The Importance of Record-Keeping: Lessons from an Exotic Dancer and Truck Driver

By: Jennie Woltz & Mark A. Konkel

May 15, 2019

On Monday May 6, 2019, a Florida federal judge denied a strip club’s bid for sanctions against an exotic dancer and her lawyer who filed a so-called “cookie-cutter” Fair Labor Standards Act lawsuit, depriving the strip club of the chance to recoup.

The next day, on Tuesday, May 7, 2019, a Texas state jury awarded a plaintiff $80 million – of which $75,000,000 was in punitive damages – to a truck driver who fell asleep and crashed behind the wheel, when his supervisors forced him to alter his log book and drive without the required amount of rest.

What could these two cases possibly have in common? Both impart the same basic lesson: adherence to good record-keeping practices can save employers money.

Montgomery v. Club Pink (19 CV-62683, Southern District of Florida)

In Montgomery v. Club Pink, Montgomery brought a putative collective action on behalf of herself and other alleged exotic dancers who worked at Club Pink, alleging that Club Pink improperly classified the dancers as independent contractors instead of employees and denied them fair wages.  Club Pink countered that it had “never heard of” Montgomery and didn’t know who she was.  Instead, it argued Montgomery was simply an “admittedly drunk and repeatedly-violent customer of Club Pink, with no affiliation to Club Pink, whom management asked to leave the premise on two separate occasions.”

Club Pink sought sanctions against Montgomery and her attorneys under Rule 11 of the FRCP – which allows sanctions for “objectively frivolous” lawsuits – for filing the suit.  The motion for sanctions was, however, denied.

The magistrate judge, in his report to the Judge on the motion, noted that “the documentation provided by Montgomery” was enough to confirm that Plaintiff’s counsel had a reasonable belief that his client was a dancer at the club and validated his filing the original complaint.  Importantly, the magistrate noted that the Club never responded to Montgomery’s lawyers’ repeated pre-filing demands, and thus did not claim that it did not know who Montgomery was until after the Complaint was filed.  Also, when the Club argued that sanctions were appropriate because Plaintiff provided no documentation to support her statement of claim, the magistrate judge found Plaintiff’s excuse persuasive – that “as is common in the industry . . . no payments were made to her, so therefore there is no documentation such as time sheets or pay checks to provide.”

Club Pink has since filed a motion for summary judgment on Plaintiff’s claims, which is currently pending.  If the court believes Club Pink’s assertion that they “never heard of” Montgomery – an outcome which is not yet decided – then the case will be dismissed.  But the inability of the club to receive attorneys’ fees and sanctions for what it believes to be a frivolous lawsuit, coupled with the time, energy and unfavorable media attention it has received as a result of this lawsuit, must sting.  Surely many employers can relate to the bitter feeling of being unable to resolve a lawsuit that it believes is fundamentally meritless.

Takeaway

Montgomery’s lack of documentation to support her claim for employment went from being a fact Club Pink thought would bolster its claim for sanctions, to one easily glossed over by the magistrate, when the magistrate recognized that Montgomery’s lack of documentation was “common” in the industry and thus the absence of documentation could not preclude a potential finding of employee status.  The magistrate was reinforcing what every good human resources professional (should) know – document, document, and then document further – and this is true even in the case of independent contractors.

As part of its Motion for Summary Judgment, Club Pink submitted that the club adhered to a “strictly-enforced” practice of obtaining government-issued ID’s and a “contractual signature” from anyone seeking a staff position or affiliated performance artist independent contractor position at Club Pink.  However, evidence of such practices was not disclosed to Plaintiff’s counsel.  Having these practices is a good start, but it provided nothing Club Pink could show to opposing counsel when asked to “prove a negative.”  Rather, a written policy describing these practices would have provided extra protection: If Club Pink had been able to produce an already-available written policy describing its independent-contractor engagement practices, along with a written affirmation from Club Pink’s owner that Montgomery failed to appear on any of the club’s documentation, it possibly could have resulted in a much earlier resolution to this lawsuit – or at least would have better supported Club Pink’s motion for sanctions.

Lozano v. JNM Express (C-571-17-B, Texas District & County Court)

In Lozano Jr. v. JNM Express, et seq., the plaintiff, a commercial truck driver, alleged that shortly after he completed a driving trip, he was instructed to drive another load several hours later.  According to Plaintiff under Federal Law, truckers are required to take 34 hours of rest between driving trips.  Plaintiff alleges that he resisted his supervisor’s request, telling his supervisor that he had not sufficiently rested from his last run and that he could not safely or legally drive the load.  In response, Plaintiff alleges, his supervisor instructed him to alter his log book so it would appear he had taken the required rest, and instructed him to appear ready to drive the following morning.  Fearing retaliation if he refused, Plaintiff complied with his supervisor’s request, and began the drive. In the early morning hours the following day, Plaintiff alleges that because his employer denied him adequate rest, he fell asleep behind the wheel, caused a collision, and suffered severe debilitating injuries as a result.

When his case came before a jury, he was awarded $5 million in compensatory damages and $75 million in punitive damages grounded on the jury’s finding of “gross negligence” against his supervisor and employer.

Takeaway

Clearly, this is a terrible outcome, no matter the “fault” involved.  And there are likely a number of contributing causes to the collision itself.  But one thing is certain – if the supervisor had not believed that altering the log books was an “option,” then Plaintiff could not have been pressured into accepting the driving assignment.  In this case, by having Plaintiff alter his own time logs, Plaintiff’s supervisor not only flouted the Federal laws that required minimum rest breaks, but jeopardized the health and safety of the driver, other vehicles, and the company’s cargo.  While commercial truck drivers are exempt from the overtime provisions of the FLSA, a similarly-minded supervisor of employees who are subject to the FLSA could have also subjected his employer to a bevy of wage and hour claims, not to mention retaliation claims.

Lessons For Employers

Strong, consistent record-keeping practices and policies are a “must” for any business.  Do not let a lack of policies – or a lax application of your policies – have a disproportionate effect on your bottom line like it did for the employers in the two cases above.  Regularly audit your workplace for discrepancies, provide training on proper record-keeping, and ensure that front line managers in particular are impressed with the importance for accurate record-keeping and are consistently adhering to your policies.  And as always, speak with experienced employment counsel for advice on any of the above.