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)

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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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