website and at the relevant clubs, according to the lawsuit.
Following the first expected payment of $800,000 in the summer of 2020, Spearmint Rhino is ordered to pay the rest of the settlement in the amount of no less than $150,000 per month for 19 months, according to the lawsuit.
In the plaintiff’s motion for preliminary approval, Spearmint Rhino indicated they may not be able to pay a larger settlement amount.
“The settlement amount and the proposed payment schedule also reflect an additional risk, the reality that defendants may not be able to satisfy a larger judgment or settlement given their financial outlook,” the lawsuit reads. “The clubs have independently reclassified all dancers as employees, a process that was mostly completed prior to the settlement negotiations in this action.”
Shannon Liss-Riordan, attorney for Ortega and the other plaintiffs, didn’t immediately return phone calls or emails seeking comment.
Peter Garrell, one of the attorneys representing Spearmint Rhino, said he couldn’t comment on the settlement, citing a clause in the agreement in which defendants, plaintiffs and their attorneys are forbidden to publicly discuss the settlement for at least six months from the entry of judgment.
Ortega’s motion for preliminary approval is scheduled to be heard at 9 a.m. Jan. 1 before judge Jesus G. Bernal in the U.S. District Court for the Central District of California.
This story was corrected to reflect that Shannon Liss-Riordan is an attorney for the plaintiffs, not defendants.