Myers v. The Copper Cellar

• Decision Date: 18 June 1999
• Docket Number: No. 98-5595,98-5595
• Citation: 192 F.3d 546
• Parties: (6th Cir. 1999) Eric Myers, Jimmy Underwood, Michelle Grundorf, et al., Plaintiffs-Appellants, v. The Copper Cellar Corporation, Defendant-Appellee. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 546

192 F.3d 546 (6th Cir. 1999)

Eric Myers, Jimmy Underwood, Michelle Grundorf, et al., Plaintiffs-Appellants, v. The Copper Cellar Corporation, Defendant-Appellee.

No. 98-5595

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: June 18, 1999

Decided and Filed: September 3, 1999

Appeal from the United States District Court for the Eastern District of Tennessee at Knoxville; No. 95-00541--Thomas W. Phillips, Magistrate Judge.

Justin M. Schwamm, Sr., Knoxville, Tennessee, Helen de Haven, Grundy, Virginia, for Appellants.

Dudley W. Taylor, TAYLOR LAW FIRM, Knoxville, Tennessee, David H. Jones, Scott & Jones, Sevierville, TN, for Appellee.

Before: KRUPANSKY, RYAN, and SUHRHEINRICH, Circuit Judges

OPINION

KRUPANSKY, Circuit Judge.

The three named plaintiffs-appellants, Eric Myers, Jimmy Underwood, and Michelle Grundorf, joined by twenty-seven similarly situated "opt-in" plaintiffs, ¹ initiated a complaint under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 201-219 ("the FLSA"), on September 29, 1995 (amended January 17, 1997), against defendant The Copper Cellar Corporation ("Copper Cellar"), the owner and operator of approximately ten steak and seafood restaurants in the Knoxville, Tennessee area, for alleged unpaid statutory minimum wages, liquidated damages, damages for alleged retaliation and intimidation, sanctions for alleged misconduct, and attorney fees. Each plaintiff had been employed in a Copper Cellar restaurant as a tipped wait staff employee during some part, or all, of the period September 29, 1992 through September 29, 1995. On review, the plaintiffs have challenged an adverse judgment entered by a United States Magistrate Judge following a bench trial authorized by 28 U.S.C. § 636(c) and Fed. R. Civ. P. 73.

During the subject three year span, Copper Cellar's corporate standard operating procedures dictated that the table server must prepare a house salad for each of his or her customers². The waiter or waitress would draw ingredients from storage bowls which had been stocked by the kitchen staff, mix them in a standard salad bowl, add the customer-specified dressing, and deliver it to the patron. However, during various peak volume seasons, days, or hours, management at some Copper Cellar restaurants would occasionally designate a single wait staff employee exclusively to prepare house salads for all table servers then on duty. During such "salad shifts," the assigned salad maker typically performed no substantial duties other than the assembly of house salads and associated tasks, such as the maintenance of the salad preparation area and the restocking of depleted salad ingredients obtained from the galley. The salad preparer had no personal contact with diners, labored outside their view, and received no direct customer gratuities.

Nonetheless, because the defendant considered the salad preparers to perform a wait staff function, it compelled the inclusion of the salad maker within the shift's "tip pool." Generally, Copper Cellar required each of its directly tipped service employees to contribute a portion of his or her gratuities (generally an amount equal to 2% or 3% of the server's total gross sales, although the practice varied among the defendant's restaurants) earned during the shift to a fund to be divided among the employees who had assisted the servers, including bus boys, runners, service bartenders, and (if one was on duty) the salad maker. In turn, the employer compensated personnel who shared in customer largess at a rate equal to approximately 50% of the $4.25 per hour prevailing statutory minimum wage (to wit, $2.13 per hour), claiming for itself the "tip credit" against the minimum wage obligation authorized by 29 U.S.C. § 203(m)³. The defendant has endeavored to justify its classification of the salad assemblers as properly "tipped" service employees by reason of their performance of a task which each individual server otherwise would have been required to discharge, thereby enhancing the efficiency of customer service and concurrently increasing the total number of tables which a server could tend, which, in tandem, escalated the server's potential perquisite earnings during the subject shift. ⁴ See 29 C.F.R. §531.54 (recognizing that bus boys who assist servers but who customarily do not directly receive diner-donated gratuities may properly be included in an employer-mandated tip pool)⁵.

In opposition, the plaintiffs have contended that the salad makers were not qualified "tipped employees" because they performed exclusively behind-the-scenes food preparation, rather than true customer service, functions. See 29 C.F.R. §531.56(e) (illustrating that an employee who discharges distinct duties on diverse work shifts may qualify as a tipped employee during one shift, such as one in which he or she serves tables, but might not qualify as a tipped employee on another shift, for example, one during which he or she performs maintenance tasks). According to the plaintiffs, the defendant's inclusion of salad preparers within a shift's tip pool invalidated its claimed statutory tip attribution against its minimum wage obligations towards the affected workers on that shift; hence, the defendant owes accrued wages equal to $2.12 to each plaintiff for each hour worked between September 29, 1992 and September 29, 1995 during any shift which included a scheduled salad maker. The district court agreed, finding that, because the salad maker's duties more closely resembled those of non-tipped kitchen staff than tipped table service personnel, they could not legitimately be incorporated into a section 203(m) tip pool.

This circuit recently affirmed a magistrate judge's summary judgment ruling that hosts and hostesses at Outback steak houses qualified as "tipped employees," and thus were legitimately subsumed into a section 203(m) tip pool, because they worked in a customarily "tipped" service occupation. Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294, 300-02 (6th Cir. 1998). On appellate review, this court concluded that, as a factual matter, the actual employment functions of the Outback hosts/hostesses entailed sufficient customer interaction and table attendance duties to qualify their job classification as among the types which have traditionally generated service gratuities. ⁶ The Kilgore court explained:

Hosts at Outback are "engaged in an occupation in which they customarily and regularly receive tips" because they sufficiently interact with customers in an industry (restaurant) where undesignated tips are common. Although the parties dispute exactly how hosts spend their time working at Outback, hosts do perform important customer service functions: they greet customers, supply them with menus, seat them at tables, and occasionally "enhance the wait." Like bus persons, who are explicitly mentioned in 29 C.F.R. § 531.54 as an example of restaurant employees who may receive tips from tip outs by servers, hosts are not the primary customer contact but they do have more than de minimis interaction with the customers. One can distinguish hosts from restaurant employees like dishwashers, cooks, or off-hour employees like an overnight janitor who do not directly relate with customers at all. Additionally, the fact that Outback prohibits hosts from receiving tips directly from customers provides some evidence that Outback hosts work in an occupation that customarily and regularly receives tips.

Id. at 301-02 (brackets and ellipses omitted; quotations in original).

In the case sub judice, the magistrate judge's post-trial finding that Copper Cellar's salad makers did not engage in a customarily "tipped" occupation was not clearly erroneous. ⁷ Fed. R. Civ. P. 52(a); Anderson v. City of Bessemer City, 470 U.S. 564, 573-75 (1985); Kline v. Tennessee Valley Authority, 128 F.3d 337, 341 (6th Cir. 1997). Indeed, on the instant record, a contrary finding would have constituted clear error in light of Kilgore. Because the salad preparers abstained from any direct intercourse with diners, worked entirely outside the view of restaurant patrons, and solely performed duties traditionally classified as food preparation or kitchen support work, they could not be validly categorized as "tipped employees" under section 203(m). Accordingly, during the work shifts in which salad mixers were included within the tip pool, the pooling scheme was illegal; thus each employee who was compelled to contribute to such a tip pool was statutorily entitled to payment of the full $4.25 per hour minimum wage for all work time logged during those shifts. 29 U.S.C. §203(m); Kilgore, 160 F.3d at 302.

Nonetheless, an FLSA plaintiff must prove by a preponderance of evidence that he or she "performed work for which he [or she] was not properly compensated." Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 686-87 (1946). Often, the plaintiff can prove his or her "under-compensation" damages through discovery and analysis of the employer's code-mandated records. ⁸ Id. at 687. However, if the employer kept inaccurate or inadequate records, the plaintiff's burden of proof is relaxed, ⁹ and, upon satisfaction of that relaxed burden, the onus shifts to the employer to negate the employee's inferential damage estimate. Id. at 687-88.

In the subject cause, the magistrate concluded that each plaintiff failed to prove his or her damages caused by the employer's invalid tip redistribution regime. The plaintiffs had merely invoked payroll records produced by the defendant which reflected the total number of hours clocked by each employee on a given work day, but which failed to disclose the precise hours of the day or the shift worked by any employee; coupled with imprecise testimony from several plaintiffs which evinced that certain Copper Cellar restaurants tended to schedule salad assemblers during certain high-traffic hours, days, or seasons. However, the defendant...