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Hooters Owner Too Late to Compel Arbitration in Class-Action Suit

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By Andrew Chow, Esq. on February 28, 2012 5:04 AM

A Hooters lawsuit can't be forced into arbitration because lawyers for a franchise owner waited too long -- more than a year -- to try to compel arbitration, a California appellate court has ruled.

The class-action suit against Hott Wings Inc., the owner of Hooters franchises in the San Francisco Bay area, will proceed in court, California's First District Court of Appeal held Feb. 14.

The lawsuit was originally filed in May 2009, but Hott Wings' counsel didn't move to compel arbitration until September 2010, SF Weekly reports. By that time, it was too late because the case was too far down the road to trial, the three-judge panel ruled.

That's despite agreements, signed by the servers, that allow Hott Wings Inc. to demand employee complaints go to arbitration. The employees' Hooters lawsuit claims they were denied tip money and lunch breaks, and forced to buy their own uniforms in violation of California labor laws, according to SF Weekly.

Hott Wings' original attorney first proposed arbitration in June 2009, according to the appellate court's decision. Both sides discussed aspects of the proposed arbitration, but no motion to compel arbitration was ever filed.

In November 2009, new counsel took over for Hott Wings. The lawsuit proceeded, and "voluminous discovery" commenced, the appeal court explained.

Not until September 2010 did Hott Wings' new attorney file his motion to compel arbitration. But the trial court held, and the appeal court agreed, that the Hooters servers had been prejudiced through the use of discovery to gain information about their case that would not have been gained in arbitration.

Further, a delay of more than 12 months in filing the motion to compel arbitration was unreasonable, the court held. And the amount of discovery, along with numerous meetings between counsel, were "inconsistent" with the right to arbitrate.

The Hooters lawsuit includes workers at Hooters restaurants in Fremont, Campbell, and Dublin, Calif., along with a former Hooters location at San Francisco's Fisherman's Wharf.

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