JULIE A. ROBINSON, District Judge.
Plaintiff brings this putative collective action under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b), against Defendant West Side Restaurant, LLC ("West Side") and Tayssir Issa, doing business as IHOP, located at 515 S. Ridge Road, in Wichita, Kansas, claiming violations of the FLSA's minimum wage and overtime pay requirements. Specifically, Plaintiff alleges that she was not informed of the restaurant's tip credit, and that its tip pool policy is invalid under the FLSA. This matter is before the Court on the following motions: Defendants' Motion for Summary Judgment (Doc. 44); Plaintiff's Motion to Strike Reply (Doc. 57); Plaintiff's Motion for Conditional Certification (Doc. 31); and Defendants' Motion to Strike Consent (Doc. 42). For the reasons explained below, Plaintiff's motion to strike the summary judgment reply is denied and Defendant's motion for summary judgment is denied. Proceeding to the conditional certification motion, the Court grants Plaintiff's motion to conditionally certify the class defined in her motion, and denies Defendants' motion to strike Alycia Geraci's consent to opt-in.
Because this case seeks to conditionally certify a collective action under § 216(b) of the FLSA, it was placed on a dual-phase discovery track. Phase 1 of discovery was completed on November 15, 2013, and was to include issues relating to the named plaintiff, and issues involved in the conditional certification of a putative class, including but not limited to whether Plaintiff is similarly situated to other servers during the statutory period, and policies, practices, and procedures applicable to servers.
Upon completing Phase 1 of discovery, Plaintiff filed her motion for conditional certification of a class composed of:
Defendant responded to the motion for conditional certification and filed a motion for summary judgment, arguing there is no genuine issue of material fact that the named Plaintiff, Ms. Porter, was compensated and provided notice in compliance with the FLSA's tip pooling requirements.
In her summary judgment response, Plaintiff argued that Defendants violated the FLSA by requiring their servers to pay a portion of their tips to expediters who did not customarily and regularly receive tips, and by failing to notify its servers of certain information required for the employer to take a tip credit against the servers' minimum wages. On summary judgment, Plaintiff relied on the deposition testimony of West Side's Rule 30(b)(6) deponent, Tayssir Issa ("Tayssir"), particularly in support of her contention that the servers were not notified that their pay would be at least $7.25 per hour. In their summary judgment reply, Defendants rely on several submissions in an effort to clarify statements Tayssir made in that deposition: (1) an errata sheet Tayssir Issa completed after receiving a copy of the deposition transcript; (2) declarations by Tayssir Issa completed in preparation for summary judgment; and (3) the declaration of Ali Issa, Defendant's brother, who is also the Director of Operations of the Ridge Road IHOP. Plaintiff asks the Court to strike Defendant's reply because these three submissions are invalid attempts to modify testimony that is material to the summary judgment motion in this matter. Because this motion to strike affects the submissions that are properly before the Court in considering Defendant's summary judgment motion, it will take up this motion before proceeding to the summary judgment motion.
As set forth above, Plaintiff moves to strike Defendants' reply to her response to the motion for summary judgment on the basis that it inappropriately modifies West Side's 30(b)(6) deponent's testimony. Under Fed. R. Civ. P. 12(f), the Court may strike from a pleading an insufficient defense, or "any redundant, immaterial, impertinent, or scandalous matter." However, motions to strike are generally disfavored because striking an entire pleading is a drastic remedy and such a motion is often brought as a dilatory tactic.
Plaintiff argues in her motion to strike that the entire reply brief should be stricken because it relies on submissions that invalidly change Tayssir's deposition testimony. The Court declines to strike the entire reply brief on this basis. Instead, the Court construes this motion as a motion to strike the evidence submitted by Defendants that arguably contradicts the deposition testimony at issue.
Defendants admit that Tayssir was mistakenly designated by his counsel as a Rule 30(b)(6) witness. He was deposed on August 2, 2013. He signed and attached an errata sheet to the transcript of that deposition on September 11, 2013. This errata sheet is not limited to typographical errors; it makes several substantive changes to the testimony.
West Side designated Tayssir as its Rule 30(b)(6) deponent, to testify on its behalf. Under the rule, this designated deponent "must testify about information known or reasonably available to the organization."
Plaintiff argues that West Side should be bound by Tayssir's testimony at the deposition. Defendants argue that Tayssir's 30(b)(6) testimony is not binding because they immediately attempted to inform Plaintiff's counsel of the corrections to his testimony through the errata sheet and by offering the declarations of Ali and Ben Nichols. As such, they argue they cannot be accused of ambushing their opponents at trial. Regardless of the time it took to correct Tayssir's deposition answers, it is clear that he did not provide complete and knowledgeable answers on behalf of the corporation. West Side admittedly designated the wrong corporate representative and then failed to prepare that deponent as required by Rule 30(b)(6). The Court finds this case presents exactly what the rule seeks to avoid— "bandying" by the various agents of a corporation who each disclaim knowledge of facts that are clearly known to persons in the organization and thereby to the corporation. The problem here is arguably worse because Tayssir did not respond to the questions he now seeks to clarify by disclaiming knowledge of those facts. Instead, he affirmatively responded to those questions and then explained his answers after the fact.
But even if Defendant is bound by virtue of Rule 30(b)(6) to Tayssir's deposition testimony, the Court must consider whether his subsequent attempts to explain or modify the 30(b)(6) testimony are permissible. Under Fed. R. Civ. P. 30(e), a deponent is allowed to review and make changes to a deposition transcript, "in form or substance," and may sign a statement listing those changes and the reasons for making them. "Rule 30(e) permits any changes to deposition testimony, except those material changes that fail the Burns test."
During Tayssir's deposition, Plaintiff's counsel asked a series of questions to determine (1) the scope of the IHOP expediter's duties; and (2) whether IHOP explained the tip credit or tip pool to its servers. The Court has no difficulty in finding that both areas of testimony are material. As described throughout this order, key issues to be decided on the pending summary judgment and conditional certification motions include whether Plaintiff can maintain an individual or collective action against IHOP, based on her allegations that expediters should not have been included in the tip pool because they lack the requisite customer interaction, and her allegation that the servers were not informed about the tip credit. Tayssir's testimony is material to both issues. Yet, the record does not make clear that the errata sheet and declarations actually change this testimony.
With respect to server and expediter duties, Plaintiff relies on Tayssir's deposition testimony to support her argument that the expediter remains at the "back of the house" near the kitchen and does not interact with the customers. Plaintiff's counsel asked Tayssir to review the IHOP employee manual, and confirm that the main job of the expediter is to "be at the pass bar, which is in the back of the house." Tayssir responded: "Right."
Next, Plaintiff relies on Tayssir's deposition testimony to argue that Defendants admit that they did not inform their servers of the tip credit requirements. During the sequence of questions at his deposition about whether the servers are notified of the tip credit, Plaintiff's counsel asked Tayssir questions about the employee handbook and about Exhibit 8, which was a form that the LLC currently uses, but did not prior to the time the case was filed, that the server fills out acknowledging that she was informed of the "tip out." The parties took a break, and apparently Tayssir called the IHOP restaurant and spoke to "the manager."
Defendant attempts to clarify this testimony in his second declaration.
Plaintiff submits only the specific page of testimony quoted above, and not the immediately preceding pages. According to Defendants, Tayssir was not answering questions about whether the restaurant informed its servers about their tip compensation at all, but whether the Exhibit 8 form was used to document this notice. He therefore took a break and contacted one of the IHOP managers. Tayssir's clarification in his declaration is a reasonable explanation for his testimony given the limited excerpt provided to the Court on this motion. Certainly, at trial, Plaintiff could attempt to impeach Tayssir's testimony that the servers were provided with notice of the tip credit requirements, but a reasonable jury could believe that he was referring in his deposition to the restaurant's neglect in documenting notice, rather than its neglect in providing any notice at all. The Court does not weigh credibility on summary judgment. As such, the Court does not view Tayssir's errata sheet or subsequent declaration as creating a sham fact issue. To the extent Plaintiff seeks to have this evidence stricken, her motion is denied.
In sum, Defendants' attempts to explain Tayssir's deposition testimony do not rise to the level of a change or correction that would subject them to Burns scrutiny, thus they are permissible under Rule 30(e). Even if it they are considered material corrections, the Court finds that the deposition transcript provided reflects confusion to which the deponent tries to explain.
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to judgment as a matter of law."
The moving party initially must show the absence of a genuine issue of material fact and entitlement to judgment as a matter of law.
Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial."
Where the moving defendant also bears the burden of proof, "[t]he defendant . . . must demonstrate that no disputed material fact exists regarding the affirmative defense asserted."
Finally, summary judgment is not a "disfavored procedural shortcut"; on the contrary, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action."
The following facts are uncontroverted or viewed in the light most favorable to Plaintiff as the nonmoving party. The Court does not consider arguments presented in the parties' statements of fact.
One of the restaurants owned by West Side Restaurant, LLC is the International House of Pancakes ("IHOP") located on Ridge Road in Wichita, Kansas. Tayssir Issa is the sole member of the LLC. Plaintiff worked as a server for this IHOP from June 12, 2012 to March 7, 2013. Prior to her tenure at IHOP, Plaintiff worked at other restaurants and was a manager for two years at a Taco Bueno.
During her first week working at IHOP, Plaintiff was trained as a server. The duties of a server our outlined in the IHOP 101Server Station booklet.
Customers of IHOP order their food from a menu that depicts the menu items in color. One day of the servers' three-day training is dedicated to expediting, which entails garnishing the plates of food from the kitchen at the pass bar to match closely the appearance of the food in the menu. Servers perform this function during the majority of shifts at IHOP, but 20-25% of the time, IHOP assigns a single server to be an expediter for that shift. These shifts occur during peak hours, usually on the weekends, when the restaurant is crowded and customers are waiting to be seated. This allows the servers on duty to deliver food to the diners more quickly. During these shifts, the expediter wears the same uniform as the servers who are waiting on the diners' tables.
Servers' compensation, including those who spend an entire shift expediting, is based on an hourly rate of $2.13 plus tips left by customers. The restaurant displays a Wage and Hour poster at the restaurant, informing employees of the federal minimum wage requirements. All servers at IHOP receive more than $30.00 per month in tips. IHOP uses a tip pool for its servers and expediters, including those servers who spend an entire shift as an expediter. Defendants' managers calculate the amount of money that servers must pay over to expediters on a predetermined formula; the managers then take that money from the servers and turn it over to the expediters.
The minimum wage provision of the FLSA requires that covered employees generally must receive wages of at least $7.25 per hour.
Defendants bear the burden of proving that they are entitled to take the tip credit.
In this case, Plaintiff claims that she was not informed by IHOP of the tip credit requirement, and that IHOP's tip pool is invalid. Defendant moves for summary judgment, arguing that there is no genuine issue of material fact about whether Plaintiff was provided with the requisite information about IHOP's tip credit and that IHOP's tip pool is lawful under the FLSA. In its response to the motion, Plaintiff moves for summary judgment on the basis that IHOP admitted it did not provide notice to its servers as required by the statute.
In order to be eligible to take a tip credit, "the employer must first notify the employees of the requirements of the law regarding minimum wages and of the employer's intention to take the tip credit."
The Court agrees with Plaintiff that her application and previous experience in the restaurant business is insufficient to establish the FLSA's notice requirements:
Defendants must show something more than Plaintiff's past work experience in the resauarant industry, and that she expected $2.13 per hour plus tips on her job application.
It is undisputed that the restaurant displayed the Department of Labor's required minimum wage poster for its employees. Plaintiff argues that this notice is insufficient on its own to constitute notice, citing a Department of Labor opinion letter,
Plaintiff argues that Tayssir admitted during his deposition that IHOP did not provide notice of the tip credit to its servers. As explained in denying Plaintiff's motion to strike, the Court does not consider Tayssir's deposition answers on this point to constitute an unequivocal admission that IHOP did not provide its servers with notice of the tip credit. Tayssir contends that these statements were in response to questions about a form that would document the employees' receipt of notice of the tip credit and tip pool. Again, given the slim record provided to the Court on summary judgment, the Court declines to find that these answers constitute admissions as urged by Plaintiff. Moreover, Plaintiff's deposition testimony is contradicted by other evidence in the record, namely Alex Abou-Hadba's declaration, in which he states that he recalls informing Plaintiff that she would receive $7.25 per hour during her training and that at least that much would be earned by adding her tips to the $2.13 hourly rate authorized for tipped employees. Information conveyed through a co-worker is sufficient notice under the statute.
Defendant argues that the Court must enter summary judgment that the IHOP tip pool was valid under the FLSA, citing cases that find expediters are validly included in a restaurant's tip pool. Plaintiff makes clear in her brief that she does not challenge tip pooling for servers who expedite their own orders at IHOP. Instead, she challenges the tip pool only for those shifts where the server engages in the occupation of expediter for the entire shift. The statute explains that it should not be construed to "prohibit the pooling of tips among employees who customarily and regularly receive tips." Defendants contend that because the expediter occupation is performed exclusively by servers, they "customarily and regularly receive tips."
The parties agree that the Department of Labor's regulation on dual jobs applies here:
It is undisputed that Plaintiff and all other IHOP servers earn more than $30 per month in tips. However, if Plaintiff is dually employed as an expediter and that occupation is not a tipped occupation, no tip credit should be taken for her hours spent on expediter shifts and she should be paid the minimum wage for those hours. Again, the Court is mindful that Plaintiff only challenges the tip pool with respect to those employees who are normally servers, but who work occasional full shifts as expediters. There is no issue here about the time that servers spend during their server shifts garnishing plates or otherwise performing expediter duties. Whether the expediter duties at Defendants' IHOP restaurant are tip-producing is the issue in this case.
First, the Court rejects Defendant's argument that there is a "precedent" in the caselaw that the expediter position at restaurants is a tipped occupation. All of the cases referenced by the parties on summary judgment contain fact-specific inquiries about this occupation and whether the particular job duties for each are tip producing. This case is no different.
The case law suggests that direct customer interaction is a relevant factor in determining whether an employee "regularly and customarily receives tips" and therefore can participate in a mandatory tip pool.
There is a genuine issue of material fact in this case about the degree of customer interaction the expediter job entailed. Defendants submit evidence that the expediters delivered food to the diners' tables, a task that clearly involves customer interaction. Conversely, Plaintiff points to evidence that the expediter remained at the pass bar, which divided the kitchen from the dining room of the restaurant. The parties dispute whether the pass bar is considered to be in the front of the house or the back of the house, and they dispute whether the expediter remains at the pass bar through her shift. A reasonable jury could believe Plaintiff's evidence that the expediter remains at the passbar and only delivers food, at best has de minimis customer interaction. Accordingly, summary judgment is denied on this issue.
An action under the FLSA may be brought "against any employer . . . by any one or more employees for and in behalf of himself or themselves and other employees similarly situated."
Before notice is sent to putative plaintiffs to inform them of the pending action, it must be conditionally certified as a collective action. The court may certify an opt-in collective action so long as the aggrieved employees are similarly situated.
After discovery is complete, defendants may file a motion to decertify, and the court then applies a stricter standard to assure that plaintiffs are actually similarly situated.
Plaintiff's motion is before the Court at the notice stage of review. The parties have not yet completed discovery.
The Court finds that Plaintiff has substantially alleged the existence of a single policy that applied to all servers employed by the Wichita IHOP on Ridge Road. Plaintiff alleges that Defendants had a policy of taking a tip credit with respect to all hours worked by servers, even when they worked full shifts as expediters. Plaintiff alleges that the expediters did not have any customer interaction and thus, were engaged in a non-tipped occupation. Plaintiff alleges that the servers were not provided with sufficient notice under the FLSA and the Department of Labor regulations about the tip credit. Plaintiff has submitted declarations by Plaintiff and Geraci that they were subject to the same tip pooling and notice policy. The Court finds these to be sufficient under the binding authority of this circuit.
The Court also finds that Defendants' motion to strike Alycia Garaci's Declaration must be denied. The motion to strike challenges whether Geraci is similarly situated to Plaintiff because there is evidence that Geraci signed a form acknowledging that she was given notice of Defendant's tip sharing policy. But the Court does not resolve factual disputes at this stage of the collective action proceeding, or rule on the merits of Plaintiff's claims. Under the lenient standard that applies to Plaintiff's motion for conditional certification, the Court only looks to whether there are substantial allegations in the Complaint and supporting affidavits that the putative class members were together the victims of a single decision, policy or plan. Geraci asserts in her declaration that Defendants did not disclose to her, or to her knowledge any other server, the items required by 29 C.F.R. § 531.59. She also states that she was a server during the proposed time period who was subject to the tip pool policy. These are sufficient substantial allegations of a common policy.
Defendants' challenges to conditional certification are largely premature. And as discussed in the summary judgment ruling, there are genuine issues of material fact that exist on Plaintiff's FLSA claims at this early stage of the litigation. To the extent Defendants wish to raise factual challenges to whether the putative plaintiffs are similarly situated, they are appropriately raised at the stricter second-stage of the conditional certification process. Plaintiff's allegations, supported by the declarations, meet the low threshold for sending notice to other putative plaintiffs.
The Court therefore grants Plaintiff's motion to conditionally certify a collective action for: all Servers and other persons with similar job duties and compensation structures, employed by Defendant West Side Restaurant, LLC, at the IHOP located at 515 S. Ridge Cir. Wichita, KS, 67209, within three years from the date of certification, to the present, who were not paid all minimum wages and overtime due and owing.
The Court grants Plaintiff's request to toll the limitations period from the date of the filing of Plaintiffs' Motion for Conditional Class Certification until the close of the opt-in period
The benefits of a collective action "depend on employees receiving accurate and timely notice concerning the pendency of the collective action, so that they can make informed decisions about whether to participate."
In preparation for the distribution of notice to putative plaintiffs, Defendants are directed to provide Plaintiff's counsel with a list of all present and former employees within the designated classes, with last known addresses and telephone numbers, by the date specified below. The Court denies Plaintiff's request for dates of birth and partial social security numbers.
The Court also grants Plaintiff's proposed distribution of the notice by mail and by posting at the subject IHOP. These are both reasonable methods to achieve the goal of reaching all affected employees.
Plaintiff Carolyn Porter is designated as the class representative and Plaintiffs' counsel shall act as class counsel in this matter.
