Guarriello v. Asnani

517 F.Supp.3d 1164

Donald GUARRIELLO and Valerie Holloway on behalf of themselves and all other persons similarly situated, known and unknown, Plaintiffs,

v.Yashna ASNANI; Classic Café Cuisine, LLC, a New Mexico Limited Liability Company; Barreras Enterprises, Inc., a New Mexico Corporation; New Mexico's Best Diner, LLC, a New Mexico Limited Liability Company, Defendants.

No. 1:19-cv-01184-WJ-CG

United States District Court, D. New Mexico.

Filed February 5, 2021

Clifford Phillip Bendau, Bendau & Bendau PLLC, Phoenix, AZ, James Lee Simon, Law Offices of Simon & Simon, Independence, OH, for Plaintiffs.

Noe Astorga-Corral, Benjamin E. Thomas, Sutin Thayer & Browne, Barbara G. Stephenson, Albuquerque, NM, for Defendants.

MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR CONDITIONAL CERTIFICATION

WILLIAM P. JOHNSON, CHIEF UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court upon Plaintiffs’ Motion for Conditional Certification of an FLSA Collective Action, filed October 5, 2020 (Doc. 54).¹ Having reviewed the parties’ submissions and the applicable law, the Court finds that Plaintiffs’ Motion is well-taken as to its allegations that Plaintiffs are similarly situated to other restaurant servers in New Mexico and is not well-taken as to its allegations that Plaintiffs are similarly situated to out of state restaurant servers. This Motion is therefore GRANTED IN PART and DENIED IN PART.

Background

On December 18, 2019, Plaintiffs filed a class and collective action Complaint alleging violations of both the Fair Labor Standards Act (the "FLSA") and the New Mexico Minimum Wage Act (the "NMMWA"). Doc. 1. Defendants² are: one individual, Yashna Asnani; two New Mexico limited liability companies, Classic Café Cuisine, LLC ("CCC") and New Mexico's Best Diner, LLC ("NMB"); and one New Mexico corporation, Barreras Enterprises, Inc. ("Barreras, Inc."). Defendants franchise several Denny's restaurants in Santa Fe and Albuquerque, New Mexico where Plaintiffs Donald Guarriello and Valerie Holloway were employed as servers. Plaintiff Guarriello was employed from approximately 2013 through approximately July 31, 2019 as a server at Defendants’ restaurants located at 3004 Cerrillos Road, Santa Fe, New Mexico 87507; 1602 Coors Road NW, Albuquerque, New Mexico 8712; 2400 San Mateo Blvd. NE, Albuquerque, New Mexico 87110; and 11261 Menaul Blvd. NE, Albuquerque, New Mexico 87112. Id. ¶ 35. Plaintiff Holloway was employed from approximately 2014 through approximately July 2019 as a server at Defendants’ restaurants located at 1620 Towne Center Lane S.E., Albuquerque, New Mexico 87106; 2400 San Mateo Blvd. NE, Albuquerque, New Mexico 87110; and 11261 Menaul Blvd. NE, Albuquerque, New Mexico 87112. Id. ¶ 37.

The Complaint alleges that Plaintiffs, and others similarly situated, were unlawfully deprived of minimum and overtime wages because Defendants failed to abide by federal and state requirements protecting tipped employees. Id. ¶¶ 1–30. On the FLSA counts, Plaintiffs allege that: (1) Defendants failed to provide proper notice to tip credit notice to Plaintiffs, as required by 29 U.S.C. § 203(m) and 29 C.F.R. § 531.59(b), Id. ¶¶ 87–92; (2) Defendants required Plaintiffs to perform non-tipped labor, both unrelated and related to their tipped occupation, while still paying them the tipped rate, Id. ¶¶ 93–98; (3) Defendants unlawfully required Plaintiffs to reimburse the restaurants for lost costs, such as broken dishes and unpaid customer bills, Id. ¶¶ 99–104; (5) Defendants required Plaintiffs to perform off the clock work, Id. ¶¶ 105–107; and, (6) Defendants paid Plaintiffs an improper overtime rate in violation to 29 U.S.C. § 207, Id. ¶¶ 108–113.

On April 20, 2020, Jillian Parker joined this lawsuit as an opt-in plaintiff. Doc. 30. Ms. Parker states that she worked in a Worcester, Massachusetts Denny's location that was franchised by Ms. Asnani until approximately May 2018, when the location was acquired by Denny's, Inc. corporate. Doc. 54-3 ¶¶ 3–6. Plaintiffs contemplate a nationwide FLSA collective action and request that the Court permit them to send notice to "all servers employed at any of Defendants’ Denny's restaurants at any point from December 18, 2016 to present." Doc. 54 at 20–21. The Court will refer to members of Plaintiffs’ proposed class as "Servers." The arguments raised by Defendants in their Response brief largely center on the geographic scope of the proposed class. Defendants contend that the proposed class is overbroad because the Complaint is limited to conduct that occurred or is occurring in New Mexico restaurants and Plaintiffs fail to properly allege that they are similarly situated to non-New Mexico Servers. Doc. 64 at 7–9. Defendants argue that the conditional certification of a New Mexico collective action would also be inappropriate due to lack of interest and the individualized nature of Mr. Guarriello's and Ms. Holloway's employment experiences.

Legal Standard

I. FLSA Wage Requirements

Under the Fair Labor Standards Act, an employee may bring a collective action on behalf of "similarly situated" employees as a remedy for violation of the FLSA. 29 U.S.C. § 216(b). The purpose of a collective action is to give "plaintiffs the advantage of lower individual costs to vindicate rights by the pooling of resources," and to benefit the judicial system "by efficient resolution in one proceeding of common issues of law and fact arising from the same alleged ... activity." Hoffmann-La Roche Inc. v. Sperling , 493 U.S. 165, 170, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989). Unlike Federal Rule of Civil Procedure 23 class actions, putative class members under the FLSA must opt-in to the class rather than opt out. Thiessen v. General Electric Capital Corp. , 267 F.3d 1095, 1102 (10th Cir. 2001), cert. denied , 536 U.S. 934, 122 S.Ct. 2614, 153 L.Ed.2d 799 (2002) ; 29 U.S.C. § 216(b) ("No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought."). District courts have discretion to authorize a party asserting FLSA claims on behalf of others to notify putative class members that they may choose to "opt-in" to the suit. Hoffmann-La Roche , 493 U.S. at 169, 110 S.Ct. 482. Court-authorized notice protects against misleading communications by the parties, resolves the parties’ disputes regarding the content of any notice, assures joinder of additional parties is accomplished properly and efficiently, and expedites resolution of the dispute. Id. at 170–171, 110 S.Ct. 482.

The FLSA requires employers to pay a minimum hourly wage, which is currently $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). For a "tipped employee," defined by the statute as an employee engaged in an occupation in which he or she customarily and regularly receives more than $30 per month in tips, 29 U.S.C. § 203(t), the employer must pay a wage of at least $2.13 per hour plus an additional amount based on tips received by the employee that is equal to the difference between the $2.13 cash wage and the current $7.25 minimum wage. 29 U.S.C. § 203(m). In other words, the tip-credit provision of the FLSA permits an employer to pay tipped employees a cash wage of as little as $2.13 an hour, and then use a portion of the employees’ tips to make up the difference between that hourly cash wage and the federal minimum wage. Romero v. Top-Tier Colorado LLC , 849 F.3d 1281, 1282–83 (10th Cir. 2017) (citing 29 U.S.C. § 203(m) ); Fast v. Applebee's Int'l, Inc. , 638 F.3d 872, 876 (8th Cir. 2011).

As the Tenth Circuit has recognized, § 203(m) ’s tip-credit provision is "not without its limits." Romero , 849 F.3d at 1284. First, pursuant to the "Dual Jobs" regulation, no tip-credit may be taken for periods in which a tipped employee spends a significant amount of time performing non-tip generating work. 29 C.F.R. § 531.56(e) ; see also Romero v. Top-Tier Colorado LLC, 274 F. Supp. 3d 1200, 1206 (D. Colo. 2017) (holding that a plaintiff stated a claim for relief when she alleged that a defendant took a tip credit for time spent performing unrelated duties or related duties in excess of 20% of her workweek). Second, both the FLSA and the Department of Labor's implementing regulations place a number of requirements on employers to ensure that tipped employees are adequately compensated for their work. Before an employer can take advantage of the tip-credit provision, it must inform the employee of the related statutory requirements. See Copantitla v. Fiskardo Estiatorio, Inc. , 788 F. Supp. 2d 253, 287–88 (S.D.N.Y. 2011) (citing and discussing 29 U.S.C. § 203(m)(2)(A) ). Employers must permit employees to retain all tips, except to the extent that tips are contributed to a tip pool with other tipped employees. See 29 U.S.C. § 203(m)(2)(A) ; see also 29 U.S.C. § 203(m)(2)(B) ("An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips...."). Third, employers are still bound by the FLSA's overtime requirements. A tipped employee's overtime compensation must be based on one and one-half times his or her regular rate of pay, meaning that the overtime rate is based on the full minimum wage rather than the tip credit rate. See 29 U.S.C. § 207(a) ; 29 C.F.R. § 531.60 (stating that "a tipped employee's regular rate of pay includes the amount of the tip credit taken by the employer per hour").

II. Two-Stage Collective Action Certification

The relevant question under § 216(b) is whether the plaintiff is "similarly situated" to members of the proposed class, as opposed to satisfying the criteria under Rule 23 for class certification. Thiessen , 267 F.3d at 1102 (explaining that Congress adopted the "similarly situated" standard instead of Rule 23 standards). Section 216(b) does not define "similarly situated," but this Court and...