KOENIG v. GRANITE CITY FOOD & BREWERY, LTD et al

Filing 63

MEMORANDUM re 55 MOTION to Certify Class PLAINTIFFS MOTION TO CONDITIONALLY CERTIFY COLLECTIVE CLASS filed by CHELSEA KOENIG and 58 MOTION to Certify Class PLAINTIFFS MOTION TO CERTIFY THE CLASS PURSUANT TO FED. R. CIV. P. 23 filed by CHELSEA KOENIG. Signed by Judge Mark A. Kearney on 5/11/2017. (kly)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA

CHELSEA KOENIG

CIVIL ACTION

v.

NO. 16-1396

GRANITE CITY FOOD & BREWERY,
LTD.

KEARNEY,J.

May 11, 2017

MEMORANDUM
Restaurant employees seeking wages based on allegedly earned tips under the Fair Labor
Standards Act and Pennsylvania wage laws typically aggregate their claims with an employee
filing the case and the other similarly situated employees either later joining the federal statutory
case or opting out of the Pennsylvania wage case. Otherwise, no single employee would have
enough possible recovery to justify the litigation expense against the employer.

We carefully

evaluate several factors before we allow one employee to bring a collective or class action for
other employees as the employer must have notice of the common claims to ensure the
individual claims do not overcome the common issues and allow a common defense. Among
other factors, but of concern today, the employee bringing the case must show her claim, and the
claim of the other employees, are sufficiently similar to allow us to conditionally certify a
collective action under federal law largely for purposes of case notice and to certify a class action
for the Pennsylvania wage claim. After evaluating all of the long-established factors and the
facts adduced in discovery, we grant this restaurant employee's motions for conditional
certification to allow notice to her co-employees under the Fair Labor Standards Act and for
class action treatment of the Pennsylvania wage claims as defined in the accompanying Order.

I.

Background
Chelsea Koenig formerly worked as a bartender for Cadillac Ranch All American Bar &

Grill in Robinson, Pennsylvania. Cadillac Ranch paid Ms. Koenig less than the hourly minimum
wage and made up the difference by crediting her customer tips towards minimum wage. Ms.
Koenig alleges Cadillac Ranch failed to give her sufficient notice of its use of the tip credit under
the Fair Labor Standards Act (FLSA). Ms. Koenig also alleges Cadillac Ranch fai led to give
sufficient notice to other bartenders, servers, bussers, and food runners in the Robinson,
Pennsylvania location and at its four other locations in Florida, Indiana, and Maryland. 1
Ms. Koenig also alleges Cadillac Ranch violated Pennsylvania's Minimum Wage Act by:
(1) failing to meet tip credit notification requirements; (2) failing to pay tipped employees full
minimum wage when they performed non-tipped work; (3) claiming a tip credit in excess of
amounts permitted by Pennsylvania law; and, (4) forcing tipped employees forfeit tips when
customers walked out or the employee had a cash shortage.
After months of initial discovery on these issues, Ms. Koenig now moves to conditionally
certify a collective action for violating the tip credit notice of the Fair Labor Standards Act. Ms.
Koenig also moves to certify a class of Pennsylvania employees under Fed. R. Civ. P. 23 for
Cadillac Ranch's alleged violation of the Pennsylvania Minimum Wage Act. Cadillac Ranch
opposes both motions, arguing Ms. Koenig adduced no evidence her allegations and injuries are
consistent with other employees at the five locations.

II.

We conditionally certify an FLSA collective class.
Ms. Koenig moves to certify a co llective of all former and current tipped employees
2

(such as server, bartender, busser, food runner) of Cadillac Ranch All American Bar & Grill in

2

Pennsylvania, Maryland, Florida, or Indiana at any time from September 9, 2013 to the date the
tipped employee signed Cadillac Ranch' s January 2017 Tip Credit Policy.
The Fair Labor Standards Act allows Ms. Koenig to bring a representative action for
herself and other employees under 29 U.S.C. § 216(b) if (1) the employees are all similarly
situated; and, (2) each class member individually consents with the court to join the action. 3 Our
Court of Appeals directs a two-tier approach in certifying a collective class.

4

In the first tier we

require a "modest factual showing," where Ms. Koenig "must product some evidence, ' beyond
pure speculation,' of a factual nexus between the manner in which the employer' s alleged policy
affected her and the manner in which it affected other employees." 5 We apply a lenient standard
because "conditional certification is not really a certification, but is rather [an] exercise of [our]
discretionary power to facilitate the sending of notice to potential class members, and is neither
necessary nor sufficient for the existence of a representative action under the [Act]."

6

Ms . Koenig makes a " modest factual showing" other tipped employees are "similarly
situated" because Cadillac Ranch failed to give sufficient notice to its tipped employees it
utilized the tip credit to satisfy the Act's minimum wage requirement at its five locations. Ms.
Koenig testified when Cadillac Ranch hired her, no one explained the tip credit policy, how her
compensation was structured, or provided her with notice of the tip credit provision.

7

Ms. Koenig adduced evidence Cadillac Ranch had the same tip credit policies and
procedures for tipped employees at its five locations.

Cadillac Ranch' s corporate designee

testified all five locations utilize the tip credit provision for its tipped employees so the
employees are similarly situated for compensation purposes. 8 In response to an Interrogatory,
Cadillac Ranch admits providing notice of its utilization of the tip credit to employees "through
its policies, procedures, FLSA posters and through oral notification from local management

3

personnel. .. Tipped Employees are informed of the tip credit Cadillac Ranch intends to claim
through the Company's Compensation Policy and oral representations from location
management personnel." 9

The Cadillac Ranch employee handbooks used from September 9,

2013 until the implementation of the January 2017 tip credit notice addressed tip credit laws but
Ms. Koenig alleges it does not meet the FLSA' s requirements for sufficient notice. 10

The

corporate designee testified Cadillac Ranch had a written policy notifying employees it used the
tip credit in beginning in April 2016 but did not have one before then. 11
Taken together, Ms. Koenig makes a "modest factual showing" all tipped employees at
Cadillac Ranch ' s five locations are "similarly situated" because Cadillac Ranch used the same
procedure to inform tipped employees and used the same employee handbooks at its five
locations.
Cadillac Ranch argues its local management personnel provided proper oral notice of the
tip credit policy to some tipped employees and attached supporting declarations from those
employees. Cadillac Ranch argues the existence of employees who received proper oral notice
defeats a conditional finding tipped employees are similarly situated for a collective action. We
disagree. Cadillac Ranch ' s actions in creating a written tip credit in 2016 and implementing and
mandatory electronically signed policy in 2017 suggests a flawed policy of oral notification.
Cadillac Ranch's argument is more appropriate for a summary judgment motion at our secondtier of review. At this stage, Ms. Koenig meets our lenient standard for conditional certification.
III.

We certify a class for Ms. Koenig's Pennsylvania Minimum Wage Act claims.
Ms. Koenig moves to certify a class of all former and current Tipped Employees (such as

server, bartender, busser, food runner) of Cadillac Ranch All American Bar & Grill in
Pennsylvania at any time from September 9, 2013 to the date the tipped employee signed

4

Cadillac Ranch ' s January 2017 Tip Credit Policy. Ms. Koenig alleges Cadillac Ranch violated
Pennsylvania' s Minimum Wage Act by: (1) failing to meet tip credit notification requirements;
(2) failing to pay tipped employees full minimum wage when they performed non-tipped work;
(3) claiming tip credit in excess of amounts permitted by Pennsylvania law; and, (4) forcing
tipped employees forfeit tips when customers walked out or the employee had a cash shortage.
When reviewing class certification, we identify the "common interests" of the class
members and evaluate Ms. Koenig's and her counsels ' "ability to fairly and adequately protect
class interests" under Fed. R. Civ. P. 23 . 12 Rule 23 (a) requires: (1) numerosity: meaning the
class "must be so numerous that joinder of all members is impracticable"; (2) commonality:
meaning there are "questions of law or fact common to the class"; (3) typicality: meaning the
"claims or defenses of the representative parties" must be "typical of the claims or defenses of
the class"; and , (4) adequacy of representation: meaning the named plaintiff and counsel will
"fairl y and adequately protect the interests of the class." 13 We then turn to Rule 23(b)(3) which
requires "(1) common questions of law or fact predominate (predominance); and, (2) the class
action is the superior method for adjudication (superiority)." 1;
1.

Ms. Koenig satisfies the Rule 23(a) requirements.

We reviewed the post-discovery detailed record and, based on our findings below,
determine Ms. Koenig establishes the propriety of certifying a class of employees with
Pennsylvania state law wage claims by a preponderance of the evidence. 15
A.

The Class satisfies the numerosity requirement.

Our Court of Appeals instructs " [n]o minimum number of plaintiffs is required to
maintain a suit as a class action, but generally if the named plaintiff demonstrates that the
potential number of plaintiffs exceeds 40, the first prong of Rule 23(a) has been met. " 16 Cadillac

5

Ranch's payroll data shows approximately 220 former and current tipped employees are
potential class members. Cadi llac Ranch does not dispute this number. We find the class of
approximately 220 members meets the numerosity requirement of Rule 23(a).
B.

The Class satisfies the commonality requirement.

"The commonality requirement [is] satisfied if [Ms. Koenig] shares at least one question
of fact or law with the grievances of the prospective class." 17 Cadillac Ranch employed and
compensated Ms. Koenig and the class members under the same policies, handbooks, and
compensation scheme.

Cadillac Ranch claimed a tip credit and used the same payroll

calculations for Ms. Koenig and the approximately 220 class members.

The proposed class

shares common legal questions because Ms. Koenig alleges Cadillac Ranch violated the
Pennsylvania Minimum Wage Act with the same four legal theories applied to all tipped
employees in the class.
We find the commonality requirement is satisfied because Cadillac Ranch used
standardized policies to notify tipped employees of the tip credit and standardized procedures to
calculate their tip credit for payroll evidencing tipped employees sharing common factual
allegations and legal theories for recovery.
C.

The Class satisfies the typicality requirement.

The typicality requirement "focuses on whether the individual claim of the class
representative has the essential characteristic common to the claims of the class." 18

Ms.

Koenig ' s claim is typical of the class because all class members were tipped employees like Ms.
Koenig. We also find Cadillac Ranch used the same employee handbook and compensation
policy for Ms. Koenig and the class members and paid Ms. Koenig and class members under the
same tip credit provision and using the same payroll system. Typicality also applies to Cadillac

6

Ranch's defenses; we find it raises the same defense of proper notice and proper calculation of
minimum wage under Pennsylvania's Minimum Wage Act for Ms. Koenig and the class
members . Rule 23(a)'s typicality requirement is satisfied.

D.

The Class is adequately represented.

Rule 23(a)'s adequacy of representation requires: (1) '"plaintiffs attorney must be
qualified, experienced, and generally able to conduct the proposed litigation;' and, (2) ' the
plaintiff must not have interests antagonistic to those of the class."' 19
We find Attorney Gerald D. Wells, III and his firm Connolly Wells & Gray, LLP are
qualified, experienced, and able to conduct this litigation.

We reviewed Attorney Wells'

attached declaration and agree with Judge Surrick, who recently found counsel has "extensive
experience litigating wage-related employment matters in various district courts" when
approving Attorney Wells and his firm as adequate representatives in a class settlement of tipped
employees suing their restaurant employer for violating tip credit provisions of Pennsylvania's
Minimum Wage Act and the Fair Labor Standards Act. 20
We find Chelsea Koenig has no interest antagonistic to the class and is adequate to
represent the class. We reviewed Attorney Wells ' declaration regarding Ms. Koenig and Ms.
Koenig's deposition testimony and find Ms. Koenig shares the same factual and legal theories of
recovery as the class members. We do not find, and Cadillac Ranch does not show, Ms. Koenig
has an interest antagonistic to class.
We find Ms. Koenig adequately represents the class and Attorney Wells and his firm are
adequate class counsel.

7

2.

Rule

The Class satisfies Rule 23(b )(3) predominance and superiority
requirements.

23(b)(3)

requires

"( l)

common

questions

of law or

fact

predominate

(predominance); and, (2) the class action is the superior method for adjudication (superiority)."

A.

21

The Class satisfies the predominance requirement.

The predominance requirement "begins, of course, with the elements of the underlying
cause of action."

22

Ms. Koenig 's underlying cause of action is Cadillac Ranch violated

Pennsylvania's Minimum Wage Act by: (1) failing to meet tip credit notification requirements;
(2) failing to pay tipped employees full minimum wage when they performed non-tipped work;
(3) claiming a tip credit in excess of amounts permitted by Pennsylvania law; and, (4) forcing
tipped employees forfeit tips when customers walked out or the employee had a cash shortage.
The class members include servers, bartenders, bussers, and food runners. We understand
certain tipped positions may have different factual claims; for example, it is more likely a server
and bartender would forfeit tips due to customer walk out than a food runner. A class may have·
individual questions of fact so long as "common questions 'predominate over any questions
affecting only individual [class] members. "' 23
The predominant questions of fact and law for the class relate to how Cadillac Ranch
notified tipped employees of the tip credit and calculated all tipped employees' minimum wage.
We find predominance is satisfied because Cadillac Ranch used the same policies and
procedures for all tipped employees and they share the same cause of action under
Pennsylvania' s Minimum Wage Act.

B.

The Class satisfies the superiority requirement.

Rule 23(b)(3)'s superiority requirement asks us to " balance, in terms of fairness and
efficiency, the merits of a class action against those of alternative methods of adjudication. "

8

24

In

Ripley, which concerned failure to pay overtime wages, the court noted there is "little incentive

for Plaintiffs to bring their claims individually because the amount of recovery, if any, would be
very small. Class actions are particularly appropriate in such cases." 25 The core claim here is
Cadillac Ranch underpaid its tipped employees the minimum wage. Each tipped employee's
recovery will be relatively small. We find a class action is the superior method for the class'
minimum wage claims because of the small size of individual recoveries.
We also find this District is a desirable place to concentrate litigation under Rule
23(b)(3)(C) because Cadillac Ranch owns and operates a restaurant employing Class members
here. We do not find likely difficulties in managing this class action under Rule 23(b)(3)(D).
Cadillac Ranch objects to Ms. Koenig' s failure to demonstrate the class action's "manageability"
makes certifying a class inappropriate.

We disagree; tip credit claims on behalf of tipped

employees in the restaurant industry are routinely managed as class actions.

There are no

conflicts of law among the claims, we apply the Fair Labor Standards Act law to the collective's
claims and Pennsylvania' s Minimum Wage laws to the class claims. Cadillac Ranch can argue
from a full factual record at summary judgment to eliminate what it believes are more
appropriately individual, and not class action, claims.

IV.

Conclusion

We conditionally certify a collective action under the Fair Labor Standards Act of all
former and current tipped employees (such as server, bartender, busser, food runner) of Cadillac
Ranch All American Bar & Grill in Pennsylvania, Maryland, Florida, or Indiana at any time from
September 9, 2013 to the date the tipped employee signed Cadillac Ranch's January 2017 Tip
Credit Policy.

We also certify the Class under Fed. R. Civ. P. 23 of all former and current

Tipped Employees (such as server, bartender, busser, food runner) of Cadillac Ranch All

9

American Bar & Grill in Pennsylvania at any time from September 9, 2013 to the date the tipped
employee signed Cadillac Ranch' s January 201 7 Tip Credit Policy.26 We find Ms. Koenig an
adequate representative for the Class and find Attorney Well s and his firm Connolly, Wells &
Gray are qualified, experienced, and able to adequately represent the Class as Class counsel.

1

One of the Maryland locations closed in January 2014. The parties agree there is also a
Cadillac Ranch restaurant in Minnesota; however, it does not use the tip credit to pay its
employees. Ms. Koenig does not seek to include the Minnesota location's employees.
2

Ms . Koenig used the corporate parent name Granite City Food & Brewery Ltd. We use the
more specific Cadillac Ranch name because there is a separate and unrelated Fair Labor
Standards Act case in the District of Minnesota against Granite City Food & Brewery locations.
Ms . Koenig also includes host/hostess; however, Cadillac Ranch ' s corporate designee testified
host/hostess are paid an hourly wage so we exclude them from the collective. See ECF Doc. No.
57-2at9-ll.
3

See Boyington v. Percheron Field Services, LLC, No. 14-90, 2015 WL 3756330 at *1 (W.D.
Pa. June 16, 2015) (internal citations omitted).

4

See Zavala v. Wal Mart Stores Inc., 691 F.3d 527, 536 (3d Cir. 2012).

5

Boyington , 2015 WL 3756330 at *l (quoting Zavala, 691 F.3d at 536 n. 4 and Symczyk v.
Genesis HealthCare Corp., 656 F.3d 189, 193 (3d Cir. 2011)).

6

Id. (citing Sy mczyk, 656 F.3d at 194).

7

ECF Doc. No . 57-3 15-16.

8

ECF Doc. No. 57-2 at 9-10.

9

ECF Doc.

o. 57-8 at 8-9.

10

ECF Doc. No . 57-7 at 65 .

11

ECF Doc. No. 57-2 at 46.

12

In re Community Bank of Northern Virginia , 622 F.3d 275 , 291 (3d Cir. 2010) (quoting In re
General Motors Corp. Pick- Up Truck Fuel Tanks Prods. Liab. Litig. , 55 F.3d 768, 799 (3d Cir.
1995)).

10

13

Id.

14

Id.

15

In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305, 320 (3d Cir. 2008) (citing
Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc., 546 F.3d 196, 202 (2nd Cir.
2008)).
16

Martz v PNC Bank, NA., No. 06-1075, 2007 WL 2343800 at *2 (W.D. Pa. August 15, 2007)
(citing Stewart v. Abraham, 275 F.3d 220, 226 (3d Cir. 2001)).
17

In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 310 (3d Cir.
1998) (quoting Baby Neal v. Casey, 43 F.3d 48, 56 (3rd Cir. 1985)).

18

In re Flat Glass Antitrust Litigation, 191 F.R.D. 472, 479 (W.D. Pa. 1999) (internal citations
omitted).
19

Hayden v. Freightcar America, Inc., No. 07-201 , 2008 WL 375762 at *13 (W.D. Pa. Jan. 11,
2008) (quoting Wetzel v. Liberty Mut. Ins. Co., 508 F.2d 239, 247 (3d Cir. 1975)).
20

Graudins v. Kop Kilt, Inc., No. 14-2589, 2017 WL 736684 at *4 (E. D. Pa. Feb. 24, 2017).

21

In re Community Bank, 622 F.3d at 291.

22

Neale v. Volvo Cars of North America, LLC, 794 F.3d 353 , 370 (3d Cir. 2015) (internal
citations omitted).
23

Id. at 371 (quoting Amgen Inc. v. Conn Ret. Plans and Trust Funds, 1184, 1191-92 (2013)).

U.S.--, 133 S.Ct.

Ripley v. Sunoco, Inc., 287 F.R.D. 300, 31 o·(E.D. Pa. 2012) (quoting In re Prudential, 148
F.3d at 307-08.
24

2s

Id.

26

We can refine the timeframe for the class and collective actions, as Ms. Koenig acknowledges
in her brief, if Cadillac Ranch proves as a matter of law it provided sufficient notice for the tip
credit under the Fair Labor Standards Act or Pennsylvania's Minimum Wage Act before its
January 2017 notice.

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