Las Vegas strip clubs prevail in taxi driver kickback lawsuit

A federal judge has rejected claims that Las Vegas nude and topless dancing clubs have participated in a racketeering scheme by paying kickbacks to taxi drivers.

U.S. District Judge Lloyd D. George in Las Vegas last week granted dismissal motions filed by eight adult clubs that were sued in 2009 in what class-action attorneys at the time called a scheme in which taxi companies were accused of extorting commissions from the clubs totaling $40 million over the years in order to deliver customers to them.

Attorneys later dropped the taxi companies from the lawsuit, saying it was the adult clubs that were at fault.

Now, the entire thesis of a racketeering scheme by anyone has been rejected by the judge.

The suit seeking class-action status was filed on behalf of Southern California resident and Las Vegas tourist Theodore Trapp by attorneys led by Jay Edelson of Chicago.

The suit charged Trapp got into a cab at Caesars Palace in January 2009 and asked to be taken to the Play it Again Sam club on West Spring Mountain Road, but instead was diverted to the nearby Spearmint Rhino club by the driver, who said Spearmint Rhino was a better club but did not disclose he would receive a kickback and a higher fare for taking Trapp there.

In his order dismissing the lawsuit against Spearmint Rhino and seven other adult clubs, George wrote that the clubs were also accused of recovering kickbacks to drivers, typically of $100, by charging higher cover charges, by selling low-quality liquor represented to be premium liquor, by watering down drinks and falsely stating amounts owed by customers and using force or intimidation to collect these amounts.

But George ruled that Trapp and his attorneys had failed to allege a single instance of illegal activity to support the racketeering allegation.

"Trapp has not alleged sufficient facts to permit an inference that, in charging an admission fee and paying taxi drivers, any of the defendant adult nightclubs committed a crime. Trapp concedes that it is not illegal for an adult nightclub to either charge an admission fee or to pay a cab driver," George wrote in his ruling.

As for clubs increasing cover charges to cover payments to taxi drivers, George wrote, " It is not a crime to increase the price charged for a service or product, so long as the service or product is delivered."

"Alleging that the adult nightclubs did not disclose that the proceeds of the increased admission fees would be used to pay taxi drivers is insufficient. Trapp has not offered any authority suggesting that adult nightclubs (or any other business) have a duty to disclose their lawful expenses to each customer or to any customer," George wrote in his ruling.

Addressing allegations that taxi drivers unlawfully divert strip club customers to clubs paying the highest kickbacks, George wrote, " That some taxi drivers engage in unlawful conduct to obtain a lawful payment from an adult nightclub does not cause the adult nightclub’s payment to be unlawful."

" Trapp’s own allegations require the conclusion that it is equally plausible that an adult nightclub must pay a satisfactory amount to taxi drivers to ensure that taxi drivers will not have an incentive to divert customers to other adult nightclubs," the judge wrote in his order.

Asked about George’s dismissal of the suit against the strip clubs, Edelson said Wednesday: "We are reviewing the order and are still considering our options."

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  1. Look at all the "upgrade to a premium room" stuff that hotels pull It is called marketing. You have to look at the fine print n any deal, coupon, offer. The biggest rip off is that these clubs should offer real sex, like they do in Europe or Asia. Time to legalize prostitution and pot.

  2. This is not racketeering just bad business practices from the strip clubs. If I was going to a trip club I would realize somewhere along the way I was going to be taken for a ride- either the cabbie gets me, the doorman gets me, or the stripper gets me. A wise tourist has to understand that in a 'tourist trap' nothing is free or cheap, in this town or any other city.

  3. Have a legitimate taxed Red Light District and prosecute Everywhere else. Legalize Pot and rate the Police on Capturing Real Criminals. Las Vegas is a Tourist Trap of Massive Proportions, so lets be honest about it and make it Bigger and Better. Remember P.T Barnum - There is a Sucker Born Every Minute, If they are going to spend money it might as well be here.

  4. In Austria the problems with the cabbie, doorman or stripper are much smaller because things are legal. So there is a tough competition. The services become better every day. Now with this crisis are much better than ever :-). Competition creates good services. Now the laws in US create a gray life for anybody, client or employee or business person (see Hard Rock Cafe for example).
    By the way, it is unfamiliar for an European to keep his T-shirt on, as mandatory rule of the club. Maybe that's why all the young people go to pool parties. .... more details later :-)

  5. "Now, the entire thesis of a racketeering scheme by anyone has been rejected by the judge."

    So the plaintiff's attorneys came up with a flimsy theory for the case. Funny thing is how the judiciary's blame goes to the party, not the attorney, and the attorneys still get paid. All this in spite of the Rule 11(b).

    "The legal system has also been wounded by lawyers who themselves no longer respect the rule of law ..... When lawyers cannot be trusted to observe the fair processes essential to maintaining the rule of law, how can we expect the public to respect the process?" -- the Honorable Edith Jones to Harvard's Federalist Club "American Legal System Is Corrupt Beyond Recognition, Judge Tells Harvard Law School" 2/28/03