Hernandez v. Harvard University

Filing 30

Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered granting 10 Motion to Remand to State Court; reserving ruling on 11 Motion for Summary Judgment for State Court. (Lovett, Jarrett)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
ANGEL HERNANDEZ, on behalf
of himself and all others
similarly situated,
Plaintiffs,
v.
HARVARD UNIVERSITY,
Defendant.

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CIVIL ACTION NO.
12-11978-DPW

MEMORANDUM AND ORDER
March 28, 2013
I.

BACKGROUND

Since 1999, plaintiff Angel Hernandez has been employed as a
wait staff employee with the Harvard Faculty Club, a food service
establishment operated by Harvard University.

Under the terms of

the governing collective bargaining agreement (“CBA”) between
Harvard University and UNITE HERE Local 26, AFL-CIO, wait staff
employees are paid a flat hourly rate.

Faculty Club patrons are

told not to tip the wait staff, and wait staff are not permitted
to retain any money nevertheless left by patrons as tips.

The

Faculty Club also imposes on patrons a surcharge of 18-22% for
certain events, but that surcharge is not remitted to the wait
staff.

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Hernandez argues that the retention of service charges and
tips by the Faculty Club is illegal under the Massachusetts Tips
Law, Mass. Gen. Laws ch. 149, § 152A.

Under the Tips Law,

employers may not retain tips given to wait staff, M.G.L. ch.
149, § 152A(b), and employers that impose a service charge must
remit that service charge to wait staff employees, id. § 152A(d).
The Law, however, allows an employer to impose and retain
surcharges properly denominated as a house or administrative fee
if the employer informs patrons that the fee does not represent a
service charge for wait staff employees.

Id.; see generally

Bednark v. Catania Hospitality Group, Inc., 942 N.E.2d 1007
(Mass. App. Ct. 2011).
On September 20, 2012, Hernandez filed a putative class
action in Middlesex Superior Court on behalf of all wait staff
employees of the Faculty Club and of the Loeb House, another food
service establishment operated by Harvard.

The operative amended

complaint, filed on September 27, 2012, includes a claim under
the Massachusetts Tips Law (Count I) and a claim for unjust
enrichment under Massachusetts common law (Count II).

Both

claims are premised on the allegedly illegal retention of
gratuities by Harvard.
Defendant removed the case to this court on grounds of
“complete preemption” by federal labor law.
to remand.

Plaintiff has moved

Defendant has moved, prior to discovery, for summary

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judgment.

Because I conclude that this case must be remanded to

state court, I express no opinion on the merits of defendant’s
motion for summary judgment, except as it presents questions of
complete preemption which must be resolved in the consideration
of the motion to remand.
II. ANALYSIS
A.

Legal Framework
Because Hernandez pleads claims arising under state law, the

“well-pleaded complaint” rule would typically prohibit the
exercise of federal question jurisdiction.

See 28 U.S.C.

§ 1441(c); Franchise Tax Bd. v. Construction Laborers Vacation
Trust, 463 U.S. 1, 9–11 (1983).

Harvard, however, argues that

§ 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C.
§ 185, “completely preempts” Hernandez’s claims--thereby
“transmuting the state law claims into federal claims and
permitting removal under federal question doctrine.”

Cavallaro

v. UMass Mem’l Healthcare, Inc., 678 F.3d 1, 4 (1st Cir. 2012).
As Chief Judge Easterbrook has framed the concept, “‘[c]omplete
preemption’ is a misleadingly named doctrine that applies to
subjects over which federal law is so pervasive that it is
impossible to make out a state-law claim, no matter how careful
the pleading.”

Hughes v. United Air Lines, Inc., 634 F.3d 391,

393 (7th Cir. 2011).

Harvard, as the party undertaking removal,

bears the burden of establishing federal jurisdiction.
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BIW

Deceived v. Local S6, Indus. Union of Marine & Shipbuilding
Workers of Am., 132 F.3d 824, 831 (1st Cir. 1997).1
“Complete preemption” under § 301 of the LMRA applies to
state law claims “founded directly on rights created by
collective-bargaining agreements” or “substantially dependent on
analysis of a collective-bargaining agreement.”

Cavallaro, 678

F.3d at 5 (quoting Caterpillar Inc. v. Williams, 482 U.S. 386,
394 (1987)).

Although exercising jurisdiction over the case

would be appropriate if either of plaintiff’s claims were
properly removable, Cavallaro, 678 F.3d at 5, I find neither the
statutory nor common law claim to be completely preempted.
B. Claim Founded on CBA-Created Rights
The governing CBA does not entitle wait staff employees to
receive gratuities; in fact, the CBA is silent on the issue of
1

Harvard’s notice of removal also raised the contention that
Hernandez’s claims are preempted by the National Labor Relations
Act (“LMRA”), 29 U.S.C. § 151 et seq., under the preemption
doctrines described by the Supreme Court in San Diego Bldg.
Trades Council v. Garmon, 359 U.S. 236 (1959) (“Garmon
preemption”), and Lodge 76, Int’l Ass’n of Machinists v.
Wisconsin Emp. Relations Comm’n, 427 U.S. 132 (1976) (“Machinists
preemption”).
Harvard, in its opposition to the motion to remand, wisely
does not waste energy arguing that Garmon or Machinists
preemption provide a grounds for removal. Caterpillar Inc. v.
Williams, 482 U.S. 386, 397-98 (1987), described Garmon and
Machinists preemption as defensive preemption doctrines not
providing a basis for removal. See also Cavallaro, 678 F.3d at 4
& n.3 (distinguishing complete preemption from defensive
preemption). Defensive preemption under the NLRA, unlike
“complete preemption” under the LMRA, does not provide a basis
for federal jurisdiction.

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gratuities.

And, as I discuss in more detail below, Harvard

argues that the CBA (or at least the bargaining relationship)
contemplates a no-tipping policy.

As a consequence, it is

evident Hernandez’s claims are based on duties created by state
law and are not founded on the governing CBA.

This eliminates

one of the two possible means of complete preemption.

Cf.

Alderman v. 21 Club Inc., 733 F. Supp. 2d 461, 469 (S.D.N.Y.
2010) (claim under analogous New York statute not completely
preempted because attempt to recover tips above 18% gratuity
guaranteed by governing CBA was necessarily based on independent
state law right rather than CBA).
C.

Claim Substantially Dependent on Analysis of CBA
Harvard nevertheless argues that the claims “plausibly can

be said to depend upon the meaning of” or “arguably hinge[] upon
an interpretation of” the governing CBA.

Flibotte v.

Pennsylvania Truck Lines, Inc., 131 F.3d 21, 26 (1st Cir. 1997).2
I will discuss in turn the ways that each claim might depend upon
interpretation of the CBA.

2

Moreover, if Harvard were correct, Hernandez’s claims might
have to be dismissed in deference to the grievance procedures
prescribed by the CBA, which cover disputes involving the
“interpretation and application of a specific provision” of the
CBA. Cavallaro, 678 F.3d at 6 (discussing dismissal “deference
to the agreed-to remedies,” whether denominated as “preemption,
deference, [or] exhaustion”). Because I conclude federal
jurisdiction is lacking because complete preemption is not made
out in this case, however, I do not decide whether CBA-related
issues injected into the suit defensively might nevertheless
provide grounds for defensive preemption under LMRA § 301. Id.
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1.

Unjust Enrichment

In support of removal, Harvard focuses on complete
preemption of the unjust enrichment claim, arguing that CBA
interpretation will be required to determine whether any
retention of tips was “inequitable” or “unjust.”

According to

the defendant, there is no inequity in withholding gratuities
when wait staff are guaranteed substantial wages--far in excess
of Massachusetts statutory minima--under the CBA.

Harvard says

these wages were set in contemplation that gratuities would not
be remitted to employees.
But Harvard does not identify what parts of the CBA are
plausibly in dispute or need to be interpreted, rather than
merely consulted or applied.

Even if the wages guaranteed under

the CBA render Harvard’s retention of tips inequitable in some
sense, plaintiff has indicated no intention of challenging the
amounts paid under the CBA.

In Cavallaro v. UMass Mem’l

Healthcare, Inc., 678 F.3d 1 (1st Cir. 2012), by contrast,
determining the “wages owed” in order for plaintiff employees to
prove unjust enrichment depended in substantial part on
intricacies of the CBA governing their employement.

Id. at 8

(“Determining whether there are wages owed thus will require
construing and applying the various ‘peculiarities of
industry-specific wage and benefit structures’ embodied in the
CBA--a complicated task better-suited for an arbitrator’s

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expertise . . . .”) (quoting Adames v. Executive Airlines, Inc.,
258 F.3d 7, 13 (1st Cir. 2001)).

Here, there is no dispute about

the wages owed to plaintiffs under the CBA.

The dispute in this

case concerns amounts allegedly owed in the form of
gratuities--which, as earlier discussed, are a form of
compensation wholly extraneous to the CBA.

Thus the governing

CBA need only be “consulted” to establish the compensation it
guarantees wait staff employees.

The CBA-guaranteed compensation

can then be compared to state minima or the amount employees
otherwise would have earned from gratuities, or deployed for
other purposes by the parties in their dispute as to whether
there is “inequity” in withholding gratuities.

Such exercises do

not entail CBA “interpretation.”
Even if CBA “interpretation” were somehow required,
defendant’s argument--that withholding gratuities would not be
inequitable because of generous CBA compensation rates
established on the understanding that wait staff would not retain
tips--is defensive in nature.

The complaint, on its face,

presents a cognizable claim for unjust enrichment solely based on
the withholding of gratuities.

Harvard’s injection of the CBA

into the case, in order to defend against unjust enrichment by
challenging “inequity,” does not provide a basis for removal.
Caterpillar, 482 U.S. at 398-99.
That Harvard’s CBA-related arguments are purely defensive is

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highlighted by the fact that the unjust enrichment claim is
derivative of the alleged violation of the Tips Law.

Williamson

v. DT Mgmt., Inc., No. 021827D, 2004 WL 1050582, at *12, *14
(Mass. Super. Mar. 10, 2004) (violation of Tips Law “may form the
basis for liability” in quantum meruit and unjust enrichment).3
As discussed in Part II.C.2 infra, the CBA is entirely irrelevant
to liability under the Tips Law.

Establishing unjust enrichment

based on liability under the Tips Law is thus equally independent
of CBA interpretation.

True, unlike liability under the Tips

Law, the CBA and the bargaining history may provide a defense to
unjust enrichment; the CBA thus may relieve Harvard from
liability as to unjust enrichment by defensive preemption, or on
the merits.

But given that plaintiff’s unjust enrichment claim

is on its face derivative of liability under the Tips Law, which
cannot plausibly be said to depend on CBA interpretation, the
claim is not completely preempted.

Cf. Wadsworth v. KSL Grant

Wailea Resort, Inc., 818 F. Supp. 2d 1240, 1255 (D. Haw. 2010)
(refusing to find complete preemption of unjust enrichment claim
premised on liability under Hawaii statute analogous to
Massachusetts Tips Law, even when CBA relevant to defense).

3

Because an unjust enrichment claim under Massachusetts law
is subject to a six-year statute of limitations, see Williamson,
2004 WL 1050582 at *12, *14, plaintiffs hope to recover an
additional three years of damages beyond the three-year statute
of limitations applicable to a claim for violation of the Tips
Law, see Mass. Gen. Laws ch. 149, § 150.
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For the foregoing reasons, I conclude Hernandez’s unjust
enrichment claim is not completely preempted.

Moreover,

prescinding from these nuances to complete preemption doctrine
for a moment, I note that defendant’s proposed approach to
complete preemption is troubling for a more general reason.
Defendant’s argument that the “inequity” of withholding non-CBA
compensation can only be assessed when taking into account the
compensation provided by the CBA could apply to any claim for
undercompensation.

In other words, defendant essentially argues

for complete preemption of all unjust enrichment claims against
employers in a collective bargaining relationship with their
employees.

The First Circuit gave no indication it meant its

opinion in Cavallaro to sweep so broadly, and the Supreme Court
has repeatedly warned against finding claims completely preempted
merely based upon the existence of a collective bargaining
relationship.

Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 211

(1985) (“Of course, not every dispute concerning employment, or
tangentially involving a provision of a collective-bargaining
agreement, is pre-empted by § 301 or other provisions of the
federal labor law.”); Caterpillar, 482 U.S. at 396 n.10 (“Claims
bearing no relationship to a collective-bargaining agreement
beyond the fact that they are asserted by an individual covered
by such an agreement are simply not pre-empted by § 301.”).

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2.

Massachusetts Tips Law

Harvard also argues that resolving Hernandez’s claim under
the Massachusetts Tips Law will require interpretation of the
collective bargaining relationship--which, Harvard argues,
establishes the understanding that wait staff would not receive
gratuities.

For example, Harvard observes that, in negotiations

about an earlier version of the CBA, the Union rejected a
proposed wait staff position that would be paid lower hourly
wages but guaranteed to be paid a 15% gratuity plus any
additional tips.

Moreover, CBA negotiations have been conducted

in the shadow of a no-tipping policy made known to wait staff in
1998.

Harvard argues that, if the no-tipping policy is assumed

in the bargaining relationship, the CBA would need to be
interpreted to determine whether the parties modified the state
law standard for payment of gratuities.

Cf. Vera v. Saks & Co.,

335 F.3d 109, 115 (2d Cir. 2003) (per curiam) (in a case
involving reduction of sales commissions, state statute
prohibiting wage deductions found completely preempted because
interpretation of CBA required to determine whether CBA postponed
when commissions were “earned” such that commission adjustments
prior to that point could not be an illegal wage “reduction”).
This argument is unconvincing for any number of reasons.
start, it is not clear that “interpretation” of bargaining
history necessarily gives rise to complete preemption.

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Harvard

To

relies on DiGiantommaso v. Globe Newspaper Co., Inc., 632 F.
Supp. 2d 85, 89 (D. Mass. 2009), but that case is readily
distinguishable.

There, plaintiffs claimed an entitlement to

additional break time based on an implied agreement by their
employer.

Whether such an implied obligation existed depended

not only on the broader relationship of the parties, but also
specifically on interpretation of the CBA--at the very least to
determine whether the CBA was the sole agreement between the
parties.

DiGiantommaso, 632 F. Supp. 2d at 85.

The CBA plays no

such role here, where the claimed entitlement to gratuities is
not premised on any implicit agreement by the employer, but on an
independent right in state law.

Cf. Alderman, 733 F. Supp. 2d at

469.
Whether the CBA seeks to modify the standard for payment of
gratuities also remains a red herring.

A practice or policy of

an employer prohibiting gratuities is not, in and of itself,
illegal under Massachusetts law.

Indeed, a no-tipping policy is

entirely consistent with Massachusetts law so long as patrons are
informed that surcharges in the form of house or administrative
fees “do[] not represent a tip or service charge for wait staff
employees,” M.G.L. ch. 149, § 152A(d), and are informed that
tipping wait staff directly is prohibited, id. § 152A(b); cf.
Meshna v. Scrivanos, No. 201101849BLS1, 2012 WL 414476, at *2-3
(Mass. Super. Dec. 21, 2011) (Tips Law “does not say that the

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employer must permit employees to receive tips, or must permit
customers to give tips to employees” so long as no-tipping policy
“announced with sufficient effectiveness to prevent any
misapprehension among customers”).
It is thus irrelevant for purposes of the Massachusetts Tips
Law whether wait staff were not paid gratuities based on an
implicit CBA-derived no-tipping policy.

Indeed, such a policy

would not--even if it could--modify the requirements of the
Massachusetts Tips Law.4

Plaintiff’s claim thus cannot plausibly

be said to depend upon CBA-analysis geared toward determining
whether a no-tipping policy existed.

Once gratuities are

withheld from the wait staff (as Harvard admits they were here),
only factual questions remain for purposes of liability under the
Massachusetts Tips Law--namely, whether patrons were informed
that tipping is prohibited (as all seem to agree that they were),
and whether any surcharges were properly denominated as
administrative and patrons were adequately informed that such

4

As recognized by the First Circuit in Cavallaro, there is
some uncertainty in Supreme Court complete preemption doctrine as
to whether rights created by certain state regulatory statutes
are “nonwaivable” or “nonnegotiable,” and the extent to which
such statutes may be completely preempted by § 301. Cavallaro,
678 F.3d at 7; see generally Livadas v. Bradshaw, 512 U.S. 107,
123 (1994) (Ҥ 301 cannot be read broadly to pre-empt
nonnegotiable rights conferred on individual employees as a
matter of state law . . . .”); Lingle v. Norge Div. of Magic
Chef, Inc., 486 U.S. 399, 407 n.7 (1988) (“It is conceivable that
a State could create a remedy that, although nonnegotiable,
nonetheless turned on the interpretation of a collectivebargaining agreement for its application.”).
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surcharges would not be remitted to wait staff (as appears to be
the crux of the factual dispute here).

Cf. Wadsworth, 818 F.

Supp. 2d at 1251 (rejecting complete preemption of analogous
Hawaii tips statute by similar reasoning).

These are matters

wholly divorced from the analysis of the governing CBA and thus
from the complete preemptive force of LMRA § 301.5
Harvard is surely correct that, if it is held liable for
noncompliance with the consumer-facing aspects of the
Massachusetts Tips Law, then wait staff will receive, by
Harvard’s lights, a “windfall” of gratuities despite having
already received substantial wages under the CBA.

Massachusetts

courts, however, have not been concerned with such a turn of
events, finding that substantial wages paid under an employment
contract were irrelevant to an employer’s liability under the
Tips Law.

Bednark, 942 N.E.2d at 1011 n.12; Cooney v. Compass

Group Foodservice, 870 N.E.2d 668, 673 (Mass. App. Ct. 2007).
Although the employment contracts in Bednark and Cooney were not
the products of collective bargaining, generous wages paid

5

It is consistent with my analysis that Harvard’s
termination of employees based on their retention of tips in
violation of the no-tipping policy has been upheld in
arbitration. The termination of an employee is a natural subject
for submission to the CBA-prescribed grievance process because
Article 5 of the governing CBA provides that an employee may be
discharged only for just cause. By contrast, the CBA is silent
on the issue of tips. Grievance of a termination thus sheds
little light on whether state law claims regarding independent
disputes about the payment of tips implicate the CBA.
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pursuant to a CBA are equally irrelevant to the question of
liability.
III. CONCLUSION
This matter belongs in state court.

There, defendant may

pursue its federal preemption defenses, which do not provide a
basis for removal but which the state court is competent to
adjudicate.

To the extent Harvard’s various arguments as to

complete preemption also play a role in its federal preemption
defenses, they may be presented to the state court.

Accordingly,

I do not resolve defendant’s federal preemption defenses-including those under Machinists, Garmon, and (unlikely as
defendant’s prospects for success may be given the foregoing
discussion) defensive preemption under LMRA § 301.
For the reasons set forth more fully above, plaintiff’s
motion to remand, Dkt. No. 10, is GRANTED.

This case shall be

REMANDED to Middlesex Superior Court, where it was originally
filed.

/s/ Douglas P. Woodlock
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE

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