Barnhart v. Chesapeake Bay Seafood House Assocs., L.L.C.

BARNHART v. CHESAPEAKE BAY SEAFOOD HOUSE ASSOCIATES, L.L.C.

Civil No. JFM-16-01277

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

March 31, 2017

MEMORANDUM

Plaintiff Morgan Barnhart ("Barnhart"), on behalf of herself and all other persons similarly situated, brings this class and collective action lawsuit against Chesapeake Bay Seafood House Associates, L.L.C. ("Chesapeake") seeking overdue wages and money damages incurred while plaintiff was employed as a server and bartender at defendant's restaurants. Plaintiff brings claims under the Federal Labor Standards Act ("FLSA"), 29 U.S.C. § 201, et seq.; the Maryland Wage and Hour Law ("MWHL"), MD. CODE ANN. § 3-401, et seq.; and the Maryland Wage Payment and Collection Law ("MWPCL"), MD. CODE ANN. § 3-501, et seq., for defendant's alleged failure to pay Barnhart and other employees the appropriate minimum wage. (ECF No. 1). Pending is defendant's motion to dismiss all claims or, in the alternative, for summary judgment. (ECF No. 16). The motion is fully briefed, and no oral argument is necessary. See Local Rule 105.6. For the reasons set forth below, defendant's motion is denied.

BACKGROUND

Defendant Chesapeake operates approximately thirty-one franchised Chili's restaurants in Maryland and Virginia. (ECF No. 1 ¶ 2). Chili's is a nationwide chain, and although its locations are generally franchised to local owners, the restaurants offer a fairly uniform dining experience. (Id. ¶ 41). During the relevant time period, for example, Chesapeake's Chili's locations shared managers and allowed servers and bartenders to work at multiple restaurants. (Id. ¶ 43-44). Across locations, Chesapeake pays its "tipped employees" - employees receiving more than the statutory minimum amount in tips per month - less than the hourly minimum wage, as permitted by the tip credit provisions of FLSA and MWHL. (Id. ¶ 3). Defendant considers servers and bartenders tipped employees for the purposes of FLSA's and MWHL's tip credit provisions. (Id.). Plaintiff Barnhart estimates that Chesapeake employed roughly 1,000 tipped employees in the state of Maryland throughout the limitations period. (Id. ¶ 21).

Chesapeake employed Barnhart as a tipped employee for over two years. (See id. ¶ 32). Barnhart began her employment with Chesapeake in June 2013 as a server in defendant's Linthicum, Maryland location. (Id.). For a short portion of her employment, Barnhart also worked a closing shift at Chesapeake's restaurant in Arundel Mills. (Id.). Approximately one year after beginning her employment with Chesapeake, Barnhart began working as a bartender as well as a server. (Id. ¶ 34). Barnhart also worked periodically as a "QA," an expeditor position responsible for the final stages of food preparation. (Id. ¶ 35). As a tipped employee, Barnhart was paid less than minimum wage at a rate of approximately $3.63 per hour when performing her role as a server or bartender. (Id. ¶ 36).

Though Chesapeake paid Barnhart and other servers and bartenders according to the tip credit provisions of FLSA and MWHL, Barnhart contends that she spent between thirty and fifty percent of her shift time performing duties in which she did not interact with customers and did not have the opportunity to earn tips. (Id. ¶ 39). According to Barnhart, she and other individuals classified as "tipped employees" were required to spend a substantial portion of their shifts attending to tasks such as setting up, stocking, and/or breaking down the soda, chip, and soup machines, cleaning floors and restaurant surfaces, removing cigarette butts from the bushesoutside of the restaurant, preparing the restaurant for pest exterminators, and taking out the trash. (Id. ¶ 40). Some of these non-tipped duties were specified in a checklist posted at Chesapeake's restaurant locations, and completion of the checklist by servers and bartenders was verified by the managers. (Id. ¶¶ 46-47). Additionally, Barnhart alleges that servers and bartenders were often required to arrive at the restaurants thirty minutes to an hour early and perform non-tipped work before the restaurants were open to customers. (Id. ¶ 49). Servers and bartenders were also required to perform non-tipped work after the restaurants were closed to customers. (Id. ¶ 50).

To Barnhart's knowledge, Chesapeake did not have any sort of institutionalized internal policy prohibiting tipped employees from performing certain types of non-tipped work unrelated to their role or from performing excessive amounts of non-tipped work. (Id. ¶ 51). Furthermore, Chesapeake did not track or record the amount of time servers and bartenders spent performing tipped versus non-tipped work during their shifts. (Id. ¶ 52). According to Barnhart, Chesapeake did not allow employees to clock-in at the full minimum wage rate when performing non-tipped work, even though their point-of-sale time management system would have allowed the defendant to easily record tipped and non-tipped time and adjust the wage accordingly. (Id. ¶¶ 53, 56-57).

Barnhart filed a class and collective action complaint in this court on April 28, 2016. The complaint asserts three claims against Chesapeake: violation of Section 201, et seq. of the FLSA (Count I), violation of Section 3-401, et seq. of the MWHL (Count II), and violation of Section 3-501, et seq. of the MWPCL (Count III). (Id. ¶ 1).¹ Chesapeake filed a motion to dismiss allclaims under Rule 12(b)(6) of the Federal Rules of Civil Procedure or, in the alternative, for summary judgment under Rule 56 on June 23, 2016. (ECF No. 16).

STANDARD

Chesapeake has filed a motion to dismiss Bales' first amended complaint under Rule 12(b)(6) or, in the alternative, for summary judgment pursuant to Federal Rule of Civil Procedure 56(c). I consider this motion as a motion to dismiss under Rule 12(b)(6).² In reviewing a motion to dismiss under Rule 12(b)(6) for failure to state a claim, the court "must accept as true all of the factual allegations contained in the complaint" and "draw all reasonable inferences in favor of the plaintiff." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011). The complaint must allege facts sufficient to "state a claim to relief that is plausible on its face," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), and allow the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 566 U.S. 662, 678 (2009). The court is not, however, required to accept the legal conclusions derived from the facts, and "[a] complaint that provides no more than labels and conclusions or a formulaic recitation of the elements of a cause of action" is insufficient to meet the pleading standard. Twombly, 550 U.S. at 555; see also Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (stating that the "mere recital of elements of acause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6)"). Generally, a motion to dismiss for failure to state a claim "does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999); see also Tobey v. James, 706 F.3d 379, 387 (4th Cir. 2013).

ANALYSIS

Barnhart uses the same alleged facts to support both her federal claim and her state law claims. I will analyze plaintiff's claim under the FLSA before turning to her parallel state claims under the MWHL and the MWPCL.

I. Barnhart's claim under the FLSA

Plaintiff Barnhart asserts two alternative bases for relief under FLSA.³ First, Barnhart contends that she and other tipped employees were required to spend a significant amount of time performing work that was unrelated to their roles as servers or bartenders, and were thus working "dual jobs" as defined by FLSA regulations. (See ECF No. 1 ¶¶ 6, 70). Because Barnhart was employed in a "dual job," she is entitled to the full minimum wage for the hours spent performing the unrelated duties. Second, Barnhart argues that even if the non-tipped duties she performed can be construed as "related" to her occupation as a server or bartender, the time spent performing these duties exceeded 20% of her weekly hours. (See id. ¶¶ 7, 71). Accordingly, Barnhart claims, Chesapeake was not entitled to take advantage of the tip credit provisions of FLSA for the time she spent performing non-tipped duties.

Defendant Chesapeake contends that Barnhart has not stated a "dual jobs" claim under FLSA because Chesapeake only utilized the tip credit provision for her work as a tipped employee and because any non-tipped duties she performed were directly related to her server and bartender occupations. (See ECF No. 16, p. 3). Moreover, Chesapeake argues, Barnhart's "20% theory" regarding the quantitative limit on a tipped employees related non-tipped duties is not a cognizable ground for relief under FLSA or relevant DOL regulations. (Id.). Chesapeake claims that the 20% limitation is derived from a piece of DOL interpretive material that is entitled to no deference by the courts and that such a limitation would be impracticable for employers. (Id. at pp. 3, 19, 29).

a. Statutory framework

Section 206 of FLSA requires covered employers to pay all employees a minimum wage for hours worked, unless the employee qualifies for a statutory exemption. See 29 U.S.C. § 206(a). Employers may, however, pay employees less than the federal minimum wage if the employee is engaged in an occupation which regularly receives tips. See 29 U.S.C. § 203(m). Section 203(t) defines a "tipped employee" as "any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips." 29 U.S.C. § 203(t). As this court has explained, "[t]ipped employees . . . are required to receive at least the minimum wage, but their employers are permitted to pay a direct wage of $2.13 per hour and then take...