Thomas et al v. Bayou Fox, Inc. (Joint Assign)

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

M.D. Ala.October 19, 2016

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF ALABAMA SOUTHERN DISTRICT MARIAH THOMAS, et al., Plaintiffs, v. BAYOU FOX, INC., d/b/a HOOTERS, et al., Defendants. Case No.: 1:15-cv-00623-WKW-GMB DEFENDANTS’ MOTION TO DISMISS NOW COME the defendants and pursuant to Federal Rule of Civil Procedure 12(b)(6), respectfully move this Court to dismiss plaintiffs’ Second Amended Complaint on the grounds that it fails to state a claim upon which relief can be granted. This Motion is supported by a Brief filed contemporaneously herewith. Respectfully submitted, this 19th day of October, 2016. STOKES WAGNER __/John R. Hunt__________________ Arch Stokes, admitted pro hac vice Georgia Bar No.: 683100 astokes@stokeswagner.com John R. Hunt, admitted pro hac vice Georgia Bar No.: 378530 jhunt@stokeswagner.com Case 1:15-cv-00623-WKW-GMB Document 44 Filed 10/19/16 Page 1 of 3 - 2 - Jordan D. Arkin, admitted pro hac vice Georgia Bar No.: 180796 jarkin@stokeswagner.com Attorneys for Defendants Bayou Fox, Inc., Dothan Wings, Inc., Gulf Coast Wings, Inc., Robert Fox, Stuart K. Houston, Phil Robinson and Homestar Restaurant Group, LLC STOKES WAGNER, A.L.C. One Atlantic Center, Suite 2400 1201 West Peachtree Street NW Atlanta, Georgia 30309 404.766.0076 (tel) 404.766.8823 (fax) Case 1:15-cv-00623-WKW-GMB Document 44 Filed 10/19/16 Page 2 of 3 - 3 - CERTIFICATE OF SERVICE I certify that on October 19, 2016, a true and correct copy of the document entitled DEFENDANTS’ MOTION TO DISMISS was served electronically via the U.S. District Court of Alabama’s CM/ECF system upon the following: Robert J. Camp, Esq. Wiggins, Childs, Pantazis, Fisher & Goldfarb, LLC The Kress Building 301 19th Street North Birmingham, Alabama 35203 WM. Gantt Pierce, Esq. Jacoby & Meyers, LLC 111 East Main Street Dothan, Alabama 36301 /s/ John R. Hunt John R. Hunt Case 1:15-cv-00623-WKW-GMB Document 44 Filed 10/19/16 Page 3 of 3 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF ALABAMA SOUTHERN DISTRICT MARIAH THOMAS, et al., Plaintiffs, v. BAYOU FOX, INC., d/b/a HOOTERS, et al., Defendants. Case No.: 1:15-cv-00623-WKW-GMB BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS UNDER Fed. R. Civ. P. 12(b)(6) Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 1 of 27 TABLE OF CONTENTS A. Factual Background ......................................................................................... 3 B. Legal Standard ................................................................................................. 4 C. The FLSA......................................................................................................... 5 D. Plaintiffs Have Not Pled an FLSA Minimum Wage Violation ....................... 8 E. The Controlling Regulation, 29 C.F.R. § 531.56(e), is Not Ambiguous, and Therefore this Court Should Not Defer to the DOL’s Interpretative Commentary Found in Sub-Regulation § 30d00(e) ....................................... 12 F. Plaintiffs Were Employed in One Occupation, Not Two, and Reliance on FOH §30d00(e) Would Create an Unworkable Rule ................................ 17 G. Conclusion ..................................................................................................... 20 Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 2 of 27 TABLE OF AUTHORITIES Cases Adair v. City of Kirkland, 185 F.3d 1055, 1063 (9th Cir. 1999) .................. 8, 10, 11 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ..................................................................... 4 Barron v. Reich, 13 F.3d 1370, 1372 (9th Cir. 1994) ............................................. 15 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) ..................................... 4 Blankenship v. Thurston Motor Lines, 415 F.2d 1193, 1198 (4th Cir. 1969) ....................................................................................................... 9 Christensen v. Harris County, 529 U.S. 576, 588 (2000) ....................................... 15 Cuevas v. Monroe Street Club, Inc., 752 F.Supp. 1405, 1416-17 (N.D. Ill. 1990) ...................................................................................................... 9 Davis v. Abington Memorial Hospital, 765 F.3d 236 (3d Cir. 2014) ..................... 10 Dove v. Coupe, 759 F.2d 167, 172 (D.C. Cir. 1985) ................................................ 9 Driver v. Apple Illinois, LLC, 890 F. Supp. 2d 1008, 1029 (N.D. Ill. 2012) .................................................................................................... 20 Fast v. Applebee's Int'l, Inc., 638 F.3d 872, 880 (8th Cir. 2011) ............................ 20 Financial Sec. Assurance, Inc. v. Stevens, Inc., 500 F.3d 1276, 1282 (11th Cir. 2007) ..................................................................................................... 4 Flood v. Carlson Restaurants Inc., 2015 WL 1396257 (S.D.N.Y. Mar. 27, 2015) .................................................................................... 20 Hill. v. White, 321 F.3d 1334, 1335 (11th Cir. 2003) ................................................ 2 Montijo v. Romulus, Inc., No. CV 14-264, 2015 WL 1470128 *14 (D. Ariz. March 30, 2015) ....................................................................... 10, 14, 19 Pellon v. Business Representation Int’l, Inc., 528 F.Supp.2d 1306 (S.D. Fla. 2007), aff’d, 291 F. App’x 310 (11th Cir. 2008) ........................... 18, 19 Richardson v. Mountain Range Restaurants LLC, No. CV 14-1370, 2015 WL 1279237 *5 (D. Ariz., March 19, 2015) ....................................... passim Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 3 of 27 ii Roberts v. Apple Sauce, Inc., 945 F.Supp.2d 995, 1000 (N.D. Ind. 2013) .............. 7 Romero v. Top-Tier Colorado, LLC, No. 15-CV-02101-MEH, 2016 WL 497095, *4-5 (D. Colo., Feb. 9, 2016) ................................................ 10 Schaefer v. P.F. Chang China Bistro, Inc., No. Civ-14-185, 2014 WL 3809069 *9 (D. Ariz. Aug. 1, 2014) .................................................... 11 United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487, 490 (2d Cir. 1960) ............................................................................................... 8, 9, 10 Statutes 29 U.S.C. § 203(m) .......................................................................................... passim 29 U.S.C. § 203(t) ................................................................................................. 3, 8 29 U.S.C. § 204 ....................................................................................................... 11 29 U.S.C. § 206 ..................................................................................................... 1, 9 29 U.S.C. § 206(a) ............................................................................................ 5, 7, 9 29 U.S.C. § 206(a)(1) ................................................................................................ 8 5 U.S.C. §§ 551-559 ............................................................................................... 13 Other Authorities 1966 U.S.C.C.A.N. 3002, 3014 ................................................................................ 6 3C K.O’Malley,J.Grenig,W.Lee, Federal Jury Practice and Instructions §175.20(5th ed. 2001) ............................................................................................. 9 DOL Opinion Ltr., WH Div., 1980 WL 141336 (Mar. 28, 1980) .......................... 15 DOL Opinion Ltr., WH Div., 1985 DOLWH LEXIS 9 (Dec. 20, 1985) ............... 16 DOL Opinion Ltr., WH Div., 2009 DOLWH LEXIS 27 (Mar. 2, 2009) ............... 16 DOL Opinion Ltr., WH Div., 2009 WL 649014 (Jan. 15, 2009 ............................. 16 Fair Minimum Wage Act of 2007, Pub. L. No. 110-28, § 8102(a), 121 Stat. 112, 188 .................................................................................................. 5 Pub. L. No. 104-188, § 2105, 110 Stat. 1755, 1928-29 ............................................ 6 Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 4 of 27 iii Pub. L. No. 89-601, §§ 101(a), 201(a), 80 Stat. 830, 833 (1966) ............................. 6 S. Rep. 89-1487......................................................................................................... 6 Sub-Regulation § 30d00(e) ......................................................................... 11, 12, 17 Wage and Hour Division Field Operations Handbook ........................................... 14 Rules Federal Rule of Civil Procedure 12(b)(6) ................................................................. 4 Regulations 29 C.F.R. § 531.56(a).............................................................................................. 13 29 C.F.R. § 531.56(d) ............................................................................................... 7 29 C.F.R. § 531.56(e)....................................................................................... passim 29 C.F.R. § 776.4(a).................................................................................................. 9 Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 5 of 27 The Fair Labor Standards Act requires employers to pay a minimum wage to non-exempt employees. 29 U.S.C. § 206. It also allows employers to take a “tip credit” when paying wages to employees in tipped occupations. Id. at § 203(m). With respect to such employees, an employer may pay a cash wage of $2.13 per hour as long as it ensures that the employee also has received an additional amount in tips that renders the total amount equal to or greater than the federal minimum wage of $7.25 per hour. Id. All of the plaintiffs in this action were employed as restaurant servers, a customarily tipped occupation. In their Second Amended Complaint, the plaintiffs do not allege that they failed to receive the minimum wage when the tips they received as servers are included in their hourly wage. Indeed, plaintiffs do not allege the existence of a single workweek in which any of them received less than the minimum wage when their tips are counted. Instead, they contend that they performed substantial “non- tipped work” and defendants1 were prohibited from taking the tip credit for the hours they spent performing these activities.2 Plaintiffs’ claims appear to be based on the premise that a restaurant server 1 Plaintiffs’ Second Amended Complaint names three individuals and four businesses as defendants. While defendants deny that all of them were plaintiffs’ employers under the FLSA and are proper party defendants in this action, they will collectively refer to themselves as “defendants” for purposes of this Motion. 2 Second Amended Complaint, hereinafter “Complaint,” at ¶ 31. Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 6 of 27 2 cannot spend more than 20% of his or her time on “non-tip producing activities.” (Complaint at ¶ 56). The “20%” figure, however, does not appear in the text of the FLSA or even in the interpretative regulations promulgated by the Department of Labor pursuant to the Administrative Procedure Act. Rather, it is contained in the Department of Labor’s Field Operations Handbook (“FOH”). The Court should not give deference to the FOH because it constitutes mere “commentary” by the DOL that is inconsistent with the statute and regulations, and is not persuasive, particularly in view of the DOL’s changing interpretations over the years. The unambiguous definition in the FLSA allows the tip credit for employees engaged in a “tipped occupation.” It would be contrary to the statute and the regulations to hold that no tip credit can be taken for a server if more than 20% of the server’s time is not consumed by waiting tables. Because plaintiffs worked in a tipped occupation and do not allege that they were paid less than the minimum wage applicable to tipped employees or that they failed to make the minimum wage for any work week (when tips are included pursuant to 29 U.S.C. § 203(m)), plaintiffs’ Complaint should be dismissed. Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 7 of 27 3 A. Factual Background According to the Complaint,3 plaintiffs formerly worked as servers at defendants’ “Hooters” restaurant in Dothan, Alabama at various times between February 2005 and 2015. (Complaint at ¶¶ 9-28). Plaintiffs do not deny that they received tips in their occupation as servers for Hooters. (Id. at ¶¶ 41-56) (contrasting their tipped work with the work they allege was “non-tipped”). See 29 U.S.C. § 203(t) (“‘Tipped employee’ means any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.”). Plaintiffs state they were required to do the following “non-tipped” labor related to their occupation as restaurant servers: • taking down chairs • wiping tables and menus • setting out menus • making tea • rolling silverware • filling salt and pepper shakers • inspecting and cleaning glasses when necessary • cutting fruits and vegetables • filling ice machines • attending “Jumpstart” meetings to discuss the day, sales, and upcoming events, etc. (Complaint at ¶ 44). Plaintiffs allege that because their related non-tipped work 3 For purposes of this Motion, defendants will assume the facts stated by plaintiffs to be true. See Hill v. White, 321 F.3d 1334, 1335 (11th Cir. 2003). Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 8 of 27 4 exceeded 20% of their server duties, the defendants were not allowed to use the tip credit hourly wage rate for the time plaintiffs spent performing these related non- tipped duties. (Id. at ¶¶ 56, 58). Notably, plaintiffs do not allege that they were paid less than the federal minimum wage of $7.25 per hour when their tips for any of their workweeks are included. Rather, they allege that defendants should have ignored any tips they received and paid them a cash wage of $7.25 per hour for the time they spent performing “non-tipped work” related to their occupation as servers. (Id. at ¶ 58). B. Legal Standard Federal Rule of Civil Procedure 12(b)(6) provides that the court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “[A] plaintiffs’ obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). In other words, the factual allegations in a complaint must “possess enough heft” to set forth a “plausible entitlement to relief.” Financial Sec. Assurance, Inc. v. Stevens, Inc., 500 F.3d 1276, 1282 (11th Cir. 2007) (quoting Twombly, 550 U.S. at 557). The Supreme Court has confirmed that this principle applies in all cases under the Federal Rules. Ashcroft v. Iqbal, 556 U.S. 662 (2009). In Iqbal, the Court held Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 9 of 27 5 that: To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief’.” Id. at 678 (citations omitted). Further, the Court observed that in ruling on a motion to dismiss, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a course of action, supported by mere conclusory statements, do not suffice.” Id. C. The FLSA Under the FLSA, employers must pay an employee the federal minimum wage “who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce,” according to the statutory schedule of the minimum hourly wage. 29 U.S.C. § 206(a) (2012). In 2007, Congress scheduled the federal minimum wage to increase to $7.25 an hour by July 2009. See Fair Minimum Wage Act of 2007, Pub. L. No. 110-28, § 8102(a), 121 Stat. 112, 188. Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 10 of 27 6 Historically, before 1966, the FLSA did not generally apply to employees in restaurants and hotels. As part of a legislative compromise struck in extending coverage of the FLSA to these industries for the first time, Congress enacted a “tip credit” provision to accommodate in part the long-standing practice in these industries whereby workers received most or even all of their income from customer tips. See Pub. L. No. 89-601, §§ 101(a), 201(a), 80 Stat. 830, 833 (1966). Legislative history clearly demonstrates that Congress’s intent was not to disrupt the restaurant industry’s “existing practices with regard to tips.” See S. Rep. 89-1487, reprinted in 1966 U.S.C.C.A.N. 3002, 3014. From the introduction of the tip credit provisions in 1966 through 1996, Congress set the amounts for the minimum employer cash wage and tip credit as a percentage of the minimum wage, ranging from 40% to 60%. The 1996 FLSA amendments changed the tip credit provisions to set the employer’s statutory minimum cash wage obligation to a dollar amount ($2.13 per hour) rather than as a percentage of the minimum wage. See Pub. L. No. 104-188, § 2105, 110 Stat. 1755, 1928-29. The maximum tip credit thereafter became the difference between $2.13 and the federal minimum wage. Id. In consequence, the tip credit provision of the FLSA, § 203(m), allows employers to pay tipped employees $2.13 per hour if the employees’ tips suffice to fulfill his or her minimum wage for the workweek. 29 U.S.C. § 203(m). Specifically, § 203(m) states: Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 11 of 27 7 In determining the wage an employer is required to pay a tipped employee, the amount paid such employee by the employee’s employer shall be an amount equal to — (1) the cash wage paid such employee which for purposes of such determination shall be not less than the cash wage required to be paid such an employee on August 20, 1996; and (2) an additional amount on account of the tips received by such employee which amount is equal to the difference between the wage specified in paragraph (1) and the wage in effect under section 206(a)(1) of this title. 29 U.S.C. § 203(m). Thus, an employer may use the tip credit to determine the wage of a tipped employee if it: (1) pays a cash wage of at least $2.13 per hour; (2) informs its employees of the FLSA’s tip credit provisions; (3) permits its employees to retain all their tips (except for permissible tip pooling); and (4) ensures that the cash wage plus tips received equals or exceeds the minimum wage for the forty-hour workweek. See Roberts v. Apple Sauce, Inc., 945 F.Supp.2d 995, 1000 (N.D. Ind. 2013). Pursuant to 29 C.F.R. § 531.56(d), “[m]ore than $30 a month in tips customarily and regularly received by the employee is a minimum standard that must be met before any wage credit for tips is determined under [29 U.S.C. § 203(m)].” In no event, however, is an employee to receive less than the minimum wage per workweek. Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 12 of 27 8 D. Plaintiffs Have Not Pled an FLSA Minimum Wage Violation The Second Amended Complaint fails to state a minimum wage claim under the FLSA. Under 29 U.S.C. § 206(a), the FLSA requires that for every workweek “every employer shall pay to each of [its] employees,” the federal minimum wage, except for tipped employees, who receive $2.13 an hour, with the rest of their federal minimum wage coming from customer tips. See 29 U.S.C. § 206(a)(1), §203(m), and § 203(t). Thus, under § 203(m)’s tip credit, employers may pay tipped employees at an hourly wage below the minimum wage, provided that for the workweek the hourly wage and the employees’ tips, taken together, are at least equivalent to the federal minimum wage, which between 2009 and 2015 was $7.25 per hour. Plaintiffs do not allege that defendants failed to comply with these provisions. Plaintiffs can state an FLSA minimum wage violation only if their total pay for a particular workweek divided by the total number of hours worked in that workweek comes to less than the minimum wage of $7.25 per hour. See United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487, 490 (2d Cir. 1960). In Klinghoffer, employees who had not been paid for certain hours worked claimed a violation of the FLSA’s minimum wage provision. The Klinghoffer court found that: [i]f the total wage paid to each [employee] in this case during any given Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 13 of 27 9 week is divided by the total time he worked that week, the resulting average hourly wage exceeds [the minimum wage required by the FLSA]. We believe this is all that is necessary to meet the requirements of 206(a). Id. at 490; see also Adair v. City of Kirkland, 185 F.3d 1055, 1063 (9th Cir. 1999) (officers failed to state a claim for minimum wage violation where their salary, when averaged across their total time worked, still paid them above the minimum wage); Cuevas v. Monroe Street Club, Inc., 752 F.Supp. 1405, 1416-17 (N.D. Ill. 1990) (with one minor exception, plaintiff restaurant servers failed to establish minimum wage claim under Klinghoffer standard); accord Blankenship v. Thurston Motor Lines, 415 F.2d 1193, 1198 (4th Cir. 1969); Dove v. Coupe, 759 F.2d 167, 172 (D.C. Cir. 1985). While § 206 speaks of an hourly wage, an employer’s failure to compensate an employee for particular hours worked does not necessarily violate the minimum wage provision. Dove, 759 F.2d at 171. That is because the workweek as a whole, not each individual hour within the workweek, determines whether an employer has complied with § 206(a). Id.; see 29 C.F.R. § 776.4(a) (“The workweek is to be taken as the standard in determining the applicability of the Act.”). Indeed, this rule has become so well-established that it is reflected in the comments to the federal jury instruction on the subject: The unit of measurement for determining compliance with the minimum wage requirement is the workweek, defined as 168 hours, or Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 14 of 27 10 seven consecutive days… Each workweek is considered separately and a workweek in which an employee receives less than the minimum wage cannot be averaged with one in which the employee receives more than the statutory minimum. 3C K. O’Malley, J.Grenig, W.Lee, Federal Jury Practice and Instructions §175.20 (5th ed. 2001) (comments), citing, United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487 (2d Cir. 1960). Accordingly, no minimum wage violation occurs so long as the employer’s total wage paid to an employee in any given workweek divided by the total hours worked in the workweek equals or exceeds the minimum wage rate. Romero v. Top- Tier Colorado, LLC, No. 15-CV-02101-MEH, 2016 WL 497095, *4-5 (D. Colo., Feb. 9, 2016); Montijo v. Romulus, Inc., No. CV 14-264, 2015 WL 1470128 *14 (D. Ariz. March 30, 2015); Richardson v. Mountain Range Restaurants LLC, No. CV 14-1370, 2015 WL 1279237 *5 (D. Ariz., March 19, 2015), citing Adair, 185 F.3d at 1062 n.6. 4 Even though plaintiffs allege in conclusory fashion that they were paid less than the overall minimum wage, they do not allege the existence of a single workweek where they received less than the minimum wage when the tips they 4 This principle also precludes so-called “gap time” claims. Davis v. Abington Memorial Hospital, 765 F.3d 236 (3d Cir. 2014) ) (“we agree with the clear weight of authority and hold that pure gap time claims – straight time wages for unpaid work during pay periods without overtime – are not cognizable under the FLSA, which requires the payment of minimum wages and overtime wages only”). Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 15 of 27 11 received are included in the calculations. Instead, they rely on the contention that they spent substantial time performing “non-tip producing” activities. In this regard, plaintiffs list examples of non-tipped tasks (side work) that defendants asked them to perform that were related to their occupation as servers. (Complaint at ¶¶ 44, 47). Such allegations do not state a minimum wage claim because the pleading never alleges that during any particular workweek, the average of plaintiffs’ hourly wages, including tips, was less than the federal minimum wage. See Complaint; see also Adair, 185 F.3d at 1062. Federal minimum wage claims fail where the aggregate wages for a workweek, “when averaged across the total time worked,” is equal to or in excess of the minimum wage. Id. at 1063. Thus, regardless of the frequency with which non-tipped work was assigned, no minimum wage claim is stated against defendants unless plaintiffs’ average wage for the workweek, including tips, fell below the minimum wage. Richardson, 2015 WL 1279237 *5. Plaintiffs here do not allege that defendants failed to pay them the minimum wage for a particular workweek. See Schaefer v. P.F. Chang China Bistro, Inc., No. Civ-14-185, 2014 WL 3809069 *9 (D. Ariz. Aug. 1, 2014) (“[R]egardless of the frequency with which non-tipped work was assigned, no minimum wage claim is stated against P.F. Chang unless Schaefer’s average wage for the week, including tips, fell below the minimum wage.”) (emphasis added). Plaintiffs’ Complaint, therefore, should be dismissed. Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 16 of 27 12 E. The Controlling Regulation, 29 C.F.R. § 531.56(e), is Not Ambiguous, and Therefore this Court Should Not Defer to the DOL’s Interpretative Commentary Found in Sub-Regulation § 30d00(e) Pursuant to 29 U.S.C. § 204, the U.S. Department of Labor has promulgated regulations interpreting the FLSA. These include 29 C.F.R. § 531.56(e) which provides that an employee must be compensated at two different rates only if s/he is working two entirely different jobs, contrasting the situation in which an employee does tasks related to the primary occupation: Dual jobs. In some situations, an employee is employed in a dual job, as for example, where a maintenance man in a hotel also serves as a waiter. In such a situation the employee, if he customarily and regularly receives at least $30 a month in tips for his work as a waiter, is a tipped employee only with respect to his employment as a waiter. He is employed in two occupations, and no tip credit can be taken for his hours of employment in his occupation of a maintenance man. Such a situation is distinguishable from that of a waitress who spends part of her time cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses. It is likewise distinguishable from the counterman who also prepares his own short orders or who, as part of a group of countermen, takes a turn as a short order cook for the group. Such related duties in an occupation that is a tipped occupation need not by themselves be directed toward producing tips. 29 C.F.R. § 531.56(e) (emphasis added). Plaintiffs presumably will argue that 29 C.F.R. § 531.56(e) is ambiguous and therefore the Court should defer to the DOL’s interpretative commentary found in the DOL Field Operations Handbook (“FOH”) § 30d00(e). This suggests that if more than 20% of an employee’s time is spent on “general preparation work or Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 17 of 27 13 maintenance,” a tip credit may not be taken for that time: Reg. 531.56(e) permits the taking of the tip credit for time spent in duties related to the tipped occupation, even though such duties are not by themselves directed toward producing tips (i.e. maintenance and preparatory or closing activities). For example, a waiter/waitress, who spends some time cleaning or setting tables, making coffee, and occasionally washing dishes or glasses may continue to be engaged in a tipped occupation even though these duties are not tip producing, provided such duties are incidental to the regular duties of the server (waiter/waitress) and are generally assigned to the servers. However, where the facts indicate that specific employees are routinely assigned to maintenance, or that tipped employees spend a substantial amount of time (in excess of 20 percent) performing general preparation work or maintenance, no tip credit may be taken for the time spent in such duties. Plaintiffs’ expected argument fails for two reasons: First, neither the statute nor the regulation is ambiguous, and the FOH sub-regulation is contrary to the clear pronouncement of both the statute and the regulation that employers are entitled to utilize the tip credit for employees in tipped occupations, not just for hours spent working in specified tasks. 29 U.S.C. § 203(m); 29 C.F.R. § 531.56(a). Second, the excerpt from the Field Operations Handbook is not enforceable because it has been only inconsistently applied by the DOL itself, and was never intended to be applied like a regulation.5 29 U.S.C. § 203(m) refers not to time spent by tipped employees on related 5 Indeed, applying it with the force of a regulation would likely violate the Administrative Procedure Act. 5 U.S.C. §§ 551-559. Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 18 of 27 14 tasks, but specifically permits the tip credit for “tipped employees” – based on their occupations, not on the time spent doing one thing or another. 29 C.F.R. § 531.56(e) is likewise not ambiguous. It clearly allows for tipped food service personnel to perform tasks that are related and incidental to their main occupation without becoming a dual employee, by contrast with an employee who performs two or more entirely distinct, non-overlapping jobs. Plaintiffs were not assigned to two identifiable, separate occupations. They were engaged in one occupation, server. Section 531.56(e) specifically allows a server to engage in incidental related duties, and the server occupation inherently includes side work. The regulation itself neither sets forth the “duties” dichotomy suggested by plaintiffs nor caps the time spent on incidental duties at 20%. Richardson, 2015 WL 1279237 *8; Montijo, 2015 WL 1470128 *16. The regulation does not require or envision that this Court must try to identify the duties that plaintiffs performed in their server occupation, classify some as related to the server position and some as nonrelated, and then implement a different occupational standard for the “non-tipped” duties as compared with tipped duties. Even if this Court were to find § 531.56(e) ambiguous, there are numerous reasons why the Field Operations Handbook sub-regulation should not be applied. The FOH itself says that it is not to be used as a device for interpretative policy. Rather, it is only meant to provide guidance for those employees of the Wage and Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 19 of 27 15 Hour Division who are charged with enforcing the FLSA. See Wage and Hour Division Field Operations Handbook6 (emphasis added) (“The Field Operations Handbook (FOH) is an operations manual that provides Wage and Hour Division (WHD) investigators and staff with interpretations of statutory provisions, procedures for conducting investigations, and general administrative guidance. … It is not used as a device for establishing interpretative policy.”) (emphasis added); Barron v. Reich, 13 F.3d 1370, 1372 (9th Cir. 1994). To the best of defendants’ knowledge, the DOL has never initiated enforcement litigation against a restaurant based upon sub-regulation § 30d00(e). See Richardson, 2015 WL 1279237 *8. Moreover, neither Congress, the Supreme Court, nor the Eleventh Circuit has recognized such a purported cause of action based on the sub-regulation. It is well- established that an employment practice does not violate the FLSA unless the FLSA prohibits it. See Christensen v. Harris County, 529 U.S. 576, 588 (2000). In addition, the DOL’s Wage and Hour Division in its opinion letters regarding the dual jobs regulation has provided inconsistent guidance, first taking one position, then reversing course, reversing course again, then withdrawing the original position. Thus: • In a 1980 opinion letter, the DOL first opined that duties performed by 6 https://www.dol.gov/Whd/FOH/index.htm Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 20 of 27 16 tipped employees after closing hours such as cleaning the salad bar, cleaning tables, and vacuuming the dining room did not render them untipped employees. See DOL Opinion Ltr., WH Div., 1980 WL 141336 (Mar. 28, 1980). • In a 1985 opinion letter, however, the DOL opined that a waiter who was required to report two hours early to perform salad preparation set- up work, a job traditionally performed by chefs, held “dual jobs” and was entitled to the full minimum wage for that portion of his shift. See DOL Opinion Ltr., WH Div., 1985 DOLWH LEXIS 9 (Dec. 20, 1985). • Next, in a 2009 opinion letter, the DOL reversed course, opining that “[w]e do not intend to place a limitation on the amount of duties related to a tip-producing occupation that may be performed, so long as they are performed contemporaneously with direct customer-service duties …” The DOL concluded that an employer could take a tip credit for an employee in the occupation of a “bar back,” even though the bar back employee spent none of his time waiting on customers. Because the employee was in an occupation where he received more than $30 a month in tips, he was a “tipped employee” and the employer could thus take the tip credit. DOL Opinion Ltr., WH Div., 2009 WL 649014 (Jan. 15, 2009). Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 21 of 27 17 • Subsequently, less than two months later, in connection with a change in the executive administration, the DOL withdrew the Jan. 15, 2009 letter. DOL Opinion Ltr., WH Div., 2009 WL 649005 (Mar. 2, 2009). By engaging in such an inconsistent approach in its opinions regarding the dual jobs regulation, the 1988 FOH sub-regulation on the same issue is neither persuasive nor entitled to deference. Christopher v. SmithKline Beecham Corp., 132 S.Ct. 2156, 2166-67 (2012) (affording no deference to the DOL’s interpretation of its own regulations regarding the outside salesperson exemption in part because the DOL’s position had shifted over time). F. Plaintiffs Were Employed in One Occupation, Not Two, and Reliance on FOH §30d00(e) Would Create an Unworkable Rule Finally, the FOH sub-regulation does not interpret § 531.56(e) but arbitrarily adds additional requirements to it, creating a rule that if incidental duties comprise more than 20% of a server’s duties, even if they are related to the server’s occupation, then no tip-credit may be taken for the server’s time spent on such incidental or related duties. Application of the sub-regulation would thus convert a straightforward statutory rule into a requirement that employers: 1) keep track of how much time a tipped employee spends each day doing things other than waiting on customers; and, 2) compensate the employee at a different rate for that time. Since “side work”, a traditional part of the server position, can be done during Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 22 of 27 18 service hours as well as before and after service hours, the application of the sub- regulation would produce a thicket of timekeeping complications. In Pellon v. Business Representation Int’l, Inc., 528 F.Supp.2d 1306 (S.D. Fla. 2007), aff’d, 291 F. App’x 310 (11th Cir. 2008), the court rejected sub-regulation § 30d00(e)’s approach as unworkable and inappropriate. In Pellon, plaintiffs were skycaps at Miami International Airport who argued that their employer was not allowed to take a tip credit because they were required to perform duties other than assisting travelers with their luggage. The Pellon court found that the skycaps were in a tipped “occupation” of skycaps and that any other duties they were required to perform were incidental to receiving tips. The court found that skycaps were similar to servers. Like servers, the skycaps’ duties involved many tasks that did not directly earn tips. The Pellon court held that the skycaps were not performing dual occupations; rather they had one occupation in which they received more than $30 a month in tips. The court rejected the sub-regulation’s 20% time cap as infeasible: However, a determination whether 20% (or any other amount) of a skycap’s time is spent on non-tipped duties is infeasible … Permitting Plaintiffs to scrutinize every day minute by minute, attempt to differentiate what qualifies as tipped activity and what does not, and adjust their wage accordingly would create an exception that would threaten to swallow every rule governing (and allowing) for tip credit for employers. 528 F.Supp.2d at 1313-14. The Eleventh Circuit affirmed “on the basis of the district court’s well-reasoned order.” See 291 F. App’x 310 (11th Cir. 2008). Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 23 of 27 19 Like the skycaps in Pellon, plaintiffs performed one occupation for defendants, the server position, not two occupations. A server’s occupation traditionally involves side work, including the types of duties plaintiffs identify in their Complaint, like rolling silverware, cleaning their areas, filling service mechanisms like ice machines, etc. A server’s performance of incidental side work does not mean that a server is performing another job classification. Montijo, 2015 WL 1470128 *18. Under the FLSA and its regulations, a tip credit is permitted for a tipped occupation; it is not based on how much time is spent on tipped or nontipped duties. Moreover, it would be impractical for this Court to parse the plaintiffs’ duties, classify them between tipped versus non-tipped, then further classify them between relating to the server position and not relating to the server position. Such parsing of the server occupation is neither required nor supported by the FLSA or its regulations. It also would be impractical and unworkable for defendants to attempt to monitor and record on a minute-by-minute basis the time spent in each of the tasks performed by servers in their restaurants and then determine tipped/nontipped and related/non-related tasks to the server occupation in order to determine wage payments. Pellon, 528 F.Supp.2d at 1314. A server’s occupation includes the duties which plaintiffs claim were non-tipped activities. Defendants, therefore, are entitled to take the tip credit for the entirety of the tipped server occupation. Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 24 of 27 20 Contrary cases have failed to consider the impracticality of the timekeeping problem that the “20% rule” would impose, the inconsistent history of the DOL’s own interpretation of the regulation, and other issues discussed above, and are usually factually distinct in important ways. See, e.g., Fast v. Applebee's Int'l, Inc., 638 F.3d 872, 880 (8th Cir. 2011) (relying in part on cases in which servers worked entire shifts on non-tipped work); Driver v. Apple Illinois, LLC, 890 F. Supp. 2d 1008, 1029 (N.D. Ill. 2012) (evidence showed that company policy included using tipped employees to do non-traditional sidework like dishwashing and cleaning in order to avoid having to pay a cleaning service); Flood v. Carlson Restaurants Inc., 2015 WL 1396257 (S.D.N.Y. Mar. 27, 2015) (collecting cases). G. Conclusion This Court should not give deference to a policy that not only would create massive timekeeping problems, but would have the net effect of allowing a server to do nothing during slow periods at a restaurant and require an employer to pay the server additional sums just to help out in the dining room. The law does not require that result. Richardson, 2015 WL 1279237 *10. Plaintiffs received more than the minimum wage for every workweek they worked for defendants. Accordingly, the Complaint should be dismissed because plaintiffs lack both a cognizable legal theory and because have failed to allege sufficient facts to support a cognizable legal claim. Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 25 of 27 21 Respectfully submitted, this 19th day of October, 2016. STOKES WAGNER, ALC /s/ John R. Hunt _______________________________ Arch Stokes, admitted pro hac vice Georgia Bar No.: 683100 astokes@stokeswagner.com John R. Hunt, admitted pro hac vice Georgia Bar No.: 378530 jhunt@stokeswagner.com Jordan D. Arkin, admitted pro hac vice Georgia Bar No.: 180796 jarkin@stokeswagner.com Attorneys for Defendants Bayou Fox, Inc., Dothan Wings, Inc., Gulf Coast Wings, Inc., Robert Fox, Stuart K. Houston, Phil Robinson and Homestar Restaurant Group, LLC STOKES WAGNER, A.L.C. One Atlantic Center, Suite 2400 1201 West Peachtree Street NW Atlanta, Georgia 30309 404.766.0076 (tel) 404.766.8823 (fax) Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 26 of 27 - 22 - CERTIFICATE OF SERVICE I certify that on October 19, 2016, a true and correct copy of the document entitled BRIEF IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS UNDER Fed. R. Civ. P. 12(b)(6) was served electronically via the U.S. District Court of Alabama’s CM/ECF system upon the following: Robert J. Camp, Esq. Wiggins, Childs, Pantazis, Fisher & Goldfarb, LLC The Kress Building 301 19th Street North Birmingham, Alabama 35203 WM. Gantt Pierce, Esq. Jacoby & Meyers, LLC 111 East Main Street Dothan, Alabama 36301 /s/ John R. Hunt John R. Hunt Case 1:15-cv-00623-WKW-GMB Document 44-1 Filed 10/19/16 Page 27 of 27