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Kickbacks from adult clubs to cab drivers spur legal battle
At issue: Tips paid by adult businesses to taxi, limo drivers to bring in customers
Tuesday, Aug. 4, 2009 | 11:43 a.m.
Sun Coverage
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.
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What does the IRS say about all this unreported extortion money. That is alot of taxes lost on earned income that could go towards the federal unemployment fund. It worked to bring down Capone.
If they had half of a clue how this system REALLY works, they'd have a build a few more jails to house everyone involved. This has been going on for years, and will never stop.
First it was the "long haul" from the airport and now its deception to get an extra $10 from a strip club. Way to report on current news. Funny thing is I heard about these 10 years ago when I made my first vacation here. Everyone seems to know that the cabs here are nothing more than rolling screw jobs. Its part of the "Vegas Experience".
This is Vegas. Most folks came here to earn a buck Vegas-Style. Why else would cabbies bring thier families to this place? I fail to see how tips to drivers hurt ANYTHING! They are taking visitors somewhere to spend money here in Clark County. Why discourage that? Goofball Theodore Trap is a grown man with a mouth. He could have said no at any time. What an idiot. He probably felt like crap after spending $1000 at the Rhino, and now he is taking it out on someone. Bully. Notice, he doesn't live here. He isnt living in a community with such economic issues as Vegas. This whole town runs on tips and insider info. Sheesh!
How can anyone prove that there are in fact kickbacks going on? The clubs aren't going to come out with it. And why should a taxi driver?
I think the IRS needs to look at all these kickbacks and start hitting the drivers up for the tax money they clearly owe. If they are getting hundreds of dollars a day in unreported income they should pay tax on that. Records systems need to be put in place or else stop all the kickback money. No wonder we have so many drivers in this town look at all the extra untaxed money these guys are milking out of the system. Do the cab companies get any of this bounty? The IRS needs to investigate.
does any one trust a cab driver???? strip clubs are for the rich that has money so they dont mind paying the price!!! if you are average joe how much money do you got ??? sure there are kick backs just like any job here
I have to pay taxes on every nickel I make and so should everyone else. It's Un American to cheat the government and if you condone it you are part of the problem. Sergio I hope the IRS traces your IP address and uses this admission of tax evasion to prosecute you for the money you stole from the government. Dirt bag tax evader! A few years in prison for you and maybe you will not cheat anymore.
Sergio the Prophet,
You are EVERYTHING that's wrong with this situation!!! You are doing EXACTLY what their trying to stop.
Did you pay taxes on your bribes??? Let's say you call it a commission - still, did you pay taxes on it? Are you willing to prove it???
You sir, are a scumbag! You make me sick to think people like you are in my city! You don't even get that it's wrong, do you?
most cab drivers are turbin heads am i right???
the practice of the kickbacks which they (ARE) kickbacks not tips,should be outlawed somehow.sergio you should stfu!some of us public are not as ignorant as you claim and understand that most cabbies are greedy and lazy,like they cant make money in a tourist town.there are plenty of clubs in this town to go around and everyone would be making money if this practice was eliminated.several good clubs are struggling because now they cannot afford to pay the ever increasing price per head war.Also it's not just the club owners that are loosing money the people working in them are aswell.Greedy cabbies are taking food out of many mouths,and you know that these bribes are not being reported to the irs.Also how do the clubs report that expense i'm sure they call it operating expenses.They will then get all that back which is a scam.The whole thing stinks and for the ones who agree with this bribery should take it to another town.I like how people think that because it's Vegas it's O.K. to be crooked,go home we don't want you here!!!Also the clubs that insist on bribing cabbies to monopolize should pack up and go home aswell.
ok, ok, Last time I checked, I noticed waitresses, bellboys, and hookers getting tips, these were illegal aliens,who paid taxes,and sent money home, to wherever.. this in NYC where it's winked at, How do you expect to run a city, otherwise? IRS can audit anyone, anytime, it's a crapshoot, (sorry)
With the economy going down faster than a hooker on crank, take a bus. or walk. I have never gone to a lady's club, If I ever do, I don't care if the driver gets a stipend. greyhound bus drivers get a free happy meal, when they drop their customers of at a franchise, same deal, right?
"most cab drivers are turbin heads am i right???"
What exactly is your point? Do you have one?
In the real world, aka cities outside of Las Vegas, large law firms are usually pretty careful about not representing sleazy clients. Huge evil corporations are ok, but publicly identifiable sleazoids, no.
But, I guess here in Las Vegas, even national law firms have no shame.
The Sun reports that the defendant taxi cab companies' owner, Frias, is represented by attorneys with the firm Snell & Wilmer. For many years Snell & Wilmer has been the pre-eminent law firm in Phoenix, and now it has branches in major cities around the country. How about this for your online law firm resume, including case summaries, Snell & Willmer? "Represents taxi companies who demand bribes from strip clubs in Vegas, for bringing customers to select bribe paying clubs, rather than clubs too cheap to provide bribes." And for good measure how about "Represents taxi companies who discriminate against female and handicapped customers".
Greenberg Traurig is one of Miami's largest and most powerful law firms. They have branches in large cities across the United States, representing big companies on high dollar litigation. Periodically, on their firm's online resume, Greenberg Traurig claims to have been the firm which won the Bush/Gore recount litigation in the Florida courts. So how about adding this to your firm's online resume Greenberg Traurig? "Representing Sapphire Gentleman's Club, in lawsuit concerning bribery of cab drivers to bring drunk customers to the company's strip club, thereby allowing the club to charge thousands of dollars of services to each drunk's credit card. Sapphire Gentleman's Club is a prominent Las Vegas company which provided "independent contractor personnel" to a prominent casino chain, including topless service providers of comfort and stimulating libations."
What General Counsel in his right mind would hire either law firm, for a major litigation case outside of Las Vegas, knowing that opposing counsel would make sure to find a way to let the trial judge know about the opposing firm's legal representation of extortionists, strip club operators like Tony Soprano's pals, strippers, hookers and drug dealers?
I know, Snell & Wilmer and Greenberg Traurig, that old American Bar Association ethical guideline telling lawyers to avoid the appearance of impropriety is just too outdated when cash flow is involved.
However, tasteful corporate lawyers wouldn't dirty their hands with these cases.
I know taxi cab drivers who dont pay their child support because most of their income in in the form of these kick backs they dont report. While the state is burdened to provide food stamps, medicaid, and housing for their kids families. If the clubs are going to pay commissions, it should be in a check and taxed. Otherwise, they are all tax evaders, criminals.
I am a cab driver in las vegas and I currently work the 1am to 1pm shift and I have not seen a strip club ride in over 2 months so No we aren't making a fortune in kickbacks as the media leads you to believe. We pay taxes on 23% of our net book to the IRS for tips even if we don't make 23% so if the IRS want to audit they would probably owe me. In today's times we are underpaid and overworked! I find it amusing that you people that call us all criminals are saying this WHY? I have never taken anyone where they don't want to go. When a guy gets in my cab Of course I hope that i get a strip club ride so I can pay my bills but if he says across the street for $4.30 then he goes across the street even though I waited for 2 hours for that ride then i get the .70 tip of which i pay .60 to the cab company for a trip charge then I get 40% the meter. FYI tourist are not good tippers you usually get 10% but we pay 23% so really come now How are we to blame if we are just trying to provide for our family. And Yes i am willing to prove it just like when i was audited last year then got a FAT return due to it. Walk a day in our shoes before you pass judgment.
so some drunken californian idiot gets diverted and falls for it and wants to cry about it? honestly, if that cabbie decided to take him to the rhino anyways, this tourist instead went inside rhino regardless? are californians truly that stupid? i know they cant drive in s straight line worth a damn but this is beyond retarded. if he in the worst case scenario was taken to the rhino he should have NOT gone inside and grabbed another cab to go to the proper place. simple as that. no one escorted this so cal idiot inside to the rhino with a gun to his head to look at boobies.
Since I dont frequent strip clubs and dont care about people who do..... How bout this weather we're having!
Notwithstanding the fact that the companies are besieged by problems that are discretionary to downright and illegal-still it does not amount to a Class-Action. There is no way a prudent Judge would classify it as Class Action. A class Action is similarly situated class of people who are affected equally. Fine example would be all the Homes built by one builder who have problems with the plumbing. This so called Class action lawsuit was ill founded,ill conceived and filed to enrich one person or one Law Firm. This is an abuse of the court and judicial system. The solution lies in regulating the trade. A cab driver reccomending one establishment versus the other, as such not illegal or violate free speech. But when the same cab driver accepts gratuity or money-it is illegal and unethical.
I agree with Floyd, the suit has no merit and will most likely be thrown out of court. This article and the subsequent comments seem to reflect a very superficial understanding of how things work and get done in the Las Vegas cab/transportation industry. Still waters run deep, they say. You have only seen the tip of the iceberg. Look below the surface and you'll see what sunk the Titanic.
It's always easy to go after the little guy, the driver. But that's like beating a person who is already a hapless victim. The average driver is barely making minimum wage after working 60 to 70 hours a week. The IRS taxes them plenty by a formula that takes tips into account. BTW, an honest driver usually pays too much to the IRS. Sorry to disillusion the folks who think cabbies are getting a free ride. Your average, honest, driver is struggling to make shift averages to keep his job. He/she is under incredible stress to give in and long haul or divert passengers for money. Sometimes it's the toke and other times it's a simple matter of what's on the meter. More is better and if you wait in line for 45min and get a $5 fare you will never make your shift average. Yes, every cab company trains their drivers not to long haul or divert passengers. Then many companies turn a blind eye to these practices because they want the money a less than honest top booker can bring in.
Money makes Las Vegas go round. Reality is the strip clubs have been toking up to $100 per non-local male customer in the recent past. The amounts change often. Always follow the money. What about the valets who demand a $50 toke every day? For an honest driver, it's tough out there. Strip club runs are like hitting a jackpot. A cabbie I know had about 6 paying runs in the last year. Not exactly a bonanza gold. BTW, the wedding chapels(and others) toke drivers too.
It is a grey area. If I am an investment counselor and I have 2 excellent opportunities that will serve my customer well, am I wrong to recommend the investment that pays me the most money? Let's not hold the cab drivers to a higher ethical standard than we are willing to exact from the business world in general. Remember, the honest driver is a victim in this scenario. He/she doesn't come out ahead. Everyone loses. It's too much trouble to punish the guilty. It's too easy to punish the lowly driver who can't afford to defend himself. Hurting the honest drivers is an empty meaningless victory. The guilty still go unpunished.
Just my opinion......
Most guys from out of town that get in a cab and who are looking for a strip club expect the cabbie to take them somewhere.
And they don't really care as long as its safe and they can enjoy themselves.
Why isn't it thought of as a commission? A finders fee or something? Because that doesn't promote the image that the critics seek. Its gotta be a bribe or a kickback.
The people that have their shorts in a knot on the issue are really anti strip clubs, anti drinking, anti this and anti that... They think the whole world ought to be like them and come home from work, sit down in an easy chair, light up the pipe (tobacco) and watch the evening news while the wife crotchets mittens.
Strip clubs are not my thing. What is my thing is defending our life style from holy than thou people, who like nothing better than telling people how to run their lives.
If you want to reform something start with Wall Street or Congress. Leave the cabbies alone for crying out loud. Give em a break.
drivers get kickbacks for the following
strip clubs
massage places
marriage places
tattoo parlors
ihop
legal whore houses
george wallace tickets
on occassion drivers get
free hotel rooms
free strip resort house show tickets
some hotels give free lunches on certain days certain months
free lunch buffets
1/2 price food at ihop or ellis island, etc.
so basically, strip clubs are the problem and where do 80% of the strip club rides from the hotels actually come from...not cabs, but limos. LIMOS AND DOORMEN are the problem, but nope...only words you see stand out in this media biased article is CAB.
id like to see the TA dismantled and metro be told to stop harassing cab drivers. metro and our state govt in general treats cabbies in this town like southern states treated blacks prior to civil rights movements....back of the bus rosa parks kinda stuff.
i for one would love to see every cabbie in this town park their cabs in a large open lot....like blvd mall, on a busy sunday morning when people need to get to the airport. and drivers dont move until the governor steps up and actually speaks to drivers...personally. but i know our gov is chicken spit and wont even respond to an email regarding the TA and its corruption.
yellowsnow hit the truth jackpot. part of TA corruption is too many cabs on the road. in this economy there are a lot of drivers out there that would never be a cabbie but a job is a job. ive spoken to many cabbies in this town that have BA in business, doctorates, contruction workers, etc....all had unemployment run out and sad thing is their paychecks from cab co's from their meter revenue are just as bad as their unemployment checks....and thats for 60 hours a week...120 hours on a biweekly check. dont count on tips from people...10 rides you may go home with 25 bucks in tips from all these cheap forigeners we get.
so when some cab driver, a more honest one not a pimp on wheels type, gets lucky to get 1 person a week or month that wants to go to a club....get a grip.
rick belcastro can go shove a broom somewhere unmentionable. hes too cheap to give the cover charge to someone else. that place is always dead when i pass by it. its poorly located. yea, its "2 minutes from the strip" and rick boy can say "look theres the bellagio and mgm and NYNY!" hey rick, i can see the whole strip from where i live too moron. he is NOT the closest club to the strip, deja vu or sapphire is closest from las vegas blvd, and the easiest to get to as well....fashion show, circus circus dr, mel torme, jay sarno, back entrance of mirage access, monte carlo back access....you get the idea.
pick on some real criminals and stop picking on people trying to earn a living. for anyone here that says or may say cab drivers are scum....tell me where you work so i can find some way to call you scum.
heres a better list of scumbags....
telemarketers
lawyers
metro cops
nevada government
TA
limo drivers
shuttle bus drivers
sands properties employees
people that work at the convention center
car salesmen
mainstream media
verizon customer service reps
im sure im missing many many many people or groups, but nope...seems like cabbies are the ONLY scum in this town.
No one was holding a gun to the guys head they went to the clubs on ther own this lawsuit I hope will fail beside are the people still going to the clubs of course they are. If this lawsuit wins what happen when people ask the cab driver about a good place to eat is the cab driver going to be sue if he makes a comment about where to eat.
Who is THEODORE TRAPP ?
works with a big chain of strip club that does not want to payout the transportation workers.
Advantage
As of today all the major stripp clubs pay 60 and charge 30.Rhino, Saphire, OG, Ricks,however cheries, diamond can can and clip joints pay more.
disadvantage
Deja vu and little darlings same company charge 30 and pay 20. screw drivers by handing passes on the strip by promoters therefore no pay for driver if customer has pass.Play again sam is a local place a real dive... Tourist don't even know its there. Play again sam does not compete with does clubs.
Play again sam is a scapgoat for deja vu intention. They are working together to stop paying hard working drivers.
Taxi driver
Remember deja vu has a lawsuit against other strip clubs . It was on the news will back nice one Theodore Trapp.
deja Theodore Trapp vu lol
If there were no cabs in Vegas, we would have a more efficient monorail and CAT system. Get over yourself and your former buddies Sergio.
NOW everyone is worried about all the uncollected taxes this creates?? Excuse me, but how many tips are really reported to the IRS??
And the website the Sun mentions here has no contact information, just a paypal button promising you privacy... Yea, ok... Send me some of the money and I promise to pay taxes on it and keep your information private!!
Last Thing... George Knapp is a reporter who, like Obummer, hates business and likes to see them fail...
sergio, you have it wrong, the customer pays $30 to get in and the club kicks $60 to the driver (although it changes all the time). the strip clubs that pay this "lose" $30 on every guy that walks in the place. but the clubs don't actually "lose" this money, because the money paid for kickbacks is paid out of the marketing budget of the club (which is a writeoff), and if the kickbacks go away then an equivalent amount of money will be spent on billboards and radio ads instead, and there is no way to track how effective these form of advertising are at bringing in customers. At least with the kickbacks clubs know exactly what they get for their money. Club owners do not want the kickbacks to go away, they just want them to be equivilant to the cover charge so that they can have more profit.
Also, the big clubs have upwards of 400 girls working on a busy weekend night, each paying approx $100 for their house fees, meaning the club makes $40,000 a night from the girls.
Just to give everyone prospective on how much the clubs make, a couple of years ago Sapphire was embattled in a lawsuit between owners, and a judge put the club up for auction. The final sale price of the club, $80 million!!!
http://www.reviewjournal.com/lvrj_home/2...
How are the cab drivers actually paid? Cash on the spot? If as one person said, it comes out of the marketing budget, it can't be all cash...
How do they track this? Do the cab drivers come up to the door and collect from the doorman as they drop the people off?