Sanchez v. Roka Akor Chicago, LLC

Filing 70

MEMORANDUM Opinion and Order Signed by the Honorable Joan B. Gottschall on 1/7/2016. Mailed notice(mjc, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MANUEL SANCHEZ, on behalf of
himself and all other persons similarly
situated, known and unknown,
Plaintiff,
v.
ROKA AKOR CHICAGO LLC,
Defendant.

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Case No. 14-cv-4645
Judge Joan B. Gottschall

MEMORANDUM OPINION & ORDER
Plaintiff Manuel Sanchez, for himself and on behalf of the class he seeks to represent
(“Plaintiffs”), bring this lawsuit against Defendant Roka Akor Chicago LLC (“Roka Akor”),
alleging that Roka Akor violated the minimum wage provisions of the Fair Labor Standards Act
(“FLSA”) and the Illinois Minimum Wage Law (“IMWL”) by illegally taking a “tip credit”
against its servers’ minimum wages. Sanchez argues that Roka Akor forfeited its right to take a
tip credit for two reasons: (1) it required its employees to distribute a portion of their tips to the
Executive Chef and Head Chef, both of whom qualify as “employer[s]” under the FLSA and
IMWL; and/or (2) it required its employees to distribute a portion of their tips to certain
“kitchen” staff and the “polisher,” both of whom are non-tipped employees. Dkt. 61. Plaintiffs
have moved to certify a class as to their IMWL claim and for conditional certification for their
FLSA claim. For the reasons discussed below, plaintiffs’ motion for class certification is
granted. Additionally, plaintiffs’ FLSA claims may proceed as a collective action.

I.

BACKGOUND

Roka Akor is a Japanese sushi and steak restaurant in Chicago, Illinois. Named Plaintiff
Manuel Sanchez and Opt-in Plaintiffs Bradley Smith, Douglass Pfundstein, and Bulmaro
Damaso worked as servers at Roka Akor during the relevant time period. Roka Akor treats
many of its employees, including servers, as “tipped employees” under the tip-credit provisions
of the FLSA and IMWL. Additionally, Roka Akor operates and facilitates a tip pool on behalf of
its tipped employees. The participants in the tip pool vary somewhat between the lunch shift and
the dinner shift. During the dinner shift, there are five categories of employees that share in the
tip pool: (1) runner; (2) server assistant; (3) bar; (4) kitchen; and (5) polisher. During the lunch
shift, bar service is typically lighter, so the bartender and polisher are not included in the tip-out.
In addition, the runner serves as the server assistant during the lunch shift. The tip pool is
managed through an Excel spreadsheet that is used to calculate a server’s tip out for each shift.
Under the provisions of the FLSA and IMWL, Roka Akor is allowed to pay its tipped
employees less than the prevailing minimum wage if the employees are able to make up the
difference in tips. see 29 U.S.C. § 203(m); 820 ILCS § 105/4(c). The difference between the
reduced wage and the minimum wage is called the “tip credit.” In order to take the tip credit,
each tipped employee must ordinarily retain all of his tips. see 29 U.S.C. § 203(m); 820 ILCS §
105/4(c). This restriction does not apply, however, if the tipped employees are participating in a
valid tip pool. see 29 U.S.C. § 203(m); 820 ILCS § 105/4(c). To be valid under the FLSA and
IMWL, the tip pool must only include employees who “customarily and regularly receive tips,”
and the employer “may not retain any of the employees’ tips for any other purpose.” Starr v.
Chicago Cut Steakhouse, LLC, 75 F.Supp.3d 859, 865 (N.D. Ill. 2014). If an employer

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improperly operates a tip pool, the employer cannot take the tip credit provision under either the
FLSA or IMWL. Id.
Plaintiffs argue that the tip pool arrangement is improper for two reasons: (1) the
Executive and Head Chef (part of the “kitchen” category) qualify as “employers” under the
FLSA and IMWL and are therefore ineligible to participate in the tip pool; and (2) other kitchen
staff members and the polisher are “non-tipped” employees because they do not have more than
de minimis customer interaction. Roka Akor argues that the Executive and Head Chef are not
employers and that the tipped kitchen staff and polisher qualify as tipped employees. Roka Akor
also argues that assuming arguendo that the Executive and Head Chef are employers and/or the
tipped kitchen staff and polisher do not qualify as tipped employees, the tip pool is still lawful
because it was a voluntary tip pool.
Plaintiffs have moved for class certification on the IMWL tip pool claims and for
conditional certification of the FLSA tip pool claims. As explained below, plaintiffs’ motion for
certification on the IMWL tip pool claims is granted and this court will skip conditional
certification of the FLSA claim and allow it to proceed as a collective action.
II.

DISCUSSION

A. Plaintiffs’ Motion for Class Certification
1. Legal Standard
The decision to certify a class action rests within the discretion of the district court. Mira
v. Nuclear Measurements Corp., 107 F.3d 466, 471 (7th Cir. 1997). “[T]he party seeking class
certification assumes the burden of demonstrating that certification is appropriate.” Retired
Chicago Police Ass’n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993). The named plaintiff
bears the burden of showing by a preponderance of the evidence that all of Rule 23’s

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requirements are satisfied. Comcast Corp. v. Behrend, -- U.S.

, 131 S.Ct. 2541, 2551 (2011).

The requirements of Federal Rule of Civil Procedure are as follows: (1) the class is so numerous
that joinder of all members is impracticable (numerosity); (2) there are questions of law or fact
common to the class (commonality); (3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class (typicality); and (4) the representative parties will
fairly and adequately protect the interests of the class (adequacy). Fed. R. Civ. P. 23(a)
If plaintiffs meet this initial burden, they must then show that the proposed class satisfies
one of the three requirements set forth in Rule 23(b). See Oshana v. Coca-Cola Co., 472 F.3d
506, 513 (7th Cir. 2006). Because plaintiffs seek money damages, they must meet the
requirements of Rule 23(b)(3). Therefore, plaintiffs must show that “questions of law or fact
common to the members of the class predominate over any questions affecting only individual
members (predominance), and that a class action is superior to all other available methods for
fair and efficient adjudication of the controversy (superiority).” Fed. R. Civ. P. 23(b)(3); see
also Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 814 n.5 (7th Cir. 2012). In
addition to Rule 23 requirements, plaintiffs must also provide a workable class definition by
demonstrating that the members of the class are identifiable. See Oshana, 472 F.3d at 513.
The court “must make whatever factual and legal inquiries necessary to ensure that
requirements for class certification are satisfied before deciding whether a class should be
certified, even if those considerations overlap the merits of the case.” Am. Honda Motor Co. v.
Allen, 600 F.3d 813, 815 (7th Cir. 2010) (citing Szabo v. Bridgeport Machs., Inc., 249 F.3d 672,
676 (7th Cir. 2001)). Although Szabo stands for the proposition that the court is not free to
accept all of the complaint’s allegations when deciding whether to certify a class, the decision
whether to certify a class is not based on a preliminary assessment of the ultimate merits of the

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plaintiffs’ claims. Rahim v. Sheahan, 2001 WL 1263493, at *10 (N.D. Ill. Oct. 19, 2001).
Rather, the preliminary inquiry is into the merits of those allegations that bear on the suitability
of a case for class treatment under Rule 23(a) and (b). Id. To base class certification on a
prediction of who will win the case would be at odds with Eisen v. Carlisle & Jacquelin, 417
U.S. 156 (1974). Id. In the end, the court has “broad discretion to determine whether
certification of a class-action lawsuit is appropriate.” Ervin v. OS Restaurant Servs., Inc., 632
F.3d 971, 976 (7th Cir. 2011).
2. Analysis
Plaintiffs advance class-action claims based on alleged violations of the Illinois
Minimum Wage Law, 820 ILCS 105/1 et seq. Plaintiffs have proposed the following class under
rule 23(b)(3):
All persons employed by Defendant as servers from June 19, 2011, to the
conclusion of this action, who contributed a portion of their tips to Defendant’s tip
out arrangement.
Dkt. 62
To be certified, this class must meet the Rule 23(a) requirements of numerosity,
commonality, typicality and adequacy, as well as the Rule 23(b) requirements of predominance
and superiority. Starr v. Chicago Cut Steakhouse, LLC, 75 F.Supp.3d 859, 871 (N.D. Ill. 2014).
The court will address each of these requirements in turn.
a) Numerosity
To meet the numerosity requirement, a plaintiff must show that the proposed class is “so
numerous that joinder of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). “[A] plaintiff
does not need to demonstrate the exact number of class members as long as a conclusion is
apparent from good-faith estimates.” Barragan v. Evanger’s Dog and Cat Food Co., 259 F.R.D.

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330, 333 (N.D. Ill. 2009). Although there is no bright-line rule for exactly how many members
are enough to establish a class, this district has found that that “[g]enerally, where class members
number at least 40, joinder is considered impracticable and numerosity is satisfied.” Oplchenski
v. Parfums Givenchy, Inc., 254 F.R.D. 489, 495 (N.D. Ill. 2008); see also Pruitt v. City of
Chicago, 472 F.3d 925, 926-27 (7th Cir. 2006) (“Sometimes ‘even’ 40 plaintiffs would be
unmanageable.”); Swanson v. Am. Consumer Indus., Inc., 415 F.2d 1326, 1333 n.9 (7th Cir.
1969) (holding that a proposed class of 40 was “a sufficiently large group to satisfy Rule 23(a)”).
In its answer and affirmative defenses to plaintiff’s first amended complaint, Roka Akor
admitted to having employed at least 40 individuals as servers during the relevant time period.
Dkt. 50, ¶ 30. However, Roka Akor argues that plaintiffs have not established that more than 40
servers “contributed a portion of their tips to Defendant’s tip out arrangement.” Roka Akor’s
argument is undercut by the admission of Steven Tindle, one of Roka Akor’s 30(b)(6)
representatives, that the suggested tip-out spreadsheet is “always” followed. Dkt. 62-1, p. 45. If
the tip-out spreadsheet is always followed, it is logical, then, to conclude that all of Roka Akor’s
servers contributed to the tip pool. Since Roka Akor has admitted it has employed at least 40
servers during the relevant time period, plaintiffs’ conclusion that the class is comprised of at
least 40 members is apparent from a “good-faith estimate.” Roka Akor’s other argument against
numerosity—that the tip-out arrangement is voluntary—is addressed below.
b) Commonality
Rule 23(a)(2) requires that “there are questions of law or fact common to the class.” To
establish commonality, the class representative must demonstrate that members of the class
“have suffered the same injury.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 131 S.Ct. 2541,
2551 (2011). Commonality requires that all of the class members’ claims “depend upon a

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common contention” that is “of such a nature that is capable of classwide resolution—which
means that determination of its truth or falsity will resolve an issue that is central to the validity
of each one of the claims in one stroke.” Id.
Plaintiffs’ proposed class meets this commonality requirement because the tip-pool claim
presents a common question that will generate a common answer. Plaintiffs allege that Roka
Akor improperly operated the tip pool by (1) distributing a portion of the tips to the Executive
Chef and Head Chef, both of whom qualify as “employer[s]” under the FLSA and IMWL; and/or
(2) distributing a portion of the tips to certain “kitchen” staff and the “polisher,” both of whom
are non-tipped employees. If plaintiffs’ allegations are correct, Roka Akor was not entitled to
take the tip credit for employees participating in the improper tip pool under the IMWL. Starr,
75 F.Supp.3d at 872. Therefore, if the tip pool was improper, Roka Akor will be liable to all
employees who participated in the improper tip pool. If, however, Roka Akor properly operated
the tip pool (i.e., the tip pool was voluntary and/or all employees in the tip pool were tipped
employees), then no participating employees will have a claim. Id. Moreover, the court is
convinced that the distinction between the lunch shift and dinner is of no real consequence in
terms of commonality. Although polishers were not included in the lunch shift tip-out
arrangement, the tip pool would still be improper, if plaintiffs’ allegations are proven true, since
the Executive Chef, Head Chef, and/or “kitchen” staff are still part of the tip-out arrangement
during the lunch shift.
c) Typicality
“A plaintiff’s claim is typical if it arises from the same event or practice or course of
conduct that gives rise to the claims of other class members and his or her claims are based on
the same legal theory.” Keele v. Wexler, 149 F.3d 589, 595 (7th Cir. 1998). Typicality is closely

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related to commonality. Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1992). As discussed
above, the success of the class’s tip-pool claims will hinge on whether Roka Akor properly
administered the tip pool. The claims of the named plaintiff, Sanchez, depend on the identical
question. Because Sanchez’s claims “have the same essential characteristics as the claims of the
class at large,” their claims are sufficiently “typical of the claims or defenses of the class.”
Retired Chicago Police Ass’n, 7 F.3d at 597. The arguments advanced by Roka Akor, namely
that the tip-out arrangement was voluntary and all of the participants were tipped employees, is a
defense to Sanchez as well as to the entire party, which satisfies the typicality requirement.
Williams v. Chartwell Fin. Servs., Ltd., 204 F.3d 748, 760 (7th Cir. 2000) (“[T]he claims or
defenses of the representative party [must] be typical of the claims or defenses of the class.”).
d) Adequacy
Plaintiffs must show that the “representative parties will fairly and adequately protect the
interests of the class.” Fed. R. Civ. P. 23(a)(4). There are typically two components to the
adequacy analysis: (1) the adequacy of the named plaintiff’s counsel; and (2) the adequacy of
representation provided in protecting the different, separate, and distinct interest of the class
members. Retired Chicago Police Ass’n, 7 F.3d at 598; see also Spano v. The Boeing Co., 633
F.3d 574, 586-87 (7th Cir. 2011). In order to be an “adequate representative,” the named
plaintiff must not have “antagonistic or conflicting claims.” Retired Chicago Police Ass’n, 7
F.3d at 598. Here, the claims of the named plaintiff are essentially identical to those of the
proposed class members. In addition, there are no individual defenses or other claims that would
in any way impede the named plaintiff’s ability to adequately represent the interest of the class
members. There is also no reason to doubt that plaintiffs’ counsel will fail to represent the
interest of the class members.

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e) Rule 23(b) Requirements
In addition to meeting the four Rule 23(a) factors above, plaintiffs must also demonstrate
that their proposed class meets the requirements of Rule 23(b)(3), which requires plaintiffs to
demonstrate that “questions of law or fact common to class members predominate over any
questions affecting only individual members, and that a class action is superior to other methods
for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). In applying
these standards, courts focus on “the substantive elements of plaintiffs’ cause of action and
inquire into the proof necessary for the various elements.” Simer v. Rios, 661 F.2d 655, 672 (7th
Cir. 1981). The Supreme Court has held that “the predominance criterion is far more
demanding” than “Rule 23(a)’s commonality requirement.” Anchem Prods., Inc. v. Windsor,
521 U.S. 591, 624 (1997). The court thus must compare the role of common issues of law and
fact with the role of individual issues. Messner, 669 F.3d at 814. Rule 23(b)(3)'s predominance
requirement is satisfied when “common questions represent a significant aspect of [a] case and ...
can be resolved for all members of [a] class in a single adjudication.” Id., quoting 7AA Wright
& Miller, Federal Practice & Procedure § 1778 (3d ed. 2011). More simply, common questions
can predominate if a “common nucleus of operative facts and issues” underlies the claims
brought by the proposed class. In re Nassau County Strip Search Cases, 461 F.3d 219, 228 (2d
Cir.2006), quoting Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 299 (1st Cir.2000).
However, individual questions need not be absent. Messner, 699 F.3d at 814. The rule requires
only that those questions not predominate over the common questions affecting the class as a
whole. Id.
As noted, Roka Akor argues that the tip-out arrangement was lawful because (1) every
participant in the tip pool was a tipped employee and/or (2) the tip-out arrangement was

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voluntary. While the first issue can be decided using common evidence, Roka Akor argues that
the second issue—whether the tip-pool was voluntary—can be decided on an individual basis,
i.e., each server’s understanding of whether the tip-pool was voluntary. It is entirely possible
that common evidence can also be used to determine whether the tip-pool was voluntary. More
specifically, the allegation that Roka Akor facilitated the tip-pool arrangement, had fixed
percentages for each category of employees, collected the tips in a uniform manner, and admitted
that the tip-pool arrangement has always been followed could potentially establish that the
arrangement was not voluntary. However, the court will not make a final determination at this
point whether the tip-pool arrangement was actually voluntary. Messner, 669 F.3d at 811 (a
district court should not turn class certification proceedings into a dress rehearsal for a trial on
the merits). Suffice to say, though, that if the tip-pool arrangement was voluntary, then not only
would the named plaintiff’s claims fail, so would the claims of the class. Therefore, plaintiffs
have adequately shown that the common questions will predominate over any individual issues.
To satisfy Rule 23(b)(3), plaintiffs must also show that “a class action is superior to other
available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P.
23(b)(3). The existence of a common legal and factual issue makes class treatment particularly
effective in this case. The superiority requirement is satisfied.
Plaintiffs have demonstrated that their proposed class meets the numerosity,
commonality, typicality, and adequacy requirements of Rule 23(a) and the predominance and
superiority requirements of Rule 23(b)(3). Their motion to certify a class for their state-law tippool claims under IMWL is granted.

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B. Certification of Plaintiffs’ FLSA Claims
Section 216(b) of the FLSA permits plaintiffs to bring a collective action against an
employer for unpaid minimum wages or overtime compensation on behalf of themselves and
others “similarly situated.” 29 U.S.C. § 216(b). A collective action under § 216(b) differs from
a class action under Fed. R. Civ. P. 23 in that Rule 23 binds class members unless they opt out,
whereas collective action members are bound under § 216(b) only if they opt into the action by
providing their written consent. Solsol v. Scrub, Inc., 2015 WL 1943888, at *2, citing Woods v.
New York Life Ins. Co., 686 F.2d 578, 579-80 (7th Cir. 1982).
Courts in in this district employ a two-step process for determining whether an FLSA
lawsuit should proceed as a collective action. Dailey v. Groupon Inc., No. 11 C 5685, 2014 WL
4379232, at *3 (N.D. Ill. Aug. 27, 2014). The first step requires the named plaintiff to establish
that the potential class members are similarly situated by making a modest factual showing that
they were victims of a common policy or plan to violate the law. Id. The standard for “similarly
situated” is a liberal one which typically results in conditional certification of a representative
class. Rottman v. Old Second Bancorp, Inc., 735 F.Supp.2d 988, 990 (N.D. Ill. 2010). Likewise,
the modest factual showing standard is lenient and demands only some factual support. Johnson
v. Pinstripes, Inc., No. 12 C 1018, 2013 WL 5408657, at *2 (N.D. Ill. Sept. 26, 2013).
Moreover, in applying these standards, the “court does not consider the merits of the plaintiff’s
claims, or witness credibility.” Nehmelman v. Penn Nat. Gaming Inc., 822 F.Supp.2d 745, 751
(N.D. Ill. 2011).
At the second step, which takes place following discovery, the analysis is more rigid and
requires the court to consider the following: “(1) whether the plaintiffs share similar or disparate
factual and employment settings; (2) whether the various affirmative defenses available to the

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defendant would have to be individually applied to each plaintiff; and (3) fairness and procedural
concerns.” Dailey, 2014 WL 4379232, at *3. At that time, a defendant may move to decertify
the class or divide it into subclasses. Johnson, 2013 WL 5408657 at *3.
As noted by the parties in their respective briefs, discovery has already been completed in
this case. As a result, the court can skip the first step of conditional certification and decide
whether the collective action can be certified. For the purposes of determining certification of a
collective action and a class action in a single suit, the court applies the same standard for
certification of both types of cases. Espenscheid v. DirectSat USA, LLC, 705 F.3d 770, 772 (7th
Cir. 2013). Because the named plaintiff has established commonality under Rule 23, he also
satisfies his burden to show that other members of the potential collective action are similarly
situated. Certification under 29 U.S.C. § 216(b) is therefore appropriate.
III.

CONCLUSION

For the foregoing reasons, plaintiffs’ motion is granted. Plaintiffs’ IMWL claims are
certified as a class action. Plaintiffs’ FLSA claims may proceed as a collective action. The
parties are ordered to meet and confer regarding the names, dates of employment, and other
pertinent information for all persons in the class defined by plaintiffs. The parties are also
ordered to meet and confer regarding a mutually agreeable notice that is to be submitted to the
court on or before February 19, 2016. The matter is set for status on February 26, 2016 at 9:30
a.m.

Date: January 7, 2016

/s/___________
Joan B. Gottschall
United States District Judge
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