Horrocks v. Keepers, Inc.

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CRYSTAL HORROCKS ET AL. v.
KEEPERS, INC., ET AL.
(AC 44321)
Alvord, Cradle and Flynn, Js.

Syllabus

The plaintiffs sought to recover damages from the defendants for, inter alia,
unpaid wages. In their complaint, the plaintiffs, who worked as exotic
dancers at a gentlemen’s club that was owned and operated by the
defendants, alleged that they were improperly characterized as indepen-
dent contractors as opposed to employees, and, as a consequence, they
were unable to obtain workers’ compensation benefits, an appropriate
minimum wage and overtime pay, and were forced to pay the defendants
certain gratuities that they received from the club’s customers. The trial
court thereafter ordered a stay of the proceedings pending arbitration
pursuant to a mandatory arbitration clause in the agreement that gov-
erned the employment relationship between the parties. The parties
then proceeded to arbitration during which the defendants submitted
incomplete written records concerning the number of hours that the
plaintiffs worked, and the plaintiffs provided oral testimony on that
issue. In his initial award, the arbitrator determined that the plaintiffs
were employees rather than independent contractors. In a subsequent
award, the arbitrator determined that the parties’ employment agree-
ment was illegal and unenforceable because it was an attempt to circum-
vent statutory wage and hourly requirements, and that the plaintiffs
were entitled to be paid the appropriate minimum wage and overtime for
the hours they worked during a certain two year period. The arbitrator
awarded the plaintiffs $113,560.75 in damages, as well as attorney’s fees
and costs. Thereafter, the trial court granted the plaintiffs’ application
to confirm the arbitration awards and denied the defendants’ motion
to vacate the awards. On the defendants’ appeal to this court, held that
the trial court did not err in rejecting the defendants’ claim that the
arbitrator’s calculation of damages awarded to the plaintiffs constituted
a manifest disregard of the law because the defendants had the right
to present evidence of the precise amount of work the plaintiffs per-
formed and the arbitrator should have based his damages calculation
on the defendants’ written records, not on the plaintiffs’ oral testimony;
in the present case, the defendants were not prevented from submitting
evidence to prove the precise number of hours worked by the plaintiffs
but, rather, they submitted written records that the arbitrator determined
were deficient, and, therefore, in light of that deficiency, the arbitrator
properly considered the plaintiffs’ oral testimony in calculating the dam-
ages award.
(One judge concurring separately)
Argued January 13—officially released November 1, 2022

Procedural History

Action to recover damages for, inter alia, unpaid
wages, and for other relief, brought to the Superior
Court in the judicial district of New Haven, where the
court, Wilson, J., granted the defendants’ motion to
stay the proceedings pending arbitration; thereafter, the
court, Abrams, J., granted the plaintiffs’ application to
confirm the arbitration awards, denied the defendants’
motion to vacate the awards and rendered judgment
for the plaintiffs, from which the defendants appealed
to this court. Affirmed.
Stephen R. Bellis, for the appellants (defendants).
Kenneth J. Krayeske, for the appellees (plaintiffs).
Opinion

CRADLE, J. This appeal stems from a dispute
between the plaintiffs, Crystal Horrocks, Yaritza Reyes,
Dina Danielle Caviello, Jacqueline Green, Sugeily Ortiz
and Zuleyma Bella Lopez, and the defendants, Keepers,
Inc., and Joseph Regensburger,1 as to the proper charac-
terization of the plaintiffs as independent contractors,
instead of employees, for services rendered as exotic
dancers at a gentlemen’s club owned and operated by
the defendants. The defendants appeal from the judg-
ment of the trial court denying their motion to vacate,
and granting the plaintiffs’ application to confirm, arbi-
tration awards finding that the plaintiffs were employ-
ees, not independent contractors, and awarding them
damages. We affirm the judgment of the trial court.
The trial court set forth the following relevant proce-
dural history. ‘‘The plaintiffs . . . brought suit against
the defendants . . . for alleged violations of the rele-
vant state and federal minimum wage and overtime
laws. As alleged in the plaintiffs’ complaint, each of
the plaintiffs worked as an exotic dancer at Keepers
Gentlemen’s Club located in Milford. This establish-
ment is owned and operated by the defendants. The
plaintiffs allege[d] that, during their time working for
the defendants, they were improperly characterized as
independent contractors as opposed to employees.
According to the plaintiffs, this improper employment
relationship . . . caused them, inter alia, to be unable
to obtain needed workers’ compensation benefits, as
well as not be paid the appropriate minimum wage and
overtime pay. The plaintiffs also contend[ed] [that] they
were illegally forced to pay the defendants certain gratu-
ities that they received from customers. Accordingly,
the plaintiffs’ eight count complaint allege[d] the follow-
ing causes of action: (1) count one—failure to pay mini-
mum wage in violation of the Fair Labor Standards Act
(FLSA), 29 U.S.C. § 206; (2) count two—failure to pay
overtime in violation of the FLSA, 29 U.S.C. § 207; (3)
count three—unlawful deductions from wages and/or
gratuities in violation of the FLSA; (4) count four—
failure to pay minimum wage in violation of General
Statutes § 31-60; (5) count five—failure to pay overtime
in violation of General Statutes § 31-76b; (6) count six—
unlawful deductions from wages in violation of General
Statutes § 31-71e; (7) count seven—unjust enrichment;
and (8) count eight—breach of implied contract.
‘‘On May 26, 2015, the defendants filed a motion to
dismiss and/or stay this action . . . on the ground that
the employment relationship between the parties was
governed by an entertainment lease agreement [agree-
ment] that contained a mandatory arbitration clause.
The court, Wilson, J., denied the motion to dismiss . . .
on October 13, 2015, but it also ordered a stay of the
proceedings pending arbitration on January 4, 2016
. . . . [T]he parties [thereafter] proceeded to an arbi-
tration . . . . On July 18, 2019, [the arbitrator] issued
his initial arbitration award wherein he determined that
the plaintiffs were appropriately characterized as
employees as opposed to independent contractors. Sub-
sequently, on March 17, 2020, [the arbitrator] issued a
further arbitration award where he determined, inter
alia, that the . . . agreement was illegal and unenforce-
able because it was an attempt to circumvent statutory
wage and hour requirements, and, as a result, the plain-
tiffs were entitled to be paid the appropriate minimum
and overtime wage for the hours they worked for the
period between April 14, 2013, to April 14, 2015. [The
arbitrator] awarded the plaintiffs $113,560.75 in dam-
ages. [The arbitrator] further denied the plaintiffs’
request for double liquidated damages because he found
[that] the defendants acted with a good faith belief they
were complying with the law, but he also gave the
plaintiffs $85,000 in attorney’s fees and $2981.16 in
costs.’’ (Footnotes omitted.)
On March 17, 2020, the plaintiffs filed an application
to confirm both the July 18, 2019 and the March 17,
2020 arbitration awards. On April 7, 2020, the defen-
dants filed a motion to vacate the arbitration awards,
claiming that (1) the arbitrator exceeded his authority
because, when he determined that the agreement was
void and unenforceable, the arbitration clause within
the agreement was also rendered unenforceable, (2)
the arbitrator’s award of attorney’s fees was improper
and should be vacated because the arbitrator relied
on the current revision of General Statutes § 31-72 as
opposed to the iteration of the statute that was in exis-
tence between April, 2013, and April, 2015, and (3) it
was incorrect for the arbitrator to rely on oral testimony
of the plaintiffs regarding how much time they had
worked. By way of a memorandum of decision filed on
October 2, 2020, the court, Abrams, J., granted the
plaintiffs’ application to confirm the arbitration awards
and denied the defendants’ motion to vacate the awards.
This appeal followed.
On appeal, the defendants claim that the trial court
erred by failing to conclude that the arbitrator’s calcula-
tion of damages constituted a manifest disregard of the
law because the arbitrator ‘‘should have based [that
calculation] on the written records [presented by the
defendants] not [on] a verbal estimate of the plaintiffs.2
We disagree.
‘‘[T]he manifest disregard of the law ground for vacat-
ing an arbitration award is narrow and should be
reserved for circumstances of an arbitrator’s extraordi-
nary lack of fidelity to established legal principles.’’
(Internal quotation marks omitted.) Blondeau v. Bal-
tierra, 337 Conn. 127, 161, 252 A.3d 317 (2020). ‘‘Under
this highly deferential standard . . . our precedent
instructs that three elements must be satisfied before
we will vacate an arbitration award on the ground that
the [arbitrator] manifestly disregarded the law: (1) the
error was obvious and capable of being readily and
instantly perceived by the average person qualified to
serve as an arbitrator; (2) the [arbitrator] appreciated
the existence of a clearly governing legal principle but
decided to ignore it; and (3) the governing law alleged to
have been ignored by the [arbitrator] is [well-defined],
explicit, and clearly applicable. . . . [E]very reason-
able presumption and intendment will be made in favor
of the [arbitration] award and of the arbitrators’ acts
and proceedings.’’ (Citations omitted; internal quotation
marks omitted.) Id., 161–62.
In setting forth the basis for the calculation of his
award of damages, the arbitrator recounted the evi-
dence presented by the parties, including evidence of
the record keeping procedures used by the defendants
to record the hours worked by the plaintiffs. The defen-
dants submitted that they had used two systems to
account for attendance. First, they used a sort of ‘‘punch
card’’ system, whereby the identification card of each
plaintiff was photocopied at the beginning of each shift,
and from those ‘‘punch cards,’’ the administrative staff
would create a ‘‘daily business recap.’’ After that recap
was produced each day, the punch cards were dis-
carded. The defendants also utilized a biometric system
that scanned the plaintiffs’ fingerprints at the beginning
of their shifts. Due to a system malfunction, however,
the records from that system were lost. Although the
plaintiffs did not have written records of the hours
they had worked, the arbitrator considered their oral
testimony regarding those hours, along with the incom-
plete records of the defendants, to calculate damages.
Before the trial court, the defendants challenged the
damages awarded by the arbitrator on the ground that
they constituted a manifest disregard of the law. In
rejecting the defendants’ argument, the court explained
that, ‘‘[a]lthough the defendants attempt to frame this
portion of their motion as an attack on the overly specu-
lative nature of [the arbitrator’s] damages calculation,
in reality, the defendants believe that [the arbitrator]
erred when he credited the plaintiffs’ oral testimony
over certain written documentation offered by the
defendants.’’ The court referred to the arbitrator’s
assessment of the evidence submitted by the parties,
explaining that the arbitrator had concluded that the
defendants’ record keeping was ‘‘inadequate and incom-
plete’’ and, therefore, that, ‘‘in calculating [the] plain-
tiffs’ damages, [he] . . . necessarily relied on both the
plaintiffs’ testimony and the partial records of the defen-
dants.’’ (Internal quotation marks omitted.) On that
basis, the court noted that the arbitrator ‘‘indicate[d]
that he examined the defendants’ attendance records,
but he found that they were not completely accurate.
Therefore, he also relied on the plaintiffs’ oral testimony
in order to determine a complete total of the number
of hours that they worked.’’ The court concluded: ‘‘This
finding is more than substantial evidence to support
[the arbitrator’s] damages calculations, and it is not the
role of this court to substitute its judgment for that of
the arbitrator. Consequently, the court also rejects this
argument as a valid basis to grant the defendants’
motion to vacate.’’
On appeal to this court, the defendants again chal-
lenge the damages awarded to the plaintiffs on essen-
tially the same ground that they raised before the trial
court. Specifically, the defendants contend that ‘‘the
arbitrator disregarded the law that the defendants have
the right to present evidence of the precise amount of
work the plaintiffs performed.’’ The defendants claim
that the court ‘‘should have based the hours worked
on the written records of the employer, not [on] a verbal
estimate by the plaintiffs.’’3 As aptly recounted by the
trial court, the arbitrator considered the evidence pre-
sented by the defendants but concluded that the defen-
dants’ record keeping was ‘‘inadequate and incomplete’’
and, consequently, ‘‘relied on both the plaintiffs’ testi-
mony and the partial records of the defendants’’ in
calculating the damages that he awarded to the plain-
tiffs. Contrary to the defendants’ assertion, they were
not prevented from submitting evidence to prove the
number of hours worked by the plaintiffs, but the evi-
dence that they did present, which was considered by
the arbitrator, was deficient. Faced with that deficiency,
the arbitrator considered the oral testimony of the plain-
tiffs. It was not improper for the arbitrator to do so.
Accordingly, the court did not err in rejecting the defen-
dants’ claim that the arbitrator disregarded the law in
calculating the damages awarded to the plaintiffs, and
thus did not err in granting the plaintiffs’ application
to confirm, and denying the defendants’ motion to
vacate, the arbitration awards.
The judgment is affirmed.
In this opinion ALVORD, J., concurred.
1
Regensburger is the president of Keepers, Inc., and was sued in both
his individual capacity and as an agent, principal or representative of Keep-
ers, Inc. He has been involved throughout both the arbitration and the
present case. The arbitrator’s awards, which were later confirmed by the
trial court’s judgment, were against both defendants and made no mention
of apportionment.
2
The defendants also claim on appeal that the trial court erred by not
holding that the arbitrator’s awards violated a legitimate public policy of
the freedom to contract, and by failing to sever the enforceable and unen-
forceable terms of the agreement and to determine that the defendants were
entitled to a credit against wages for the entertainment fees paid to the
plaintiffs. Because the defendants did not raise these claims before the trial
court, we decline to review them. See Board of Education v. Commission
on Human Rights & Opportunities, 212 Conn. App. 578, 590, 276 A.3d 447
(‘‘[t]his court will not review issues of law that are raised for the first time
on appeal’’ (internal quotation marks omitted)), cert. denied, 345 Conn. 902,
A.3d (2022); see also Practice Book § 60-5 (reviewing court not bound
to consider claim unless it was distinctly raised at trial).
3
We note that, at oral argument before this court, counsel for the defen-
dants acknowledged that it was not ‘‘improper for the arbitrator to credit
some of the plaintiffs’ [oral] testimony.’’