Fast v. Applebee's International, Inc.
ORDER by Judge Nanette Laughrey denying 176 motion for partial summary judgment. ORDERED that Plaintiff's motion for summary judgment [Doc. # 176] is DENIED.(Smith, Fran)
IN THE UNITED STATES DISTRICT COURT FOR THE W E S T E R N DISTRICT OF MISSOURI C E N T R A L DIVISION G E R A L D A. FAST, TALISHA C H E S H IR E , and BRADY GEHRLING, P l a i n t if f s , v. A P P L E B E E 'S INTERNATIONAL, INC., D e f e n d a n t. ) ) ) ) ) ) ) ) ) )
C as e No. 06-4146-CV-C-NKL
ORDER P lain tiff s Gerald A. Fast, Talisha Cheshire, and Brady Gehrling ("Plaintiffs") filed this c a se as a collective action under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216. T h e y allege that Defendant Applebee's International, Inc. ("Applebee's"), has failed to pay its servers and bartenders an appropriate wage under the FLSA. Before the Court is P la in tif f s ' motion for partial summary judgment [Doc. # 176]. It is DENIED. I. B a c k gro u n d1 P la in t if f s were (or are) servers and bartenders at Applebee's restaurants. Plaintiffs' C o m p la in t alleges that Applebee's is liable under the FLSA for paying them the tipped wage ra te for time they spent performing non-tipped work.
The following facts are drawn from the supported statements of undisputed facts set forth in the parties' briefs on Plaintiffs' motion for summary judgment, as well as procedural facts appearing in the Court's docket. All facts are considered in the light most favorable to Applebee's, the nonmovant.
A p p le b e e's denies liability and claims that it adopted its compensation and tim e k e ep in g practices for servers and bartenders in good faith, in reliance on written a d m in is tra tiv e regulations, orders, rulings or interpretations of the United States Department o f Labor. Thus, Applebee's states it is shielded from any liability on Plaintiffs' claims by the g o o d faith defense found in 29 U.S.C. § 259. [Doc. # 82.] In its May 3, 2007, summary judgment Order, the Court found that employers may pay th e tipped wage rate in certain circumstances: F L S A regulations and the [Department of Labor's Field Operations] Handbook in d ic a te that a tipped employee's duties must fall into one of three categories. The first c a te g o ry includes all tip producing duties. An employer may take the tip credit for any e m p l o ye e time that falls within the first category. If an employee's duty is not tip p ro d u c i n g , then it must be incidental to one of the employee's tip producing duties (th e second category), or it must be a duty that is unrelated to any of the employee's tip producing duties (the third category). If the duty falls within the second category, th e n the employer may take the tip credit for the time the employee spent on incidental d u tie s so long as the incidental duties do not exceed 20 percent of the employee's o v e ra ll duties. If the employee's second category duties exceed 20 percent of the e m p lo y e e's overall duties, then the employer may not take the tip credit for any of the e m p l o y e e 's time spent on second category duties. Finally, an employer may not take the tip credit for any employee time that falls within the third category because third c a te g o r y duties are treated as separate and distinct occupations. [D o c. # 73 (emphasis added).] The parties dispute what Applebee's policy was with regard to the amount of time s p e n t by servers and bartenders on non-tip producing duties, as well as the extent to which A p p l e b e e's monitored that time and the extent to which it was required to keep records of su c h time. With regard to Applebee's policy, Applebee's corporate designee testified that it is Applebee's policy that its tipped-wage employees should not spend more than twenty 2
p e rc e n t of their shifts performing non-tipped work. However, Applebee's does not have a w ritten policy requiring its servers and bartenders to spend less than twenty percent of their tim e on non-tipped work; nor does it specifically inform its servers and bartenders of the tw e n ty percent tolerance. One document, titled "Best Demonstrated Practices," which was a p p a re n tly directed to Applebee's restaurant managers, indicates that Applebee's could save o n labor costs by having servers and bartenders perform non-tipped work during slow times; b u t none of the managers deposed in this case had seen the document or implemented such a practice. As for how much time was actually spent on non-tip producing duties, Plaintiffs claim th a t they spent more than twenty percent of their time performing such duties, and Applebee's d e n ies this (at least as to the majority of Plaintiffs and opt-in plaintiffs). However, with re g a rd to records of time spent on tipped and non-tipped producing duties, Applebee's did n o t generate any data which specifically shows the amount of time servers and bartenders s p e n t on tip producing work. O n June 19, 2007, the Court conditionally certified the following class in this case, a s suggested by Plaintiffs: c u rre n t and former servers and bartenders at 'corporate' restaurants (i.e. those operated b y defendant or its subsidiaries as opposed to franchisees) . . . who were/are directed o r permitted to perform duties that would not generate tips such as general m a in te n a n c e and preparatory work in excess of twenty percent (20%) of their shift w ith o u t paying them at least minimum wage for such work.
[ D o c . # 83.] After notice was sent to potential class members, over 5,549 plaintiffs opted in to the action. B o th Plaintiffs and Applebee's retained experts to analyze the amount of time servers a n d bartenders spent performing non-tipped work. Applebee's retained an expert to study s e rv e r s and bartenders at thirty of its restaurants, videotaping their activities for three weeks, a n d recording what duties several randomly-selected servers and bartenders performed over the course of one week. Analyzing this data, Applebee's expert concluded that the servers a n d bartenders he observed devoted an average of eighteen percent of their time to duties that P la in tif f s would classify as non-tipped work. The parties do not discuss the findings of Plaintiffs' experts in their statements of fact in the briefing on Plaintiffs' motion for summary judgment. Applebee's does mention the re p o rt of one of Plaintiffs' experts in its response brief. That expert report states that its c o n c lu s io n s are based, in part, on responses to a questionnaire sent to opt-in plaintiffs c o n c e rn in g the amount of time they spent on non-tipped work. Approximately 1,610 opt-in p la in tif f s responded to that questionnaire, submitting 2,103 responses. The responses in d ic a te that the responding opt-ins spent anywhere from zero percent to (apparently) over o n e hundred percent of their time on unspecified non-tipped work. From those responses, P la in tif f s' expert determined the average amount of time spent by opt-in plaintiffs on nontip p e d work was 43.8%. II. D is c u s s io n
P lain tiff s, on behalf of themselves and all opt-in plaintiffs, move for partial summary ju d g m e n t on the issues of (a) whether Applebee's paid Plaintiffs and all opt-in plaintiffs p ro p e rly and (b) whether Applebee's may assert a good faith defense under 29 U.S.C. § 259. B e f o re ruling on this motion, the Court considered the issues, arguments and authorities ra ise d both in the briefs and at oral argument. S u m m a ry judgment is proper "if the pleadings, depositions, answers to interrogatories, a n d admissions on file, together with the affidavits, if any, show that there is no genuine is s u e as to any material fact and that the moving party is entitled to a judgment as a matter o f law." Fed. R. Civ. P. 56(c). The moving party bears the "responsibility of informing the d is tric t court of the basis for its motion," and must identify "those portions of [the record] w h i c h it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v . Catrett, 477 U.S. 317, 323 (1986). If the moving party satisfies its burden, Rule 56(e) re q u ire s the nonmoving party to respond by submitting evidentiary materials that designate " s p e c if ic facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v . Zenith Radio Corp., 475 U.S. 574, 587 (1986). In determining whether summary judgment is appropriate, a court must look at the record and any inferences to be drawn from it in the lig h t most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 2 5 5 (1986).
L i a b i li t y
P la in tif f s seek a ruling that, as a matter of law, Applebee's is liable to the Plaintiffs a n d the opt-in plaintiffs for unpaid wages because Applebee's has failed to show that it was e n title d to take the tip credit for those employees who worked more than twenty percent of th e ir time doing work incidental to tip producing work. Plaintiffs argue that, under the F L S A , the burden is upon Applebee's to prove by "clear and affirmative evidence" that it was entitled to pay Plaintiffs and the opt-in plaintiffs the tipped wage. Plaintiffs appear to a rg u e that their only burden is to generally claim that all Plaintiffs and all opt-in plaintiffs s p e n t more than twenty percent of their time on unspecified non-tipped work and that, after they have done so, the burden shifts to Applebee's to disprove that assertion by documentary e v id e n c e. According to Plaintiffs, because Applebee's cannot produce documentary records o f how much time its servers and bartenders spent on non-tipped work, Applebee's cannot m e e t its burden. Applebee's correctly points out that the tip credit is contained in a definitional section o f the FLSA and therefore is not an exemption or exception which the employer must prove. C o m p a r e 29 U.S.C. §§ 207 ("Maximum Hours") and 213 ("Exemptions") with 29 U.S.C. § 203 ("Definitions"). Instead, the employee must prove that he or she performed work for w h ic h he or she has not been paid. Anderson v. Mount Clemens Pottery Co., 328 U.S. 680, 6 8 6 -8 7 (1946). In Mount Clemens, the court stated, "An employee who brings suit . . . for u n p a id minimum wages . . . has the burden of proving that he performed work for which he
w a s not properly compensated." Id. at 986-87. The Mount Clemens court also found that e m p lo ye rs are charged with keeping records demonstrating that employees have been p ro p e rly compensated, and that employees should not be penalized for failing to produce co n v incin g substitutes for such records where employers fail to keep them. Id. at 687. T h e re f o re , the Mount Clemens court held, "In such a situation we hold that an employee has c a rrie d out his burden if he proves that he has in fact performed work for which he was im p ro p e rly compensated and if he produces sufficient evidence to show the amount and e x t e n t of that work as a matter of just and reasonable inference." Id. To prevail on their FLSA claims, Plaintiffs have the burden of proving that they p e rf o rm e d work for which they have not been compensated. Because there remain disputed is s u e s of fact concerning this issue, summary judgment is not appropriate. B. G o o d Faith Defense under 29 U.S.C. § 259
N e x t, Plaintiffs argue that, as a matter of law, Applebee's is not entitled to the good f a ith defense provided by 29 U.S.C. § 259. Section 259 provides immunity from liability in F L S A cases where an employer pleads and proves: th a t the act or omission complained of was in good faith in conformity with and in re lia n c e on any written administrative regulation, order, ruling, approval, or in te rp re ta tio n , of the [United States Department of Labor] . . . . 29 U.S.C. § 259(a) and (b)(1); Hultgren v. County of Lancaster, Neb., 913 F.2d 498, 507 (8th C ir. 1990). "This defense is essentially an estoppel defense to protect employers from an a g e n c y's mistakes in statutory interpretation." Hultgren, 913 F.2d at 507. A § 259 defense
re q u ire s an objective test where an employer must prove the following: (1) its compensation p o lic ie s were adopted in reliance on a written interpretation of the FLSA by the Department o f Labor, (2) the policies were in conformity with that interpretation; and (2) its actions were o b je c tiv e ly reasonable. See Hultgren, 913 F.2d at 507 (stating that the interpretations on w h ich the defense is based must be both written and "specific enough to provide guidance"). P la in tif f s argue that Applebee's is not entitled to the § 259 defense because the e v i d e n c e shows that Applebee's did not rely on or conform with FLSA requirements. P la in tif f s point to the Handbook, cited in the Court's May 3, 2007, Order. The Handbook in d ic a te s that employees who spend more than twenty percent of their time performing nontip p e d work cannot be paid the tipped wage and must be paid at least the minimum wage for such work. Plaintiffs take the position that Applebee's cannot claim the good faith d e f en s e unless it relied on and conformed with the twenty percent tolerance laid out in the H andbook. F u r th e r, Plaintiffs state that Applebee's inaction with regard to the Handbook re q u ire m e n ts demonstrates that it was not acting in good faith. Plaintiffs argue that
A p p lebe e's does not train its managers to assure that servers and bartenders spend no more th a n twenty percent of their time on non-tipped work, or have written rules or training c o n c e rn in g limits on non-tipped work. Applebee's does not monitor employee time spent in s u c h work. Plaintiffs point to one document, titled "Best Demonstrated Practices," which ap p ea rs to encourage its restaurants to save labor costs by having its servers and bartenders
p e rf o rm non-tipped work. Plaintiffs emphasize letters sent by Applebee's to the Department o f Labor promising that Applebee's would assure that employees were properly monitored a n d compensated according to the twenty percent Handbook directive, and argue that A p p le b e e 's broke this promise. In response, Applebee's argues evidence indicating that it did rely on and conform w it h Department of Labor interpretations regarding payment for non-tipped work in good f a ith . Applebee's notes that there is no statutory guidance demonstrating the specific duties f o r which employees may be paid the tipped wage, as opposed to minimum wage. A p p leb e e 's argues that 29 C.F.R. § 516.56(e) indicates that it was not obligated to pay its e m p lo ye e s minimum wage for non-tipped work so long as the work they performed was w ith in the "occupation" of a server or bartender. See id. (stating that waitresses may spend p a rt of their time cleaning and setting tables, toasting bread, making coffee and washing d is h e s). Applebee's also cites a 1980 Department of Labor opinion letter, which gives the s a m e indication. See generally, Hultgren, 913 F. 2d at 507 (stating that opinion letters from th e Department of Labor "may properly be characterized as the position of the agency for p u rp o s e s of section 259"). Applebee's argues that, read in light of a 1985 opinion letter, the H a n d b o o k 's twenty percent tolerance relates only to work performed beyond their restaurants' g e n e ra l operating hours. Finally, Applebee's states that the Court's ruling setting forth the tw e n ty percent tolerance for non-tipped work was the first of its kind. Applebee's indicates th a t this evidence could support a finding that it relied on and acted in compliance with
D e p a rtm e n t of Labor regulations and opinion letters and therefore summary judgment on its g o o d faith defense is not appropriate. T h e re is also evidence that it is Applebee's policy that tipped-wage employees do not s p e n d over twenty percent of their time on non-tipped work. Applebee's produced evidence in d ic a tin g that the "Best Demonstrated Practices" document does not reflect its policies as a rg u e d by Plaintiffs, was not used in its restaurants, and is not inherently improper under D e p a r tm e n t of Labor interpretations. Viewing the facts in the light most favorable to A p p leb e e 's, it has produced some evidence that it does not have a policy to violate the twenty p e rc e n t rule. D ra w in g all inferences in favor of Applebee's, the Court cannot find as a matter of law t h a t Applebee's is not entitled to the § 259 defense. There remain questions of fact co n ce rnin g whether Applebee's actions were in good faith. See Bouchard v. Regional G o v e r n i n g Bd. of Region V Mental Retardation Servs., 939 F.2d 1323 (8th Cir. 1991) (c o n sid e rin g particular facts and circumstances of employees' work situations in determining w h e t h e r their employer was entitled to a good faith defense). The Court cannot find, as a m a tte r of law, that Applebee's is not entitled to the protection of § 259. III. C o n c lu s io n A c c o rd in g ly, it is hereby ORDERED that Plaintiff's motion for summary judgment [ D o c . # 176] is DENIED.
s / Nanette K. Laughrey NANETTE K. LAUGHREY U n ite d States District Judge D a te d : August 4, 2009 Jef fe rson City, Missouri
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