Harrington v. DC Winery, LLC

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BRENDAN HARRINGTON, Plaintiff, v. DC WINERY, LLC d/b/a FIRST BATCH HOSPITALITY, et al., Defendants.

Civil Action No. 22-689 (TSC)

United States District Court, District of Columbia

August 29, 2023

MEMORANDUM OPINION

TANYA S. CHUTKAN, UNITED STATES DISTRICT JUDGE.

Plaintiff Brendan Harrington has sued DC Winery, LLC, along with two of its founders and owners, Brian Leventhal and John Stires, for violations of the Fair Labor Standards Act (“FLSA”) and the District of Columbia Minimum Wage Act (“DCMWA”). Before the court are Defendants' Motion to Dismiss, ECF No. 25, and Plaintiff's Motion for Conditional Certification and Notice, ECF No. 31. For the reasons set forth below, the court will GRANT in part and DENY in part Defendants' Motion, dismissing certain claims without prejudice and giving Plaintiff leave to amend the Complaint. The court will therefore also DENY Plaintiff's Motion without prejudice permitting him to again seek conditional certification after filing an Amended Complaint.

I. BACKGROUND

A. Legal framework

FLSA and DCMWA codify similar wage protections for workers. Both set a minimum hourly wage, see 29 U.S.C. § 206(a); D.C. Code § 32-1003(a), and both create liability for employers who do not pay that wage. 29 U.S.C. § 216(b); D.C. Code § 32-1012(b)(1).

However, both statutes also allow an employer to pay a tipped employee less than minimum wage by taking a “tip credit”-i.e., counting a portion of the employee's tips to satisfy the statutes' minimum hourly wage requirements. See 29 U.S.C. § 203(m); D.C. Code § 32-1003(f)-(g). “[T]he tip credit is considered an affirmative defense to a claim of underpayment that Defendants have the burden of proving.” Portillo v. Smith Commons DC, LLC, 2022 WL 3354730 at *6 (D.D.C. Aug. 13, 2022) (citation omitted).

Under FLSA, a tip credit cannot be applied to an employee's wages unless

such employee has been informed by the employer of the provisions of [the tip credit] subsection, and all tips received by such employee have been retained by the employee, except that this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips.

29 U.S.C. § 203(m)(2)(A). Likewise, a tip credit cannot be applied to an employee's wages under DCMWA unless:

(1) The employer has provided the employee with notice of the following, included in the notice furnished pursuant to § 32-1008(c):

(A) The provisions of [the tipped minimum wage section];

(B) If tips are not shared, that the tipped employee shall retain all tips received;

(C) If tips are shared, the employer's tip-sharing policy; and

(D) The percentage by which tips paid via credit card will be reduced by credit card fees;

(2) If the employer uses tip sharing, the employer has posted the tip-sharing policy; and

(3) All gratuities received by the employee have been retained by the employee, except that this provision shall not be construed to prohibit the sharing of gratuities among employees who customarily receive gratuities.

D.C. Code § 21-1003(g).

If an employer fails to meet any of these requirements, “it loses the ability to invoke the tip credit.” Camara v. Mastro's Restaurants LLC, 340 F.Supp.3d 46, 50 (D.D.C. 2018), aff'd, 952 F.3d 372 (D.C. Cir. 2020) (citations omitted). And “[e]mployees may sue to recover underpaid wages in violation of these requirements under the Fair Labor Standards Act and the D.C. Minimum Wage Revision Act.” Id.

B. Plaintiff's allegations

At the motion to dismiss stage, the court accepts as true the following allegations. From “approximately February 2020 until December 2021,” Plaintiff worked as a bartender at District Winery in Washington, D.C. Compl. ¶¶ 11, 16, 31, ECF No. 1. District Winery is also known as DC Winery, LLC, which in turn is affiliated with corporations founded and owned by Defendants Brian Leventhal and John Stires. Id. ¶¶ 16, 19-20. According to the Complaint, Leventhal and Stires act on behalf of those corporations “by making operational and strategic decisions affecting employees, including decisions affecting employee compensation and permitting employees to work.” Id. ¶¶ 19-20. Plaintiff alleges that during his employment at District Winery, because Defendants claimed the tip credit, he was paid “a subminimum hourly wage plus tips,” as were other bartenders and servers. Id. ¶¶ 31-32, 35. Specifically, he was paid “$5.05 per hour,” which was combined with tips to “bring his effective rate of pay . . . up to the required minimum wage of $15.00 per hour.” Id. ¶ 36.

The Complaint claims “Defendants violated the tip credit” requirements under FLSA and DCMWA in several ways.

■ First, Defendants “failed to inform Plaintiff' and other tipped employees of (a) “the provisions of the tip credit” in each statute, (b) “the amount per hour which Defendants took as a tip credit . . . each time it was changed,' and (c) “the operation, accounting, and distribution of the tip pool.' Id. ¶¶ 44-48, 71-73.

They likewise “failed to post their tip-sharing policies or other provisions of the [DCMWA] in a conspicuous and accessible location.” Id. ¶ 74.

■ Second, Defendants required Plaintiff and other tipped employees “to contribute tips to a tip pool that included ineligible tip pool participants”-specifically, “bussers, expediters, glass polishers, and winery tour guides.” Id. ¶¶ 50, 76-78. The “tour guides do not render any services to traditional restaurant and bar customers,” and the expediters and glass polishers do not “perform their work in view of customers,” “regularly receive tips from customers,” or “take orders from customers.” Id. ¶ 52.

■ Third, Defendants required Plaintiff and other tipped employees “to pay for credit card processing fees in violation of the amount permitted to be deducted.” Id. ¶¶ 55, 79.

■ Fourth, Defendants required Plaintiff and other tipped employees “to perform a number of non-tipped duties” like “wiping down tables, setting tables, [and] busing tables,” as well as “to work for a subminimum hourly wage while the restaurant was closed and there was no opportunity to earn tips,” such that their “non-tipped duties . . . exceeded twenty percent (20%) of their time worked each workweek” and were frequently performed “for a continuous period of time exceeding thirty (30) minutes.” Id. ¶¶ 57-61, 80-81.

Because Plaintiff alleges that those violations also affected his tipped co-workers, he “brings []his DCMWA claim as a class action . . . under Fed.R.Civ.P. 23,” id. ¶ 95, and “brings this lawsuit as a collective action under § 216(b) of the FLSA,” id. ¶ 109.

Since filing the Complaint, Plaintiff has voluntarily dismissed several Defendants. See ECF Nos. 24 (Brooklyn Winery LLC, Chicago Winery LLC), 27 (FB Hospitality, LLC). He has also moved to certify a conditional collective action under FLSA, including opt-in Plaintiffs Larisa Paz and Alexandra Scott, encompassing “[a]ll individuals who worked as bartenders or servers for Defendants at any time during the three (3) year period preceding the filing of this lawsuit, and who were paid a direct cash subminimum hourly wage.” See ECF No. 31 at 4-5; Compl. ¶ 86.

II. LEGAL STANDARD

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). The court does not assess the truth of what is asserted nor “whether a plaintiff has any evidence to back up what is in the complaint.” Id. (citation omitted). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation omitted). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. The court therefore construes the complaint “in favor of the plaintiff, who must be granted the benefit of all inferences that can be derived from the facts alleged.” Hettinga v. United States, 677 F.3d 471, 476 (D.C. Cir. 2012) (internal quotation marks omitted). This presumption does not apply, however, to a “legal conclusion couched as a factual allegation.” Iqbal, 556 U.S. at 678. Accordingly, a complaint must offer more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

III. ANALYSIS

Plaintiff's Complaint suffers from fatal defects that require dismissal in part. However, he requests leave to amend it and remedy any defects. See Opp'n to Mot. to Dismiss at 14-15, ECF No. 26. Federal Rule of Civil Procedure 15 directs courts to “freely give leave” to amend a complaint “when justice so requires.” “If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits.” Foman v. Davis, 371 U.S. 178, 182 (1962). Granting leave to amend is therefore appropriate “[i]n the absence of any apparent or declared reason” to deny it, “such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.” Id. Defendants oppose any amendment but do not cite any of the relevant factors. See ECF No. 28 at 9-10. They consequently have not carried their burden for demonstrating why leave should be denied, see Council on Am.-Islamic Rels. Action Network, Inc. v. Gaubatz, 891 F.Supp.2d 13, 31 (D.D.C. 2012), and the court will grant it.

A. Personal jurisdiction...