Kickbacks from adult clubs to cab drivers spur legal battle

By Steve Green

Tuesday, Aug. 4, 2009 | 11:43 a.m.

Several Las Vegas taxi companies and adult clubs are firing back in a lawsuit over commissions topless and nude clubs pay to cab drivers for bringing them customers, and both sides appear to be digging in for a long legal fight.

On June 2, attorneys filed a lawsuit seeking class-action status in federal court in Las Vegas against most of the players in the local taxi and adult business industries.

The suit charges consumers have been harmed because taxi and limousine companies have extorted more than $40 million in illegal kickbacks from local strip clubs in exchange for diverting customers to the adult establishments.

The suit was filed on behalf of Southern California resident Theodore Trapp, who alleges in January a driver diverted him from a planned visit to Play it Again Sam's to another club -- the Spearmint Rhino -- because the driver wanted to be paid a kickback from Spearmint Rhino.

The defendants are now filing responses to the lawsuit and, generally, they say it lacks legal merit.

The lawsuit "completely fails under existing law since it is impossible for plaintiff to transform allegations of taking a single cab ride from a unknown cab company, driven by an unidentified driver, to one specific gentlemen’s club, into a class of plaintiffs consisting of every person that took a cab to a gentlemen’s club and a complaint seeking damages from nearly every cab and limousine company and nearly every gentlemen’s club operating in Clark County,'' wrote attorneys for Western Cab, Lucky Cab, On Demand Sedan Services, BLS Limousine Services, Desert Cab and Sun Cab.

"Plaintiff cannot simply allege that he has been damaged by all cab company’s actions based upon his interaction with a single driver. This would be the equivalent of a plaintiff suing all tire manufacturers because he had a single defective tire on his vehicle,'' wrote the attorneys with the Moran Law Firm.

Attorneys for Frias Management LLC, owner of Ace Cab and A-North Las Vegas Cab, said Frias trains its drivers not to divert passengers to unintended destinations.

"Under the terms of Frias’ collective bargaining agreement with its drivers, Frias never receives a penny of its drivers’ tips or gratuities. Any tips or gratuities received by a driver, regardless of the source, are the driver’s sole property,'' the Frias attorneys wrote. "Accordingly, there is no incentive for Frias to conspire with other taxicab companies or permit its drivers to break the law. In fact, diverting customers in exchange for kickbacks harms Frias because it takes its drivers away from their regular routes from which Frias earns money.''

Frias also argued that drivers offering their opinions on which adult clubs passengers should go to amounts to free speech protected by the First Amendment to the U.S. Constitution.

Frias is represented by attorneys with the firms Snell & Wilmer and Kemp, Jones & Coulthard.

Also responding to the complaint were attorneys with the firm Greenberg Traurig, representing Sapphire Gentleman's Club.

Sapphire "categorically denies that it has been involved in any illegal scheme,'' the attorneys wrote.

Court records show several of the defendants have demanded that Trapp post security in order to proceed with the suit. These are funds that can be required of out-of-state plaintiffs that could be recovered by the defendants if they win the case.

The posting of the funds is also an indication of how serious the plaintiff and his attorneys are about pursuing the case.

In response to those demands, Trapp, through his attorneys, went ahead and made several $500 security deposits with the court.

But not all the defendants are preparing to litigate the case.

Court records show companies that own the Badda Bing Men's Club and the Olympic Gardens have been or plan to engage in settlement discussions with the plaintiff's attorneys

Badda Bing and Olympic Gardens deny the allegations in the lawsuit and that they committed any wrongdoing, but said they are interested in settling considering the potential expense of litigation, trials and appeals.

This isn't the only lawsuit over the issue. In an existing case in state court, some club owners say paying commissions is a standard and acceptable procedure.

"Plaintiffs themselves have been tipping taxicab drivers for years. Moreover, adult nightclubs are not the only businesses that tip or provide another form of compensation to taxicab drivers that bring patrons to their businesses," lawyers for Seamless and Sheri's Cabaret clubs said last year in response to a state lawsuit filed by Deja Vu Showgirls and Little Darlings.

In that suit, which is pending against several clubs, Deja Vu and Little Darlings complained competing clubs were paying kickbacks to cab drivers -- causing drivers to divert customers from Deja Vu and Little Darlings.

Besides the lawsuits, a group called Fairness in Transportation is fighting the kickback practice, arguing it hurts women because cab drivers are less likely to pick up women as they focus on male adult-club customers. That group's Web site is wedontdobusinessthatway.com.