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Hicks v. T.L. Cannon Corp.

United States District Court, W.D. New York

August 5, 2014

ASHLEY HICKS, et al., Plaintiffs,
v.
T.L. CANNON CORP., et al., Defendants

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For Ashley Hicks, Kristin Raymond, Plaintiffs: J. Nelson Thomas, Justin M. Cordello, Michael J. Lingle, LEAD ATTORNEYS, Thomas & Solomon LLP, Rochester, NY; Jared K. Cook, Thomas, Solomon Law Firm, Rochester, NY.

For T. L. Cannon Management Corp., TLC West, LLC, TLC Central LLC, TLC Utica, LLC, TLC North, LLC, Matthew J. Fairbairn, Individually and as Owner and President of T.L. Cannon Corp. and as Director and Chief Executive Officer of T.L. Cannon Management Corp., John A. Perry, Individually and as Vice-President and Director of Operations of T.L. Cannon Corp. and as President of T.L. Cannon Management Corp., T.L. Cannon Corp., David A. Stein, Individually and as Owner and Chairman of T.L. Cannon Corp. and as Director and Chariman of T.L. Cannon Management Corp., Defendants: Craig R. Benson, Elena Paraskevas-Thadani, LEAD ATTORNEYS, Littler Mendelson, P.C., New York, NY; Erin W. Smith, LEAD ATTORNEY, Littler Mendelson, P.C., Rochester, NY.

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DECISION AND ORDER

ELIZABETH A. WOLFORD, United States District Judge.

INTRODUCTION

Plaintiffs bring this action alleging violations of the New York Minimum Wage Act, New York Labor Law (" NYLL" ) § § 650 et seq., and violations of the Fair Labor Standards Act (" FLSA" ), 29 U.S.C. § § 201 et seq., for Defendants' alleged failure to pay minimum wages to Plaintiffs. (Dkt. 82). The case centers on the compensation that must be paid to tipped employees in the food service industry, and the conditions under which an employer may take a credit for the tips paid to those employees. Currently before the Court are Plaintiffs' motion for partial summary judgment (Dkt. 144), Defendants' cross-motion for partial summary judgment (Dkt. 176), and Plaintiffs' motion for class certification pursuant to Fed.R.Civ.P. 23 (Dkt. 143). For the following reasons, Plaintiffs' motion for partial summary judgment is granted in part and denied in part, Defendants' cross-motion for partial summary judgment is denied, and Plaintiffs' motion for class certification is granted.

FACTUAL BACKGROUND

Defendants are responsible for the operation of Applebee's restaurants in Connecticut and New York. Defendant TLC West, LLC employs the store managers and servers for New York restaurants in Buffalo, Rochester, Syracuse, and the Finger Lakes. (Dkt. 146-2 at 16:12-13). Defendant TLC Central, LLC employs the store managers and servers for New York restaurants in the Hudson Valley, the Mohawk Valley, Albany, and the Southern Tier. ( Id. at 16:14-15). Defendant TLC Utica, LLC employs the store managers and servers for the Utica, New York, restaurant. ( Id. at 15:22-25). Defendant TLC North, LLC has no employees. ( Id. at 16:16-22). These business entities, along with Defendants T.L. Cannon Corp. and T.L. Cannon Management Corp., will be collectively referred to as " T.L. Cannon."

Defendant Matthew J. Fairbaim is the owner of T.L. Cannon, Defendant John A. Perry is President of T.L. Cannon, and Defendant David A. Stein is a partner in T.L. Cannon. ( Id. at 23:10-14, 28:22-25).

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Named Plaintiff Ashley Hicks was employed by Defendant TLC West, LLC at an Applebee's restaurant in Henrietta, New York, from December 20, 2005, through August 24, 2007, and in Irondequoit, New York, from June 23, 2008, through December 19, 2010. (Dkt. 176-6 at ¶ 2). Named Plaintiff Kristin Raymond was employed by Defendant TLC West, LLC at the Applebee's restaurant in Gates, New York, from February 25, 2002, to December 11, 2011. ( Id. at ¶ 3). Barbara Kubiak, Raegan Johnson, Barbara Soluri, Lilian Mullen, Heidi Prentice, Amber Dewey, and Shanice Ford (collectively the " Moving Opt-In Plaintiffs" ) have consented to become party plaintiffs to this litigation. (Dkt. 18, 19, 20, 23). The record does not contain information regarding the Moving Opt-In Plaintiffs' dates or locations of employment.

During the course of their employment with Defendants, Ms. Hicks and Ms. Raymond were, when working in tipped occupations, paid the lower cash wage applicable to food service workers pursuant to NYLL § 652(4). (Dkt. 176-7, 176-8). The NYLL regulations in effect prior to January 1, 2011, permitted an employer to take a tip credit and pay a lower hourly rate than the minimum wage if certain requirements were met, including furnishing the employee a pay statement with each payment of wages that showed, among other things, the " allowances, if any, claimed as part of the minimum wage. . . ." 12 N.Y.C.R.R. § 137-2.2 (repealed).

Ms. Hicks and Ms. Raymond received pay statements that did not expressly set forth a category listing the amount of any allowance claimed for tips as part of the minimum wage, but did list:

o Employer name and address;
o Employee name and address;
o Pay period;
o Regular rate for each position worked;
o Overtime rate for each position worked;
o Hours worked at each rate of pay;
o Tips earned;
o Spread of hours pay;
o Tip makeup pay;
o Deductions;
o Withholdings;
o Gross earnings; and
o Net earnings.

(Dkt. 176-6 at ¶ 7).

On December 15, 2010, the New York State Department of Labor (the Department of Labor ) issued a consolidated Wage Order for the Hospitality Industry (" the Wage Order" ) (12 N.Y.C.R.R. Part 146) that became effective on January 1, 2011. The Wage Order requires employers to provide certain written notices to employees upon hire and prior to any change in the employee's hourly rate of pay. 12 N.Y.C.R.R. § 146-2.2. Among other things, the notice must set forth " the amount of tip credit, if any, to be taken from the basic minimum hourly rate" and it must " also state that extra pay is required if tips are insufficient to bring the employee up to the basic minimum hourly rate." Id. On January 1, 2011, Ms. Raymond's hourly rate of pay for tipped occupations was raised to $5.00 per hour from $4.65 per hour. (Dkt. 176-8 at 25; Dkt. 176-10 at 13). On that same day, Ms. Raymond received a " Pay Rate Notice" that listed her position, rate of pay, rate of overtime pay, and regular pay day, but did not state that her employer intended to take a tip credit, the amount of the tip credit, or that she was entitled to makeup pay if she did not earn enough in tips. (Dkt. 176-10 at 13).

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For purposes of Plaintiffs' motions for partial summary judgment and class certification, the parties have entered into certain stipulations. (Dkt. 176-5).[1] In particular, the parties have stipulated that from September 24, 2006, to the present: Plaintiffs understood that they were being paid the tipped minimum wage for hours that they worked in tipped occupations and had actual knowledge that Defendants were taking tip credits from the minimum wage; Defendants had a policy to provide their employees with verbal notice at orientation that Defendants would take a tip credit and that Defendants had a policy to pay its tipped employees extra pay if their tips were insufficient to bring the employee up to the basic minimum hourly rate for the week; Plaintiffs were not confused by Defendants' wage notices and pay stubs nor did they fail to understand the amounts they were being paid; in the instances where Plaintiffs did not earn enough in tips to bring their pay to the minimum wage, Defendants made up the difference in accordance with their tip makeup pay policy; and, when combining the tipped minimum wage that they received, the tips that they earned, and any tip makeup pay provided, Plaintiffs never earned less than minimum wage. (Dkt. 176-5 at 3-4).

PROCEDURAL HISTORY

Plaintiffs filed their complaint on September 14, 2012. (Dkt. 1). Plaintiffs bring their FLSA claim as a collective action under Section 16(b) of the FLSA. ( Id.). With leave of Court, Plaintiffs filed an amended complaint on April 10, 2013, and an answer to the amended complaint was filed on May 24, 2013. (Dkt. 82, 90).

Defendants filed a motion to change venue on October 9, 2012, which Plaintiffs opposed. (Dkt. 24, 50, 51). On June 4, 2013, United States District Judge Michael A. Telesca granted Defendants' motion to change venue (Dkt. 93), and the case was transferred to the Northern District of New York. (Dkt. 94). On June 18, 2013, Plaintiffs filed a motion seeking to have the action transferred back to the Western District of New York (Dkt. 95), and on August 23, 2013, Plaintiffs' motion was granted and the case was transferred back to this District. (Dkt. 117).

Plaintiffs filed a motion for approval of the collective action on October 18, 2013, and Defendants filed a cross-motion for approval of their proposed collective action notice on November 15, 2013. (Dkt. 128, 134). On December 10, 2013, the Court entered an order instructing the parties to confer and submit a jointly-approved proposed notice of collective action. (Dkt. 139). The Court granted the final proposed notice of collective action on December 20, 2013. (Dkt. 141).

On January 27, 2014, Plaintiffs filed the instant motion for partial summary judgment as to the Named Plaintiffs Ashley Hicks and Kristin Raymond, and the Moving Opt-In Plaintiffs. (Dkt. 144). In support of their motion for partial summary judgment, Plaintiffs contend that Defendants violated the minimum wage provisions of the NYLL by improperly taking a tip credit against their wages without following the regulatory requirements associated

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with the allowable use of such a tip credit. ( Id.). Plaintiffs make two arguments in support of their position. First, they argue that Defendants did not comply with the regulatory requirements related to information that must be provided on a pay stub where the employer takes a tip credit. Second, they argue that after January 1, 2011, Defendants failed to comply with the provisions of the Wage Order requiring them to provide written notice to employees before taking a tip credit. Defendants cross-moved for partial summary judgment on March 14, 2014, arguing that they complied in all respects with the NYLL and its associated regulations. (Dkt. 176). Plaintiffs filed a response to Defendants' motion on April 3, 2014, and Defendants filed a reply on April 17, 2014. (Dkt. 191, 197). Plaintiffs also filed a motion to certify the class on January 27, 2014. (Dkt. 143). Defendants filed a response to the class certification motion on March 13, 2014, and Plaintiffs filed a reply on April 3, 2014. (Dkt. 177, 192). Oral argument on the instant motions was held on May 13, 2014. (Dkt. 201).

As set forth below, Plaintiffs' motion for partial summary judgment is granted in part and denied in part. Specifically, Plaintiffs' motion is granted as to Ms. Raymond's claim that Defendant TLC West, LLC failed to comply with the Wage Order effective January 1, 2011. Plaintiffs' motion for partial summary judgment is denied in all other respects. Furthermore, Defendants' cross-motion for partial summary judgment is denied, and Plaintiffs' motion to certify the class pursuant to Fed.R.Civ.P. 23 is granted.

DISCUSSION

I. The Motions for Partial Summary Judgment

A. Legal Standard

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment should be granted if the moving party establishes " that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The Court should grant summary judgment if, after considering the evidence in the light most favorable to the nonmoving party, the court finds that no rational jury could find in favor of that party. Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). Once the moving party has met its burden, the opposing party " 'must do more than simply show that there is some metaphysical doubt as to the material facts. . . . [T]he nonmoving party must come forward with specific facts showing that there is a genuine issue for trial.'" Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002) (quoting Matsushita Elec., 475 U.S. at 586-87) (emphasis in original). " [T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. . . ." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis in original).

B. Status of the FLSA Opt-In Plaintiffs

As a threshold matter, the Court must consider whether the Moving Opt-In Plaintiffs have standing to seek summary judgment as to the New York state law claims. Defendants maintain that the Moving Opt-In Plaintiffs are not parties to the state law claims set forth in the amended complaint. (Dkt. 178 at 16). In support of this argument, Defendants contend that there is no mechanism by which

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FLSA opt-in plaintiffs may join state law claims and that the consents signed by the Moving Opt-In Plaintiffs only reference the FLSA claims. (Dkt. 197 at 7). The consents state, in relevant part, as follows:

I consent to become a " party plaintiff," named, or a representative plaintiff in any Fair Labor Standards Act action of unpaid wages, including overtime wages and/or tip credit violations, and related relief against my employer(s), including T.L. Cannon Corp. d/b/a Applebee's. . . .
I wish to preserve and pursue any claim that I may have to the greatest extent possible. Therefore, I expressly consent to the use of this consent form for purposes of making me a party plaintiff in any lawsuit and/or lawsuits that plaintiffs' attorneys have brought and/or may bring on behalf of myself and other employees alleged to be similarly situated.

(Dkt. 18, 19, 20,23).

Plaintiffs counter that the express terms of the FLSA provide that when a party opts in to a litigation, she becomes a " party plaintiff' to the " action" (29 U.S.C. § 216(b)) and that this necessarily means that she is a plaintiff as to all claims. As such, Plaintiffs argue, the Moving Opt-In Plaintiffs are free to seek relief on the NYLL claims as well as the FLSA claims.

Defendants cite two cases standing for the proposition that Ms. Hicks and Ms. Raymond cannot file a summary judgment motion 6n behalf of the class before the class is certified. (Dkt. 178 at 16). These cases are not on point as Plaintiffs are not seeking summary judgment on behalf of the class.

Plaintiffs cite three cases that they claim demonstrate that the Moving Opt-In Plaintiffs should be considered plaintiffs with respect to the NYLL claims. In Prickett v. Dekalb County, 349 F.3d 1294 (11th Cir. 2003), relied on by Plaintiffs, the court considered whether opt-in plaintiffs had to submit additional consent forms when additional FLSA claims were added to the complaint. The court held that they did not, explaining:

We are bound by the intent of Congress, as expressed in the language of the statute. The statute says, " [n]o employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party. . . ." 29 U.S.C. § 216(b) (emphasis added). That plain language indicates that plaintiffs do not opt-in or consent to join an action as to specific claims, but as to the action as a whole. The statute does not indicate that opt-in plaintiffs have a lesser status than named plaintiffs insofar as additional claims are concerned. To the contrary, by referring to them as " party plaintiff[s]" Congress indicated that opt-in plaintiffs should have the same status in relation to the claims of the lawsuit as do the named plaintiffs.

349 F.3d at 1297.[2] The Prickett court also relied on the language of the consent forms themselves, holding that " the language of the consent forms that the opt-in plaintiffs signed in this case indicates that they consented to have the named plaintiffs adjudicate all of their claims for overtime compensation under FLSA, not merely the claims then specified in the complaint." Id.

In a later case, the Eleventh Circuit Court of Appeals explained that " the lesson from Prickett is that we must interpret consent forms according to the plain meaning

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of their language." Albritton v. Cagle's, Inc., 508 F.3d 1012, 1018 (11th Cir. 2007). In Albritton, plaintiffs argued that they were entitled to commence a second FLSA action on behalf of plaintiffs who had opted in to an earlier action. The court rejected this argument because the consent forms at issue " used narrow language in describing the litigation that they authorized." Id.

Plaintiffs also cite Fengler v. Crouse Health System, Inc., 634 F.Supp.2d 257 (N.D.N.Y. 2009). In Fengler, there were two FLSA claims -- first, that employees were required to work through meal breaks, and second, that employees were required to work overtime without compensation. Id. at 259. On plaintiffs' motion for certification as a collective action, the magistrate judge limited opt-in plaintiffs' claims to " those for time worked during unpaid meal breaks." Id. at 262. On review, the district judge held that this was clear error because " [the] statutory language [of the FLSA] indicates that once a potential plaintiff opts in, that person is a party to the action, not just to a claim." Id. (emphasis in original). Fengler, like Prickett, involved only FLSA claims.

Finally, Plaintiffs cite Ansoumana v. Gristede's Operating Corp., 201 F.R.D. 81 (S.D.N.Y. 2001). There, plaintiffs brought both FLSA and NYLL claims; there were approximately 350 opt-in plaintiffs. Id. at 83. Plaintiffs filed a motion to certify their state law claims as a class action. In deciding this motion, the court considered whether it should exercise supplemental jurisdiction over the state law claims, and concluded that it should. With respect to the opt-in plaintiffs, the court held:

The same considerations of sound jurisdictional efficiency and economy should apply to the delivery workers who filed consents to be party-plaintiffs to the FLSA claims. Section 216(b) gives them the status of parties and, as parties, they should have the same rights as the named Plaintiffs to have all their related claims adjudicated in the same forum. Plaintiffs properly chose a federal forum to vindicate their federal rights to be paid a minimum wage and overtime premium pay. Their suit will not be undermined or compromised by including their related claims under New York's Minimum Wage Act.

Id. at 90. Ansoumana is nearly on point -- it involved both FLSA and state law claims, and the court held that it had supplemental jurisdiction over the opt-in plaintiffs' state law claims in the same way it had supplemental jurisdiction over the named plaintiffs' state law claims. The Ansoumana court did not directly address whether the consent forms in that case covered the state law claims.

The Court has found only one case arguably supporting Defendants' position. In Bradford v. CVS Pharmacy, Inc., No. 1:12-CV-1159-TWT, 2013 WL 5587350 (N.D.Ga. Oct. 10, 2013), the court expressly considered " whether a collective action can ever encompass non-FLSA claims" and concluded that the collective action could not include a declaratory judgment claim and that therefore " the opt-in plaintiffs that allegedly signed separation agreements cannot confer standing for the declaratory judgment claim because they opted in to a collective action that only encompassed the unpaid overtime FLSA claim." Id. at *3. The court distinguished Prickett on the grounds that it involved only FLSA claims. Id. The Bradford case has not been cited by any other court on this point, nor did it cite any case for the proposition that a non-FLSA claim may not proceed in tandem with an FLSA claim. Moreover, in direct opposition to Bradford, the Sixth Circuit Court of Appeals held that a court may certify supplemental

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state law claims to proceed as part of a collective action pursuant to the FLSA because " supplemental claims by definition are treated as part of the same controversy animated by a particular employee's FLSA claim." O'Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 580 (6th Cir. 2009). The supplemental claims in O'Brien involved Ohio's Prompt Pay Act. Id. at 577.

Based on the foregoing, Defendants' argument that there is no mechanism for FLSA opt-in plaintiffs to join in state law claims is misplaced. Indeed, the United States District Court for the Southern District of New York in Ansoumana expressly permitted the opt-in plaintiffs to join the state law claims because " they should have the same rights as the named Plaintiffs to have all their related claims adjudicated in the same forum." 201 F.R.D. at 90 Therefore, the issue is not whether the Moving Opt-in Plaintiffs may pursue both FLSA and NYLL claims in the same action, but rather whether in this case they have consented to pursuing state law claims. The consents signed by the Moving Opt-in Plaintiffs expressly state that they consent to be a plaintiff in " any Fair Labor Standards Act action of unpaid wages. . ." (Dkt. 18, 19, 20, and 23). The consents do not expressly reference an agreement to pursue claims under the NYLL. However, the consents state that the Moving Opt-in Plaintiffs " wish to preserve and pursue any claim that I may have to the greatest extent possible" and that they " expressly consent to the use of this consent form for purposes of making me a party plaintiff in any lawsuit and/or lawsuits that plaintiffs' attorneys have brought and/or may bring on behalf of myself and other employees alleged to be similarly situated." ( Id.). This is broad language that would seem to encompass the state law claims brought in this lawsuit. As such, the Court finds that the Moving Opt-in Plaintiffs may seek redress in this lawsuit as to the NYLL claims.

Nonetheless, at this stage of the proceedings, the Court cannot grant relief to the Moving Opt-in Plaintiffs because there is a fundamental flaw with their partial summary judgment motion. In their moving papers, Plaintiffs do not provide any specific records or documents related to the Moving Opt-in Plaintiffs. Instead, they provide records for individuals identified as Employees 1 through 9. ( See Dkt. 146-1 at ¶ ¶ 5-21). These employees are never identified by name and it is not even clear that they are the Moving Opt-in Plaintiffs. The Court simply cannot determine whether Defendants violated the NYLL as to the Moving Opt-in Plaintiffs when the record does not contain ...


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