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Hart v. Barbeque Integrated, Inc.

United States District Court, D. South Carolina, Charleston Division

October 25, 2017

Jennifer Hart, on behalf of herself and all others similarly situated, Plaintiff,
v.
Barbeque Integrated, Inc. d/b/a Smokey Bones, Defendant.

          ORDER

          PATRICK MICHAEL DUFFY UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Defendant's motion to dismiss (ECF No. 30) and Plaintiff's motion for conditional certification (ECF No. 33). For the reasons set forth herein, Defendant's motion to dismiss is denied and Plaintiff's motion for conditional certification is granted.

         BACKGROUND

         On January 24, 2017, Plaintiff commenced this action on behalf of herself and all others similarly situated, seeking unpaid minimum wages pursuant to the Fair Labor Standards Act (“FLSA”) and the South Carolina Payment of Wages Act (“SCPWA”). Plaintiff and the putative class seek recovery from Defendant, who owns and operates sixty-seven restaurants nationwide known as Smokey Bones.

         Plaintiff primarily alleges that Defendant, while taking advantage of the FLSA's tip credit provision, required her and the putative class members to perform non-tipped side work that was not related to their tipped occupations as servers and bartenders, as well as requiring that Plaintiff and the putative class members spend more than twenty percent of their shifts performing non-tipped side work that was related to their tipped occupations. Additionally, Plaintiff alleges that she and the putative class members were required to pay Defendant out of their tips when a customer walked out, were required to purchase additional Smokey Bones t-shirts with their tips, and were never notified that Smokey Bones was paying them less than minimum wage pursuant to the FLSA's tip-credit provision. Plaintiff alleges that all three of those requirements violate the tip-credit provision. See 29 U.S.C. § 203(m).

         PROCEDURAL HISTORY

         Defendant filed its motion to dismiss on May 31, 2017. Plaintiff responded on June 14, and Defendant replied on August 31. Plaintiff filed her motion for conditional certification on June 2. Defendant responded on June 30, and Plaintiff replied on July 7. Accordingly, these matters are now ripe for consideration.

         Defendant's Motion to Dismiss

         Defendant moves to dismiss count one of Plaintiff's complaint on the grounds that Plaintiff has failed to allege that she earned less than minimum wage during a particular workweek, that the twenty-percent rule does not support a cause of action, and that Plaintiff's allegations do not violate the FLSA's dual-jobs regulation. The Court will address each argument in turn.

         LEGAL STANDARD

         A motion to dismiss pursuant Rule 12(b)(6) for failure to state a claim upon which relief can be granted “challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009) (citations omitted); see also Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) . . . does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.”). To be legally sufficient, a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).

         In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the Supreme Court articulated a “two-pronged approach” to test the sufficiency of a complaint. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). First, the complaint must “contain factual allegations in addition to legal conclusions.” Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278, 288 (4th Cir. 2012). Under Rule 8's pleading standard, “a formulaic recitation of the elements of a cause of action will not do, ” id. (quoting Twombly, 550 U.S. at 555) (internal quotation marks omitted), and “‘naked assertion[s]' devoid of ‘further factual enhancement'” will not suffice, Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). Second, the complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). More specifically, the complaint must demonstrate that the plaintiff's right to relief is more than a mere possibility, but it need not rise to the level of evincing a probability of success. Id. Accordingly, “[d]etermining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.

         When ruling on a Rule 12(b)(6) motion to dismiss, the trial judge must accept as true all of the facts alleged in the plaintiff's complaint and construe all reasonable inferences in favor of the plaintiff. E.g., E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011). The court must determine whether the allegations give rise to a plausible right to relief, Iqbal, 556 U.S. at 679; however, it should “not accept ‘legal conclusions couched as facts or unwarranted inferences, unreasonable conclusions, or arguments, '” United States ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 455 (4th Cir. 2013) (quoting Wag More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir. 2012)); see also Iqbal, 556 U.S. at 678 (“[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”). Thus, although the court must accept a plaintiff's well-pleaded factual allegations as true for purposes of ruling on the motion, the complaint must nevertheless satisfy the “two-pronged” test articulated by the Supreme Court. Iqbal, 556 U.S. at 679.

         ANALYSIS

         Defendant first argues that Plaintiff's failure to allege that she earned less than minimum wage in any particular workweek is fatal to count one of her complaint. Citing this Court's decision in Schmidt v. Charleston Collision Holdings, LLC, Defendant argues that so long as Plaintiff's average wage per hour worked during the workweek is above minimum wage, there is no violation of the FLSA. No. 2:14-cv-1094-PMD, 2014 WL 10102245, at *3 (D.S.C. July 14, 2014).[1] Utilizing the FLSA's tip credit provision, § 203(m), Defendant paid Plaintiff a direct wage of $2.13 an hour and then applied Plaintiff's tips to cover the gap between the $2.13 direct wage and the $7.25 federal minimum wage. According to Defendant, so long as Plaintiff's average wage per hour, including her tips, was above minimum wage over the course of the workweek, then Defendant could not have violated the FLSA. Defendant's argument derives from the Second Circuit's decision in United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487 (2d Cir. 1961), where that court held that an employer had not violated the FLSA because their average hourly wage over the course of a workweek exceeded minimum wage. Id. at 490. Thus, Defendant asserts that count one should be dismissed.

         Plaintiff disagrees, relying primarily on Romero v. Top-Tier Colorado LLC, 849 F.3d 1281 (10th Cir. 2017). In Romero, the Tenth Circuit addressed this question and concluded that “an employer doesn't comply with its federal minimum wage obligations just because its employees receive at least $7.25 in tips. Instead, an employer complies with its minimum-wage obligations if it ‘pays' its employees at least $7.25 an hour in ‘wages.'” Id. at 1282. “[W]hile an employer can treat tips as wages under certain circumstances, ” id., Plaintiff claims that Defendant impermissibly did so here. In other words, Plaintiff claims that when she was performing non-tipped side work, she did not qualify as a tipped employee under § 203(m) of the FLSA and was entitled to be paid the full minimum wage of $7.25 an hour for the hours she spent performing non-tipped side work. Thus, Plaintiff claims that even if her total direct wages and tips for the week averaged to greater than minimum wage, Defendant was still not entitled to pay her the $2.13 tip-credit wage when she was performing non-tipped side work. Plaintiff's claim for non-tipped related side work is based on the FOH's twenty-percent rule, [2] while her claim for non-tipped unrelated side work is based on the dual-jobs regulation.[3] The FLSA treats the related and unrelated non-tipped side work differently, but the majority of courts, including this Court, have concluded that a plaintiff can allege an FLSA cause of action based on both types of non-tipped tasks. Irvine v. Destination Wild Dunes ...


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