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Mackereth v. Kooma, Inc.

United States District Court, E.D. Pennsylvania

May 14, 2015

SHANNON MACKERETH; JONATHAN YOUNG; and ALYSSA WETZEL, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
KOOMA, INC. d/b/a KOOMA; KOOMA VIET INC.; KOOMA RIVERFRONT; KOOMA II, LLC; SCOTT KIM; JANG MOON; YUNG H. KWUN; JIN Y KIM; and DOE DEFENDANTS 1-10, Defendants.

MEMORANDUM

GERALD J. PAPPERT, J.

Plaintiffs Shannon Mackereth (“Mackereth”), Jonathan Young (“Young”) and Alyssa Wetzel (“Wetzel”), on behalf of themselves and those similarly situated (collectively “Plaintiffs”), filed this lawsuit against Defendants Kooma, Inc., Kooma Viet Inc. (“Kooma Viet”), Kooma Riverfront, Kooma II, LLC (“Kooma II”), Scott Kim (“S. Kim”), Jang Moon (“Moon”), Yung H. Kwun (“Kwun”), Jin Y Kim (“J. Kim”) and Doe Defendants 1-10 for alleged violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., the Pennsylvania Minimum Wage Act (“PMWA”), 43 Pa. Cons. Stat. § 333.101 et seq., the Pennsylvania Wage Payment and Collection Law (“WPCL”), 43 Pa. Cons. Stat. § 260.1 et seq., and for unjust enrichment. Before the Court is Defendants’ Motion to Dismiss. (Doc. No. 32.)

For the following reasons, Defendants’ motion is granted in part and denied in part.

I. Factual and Procedural Background

Plaintiffs bring this putative collective action[1] and putative class action[2] against their alleged employers, a group of restaurants they contend operate under the trade name “Kooma, ” and “share common ownership and employment policies.” (Am. Compl. ¶¶ 1, 3.) Each restaurant employs waiters, waitresses and bartenders (collectively “Tipped Employees”) who are “subjected to Defendants’ unlawful pay practice.” (Id. ¶ 2.) Plaintiffs refer to Defendants collectively as “Kooma” and/or “Kooma Entities.” (Id. ¶¶ 1, 2.)

Kooma, Inc. operates a restaurant located at 123 N. Church Street in West Chester, Pennsylvania and employs Tipped Employees. (Id. ¶ 25.) Kooma, Inc.’s corporate filings identify S. Kim as Kooma, Inc.’s President, Secretary and Treasurer, Moon as the Vice President, and J. Kim as the Secretary/Treasurer, Director and Stockholder. (Id. ¶¶ 25, 32.) Kooma, Inc.’s filing with the Pennsylvania Liquor Control Board identifies Kwun as Kooma, Inc.’s President, Director, and Stockholder. (Id.) The individual defendants exercise control over the labor policies and practices of the “Kooma Entities, ” (Id. ¶¶ 29-32), and the corporate entities “share common labor policies and practices.” (Id. ¶ 33.)

Kooma Viet operated a restaurant located at 151 W. Gay Street in West Chester and employed Tipped Employees. (Id. ¶ 26.) Kooma Viet has since closed. (Id. ¶ 2 n.2.) Kooma Riverfront operates a restaurant employing Tipped Employees located at 400 Justison Street in Wilmington, Delaware. (Id. ¶ 27.) J. Kim is the manager of Kooma Riverfront. (Id. ¶ 32.) Kooma II’s registered address is 123 E. Gay Street in West Chester and it owns the liquor license for the restaurant at that location. (Id. ¶ 28.)

Mackereth began working for “Kooma” on March 15, 2009. During this time, she has worked as a Tipped Employee at the restaurants located at 151 W. Gay Street and 123 N. Church Street in West Chester, Pennsylvania. (Id. ¶ 21.) Prior to the summer of 2011, Mackereth worked full time and “there were multiple occasions where [she] worked in excess of forty hours per week.” (Id. ¶ 44.) Since the summer of 2011, Mackereth typically works two shifts per week and averages approximately fourteen to sixteen hours per week. (Id. ¶ 43.) Mackereth is paid an hourly rate of $2.85, regardless of the amount of tips she receives. (Id. ¶ 45.) She has received paychecks from Kooma, Inc. and Kooma II. (Id. ¶ 21.)

Young worked for “Kooma” from the summer of 2006 through September 2014. (Id. ¶¶ 46, 122.) He, like Mackereth, worked at 151 W. Gay Street and 123 N. Church Street and received paychecks from both Kooma, Inc. and Kooma II. (Id. ¶ 22.) Young typically worked two shifts per week and averaged thirteen hours per week. (Id. ¶ 47.) Young was paid a wage of $2.85 per hour worked, regardless of the amount of tips he received. (Id. ¶ 48.)

Wetzel began working for “Kooma” in the summer of 2010. (Id. ¶ 49.) From the beginning of her employment until May 2013, she worked part-time and averaged twenty hours per week. (Id. ¶ 50.) Since then Wetzel works five to six days a week and averages approximately thirty-five hours per week. (Id. ¶ 51.) Wetzel has received paychecks from Kooma, Inc. and Kooma II and has worked at the restaurants located at 151 W. Gay Street and 123 N. Church Street. (Id. ¶ 23.)

Throughout Plaintiffs’ time with “Kooma, ” the Defendants allegedly claimed the tip credit permitted under the FLSA and PMWA and paid their Tipped Employees either an hourly wage of $2.85 or nothing at all. (Id. ¶ 111.) Plaintiffs “do not recall being notified by Defendants that they intended to take a ‘tip credit, ’” or how much the credit would be. (Id. ¶ 74.) The Tipped Employees were not given any documents explaining the operation of the tip credit or their rights under the relevant wage laws. (Id.75.)

Though Tipped Employees did not always earn tips sufficient to amount to the minimum hourly wage, Plaintiffs were never paid more than $2.85 per hour. (Id. ¶ 81.) Specifically, Mackereth worked a full day as a bartender on July 4, 2013 and earned only $30 in tips. Her wages were not adjusted to ensure that she earned the mandatory minimum hourly wage. In another instance, Mackereth made only $20 in tips during a five hour shift, and, again, her wages were not adjusted. (Id. ¶¶ 82-84.)

Defendants also forced their Tipped Employees to forfeit a portion of their tips to cover various expenses and to work without compensation. Tipped Employees had to pay Defendants “anywhere from a few hundred to a few thousand dollars” to help Defendants satisfy a delinquent tax bill, and they were required to pool three percent of their tips to compensate the sushi chefs and the back of the house cooks. (Id. ¶¶ 93, 96.) Tipped Employees were obligated to clean the restaurants, which typically lasted several hours, without compensation. (Id. ¶ 104.) Tipped Employees were also required to help Kooma, Inc. move locations in late August 2013 without compensation. (Id. ¶ 105.)

Plaintiffs further allege that Defendants failed to pay Tipped Employees overtime for the hours they worked in excess of forty hours per week. On “multiple occasions, ” Wetzel worked a double shift. (Id. ¶ 52.) Working a double shift requires the Tipped Employee to work a shift of approximately 10.5 hours (on a week day) or 12.5 hours (on the weekend). (Id. ¶ 52.) During the summer of 2013, Wetzel “was often working five (5) to six (6) doubles per week, ” which amounted to approximately 52.5 to 67 hours per week. (Id. ¶ 53.) Wetzel never received any overtime compensation for the time she worked in excess of forty hours per week and received an hourly wage of $2.85, regardless of the tips she earned.[3] (Id. ¶ 54.) Defendants also allegedly manipulated Tipped Employees’ time entries in the timekeeping system to “minimize the amount of hours worked.” (Id. ¶ 100.) Mackereth typically worked the same shifts each week, but her recorded hours varied widely from week to week. (Id. ¶ 101.) Similarly, if a Tipped Employee was approaching forty hours for the week, the employee was instructed not to clock in until his first table arrived and/or to clock out after the last table left for the evening. (Id. ¶ 103.) Thus “Tipped Employees regularly worked hours in excess of 40 in a week”-some worked shifts that exceeded forty hours and others exceeded forty hours through “off the clock work”-and were not compensated for this time. (Id. ¶ 113.)

On August 18, 2014, Plaintiffs filed this action against the Defendants. (Compl., Doc. No. 1.) On September 9, 2014, Defendants instituted new rules and regulations for their Tipped Employees. (Id. ¶ 118.) The new rules required, for the first time, all evening shifts to begin at 4:00 p.m and a late arrival became grounds for termination. (Id. ¶ 120.) Prior to the implementation of these rules, Plaintiffs had always begun their evening shifts after 4 p.m. (Id. ¶ 121.) Young was forced to resign from his position because he could not comply with the new start time. (Id. ¶ 122.) The rules and regulations also altered the “closer” position. As the “closer, ” the most senior Tipped Employee remained to serve customers after the other servers finished their shifts for the night. (Id. ¶ 124.) Plaintiffs “due to their seniority and long tenure” usually held the position of closer during their respective shifts. (Id. ¶ 126.) The new rules and regulations provided that management would determine which server would remain as “closer” for a given shift. (Id. ¶ 125.) This effectively eliminated the closer position and the opportunity to receive additional tips. (Id. ¶ 123.) Mackereth was informed by a co-worker that the Defendants specifically stated that (1) the new rules were designed to teach Plaintiffs a lesson and (2) the earlier shift start time was implemented because “it was the only legal way to get rid of” Mackereth and Young. (Id. ¶¶ 128-29.)

In response to the new rules and regulations, Plaintiffs moved for a temporary restraining order and preliminary injunction on September 13, 2014. (Doc. No. 4.) Judge Brody[4] denied Plaintiffs’ request and issued a temporary order permitting Defendants to enforce their new rules subject to certain exemptions for Plaintiffs. (See Doc. No. 9.) The preliminary injunction matter was settled and the parties stated their agreement on the record at a hearing before Judge Brody on October 8, 2014. (Doc. No. 14.) Defendants then moved to dismiss the complaint, and Plaintiffs responded by filing an amended complaint on November 20, 2014.

The amended complaint alleges that Defendants fail to pay the required minimum wage and overtime compensation in violation of the FLSA, PMWA and WPCL, that Defendants were unjustly enriched by their failure to comply with the PMWA and forcing Tipped Employees to work without compensation, and that Defendants violated the anti-retaliation provision of the FLSA by implementing the new rules and regulations. The claims are brought on behalf of “employees who work or have worked restaurants [sic] operating under the trade name ‘Kooma, ’ including ‘Kooma, ’ ‘Kooma Viet, ’ and ‘Kooma Riverfront, ’ that is owned and operated and/or managed by” the Defendants. (Am. Compl. ...


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