Labor & Employment Law Daily Wrap Up, PROCEDURE—11th Cir.: In FLSA collective action, district court properly allowed opt-in plaintiffs to voluntarily dismiss all their claims against defendants, (Jul 28, 2025)

By Ronald Miller, J.D.

The Eleventh Circuit has consistently held that Rule 41 “does not permit plaintiffs to pick and choose, dismissing only particular claims within an action.”

A district court’s dismissal of a subset of the opt-in plaintiffs in an FLSA case was proper where the opt-in plaintiffs sought voluntary dismissal under Rule 41(a)(2) to take their individual “case[s] out of court” before any significant litigation had begun, ruled the Eleventh Circuit. Rule 41(a) allows plaintiffs to voluntarily dismiss less than the entire action so long as they dismiss all of the claims brought against that particular defendant. Accordingly, the appeals court concluded that the district court’s order dismissing the opt-in plaintiffs was valid under Rule 41(a)(2), and their claims were finally resolved for purposes of appellate jurisdiction. Further, the appeals court ruled that because the district court did not clearly err in finding that the employer carried its burden on a tip credit defense, it defeated the employees’ minimum wage claim (Weinstein v. 440 Corp. dba The Ridge Great Steaks & Seafood, No. 23-13807 (11th Cir. July 25, 2025)).

Tip pool. The employee worked as a server at the employer’s restaurant. The employer paid its servers and bartenders $2.15 per hour. So, to meet or exceed the $7.25 federal minimum wage, it had to supplement its employees’ income with the tips they received each shift. The employer also guaranteed its hostesses, food runners, and bussers a flat hourly wage of $10.00: $2.15 from the employer and the remainder from the tip pool money collected from the servers and bartenders each night.

The employer required all servers and bartenders to contribute 3 percent of their gross food sales to the tip pool, and they retained any tips above the 3 percent.

If the tip pool failed to generate sufficient funds to fully compensate the support staff, the employer would supplement their wages itself. If the tip pool was more than sufficient to cover those employees, the employer required the remaining funds to be distributed to the bartenders who worked that night’s shift.

Extra tips. When there were extra tips, the manager on duty was responsible for collecting them and placing them in an envelope in the employer’s safe. The manager was supposed to write on the back of the envelope the date of the shift, the amount of extra tips collected, and the names of the bartenders to whom the extra tips should be distributed. But the managers did not always follow this last step. Sometimes, a manager would instead write that the extra tips were to be distributed to the “bar,” without naming a specific bartender.

Further, the managers did not consistently follow certain protocols to ensure the proper accounting of all tips. The managers were required to record all tipped employees’ earnings on cash out records at the end of every shift. When managers left incomplete cash out records with the extra tip envelope in the safe overnight, the employer’s bookkeeper, had to reconcile the extra tip distributions the following day. But the responsibility for distributing extra tips in cash to the bartenders was delegated to the managers on duty each shift.

Collective action complaint. This case began when employees filed a collective action complaint alleging that the employer violated the FLSA’s minimum wage requirement. The employer raised a tip credit affirmative defense in response to the employees’ wage claims and, on summary judgment, the district court ruled partially in its favor. It found that the employer did not distribute the tip pool funds to any employees who were not customarily or regularly tipped. The only question left for the bench trial was whether the employer retained any portion of the tip pool funds for itself.

The district court could not conclusively trace the extra tips from the employer’s safe to the bartenders. Despite this evidentiary gap, the district court was able to “eliminat[e] certain destinations from the realm of possibilities.” Specifically, it determined that certain managers never kept any portion of the extra tips for themselves, nor did they reserve any tips for the employer. Because the district court concluded that the employer did not retain any of the extra tips, and the extra tips at issue could have gone only to tipped employees, it concluded that the employer operated a lawful tip pool.

Given that the district court had previously ruled for the employer on the first two elements of the tip credit defense, it found that it had successfully asserted the defense, and the employees could not prevail on their minimum wage claim. This appeal followed.

Opt-in plaintiffs. On appeal, the Eleventh Circuit first explained why the dismissal of several opt-in plaintiffs during the early stages of this litigation did not deprive it of jurisdiction. Second, the appeals court explained why it did not find error in the district court’s conclusion that the employer asserted a valid tip credit defense.

Jurisdiction. Earlier in the litigation, several plaintiffs who had initially opted into the case chose to abandon their claims and seek voluntary dismissal under Rule 41(a)(2). The district court granted this request. The appeals court’s jurisdiction turns on whether these dismissals were valid.

Rule 41 governs the “Dismissal of Actions.” The Eleventh Circuit has consistently held that Rule 41 “does not permit plaintiffs to pick and choose, dismissing only particular claims within an action,” and “[a]ny attempt to use [Rule 41(a)] to dismiss... anything less than the entire action[] will be invalid.” But the court has recognized an exception to this rule, allowing plaintiffs to voluntarily dismiss less than the entire action so long as they dismiss all of the claims brought against that defendant.

Now, the Eleventh Circuit has made clear that, under Rule 41(a), an “action” refers to all claims that an individual plaintiff has brought against an individual defendant, even if multiple actions involving multiple parties have been combined into a single lawsuit. The use of Rule 41(a) to dismiss all claims between two parties allows a district court to set aside the claims involving the dismissed party, even if claims involving the remaining party and other litigants are left unresolved.

In this case, the five opt-in plaintiffs who sought voluntary dismissal under Rule 41(a)(2) wished to take their individual “case[s] out of court” before any significant litigation had begun. There were no claims remaining between these dismissed plaintiffs and any of the defendants, and there was no indication that any of the remaining parties were prejudiced by the plaintiffs’ departure from the case.

Accordingly, the appeals court concluded that the district court’s order dismissing opt-in plaintiffs was valid under Rule 41(a)(2), and their claims were finally resolved for purposes of appellate jurisdiction.

Tip credit defense. The FLSA’s “tip credit” exception allows an employer to pay below the minimum wage if the difference is covered by the employee’s tips. The question in this case is whether all of the tip money was fully distributed to the employer’s employees who were customarily and regularly tipped employees.

At summary judgment, the district court found that the employer had established the first two elements of the defense: (1) employees who received tips qualified as “tipped employees”; and (2) it notified the employees that it intended to claim the tip credit. The district court also found that the employer did not distribute the tip pool funds to any employees who were not customarily or regularly tipped. Thus, the only factual dispute left for trial was whether the employer ever retained tips from the tip pool.

After the bench trial, the district court could not conclusively trace the extra tips from the employer’s safe to its bartenders. The district court further concluded that the employer never retained any of the extra tips at issue. As a result, the district court determined that the extra tips at issue could have gone only to tipped employees.

Under the clearly erroneous standard, the district court’s findings of fact must stand unless the appeals court has the definite and firm conviction that a mistake has been made. Here, the appeals court was left with no such conviction.

Because the district court did not clearly err in finding that the employer did not retain the extra tips, it likewise did not clearly err in finding that the employer carried its burden on the tip credit defense. Thus, the employer’s success on their tip credit defense defeated the employees’ minimum wage claim.

The case is No. 23-13807.

Judge: Kidd, E.

Attorneys: Drew Herrmann (Herrmann Law) for Jeanne Weinstein. Canon T. Corbitt (Gordon Rees Scully Mansukhani) for 440 Corp. dba The Ridge Great Steaks & Seafood and Stephen Campbell.

Companies: 440 Corp.; The Ridge Great Steaks & Seafood

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