Georgina SANTICH, Amanda Livingston, Rebecca Rail, Amanda Gabriel, Casandra Windecker, Gale Raffaele, Adrianne Axelson, Amanda Shafer, Brandi Campbell, Penny Watkins, Arielle Mansfield, Emily Bachelder, Amrica Terrell, Melanie Tracy, Ashley Wozneak, Laportia Oakley, Alexis Nagle, Janel Anderson, Porscha Green, Johanna Grissom, Karla Martinez, Amy Glines, Chada Mantooth, Ariel Cline, Alena Bailey, Jessica Saulters-Archuleta, Melissa Chavez, Talita Catto, Megan Fitzgerald, Christina Massaro, Andrea Abbott, Nicole Bujok, Rachel Berry, and Kimberly Hale, all individually and on behalf of all others similarly situated, Plaintiffs,
v.
VCG HOLDING CORP.; Lowrie Management, LLLP; Denver Restaurant Concepts LP d/b/a PTs Showclub; Troy Lowrie; Michael Ocello; Kenkev, II, Inc. d/b/a PTs Showclub Portland; Indy Restaurant Concepts, Inc. d/b/a PTs Showclub Indy; Glenarm Restaurant LLC d/b/a Diamond Cabaret; Glendale Restaurant Concepts, LP d/b/a The Penthouse Club; Stout Restaurant Concepts, Inc. d/b/a La Boheme; and VCG Restaurants Denver, Inc. d/b/a PTs All Nude., Defendants.
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Certification of Question of Law, United States
District Court for the District of Colorado Case No.
17CV00631-RM-MEH
Attorneys
for Plaintiffs: Killmer, Lane & Newman, LLP, Mari Newman,
Liana Orshan, Denver, Colorado, Towards Justice, David H.
Seligman, Denver, Colorado
Attorneys
for Defendants: Berg Hill Greenleaf & Ruscitti LLP, Rudy E.
Verner, Boulder, Colorado, Jackson Lewis P.C., Collin
OConnor Udell, Hartford, Connecticut, Jackson Lewis P.C.,
Ryan P. Lessmann, Melisa H. Panagakos, Denver, Colorado,
Jackson Lewis P.C., Allan S. Rubin, Southfield, Michigan
Attorneys
for Amicus Curiae the Colorado Trial Lawyers Association:
Lowrey Parady, Attorneys at Law, Sarah J. Parady, Denver,
Colorado
Attorneys
for Amici Curiae National Employment Lawyers Association and
Plaintiff Employment Lawyers Association: Sweeney & Bechtold,
LLC, Joan M. Bechtold, Denver, Colorado
OPINION
JUSTICE
HART
[¶1]
Under Colorado law, equitable estoppel requires proof of four
elements. One of those elements has long been detrimental
reliance on the words or actions of the party against
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whom estoppel is sought. In this case, we accepted
jurisdiction over a certified question of law from the United
States District Court for the District of Colorado that
requires us to determine whether there should be an exception
to that requirement in the context of arbitration
agreements.[1] We hold that Colorados law of
equitable estoppel applies in the same manner when a dispute
involves an arbitration agreement as it does in other
contexts. Thus, a nonsignatory to an arbitration agreement
can 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.
I. Facts and Procedural History
[¶2]
In 2017, a group of current and former exotic dancers sued
the owners of clubs where they perform and the club owners
corporate parent companies in the United States District
Court for the District of Colorado. The plaintiffs allege in
their amended complaint that the defendants acted in concert
to wrongfully deprive the dancers of basic protections
provided by law to employees. The plaintiffs contend that
they have been misclassified as nonemployee "independent
contractors" or "lessees" pursuant to
"Entertainment Lease" agreements that identify the
club-owner defendants as "landlords" rather than
employers. According to the plaintiffs pleadings, the
club-owner and corporate-parent defendants are 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.
[¶3]
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
seek to do the same, but because they were not parties to the
agreements or to any other written contract with the dancers,
they have to find a different hook to compel the dancers into
arbitration. They argue that the dancers should be equitably
estopped from litigating their claims against one set of
defendants because they are in compelled arbitration of the
same claims against the other set of defendants.
[¶4]
A federal magistrate judge examined Colorado state contract
law and recommended that the district court accept that
argument and compel the arbitration of the plaintiffs claims
against the corporate-parent defendants. The recommendation
was predicated, in large part, upon a prediction that this
court would agree with the court of appeals decision in
Meister v. Stout,2015 COA 60, 353 P.3d 916. In that
case, a division of the court of appeals concluded that when
a signatory to a contract containing an arbitration clause
asserts a claim arising from that contract against a
defendant who was not a party to the contract, he may be
estopped from avoiding arbitration and instead be compelled
to arbitrate by and with the nonsignatory defendant.
Id. at ¶¶ 6, 13-18, 353 P.3d at 919, 920-22. Relying
on Meister, the magistrate judge determined that,
although they had not signed the agreements, the
corporate-parent defendants are entitled to enforce the
arbitration provisions against the plaintiffs because the
claims asserted against all defendants are interdependent and
intertwined with duties and obligations in the ...