SUNDAY EDITION | Cordish officials grapple with wage issues - WDRB 41 Louisville News

SUNDAY EDITION | Cordish officials grapple with wage issues at 4th Street Live bars

Updated: Dec 28, 2013 06:00 AM
Tengo Sed Cantina at 4th Street Live (Chris Otts) Tengo Sed Cantina at 4th Street Live (Chris Otts)
Sports and Social Club at 4th Street Live (Chris Otts) Sports and Social Club at 4th Street Live (Chris Otts)

LOUISVILLE, Ky. (WDRB) – Settlement talks are about to begin in a long-running class-action lawsuit in which six former bar workers at 4th Street Live allege their employers -- Angel's Rock Bar, Tengo Sed Cantina and Hotel – stiffed them out of fair compensation.

The three bars – only one of which is still in business – are owned, at least in part, by principals of the Cordish Co., the Baltimore development firm that owns 4th Street Live, according to court records.

It's not the first time that the developers behind Louisville's taxpayer-subsidized downtown entertainment district have dealt with allegations of wage-and-hour violations at a 4th Street Live venue.

In 2010, a U.S. Department of Labor investigation found the Sports & Social Club, another bar and restaurant controlled by Cordish officials at 4th Street Live, failed to pay a total of $62,179 in wages and overtime to 61 employees. The bar agreed to pay back-wages.

A subsequent lawsuit by two former Sports and Social Club employees was partially settled after a major portion of the case was thrown out, according to Jefferson Circuit Court records.

The pending case, which is playing out in U.S. District Court in Louisville, could affect "hundreds" of people who worked at Angel's Rock Bar, Tengo Sed Cantina and Hotel between Jan. 30, 2007 and Jan. 1, 2010, according to a judge's ruling.

The case was filed in 2010. Only Tengo Sed Cantina is still operating; Hotel closed in 2012 and Angel's Rock Bar in early 2013.

The parties will attend a settlement conference before a federal magistrate judge on Jan. 8, but it's a routine step and no indication of a deal, according to the lawyer representing the ex-employees and a spokeswoman for the Cordish Co.

The six former bar employees worked in a variety of roles at Tengo, Angel's and Hotel, according to their complaint, including bartender, bar manager, head of security and "beer tub girl."

They claim they were forced to perform unpaid work promoting the venues, setting up and cleaning up, and attending mandatory meetings, and that they were forced to pool and share their tips in violation of Kentucky law. (Read the complaint).

In court records, the three bars deny the former employees' allegations. They say employees promoted the venues on the clock and that any tip pooling was voluntary. They also challenge the ex-employees' credibility.

The ex-employees have cleared one important hurdle: In 2012, U.S. District Judge Joseph H. McKinley ruled that they do indeed represent a class of workers broadly affected by the bar's policies. Lawyers for the ex-employees say the class could be more than 400 people.

But there has been no ruling on the merits of the ex-employees' allegations. A judge could throw out the case, or it could head to trial, said Michele Henry, attorney for the ex-employees.

"It's all still up in the air," said Henry, of the Louisville firm Priddy, Cutler, Naake & Meade.

Cordish's involvement

The Cordish Co. developed 4th Street Live – a collection of bars, restaurants and stores along S. 4th Street between Muhammad Ali Boulevard and Liberty Street – in the mid-2000s through an arrangement that involves heavy taxpayer subsidies from Louisville Metro and the commonwealth of Kentucky

It's Cordish's responsibility to keep the entertainment district vibrant. Some spaces in the development are leased to independent operators (such as Hard Rock Café), while other bars and restaurants (such as Sports and Social Club) appear to be operated by companies involving the Cordish Co.'s executives. 

The Cordish Co. itself is not named in the lawsuit against Angel's Rock Bar, Tengo Sed Cantina and Hotel. The company "has no ownership interest" in the three venues, Cordish Co. spokeswoman Candice Coolahan said.

Yet the venues were controlled by Reed Cordish, a Cordish Co. vice president and son of Cordish Co. Chairman David Cordish, through a separate company called Entertainment Concepts Investors, according to a Judge McKinley's 2012 opinion. Lawyers for the bars had argued ECI was merely a consultant to Tengo, Angel's and Hotel, but the judge said ECI was in fact in control of the venues. 

ECI also controls Sports and Social Club, the Department of Labor found in its 2010 investigation.

Reed Cordish is president of ECI, and records filed in the case show he partly owns ECI along with his brothers Jonathan and Blake (also Cordish Co. vice presidents); Jonathan's wife Melissa; and a trust in the name of Joseph S. Weinberg, a Cordish Co. partner.

Coolahan, the Cordish Co. spokeswoman, said the "ownership and control" of ECI is different than that of the Cordish Co.

But the distinction was lost on the Department of Labor, which called ECI "a division of the Cordish Company" and said the "actual employer" at Sports and Social Club is the Cordish Co. itself.

(Louisville taxpayers helped Sports and Social Club get off the ground in 2009 with a $950,000 forgivable loan from metro government, which was used to renovate the former Lucky Strike bowling alley as a sports bar. It was part of a $1.8 million deal former Mayor Jerry Abramson struck with Cordish officials in 2007. Now the remainder of the money, $850,000, is helping to renovate the space above Sports and Social for a new venue called Tavern on Fourth.)

Allegations of off-the-clock work

In the suit against Tengo Sed Cantina, Angel's Rock Bar and Hotel, the former employees of allege they were required, on their own time, to:

  • Go to other nightclubs, bars, sporting events, concerts and hotels to pass out advertising such as flyers promoting the venues;  
  • Call potential customers and try to sell them a "happy hour party" at the venues
  • Have a certain number of people on the venue's "guest list(s)" so they would be admitted without a cover charge
  • Promote the venues on social media
  • Encourage cab drivers to talk up the bars to passengers.

McKinley cited an October 2009 manager meeting agenda for Tengo Sed Cantina, which said: "Staff promoting must improve or I must find a new staff…Happy Hour bookings have to improve. The shot girls are the only ones actively getting after it at this point, and that is unacceptable."

The judge also cited a November 2009 meeting agenda for Angel's Rock Bar, which said: "The majority of the Rockbar staff gets out and promotes but we have some dead weight. It is time for them to step up or find another job."

The ex-employees also allege the bars forced them to clock-out before completing closing and cleaning work at the end of shifts, thus working without being paid.

The Department of Labor looked into similar issues in its investigation of Sports and Social Club: While off the clock, the bar's employees were required to cold-call potential customers, hand out fliers at other events and promote the venue on Facebook and Twitter, according to the investigation.

"Employees received ‘points' as a result of these activities, and if an employee did not receive sufficient points in one week, they were not permitted to work as many hours and were assigned to low-tip producing shifts," the Department of Labor said.

The Department of Labor also found that Sports and Social Club "regularly engaged" in practices that "resulted in employees not getting paid at least the minimum wage for all hours worked," such as, "refusing to allow employees to clock in, clocking them out before they had finished work, and manually altering hours within the time system."

Coolahan, the Cordish Co. spokeswoman, said the company that owns Sports and Social Club, Downtown Sports LLC, agreed to pay "a modest sum" – the $62,179 in back wages – "solely to avoid the costs of litigation and without any admission of liability" to the Department of Labor.

The subsequent lawsuit against Sports and Social Club was settled without an admission of liability, she said.

Meanwhile, in the pending lawsuit, the three bars deny the ex-employees' allegations while submitting affidavits from other employees that contradict their claims.

The bars say any sharing of tips by servers and bartenders with other employees such as barbacks (a customary practice in the hospitality industry) was voluntary; that promotional activities such as calls to potential happy hour customers and posting on social media were done on the clock; and that the bars did not force employees to perform unpaid work such as cleaning up after shifts.

The bars also raise issues affecting some of the ex-employees' credibility, saying that:

  • David Skyrm, a bartender at Tengo Sed Cantina, was disciplined in 2008 for drinking on the job and possibly relieving himself somewhere other than the restroom.
  • Holly Goodman, a beer tub girl at Hotel, and Kristin Moore, a bartender and administrative assistant at Angel's Rock Bar, admitted they did not report all their income from the bars on their tax returns.
  • Gary Muncy, bar manager at Angel's and Hotel, was charged with murder after beating a man to death in 2011. Muncy was sentenced to five years in prison in August after pleading guilty to delivering a single "sucker punch" that killed Donald Smith Jr. at the 2011 Schnitzelburg Walk.

Those issues might be "relevant to witness credibility" at a trial, Judge McKinley ruled last year. Still, he certified that the ex-employees represent a class and sub-class of people affected by the bars' policies and defined those groups as:

  • All non-salaried employees of the bars who worked without receiving hourly wages from Jan. 30, 2007 through Jan. 1, 2010.
  • All tipped employees of the bars who were required to pay a portion of their tips to other employees and were required to participate in a mandatory tip pool from Jan. 30, 2007 to Jan. 1, 2010.

In recent months, the parties in the case have been arguing over which exact types of employees are included in the class and sub-class. They do not agree, according a Dec. 10 filing by the bars, whether servers and "shot girls" should be included in the group, nor whether bartenders are the only types of employees who required to pool their tips.

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