Third Circuit Holds Dancer Can Pursue Statutory Claim in Court Despite Arbitration Clause

On August 17, 2017, the U.S. Court of Appeals for the Third Circuit held that a dancer who sued a club under federal and state labor laws can pursue her claims in court, despite the arbitration clause in her contract with the club.

Alissa Moon, an exotic dancer, sued Breathless Mens’ Club in 2015, claiming that the club misclassified its dancers as independent contractors, and claiming that because the dancers were in fact employees, the club owed them unpaid overtime wages and other legal protections like workers’ compensation insurance. Moon brought a collective action under the federal Fair Labor Standards Act (“FLSA”), the New Jersey State Wage and Hour Law (“NJWHL”), and the New Jersey State Wage Payment Law (“NJWPL”).

The club moved to dismiss Moon’s claims, arguing that she could not bring her case in court because the parties’ contract included an arbitration clause. The U.S. District Court for the District of New Jersey agreed, holding that Moon’s claims fell within the arbitration clause, and dismissed the case.

Moon appealed, and the U.S. Court of Appeals for the Third Circuit reinstated her case, holding that the arbitration clause did not cover Moon’s statutory claims because the clause failed to clearly state that the employee agreed to arbitrate all statutory claims arising from the employment relationship, didn’t reference the types of claims the employee was waiving (the court used workplace discrimination claims as an example of a type of claim the clause could reference), and didn’t explain the difference between arbitration and litigation. Because of these deficiencies, the court held that Moon had not agreed to arbitrate her statutory claims, and that because her claims arose under the FLSA, NJWHL, and NJWPL—not under the contract—she could pursue her claims in court.