Santich v. VCG Holding Corp.Annotate this Case
The United States District Court for the District of Colorado certified a question of law to the Colorado Supreme Court. The question centered on proof of equitable estoppel. In 2017, a group of current and former exotic dancers sued the owners of clubs where they performed and the club owners’ corporate parent companies alleging the defendants acted in concert to wrongfully deprive the dancers of basic protections provided by law to employees. The plaintiffs contended they were misclassified as nonemployee “independent contractors” or “lessees” pursuant to “Entertainment Lease” agreements that identified the club-owner defendants as “landlords” rather than employers. According to the plaintiffs’ pleadings, the club-owner and corporate-parent defendants were jointly and severally liable for denying the dancers earned minimum wages and overtime pay, confiscating or otherwise misallocating their gratuities, charging them fees to work, and subjecting them to onerous fines. The club-owner defendants have successfully compelled arbitration of the plaintiffs’ claims based on the arbitration clause included in the agreements the dancers signed with the club owners. The corporate-parent defendants sought to do the same, but because they were not parties to the agreements or to any other written contract with the dancers, they had to find a different hook to compel the dancers into arbitration: that the dancers should be equitably estopped from litigating their claims against one set of defendants because they were in compelled arbitration of the same claims against the other set of defendants. The Colorado Supreme Court held Colorado’s law of equitable estoppel applied in the same manner when a dispute involves an arbitration agreement as it did in other contexts. Thus, a nonsignatory to an arbitration agreement could only assert equitable estoppel against a signatory in an effort to compel arbitration if the nonsignatory can demonstrate each of the elements of equitable estoppel, including detrimental reliance.