The opinion of the court was delivered by: Reena Raggi, Circuit Judge:
Barenboim v. starbucks, Winans v. Starbucks Corp.
Before: WINTER, RAGGI, and LIVINGSTON, Circuit Judges
Appeals heard in tandem from awards of summary judgment in favor of defendant Starbucks Corporation in the United States District Court for the Southern District of New York (Laura Taylor Swain, Judge). In No. 10-4912-cv, plaintiffs, representing a putative class of Starbucks baristas, contend that the district court erred in failing to construe New York Labor Law § 196-d to prohibit Starbucks from distributing pooled tips to shift supervisors, who are purportedly Starbucks "agent[s]," as that word is used in the statute. In No. 11-3199-cv, plaintiffs, representing a putative class of Starbucks Assistant Store Managers ("ASMs"), contend that the district court erred in construing § 196-d as not requiring Starbucks to include ASMs in its tip pools. Because these cases turn on the proper construction of New York Labor Law § 196-d, and the New York Court of Appeals has yet to construe the meaning of the word "agents" under the statute or to decide whether an employer may exclude a tip-earning employee from receiving distributions from a common tip pool, we defer decision and certify these questions to the New York Court of Appeals.
These appeals, heard in tandem, challenge awards of summary judgment entered in the United States District Court for the Southern District of New York (Laura Taylor Swain, Judge), in favor of defendant Starbucks Corporation on plaintiffs' complaints that Starbucks violates New York Labor Law § 196-d in the distribution of tip pools maintained at stores in New York State. In each store, Starbucks employs four types of workers. At the bottom of a Starbucks store's hierarchy are "baristas," the line workers responsible for taking customers' orders and serving the company's coffee- and tea-based drinks. Immediately above baristas are "shift supervisors," who are principally responsible for serving customers, but who also enjoy limited supervisory responsibilities. Above the shift supervisors are "assistant store managers" ("ASMs"), who serve as deputies to the highest-ranking employees, the store managers.
Each Starbucks store posts a plexiglass box at the counter where customers may leave tips. Starbucks policy provides for these tips to be pooled and distributed among the baristas and shift supervisors. Starbucks does not permit its store managers or ASMs to receive any share of a tip pool.
In the first appeal before us, Barenboim v. Starbucks Corp., No. 10-4912-cv, a putative class of baristas sued Starbucks, contending that shift supervisors are not permitted to receive distributions from a store's tip pool because shift supervisors are Starbucks "agent[s]" who may not "demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee." N.Y. Lab. Law § 196-d. In the second appeal, Winans v. Starbucks Corp., No. 11-3199-cv, a putative class of ASMs sued Starbucks, claiming that they are not Starbucks agents ineligible to receive tips pursuant to § 196-d, and therefore could not be excluded from sharing in a tip pool to which their own customer service yields gratuities. In awarding summary judgment in favor of Starbucks in both cases, the district court ruled as a matter of law that there was no genuine dispute of material fact that shift supervisors are not Starbucks agents under N.Y. Lab. Law § 196-d, see In re Starbucks Emp. Gratuity Litig., 264 F.R.D. 67, 72-73 (S.D.N.Y. 2009), and that, even if a genuine factual dispute existed as to ASMs' eligibility to retain gratuities, § 196-d did not afford them a statutory right to receive distributions from Starbucks tip pools, see Winans v. Starbucks Corp., 796 F. Supp. 2d 515, 519 (S.D.N.Y. 2011).
These appeals present two unresolved questions of New York law:
First, what types of employees are eligible to participate in a tip-pooling arrangement, and what factors should inform a court's consideration of eligibility? Section 196-d prohibits an "agent," defined elsewhere as a "supervisor," N.Y. Lab. Law § 2(8-a), from retaining tips. New York law does not define "supervisor." Here, shift supervisors and ASMs both exercise supervisory roles, although in differing degrees, and it remains unclear how many or what kind of supervisory responsibilities are dispositive to the § 196-d analysis. Moreover, although the statute permits employers to require tip sharing by "a waiter with a busboy or similar employee," id. § 196-d, it is unclear whether an employer may mandate a tip-pooling arrangement between a waiter and another customer-service employee of higher rank.
Second, if an employee is not an agent and therefore is eligible to receive tips, may an employer deny him tip-pool distributions even though customers paid gratuities into the pool in compensation for his service? Although § 196-d establishes who is ineligible to receive a share of tips, New York law does not clearly state whether an employer may exclude an otherwise eligible tip-earning employee from any share of the business's tip pool.
Because these unresolved questions implicate significant New York state interests, and are determinative of these appeals, we defer decision and certify them to the New York Court of Appeals.
A. Barenboim v. Starbucks Corp., No. 10-4912-cv
Jeana Barenboim and Jose Ortiz (collectively, "Barenboim") were formerly employed by Starbucks as baristas in New York. As such, they were responsible for preparing food and beverages for Starbucks customers. Baristas work on a part-time, hourly basis.
Similarly, shift supervisors, the Starbucks employees immediately senior to baristas, are primarily responsible for serving food and beverages to customers and work on a part- time, hourly basis. As their title indicates, however, shift supervisors also have some supervisory responsibilities, such as assigning baristas to particular positions during their shifts, administering break periods, directing the flow of customers, and providing feedback to baristas about their performance. Further, shift supervisors are authorized to open and close stores, change the cash register tills, and deposit money in the bank, but only when both an ASM and store manager--the Starbucks employees senior to shift supervisors--are unavailable.
Starbucks stores post tip jars next to cash registers, wherein customers regularly leave gratuities. Once these tip jars become full, Starbucks requires that they be emptied into a bag, which is then placed in the store safe. Each week, tips are tallied and then distributed in cash to baristas and shift supervisors in proportion to the number of hours each employee worked. Starbucks's company-wide policy requires tips to be distributed among baristas and shift supervisors and precludes store managers and ASMs from receiving payments from the tip pool.
Barenboim filed this putative class action on April 3, 2008, principally alleging that Starbucks violated various provisions of New York Labor Law by allowing shift supervisors to participate in tip pools. See N.Y. Lab. Law §§ 193, 196-d & 198-b. Barenboim also alleged that Starbucks illegally failed to distribute tips to barista trainees who served customers during their training periods.
On December 16, 2009, the district court awarded summary judgment to Starbucks and denied plaintiffs' motions for summary judgment and class certification. It concluded that shift supervisors are not Starbucks agents because their limited supervisory responsibilities "do not carry the broad managerial authority or power to control employees that courts have held to be sufficient to render an employee an 'employer or [employer's] agent' within the meaning of Section 196-d." In re Starbucks Emp. Gratuity Litig., 264 F.R.D. at 72 (alteration in original).
The parties stipulated to dismissal of plaintiffs' remaining claim concerning Starbucks's distribution of tips to barista trainees, and the district court endorsed that stipulation on October 8, 2010 without entering a separate judgment. Plaintiffs timely appealed on December 2, 2010. See Fed. R. App. P. 4(a)(7)(A)(ii) (permitting party 150 days to appeal from entry of final order if no separate judgment is entered as otherwise required under Fed. R. Civ. P. 58(a)).
B. Winans v. Starbucks Corp., No. 11-3199-cv
Plaintiffs Eugene Winans, Michael Bienthcs, Reynolds Mangones, Matthew Taber, and Kristen Tomaino (collectively, "Winans") are former Starbucks ASMs. In contrast to baristas and shift supervisors, ASMs are full-time employees who receive a salary when they work at least 37 hours per week and are paid an hourly wage when they work less than 37 hours. Nevertheless, ASMs are "non-exempt" under the Fair Labor Standards Act ("FLSA") and, thus, Starbucks pays them overtime, just as it does baristas and shift supervisors. Winans adduced evidence showing that the majority of ASMs' time is spent serving customers and that ASMs wear the same uniform as baristas and shift supervisors, rendering these three groups of workers indistinguishable from each other in dealings with customers.
ASMs, however, are also responsible for managerial tasks, although the parties contest the degree to which ASMs act as managers. Winans emphasizes that ASMs have no final authority over management decisions. Rather, ASMs assist the store manager by conducting preliminary interviews of job applicants, advising about employee work performance and promotions, recommending termination of employees, disciplining employees at the store manager's direction, and preparing work schedules and payrolls for the store manager's approval. Winans also points out that, in Starbucks's internal job descriptions, ASMs are listed as retail store support, while only store managers are considered management, and that the principal requirement for the ASM position is the "[a]bility to act with a 'customer comes first' attitude and deliver customer service that meets or exceeds customer expectations." Winans J.A. 1554.
In response, Starbucks stresses that ASMs' principal function is to manage the store and its employees by participating in managerial decisionmaking with the store manager and serving as the store manager's deputy. Starbucks identifies its ASMs as the company's "bench" of future store managers; their assistance to store managers is intended to teach them the skills necessary to manage a Starbucks store in the future. Id. at 601. Thus, Starbucks maintains that, although they may lack final authority over management decisions, ASMs are integral to store management insofar ...