United States District Court, W.D. Kentucky, Louisville
GLORIA TASSY, individually and on behalf of all similarly situated, PLAINTIFF
LINDSAY ENTERTAINMENT ENTERPRISES, INC., DEFENDANTS
MEMORANDUM & OPINION
B. Russell, Senior Judge.
matter is before the Court upon Defendant's Motion to
Stay Proceedings and Compel Arbitration pursuant to the
Federal Arbitration Act (FAA), 9 U.S.C. § 3. (R. 9). An
evidentiary hearing was held on June 7, 2018 to resolve the
threshold issue of whether Plaintiff, Gloria Tassy, entered
into an arbitration agreement with the Defendant, Lindsay
Entertainment Enterprises, Inc. (R. 59). The Parties have
completed post-hearing briefing. (R. 65-68). Being otherwise
sufficiently advised, for the reasons set forth below, the
Defendant's Motion to Stay Proceedings and Compel
Arbitration is DENIED.
Tassy is an exotic dancer. (R. 1). She worked at the
Godfather gentlemen's club in Louisville, Kentucky from
2014 to 2016. (Id.). Lindsay Entertainment
Enterprises operates the Godfather. (Id.). Lindsay
Entertainment Enterprises classifies its dancers, including
Tassy, as independent contractors. (Id.). As such,
Lindsay Entertainment Enterprises never paid Tassy, or any of
its other dancers a “direct wage.”
(Id.). Instead, Tassy and the other dancers were
paid a certain percentage of the tips they earned from
that she was an employee entitled to a minimum wage under the
Fair Labor Standards Act (FLSA), Tassy sued Lindsay
Entertainment Enterprises, individually and on behalf of
those similarly situated, in February of 2016.
(Id.). Claiming that Tassy had executed an
arbitration agreement, Lindsay Entertainment Enterprises
moved to stay the proceedings and compel arbitration pursuant
to § 3 of the Federal Arbitration Act. (R. 9). Tassy
responded that she never entered into an arbitration
agreement with Lindsay Entertainment Enterprises. (R. 17-1).
Thus, the Court found there to be a factual dispute as to the
arbitration agreement's existence and determined an
evidentiary hearing to be necessary. (R. 24). Prior to
holding the evidentiary hearing, the Court conditionally
certified Tassy's FLSA collective action class on March
9, 2017. (R.33). Then, with leave to refile, the Court denied
Lindsay Entertainment Enterprises' Motion to Stay
Proceedings and Compel Arbitration. (R. 39).
March 23, 2017 Lindsay Entertainment Enterprises appealed the
Court's conditional class certification and the
Court's ruling on its Motion to Stay Proceedings and
Compel Arbitration. On February 22, 2018, the Sixth Circuit
dismissed Lindsay Entertainment Enterprises' appeal from
the Court's conditional class certification. (R. 46).
However, the Sixth Circuit vacated this Court's ruling on
Lindsay Entertainment Enterprises' Motion to Stay
Proceedings and Compel Arbitration. (Id.). In
remanding for further proceedings, the Sixth Circuit
instructed the Court to “promptly determine whether the
Parties agreed to arbitrate.” (Id.).
Accordingly, the Court set an evidentiary hearing for May 9,
2018. (R. 55). The sole issue to be decided by that
evidentiary hearing was whether Gloria Tassy agreed to
arbitrate. However, due to a scheduling conflict, the Court
had no choice but to push the hearing back. (R. 58).
7, 2018 the hearing finally occurred. (R. 59). At the
hearing, the Court heard testimony from Tammy Sloss, Jason
Crosby, and Scott Lindsay on behalf of the Defendant. On
behalf of the Plaintiff, the Court heard from Gloria Tassy,
Melissa McGrew, and Karen Mead. At the hearing's close,
the Court set a post-hearing briefing schedule for the
Parties. (R. 61, Hr'g Tr., p. 123). The Court also
instructed the parties to notify the Court when the
post-hearing briefing had been completed and the matter was
ripe for adjudication. (Id.). However, the parties
failed to do so. In addition, CM-ECF has a program where
anyone can see a pending motions report. It is supposed to
show all pending motions in an active case before the Court.
This was a briefing schedule, which did not appear on the
pending motions lists. Frankly, this, combined with the
Court's own oversight, has again caused this threshold
issue to languish on the docket for longer than it should
have. The Court accepts its share of the responsibility for
the oversight, and albeit overdue, now sets about resolving
the issue of whether Tassy agreed to arbitrate.
Entertainment Enterprises' Motion to Stay Proceedings and
Compel Arbitration turns upon one threshold issue: whether
Gloria Tassy agreed to arbitrate. If she did not, Lindsay
Entertainment Enterprises' Motion must be denied. At
least regarding this threshold issue, the parties'
arguments are not complicated. Tassy claims that she never
signed an agreement containing an arbitration clause. (R. 10,
pp. 2, 5-6; R. 17-1, p. 1; R. 21, p. 4). On the other hand,
Lindsay Entertainment Enterprises claims that she did. (R.
9-1, p. 6; R. 13, pp. 2-4; R. 18, pp. 3-5). Lindsay
Entertainment Enterprises claims that pursuant to its
standard practice, prior to working, all their dancers sign
lease agreements that contain an arbitration clause. (R. 9-2,
p. 2; R. 13-1, pp. 1-2). However, Lindsay Entertainment
Enterprises is unable to produce such paperwork for Tassy
because it was allegedly lost in a flood caused by a
rusted-out water heater in the backroom where Tassy's
paperwork was stored. (R. 61, Hr'g Tr., pp. 55, 68-70).
Lindsay Entertainment Enterprises claims further that, even
if Tassy never signed the lease agreement containing the
arbitration clause, Tassy accepted the terms of that lease
agreement by acting in accordance with the agreement's
terms and continuing her employment. (R. 65).
arbitration agreements are, in essence, contracts, Kentucky
law guides the Court's inquiry into the question of
contract formation. See Arthur Andersen LLP v.
Carlisle, 556 U.S. 624, 630-31 (2009); Seawright v.
Am. Gen. Fin. Servs., Inc., 507 F.3d 967, 972 (6th Cir.
2007). In Kentucky, as in all jurisdictions, a contract is
only enforceable if both parties agree to be bound by it.
See, e.g., David Roth's Sons, Inc. v. Wright &
Taylor, Inc., 343 S.W.2d 389, 391 (Ky. 1976). According
to Kentucky law, the initial burden of proving an
agreement's existence rests with the party seeking to
enforce arbitration. Louisville Peterbilt, Inc. v.
Cox, 132 S.W.3d 850, 857 (Ky. 2004). Furthermore, while
there is a strong presumption in favor of enforcing valid
arbitration clauses, that presumption is not applicable when
determining whether an arbitration agreement exists in the
first place. See Clowdis v. Colo. Hi-Tec Moving &
Storage, Inc., Civil Action No. 11-cv-00036-CMA-KMT,
2011 U.S. Dist. LEXIS 137380, at *10 (D. Colo. Nov. 3, 2011)
(citing Dumais v. Am. Golf Corp., 299 F.3d 1216,
1220 (10th Cir. 2002)) (“However, when the parties
dispute the existence of a valid arbitration agreement, there
is no presumption in favor of arbitration.”). Having
considered the testimony and evidence given at the
evidentiary hearing in its entirety, the Court finds that
Lindsay Entertainment Enterprises failed to carry its burden.
Lindsay Entertainment Enterprises has Failed to Establish
that Tassy Signed a Lease Agreement Containing an Arbitration
the Court is unconvinced that Tassy signed a lease agreement
containing an arbitration clause. Lindsay Entertainment
Enterprises points to two things to prove that she did- the
testimony of their three witness at the evidentiary hearing
and Lindsay Entertainment Enterprises' standard practices
as described by those same witnesses. (R. 65). The Court will
were three witness who testified that Tassy signed a lease
agreement containing an arbitration clause: Tammy Sloss,
Jason Crosby, and Scott Lindsay. (See R. 61, Hr'g Tr.).
The Court finds all three witness' testimony problematic.
Starting with Sloss, the Court will address each
witness's testimony and its corresponding problems.
is a Lindsay Entertainment Enterprises employee. (R. 61,
Hr'g Tr., p. 47). She started working for the Godfather
in 1998. (Id.). Since that time, she has left the
Godfather at various times for numerous reasons, including to
serve jail-time for drug-crimes. (R. 61, Hr'g Tr., p.
52). While employed at the Godfather, Sloss has done
everything from dancing, to waitressing, to administrative
work. (R. 61, Hr'g Tr., p. 47). Sloss's
administrative duties include, hiring and firing dancers,