“Get your head out of your ass. Big or small, East or West, if you own a club, you will eventually be sued.” – EXPO 2025 “Club Operator On Trial” legal panelist Gary Edinger
(NOTE: This story appears in the July 2025 issue of ED Magazine.)
In the adult nightclub industry, lawsuits are a reality, and a loss can have devastating consequences for your club’s future. Yet, you’re not powerless in shaping the outcome. A critical piece of evidence often comes from your legal deposition as the club operator.
For the uninitiated, a deposition is a formal, on-the-record, out-of-court interview where you answer questions under oath about the case. It’s a vital part of gathering information before trial, typically held in a lawyer’s office or via Zoom, with a court reporter present to transcribe. Opposing counsel are experts at depositions; without preparation, you risk providing them with ammunition that could potentially cost you millions.
EXPO 2025 legal panelist Brad Shafer, who created the original Club Operator On Trial legal panel years ago, notes, “I’ve found that the best way to get the attention of club owners with what they need to know about the labor issues involving exotic dancers is to let them see what a deposition cross-examination is like, and have them consider: “How would I answer that question?” Often, they may have no good answer. An experienced labor/tax lawyer can provide proper advice and direction to a club operator ahead of time, as it is not the time to try to figure all this out at deposition. Clubs can invoke multiple layers of defenses against dancers’ labor claims, but they must be in place before a lawsuit—afterward is too late.”
Panelist Gary Edinger adds, “The legal environment for clubs is simply different from that faced by conventional bars and nightclubs and different from the sort of lawsuits we faced 15 or 20 years ago. A club owner who is unprepared to defend against these claims is an owner who may soon be without a club.”
After 30+ years of legal panels, the original Club Operator On Trial is remembered as among the most entertaining panels ever. Panelist Edinger reports, “We aim to make the vital subject matter once again engaging, as an entertaining presentation often reinforces lessons better than a traditional lecture. Learning can be fun—and that’s our goal.”
The Club Operator On Trial will stage three mock depositions on critical legal issues that club operators often face, including liquor liability (dram shop law), use of force, and labor issues.
When the party goes too far: Dram shop lawsuits and adult nightclubs
Adult nightclubs, like any establishment serving alcohol, operate under dram shop liability. These laws hold businesses accountable for the harm caused by intoxicated patrons they have overserved. Originating from 18th-century “dram shops” that sold small measures of alcohol, these laws allow third parties injured by an intoxicated person to sue the establishment that provided the alcohol. The core principle is a duty of care to prevent harm by not serving visibly intoxicated individuals or minors.
Adult nightclubs face heightened risk due to the atmosphere that can encourage heavy drinking, making it challenging to monitor intoxication levels. Successful lawsuits have resulted in multi-million-dollar awards against clubs for injuries or deaths caused by patrons who were overserved, emphasizing that courts hold venues accountable for negligent serving practices.
Proving liability can be complex, often requiring eyewitness testimony, surveillance footage, and expert testimony. Despite this, there have been significant successful dram shop lawsuits against strip clubs:
- Illinois multi-million dollar award: A judge awarded $37.5 million to a man whose wife was killed by a drunk driver overserved at a St. Louis adult club.
- Ohio ruling against adult nightclub: An Ohio court ordered an $8 million payment to the family of a woman killed by an intoxicated patron who had been served there.
In order to not suffer a similar fate, staff must be trained to recognize signs of intoxication, prevent overserving, and practice responsible ejection procedures to ensure safety and avoid legal consequences. Dram shop lawsuits serve as a crucial mechanism for accountability, reminding venues that public safety must take precedence over profit.
The growing legal risks of use-of-force lawsuits against adult nightclubs
Adult nightclubs face unique operational challenges, with use-of-force lawsuits becoming a critical issue that threatens both financial stability and reputation. Maintaining a safe and controlled environment is paramount for patrons, staff, and entertainers. These lawsuits typically arise when security personnel, floor hosts, or other staff members are accused of using excessive or improper physical force. While maintaining order is essential in any venue with alcohol or large crowds, improper use of force can lead to costly litigation and even criminal liability.
Why they happen: Disputes in adult nightclubs can stem from alcohol consumption, inappropriate behavior, or payment disagreements. When conflicts arise, improper actions—whether intentional or negligent—by security or staff can result in injuries, legal claims, and lasting damage. Common causes include injuries during patron ejections, excessive force, improper detention, and failure to de-escalate. Even innocent bystanders injured in incidents can pursue claims.
The legal and financial risks created by these lawsuits are:
- Severe Financial Damages: Clubs may be liable for medical costs, lost wages, emotional distress, and punitive damages.
- Higher Insurance Costs: Lawsuits increase liability premiums, further straining budgets.
- Reputational Damage: Negative publicity deters patrons and undermines long-term business sustainability.
The bottom line is that improper use of force can devastate an adult nightclub. By prioritizing staff training, refining protocols, and upholding public safety, operators can minimize risks, prevent lawsuits, and preserve patron trust and loyalty.
Understanding labor laws in strip clubs: A key to success
Running an adult nightclub involves intricate legal considerations, particularly those related to labor laws. These laws and the court decisions interpreting them are constantly evolving, creating significant pressures for business owners.
At the forefront of these challenges is the distinction between independent contractors and employees for entertainers. While the independent contractor model has historically seemed a sensible fit for both clubs and dancers, lawsuits still abound.
Courts are meticulously examining the level of control clubs exert over dancers—from scheduling and stage rules to specific performance guidelines. Even minor operational aspects, if viewed as “control,” can elevate a dancer to employee status. This reclassification, often retroactive, can lead to substantial financial burdens for owners who genuinely believed they were operating within established norms. Back pay for minimum wage and overtime, penalties, and new payroll obligations can collectively threaten a club’s very existence.
For club operators, the goal is always to create a successful business while offering performers an attractive opportunity. The current legal climate, however, often places owners in a difficult position as they grapple with rules that can seem at odds with the flexible, entrepreneurial spirit that has long defined the industry.
Panelist Shafer notes, “One misconception that I often see, both with club owners and lawyers representing their clubs, is considering the application of various labor laws to the club/dancer relationship without taking into account how tax laws fit into this picture. The two go hand in hand, but I often see that overlooked, which can then lead to a sizable judgment against the club and its operators.
“In today’s highly litigious environment, it’s not enough simply to understand the general concepts between employees and independent contractors. You must know what courts look at, your paperwork must accurately reflect both the law and how your club operates (simply copying a dancer contract from your competitor is one of the easiest ways to get into legal trouble), and you must understand the various types of claims that dancers make and your best defenses against them. You must have in place proper paperwork, procedures, and documentation to obtain a “wage offset” if dancers are later determined to be employees.
“One of the areas where club owners can get into trouble is tip pooling or tip outs (involving not only entertainers but employees as well) that do not comply with the law. Even if your club truly operates where no one is required to tip out, that may not be enough to save you from a big money judgment. You need appropriate documentation and procedures in place to protect you and your club from these “tip confiscation” claims.”
Proactive engagement is key. By seeking expert legal counsel, continually reviewing worker classifications, implementing clear policies and contracts, and investing in comprehensive training, owners can better navigate these intricate laws. These proactive measures allow them to protect their businesses, maintain their livelihoods, and continue offering the entertainment experiences their patrons enjoy.
Join EXPO 2025 legal panelists Barry Covert, Gary Edinger, Will King, Brad Shafer and moderator Larry Kaplan from 1-2:30 p.m. Monday August 25 at the ED EXPO for the “Club Operator on Trail” legal session.
Larry Kaplan has been the legal correspondent for ED Magazine for 25 years. Mr. Kaplan is a broker in the sales and purchase of adult nightclubs and adult retail stores and the Executive Director of the ACE of Michigan adult nightclub state trade association. Contact Larry Kaplan at 313-815-3311 or larry@kaplanclubsales.com.
