Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—EDMo: Restaurant Employees Allegedly Forced into “Tip Pool” Certified to Sue for Minimum Wage Violations. , (Dec 19, 2012)

By E. Darius Sturmer, J.D.

A group of servers and bartenders employed by franchised chain restaurant Hotshots Bar & Grill at multiple locations in the St. Louis, Missouri, area was entitled to conditional certification as a class, for purposes of claims that their forced participation in a “tip pool”—whereby they shared tips with other “back of the house” and non-tipped employees, such as cooks, dishwashers, and doormen—amounted to violation of the Fair Labor Standards Act of 1938 (FLSA) and the Missouri Minimum Wage Law, the federal district court in St. Louis has held (White v. 14051 Manchester, Inc., November 30, 2012, Ross, J.). As employees who participated in the tip pool were allegedly victims of the same policy or plan and were denied compensation as a result of the tip-pooling arrangement, the class was properly defined as all Hotshots employees who shared in any tip pool, the court stated.

The plaintiffs, who as tipped employees were paid an hourly rate under minimum wage, met their burden of showing that conditional certification was proper, according to the court. They specifically alleged that they, along with other similarly situated employees, were denied compensation as a result of the policy. The purported policy does violate the FLSA, the court noted.

An argument by the defendants that certification of the case as a conditional collective action was inappropriate because they did not control the Hotshots franchise locations was rejected by the court. For purposes of the motion, the defendants “permitted or suffered to work” all Hotshots employees, even those at franchise locations. Given the FLSA’s broad definition of the “employee” and its remedial purpose, the defendants’ franchise arrangement demonstrated sufficient control for conditional class certification, in the court’s view.

Hotshots’ contention that the complaining employees were not similarly situated to employees of other locations and/or franchise locations was no basis for denying conditional certification, because such an assertion concerned the merits of the case and was therefore not an issue proper for consideration at the conditional certification stage of the litigation.

The proposed notice to putative class members complied with the FLSA and collective action procedures, the court also found. It further ordered the defendants to provide the plaintiffs’ attorneys with the names and last known mailing and email addresses of all employees who may be potential plaintiffs in the suit.

In an order issued on December 18, the court reiterated its earlier holding on conditional certification, but sustained an objection by the defendants to producing documents related to franchisee employees. The defendants could not be compelled to produce the franchisee employees’ information, the court said, because the plaintiffs chose not to include the franchisee locations as defendants in the suit. Production of documents from a non-party could be compelled only by subpoena issued under Federal Rule of Civil Procedure 45(d)(1), the court observed.

The case is No. 4:12CV469 JAR.

Cyrus C. Dashtaki (Dashtaki Law Firm, LLC) for Thelma White. Christopher O. Baumann (Blitz and Bardgett) for 14051 Manchester, Inc.

Cases: FranchisingDistribution MissouriNews