In re Starbucks Employee Gratuity Litigation
In re STARBUCKS EMPLOYEE GRATUITY LITIGATION
Attorneys
D. MaimĂłn Kirschenbaum, Esq., Joseph & Herzfeld LLP, New York, NY, Shannon Liss-Riordan, Esq., Lichten & Liss-Riordan, P.C., Boston, MA, for Plaintiffs., Samidh Jalem Guha, Esq., Daniel L. Nash, Esq., Nathan J. Oleson, Esq., Akin Gump Strauss Hauer & Feld, LLP, New York, NY, for Defendants.
Full Opinion (html_with_citations)
Opinion and Order
Plaintiffs Jeana Barenboim (âBarenboimâ) and Jose Ortiz (âOrtizâ) (collectively, âPlaintiffsâ), formerly employed as Baristas in stores operated by Starbucks Corporation (âStarbucksâ or âDefendantâ), bring this putative statewide class action asserting various claims against Starbucks for alleged violations of several provisions of the New York Labor Law (âN.Y. Labor Lawâ). Plaintiffsâ first claim arises out of Starbucksâ policy of distributing tips to store Shift Supervisors, who Plaintiffs assert are agents of the employer and thus may not lawfully be included in the distribution of tips pursuant to Section 196-d of the N.Y. Labor Law. Plaintiffs additionally assert that Starbucksâ tip distribution policy constitutes an illegal âkick-backâ of wages and an unlawful deduction of wages in violation of Sections 198-b and 193, respectively, of the N.Y. Labor Law. Plaintiffs also assert a âtraining claim,â premised on the allegation that Starbucks unlawfully denied tips to Baristas for customer service performed during their two-week training
Plaintiffs have moved for class certification and the parties have cross-moved for summary judgment pursuant to Rules 23 and 56 of the Federal Rules of Civil Procedure. The Court has considered thoroughly the partiesâ submissions. For the following reasons, Defendantâs motion for summary judgment as a matter of law is granted in its entirety and every claim asserted by Plaintiffs, with the exception of plaintiff Baren-boimâs individual âtraining claimâ (as to which Defendant concedes there is a genuine issue of material fact and has not moved for summary judgment), is hereby dismissed. Plaintiffsâ motion for class certification of the âtraining claimâ is denied. The Court will not address Plaintiffsâ class certification motion with respect to the other claims in light of the Courtâs ruling on Defendantâs summary judgment motion.
Background
The following material facts are undisputed unless otherwise indicated.
Baristas are entry-level, part-time hourly employees primarily responsible for customer service-related tasks such as working the cash register, making coffee drinks, and â[a]nticipat[ing] customer and store needs by constantly evaluating the environment and customers for cues.â (Id. at ¶¶ 9-11.) Each Barista must complete a two-week training program at the beginning of her employment, learning how to perform the various tasks associated with that position. (Id. at ¶ 12.) During the training period, new Bar-istas must complete four to five hours of technology training, which teaches Baristas how to use the storeâs cash register. New Baristas must also work three or four âpractice shifts,â during which time the Baristas work âon the floorâ serving customers, taking drink orders, preparing drinks, processing customer payments, cleaning the store, and reading and performing assignments in a workbook. (Id. at ¶¶ 14-16.) At the end of the two-week training period, Baristas must take a practical exam to become âcertified,â demonstrating their skills and knowledge of the tasks associated with their position. (Id. at ¶ 17.)
Shift Supervisors, like Baristas, are part-time hourly employees, who are non-exempt from applicable labor laws governing overtime pay. (Id. at ¶¶ 22, 29; Def. 56.1 St. ¶ 10.) Shift Supervisors spend a majority of their time performing the same duties as Baristas, but are also responsible for some additional tasks, including supervising and coordinating partners within the store, opening and elos-
Store Managers are exempt, full-time salaried employees and have the authority to recruit, hire, promote, transfer, schedule, discipline, and terminate Baristas and Shift Supervisors. (Id. at ¶ 51; Def. 56.1 St. ¶¶ 5-6.) Store Managers are responsible for leading a team of store partners and are responsible for the operations of the store to which they are assigned. (Def. Response ¶ 54.) In some stores, a Store Manager is supported by an Assistant Store Manager, who is a full-time salaried employee. (Id. at ¶¶ 50, 53.) Although Store Managers and Assistant Store Managers may perform the same customer-service related duties performed by Baristas and Shift Supervisors on an as-needed basis, their primary duties are related to managing the store. (Id. at ¶ 56.) Approximately 70% of Assistant Store Managers are promoted internally from the ranks of Shift Supervisors. (Id. at ¶ 45.) Approximately 60-70% of Store Managers are promoted internally from the ranks of Assistant Store Managers. (Id. at ¶ 46.)
Starbucks requires that every store have a Shift Supervisor, Assistant Store Manager or Store Manager on the premises at all times. (Id. at ¶ 30.) In the absence of an Assistant Store Manager or Store Manager, a Shift Supervisor is authorized to open the safe, transfer money from the safe to the cash registers, and take the daily deposit to the bank. (Id. at ¶¶ 32, 34.) Shift Supervisors also collect deposit slips and place them in the storeâs safe and bring deposit slips to and from the bank. (Id. at ¶ 34.) Shift Supervisors, as well as Assistant Store Managers and Store Managers, are authorized to open and close the store: they possess keys to the store and are able to disarm the storeâs alarm system. (Id. at ¶ 35.) A written Starbucks policy provides that all partners work as a team to create and maintain the âStarbucks Experienceâ for customers and partners, and thus customers are served by a customer service âteamâ rather than by individual employees. (Id. at ¶¶ 9, 53-54.)
Tip Distribution Practices
Starbucks has a highly detailed written policy governing the collection, storage and distribution of tips. (Def. Response ¶ 62.) The policy requires that each store place a small plexiglass cube container near the cash register (the âcollective tip boxâ). (Id.) When the collective tip box becomes full, its contents are emptied into a bag labeled âtipsâ that is placed in the storeâs safe, (Id.) Once a week, a Shift Supervisor or Barista calculates the weekly total of accumulated tips and then consults a report of the total hours worked during the week to determine the ratable tip distribution to each tip-eligible partner. (Id. at ¶¶ 66-67.) Shift Supervisors and Baristas are tip-eligible partners whereas Assistant Store Managers and Store Managers are not. (Id. at ¶¶ 64-65.) For the purposes of tip distribution, only qualifying hours (explained below) are included in a
Training and Tip-Eligible Hours
During a Baristaâs two-week training period at the beginning of her employment, hours worked are recorded either as âtrainingâ hours or âcoverage/baristaâ hours. âTrainingâ includes the hours spent reading training materials and policy manuals, completing written and computer-based training modules, attending off-site workshops, and practicing tasks with more experienced partners (âlearning coachesâ). (Id. at ¶ 78.) These hours are not tip-eligible, or âqualifying,â hours. (Id.) However, when Baristas work âpractice shiftsâ during their training period, in which they perform customer service related duties such as preparing beverages and processing payments at the cash register, that time is recorded as âcoverage/baristaâ and does qualify as tip-eligible. (Id.) Plaintiff Ortiz has not proffered any evidence that he engaged in any customer service-related work during his two-week training as a Barista for which he did not receive a distribution of tips. (Def. 56.1 St. ¶¶ 15-16.) Plaintiffs do, however, proffer evidence that plaintiff Barenboim may have engaged in customer service-related work during her two-week training as a Barista but did not receive any distribution of tips during that time.
Discussion
The Partiesâ Cross-Motions for Summary Judgment
In their cross-motions, the parties seek summary judgment with respect to Plaintiffsâ claims that Defendantâs collective tip distribution policy violates Sections 196 â d, 198-b, and 193 of the New York Labor Law by reason of the inclusion of Shift Supervisors in the tip-eligible group and the pooling and distribution of tips on a weekly basis. Defendant also seeks summary judgment dismissing Plaintiff Ortizâs claim that he was denied tips during his training period. Summary judgment is to be granted in favor of a moving party where âthe 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.â Fed.R.Civ.P. 56(c). The moving party bears the burden of establishing that there is no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is considered material to summary judgment âif it âmight affect the outcome of the suit under the governing law,â â and an issue of fact is a genuine one where âthe evidence is such that a reasonable jury could return a verdict for the nonmoving party.â Holtz v. Rockefeller & Co. Inc., 258 F.3d 62, 69 (2d Cir.2001) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). The Second Circuit has explained, however, that â[t]he party against whom summary judgment is sought ... âmust 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.ââ Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir.2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 89 L.Ed.2d 538 (1986)).
When cross-motions for summary judgment are filed, âthe standard is the same as that for individual motions for summary judgment.â Natural Res. Def. Council v. Evans, 254 F.Supp.2d 434, 438 (S.D.N.Y. 2003). âThe court must consider each mo
Plaintiffsâ N.Y. Labor Law § 196-d Tip-Sharing Claim
New York Labor Law Section 196-d prohibits any âemployer or his agentâ from âdemanding] or accepting], directly or indirectly, any part of the gratuities, received by an employee, or retaining] any part of a gratuity or of any charge purported to be a gratuity for an employee.â N.Y. Lab. Law § 196-d (McKinney 2002); see Chung v. New Silver Palace Rest., Inc., 246 F.Supp.2d 220, 230 (S.D.N.Y.2002) (holding that Section 196â d âclearly prohibits part-owner employees who wield ... broad managerial authorityâ from retaining tips). The drafters of Section 196-d âsought to end the unfair and deceptive practice of an employer retaining money paid by a patron under the impression that he is giving it to the employee, not to the employer.â Samiento v. World Yacht Inc., 10 N.Y.3d 70, 78 n. 4, 854 N.Y.S.2d 83, 883 N.E.2d 990 (N.Y.2008) (internal quotation marks omitted). The New York Labor Law defines an âagentâ of a corporation as someone including, but not limited to, âa manager, superintendent, foreman, supervisor or any other person employed acting in such capacity.â N.Y. Lab. Law § 2(8-a) (McKinney 2009).
Plaintiffs contend that Shift Supervisors are âagentsâ of Starbucks and thus prohibited from sharing in tips because they were able to supervise and coordinate Baristas, open and close the store, deposit money into the safe, and oversee the store in the absence of a Store Manager or Assistant Store Manager. These responsibilities, however, do not carry the broad managerial authority or power to control employees that courts have held to be sufficient to render an employee an âemployer or [employerâs] agentâ within the meaning of Section 196-d. In Ayres v. 127 Restaurant Corp., the court held that an employee became an âemployer or his agentâ when he gained âfull authorityâ to suspend or terminate employees, assumed greater responsibility for the restaurantâs budget, and received a guaranteed salary, whereas a âsenior floor captain with more limited supervisory responsibilitiesâ would not be an agent for the purposes of Section 196-d. Ayres v. 127 Restaurant Corp., 12 F.Supp.2d 305, 308 (S.D.N.Y.1998). Similarly, in Chan v. Sung Yue Tung Corp., the court held that a restaurant employeeâs authority to manage the distribution of tips to other employees and the flexibility he was afforded in his work schedule did not suffice to qualify him as an agent for the purposes of Section 196-d because the employee did not enjoy operational control or managerial authority and could not hire or fire other employees. Chan v. Sung Yue Tung Corp., No. 03 Civ. 6048, 2007 WL 313483, at * 2-3, 13-14 (S.D.N.Y. Feb. 1, 2007); see also Chan v. Triple 8 Palace, Inc., No. 03 Civ. 6048, 2006 WL 851749, at *16-17 (S.D.N.Y. Mar. 30, 2006) (concluding that plaintiffs failed to demonstrate that certain restaurant employees â who carried business cards and represented to customers they were managers, addressed customer complaints, supervised waiters and busboys, made menus, set shifts for other employees, made hiring recommendations, and documented and calculated tip sharing â were either employers or agents because the proffered evidence failed to demonstrate that they âpossessed the power to controlâ plaintiffs). From this case law emerges the proposition that persons without the capacity to hire, fire or discipline other employees, even restaurant staff characterized as senior floor captains and accorded supervisory responsibilities, are not agents for the purposes of Section 196-d, presumably because persons without authority over hiring, firing and other incidents of the employment relationship are not exercising powers relevant to the creation or maintenance of the employment relationship. It is undisputed that Shift Supervisors spend a majority of their working hours performing the same tasks as Baristas. Shift Supervisorsâ additional responsibilities do not constitute exercise of authority over the creation, terms or conditions of the employment relationship with Starbucks. Accordingly, the Court concludes that no rational jury could conclude on this record that
Plaintiffs fail to cite any authority to support the contrary proposition that the limited supervisory authority possessed by Shift Supervisors is sufficient to render them agents under Section 196-d. Rather, Plaintiffs rely on a California state trial court decision in which a class of Baristas who had asserted claims against Starbucks nearly identical to the instant claims prevailed on their contention that Shift Supervisors were Starbucksâ agents and that it therefore was unlawful under California law for them to share with Baristas in the collective tips. See Chau v. Starbucks Corp., 174 Cal.App.4th 688, 94 Cal. Rptr.3d 593 (Cal.Ct.App.2009). The Chau decision relied on by Plaintiffs, however, was reversed unanimously on appeal and therefore does not provide viable support for Plaintiffsâ claims here. Chau v. Starbucks Corp., 174 Cal.App.4th 688, 94 Cal.Rptr.3d 593 (Cal.Ct.App.2009).
Plaintiffs also make various arguments regarding the final sentence of Section 196-d, which provides that â[n]othing in this subdivision shall be construed as affecting ... the sharing of tips by a waiter with a busboy or similar employee.â N.Y. Lab. Law § 196-d (McKinney 2002). Plaintiffs argue that the phrase âsimilar employeeâ modifies âbusboyâ rather than âwaiterâ and therefore only allows waiters (and, by analogy, Baristas) to share tips with employees âwho are lower down the food and beverage hierarchy.â (Pl.âs Opp. at 3.) The argument is unavailing because the plain language of the statute makes clear that this sentence merely limits the scope of the first sentence of Section 196-d, without independently proscribing any activity. In light of the Courtâs conclusion that Defendant has not violated the first sentence of the statute, the Court need not consider further the partiesâ arguments regarding the statuteâs final sentence.
Plaintiffsâ Claims under N.Y. Labor Law Sections 198 and 198-b
Plaintiffs assert that Defendantâs policy of distributing tips earned by Baristas to Shift Supervisors constitutes an illegal kickback and an illegal deduction of wages, in violation of New York Labor Law Sections 193 and 198-b, respectively. Section 193 prohibits employers from making any deductions from wages, except as required by law or regulation, or authorized by the employee for the employeeâs benefit.
Plaintiffs similarly have failed to proffer any evidence that Defendantâs policy constituted an illegal âkick-backâ of wages within the meaning of Section 198-b, such that engaging in the tip distribution policy would be a condition of obtaining or retaining employment as a Barista with Starbucks, which is a necessary element of a claim asserted under this provision.
Plaintiffsâ Class Certification Motion and the Training Claim
Plaintiffs âtraining claimâ is premised on the allegation that Defendant unlawfully denied tips to Baristas for customer service performed during their two-week training period. As explained above, Plaintiffs have failed to proffer any evidence that Ortiz performed customer service work during his training period for which he did not receive his share of tips and, accordingly, Defendantâs motion for summary judgment on Ortizâs training claim is granted. Defendant concedes, however, that there is a genuine issue of material fact with respect to plaintiff Barenboimâs training claim.
Plaintiffs seek to certify a class, pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3), consisting of all current and former Baristas employed by Defendant in New York State within the six-year limitations period who were denied tips for customer service work performed during their training period. The party seeking class certification bears the burden of showing that: (1) the class is so numerous that joinder of all members is impracticable (ânumerosityâ); (2) there are questions of law or fact common to the class (âcommonalityâ); (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class (âtypicalityâ); and (4) the representative parties will fairly and adequately protect the interests of the class (âadequacyâ). Fed. R.Civ.P. 23(a). The party seeking class certification must also show that the proposed class action meets the criteria of one of the three categories of class actions permissible under Rule 23(b). Plaintiffs seek certification pursuant to Rule 23(b)(3), asserting that questions of law or fact common to members of the class predominate and a class action is superior to other available methods for adjudication. Fed.R.Civ.P. 23(b).
âRule 23 is given a liberal rather than restrictive construction and courts are to adopt a standard of flexibility.â Marisol v. Giuliani, 126 F.3d 372, 377 (2d Cir.1997). However, a district court must only grant class certification âafter a rigorous analysis.â Gen. Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982). After a careful consideration of the partiesâ submissions, the Court concludes that Plaintiffs fail to meet the numerosity, commonality, and typicality requirements of Rule 23(a).
To satisfy the numerosity requirement, the plaintiffs must show that âthe class is so numerous that joinder of all members is impracticable.â Fed.R.Civ.P. 23(a). Numerosity can be presumed at a level of forty members. Consolidated Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir.1995). However, â[c]ourts have not required evidence of exact class size or identity of class members to satisfy the numerosity requirement.â Robidoux v. Celani, 987 F.2d 931, 935 (2d Cir.1993) (certifying a class estimated to include between 22 and 133 members). District courts must make factual findings as to the approximate size of the class based on the partiesâ evidentiary proffers. In re Initial Public Offering Securities Litig., 471 F.3d 24, 40 (2d Cir.2006).
Plaintiffsâ training claim is premised on their allegation that Baristas were denied tips during their training period. However, it is undisputed that Defendant had a lawful policy of distributing tips to Baristas in training when they performed customer-service related duties, while not distributing tips to Baristas for training hours in which they did not perform customer service. Plaintiffs argue that this policy may not have been consistently implemented at all of Defendantâs New York stores during the putative Class Period, and that some Baristas may therefore have been denied tips to which they
Plaintiffsâ class certification motion with respect to the training claim fails on commonality and typicality grounds as well. The commonality and typicality criteria for class certification âtend to merge ... [because] [b]oth serve as guideposts for determining whether ... the named plaintiffs claim and the class claims are so inter-related that the interests of the class members will be fairly and adequately protected in their absence.â Gen. Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, 157 n. 13, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982). Commonality requires the party seeking class certification to show that âthere are questions of law or fact common to the class.â Fed. R.Civ.P. 23(a)(2). Typicality requires that the claims of the party seeking certification are âtypical of the claims ... of the class.â Fed.R.Civ.P. 23(a)(3). The typicality requirement âis satisfied when each class memberâs claim arises from the same course of events and each class member makes similar legal arguments to prove the defendantâs liability,â and is âusually met irrespective of minor variations in the fact patterns underlying individual claims.â Robidoux, 987 F.2d at 936.
Here, Plaintiffs have failed to meet their burden of demonstrating the requisite commonality and typicality of their training claim. The evidence proffered does not support a claim that any Barista other than plaintiff Barenboim was denied tips for customer service work engaged in during the training period. Thus, Plaintiffs fail to establish that individual factual questions as to whether Baristas did not receive tips during training, despite Defendantâs lawful policy to distribute tips for customer service work, would not predominate over common legal and factual questions among the class. Plaintiffs similarly fail to demonstrate that plaintiff Barenboimâs claim would be typical of the claims of the putative class.
Plaintiffsâ Class Certification Motion With Respect To Their Other Claims
The Court need not address Plaintiffsâ class certification motion with respect to their other claims. Federal Rule of Civil Procedure 23 provides that a district court must rule on the issue of class certification â[a]t an early practicable time after a person sues or is sued as a class representative ...â Fed.R.Civ.P. 23(c)(1). This provision affords district courts with flexibility when presented with both a dispositive motion and a motion for class certification. See Project Release v. Prevost, 722 F.2d 960, 963 (2d Cir.1983); Wright v. Schock, 742 F.2d 541, 543-44 (9th Cir.1984). A court should consider whether an initial ruling on the merits of a claim would protect the parties from needless and costly further litigation and whether such a ruling would prejudice any of the parties. Wright, 742 F.2d at 544. A district court may reserve decision on a class certification motion pending disposition of a motion to dismiss, Benfield v. Mocatta Metals Corp., No. 91 Civ. 8255, 1993 WL 148978, at *2 (S.D.N.Y. May 5, 1993) (citing Christensen v. Kiewit-Murdock Investment Corp., 815 F.2d 206, 214 (2d. Cir.1987)), or pending disposition of a motion for summary judgment, Encarnacion v. Astrue, 491 F.Supp.2d 453, 459 (S.D.N.Y.2007), aff'd, 568 F.3d 72 (2d Cir. 2009). Having determined that Defendant is entitled to summary judgment dismissing all of Plaintiffsâ claims other than the training claim, the Court will forego determination of the class certification motion with respect to those claims.
Defendantâs summary judgment motion is granted in its entirety. Plaintiffsâ cross-motion for summary judgment is denied in its entirety. Accordingly, all of Plaintiffsâ claims are dismissed, other than plaintiff Baren-boimâs individual training claim. Plaintiffsâ motion for class certification is denied in its entirety. The parties must promptly contact Magistrate Judge Francisâ chambers to schedule a settlement conference. If the parties fail to settle their dispute, they must appear for a Final Pre-Trial Conference on Friday, March 12, 2010, at 3:00 p.m. The parties must confer and make submissions in advance of the Final Pre-Trial Conference as required by the previously entered Pre-Trial Scheduling Order (docket entry no. 26). This Opinion and Order resolves docket entry nos. 41, 56 and 62.
SO ORDERED.
. Although Plaintiffs do not specifically articulate the legal authority for this claim, the Court construes the claim as arising under Section 196-d of the N.Y. Labor Law.
. Citations to the partiesâ respective S.D.N.Y. Local Civil Rule 56.1 statements ("_56.1 St.") incorporate by reference citations to the underlying evidentiary submissions. Each party submitted a 56.1 Statement with its motion for summary judgment. Defendant also submitted a responsive 56.1 Statement ("Def. Responseâ) with its submission in opposition to Plaintiffsâ motion.
. "Deploymentâ refers to the supervision of partnersâ placement in a store during a particular shift, such as designating some partners to work at the cash register, while designating others to make drinks for customers. (Id. at ¶ 27.)
. "Coachingâ refers to how partners provide feedback to other partners on their task performance. (Id. at ¶ 28.)
. It is undisputed that Starbucks does not require the contribution of tips, if any, given directly to individual employees. (Def. Response ¶ 75.) It is also undisputed that neither Barenboim nor Ortiz ever received a tip directly from any customer they served. (Def. 56.1 St. ¶ 17.)
. Defendant concedes that plaintiff Barenboim has framed a genuine issue of material fact with respect to this claim.
. "1. No employer shall make any deduction from the wages of an employee, except deductions which: a. are made in accordance with the provisions of any law or any rule or regulation issued by any governmental agency; or b. are expressly authorized in writing by the employee and are for the benefit of the employee ... 2. No employer shall make any charge against wages, or require an employee to make any payment by separate transaction unless such charge or payment is permitted as a deduction from wages under the provisions of subdivision one of this section.â N.Y. Lab. Law § 193 (McKinney 2009).
. "Whenever any employee who is engaged to perform labor shall be promised an agreed rate of wages for his or her services ... it shall be unlawful for any person, either for that person or any other person, to request, demand, or receive ... a return, donation or contribution of any part of all of said employee's wages ... upon the statement, representation, or understanding that failure to comply with such request or demand
. In light of the Courtâs conclusion that Plaintiffs have failed to satisfy the requirements of Rule 23(a), the Court need not consider whether Plaintiffs have satisfied the requirements of Rule 23(b).