San Francisco- Where else but San Francisco could a flap about the heft of the nude dancers at a peep show wind up as a union grievance?

That’s just what’s happened over at North Beach’s Lusty Lady, the town’s only employee-owned, employee-run, fully unionized flesh arcade.

Like a lot of San Francisco businesses, the Lusty Lady prides itself on diversity, offering up dancers in a variety of sizes, shapes, ethnicities, attitudes and tattoos.

But like a lot of North Beach clubs, business at the Lusty — while steady — isn’t what it was a few years back during the dot-com years, so every customer and dollar counts.

That’s why it was such a big deal in July, when someone booked an entire night of “BBW” entertainment — big, beautiful women — and the clientele reacted by walking out.

The counterman wrote up the customers’ objections — “I came for fantasies, not nightmares” being one of the more printable ones — and sent them off in what he thought was a confidential e-mail to the club’s board of directors.

However, one board member, who worked as a Lusty dancer, took offense and plastered a printout of the e-mail on the dressing room mirror for all the entertainers to see.

Talk about an ugly situation.

“Those same BBW girls had to come in, see it, then go out and perform,” said Lorellie, a dancer, board member and designated PR rep for the club, who like many of the entertainers goes by just the one name.

“It sort of became a guy versus girls thing,” Lorellie said. “Some said, ‘Fire him.’ Others said, ‘Fire her.’ ”

Instead, the Lusty board suspended them both.

Then, after talking over the situation with no fewer than three lawyers, the board fired the dancer for making the e-mail public and reinstated the counterman — who already had decided to move on.

“We were looking for some middle ground,” Lorellie said, “but everyone said posting the letter created a hostile work environment.”

End of story? Not quite. The Bay Guardian wrote a piece this past week that some workers felt was tilted toward the fired dancer’s perspective, and people got angry all over again.

The dancer, meanwhile, has filed a grievance against the club through the Service Employees International Union Local 790, which represents all the Lusty workers and managers. She hopes to get her job back.

The club “had a policy that anyone could post anything, and . . . she was terminated without just cause, with no progressive discipline,” the union’s Dale Butler said.

Everyone has agreed to mediation to try to settle the matter.

If that doesn’t work, there’s always the Board of Supervisors — sounds like something right up their alley.