Federal Judge Holmes Tosses Strip Club Settlement

by Arkansas Business Staff  on Monday, Jul. 17, 2017 12:00 am   2 min read

P.K. Holmes III

P.K. Holmes III is going to get a reputation if he keeps this up.

The chief federal judge for the Western District of Arkansas threw out a proposed settlement that would have given a plaintiff’s lawyers five times the amount their client received.

Attorneys Joshua West and Josh Sanford of the Sanford Law Firm in Little Rock submitted the proposed settlement that called for them to collect $5,000 in attorneys’ fees while their client, Jacob Yates of Hot Springs, received $1,000 from Centerfold Entertainment Club Inc. of Hot Springs. The attorney for Centerfold, Travis J. Morrissey of Hot Springs, also had approved the settlement.

But then in stepped Holmes, who has criticized other settlements.

“Based on the limited information provided, the Court finds that the proposed settlement agreement in this case is neither fair nor equitable to all of the parties,” Holmes wrote.

The case involved Yates, who worked as a bouncer for Centerfold, which is what’s known in the vernacular as a strip club. He was paid only $50 a night for the six years he worked there starting in February 2009. He said he worked about 52 hours a week during that period. Yates alleged violations of the Fair Labor Standards Act and the Arkansas Minimum Wage Act.

Holmes ran the numbers and, even assuming a three-year statute of limitation for willfulness, found Yates was owed $18,798 for unpaid regular and overtime hours. That’s before other damages were even considered.

“The parties have not provided the Court with any indication as to the sharp disparity between this figure and the $1,000 Mr. Yates would recover under the proposed settlement agreement,” Holmes wrote. “This is particularly troublesome in light of the contention that ‘Plaintiff and his attorneys believe he has a meritorious case.’”

Holmes said he could not and would not approve such an amount.

Yates said in his court filings that he agreed to the settlement because he wants to avoid the “hassle of trial for reasons that are more important to me than winning this case at trial. These reasons are personal and confidential to me.”

Holmes said that because Yates wants to avoid trial, the case has been dismissed, although it could be refiled.

Neither Sanford nor Morrissey immediately returned a call for comment.

8th Circuit Update
If you recall, Judge Holmes blasted attorney John Goodson of Texarkana and other lawyers found to have engaged in “forum shopping” in a class-action case.

Holmes concluded that the attorneys moved a case that had been on his docket to state court to avoid his review of the settlement, which he said he wouldn’t have approved.

In August 2016, Holmes issued an order that reprimanded Goodson, who is the husband of an Arkansas Supreme Court justice, and four other attorneys who were found to have abused the court system for manipulating the case. A reprimand is considered a mild form of sanction.

Goodson and others appealed the decision to the 8th U.S. Circuit Court of Appeals. A three-judge panel heard arguments in February, but as of Thursday a ruling hadn’t been announced.



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