Bruske v. Capitol Watertown Sprechers, LLC

RYEA BRUSKE & TAMSYN BRUSKE, on behalf of themselves and all others similarly situated, Plaintiffs, v. CAPITOL WATERTOWN SPRECHERS, LLC; CAPITOL GENEVA, LLC; CAPITOL DELTON, LLC; CAPITOL GLENDALE, LLC; CAPITOL HOSPITALITY, LLC; KEVIN LEDERER; & SUE GETGEN, Defendants.

No. 19-cv-851-wmc

United States District Court, W.D. Wisconsin

August 23, 2021

OPINION AND ORDER

WILLIAM M. CONLEY District Judge

Both United States and Wisconsin labor laws require that employers (1) pay their employees a minimum wage for each hour of work and (2) pay an overtime premium for hours worked in excess of forty in a single work week. 29 U.S.C. §§ 206(a)(1)(C), 207(a); Wis.Stat. §§ 104.035(1)(a), 103.025(1)(c). However, these wage obligations may be offset by certain tips earned by a tipped employee, known as a “tip credit.” 29 C.F.R. § 531.59; Wis.Stat § 104.035(3). In this proposed collective and class action, named plaintiffs Ryea and Tamsyn Bruske allege that defendants improperly claimed a “tip credit” against their wages, and in doing so, failed to pay the full wages owed to them under federal and state law. Specifically according to plaintiffs, defendants' offset was improper under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., because they neither informed their tipped employees that they would make up the difference if the employees' cash wage plus tips fell short of the minimum wage, nor did they inform the tipped employees that the claimed credit would increase to account for the cost of additional employee uniforms. Similarly, plaintiffs claim that defendants improperly claimed a tip credit under Wisconsin law because defendants did not obtain complete “tip declarations” from their tipped employees. Finally, although the named plaintiffs were only employed by one of the five LLCs named in this suit, plaintiffs allege that all the LLC defendants are properly joined in this action as a “single employer.”

Now before the court are various motions, including plaintiffs' motion for conditional certification of a collective action under the FLSA (dkt. #37) and defendants' motion for partial summary judgment on plaintiffs' state law claim (dkt. #50). These motions are addressed in the opinion that follows.

BACKGROUND

A. Facts Regarding the Parties and the Relationship Between the LLC Defendants

The defendants presently named in this case are Capitol Watertown Sprechers, LLC; Capitol Geneva, LLC; Capitol Delton, LLC; Capitol Glendale, LLC; Capitol Hospitality, LLC; Kevin Lederer; and Sue Getgen. Named plaintiffs Ryea Bruske and Tamsyn Bruske were employed to work as servers and bartenders at the Sprecher Pub & Restaurant located in Watertown, Wisconsin (“Watertown Sprechers”), which is owned by defendant Capitol Watertown Sprechers, LLC.^[1] The remaining four LLC defendants also operate as holding companies for various Sprechers Pub & Restaurants across Wisconsin.^[2]

All of the five LLCs named in this suit are either solely- or majority-owned by the same four investors, one of whom is defendant Kevin Lederer. (Lederer Dep. (dkt. #40) 4:22-5:12.) Lederer explained that the LLCs would, from time to time, loan money between each other, and he would not set specific repayment deadlines or terms, although the goal would be for those loans to be repaid eventually. (Id. at 38:19-25.) When asked if one Sprechers LLC would sue another for repayment of these loans, Lederer responded, “I don't think you sue yourself too often, do you?” (Id. at 39:1-5.)

In addition, defendant Sue Getgen served as the operations director for all of the Sprechers restaurants owned by the five LLCs, although she was technically an employee of and paid by Capitol Geneva, LLC.^[3] (Lederer Dep. (dkt. #40) 6:3-7:3.) In her capacity as operations director, Getgen also oversaw the general managers at all of the Sprechers locations. (Id.) For example, Ryea explained that Getgen would sometimes come to the Watertown Sprechers and ask Ryea to make drinks that were on the Watertown menu so that Getgen could take pictures of them, then use those pictures in advertisements for all of the Sprechers Pub & Restaurant locations. (Ryea Bruske Decl. (dkt. #41) ¶ 6.)^[4]

Further, non-party Abe Richgels was the accountant for all five of the defendant LLCs, although he was formally employed through yet another separate LLC -- Capitol Real Estate Management, LLC.^[5] (Lederer Dep. (dkt. #40) 9:6-19.) Richgels was given the authority by Lederer and Getgen to hire payroll companies, which were in turn relied on to ensure the five LLCs' compliance with state and federal laws, including wage and hour laws. (Id. at 8:3-10:1.) In particular, when plaintiffs Ryea and Tamsyn Bruske began working at Watertown Sprechers, they received a copy of a document titled “Sprecher's Restaurant & Pub Employee Handbook.” (Ho Decl., Exs. 4, 5 (dkts. #59-4, 59-5; Ryea Bruske Decl., Ex. A (“Handbook”) (dkt. #41-1).) This Handbook was dated May 1, 2015, although the Watertown Sprechers location did not open until 2016.

B. Facts Regarding the Tip Credit and Uniform Expenses

Generally, the Bruskes were paid by Watertown Sprechers $2.33 per hour when they worked as servers and $7.00 per hour during the majority of the time they worked as bartenders.^[6] Payroll records from Watertown Sprechers from October 2017 through October 2019 show that the Bruskes' rate of pay was typical of other tipped employees. (Id.) Specifically, with few exceptions, the records show that servers were paid $2.33 per hour, bartenders were paid $7.00 per hour, bussers were paid $4.25 per hour, and trainers were paid $6.00 per hour. (Id.)

Watertown Sprechers also required employees to abide by a dress code. (Watertown Sprechers Dep. (dkt. #39) 69:16-22.) Employees were required to wear a t-shirt with a Sprechers logo on it, although they could also wear a long-sleeve shirt underneath the t-shirt or a jacket with a Sprechers logo; in addition, employees were generally expected to be “clean.” (Id. at 71:4-73:7.) Tipped employees were given one free t-shirt (and servers would also receive a free apron), but if they wanted additional clothing they would have to pay for it. (Id. at 72:15-18.) Both Ryea and Tamsyn Bruske testified that they purchased additional clothing from Watertown Sprechers, and the expense for that clothing was deducted from their paychecks. (Ryea Bruske Dep. (dkt. #46) 95:7-25; Tamsyn Bruske Dep. (dkt. #47) 73:20-76:9.)

As for what information was provided about their tip credit, Ryea represented that: (1) “[n]o one ever told me, either before or while I worked at the Watertown location, whether the amount of the tip credit that was being claimed was the difference between $7.25 per hour and my cash wage, or was a larger amount to account for the uniform deductions”; and (2) “[n]o one ever told me, either before or while I worked at the Watertown location, that I would receive additional cash to make up the difference if my cash wage plus tips fel[l] short of the minimum wage of $7.25 per hour.” (Ryea Bruske Decl. (dkt. #41) ¶¶ 11-12.) In fact, when asked in her deposition if she understood that whenever her wage plus tips did not equal the minimum wage, the restaurant must make up the difference, Ryea responded: “I was told by the management of the restaurant team that they don't do that at Sprecher[]s.” (Ryea Bruske Dep. (dkt. #46) 24:12-17.) Similarly, Tamsyn testified that although told to expect payments in the form of a cash wage plus tips, she did not have any discussion with anyone at the Watertown Sprechers about tip credit, nor was she informed that if her tips plus cash wage ever fell below the minimum wage, Watertown Sprechers would pay the difference. (Tamsyn Bruske Dep. (dkt. #47) 73:20-76:9, 37:18-23.)

At the same time, both Ryea and Tamsyn conceded that they did not have any personal knowledge about what other employees at other Sprechers restaurants, including the Watertown Sprechers, were told about the tip credit. (Ryea Bruske Dep. (dkt. #46) 148:1-13; Tamsyn Bruske Dep. (dkt. #47) 112:16-25.) Still, in response to plaintiffs' interrogatory asking Watertown Sprechers to “[i]dentify all differences between the explanation of the Tip Credit that you provided to the Named Plaintiffs, and the explanation of the Tip Credit that you provided to any other of your Tipped Employees during the time period of October 10, 2016 to the present, ” Watertown Sprechers responded: “There are no differences. All tipped employees, including the [named] Plaintiffs, are informed as to the hourly wage they will be paid. . . . Tipped employees are informed that Sprechers applies tips earned toward the current minimum wage. They are [also] informed that the current minimum wage is $7.25/hour.” (Ho Decl., Ex. 2 (Def. Watertown Sprechers' Resp. to Pls.' Discovery Requests) (dkt. #42-2) 2.) Through its 30(b)6 designee, Sue Getgen, Watertown Sprechers similarly confirmed that, when an employee is hired, they are told that there is a tip credit calculated, and the amount of the tip credit is the difference between what they are paid and the minimum wage. (Watertown Sprechers Dep. (dkt. #45-3) 55:4-14, 56:5-21.)

However the only provision in the Sprechers Restaurant & Pub Employee Handbook that discusses the tip credit states that: “When permitted by law, we apply tips earned by tipped employees towards a percentage of the current minimum wage requirement.” (Ryea Bruske Decl., Ex. A (“Handbook”) (dkt. #41-1) 2.) Additionally, posters from the Wisconsin Department of Workforce Development (“DWD”) containing information about the tip credit were apparently sent to Watertown Sprechers by an outside payroll company, but the record does not show what information was provided in those posters. (Watertown Sprechers Dep. (dkt....