Carpaneda v. Domino's Pizza, Inc. et al

Filing 38

Judge William G. Young: ORDER entered. MEMORANDUM AND ORDER: This Court DENIES Domino's motion to dismiss Carpaneda's Tips Act claim. SO ORDERED... (Paine, Matthew)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

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Plaintiffs,
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v.
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DOMINO’S PIZZA, INC.; DOMINO’S )
INC.; DOMINO’S PIZZA LLC; PMLRA )
PIZZA, INC.; AND HENRY ASKEW,
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Defendants.
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EDUARDO CARPANEDA,
ON BEHALF OF HIMSELF AND
ALL OTHERS SIMILARLY SITUATED,

CIVIL ACTION
NO. 13-12313-WGY

YOUNG, D.J.

January 9, 2014
MEMORANDUM AND ORDER

I. INTRODUCTION
This case involves a putative class action filed by Eduardo
Carpaneda (“Carpaneda”) on behalf of himself and all other
employees similarly situated against Domino’s Pizza, Inc.;
Domino’s, Inc.; Domino’s Pizza, LLC; PMLRA Pizza, Inc.
(“PMLRA”); and Henry Askew (“Askew”), (collectively “Domino’s”),
alleging unlawful retention of service charges in violation of
Massachusetts Tips Act (Tips Act), Mass. Gen. Laws ch. 149 §
152A (2004), and the Massachusetts Minimum Fair Wage Act
(Minimum Wage Act), Mass. Gen. Laws ch. 151 §§ 1-7 (2008).

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On December 17, 2013, this Court heard oral arguments and
denied Domino’s motion to dismiss the Minimum Wage Act claim and
took the Tips Act claim under advisement. Mot. Hr’g Tr., ECF No.
31. Upon review of the parties’ submissions, the relevant
portions of the record, and the applicable law, the Court rules
as follows.
A.

Procedural Posture

On August 8, 2013 Carpaneda filed this suit against
Domino’s in the Massachusetts Superior Court sitting in and for
the County of Middlesex. Notice Removal Fed. Ct., ECF No. 1. On
September 20, 2013, Domino’s removed the suit to the United
States District Court for the District of Massachusetts on
diversity grounds. Id. On October 28, 2013, Domino’s moved to
dismiss Carpaneda’s entire complaint. Defs.’ Mot. Dismiss, ECF
No. 17; Defs.’ Mem. Law Supp. Mot. Dismiss, ECF No. 18.
Carpaneda filed its opposition to Domino’s’ motion to dismiss on
November 12, 2013. Pl.’s Opp’n Defs.’ Mot. Dismiss, ECF No. 22.
Domino’s filed a reply to Carpaneda’s opposition to its motion
on November 21, 2013. Defs.’ Reply Pl.’s Opp’n Mot. Dismiss, ECF
No. 27. On December 17, 2013, the Court heard oral arguments and
denied the motion to dismiss the Minimum Wage Act claim and took
the Tips Act claim under advisement. Mot. Hr’g Tr., ECF No. 31.
B.

Facts Alleged

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Carpaneda is employed by PMLRA, a Domino’s Pizza
franchisee, as a pizza delivery driver. Compl. ¶ 9. Under the
Minimum Fair Wage Act, Mass. Gen. Laws ch. 151 §§ 1-2, he is
paid a “tipped minimum wage” of about $3 per hour, plus tips.
Id. Domino’s business is primarily focused on pizza delivery, as
opposed to in-store dining. Id. at ¶ 10. For every pizza
delivery, regardless of the means by which the customer orders
the pizza, Domino’s imposes a $2.50 “delivery charge.” Id. at ¶
11. Domino’s retains this delivery charge; the drivers receive
no portion as part of their tipped wages. Id. The $2.50 is
within the range of what an objectively reasonable customer
would pay as a tip to a driver. Id.
It is undisputed that Domino’s notifies customers in three
different ways that the delivery charge is not a tip paid to the
drivers and encourages customers to tip them for delivery.

1

Id.

at ¶ 13; Def.’s Mot. Dismiss 7. Indeed, when a customer orders
online, before checking out, the order summary informs the
customer that the total amount due is composed of (i) the food
and beverage price, (ii) a $2.50 delivery fee, and (iii) taxes.
Compl., Ex. A, Online Pizza Order (“Online Pizza Order”) 24, ECF
No. 14. The system displays the amount due automatically and

1

Domino’s’ statement reads: “Any Delivery Charge is not a
tip paid to your driver. Please reward your driver for
awesomeness.” Compl., Ex. C, Domino’s Pizza Box (“Domino’s Pizza
Box”) 29, ECF No. 14.
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does not allow the customer to modify any prices that compose
the total price or to add extra money for a tip. Id. If the
customer scrolls down, there is a section at the bottom of the
page entitled “Legal Stuff,” which states that the delivery
charge does not constitute a tip and encourages customers to tip
drivers. Id. Customers can pay either by credit card or cash.
Id.
When a customer places an order through Domino’s smartphone
or tablet app, the total price is displayed in the same way and
an identical disclaimer appears under the “Place Your Order”
button. Compl., Ex. B, Smartphone & Tablet Pizza Order
(“Smartphone & Tablet Pizza Order”) 27, ECF No. 14. Regarding
orders placed by telephone, however, Domino’s has a nationwide
uniform processing system that fails to inform customers the
delivery charge in not paid to drivers. Compl. ¶ 18. Instead,
the Domino’s representative states only the total amount due.
Id. Domino’s pizza boxes are covered with various pictures and
logos, and on one side of the box there is a notification about
delivery charges and tips, identical to the disclaimer displayed
in the webpage. Compl., Ex. C, Domino’s Pizza Box (“Domino’s
Pizza Box”) 29, ECF No. 14.
II.

ANALYSIS
At the December 17, 2013 motion hearing, this Court denied

Domino’s’ motion to dismiss the Minimum Wage Act claim.
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Therefore, this memorandum addresses only Domino’s motion to
dismiss Carpaneda’s Tip Act claim.
A.

Standard of Review.

To survive a motion to dismiss, a complaint must contain
sufficient factual matter to “state a claim to relief that is
plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007). In deciding a motion to dismiss under Rule
12(b)(6), all well-pleaded facts in the complaint are taken as
true. See Glassman v. Computervision Corp., 90 F.3d 617, 628
(1st Cir. 1996) (citing Gooley v. Mobil Oil Corp., 851 F.2d 513,
515 (1st Cir. 1988)). The Court must “draw all reasonable
inferences in the plaintiff's favor.” Langadinos v. American
Airlines, Inc., 199 F.3d 68, 69 (1st Cir. 2000).
B.

Massachusetts Tips Act Violation

Carpaneda argues that the “delivery charge” is a service
charge under the Tips Act. Accordingly, Domino’s violated the
Tips Act by failing to turn over to the drivers the proceeds of
the fee. A service charge is defined for purposes of the Tips
Statute as:
[A] fee charged by an employer to a patron in lieu of a
tip to any wait staff employee, service employee, or
service bartender, including any fee designated as a
service charge, tip, gratuity, or a fee that a patron or
other consumer would reasonably expect to be given to a
wait staff employee, service employee, or service
bartender in lieu of, or in addition to, a tip.

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Mass. Gen. Laws ch. 149, § 152A. The Act further provides that
if the employer submits a bill to the patron charging the
service charge, the total proceeds of that service charge
shall be passed to the service employee in proportion to the
service provided by those employees. Id. This Act, however,
also provides employers with a safe harbor, authorizing them
to retain a fee in addition or instead of the service charge
“if the employer provides a designation or written description
of that house or administrative fee, which informs the patron
that the fee does not represent a tip or service charge for
wait staff employees, service employees, or service
bartenders.” Id.
It is undisputed that, except when ordering by phone,
Domino’s informs its clients before paying that the “delivery
charge” does not constitute a tip for employees. Carpaneda,
however, claims that the question of whether the notice provided
by Domino’s is sufficient to comply with the requirements of the
safe harbor of section 152A of the Tip Act is a question for a
fact finder that cannot be resolved at the motion to dismiss
stage. Because the statute has not set parameters regarding font
size, format, or placement of the notice, the issue becomes
whether the notice Domino’s provides to its customers is
sufficiently clear and unambiguous to fall within the safe

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harbor of section 152A that allows Domino’s to retain the
delivery charge.
This Court has already analyzed the sufficiency of notices
under the Tips Act. In DiFiore, skycaps working at American
Airlines (“American”) filed a class action lawsuit against
American alleging, among other claims, that American’s two
dollar per bag handling fee for curbside baggage services
violated the Tips Act. See DiFiore v. American Airlines, Inc.,
561 F. Supp. 2d 131, 132 (D. Mass. 2008), rev’d on other
grounds, 646 F.3d 81, 82 (1st Cir. 2011). The fee was not paid
to the skycaps who physically handled the bags, but rather
retained and split between American and a third party
contractor. Id. The skycaps alleged that American violated the
Tips Act by failing to distribute the proceeds of the bag fee,
and by not adequately notifying its customers that the charge
was not a tip for the skycaps. See DiFiore v. American Airlines,
Inc., 646 F.3d 81, 82 (1st Cir. 2011). American, though,
informed its customers by posting several signs adjacent to the
bag-check podiums stating “U.S. Domestic Flights: $2 per bag.
Gratuity not included.” Id. at 83. In a motion in limine,
American argued that this notice was sufficient, as matter of
law, to establish an affirmative defense under section 152A.
American’s Mot. In Limine, DiFiore, 646 F.3d 81, (No. 07-10070WGY), ECF No. 98-1. The skycaps claimed that whether the
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notation “gratuities not included” was sufficiently readable and
understandable to passengers, such that it satisfied the
requirement of section 152A, was a question for the jury.
DiFiore’s Opp’n American’s Mot. In Limine, DiFiore, 646 F.3d 81,
(No. 07-10070-WGY), ECF No. 103. This court denied American’s
motion and sent the case to trial, where the jury found American
liable. Jury Verdict, DiFiore, 646 F.3d 81, (No. 07-10070-WGY),
ECF No. 145.
American thereafter filed a motion for a new trial, or in
the alternative, a motion for a judgment as

matter of law,

alleging that the notice provided by American prevented the
skycaps from recovering any damages because the notice complied
with section 152A. American’s Mot. J. Matter Law, DiFiore, 561
F. Supp. 2d 131, (No. 07-10070), ECF No. 152. This Court ruled
that judgment as matter of law was inappropriate on the grounds
that despite the notice provided by American, a reasonable
passenger could have thought that the two dollar fee was given
to the skycaps as a tip. See DiFiore, 561 F. Supp. 2d at 136.
The Massachusetts Superior Court, on the other hand,
appears to interpret the Tips Act in a more restrictive way. In
Mouiny v. Commonwealth Flats Development Corp., No. 2006-01115,
2008 WL 9028521, at *7 (Mass. Super. Aug. 18, 2008) (Gants, J.),
the court analyzed whether a reasonable patron would consider
“station fees” (fees for extra tables ordered by hotel’s banquet
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customers) as “service charges” that the employer should have
distributed amongst the wait staff as tips under section 152A of
the Act. The court ruled that no reasonable customer would think
that the station fees were tips for employees because, (i) one
would normally understand that the stations would need to be
separately staffed by additional employees whose wages were paid
by the hotel, and (ii) the invoices provided notice that the
“banquet station fees” were not tips for the wait staff. Id. See
e.g., DePina v. Marriott International, Inc., No. 2003-05434,
2009 WL 8554874 at *12 (Mass. Super. July 28, 2009) (Henry, J.)
(granting motion for summary judgment on the grounds that the
hotel's practice of (i) listing flat fees for culinary stations
as a “chef fee,” “bartender fee,” or “attendant fee” separate
and distinct from the percentage based “service charge” fee, and
(ii) informing customers that only the last ones were
distributed amongst wait staff, met the requirements of section
152A); Masiello v. Marriott International, Inc., No. 2006-05109,
2010 WL 8344105 at *2-3 (Mass. Super. May 11, 2010) (Roach, J.)
(granting the hotel’s motion for summary judgment because the
hotel listed the flat fees for banquet stations, clarifying that
tips for banquet stations employees were not included in the
price and differentiated them from the service charges that were
distributed amongst wait staff).

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The case at hand, however, presents slight, but relevant
questions of fact, distinguishable from the Superior Court cases
just cited.
In cases where the employer provided notice to the patron
stating that a certain fee did not constitute a tip or service
charge, courts have focused on whether a reasonable customer
would understand that the employer did not distribute the fee
amongst employees. See Masiello, 2010 WL 8344105 at *2-3,
Mouiny, 2008 WL 9028521, at *7. Indeed, this Court held in
DiFiore that the question whether the sign posted by American
informing that tips were not included in the handling fee was
enough to put a “reasonable customer” on notice had to be
answered by a jury. See DiFiore, 561 F. Supp. 2d at 132. As in
Carpaneda’s case, American posted a sign explaining to
passengers that notwithstanding the two dollar fee, they were
expected to also tip the skycaps because gratuities were not
included in the fee. Id. This Court tried the case and
instructed the jury to determine if the notice was sufficient to
inform customers that the two dollar per bag charge was not a
tip for the skycaps. Pl.’s Opp’n Def.’s Mot. Dismiss, Ex. B,
Jury Instructions in DiFiore case (“Jury Instructions”) 28, 33,
55, ECF No. 22. Likewise, the question whether the notice
Domino’s provided to its customers about the delivery charge and
tips was sufficiently clear and unambiguous so that no
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reasonable customer would think it was a tip for the driver
ought here be answered by a jury. Although the notice Domino’s
provides on its webpage presents a close case, ambiguity remains
where customers who order by phone are not warned about the
delivery charge policy beforehand. They ultimately learn, if at
all, that the delivery charge is not a tip when they receive the
box with the attached notice. In this scenario, it is not
unreasonable to conclude that many customers do not tip the
driver upon receiving the delivery, assuming that the delivery
charge constitutes a tip. If the customer does read the
disclaimer on the box, this may occur only after the driver
leaves, leaving no opportunity to provide a tip.
It ought also be noted that, unlike other online ordering
systems where the customer can add to the total price the amount
of money he wishes to tip, Domino’s web page automatically
displays the amount due including the delivery charge, but does
not permit the customer to add a tip. This system, coupled with
the fact that $2.50 is an amount comparable to what an average
customer might pay as a tip, makes it plausible that a
reasonable customer would interpret the delivery charge as a
tip. Carpaneda has therefore pled facts regarding the delivery
charge nature to establish a claim under the Tips Act.

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Lastly, Domino’s also argues that because PMLRA, and not
Domino’s, collects the delivery charge,2 only PMLRA can be held
liable under the Tips Act. Def.’s Mot. Dismiss 16. In his
complaint, however, Carpaneda alleges that pursuant to the
franchise agreement, Domino’s has a contractual right to receive
a percentage of all revenues, including delivery charges,
received by the franchisee. Compl. ¶ 20.
III. CONCLUSION
For the foregoing reasons, this Court DENIES Domino’s
motion to dismiss Carpaneda’s Tips Act claim.

SO ORDERED.

/s/ William G. Young
WILLIAM G. YOUNG
DISTRICT JUDGE

2

Under the Tip Act, an employer or other person who
improperly retains any portion of a gratuity that a patron
reasonably expects to go to the employee might be held liable.
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