Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-01111/USCOURTS-casd-3_17-cv-01111-0/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 29:0206 FLSA: Minimum Wage

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

CIERRA DAVIS, on behalf of herself and 

on behalf of other current and former 

employees similarly situated et al.,

Plaintiffs,

v.

RED EYE JACK’S SPORTS BAR, INC., 

a Nevada Corporation doing business as 

Cheetahs Gentleman’s Club, doing 

business as Cheetahs Nightclub, et al.,

Defendants.

Case No.: 3:17-cv-01111-BEN-JMA

ORDER:

(1) DENYING DEFENDANTS’ 

MOTION TO COMPEL 

ARBITRATION;

(2) GRANTING IN PART 

DEFENDANTS’ REQUEST FOR 

STAY 

Before this Court is Defendant Red Eye Jack’s Sports Bar, Inc. (“Cheetahs”) and 

Suzanne Coe’s motion to compel arbitration and stay action as to Plaintiff Cierra Davis

(“Davis”),

1 which Defendant Rich Buonantony joins. (Docket Nos. 32, 34.) The motion 

is fully briefed. For the reasons set for below, the Defendants’ motion to compel 

 

1 According to the Third Amended Complaint (“TAC”), Davis and Amber Moore

(“Moore”) are the two named plaintiffs in this purported “hybrid collective action” under 

the federal Fair Labor Standards Act (“FLSA”) and putative class action for alleged 

violations of California state law. (Docket No. 29, TAC ¶ 1.)

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arbitration is DENIED, and Defendants’ request to stay the action is GRANTED in 

part.

BACKGROUND2

Defendant Cheetahs is an all-nude strip club. It is open seven days a week, from 

12:00 p.m. to 2:00 a.m. At all relevant times, Defendants Suzanne Coe (“Coe”) and Rich 

Buonantony (“Buonantony”) owned, operated, controlled, and/or managed Cheetahs. 

Davis alleges Coe and Buonantony are alter egos of Cheetahs, and that Buonantony is 

also a managing agent of Cheetahs. 

In June 2014, Cheetahs hired Davis as an adult entertainer or dancer. Davis 

worked at Cheetahs “about seven days per week, from approximately 6:00 p.m. to 2:00 

a.m.” (TAC ¶ 8.) Davis alleges Defendants “refused to compensate [her] as a dancer for 

her time working at the club. Among other things, [she] never received minimum wage 

or any other compensation from Cheetahs.” (Id.) Davis generated income solely through 

tips and/or gratuities received from patrons when she performed dance services. 

In essence, Davis alleges Defendants misclassified, and continue to misclassify “all 

of their employees who work as adult entertainers, including [Davis], as ‘independent 

contractors.’” (Id. ¶ 23.) “As a result of this uniform misclassification, [Davis] and [her] 

fellow dancers were denied minimum wages required under the FLSA and the California 

Labor Code and, therefore, suffered injury and incurred financial loss.” (Id.) Davis also 

alleges Cheetahs wrongfully required her to pay “a daily ‘house fee’ simply for showing 

up for work,” wrongfully “skimmed” her tips and gratuities by requiring her to pay “fees 

or tip-out a substantial percentage of all [her] daily earnings to ‘the DJ’ and/or ‘door’ 

 

2 Because Defendants’ motion only seeks to compel arbitration as to Davis’s 

claims, the following overview of the facts is drawn from the relevant allegations of the 

TAC as they relate to Davis, which the Court assumes true for purposes of evaluating 

Defendant’s motion. Smallwood v. Allied Van Lines, Inc., 660 F.3d 1115, 1118 (9th Cir. 

2011) (“Because this case is still at the pleading stage, we assume the facts alleged in the 

complaint to be true.”). 

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and/or ‘manager,” and failed to provide her meal and rest breaks. (Id. ¶¶ 26-30.) 

Approximately 20% of Davis’s tips and gratuities “go back to Cheetahs.” (Id. ¶ 33.) 

Davis asserts these facts give rise to claims against Defendants for: (1) violation of 

29 U.S.C. § 206(a) (failure to pay minimum wage under the FLSA); (2) violation of 

multiple sections of the California Labor Code for failure to pay wages, overtime, 

provide adequate rest and meal breaks, and reimbursement of necessary work 

expenditures; and (3) conversion. 

Defendants move for arbitration on the grounds that Davis agreed to submit the 

claims she alleges in the TAC to binding arbitration. Davis responds that Ninth Circuit 

authority requires the Court find the arbitration agreement upon which Defendants rely is 

invalid and unenforceable. 

LEGAL STANDARD

Section 2 of the Federal Arbitration Act (“FAA”) states that:

A written provision in any ... contract evidencing a transaction 

involving commerce to settle by arbitration a controversy 

thereafter arising out of such contract or transaction ... shall be 

valid, irrevocable, and enforceable, save upon such grounds as 

exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2. Section 2 demonstrates “‘a national policy favoring arbitration of claims 

that parties contract to settle in that manner.” Preston v. Ferrer, 552 U.S. 346, 352–53 

(2008) (citing Southland Corp. v. Keating, 465 U.S. 1, 10 (1984)). 

Under Section 3 of the FAA, where an issue involved in a suit or proceeding is 

referable to arbitration under an agreement in writing, the district court “shall on 

application of one of the parties stay the trial of the action until such arbitration has been 

had in accordance with the terms of the agreement . . . .” 9 U.S.C. § 3. The language is 

mandatory, and district courts are required to order arbitration on issues as to which an 

arbitration agreement has been signed. Kilgore v. KeyBank, N.A., 718 F.3d 1052, 

1058(9th Cir. 2013) (citing Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 

(1985)). The role of the district court is “limited to determining (1) whether a valid 

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agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the 

dispute at issue.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th 

Cir. 2000).

An agreement to arbitrate is “valid, irrevocable, and enforceable, save upon such 

grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. 

Under California law, the elements of a valid contract are (1) parties capable of 

contracting; (2) mutual consent; (3) a lawful object; and (4) consideration. Cal. Civ. 

Code § 1550. However, a court will not enforce an otherwise valid contract if there 

exists a viable defense, such as illegality. 1 Witkin, Summary 10th (2005) Contracts, 

§ 331, p. 365.

DISCUSSION

A. The Arbitration Agreement is Invalid and Unenforceable

In support of their motion to compel arbitration, Defendants submitted a copy of an 

“Entertainer Performance Space Lease,” which they represent Davis executed on 

November 18, 2013, and a copy of an “Arbitration Agreement,” which they represent 

Davis executed on May 3, 2015. (See Mot. at p. 23; Docket No. 32-3, Declaration of 

Rich Buonantony (“Buonantony Decl.”), Ex. A.)4 The last page of the “Entertainer 

Performance Space Lease” includes the following arbitration provision:

Other than the provisions contained in this agreement relating to 

agreement to indemnify, defend and hold OWNER harmless, all 

disputes between PERFORMER and OWNER [sic] shall be 

submitted to binding arbitration in accordance with the 

Commercial Dispute Arbitration Rules of the American 

Arbitration Association. Any dispute that can be litigated in 

Small Claims Court is excepted from the requirement of binding 

arbitration.

 

3 Unless otherwise noted, the Court’s reference to a page number is to the page 

number generated by the CM/ECF system.

4 Davis does not dispute or object to the authenticity of these documents or 

Defendants’ representation that she signed them.

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(Buonantony Decl., Ex. A at p. 7.)

By its own terms, the “Arbitration Agreement” “supersedes any and all other 

agreements, whether oral or written between the Parties with respect to arbitration of any 

disputes.” (Id. at p. 9.) It provides:

1. In the event of any dispute between Cheetahs (Owner) and 

Performer (the Parties) [sic], the Parties agree to submit the 

dispute for binding arbitration in accordance with the 

Commercial Dispute Arbitration Rules of the American 

Arbitration Association. Any dispute that can be litigated in 

Small Claims Court is excepted from the requirement of 

binding arbitration.

. . .

3. Only individual claims may be brought. Neither the Owner 

nor Performer will bring or participate in a class action.

. . .

6. Each and every provision of this arbitration agreement is 

severable and independent of any other term or provision of 

this arbitration agreement and any other agreement between 

Owner and Performer, including but not limited to the 

Entertainer Performance Space Lease.

. . .

8. The parties agree that, notwithstanding the date in which the 

parties entered into this arbitration agreement, its terms shall 

be applied retroactively to the time that the parties first 

entered into any relationship. 

(Id.) There is no dispute that Davis signed the “Arbitration Agreement” or that it covers 

her claims against Defendants. The parties only dispute whether the “Arbitration 

Agreement” is valid and enforceable.5 The Court agrees with Davis that it is neither.

 

5Although Defendants’ motion references the arbitration provisions of both the 

“Entertainer Performance Space Lease” and the “Arbitration Agreement,” Defendants’ 

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As Davis points out, in Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 

2016), cert. granted, 137 S. Ct. 809 (Mem.) (January 13, 2017) (No. 16-300), the Ninth 

Circuit determined that the National Labor Relations Act (“NLRA”) establishes a core 

right to concerted activity,

6 which “precludes contracts that foreclose the possibility of 

concerted work-related legal claims.” Id., 834 F.3d at 989-90. Thus, the provision in the 

arbitration agreement at issue in Morris that required employees to resolve all of their 

legal claims in “separate proceedings” (i.e., a concerted action waiver) was found to be 

unenforceable because it both “prevents concerted activity by employees in arbitration 

proceedings” and requires employees to only use arbitration, which effectively prevents 

the employees from initiating concerted legal action anywhere else. Id. at 983-84. 

Here, Defendants do not deny that the “Arbitration Agreement” contains a 

concerted action waiver. Instead, Defendants essentially argue that the determination of 

whether Davis was an employee (and thus whether Morris renders the concerted action 

waiver unenforceable) is for the arbitrator to decide. The Court disagrees. 

First, as noted above, for purposes of evaluating Defendants’ motion to compel 

arbitration, the Court need not decide whether Davis is an employee; this allegation is 

assumed true. See Smallwood, 660 F.3d at 1118 (“Because this case is still at the 

pleading stage, we assume the facts alleged in the complaint to be true.”). Second, it is 

undisputed that the “Arbitration Agreement” broadly includes “any dispute between 

Cheetahs (Owner) and [Davis],” including Davis’s alleged FLSA and California Labor 

 

motion relies on the arbitration provision in the Arbitration Agreement.” (Mot. at p. 7) 

(“the Arbitration Agreement is valid, enforceable, and irrevocable, and the [Defendants] 

therefore respectfully submits the Court has only very simple task before it – allow the 

matter to proceed to arbitration per the agreement of the parties.”) Moreover, paragraphs 

7 and 8 of the “Arbitration Agreement” clearly state that the “Arbitration Agreement” 

superseded all prior arbitration agreements and applied retroactively. (Buonantony Decl., 

Ex. A at p. 9.)

6 The right to concerted activity is “the right of employees to act together.” 

Morris, 834 F.3d at 980. 

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Law claims. Accordingly, the Court’s analysis of the validity of the “Arbitration 

Agreement” necessarily includes consideration of whether Davis has raised a valid 

contract defense, i.e., whether the concerted action waiver renders the “Arbitration 

Agreement” unenforceable. See Morris, 834 F.3d at 984-90.

Assuming Davis is an employee, the Court finds the concerted action waiver 

invalid and unenforceable because, like the same clause in Morris, it clearly prevents 

Davis from participating in concerted activity in any forum. Indeed, Defendants 

acknowledge this effect. (See Mot. at p. 7) (“Here, the Arbitration Agreement . . . 

provide[s] . . . in the event of any dispute between Davis and [Defendants], Davis agreed 

to pursue that matter only through arbitration . . . [.] Moreover, Davis even agreed that 

she could only pursue individual claims . . . [.]”) (emphasis in original.) The Ninth 

Circuit expressly found this type of provision precluded by the NLRA. Morris, 834 F.3d 

at 989 (“Irrespective of the forum in which disputes are resolved, employees must be able 

to act in the forum together.”) (emphasis in original). 

Although the “Arbitration Agreement” contains a severability clause, the Court 

further agrees with Davis that the concerted action waiver is not severable. As at least 

one district court in this district, and district courts in other districts have concluded, 

severing the concerted action waiver “would amount to compelling arbitration on a class 

wide basis.” Rodriguez v. Jerome’s Furniture Warehouse, No. 3:17-CV-00460-L-NLS, 

2017 WL 3131845, at *3 (S.D. Cal. July 24, 2017); see also Mackall v. Healthsource 

Glob. Staffing, Inc., No. 16-CV-03810-WHO, 2016 WL 6462089, at *5 (N.D. Cal. Nov. 

1, 2016) (same). But the Supreme Court has held that the FAA does not permit a district 

court to compel a party to class arbitration “unless there is a contractual basis for 

concluding that the party agreed to do so.” Stolt-Nielsen S.A. v. Animal Feeds Int’l

Corp., 559 U.S. 662, 684 (2010) (emphasis in original). Thus, in light of the “Arbitration 

Agreement’s” explicit prohibition against concerted activity, and Defendants’ apparent 

opposition to the same (see Mot. at p. 7), the Court has no contractual basis for 

concluding Defendants and Davis agreed to submit to class arbitration. See Rodriguez, 

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2017 WL 3131845, at *3 (citing Gonzalez v. Ceva Logistics, U.S., Inc., 2016 WL 

6427866, at *7 (N.D. Cal. Oct. 31, 2016)); Mackall, 2016 WL 6462089, at *5 (holding 

the same). Therefore, the Court finds the concerted action waiver renders the entire 

arbitration agreement unenforceable. Id. (concluding the same). 

B. A Stay of Davis’s Claims Pending the Outcome of Morris is Warranted

In reply, Defendant requested a stay of the action until the Supreme Court decides 

Morris.

7

 Contrary to Davis’s contention otherwise, the Court has discretion “to enter a 

stay of an action before it, pending resolution of independent proceedings which bear 

upon the case.” United States v. Greek, No. 14-CR-00605-TEH, 2016 WL 5243408, at 

*1 (N.D. Cal. Aug. 10, 2016) (quoting Leyva v. Certified Grocers of Cal., 593 F.2d 857, 

863 (9th Cir. 1979)) (internal quotation marks omitted). However, the Court must first 

consider the following three factors: “(1) the possible damage from granting the stay; (2) 

possible hardship or inequity of denying the stay; and (3) the orderly course of justice.”

Rodriguez, 2017 WL 3131845, at *4 (citing CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th 

Cir. 1962); McElrath v. Uber Technologies, 2017 WL 1175591 *5 (N.D. Cal 2017)). 

The Court agrees with Defendants that a stay is warranted, but only as to Davis’s 

claims, not Plaintiff Moore or those similarly situated that she purports to represent. As 

the Honorable M. James Lorenz acutely observed: 

If the Supreme Court reverses Morris, [Davis] would have to 

bring [her] claims via individual arbitration. If the Supreme 

Court affirms, [Davis] would be able to bring [her] claims in this 

Court on a collective and class wide basis. Thus, the outcome of 

Morris will be dispositive as to whether arbitration or litigation 

in court is the proper method of dispute resolution here.

 

7 The Court notes Davis’s opposition “anticipate[d] that Defendants may attempt to 

request a stay because the Supreme Court has granted review of Morris” and argued 

against granting any such request for failing to raise the issue in their initial briefing. 

(Opp’n at p. 11.) However, in the interests of justice of judicial economy, the Court 

considers Defendants’ request. Fed. R. Civ. P. 1. 

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Rodriguez, 2017 WL 3131845, at *4. Here, the possible damage from the stay is even 

more minimal than in Rodriguez because the Supreme Court’s decision is imminent. 

Moreover, the only harm Davis will likely suffer as a result of a short stay is a delay in 

monetary recovery. In contrast, Defendants “will certainly incur significant legal fees 

and costs if forced to continue litigating [Davis’s claims] in this Court. If the Supreme 

Court reverses the Ninth Circuit’s decision in Morris, such fees and costs would largely 

constitute waste. So too would the scarce judicial resources that continued litigation 

would consume.” Id. 

In sum, because the “Arbitration Agreement” only applies to Davis’s claims, the 

outcome of Morris only affects her claims, and therefore Defendants’ request to stay is 

only granted as to Davis’s claims. 

CONCLUSION

For the reasons set forth above, Defendants’ motion to compel arbitration is 

DENIED, and Defendants’ request to stay is GRANTED in part. Davis’s claims are 

hereby STAYED pending the outcome of Morris. Defendants are ordered to notify the 

Court within five (5) days of the Supreme Court’s decision in Ernst & Young v. Morris, 

137 S. Ct. 809 (2017); their notice may include a request to reconsider the Court’s denial 

of their motion to compel arbitration. Any such request is limited to three (3) pages, and 

must state the grounds upon which the request is made. If Defendants timely request 

reconsideration, Davis has seven (7) days from the date the request is filed to file a 

response of up to three (3) pages. 

IT IS SO ORDERED.

Dated: May 9, 2018

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