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Koenig v. Granite City Food & Brewery, Ltd.

United States District Court, W.D. Pennsylvania

May 11, 2017

CHELSEA KOENIG
v.
GRANITE CITY FOOD & BREWERY, LTD.

          MEMORANDUM

          KEARNEY, J.

         Restaurant employees seeking wages based on allegedly earned tips under the Fair Labor Standards Act and Pennsylvania wage laws typically aggregate their claims with an employee filing the case and the other similarly situated employees either later joining the federal statutory case or opting out of the Pennsylvania wage case. Otherwise, no single employee would have enough possible recovery to justify the litigation expense against the employer. We carefully evaluate several factors before we allow one employee to bring a collective or class action for other employees as the employer must have notice of the common claims to ensure the individual claims do not overcome the common issues and allow a common defense. Among other factors, but of concern today, the employee bringing the case must show her claim, and the claim of the other employees, are sufficiently similar to allow us to conditionally certify a collective action under federal law largely for purposes of case notice and to certify a class action for the Pennsylvania wage claim. After evaluating all of the long-established factors and the facts adduced in discovery, we grant this restaurant employee's motions for conditional certification to allow notice to her co-employees under the Fair Labor Standards Act and for class action treatment of the Pennsylvania wage claims as defined in the accompanying Order.

         I. Background

         Chelsea Koenig formerly worked as a bartender for Cadillac Ranch All American Bar & Grill in Robinson, Pennsylvania. Cadillac Ranch paid Ms. Koenig less than the hourly minimum wage and made up the difference by crediting her customer tips towards minimum wage. Ms. Koenig alleges Cadillac Ranch failed to give her sufficient notice of its use of the tip credit under the Fair Labor Standards Act (FLSA). Ms. Koenig also alleges Cadillac Ranch failed to give sufficient notice to other bartenders, servers, bussers, and food runners in the Robinson, Pennsylvania location and at its four other locations in Florida, Indiana, and Maryland.[1]

         Ms. Koenig also alleges Cadillac Ranch violated Pennsylvania's Minimum Wage Act by: (1) failing to meet tip credit notification requirements; (2) failing to pay tipped employees full minimum wage when they performed non-tipped work; (3) claiming a tip credit in excess of amounts permitted by Pennsylvania law; and, (4) forcing tipped employees forfeit tips when customers walked out or the employee had a cash shortage.

         After months of initial discovery on these issues, Ms. Koenig now moves to conditionally certify a collective action for violating the tip credit notice of the Fair Labor Standards Act. Ms. Koenig also moves to certify a class of Pennsylvania employees under Fed.R.Civ.P. 23 for Cadillac Ranch's alleged violation of the Pennsylvania Minimum Wage Act. Cadillac Ranch opposes both motions, arguing Ms. Koenig adduced no evidence her allegations and injuries are consistent with other employees at the five locations.

         II. We conditionally certify an FLSA collective class.

         Ms. Koenig moves to certify a collective of all former and current tipped employees (such as server, bartender, busser, food runner) of Cadillac Ranch All American Bar & Grill[2] in Pennsylvania, Maryland, Florida, or Indiana at any time from September 9, 2013 to the date the tipped employee signed Cadillac Ranch's January 2017 Tip Credit Policy.

         The Fair Labor Standards Act allows Ms. Koenig to bring a representative action for herself and other employees under 29 U.S.C. § 216(b) if (1) the employees are all similarly situated; and, (2) each class member individually consents with the court to join the action.[3] Our Court of Appeals directs a two-tier approach in certifying a collective class.[4] In the first tier we require a "modest factual showing, " where Ms. Koenig "must product some evidence, 'beyond pure speculation, ' of a factual nexus between the manner in which the employer's alleged policy affected her and the manner in which it affected other employees."[5] We apply a lenient standard because "conditional certification is not really a certification, but is rather [an] exercise of [our] discretionary power to facilitate the sending of notice to potential class members, and is neither necessary nor sufficient for the existence of a representative action under the [Act]."[6]

         Ms. Koenig makes a "modest factual showing" other tipped employees are "similarly situated" because Cadillac Ranch failed to give sufficient notice to its tipped employees it utilized the tip credit to satisfy the Act's minimum wage requirement at its five locations. Ms. Koenig testified when Cadillac Ranch hired her, no one explained the tip credit policy, how her compensation was structured, or provided her with notice of the tip credit provision.[7]

         Ms. Koenig adduced evidence Cadillac Ranch had the same tip credit policies and procedures for tipped employees at its five locations. Cadillac Ranch's corporate designee testified all five locations utilize the tip credit provision for its tipped employees so the employees are similarly situated for compensation purposes.[8] In response to an Interrogatory, Cadillac Ranch admits providing notice of its utilization of the tip credit to employees "through its policies, procedures, FLSA posters and through oral notification from local management personnel...Tipped Employees are informed of the tip credit Cadillac Ranch intends to claim through the Company's Compensation Policy and oral representations from location management personnel."[9] The Cadillac Ranch employee handbooks used from September 9, 2013 until the implementation of the January 2017 tip credit notice addressed tip credit laws but Ms. Koenig alleges it does not meet the FLSA's requirements for sufficient notice.[10] The corporate designee testified Cadillac Ranch had a written policy notifying employees it used the tip credit in beginning in April 2016 but did not have one before then.[11]

         Taken together, Ms. Koenig makes a "modest factual showing" all tipped employees at Cadillac Ranch's five locations are "similarly situated" because Cadillac Ranch used the same procedure to inform tipped employees and used the same employee handbooks at its five locations.

         Cadillac Ranch argues its local management personnel provided proper oral notice of the tip credit policy to some tipped employees and attached supporting declarations from those employees. Cadillac Ranch argues the existence of employees who received proper oral notice defeats a conditional finding tipped employees are similarly situated for a collective action. We disagree. Cadillac Ranch's actions in creating a written tip credit in 2016 and implementing and mandatory electronically signed policy in 2017 suggests a flawed policy of oral notification. Cadillac Ranch's argument is more appropriate for a summary judgment motion at our second-tier of review. At this stage, Ms. Koenig meets our lenient standard for conditional certification.

         III. We certify a class for Ms. Koenig's Pennsylvania Minimum Wage Act claims.

         Ms. Koenig moves to certify a class of all former and current Tipped Employees (such as server, bartender, busser, food runner) of Cadillac Ranch All American Bar & Grill in Pennsylvania at any time from September 9, 2013 to the date the tipped employee signed Cadillac Ranch's January 2017 Tip Credit Policy. Ms. Koenig alleges Cadillac Ranch violated Pennsylvania's Minimum Wage Act by: (1) failing to meet tip credit notification requirements; (2) failing to pay tipped employees full minimum wage when they performed non-tipped work; (3) claiming tip credit in excess of amounts permitted by Pennsylvania law; and, (4) forcing tipped employees forfeit tips when customers walked out or the employee had a cash shortage.

         When reviewing class certification, we identify the "common interests" of the class members and evaluate Ms. Koenig's and her counsels' "ability to fairly and adequately protect class interests" under Fed.R.Civ.P. 23.[12] Rule 23(a) requires: (1) numerosity: meaning the class "must be so numerous that joinder of all members is impracticable"; (2) commonality: meaning there are "questions of law or fact common to the class"; (3) typicality: meaning the "claims or defenses of the representative parties" must be "typical of the claims or defenses of the class"; and, (4) adequacy of representation: meaning the named plaintiff and counsel will "fairly and adequately protect the interests of the class."[13] We then turn to Rule 23(b)(3) which requires "(1) common questions of law or fact predominate (predominance); and, (2) the class action is the superior method for adjudication (superiority)."', [14]

         1. Ms. Koenig satisfies the Rule 23(a) requirements.

         We reviewed the post-discovery detailed record and, based on our findings below, determine Ms. Koenig establishes the propriety of certifying a class of employees with Pennsylvania state law wage claims by a preponderance of the evidence.[15]

         A. The Class satisfies the numerosity requirement.

         Our Court of Appeals instructs "[n]o minimum number of plaintiffs is required to maintain a suit as a class action, but generally if the named plaintiff demonstrates that the potential number of plaintiffs exceeds 40, the first prong of Rule 23(a) has been met."[16] Cadillac Ranch's payroll data shows approximately 220 former and current tipped employees are potential class members. Cadillac Ranch does not ...


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