Perez v. Yama, Inc. et al
Filing
33
MEMORANDUM ORDER: This court, having examined the Objections to the Magistrate Judge's R&R, and having made de novo findings with respect thereto, OVERRULES the Defendants' Objections and hereby ADOPTS and APPROVES in full the findings of f act and recommendations set forth in the R&R of the United StatesMagistrate Judge filed on December 6, 2016. ECF No. 28. Accordingly, the court DENIES the Defendants' Motion for Summary Judgment filed on October 13, 2016. ECF No. 15. re denying 15 Motion for Summary Judgment; adopting Report and Recommendations re 28 Report and Recommendations. Copy of Memorandum Order provided to counsel for all parties. Signed by Chief District Judge Rebecca Beach Smith on 12/28/2016. (bgra)
FILED
UNITED
0eC2 820l6
STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
CLERK, U.S. DISTRICT COUKl
Norfolk Division
THOMAS
E.
NORFOI K. VA
PEREZ
SECBETARY OF LABOR,
UNITED STATES DEPARTMENT OF LABOR,
Plaintiff,
ACTION NO:
V.
YAMA,
2:16cv432
INC.,
d/b/a
YAMA SUSHI RESTAURANT,
and
JING LIN,
Defendants.
MEMORANDUM ORDER
This
matter
is
before
for Summary Judgment
No.
15.
On
the
accompanying
ECF
No.
Opposition
No.
ECF
20,
No.
Response
No.
22.
On
to
and a
21.
in
same
day,
in
November
Defendants'
Memorandum in
On
November
Support
court
("Motion"),
Memorandum
16.
the
of
the
the
for
2016,
Motion
also
{"Defendants'
Support
their
Defendants'
Defendants
2016,
Motion
14,
the
filed on October 13,
Support
1,
on
2016.
EOF
filed
an
Memorandum").
Plaintiff
Summary
Motion
filed
Judgment,
an
ECF
{"Plaintiff's Memorandum"),
the
for
Defendants
Summary
filed
Judgment.
a
ECF
On
United
November
States
16,
2016,
Magistrate
this
Judge
the provisions of 29 U.S.C.
Civil
Procedure
submit
fact
to
and
Motion
filed
ECF
the
72(b),
to
Summary
a
Report
No.
28.
Defendants'
The
December 21, 2016,
law
for
the
27.
("R&R")
Judge
the
The
Defendants' Objections. ECF No.
I.
findings
of
December
recommended
of
the
Judge
6,
2016.
denying
Id.
the
at
2.
On
Objections
to
the
Recommendation.
filed
to
Magistrate
on
filed
Plaintiff
and
disposition
Defendants
and
to
hearings,
Judgment.
Report
to
pursuant
judge proposed
for
Motion
and Federal Rule of
Summary
the
the
Miller,
necessary
ECF No.
Magistrate
2016,
Judge's
of
Recommendation
Motion
December 16,
Magistrate
and
E.
636(b) (1) (B)
conduct
Judgment.
referred
Douglas
undersigned district
recommendations
for
§
court
a
ECF
No.
Response
31.
On
to
the
32,
LEGAL STANDARDS
A. Motion for Summary Judgment
Summary
judgment under
Federal
Rule of Civil
Procedure
56
is appropriate when the court, viewing the record as a whole and
in the light most favorable to the nonmoving party,
finds
that
there is no genuine issue of material fact and that the moving
party is
entitled to
Liberty
Lobby,
summary
judgment
judgment
Inc.,
stage
477
the
U.S.
as
a
242,
judge's
matter of law.
248-50
function
(1986).
is
not
Anderson v.
"[A]t
himself
the
to
weigh the evidence and determine the truth of the matter but to
determine
whether
there
is
a
genuine
issue
for
trial."
Id.
at 249.
A court should grant summary judgment if the nonmoving
party,
after
adequate
time
for
discovery,
has
establish the existence of an essential element
case,
on
trial.
which
Celotex
essence,
the
that
Corp.
To
party
rely
instead
show a
see
defeat
go
Hosp.,
Catrett,
must
motion
beyond
477
on
of that party's
burden
317,
of
proof
at
(1986).
323
"evidence
issue
for
In
on
which
trial.
160,
judgment,
alleged
in
or
{4th
Inc.
Cir,
477
v.
nonmoving
pleadings,
other
See Celotex,
& Serv.,
163
the
the
U.S.
Anderson,
or
477
'is
U.S.
not
at
sufficiently
249-50).
specific evidentiary support,
162
F.3d
existence
795,
of
802
a
(4th
scintilla
do not
Cir.
of
plaintiff's position." Anderson,
statements,
suffice.
1998),
evidence
477 U.S.
nor
in
at 252.
Rather,
for
(quoting
without
Baloq,
"[t]he
support
324;
^merely
Causey v.
does
to
Valley
(''A motion
probative.'")
Conclusory
at
Pleasant
1993)
and
evidence
summary judgment may not be defeated by evidence that is
colorable'
the
for the nonmoving party.
depositions,
Supplies
F.2d
summary
facts
affidavits,
981
the
U.S.
present
for
the
M & M Med.
Inc.,
bear
to
at 252.
a
genuine
also
will
could reasonably find"
477 U.S.
must
v.
nonmovant
[trier of fact]
Anderson,
party
failed
mere
of
the
"there
must be evidence on which the jury could reasonably find for the
plaintiff." Id.
B. Review of Magistrate Judge's R&R
Pursuant
Procedure,
entirety,
of
the
Fed.
the
Cir.
to
which
Civ.
P.
2007).
§
the
the
Federal
reviewed
the
Rules
of
record
Civil
in
its
novo determination of those portions
the
Plaintiff
72(b).
The
of
having
United
whole or in part,
recommit
72(b)
court,
particularized."
(4th
Rule
shall make a ^
R&R
R.
to
has
Objections
States
Midqette,
"specific
and
478
F.3d
621
or
with
reject,
or
616,
the recommendation of the Magistrate Judge,
him
accept,
be
in
to
may
must
objected.
modify,
matter
court
v.
specifically
instructions.
28
U.S.C.
636(b)(1).
II.
ANALYSIS
A. First Objection
The
Defendants
object
determination that there
as
The
is a
to
the
state
that
Judge's
genuine dispute of material
to whether the restaurant utilized a
Defendants
Magistrate
there
is
tip credit.
Obj.
"undisputed evidence
fact
at 1.
.
.
.
that the employers did not keep any of the tips and Yama did not
seek a
credit."
The
"tipped
Id.
Fair Labor
employees"^
^ A "tipped
Standards Act
to
satisfy
employee"
is
("FLSA")
the
"any
allows
federal
employee
employers
minimum
engaged
of
wage
in
an
occupation in which he customarily and regularly receives more
than $30 a month in tips." 29 U.S.C. § 203 (t). "A tip is a sum
requirement by paying a base hourly rate of at least $2.13 and
accounting
receives.
for
29 U.S.C.
portion
of
29 C.F.R.
notify
the
the
§
203 (m) .
minimum
through
wage.
that
wage
29
their
U.S.C.
which
some
or
all
is
known
tips
§
are
this
retention
participation
include
and
as
being
203(m).
All
a
in
employees'
requirement.
a
employees
the
employer
tip
who
pool
contribution amount,
Id.;
is
notify
29
and
the
only take a
employee ultimately receives,
counted
tips
credit."
the employer must
such
toward
tips
are
the
must
be
"tip pool,"
collected
for
provides an exception
C.F.R.
mandatory,
customarily
must
employee
"tip
Participation in a
redistribution among a group of employees,
to
the
The use of tips to account for a
"retained by the employee." Id.
in
tips
§ 531.51. To utilize the tip credit,
employees
minimum
difference
§
the
531.54.
pool
regularly
employees
Where
must
receive
of
any
only
tips,
required
tip credit for the amount each
and may not retain any of the tips
for any other purpose. See 29 C.F.R. § 531.54.
The
Defendants
employees,
and
credit.
Obj. at
servers
were
retain
tips.
that
1.
paid
argue
the
The
a
servers
restaurant
Defendants
flat
Jiang Aff.
that
55
hourly
19-20.
did
have
rate
were
not
utilize
produced
and
were
According
to
not
tipped
the
evidence
not
the
tip
that
allowed
to
Defendants,
presented by a customer as a gift or gratuity in recognition of
some service performed for him." 29 C.F.R. § 531.52 (2013).
this
practice
Handbook,
because
was
id.
the
memorialized
at 5 25,
at
some
point
and accordingly,
restaurant
paid
its
in
its
Employee
§ 203 (m) does not apply
servers
an
hourly
salary
in
excess of the federal minimum wage and did not rely on tips to
do so. Obj. at 4.
While
the
Defendants
assert
that
"the
undisputed evidence
was that the employees did not keep any of the tips and Yama did
not
seek a
contrary.
credit,"
To
Defendants'
id.
utilize
Memorandum,
at
1,
the
the
its
payroll
Defendants'
restaurant's
records
are
example
to
the
from
the
Wage Transcription and
Computation Sheets calculate server Christina Correa's earnings
as the sum of "tips" and her "cash wage." See ECF No.
The amount paid as
hourly
wage
received.
a
the
"cash wage"
Defendants
See id.;
Computation Sheet provides a
and
is below the
is the difference between the
promised
Correa Aff.
16-2 at 8.
5 5.
her
and
the
tips
she
The Wage Transcription and
"rate of pay" that varies by week
federal minimum wage.
See ECF No.
16-2 at
8.
The "rate of pay" is multiplied by the number of hours worked to
calculate
the
amount
indicates
that
the
wage
and
record,
the
the
used
tips
as
Defendants
to
make
a
"cash
paid
up
the
credit;
tipped employees
the
Magistrate
wage."
servers
See
less
difference.
there is evidence from which a
servers were
tip
paid
id.
than
Based
This
minimum
on
this
jury could conclude that
and that
Judge
the
restaurant
correctly
noted
used
that
"Yama's
records
redistributed,
raise
the
show
and
that
then
effective
the
employees'
supplemented
tips
with
hourly compensation
were
an
of
collected,
hourly
wage
each employee
to
above
minimum wage." R&R at 14,
The
Defendants
further
argue
that
under
the
Employee
Handbook all funds paid by customers "for payment of the bill or
by tip" belonged to the
fungible,
no
actual
restaurant,
tip money was
According to the Defendants,
not
use
tip
credit.
Transcription
and
Computation
the
Anderson,
jury
477
credit was
could
U.S.
at
paid to
Id.
But
the
Sheets
reasonably
252,
servers.
Obj.
at
5.
this means that the restaurant did
the
which
and that because money is
is
find
because
presence
plainly
for
it
of
the
Wage
"evidence
the
on
[P]laintiff,"
indicates
that
the
tip
used.
In support of their argument,
the Defendants cite Guerra v.
Guadalajara, IV.^ According to the Defendants, in Guerra a group
of employees sued their employer for taking a percentage of the
servers'
tips,
seeking
"the
amount
withheld
but the court "dismissed this claim." Obj.
egregiously misrepresent
court
considered
pleadings
on
defendant's
the
the
the
employer's
servers'
retention
record.
of
"claim
tips."
In
for
The Defendants
for
judgment
conversion
Guerra
employer,"
opinion cited,
at
2 2016 WL 3766444 (W.D. Va. July 7, 2016).
7
the
at 3.
the
motion
by
based
*1.
The
the
on
the
on
the
court
concluded
Id.
at
that
"the
defendant's
motion
.
.
.
will
be
denied."
*4.
The Defendants'
first objection is OVERRULED.
B. Second Objection
The
Defendants
do
not
object
to
the
Magistrate
Judge's
determination that there is a genuine issue of material fact as
to whether Lin participated in the tip pool,
and instead argue
that the Department of Labor is only allowed to recover "unpaid
minimum wages," and cannot recover "unpaid tips in excess of the
minimum wage," Obj.
if
the
servers
at 6. The Defendants further argue that even
could
recover
Department of Labor cannot.
The
to
Defendants'
receive
federal
tips
minimum
hour,
but
if
wage
their
is
pre-tip
based
restaurants
Transcription
Defendants
did
in
question,
and
precisely
on
compensation
a
exceeds
misunderstanding
of
may use
the
requirement.
Computation
that.
See
tip
29
credit
U.S.C.
Sheets
ECF
No.
to
§
203(m).
indicate
16-2.
that
However,
tips
been
such
the
partially
as relevant here,
by
the
The federal minimum wage is $7.25
employer may only use the tip credit if,
received
the
argument that the servers are not entitled
satisfy the minimum wage
Wage
tips
Id.
statute or the relevant facts.
per
the
employee
have
retained
by
The
the
an
"all
the
employee" or the employees are compensated via a valid tip pool.
29
U.S.C.
§
203{m).
The
Defendants
8
have
not
complied with
the
former
provision.
"randomly
assign
Therefore,
the
See Jiang
a
portion
restaurant
servers
were
paid
Robert,
Inc.,
28
Aff.
via
a
of
has
15
(the
tips
403
tip
restaurant
to
each
with
complied
valid
F.3d 401,
f
the
pool.
(3d Cir.
See
1994)
would
server[]").
law
only
Reich
v.
(stating
if
Chez
that
if
employer fails to notify employees that "tips are being credited
against
their
wages,
then
no
tip
credit
can
be
employer is liable for the full minimum-wage").
Yama's
tip
evidence
tip
pool
is
showing
pool.
that
Jiang Aff.
in
dispute.
Lin
did
SI5 15,
The
not
Defendants
The
and
the
The validity of
have
produced
in
the
servers'
Plaintiff
has
produced
participate
21-23.
taken
evidence showing that tips Lin earned while acting as
a
server
were combined with tips earned by others and later redistributed
to
Lin's
benefit.
Mazuera
Aff.
S
16.
The
R&R correctly
found
that the Defendants were not entitled to summary judgment on the
issue.
R&R at
17.
The Defendants further argue that even if the servers could
bring such an action,
the Department of Labor cannot. Obj.
They
court
would
have
statute,
and
that
federal
of
the
this
the
claim,
regulation,
case,
the
Department
government
the
or
believe
of
that
Labor
Congress
has
enacted
cannot enforce.
Defendants
treatise.
do
See
not
id.
without any legal support of any kind -
has
See
cite
They
at 6.
passed
a
regulations,
id.
any
simply
In
support
statute,
assert
-
that the "Department of
Labor has no statutory right to recover" tips that Lin may have
taken
law.
of
from
the
servers.
Id.
at
6-7.
This
defies
logic
and
the
The Department of Labor may "bring an action in any court
competent
jurisdiction
minimum wages
liquidated
or
to
overtime
damages."
29
recover
compensation
U.S.C.
§
requirements,
should
have
servers.
about
been
but
that
excluded,
See Mazuera Aff.
whether
the
and
216(c).
evidence that the Defendants used a
wage
the
the
16.
Defendants
an
of
equal
The
unpaid
amount
record
as
contains
tip pool to satisfy minimum
tip
pool
and allotted
5
amount
to
Accordingly,
have
complied
included
Lin
tips
Lin,
who
earned by
there
is a
dispute
with
the
federal
minimum wage law.
At issue is the $43, 580.87 that Lin claims to
have
tips
earned
servers,
from
and the
but
which may
Defendants have not
in
reality
shown that
belong
the
to
the
Department
of Labor lacks the authority to recover the amount in question.
The Defendants'
second objection is OVERRULED.
C. Third Objection
The
Defendants
next
object
to
the
Magistrate
Judge's
determination that they are not entitled to summary judgment on
the basis that they acted in good faith. Obj. at 7.
In an action to recover unpaid minimum wages or liquidated
damages
award
under
the
liquidated
FLSA,
the
damages
satisfaction of the
court
court
where
has
discretion
"the
employer
that the act
10
to
decline
shows
to
to
the
or omission giving rise
to
such
action
grounds
violation
This
of
good
faith
that
his
the
language
employer.
in
believing
for
was
Fair
places
Labor
a
See Mayhew v.
(quoting Richard v.
and
that
act
or
Standards
"plain
and
Wells,
had
omission
Act."
29
substantial
125 F.3d 216,
Marriott Corp.,
he
reasonable
was
not
U.S.C.
burden"
220
§
549 F.2d 303,
306
260.
on
{4th Cir.
a
the
1997)
(4th Cir.
1977).
The Defendants argue that they had a
believe
that
compliance
record
in a
paying
with
the
suggests
servers
FLSA.
that
more
Obj.
than
at
7.
Lin may have
"reasonable basis" to
$7.25
But
the
per
hour
ensured
evidence
in
the
established and participated
tip pool that allowed her to pocket tips earned by others.
The Defendants further argue that because they consulted with a
lawyer when drafting the Employee Handbook,
of
fact
on which
a
fact
finder
can
find
that
subjective belief that
its practice was
law."
the
good
Obj.
faith.
done so.
at
8.
See
But
e.g.,
Defendants
Mayhew,
125
Yama did not have
a
in compliance with the
must
F.3d
"there is no dispute
at
establish
220.
objective
They
have
not
They merely stated that an attorney "was consulted" as
they prepared the Employee Handbook,
not that the attorney wrote
the Handbook or provided advice on this issue.
See Jiang Aff.
f
10. While the Defendants may ultimately prevail on this point at
trial,
they
have
not
shown
that
judgment.
11
they
are
entitled
to
summary
The Defendants' third objection is OVERRULED.
III.
This
court,
having
Magistrate Judge's
respect thereto,
ADOPTS
and
Judgment
set
Judge
Accordingly,
the
Objections
and having made ^
novo
in
full
forth
filed
in
on
the
the
findings
R&R
December
of
6,
the
2016.
the court DENIES the Defendants'
filed
DIRECTED to
examined
to
the
findings
with
OVERRULES the Defendants' Objections and hereby
APPROVES
recommendations
Magistrate
R&R,
CONCLUSION
on
October
forward a
13,
2016.
ECF
No.
of
United
ECF
IS
15.
The
States
No.
28.
Clerk
is
copy of this Memorandum Order to counsel
SO ORDERED.
Isl
Rebecca Beach Smith
Chief Judge
REBECCA BEACH
CHIEF JUDGE
December
and
Motion for Summary
for all parties.
IT
fact
2016
12
SMITH
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