Cachola-Bonilla v. Wyndham El Conquistador Resort & Country Club

Full title: Justin CACHOLA-BONILLA, et al., Plaintiff(s), v. WYNDHAM EL CONQUISTADOR…

Court: United States District Court, D. Puerto Rico

Date published: Sep 19, 2008

577 F. Supp. 2d 566 (D.P.R. 2008)

Opinion

Civil No. 05-2294 (DRD).

September 19, 2008.

George E. Green, Miguel A. Maza Associates, Joanna Bocanegra-Ocasio, Bocanegra Law Offices, PSC, Jose 1. AyalaSantana, Ayala Cadiz Law Office, San Juan, PR, for Plaintiffs.

Edwin J. Seda-Fernandez, Patricia R. Limeres-Vargas, Adsuar Muniz Goyco Seda Perez Ochoa PSC, San Juan, PR, for Defendant.

ORDER

DANIEL R. DOMINGUEZ, District Judge.

Pending before the Court is a Motion For Summary Judgment filed by defendant Wyndham El Conquistador Resort Country Club ("El Conquistador") (Docket entries No. 50, 51); plaintiff's opposition thereto (Docket entries No. 61, 62, 63), and defendant's reply to plaintiffs' opposition to defendant's motion for summary judgment (Docket entries No. 69, 70).

INTRODUCTION

Plaintiffs, Justin Cachola Bonilla ("Cachola"), Juan Canales Medina ("Canales"), Juan R. Ojeda ("Ojeda"), Melvin Rodríguez López ("Rodríguez-López"), Julio Rodríguez Milland ("Rodríguez-Milland"), and Juan C. Moctezuma ("Moctezuma" or collectively "plaintiffs"), allege that their employer El Conquistador had illegally deducted twenty-five percent (25%) from their tips, in violation of provisions under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 203, 215. Plaintiffs further claim that El Conquistador has taken retaliatory adverse employment actions against them for having complained about the above described unlawful practice under the FLSA. Plaintiffs claim back pay for the amounts improperly deducted from their tips, retroactive to three (3) years from the "filing of the complaint . . . in an amount not less than $20,748.00 to each plaintiff and [an] equal amount as liquidated damages; and for plaintiffs JCB [Cachola] and JRO [Ojeda] who were terminated in retaliation for claiming their rights, back pay of wages from date of termination, as well as front pay, and the cost of any other employment benefits and, an equal amount as liquidated damages, a reasonable amount in attorney's fees, the costs of this action, and pre and post judgment interest at the prevailing rate."¹ See Complaint (Docket No. 1).

1 Canales, Rodríguez-López, and Rodríguez-Millan also later alleged they suffered retaliatory termination for claiming their rights under the FLSA.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs were employed at Le Bistro Restaurant ("Le Bistro"), located in the area known as Las Casitas of El Conquistador Hotel Complex in Fajardo, Puerto Rico. On December 14, 2005, plaintiffs filed (Docket No. 1) the instant action requesting relief under federal law, specifically under the FLSA, as their employer El Conquistador "illegally deducted twenty-five percent (25%) from their tips, illegally [sic] included amounts from a twenty percent (20%) service charge to customers as gratuities instead of salary in plaintiffs' paychecks" (Docket No. 75 at page 4), and [further] terminated plaintiffs Canales, Cachola, and Rodríguez-López in retaliation for their complaining of such [illegal activity]" (Docket No. 75 at page 5). Plaintiffs allege that the termination of Cachola, Canales and Rodríguez-López was in retaliation for their complaints as to the questionable policy implemented by El Conquistador.

On October 24, 2007, El Conquistador filed a Motion For Summary Judgment (Docket No. 50) together with a statement of uncontested facts, (Docket No. 51), arguing that: (a) the amount of 25% withheld by defendant was not to be considered as tips, but as a service charge, which is a perfectly legal deduction under the FLSA; and (b) plaintiffs cannot prove a retaliation action, as they were discharged for just cause.

On December 10, 2007, plaintiffs opposed, and argued that the alleged service charge claimed by El Conquistador does not meet the definition of service charge under the FLSA, and that plaintiffs have established a prima facie case of retaliation termination, as the facts show that their termination was not for just cause.

On January 10, 2008, El Conquistador replied, Docket No. 70, and alleged that plaintiffs, not the defendant, have the burden of showing the causal link between termination and retaliation, and plaintiffs failed to meet this burden.

The Motion For Summary Judgment (Docket No. 50), as well as all related motions were referred to the United States Chief, Magistrate Judge Just Arenas ("Magistrate Judge") for report and recommendation (Docket entries No. 72, 73). The Report and Recommendation was filed on June 23, 2008 (Docket No. 75). The objections to the Report and Recommendation were filed on July 11, 2008, with leave of Court. See Docket entries No. 76, 77 and 78. The record shows that plaintiffs did not object to the Report and Recommendation.

In the Report and Recommendation, the Magistrate Judge recommended that El Conquistador's Motion For Summary Judgment be granted in part and denied in part. The Magistrate Judge's recommendations are:

1. El Conquistador has not shown that the "service charges" added to its customers' bills were compulsory in nature to be paid by clients as required by Department of Labor regulations, and therefore were not bona fide. The Magistrate Judge recommends that summary judgment be denied as to the claims related to the service charge. See Docket No. 75 at page 23.

2. Plaintiffs have established a prima facie case of retaliatory discharge as to Canales only, as Canales was forewarned that his job was at risk if he continued complaining of the service charge. Canales was terminated shortly thereafter for complaining of the service charges, and the reasons for his termination stem from his protected activity. The Magistrate Judge recommended the court that summary judgment be denied as to the Canales' retaliation claim. See Docket No. 75 at page 23.

3. Plaintiffs failed to establish a claim of retaliatory discharge as to plaintiffs Cachola, Rodríguez-López and Rodríguez-Millán, as they failed to establish a causal connection between their complaints about the service charge and their terminations. Further, plaintiff failed to prove El Conquistador's articulated valid non discriminatory disciplinary reason was a sham or a pretext for discrimination. Fennell v. First Step Designs, 83 F.3d 526, 535 (1^st Cir. 1996). The Magistrate Judge recommended that summary judgment be granted as to the retaliation claims of Cachola, Rodríguez-López and Rodríguez-Millán. The Court incorporates the Magistrate Judge's clarifications as to Ojeda, included in the Report and Recommendation as footnote 2.² See Docket No. 75 at page 23.

2 [Ft. 2, Report and Recommendation, Docket No. 75] "While Ojeda is identified as one of the terminated defendants in the body of the complaint (Docket No. 1, at 3, ¶ 9) and then again in its conclusion (id. at 6), Ojeda was still employed by Le Bistro at the time of his deposition (Docket No. 51, 11, ¶ 66; Docket No. 63, at 8, ¶ 66), and no arguments have been made that he was the victim of a retaliatory termination."

Hence, since plaintiffs Cachola, Rodríguez-López and Rodríguez-Millán were unable to establish a retaliatory discharge claim, the Magistrate Judge found that Law 80, 29 L.P.R.A. §§ 185a et seq., is inapplicable. For the reasons set forth below, the Report and Recommendation issued by the Magistrate Judge is confirmed and adopted in toto, except that the claim as to Law 80 under 29 LPRA 185 is dismissed without prejudice but on alternate grounds.³

3 The Court is mindful that it is not a rubber stamp of the recommendations made by the Magistrate Judge. However, in the instant case, the Court finds that plaintiffs' objections, aside from rehashing the same arguments raised in their opposition to summary judgment, do not persuade the Court to rule differently from the findings made by the Magistrate Judge except as to the Law 80 matter which is dismissed without prejudice as there are no allegations in the complaint as to Law 80 under 29 LPRA 185 et sec. wherein the employer and not the employee, contrary to a federal discrimination in employment case, carries the burden of proof under 29 LPRA 185(b).

The Court incorporates in toto except as to the Law 80 claims the factual findings made by the Magistrate Judge in his Report and Recommendation (Docket No. 75 at pages 4-7).

STANDARD FOR REVIEW

The district court may refer dispositive motions to a United States Magistrate Judge for a report and recommendation. 28 U.S.C. § 636(b)(1)(B); Rule 72(b) of the Federal Rules of Civil Procedure ("Fed.R.Civ.P."); Local Civil Rule 72(a) of the Local Rules of the United States District Court for the District of Puerto Rico ("L.Civ.R."). See Mathews v. Weber , 423 U.S. 261 (1976). An adversely affected party may contest the Magistrate Judge's report and recommendation by filing its objections within ten (10) days after being served a copy thereof. See Fed.R.Civ.P. 72(b) and L.Civ.R. 72(d). Moreover, 28 U.S.C. § 636(b)(1) (1993), in pertinent part, provides that:

Within ten days of being served with a copy, any party may serve and file written objections to such proposed findings and recommendations as provided by rules of court. A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made. A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate.

(Emphasis ours).

"Absent objection, . . . [a] district court ha[s] a right to assume that [the affected party] agree[s] to the magistrate's recommendation." Templeman v. Chris Craft Corp. , 770 F. 2d 245, 247 (1st Cir. 1985), cert. denied, 474 U.S. 1021, 106 S.Ct. 571, 88 L.Ed.2d 556 (1985). Moreover, "failure to raise objections to the Report and Recommendation waives that party's right to review in the district court, and those claims not preserved by such objections are precluded on appeal." Davet v. Maccarone , 973 F. 2d 22, 30-31 (1st Cir. 1992). See also Sands v. Ridefilm Corp ., 212 F.3d 657, 663 (1st Cir. 2000); Henley Drilling Co. v. McGee , 36 F.3d 143, 150-151 (1st Cir. 1994) (holding that objections are required when challenging findings actually set out in magistrate's recommendation, as well as magistrate's failure to make additional findings); Lewry v. Town of Standish , 984 F.2d 25, 27 (1st Cir. 1993) (stating that "[o]bjection to a magistrate's report preserves only those objections that are specified"); Keating v. Secretary of H.H.S. , 848 F.2d 271, 275 (1st Cir. 1988); Borden v. Secretary of H.H.S. , 836 F.2d 4, 6 (1st Cir. 1987) (holding that appellant was entitled to a de novo review, "however he was not entitled to a de novo review of an argument never raised"). See also United States v. Valencia , 792 F.2d 4, 6 (1st Cir. 1986); Park Motor Mart, Inc. v. Ford Motor Co. , 616 F.2d 603, 605 (1st Cir. 1980). The Court, in order to accept the unopposed R R, needs only satisfy itself by ascertaining that there is no "plain error" on the face of the record. See Douglass v. United Servs. Auto, Ass'n , 79 F.3d 1415, 1419 (5th Cir., 1996) (en banc) (extending the deferential "plain error" standard of review to the un objected legal conclusions of a magistrate judge); Nettles v. Wainwright , 677 F.2d 404, 410 (5th Cir., 1982) (en banc) (appeal from district court's acceptance of unobjected findings of magistrate judge reviewed for "plain error"); Nogueras-Cartagena v. United States , 172 F.Supp.2d 296, 305 (D.P.R., 2001) ("Court reviews [unopposed] Magistrate's Report and Recommendation to ascertain whether or not the Magistrate's recommendation was clearly erroneous") (adopting the Advisory Committee note regarding FED.R.CIV.P. 72(b)); Garcia v. I.N.S. , 733 F.Supp. 1554, 1555 (M.D.Pa., 1990) ("when no objections are filed, the district court need only review the record for plain error.") The standard for an objected Report and Recommendation is de novo as to those issues that are properly objected. Borden v. Secretary of H.H.S. , 836 F.2d at 6.

THE SUMMARY JUDGMENT STANDARD

Generally, "[s]ummary judgment is appropriate when the facts properly supported by the record and taken in the light most favorable to the non-moving party `show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Latin American Music Co., Inc., et al. v. The Archdiocese of San Juan of the Roman Catholic Apostolic Church, et al. , 499 F.3d 32, 38 (1^st Cir. 2007); Torres-Negrón v. Merck Company, Inc., et al. , 488 F.3d 34, 39 (1^st Cir. 2007) (a sex discrimination claim in the workplace, including averments as to disability, retaliation, and hostile work environment under Title VII, as well as other causes of action under the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), together with state supplemental claims).

"The object of summary judgment is `to pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required.'" Davila v. Corporacion de Puerto Rico Para La Difusison Publica , 498 F.3d 9, 12, (1^st Cir. 2007), citing from Acosta v. Ames Dep't Stores, Inc. , 386 F.3d 5, 7 (1st Cir. 2004) (quoting Wynne v. Tufts Univ. Sch. of Med. , 976 F.2d 791, 794 (1^st Cir. 1992). In Davila , 498 F.3d at 12, an age discrimination case under both the ADEA, and Puerto Rico law, the Court further held:

Thus, summary judgment is appropriate only when the record "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

For this purpose, an issue is genuine if a reasonable jury could resolve the point in favor of the nonmoving party. Suarez v. Pueblo Int'l, Inc., 229 F.3d 49, 53 (1^st Cir. 2000). By like token, a fact is material if it has the potential to determine the outcome of the litigation. See Calvi v. Knox County, 470 F.3d 422, 426 (1^st Cir. 2006). Where, as here, the nonmovant has the burden of proof and the evidence on one or more of the critical issues in the case "is . . . not significantly probative, summary judgment may be granted." Acosta, 386 F.3d at 8 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-250 (1986)).⁴ (Emphasis ours.)

4

The court sees no reason not to apply the standard requiring that there not be present a "material fact" for the court to issue a summary judgment to the current Fair Labor Standard wage claim and statutory retaliation claim under the FLSA. After all absence of a material fact is one of the sine qua non requirements of a summary judgment. Anderson v. Liberty Lobby, 477 US at 249-250. ("it is clear enough from our recent cases that at summary judgment stage the judges' function is not himself to weight the evidence and determine the truth of the matter but to determine whether there is a genuine use for trial . . . The trial judge shall then grant summary judgment if there is no genuine issue as to any material fact and if the moving party is entitled to judgment as a matter of law."(Emphasis ours.)

When reviewing de novo, the court "must scrutinize the evidence in the light most agreeable to the nonmoving party, giving that party the benefit of any and all reasonable inferences." Noviello v. City of Boston , 398 F.3d 76, 84 (1^st Cir. 2005), citing Cox v. Hainey , 391 F.3d 25, 27 (1^st Cir. 2004). "[T]he nonmovant bears `the burden of producing specific facts sufficient to deflect the swing of the summary judgment scythe.'" Noviello , 398 F.3d at 84, citing Mulvihill v. Top-Flite Golf Co. , 335 F.3d 15, 19 (1<sup>st</sup> Cir. 2003). See also, Davila , 498 F.3d 9. "Those facts, typically set forth in affidavits, depositions, and the like, must have evidentiary value; as a rule, `[e]vidence that is inadmissible at trial, such as, inadmissible hearsay, may not be considered on summary judgment." Noviello , 398 F.3d at 84, citing Vázquez v. López-Rosario , 134 F.3d 28, 33 (1^st Cir. 1998); accord Garside v. Osco Drug, Inc. , 895 F.2d 46, 48 (1^st Cir. 1990). "The evidence presented by the non-moving party may not be `conclusory allegations, improbable inferences, [or] unsupported speculation.'" Torres-Negrón v. Merck Company, Inc., et al. , 488 F.3d at 39, citing Medina-Muñoz v. R.J. Reynolds Tobacco Co. , 896 F.2d 5, 8 (1^st Cir. 1990).

Generally, the court is precluded from granting summary judgment when there is a question of motive or intent regarding the conduct of any of the parties involved. See Reeves v. Sanderson Plumbing Products, Inc. , 530 U.S. 133, 150 (2000), and Stephanischen v. Merchants Despatch Transp. Corp. , 722 F.2d 922, 928 (1^st Cir. 1983). Mulero-Rodríguez v. Ponte, Inc. 98 F.3d 670, 677 (1^st Cir. 1996) (issues of motive and intent as to the conduct of any party will normally preclude the court from granting summary judgment); Dominguez-Cruz v. Suttle Caribe, Inc. , 202 F.3d 424, 433 (1st Cir. 2000). In any event, only preponderance of the evidence using direct or circumstantial evidence is required to prove employment discrimination or retaliation. Hillstrom v. Best Western TLC Hotel , 354 F.3d 27, 31 (1^st Cir. 2003).

The court is further precluded under summary judgment to perform credibility determinations and/or weighing of the evidence. Anderson v. Liberty Lobby, 477 U.S. at 249-250, N. 4 infra.

ANALYSIS

In the instant case, El Conquistador alleges that the Magistrate Judge's erred on the following findings: (a) whether the fee assessed was a tip or a service charge is not a matter of law ( Report and Recommendation, Docket No. 75 at pages 9-12, and defendant's Objections To Magistrate Judge's Report And Recommendation ("Objections"), Docket No. 78 at pages 3-4); (b) the language used in El Bistro's menu does not establish that the fee assessed meets the requirements of "service charge" under the Regulations of the Department of Labor ( Report and Recommendation, Docket No. 75 at pages 9-12, and defendant's Objections, Docket No. 78 at pages 5-6); (c) the fact that the service charge may be removed by a supervisor or a manager shows that the fee was not compulsory ( Report and Recommendation, Docket No. 75 at pages 9-12, and defendant's Objections, Docket No. 78 at pages 6-8); (d) Mr. Ronaldo Sanabria's expert witness testimony does not discard that the fee assessed was a tip instead of a service charge, as there were no entries for services charges in El Conquistador's earning statements ( Report and Recommendation, Docket No. 75 at pages 9-12, and defendant's Objections, Docket No. 78 at pages 6-10); and, (e) there is sufficient evidence to properly infer that Canales was dismissed in retaliation for his complaints about the service charge ( Report and Recommendation, Docket No. 75 at pages 12-23, and defendant's Objections, Docket No. 78 at pages 10-12). The defendant further challenges plaintiffs' allegation as to willfulness extending the average of the complaint for three years. The Court is required to review de novo the challenged portions of the Report and Recommendation as defendant El Conquistador has made specific objections but only as to plain error those sections of the report that remain unobjected.

I. COMPULSORY SERVICE CHARGE OR "TIP"

After a careful review of the record, the Court fully agrees with the analysis made by the Magistrate Judge based on the testimony and evidence submitted by plaintiffs regarding the alleged "service charge" as opposed to El Conquistador's argument regarding the compulsory nature of the fee, which pursuant to the regulations of the Department of Labor, are inapposite.

Plaintiffs have shown that the service charge was subject to change or could even be eliminated from the client's bill by El Bistro's manager, supervisor or an employee, if the client as much as questioned the fee. Plaintiffs also have produced probative evidence that the amount corresponding to the service charge fails to be included in the earning statements of El Conquistador as an additional income. Hence, there is clearly an issue of material fact regarding the nature of the assessed fee, that is, whether it is a compulsory service charge or whether it is indeed a "disguised" tip. El Conquistador avers differently and consequently objects to the Magistrate Judge's finding, and further allege that the assessment of the service charge is a matter of law. The Court disagrees, and for the reasons set forth below incorporates and adopts herein the analysis made by the Magistrate Judge in the Report and Recommendation (Docket No. 75 at pages 9-12).

The court understands that there are genuine issue of material fact as found by the Magistrate Judge as to the nature of the tip, that is whether or not the tip is compulsory. The court briefly explains.

The Magistrate Judge concluded that "the language on the menu informing "Le Bistro" customers of the service charge does not establish that the fee met the requirements for a service charge" in compulsory fashion. "A 20% service charge shall be added" . . . "As the plaintiff point out, the menu does not state that the fee is compulsory." (Docket No. 75, p. 10.) Further ". . . only one plaintiff Moctezuma testified in his deposition that he though the fee was compulsory . . ." El Conquistador cited Cachola and Rodríguez López's depositions in support of its contention, but neither of these two plaintiffs testified that the fee was compulsory. The cited portion of Cachola's deposition shows he testified that the customers "could leave an additional tip . . . [as to Rodríguez López, he stated] if a guest complained about pricing . . . the twenty percent we could take out of the check . . . Moreover, plaintiff present several sets of deposition testimony stating that the service charge could be removed if the customer did not agree with the amount." (Docket No. 75, p. 10-11.

Second, "Conquistador argument that the fee was not compulsory because only a supervisor or manager could remove [the tip] . . . misses the mark [because] . . . if a customer did not want to pay the fee, then she or he could have the manager remove it [but] the deposition testimony provided by the plaintiffs again establishes an issue of material fact. Several sets of testimony [presented by plaintiffs] state that waiters were at liberty to remove the service if the customers did not agree . . . only one deposition stated that the supervisor or manager had the authority to remove the service charge . . . Again this contradicting testimony creates an issue of fact." Docket No. 75, p. 11.

Defendants lastly contends that plaintiff's witness Sanabria, former FLSA wage and hour executive in Puerto Rico, "somehow evinces the fact that the fee was a service charge and not a tip is misguided." But Sanabria "testified [that] there were no entries for service charges in Conquistador earning statements . . . Sanabria testified he relied on defendants' records to justify its assertion and saw no reason why Conquistador would withhold records that showed otherwise . . .; these statements do not support Conquistador's contention that the fee it charged its customers was compulsory."

The entire subject matter relating to whether the charge made to customers was a tip, not subject to the defendants retention, or constituted a "service charge" and in reality not a "tip", can not be disposed by the court on brevis disposition fashion as there are clearly issues of material facts in dispute. In determining not to dispose of the case via summary judgment the court is particularly impressed with the fact that, on the one hand, the language contained at the menu tends to point the court toward a "service charge" but, on the other, the employer provides most of the proceeds to the employees signaling a tip. Further, the defendant insists that the customers were obligated to pay the "service charge" but the record contains evidence from various sources wherein exceptions were made. Further, there are no records by El Conquistador carrying in its books the matter as "a service charge." Hence, the court ends with "material facts" in dispute which consequently bar a summary judgment disposition as well as a matter that the court can not make credibility findings nor weight the evidence. Anderson v. Liberty Lobby , 477 U.S. at 249-250.

II. THE RETALIATORY DISCHARGE

Plaintiff Justin Cachola, Canales, Ojeda, Rodríguez-López, and Rodríguez-Millan, have all claimed to be dismissed due to retaliation for exercising their rights under the FLSA.

The statute protects their rights pursuant to the following explicit language:

[I]t shall be unlawful for any person . . . to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceeding, or has served or is about to serve on an industry committee[.] 29 U.S.C. § 215(a)(3)

In order to succeed to establish a prima facie case under that statute, plaintiffs must prove that "(1) the plaintiff engaged in a statutorily protected activity, and (2) his employer thereafter subjected him to an adverse employment action (3) as a reprisal for having engaged in protected activity." Claudio-Gotay v. Becton Dickinson Caribe, Ltd. , 375 F.3d 99, 102 (1st Cir. 2004) (citing Blackie v. Maine , 75 F.3d 716, 722 (1st Cir. 1996))." See Docket No. 75 at page 13.

El Conquistador does not object the findings made by the Magistrate Judge as to whether plaintiffs were engaged in a protected activity. Hence, the Court will not disturb the findings of the Magistrate Judge, and adopts them in toto as the court does not detect any plain error whatsoever in said finding.

El Conquistador objects the Magistrate Judge's findings only as to Canales' termination by concluding that said termination was in retaliation for Canales' complaints regarding the nature of the service charge. El Conquistador further alleges that "Canales was terminated as a result of serious violations of El Conquistador House Rules which included the willful falsification of Hotel records, unlawful and immoral conduct or behavior deemed unbecoming of a Wyndham employee, and failure to comply with Hotel policies and procedures." See Docket No. 78 at page 11. Defendant alleges that Canales admitted being involved with other Hotel employees in a service charge redistribution scheme in violation of the Hotel policies. See Docket No. 78 at page 12.

As to Canales, the Court finds that El Conquistador did not rebut the inference of the causal link between Canales' complaints about the service charge and his termination. The factual sequel follows: (a) Canales was admonished by Alex Rodríguez, El Conquistador's Food and Beverage Director, to stop complaining about the twenty-five (25%) of the service charge or "you will lose your job" (Docket No. 75 at page 19); (b) on or about May 2004, Canales spoke with Jay Francis, manager of Las Casitas, regarding the Hotel's retention of part of his tips; (c) "on June 18, 2004, Canales prepared and signed a statement admitting he redistributed the service charge, but that such had been done at the direction of Alfredo Arroyo, who promised that if Canales fixed the service problem at Le Bistro, then Arroyo would fix the tip problem" (Docket No. 75 at page 20); (d) Canales was terminated on June 28, 2004 for willful falsification of documents and failure to follow Hotel's procedures. See Docket No. 75 at page 20. The court notes that retaliation constitutes a modality of direct evidence of discrimination. Gómez-Pérez v. Potter , ___ U.S. ___, 128 S. Ct. 1931 (2008); Burlington Northern Santa Fe Railway Co. v. White , 548 U.S. 53 (2006). Further, "statements by supervisors [as occurred as to Canales] carrying the inference that the supervisors harbored animus against protected classes of people [employee claiming rights under the FLSA] or conduct are clearly probative of pretext." Hudges v. General Dynamics Corp. , 141 F.3d 151, 171 (1^st Cir. 2009) (citing Blackie v. Maine , 75 F.3d 716, 222 (1^st Cir. 1996). The timing for termination

"creates an inference that Conquistador terminated Canales in retaliation for his complaints about the service charge." See Docket No. 75 at page 20 together with the statements attributed to the supervisors as to Canales. The court reminds defendant El Conquistador that the court must examine the evidence " in the light most agreeable to the non moving party." Novello v. City of Boston , 398 F.3d at 94. Further the court can not make credibility determinations nor weight the evidence at summary judgment level. See Stepanischen v. Merchants Despatch Transp. Corp. 722 F.2d 922; Domínguez-Cruz v. Suttle Caribe, Inc. , 202 F.3d 424.⁵

5 Canales, on the other hand, can not at this time claim a cause of action under Law 80 since severance pay should not be awarded when compensatory pay under another statute is superior. Selgas v. American Airlines , 858 F. Supp. 316 (D.P.R. 1994), reversed on other grounds, 104 F.3d 9 (1^st Cir. 1997). Further, plaintiff may be reinstated with back pay and hence he is not entitled to the severance granted under Law 80 of 1976.

The Court finds that El Conquistador's arguments, unless the court enters into weighing of the evidence and or examining the evidence in favor of the mover, which is contrariwise to the jurisprudence, does not rebut the inference of retaliation as to Canales, hence, the Court hereby adopts in toto the Magistrate Judge's findings as to retaliation.

As to the remaining plaintiffs Cachola, Rodríguez-López and/or Rodríguez-Millan the court agrees with the annalysis of the defendants which remains unchallenged by plaintiff as to the R R issued by the Magistrate Judge and, hence, is examined by the court under the standard of "plain error." Douglass v. United Services Auto Ass'n , 79 F. 3d 1415 (1996); Nettles v. Wainwright , 677 F.2d 404 (1982); Nogueras-Cartagena v. United States , 172 F. Supp. 2d 296 (D. Puerto Rico 2001).

As correctly analyzed by the Magistrate Judge there is a total lack of any "evidence in the record that any supervisor told Cachola, Rodríguez-López, or Rodríguez-Millan they would be terminated if they continue[d] to complain about the service charge."

Second, "plaintiffs have not provided evidence of the proximity of Cachola, Rodríguez-López or Rodríguez-Millan's complaints about the service charge to their dates of dismissal" citing Oliver v. Digital Equip. Corp. , 846 F.2d 102, 110 (1^st Cir. 1988). Third, "plaintiff have provided no case law" that stands for the proposition that "[mere] frequency of an employee protected conduct can establish a causal link between such complaint and their dismissal."

Finally, following the burden shifting of the McDonnel Douglas v. Green , 411 U.S. 792, 802 (1973) model for proving discrimination, and assuming that plaintiffs have complied with proving a prima facie case, defendants have articulated a valid non discriminatory reason which plaintiffs have failed to show that said reason constitutes a sham. "Cachola was terminated for absenteeism and failure to fallow proper proceedings while making guest checks . . . Rodríguez-López was terminated for servicing customers food and drinks for which they allegedly did not pay . . . Rodríguez-Millan was terminated for absenteeism." (Docket No. 75, p. 21-22.)

Plaintiffs have failed to prove that the reasons provided by defendants were pretextual, they have merely shown that the terminations "may have been a mistake." (Docket No. 75 p. 22.)⁶ But they fall short of showing "that such dismissals were in disregard of Conquistador's Employee Manual or in some way different than Conquistador's past dismissals . . . [or] . . . that such finding would infer Conquistador retaliated against plaintiffs for their complaints" or that the dismissal were a pretext for discrimination. The court reminds plaintiffs that defendant has only to articulate a valid non discriminatory reason which is a burden of production not persuasion. Texas Dept. of Affairs v. Burdine , 450 U.S. 248, 253 (1981) and plaintiffs must then prove "that the employer's proffered reason is a pretext." Mesnick v. Gen. Elec. Co. , 950 F.2d 816, 827 (1^st Cir. 1991). Plaintiffs have failed to prove that the reasons articulated by El Conquistador are pretextual in nature. The court reminds plaintiffs that they have the burden to prove discrimination throughout the entire case. St. Mary's Honor Center v. Hicks , 509 U.S. 502 (1993).

6

Plaintiffs have merely shown that the company may have made a mistake. This falls short of the threshold and falls under the "honest belief" rule finding nodiscriminatory animus. Jackson v. E.J. Brach Corp. , 176 F.3d 971 (7^th Cir. 1999).

Hence, plaintiffs Cachola, Rodríguez-López, and Rodríguez-Millan retaliation claim of termination from employment is dismissed as the court detects no plain error, the standard for an unobjected Report and Recommendation of a Magistrate Judge.

III. "WILLFULNESS"

Plaintiffs have filed a claim covering a period of three years under the FLSA, alleging a willful violation, 29 U.S.C. § 255(a). In Chao v. Hotel Oasis, Inc., et al. , 493 F.3d 26, 35 (1^st Cir. 2007), the appellate Court of the First Circuit citing Reich v. Newspapers of New Eng., Inc. , 44 F.3d 1060, 1079 (1^st Cir. 1995), "[t]he FLSA imposes a two-year statute of limitations unless the violations are shown to be willful, in which case a three-year period applies. (citing 29 U.S.C. § 255(a))."

A finding of willfulness is made when the employer has "intentionally and consistently failed to keep accurate records of the time worked by its employees [,] . . . disguised minimum wage, as well as overtime pay violations, . . . did not record the amounts of cash tips [,] . . . [and] most salient . . . [to] a finding of willfulness, . . . [paid] employees `off the books.'" Oasis, 493 F.3d at 35. In Oasis , 493 F.3d at 35, the First Circuit Court of Appeals confirmed the district court's finding of willfulness, and held:

Oasis' failure to keep adequate payroll records and its intentional manipulation of the records it did keep are sufficient grounds for concluding that Oasis did not act in good faith or with a reasonable belief that it was in compliance with the FLSA. Cf. Elwell v. Univ. Hosps. Home Care Servs., 276 F.3d 832, 844 (6^th Cir. 2002) ("[T]he fact that an employer knowingly under-reported its employee's work hours could suggest to a [fact finder] that the employer was attempting to conceal its failure to pay overtime from regulators, or was acting to eliminate evidence that might later be used against it in a suit by one of its employees"). Moreover, a finding of willfulness means that "the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute." McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988). (Emphasis ours.)

The court in the instant case can not make a determination as to willfulness since said determination is imbued with issues of intent of the employer. See also Poller v. Columbia Broad. Sys. , 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962); Pullman-Standard v. Swint , 456 U.S. 273, 288-90 (1982) (discriminatory intent is a factual matter for the trier of fact); see also William Coll v. PB Diagnostic Sys., Inc. , 50 F.3d 1115, 1121 (1st Cir. 1995); Oliver v. Digital Equip. Corp. , 846 F.2d 103, 107 (1st Cir. 1988); Lipsett v. University of P.R., 864 F.2d at 895. "Under such circumstances [state of mind], jury judgments about credibility are typically thought to be of special importance." See Stepanischen v. Merchants Despatch Transp. Corp. , 722 F.2d 922, 928 (1st Cir. 1983); see Dominguez-Cruz v. Suttle Caribe, Inc. , 202 F.3d at 433.

IV. LAW 80 CLAIM

Although the Magistrate Judge dismissed the Law 80 of May 30 1976, P.R. Laws Ann. Tit. 29, § 185(a), as to retaliatory discharge, on the merits not being applicable to a retaliatory discharge, the court prefers to dismiss the same on alternate grounds.

There simply is no claim made under the allegations of the complaint at this time even though the complaint was filed on December 14, 2005. No vestige of a Law 80 claim was present on the record until after the summary judgment was filed on October 2007, Docket No. 50.

The court prefers to dismiss this claim without prejudice. Plaintiff is free to amend the complaint. However, plaintiff is forewarned that defendant has set forth a colorable claim of "just cause" for termination under the local statute. 29 P.R. Law Ann. § 185(b). (Enumerating the just cause provisions.)

CONCLUSION

After a de novo review of the Magistrate Judge's Report and Recommendation (Docket No. 75), this Court agrees with the thorough analysis made by the Magistrate Judge's recommendations and adopts them in toto except that the Law 80 claim is dismissed without prejudice under alternate grounds as described herein. Accordingly, defendants' Motion For Summary Judgment (Docket entries No. 50-51) is granted in part and denied in part. The claims under Law 80 are dismissed without prejudice.

IT IS SO ORDERED.

MAGISTRATE JUDGE'S REPORT RECOMMENDATION

JUSTO ARENAS, United States Chief Magistrate Judge.

This matter comes before the court on motion for summary judgment by defendant El Conquistador Partnership, L.P., S.E. d/b/a El Conquistador Resort Country Club (hereinafter "Conquistador"). (Docket No. 50.) Plaintiffs Justin Cachola Bonilla (hereinafter "Cachola"), Juan Canales Medina ("Canales"), Juan R. Ojeda ("Ojeda"), Melvin Rodríguez-López ("Rodríguez-López"), Julio Rodríguez-Millán ("Rodríguez-Millán") and Juan C. Monteczuma ("Monteczuma") (see Docket No. 1) filed an opposition to the defendant's motion. (Docket No. 61.)

The matters at issue arise from a policy instituted at the Le Bistro Restaurant ("Le Bistro") in the Las Casitas section of the El Conquistador Resort. Customer checks at Le Bistro are billed a twenty percent (20%) "service charge," which is automatically included in the check. (Docket No. 51, at 2, ¶ 3; Docket No. 63. at 2, ¶ 3.) Seventy-five percent (75%) of this service charge is distributed to the wait staff (15% of the customer's bill) with the remaining twenty-five percent (25%) of the service charge (5% of the customer's bill) retained by Conquistador to cover administrative and facilities expenses. (Docket No. 50, at 10; 51, at 2, ¶ 4; Docket No. 63, at 2, ¶ 4.)

The plaintiffs were all employed at Le Bistro during the relevant times. (Docket No. 51, at 1-2, ¶¶ 1 5; Docket No. 63, at 1-2, ¶¶ 1 5.¹) During their employment with Le Bistro, the plaintiffs all felt that the "service charge" was actually their tip, and Le Bistro was therefore illegally retaining twenty-five percent (25%) of what plaintiffs considered their tips. (Docket No. 1, at 4, ¶ 14.) Canales, Cachola, Rodríguez-López and Rodríguez-Millán testified at deposition that they complained about these "service charges" to different managers and directors, or to Conquistador's Human Resources department. (Docket No. 65-2, at 24:21-25:16, 21:23-22:9, 55:18-24, 58:16-21; Docket No. 65-3, at 13:18-14:4, 14:13-18, 15:8-9 at 28.) These four plaintiffs were later terminated from Le Bistro. (Docket No. 51, at 2, ¶ 8, at 6, ¶ 31, at 7, ¶ 42, at 9, ¶ 53; Docket No. 63, at 2, ¶ 8, at 4, ¶ 31, at 5, ¶ 42, at 6, ¶ 53.)

1 While Conquistador has "denied" the plaintiffs' allegation that "[a]t all times relevant herein, plaintiffs were employees of Wyndham Corporation, within the meaning of 29 U.S.C. § 203(l)(i), fulfilling duties for Defendant in Las Casitas, which is part of El Conquistador Hotel located in Fajardo, Puerto Rico[,]" (Docket No. 1, at 6, ¶ 5), they seem to do so inasmuch as " 29 U.S.C. § 203(l)(i)(sic) of the Fair Labor Standards Act (`FLSA") refers to `oppressive child labor' provisions and this fully contradicts allegation number (4) of the Complaint, which avers that all plaintiffs are adult individuals." (Docket No. 22, at 2, ¶ 5.) I assume that Conquistador admits to the rest of the allegation, inasmuch as the summary judgment record shows those facts to be uncontested.

In their complaint, the plaintiffs allege that Conquistador illegally deducted twenty-five percent (25%) from their tips, illegally included amounts from the service charge to customers as gratuities instead of salary in the plaintiffs' paychecks (Docket No. 1, at 4, ¶ 14), and terminated plaintiffs Canales, Cachola, and Rodríguez-López in retaliation for their complaining of such.² (Docket No. 1, at 3, ¶¶ 8 9; at 4, ¶ 17; at 5, ¶¶ 22 23.)

2 While Ojeda is identified as one of the terminated defendants in the body of the complaint (Docket No. 1, at 3, ¶ 9) and then again in its conclusion (id. at 6), Ojeda was still employed by Le Bistro at the time of his deposition (Docket No. 51, at 11, ¶ 66; Docket No. 63, at 8, ¶ 66), and no arguments have been made that he was the victim of a retaliatory termination.

In its motion for summary judgment, Conquistador argues that (A) the sums which Conquistador withheld were not "tips" as plaintiffs argue, but "service charges" which Conquistador could legally withhold under the Fair Labor Standards Act ("FLSA"), and (B) the plaintiffs cannot support a claim of retaliatory discharge and in fact were discharged for just cause. (Docket No. 50, at 10-16.)

In their opposition to Conquistador's motion for summary judgment, plaintiffs argue that (A) Conquistador's "service charge" does not meet the FLSA definition of such, and (B) internal complaints made by the plaintiffs establish a prima facie case of retaliatory discharge and the facts show they were not discharged for just cause. (Docket No. 61, at 2-6.)

Having considered the arguments of the parties, the evidence presented, and for the reasons set forth below, I recommend that Conquistador's motion for summary judgment be GRANTED in relation to plaintiffs' claims of retaliatory discharge except as to plaintiff Canales, and that it be otherwise DENIED.

I. BACKGROUND

As stated, the plaintiffs were employed at Le Bistro at all relevant times. Le Bistro had a policy of automatically including a twenty-percent (20%) "service charge" on customers' bills, of which the restaurant would keep twenty-five percent (25%) and of which it would distribute the remaining seventy-five percent (75%) to its employees.

In addition to this service charge, customers were free to leave an additional amount, adding such to a separate line labeled "gratuity." (Docket No. 51, at 2, ¶ 5; Docket No. 63, at 2, ¶ 5; see also Docket No. 51-2, at 18-20.) Conquistador never retained any portion of the amounts added as "additional" gratuity. (Docket No. 51, at 2, ¶ 6; Docket No. 63, at 2, ¶ 6.)

On December 14, 2005, the plaintiffs filed a complaint against Conquistador pursuant to the FLSA, 29 U.S.C. §§ 203(m), 203(t) and 215(a)(3), alleging the defendant illegally deducted twenty-five percent (25%) from their tips, illegally included amounts from a twenty percent (20%) service charge to customers as gratuities instead of salary in the plaintiffs' paychecks (Docket No. 1, at 4, ¶ 14), and terminated plaintiffs Canales, Cachola, and Rodríguez-López in retaliation for their complaining of such. (Docket No. 1, at 3, ¶¶ 8 9; at 4, ¶ 17; at 5, ¶¶ 22 23.)

On November 13, 2006, after some procedural back-and-forth (Docket Nos. 6, 7, 17, 19 20), Conquistador filed an answer to the complaint, denying the plaintiffs' claims and setting forth affirmative defenses. (Docket No. 22.)

On October 24, 2007, Conquistador filed its motion for summary judgment and memorandum in support thereof (Docket No. 50) along with a statement of uncontested facts and attached exhibits. (Docket No. 51.)

First, Conquistador argues that the disputed sums were not "tips" within the meaning of the FLSA, but rather "services charges." (Docket No. 50, at 10-14.) Conquistador argues that whether a tip is to be given, and in which amount, is a matter solely determined by the customer and, in absence of an agreement between the recipient and a third party, the tip becomes the property of the person to whom the tip is presented. (Id. at 6.) A service charge, argues Conquistador, is imposed upon the customer by the employer, not the employees, and becomes part of the employer's gross receipts. (Id. at 6-7.) Conquistador argues that "an employer is under no obligation to turn over the entire amount of the service charge to the employee." (Id. at 7.)

Second, Conquistador argues that plaintiffs Canales, Cachola, Rodríguez-López and Rodríguez-Millán³ cannot establish a prima facie case of retaliatory discharge because the complaints they made to Conquistador managers and directors were protected activity under the FLSA. (Id. at 14-15.)

3 Although Rodríguez-Millán's claim of retaliatory discharge was not included in the complaint and no amended complaint has been filed, Federal Rule of Civil Procedure 15(b)(2) provides that "[w]hen an issue not raised by the pleadings is tried by the parties' express or implied consent, it must be treated in all respects as if raised in the pleadings." Therefore, Rodríguez-Millán's claim of retaliatory discharge may be adjudicated.

Third, Conquistador argues that even if the plaintiffs' complaints to their supervisors were enough to constitute protected activity under the FLSA, the plaintiffs have not presented evidence establishing a causal connection between the complaints and their terminations. (Id.)

Fourth, Conquistador argues that the plaintiffs were terminated for legitimate reasons. (Id. at 15-16.) Conquistador alleges Canales was terminated for violation of the House Rules, including falsification of records, unlawful and immoral conduct and failure to comply with Hotel policies and procedures (id. at 16); Cachola was terminated because he did not follow proper procedures while making a guest check (id. at 17); Rodríguez-López was terminated for "serving guests certain items and not charging them for them" (id. at 17-18); and Rodríguez-Millán was terminated for chronic absenteeism. (Id. at 18.)

On December 10, 2007, the plaintiffs filed a response in opposition to Conquistador's motion for summary judgment (Docket No. 61), a memorandum of law in support thereof (Docket No. 62), and an opposition to Conquistador's statement of uncontested material facts along with additional material facts. (Docket No. 63.)

First, the plaintiffs contend that the disputed sums were tips, and not service charges, because these were not compulsory as required by the Department of Labor regulations. (Docket No. 61, at 2, ¶ 4.)

Second, the plaintiffs argue that their informal complaints regarding the alleged withholding of tips is a protected activity which establishes a prima facie case of retaliatory discharge. (Id. at 4, ¶¶ 10-11.)

Third, the plaintiffs argue that the fact that they were terminated "in complete disregard of defendant's Employee Manual" reveals that the disciplinary actions taken against them were retaliatory in nature. (Id. at 4-5, ¶ 13.)

On January 10, 2008, Conquistador filed a reply to the plaintiffs' response in opposition (Docket No. 70) along with a reply to the plaintiffs' response to its statement of uncontested material facts. (Docket No. 69.)

On April 14, 2008, this case was referred to me for a report and recommendation on Conquistador's motion for summary judgment and all other related pending motions. (Docket No. 72.)

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). To succeed on a motion for summary judgment, the moving party must show that there is an absence of evidence to support the nonmoving party's position. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the movant has brought a properly supported motion for summary judgment, the burden shifts to the nonmoving party to set forth specific facts showing there is a genuine issue for trial and that a trier of fact could reasonably find in the non-movant's favor. Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir. 2000). A party cannot discharge said burdens by relying upon "conclusory allegations, improbable inferences, and unsupported speculation."López-Carrasquillo v. Rubianes, 230 F.3d 409, 413 (1st Cir. 2000) (quoting Morris v. Gov't Dev. Bank of P.R., 27 F.3d 746, 748 (1st Cir. 1994)).

The court must view the facts in light most favorable to the nonmoving part, drawing all reasonable inferences in that party's favor. See Patterson v. Patterson, 306 F.3d 1156, 1157 (1st Cir. 2002). A fact is material if it has the potential to affect the outcome of the case under applicable law. Nereida-González v. Tirado-Delgado, 990 F.2d 701, 703 (1st Cir. 1993).

III. DISCUSSION A. The Disputed Sums

Conquistador argues it assessed its customers a bona fide service charge, and, in support thereof, points to (1) language on the menu informing customers of the charge (Docket No. 50, at 10; Docket No. 51, at 1, ¶ 2); (2) three different plaintiffs' testimony that the fee was compulsory (Docket No. 50, at 10; Docket No. 51, at 6, ¶ 33; at 7, ¶ 38; at 10, ¶ 59); (3) the fact that the charge could only be removed at the discretion of a supervisor or a manager (Docket No. 50, at 11); and (4) the plaintiffs' expert, Ronaldo Sanabria, who was Director of the Wages and Hours Division of the Federal Department of Labor for fifteen years (Docket No. 65-3, at 56:4-7), stated that while no entries for service charges were in the earnings statements, "he does not rule out the possibility that they were service charges." (Docket No. 50, at 13.) These allegedly uncontested facts, argues Conquistador, render the issue of whether the fee assessed was a tip or a service charge a matter of law. I disagree.

At the heart of this matter is whether the service charge Conquistador added to the bill at its Le Bistro restaurant was compulsory. Department of Labor regulations provide that:

A tip is a sum presented by a customer as a gift or gratuity in recognition of some service performed for him. It is to be distinguished from payment of a charge, if any, made for the service. Whether a tip is to be given, and its amount, are matters determined solely by the customer, and generally he has the right to determine who shall be the recipient of his gratuity.

29 C.F.R. § 531.52. "A compulsory charge for service, such as 10 percent of the amount of the bill, imposed on a customer by an employer's establishment, is not a tip and, even if distributed by the employer to his employees, cannot be counted as a tip received in applying the provisions of section 3(m) and 3(t)." 29 C.F.R. § 531.55 (emphasis added).

First, the language on the menu informing Le Bistro's customers of the service charge does not establish that the fee met the requirements for a "service charge." The menu provided by the defendant simply states: "A 20% service charge will be added[.]" (Docket No. 51-2, at 16.) Plaintiffs have provided a wine list which states "For your convenience, a 20% service charge will be added to the check." (Docket No. 65-2, at 2.) As the plaintiffs point out, the menu does not state the fee is compulsory. (Docket No. 63, at 1, ¶ 2.)

Second, contrary to what Conquistador alleges, only one plaintiff, Monteczuma, testified in his deposition that he thought the fee was compulsory. (Docket No. 51, at 10, ¶ 59.) Conquistador cited Cachola and Rodríguez-López' depositions in support of its contention, but neither of those two plaintiffs testified the fee was compulsory. The cited portion of Cachola's deposition shows he testified that the customers could leave an "additional tip." (Docket No. 51, at 6, ¶ 33; Docket No. 51-3, at 6:16-20.) In the cited portion of Rodríguez-López' deposition, Rodríguez-López testified to the contrary, stating that "if a guest complained about paying . . . the twenty percent, we could take it out of the check[.]" (Docket No. 51-3 at 24:1-3.) This evidence on its own — contradictory testimony — without even considering the plaintiffs' rebuttal, presents an issue of material fact. Moreover, plaintiffs present several sets of deposition testimony stating that the service charge could be removed if the customer did not agree with the amount. (Docket No. 65-2, at 9-13, 53; Docket No. 65-3, at 11.)

Third, Conquistador's argument that the fee was not compulsory because only a supervisor or manager could remove it still misses the mark. That argument on its face shows that the fee was not compulsory: if a customer did not want to pay the fee, then she or he could have the manager remove it. The deposition testimony provided by the plaintiffs again establishes an issue of material fact. Several sets of testimony state that the waiters were at liberty to remove the service charge if the customer did not agree with it. (Docket No. 65-2, at 9-13, 53.) Only one deposition stated that the supervisor or manager had the authority to remove the service charge. (Docket No. 65-3, at 11.) Again, this contradicting testimony creates an issue of material fact.

Last, Conquistador's claim that Sanabria's testimony somehow evinces the fact that the fee was a service charge and not a tip is misguided. Sanabria testified there were no entries for service charges in Conquistador's earning statements. (Docket No. 50, at 13; Docket No. 51, at 12.) Sanabria testified he relied on the defendant's records to justify his assertion and saw no reason why Conquistador would withhold records that showed otherwise. (Docket No. 51-4, at 32:1-25.) These statements do not support Conquistador's contention that the fee it charged its customers was compulsory.

Therefore, because Conquistador has not met its burden of showing that the plaintiffs cannot support a claim under the 29 U.S.C. §§ 203(m) and (t), and it is apparent there are issues of material fact present, summary judgment cannot be granted as to those claims.

B. Retaliatory Discharge

Conquistador claims that plaintiffs Canales, Cachola, Rodríguez-López and Rodríguez-Millán cannot support a claim of retaliatory discharge because (1) their "informal" complaints to their supervisors about the service charges were not activities protected by the framework set out for a claim of retaliatory discharge (Docket No. 50, at 14-15); (2) even if those complaints meet the standard for protected activities, the plaintiffs cannot establish a causal connection between the complaints and their discharge (id. at 15); and (3) these plaintiffs were discharged for legitimate reasons.

The FLSA provides that:

[I]t shall be unlawful for any person . . . to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceeding, or has served or is about to serve on an industry committee[.]

29 U.S.C. § 215(a)(3) (emphasis added).

In order to establish a prima facie case under that statute, plaintiffs must show that "(1) the plaintiff engaged in a statutorily protected activity, and (2) his employer thereafter subjected him to an adverse employment action (3) as a reprisal for having engaged in protected activity." Claudio-Gotay v. Becton Dickinson Caribe, Ltd., 375 F.3d 99, 102 (1st Cir. 2004) (citing Blackie v. Maine, 75 F.3d 716, 722 (1st Cir. 1996)).

Statements by supervisors carrying the inference that the supervisor harbored animus against protected classes of people or conduct are clearly probative of pretext[.]" Hodgens v. Gen. Dynamics Corp., 144 F.3d 151, 171 (1st Cir. 1998) (citations omitted).

"Where . . . there is no direct evidence of the defendant's retaliatory animus[] the McDonnell Douglas burden-shifting framework is used to allocate and order the burdens of producing evidence." Fennell v. First Step Designs, Ltd., 83 F.3d 526, 535 (1st Cir. 1996) (citing Mesnick v. Gen. Elec. Co., 950 F.2d 816, 827 (1st Cir. 1991) (explaining the interplay between summary judgment and burden-shifting)).

If a plaintiff can establish a prima facie case, "the burden shifts to the defendant to articulate a legitimate, non-retaliatory reason for its employment decision." Fennell v. First Step Designs, Ltd., 83 F.3d at 535 (citing Mesnick v. Gen. Elec. Co., 950 F.2d at 827). "This entails only a burden of production, not a burden of persuasion; the task of proving discrimination remains the claimant's at all times." Mesnick v. Gen. Elec. Co., 950 F.2d at 823 (citing Texas Dep't of Cmty. Affairs v. Burdine, 450 U.S. 248, 253 (1981)). "If this is accomplished, the ultimate burden falls on the plaintiff to show that the employer's proffered reason is a pretext[.]" Mesnick v. Gen. Elec. Co., 950 F.2d at 827 (citing Dominic v. Consol. Edison Co., 822 F.2d 1249, 1254 (2d Cir. 1987)).

Once that burden has been met, "the ultimate burden falls on the plaintiff" to show that the proffered reason is pretext and that the adverse employment decision was the result of the defendant's retaliatory animus. Fennell v. First Step Designs, Ltd., 83 F.3d at 535 (citing St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 510-11 (1993)) (emphasis added). "[C]ourts confronted by summary judgment motions must at this point focus on the ultimate question, scrapping the burden-shifting framework in favor of considering the evidence as a whole." Mesnick v. Gen. Elec. Co., 950 F.2d at 827 (collecting cases) (emphasis added)).

1. Statutorily Protected Activity

Conquistador asserts that the plaintiffs' complaints to Human Resources or their managers about the withheld sums were too informal to meet the FLSA requirements. That contention is incorrect.

While there is a circuit split in what kind of complaint is sufficient to make a prima facie case of retaliatory discharge, the First Circuit has found that section 215(a)(3), "embraces all types of complaints, including those that might be filed with an employer." Valerio v. Putnam Assoc. Inc., 173 F.3d 35, 42 (1st Cir. 1999) (explaining that "if `filed any complaint' were read to encompass only filings with a court or government agency, one would wonder why the additional language `or instituted or caused to be instituted any proceeding under or related to this chapter' was inserted. The latter words become surplusage if the former means only the filing of in-court or in-agency complaints."). Therefore, the plaintiffs' complaints concerning the withheld sums were statutorily protected.

Conquistador argues that Claudio-Gotay v. Becton Dickinson Caribe, Ltd. should persuade the court to find the opposite, but does not argue why such a finding is appropriate. (Docket No. 50, at 8.) In that case, the First Circuit held that the plaintiff's informal complaint did not rise to the level of a protected activity because such complaints were in furtherance of the plaintiff's job responsibilities. Id. at 102. Conquistador does not argue that plaintiffs' complaints in this case were somehow related to their job responsibilities. Therefore, Claudio-Gotay v. Becton Dickinson Caribe, Ltd. is not persuasive.

2. Causality

Conquistador argues that Canales, Cachola, Rodríguez-López and Rodríguez-Millán cannot establish a prima facie case of retaliatory discharge because they cannot establish a causal link between their complaints and their dismissals. I agree inasmuch as plaintiffs' argument as to why a casual link existed between Canales, Cachola, Rodríguez-López and Rodríguez-Millán's complaints and their dismissals is fatally flawed. However, independent of this flawed argument, I find there is sufficient evidence to establish a causal link between Canales' complaints and his dismissal.

a. Plaintiffs' Prima Facie Argument

The plaintiffs argue they have fulfilled their prima facie obligations regarding causality because their "Additional Statement of Facts reveals that the disciplinary actions taken against these plaintiffs were clearly retaliatory and disproportionate in nature." (Docket No. 62, at 16.)

This contention is flawed in two different ways. First, there is no legal foundation on which plaintiffs can base such a claim. While plaintiffs contend that "retaliation has been found when employers . . . disciplined employees out of proportion to past disciplinary practices" (id. at 13), they provide no citation for such a proposition. (See id. at 13-17.) Such a contention cannot be given any merit. See Local Rules of the United States District Court for the District of Puerto Rico, Rule 7.1(a) (ed. 2004) (requiring "citations and supporting authorities"); United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) ("[i]t is not enough merely to mention a possible argument in the most skeletal way, leaving the court to do counsel's work, create the ossature for the argument, and put flesh on its bones.").

Plaintiffs also propose that "to what extent the employer conducted an investigation before discharge and if such discharge was a departure from the employer's normal policies and practices" may be used to determine if an employee's discharge was motivated by retaliation. (Docket No. 62, at 18.) In support of such a proposition, plaintiffs cite, Vaughn v. Edel, 918 F.2d 517 (5th Cir. 1990), and Spulak v. Kmart Corp., 894 F.2d 1150 (10th Cir. 1990). Neither of those cases is controlling in this district.

Second, even if plaintiffs had a legal foundation to support their contention that retaliatory discharge may be inferred where an employer's disciplinary actions are a departure from its normal practices, plaintiffs have not provided any evidence showing that such departures existed in this case. In other words, plaintiffs have not shown that the procedures Conquistador used to dismiss Canales, Cachola, Rodríguez-López and Rodríguez-Millán were outside the norm.

Plaintiffs point to Conquistador's failure to "submit its Employment Manual to establish that the alleged actions violated the disciplinary rules or even as an attempt to demonstrate that its disciplinary procedures were followed according to the established progressive disciplinary norms." (Docket No. 62, at 16.)

The plaintiffs' argument is misplaced: the burden lays with the plaintiffs, not Conquistador. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973); Fennell v. First Step Designs, Ltd., 83 F.3d at 535. If the plaintiffs seek to show that Conquistador's method of termination fell outside of the normal procedures established by the Employment Manual, plaintiffs have the burden of submitting the Employee Manual and spelling out the argument.

Not only does Conquistador not have the burden in this initial step, but its burden in the following step of the burden-shifting analysis is only of production, not persuasion. Texas Dept. of Affairs v. Burdine, 450 U.S. at 253. Conquistador need only articulate, not prove, a non-retaliatory reason for the plaintiffs' dismissal. Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 9 (1st Cir. 1990). Therefore, even if the plaintiffs did establish causality in their prima facie case — whether by their chosen argument or otherwise — Conquistador would not be under a duty to produce the Employee Manual to prove their proffered reasons for termination were legitimate. In fact, that duty would still lay with the plaintiffs, who bear the "ultimate burden" of proving that Conquistador's proffered reasons are pretext. Fennell v. First Step Designs, Ltd., 83 F.3d at 535.

Therefore, plaintiffs' argument that retaliation on Conquistador's part may be inferred because it did not follow normal procedures for dismissing Canales, Cachola, Rodríguez-López and Rodríguez-Millán is ineffectual.

b. Other Evidence

In regards to Canales, there is sufficient evidence to infer that he was dismissed in retaliation for his complaints about the service charge. First, Canales testified that Alex Rodríguez, Conquistador's Food and Beverage Director, told Canales to "stop complaining about the twenty-five percent (25%), or you will lose your job." (Docket No. 65-2, at 24:21-25:16.) Such statements create an inference that Canales' supervisors harbored animus against him for his protected activities, and alone establishes a prima facie case of retaliation. Hodgens v. Gen. Dynamics Corp., 144 F.3d at 171; see also DeCintio v. Westchester County Med. Ctr., 821 F.2d 111, 115 (2d Cir. 1987) ("Proof of causal connection can be established . . . directly through evidence of retaliatory animus directed against a plaintiff by the defendants") (citing Hochstadt v. Worcester Found. for Experimental Biology, Inc., 425 F. Supp. 318, 328-29 (D. Mass.)aff'd, 545 F.2d 222 (1st Cir. 1976)).

Second, Canales testified that on or about May, 2004, he spoke to Jay Francis, manager of Las Casitas and explained to him that the hotel was retaining part of the waiters' tips. (Docket No. 65-2, at 21:23-22:9.) Canales was terminated June 28, 2004. Involvement in a protected activity followed closely by termination raises an inference that the discharge was retaliatory. Oliver v. Digital Equip. Corp., 846 F.2d 103, 110 (1st Cir. 1988) (citing DeCinto v. Westchester County Med. Ctr., 821 F.2d at 115).

Finally, it is uncontested that Canales' termination stemmed from his redistributing the service charge in order to avoid giving Conquistador its twenty-five percent. (Docket No. 50, at 16; Docket No. 51, at 3, ¶ 9; Docket No. 51-2, at 28; Docket No. 63, at 2, ¶ 9.) On June 18, 2004, Canales prepared and signed a statement admitting he redistributed the service charge, but that such had been done at the direction of Alfredo Arroyo, who promised that if Canales fixed the service problem at Le Bistro, then Arroyo would fix the tip problem. (Docket No. 51-2, at 28.)

The timing of Canales' termination, his testimony that he was told to stop complaining or he would lose his job, combined with Conquistador's proffered reasons for his discharge, which revolved around the Canales' actions concerning the service charges, create an inference that Conquistador terminated Canales in retaliation for his complaints about the service charge.

Plaintiffs have provided no such evidence for Cachola, Rodríguez-López or Rodríguez-Millán. First, unlike Canales, there is no evidence in the record that any supervisor told Cachola, Rodríguez-López or Rodríguez-Millán they would be terminated if they continue to complain about the service charge.

Second, plaintiffs have not provided evidence of the proximity of Cachola, Rodríguez-López and Rodríguez-Millán's complaints about the service charge to their dates of dismissal. See Oliver v. Digital Equip. Corp., 846 F.2d at 110 (holding retaliation maybe inferred from proximity of protected activity to dismissal). While Cachola, Rodríguez-López and Rodríguez-Millán all testified they complained about the service charge on a regular basis (Docket No. 65-2, at 55:18-24; 58:16-21; Docket No. 65-3, at 13-15, 28), plaintiffs have provided no case law to support a finding that the frequency of an employee's protected conduct can establish a causal link between such complaints and their dismissal.United States v. Zannino, 895 F.2d at 17.

Finally, unlike with Canales, documentary evidence shows Conquistador's reasons for dismissing Cachola, Rodríguez-López and Rodríguez-Millán, do not stem from their complaints about the service charge. Cachola was terminated for absenteeism and failure to follow proper procedures while making a guest check. (Docket No. 51-3, at 19 21; Docket No. 51-4, at 49.) Rodríguez-López was terminated for serving customers food and drinks for which they allegedly did not pay. (Docket No. 51-3, at 30, 32; Docket No. 51-5, at 2.) Rodríguez-Millán was terminated for absenteeism. (Docket No. 51-3, at 43-49; Docket No. 51-4, at 3, 7.)

Although plaintiffs have presented evidence showing Conquistador reasons for dismissing Cachola, Rodríguez-López and Rodríguez-Millán may have been mistaken (Docket No. 65-1, at 38, 40, 42, 43:10-24, 45:1-19; Docket No. 65-2, at 6-9, 39:4-15, 41:16-21, 43, 45-46), they have not shown that such dismissals were in disregard of Conquistador's Employee Manual or in some way different than Conquistador's past dismissal procedures. It bears repeating that plaintiffs have not provided a legal basis to support that such a finding would infer Conquistador retaliated against the plaintiffs for their complaints. (See supra at 16-19.)

Therefore, plaintiffs have not established prima facie evidence that Cachola, Rodríguez-López or Rodríguez-Millán were discharged in retaliation for their complaints about the service charge.

c. LAW 80

Plaintiffs propose that the mandates of Law 80 of May 30, 1976, P.R. Laws Ann. tit 29, §§ 185a et seq. ("Law 80"), should apply to plaintiffs' claims of retaliatory discharge. (Docket No. 62, at 17.) Law 80 governs indemnity to employees who have been discharged without cause and lists what entails such discharge. P.R. Laws Ann. tit. 29, §§ 185a, 185b. Plaintiffs have not proffered an argument or cited a case explaining why the definition of "discharge without cause" provided in Law 80 should be applied to plaintiffs claims of retaliatory discharge. Therefore, Law 80 is inapplicable.

IV. CONCLUSION

In view of the above, I find that Conquistador has not shown that the "service charges" it added to its customers' bills were compulsory as required by Department of Labor regulations, and therefore were not bona fide. Therefore, I recommend summary judgment be DENIED as to those claims.

I find that plaintiffs have established a prima facie case of retaliatory discharge as to Canales, inasmuch as Canales was told he could lose his job for complaining about the service charges, was terminated shortly after complaining of such, and the reasons for his discharge revolved around his protected activity. Therefore, I recommend summary judgment be DENIED as to that claim.

I find that the plaintiffs cannot establish a claim of retaliatory discharge as to plaintiffs Cachola, Rodríguez-López and Rodríguez-Millán, inasmuch as those plaintiffs cannot establish a causal connection between their complaints about the service charges and their terminations. Therefore, I recommend summary judgment be GRANTED as to those claims.

Therefore, it is my recommendation that Conquistador's motion for summary judgment be GRANTED in part and DENIED in part.

Under the provisions of Rule 72(d), Local Rules, District of Puerto Rico, any party who objects to this report and recommendation must file a written objection thereto with the Clerk of this Court within ten (10) days of the party's receipt of this report and recommendation. The written objections must specifically identify the portion of the recommendation, or report to which objection is made and the basis for such objections. Failure to comply with this rule precludes further appellate review. See Thomas v. Arn, 474 U.S. 140, 155 (1985);Davet v. Maccorone, 973 F.2d 22, 30-31 (1st Cir. 1992);Paterson-Leitch v. Mass. Mun. Wholesale Elec. Co., 840 F.2d 985 (1st Cir. 1988); Borden v. Sec'y of Health Human Servs., 836 F.2d 4, 6 (1st Cir. 1987); Scott v. Schweiker, 702 F.2d 13, 14 (1st Cir. 1983); United States v. Vega, 678 F.2d 376, 378-79 (1st Cir. 1982); Park Motor Mart, Inc. v. Ford Motor Co., 616 F.2d 603 (1st Cir. 1980).