United States District Court, D. South Carolina, Charleston Division
LOGAN CARBONE and LAURA STANGER, individually and on behalf of others similarly situated, Plaintiffs,
ZEN 333 INC., d/b/a ZEN ASIAN FUSION, CHEN ZHOU, a/k/a CINDY ALFREDSON, RONG A. ZHOU, and MEI ZHENG, Defendants.
C. NORTON UNITED STATES DISTRICT JUDGE
following matters are before the court on plaintiffs Logan
Carbone (“Carbone”) and Laura Stanger's
(“Stangler, ” together with Carbone,
“plaintiffs”) motion for conditional class
certification, ECF No. 23, and defendants Zen 333 Inc., d/b/a
Zen Asian Fusion, Chen Zhou, a/k/a Cindy Alfredson, Rong A.
Zhou, and Mei Zheng's (“defendants”) motion
to dismiss, ECF No. 32. For the reasons set forth below, the
court grants in part and denies in part defendants'
motion to dismiss, and grants plaintiffs' motion for
conditional class certification.
were employed by defendant Zen 333 Inc., which operates an
Asian cuisine restaurant known as Zen Asian Fusion in
Charleston, South Carolina (the “Restaurant”).
ECF No. 26, Second Am. Compl. ¶ 19. Carbone worked as a
server and bartender at the Restaurant from July 2014 to
February 2016. Id. ¶¶ 23, 27. Stangler
worked primarily as a server at the Restaurant from January
2014 to February 2016. Id. ¶¶ 24, 28.
Defendants Chen Zhou a/k/a Cindy Alfredson
(“Chen”), Rhon Zhou (“Rhon”), and Mei
Zheng (“Mei”) were each owners and managers of
the Restaurant, and each had control over finances and
operations of the restaurant, including the power to hire,
fire, manage, and set compensation for employees.
Id. ¶¶ 20-22.
and other similarly situated servers and bartenders were
compensated pursuant to an employment agreement whereby
defendants paid $40.00 plus tips for all shifts worked as
bartenders, and $2.25 an hour for all hours worked plus tips
for shifts worked as servers. Id. ¶ 25. In
order to meet the statutory minimum wage requirement of the
Fair Labor Standards Act 29 U.S.C. § 201, et
seq. (“FLSA”), defendants applied a
“tip credit” equal to the difference in the
FLSA's statutory minimum wage of $7.25 per hour and the
hourly compensation plaintiffs received directly from
defendants. Id. ¶¶ 29-31.
plaintiffs and other similarly situated employees were not
entitled to take their tips directly from customers. Instead,
bartenders and servers were required to contribute their tips
to a mandatory “tip pool, ” pursuant to which:
(1) servers were required to contribute an undisclosed
amount, which was calculated by defendants, to the busboys;
(2) servers were required to contribute 4.5% of their gross
food and alcohol sales directly to “the house, ”
i.e. defendants; (3) servers were required to contribute 3.5%
of their alcohol sales to the bartenders; and (4) bartenders
were required to contribute an undisclosed percentage of
their alcohol sales to “the house.” Id.
¶ 36. Defendants never informed plaintiffs and other
similarly situated employees of the amount of tip pool
contributions they would be required to make. Id.
¶ 35. Defendants first deducted each employee's
mandatory tip pool contributions from the employee's cash
tips. Id. ¶ 37. If an employee's cash tips
did not cover the amount they owed to the tip pool,
defendants would take the difference from the employee's
credit card tips. Id. Employee tip pool
contributions were then deposited into a general operating
account, which was used to pay hourly wages to non-tipped
employees. Id. ¶ 38.
enforced this tip pool arrangement by withholding all tips
until the end of each week, when defendants issued each
employee a handwritten check containing their cash and credit
card tips minus the tip pool deductions. Id. ¶
52. Notably, the amounts plaintiffs and other similarly
situated employees actually received in their weekly checks
were often less than that amount defendants reported on the
employees' bi-weekly pay stubs and W-2 tax forms.
Id. ¶¶ 55-57. As a result of this
over-reporting, plaintiffs allege that they were required to
pay taxes on tips they never received. Id. ¶
filed the instant action on January 12, 2016. ECF No. 1. On
July 13, 2016, plaintiffs filed a motion for conditional
class certification. ECF No. 23. On July 15, 2016, plaintiffs
filed a second amended complaint, bringing individual and
class claims for violation of the FLSA's minimum wage and
unpaid overtime provisions, unpaid wages under the South
Carolina Payment of Wages Act, SC Code § 41-10-10,
et. seq. (“SCPWA”), and violations of
Internal Revenue Code (“IRC”) 29 U.S.C. §
7434, as well as an individual claim for retaliation under
the FLSA. Second Am. Compl. ¶¶ 70-117. On August 1,
2016, defendants filed a motion to dismiss plaintiffs'
SCPWA and IRC claims. ECF No. 32. Defendants responded to the
motion for conditional certification on August 19, 2016, ECF
No. 35, and plaintiffs responded to the motion to dismiss on
August 26, 2016. ECF No. 37. Defendants filed a reply in
support of the motion to dismiss on September 6, 2016, ECF
No. 39, and plaintiffs filed a reply in support of their
motion for conditional certification on September 15, 2016.
ECF No. 40. The matters are now ripe for the court's
Motion to Dismiss
Federal Rule of Civil Procedure 12(b)(6), a party may move to
dismiss for “failure to state a claim upon which relief
can be granted.” When considering a Rule 12(b)(6)
motion to dismiss, the court must “accept all
well-pleaded allegations in the plaintiff's complaint as
true and draw all reasonable factual inferences from those
facts in the plaintiff's favor.” Edwards v.
City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
But “the tenet that a court must accept as true all of
the allegations contained in a complaint is inapplicable to
legal conclusions.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009).
motion to dismiss, the court's task is limited to
determining whether the complaint states a “plausible
claim for relief.” Id. at 679. A complaint
must contain sufficient factual allegations in addition to
legal conclusions. Although Rule 8(a)(2) requires only a
“short and plain statement of the claim showing that
the pleader is entitled to relief, ” “a formulaic
recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). The “complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.'”
Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 570). “Facts pled that are ‘merely
consistent with' liability are not sufficient.”
A Soc'y Without a Name v. Virginia, 655 F.3d
342, 346 (4th Cir. 2011) (quoting Iqbal, 556 U.S. at
Motion for Conditional Certification
§ 216(b) of the FLSA, plaintiffs may institute a
collective action against their employer on behalf of
themselves and other similarly situated employees. The
collective action procedures of § 216(b) require
similarly situated employees to give their consent before
joining a collective action. Id. “In order to
expedite the manner in which collective actions under the
FLSA are assembled, ‘district courts have discretion[,
] in appropriate cases[, ] to implement . . . § 216(b) .
. . by facilitating notice to potential
plaintiffs.'” Purdham v. Fairfax Cnty. Pub.
Sch., 629 F.Supp.2d 544, 547 (E.D. Va. 2009) (quoting
Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165,
169 (1989)). To obtain the benefits of this court-approved
notice procedure, plaintiffs must demonstrate that the
proposed class members are “similarly situated”
and that notice is “appropriate.” Id. at
548. Notice is “appropriate” where the proposed
class members' claims “share common underlying
facts and do not require substantial individualized
determinations for each class member.” Id.;
MacGregor v. Farmers Ins. Exch., No. 2:10-cv-03088,
2012 WL 2974679, at *2 (D.S.C. July 20, 2012). Ordinarily,
the plaintiff's burden at the conditional certification
stage is fairly lenient, requiring only a modest factual
showing that members of the proposed class are “victims
of a common policy or plan that violated the law.”
Purdham, 629 F.Supp.2d at 547-48; Regan v. City
of Charleston, S.C., No. 2:13-cv-3046, 2014 WL 3530135,
at *2 (D.S.C. July 16, 2014) reconsideration denied,
40 F.Supp.3d 698 (D.S.C. 2014); Essame v. SSC Laurel
Operating Co. LLC, 847 F.Supp.2d 821, 824-25 (D. Md.
motion for conditional certification arises under § 216
of the FLSA and necessarily pertains only to plaintiffs'
minimum wage and overtime claims. Meanwhile, defendants'
motion to dismiss only relates to plaintiffs' SCPWA and
IRC claims. Thus, the two motions do not overlap. The court
begins by addressing the motion to dismiss and then turns to
the motion for conditional certification.
Motion to Dismiss
allege that defendants unlawfully withheld wages owed to
plaintiffs and other similarly situated employees by forcing
them to contribute to the mandatory tip pool. Second Am.
Compl. ¶¶ 78-97. Defendants argue that the SCPWA
claim must fail because: (1) tips are not considered
“wages” under the SCPWA; (2) the SCPWA claim is
dependent on finding a violation of the FLSA and therefore
preempted; and (3) plaintiffs failed to plead sufficient
facts to meet the “plausibility” standard under
Twombly and Iqbal. Defs.' Mot. 8-20.
to S.C. Code § 41-10-40(C),
An employer shall not withhold or divert any portion of an
employee's wages unless the employer is required or
permitted to do so by state or federal law or the employer
has given written notification to the employee ...