Trejo v. Ryman Hospitality Props., Inc.

• Decision Date: 29 July 2015
• Docket Number: No. 14–1485.,14–1485.
• Citation: 795 F.3d 442
• Parties: Patricio David TREJO, Plaintiff, Mohammad Sazzad Jahir; Anthony Mintu Gomes, Plaintiffs–Appellants, v. RYMAN HOSPITALITY PROPERTIES, INC., a Delaware corporation; Marriott International, Inc., a Delaware corporation, Defendants–Appellees. United States of America, Amicus Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

795 F.3d 442

Patricio David TREJO, Plaintiff

Mohammad Sazzad Jahir; Anthony Mintu Gomes, Plaintiffs–Appellants

v.RYMAN HOSPITALITY PROPERTIES, INC., a Delaware corporation; Marriott International, Inc., a Delaware corporation, Defendants–Appellees.

United States of America, Amicus Curiae.

No. 14–1485.

United States Court of Appeals, Fourth Circuit.

Argued: May 12, 2015.

Decided: July 29, 2015.

ARGUED:Charity Chidinma Emeronye Swift, Swift & Swift, Attorneys at Law, P.L.L.C., Alexandria, Virginia, for Appellants. Joshua B. Waxman, Littler Mendelson, P.C., Houston, Texas; Daniel Vincent Johns, Ballard Spahr LLP, Philadelphia, Pennsylvania, for Appellees. ON BRIEF:Stephen Christopher Swift, Swift & Swift, Attorneys at Law, P.L.L.C., Alexandria, Virginia, for Appellants. Steven E. Kaplan, Washington, D.C., David B. Jordan, Littler Mendelson, P.C., Houston, Texas, for Appellee Marriott International, Incorporated; Michelle M. McGeogh, Ballard Spahr LLP, Baltimore, Maryland, for Appellee Ryman Hospitality Properties, Inc. Rod J. Rosenstein, United States Attorney, Baltimore, Maryland, Joyce R. Branda, Acting Assistant Attorney General, Michael Jay Singer, John S. Koppel, Civil Division, United States Department of Justice, Washington, D.C., for Amicus United States of America.

Before SHEDD, DUNCAN, and HARRIS, Circuit Judges.

Opinion

Affirmed by published opinion. Judge SHEDD wrote the opinion, in which Judge DUNCAN joined. Judge HARRIS wrote a separate opinion concurring in the judgment.

SHEDD, Circuit Judge:

Mohammad Sazzad and Anthony Gomes (the Plaintiffs)¹ brought this action against their employers, Ryman Hospitality Properties Inc., and Marriott International, Inc. (the Defendants), alleging violations of the tip-credit provision of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 203(m), their collective bargaining agreement, and Maryland's Wage Payment and Collection Law. For the following reasons, we affirm the district court's dismissal of the complaint.

I.

The Plaintiffs work as servers for hotels and restaurants at the National Harbor complex in Prince George's County, Maryland.² The properties were previously owned by Ryman but are currently owned and operated by Marriott. The Plaintiffs are also members of the UNITE HERE, Local 25 union. Although the servers have not voluntarily agreed to a tip—pooling arrangement, the Plaintiffs allege that the Defendants take a portion of their tips-roughly 4% of the total daily food and drink sales—and redistribute those tips to bartenders, server assistants, busboys, and food runners. (J.A. 11–12). Sazzad eventually asked a union official if the tip-pooling arrangement was legal and was told that it was not.

In response, the Plaintiffs filed suit against the Defendants, alleging that the tip-pooling arrangement violated the FLSA, 29 U.S.C. § 203(m), the 2009 Collective Bargaining Agreement between UNITE HERE and the Defendants, and the Maryland Wage Payment and Collection Law. Importantly, the Plaintiffs allege that the Defendants violated the FLSA by “not paying Plaintiffs all their earned tips,” (J.A. 14), and limit their requested relief to, inter alia, “the amount of tip wages” taken by the Defendants (J.A. 16). Thus, the Plaintiffs do not allege that they were paid below minimum wage; even absent tips, their base salary was above the minimum wage at all times. Further, the Plaintiffs do not allege that they were forced to work overtime without proper pay.

The district court, following a hearing, granted the Defendants' Rule 12(b)(6) motion to dismiss. As to the FLSA count, the court held that because the Plaintiffs were paid the minimum wage, § 203(m) “does not have anything to do with this case.” (J.A. 131). The court noted that the Plaintiffs “do not want to” allege a violation of Department of Labor Regulations which extend § 203(m) to employers who are not utilizing the statute's tip credit, (J.A. 131), but nonetheless stated that those regulations “exceeded [the Department of Labor's] authority and ... don't get past step 1 of the Chevron³ analysis in terms of deference,” (J.A. 132). The court dismissed the collective bargaining count for failure to exhaust, and the Maryland state law count because the Plaintiffs agreed that a “tip” was not a “wage” under the Maryland statute. The Plaintiffs timely appealed.⁴

II.

The Plaintiffs continue to press their claim that the Defendants violated the FLSA by requiring them to join the tip-pooling arrangement.⁵ We review the grant of a motion to dismiss under Rule 12(b)(6) de novo. United States ex rel. Rostholder v. Omnicare, Inc., 745 F.3d 694, 700 (4th Cir.2013). The Plaintiffs' argument turns on a question of statutory interpretation. “When interpreting statutes we start with the plain language.” U.S. Dep't of Labor v. N.C. Growers Ass'n, 377 F.3d 345, 350 (4th Cir.2004). “It is well established that when the statute's language is plain, the sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms.” Lamie v. U.S. Tr., 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004) (internal quotation marks omitted). In determining the plain meaning of the text, we must consider the “broader context of the statute” as a whole, Santoro v. Accenture Fed. Servs., LLC, 748 F.3d 217, 223 (4th Cir.2014), in light of the “cardinal rule,” that “the meaning of statutory language, plain or not, depends on context.” King v. St. Vincent's Hosp., 502 U.S. 215, 221, 112 S.Ct. 570, 116 L.Ed.2d 578 (1991) (citations omitted).

The FLSA is best understood as the “minimum wage/maximum hour law.” Monahan v. County of Chesterfield, 95 F.3d 1263, 1266 (4th Cir.1996) (internal quotation marks omitted). In enacting the FLSA, Congress intended “to protect all covered workers from substandard wages and oppressive working hours.” Barrentine v. Arkansas–Best Freight Sys., Inc., 450 U.S. 728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981). “ ‘The substantive sections of the FLSA, narrowly focusing on minimum wage rates and maximum working hours, bear out its limited purposes.’ ” Monahan, 95 F.3d at 1267 (quoting Lyon v. Whisman, 45 F.3d 758, 764 (3d Cir.1995) ). Thus, the Act requires payment of a minimum wage, 29 U.S.C. § 206(a), and limits the maximum working hours an employee may work without receiving overtime compensation, 29 U.S.C. § 207(a). Section 216(b) provides a cause of action for violations of these two provisions, permitting employees to seek damages, as relevant here, in “the amount of their unpaid minimum wages” and (in appropriate circumstances) an equal amount of liquidated damages. 29 U.S.C. § 216(b).⁶

Here, the Plaintiffs concede that they are paid a full minimum wage absent tips. See J.A. 100 (“Section 206 talks about employer's paying minimum wage. We never mentioned minimum wage in our complaint ... because that was not our problem”). Under direct questioning from the district court, and at oral argument before us, the Plaintiffs affirmed that they are paid the minimum wage and that the Defendants do not claim the tip credit to pay the minimum wage. Accordingly, the Plaintiffs essentially concede that they do not have a private right of action under § 216(b) because they are not seeking damages for unpaid minimum wages. See Monahan, 95 F.3d at 1284 (rejecting a pure gap time pay claim under the FLSA because, “[i]f the employee has been properly paid at or above minimum wage for all nonovertime hours” there is no FLSA violation).

Instead, however, the Plaintiffs argue that § 203(m), commonly called the tip credit provision, creates a free-standing right to bring a claim for lost “tip” wages. Passed in 1974, § 203(m) defines the term “wage” for “tipped employees” as follows:

In determining the wage an employer is required to pay a tipped employee, the amount paid such employee by the employee's employer shall be an amount equal to—(1) the cash wage paid such employee which for purposes of such determination shall be not less than the cash wage required to be paid such an employee on August 20, 1996; and (2) an additional amount on account of the tips received by such employee which amount is equal to the difference between the wage specified in paragraph (1) and the wage in effect under section 206(a)(1) of this title.

The additional amount on account of tips may not exceed the value of the tips actually received by an employee.

The preceding 2 sentences shall not apply with respect to any tipped employee unless such employee has been informed by the employer of the provisions of this 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).

In other words, § 203(m) permits an employer, in certain circumstances, to take a credit against the minimum wage by using an employees' tips as “wages.” An employer can thus pay tipped employees (1) a cash wage of $2.13 plus (2) an additional amount in tips that brings the total wage to the federal minimum wage. Cumbie v. Woody Woo, Inc., 596 F.3d 577, 580 (9th Cir.2010). In a situation where the employer uses tips to help meet the minimum wage requirement for its employees, the employee must be informed of this fact and the employee must also be permitted to keep tips, unless the employee is part of a tip pool with other employees who regularly receive tips. The provision was “to make clear the original Congressional intent that an employer could not use the tips of a ‘tipped employee’ to satisfy more than [a certain percentage] of the Act's applicable minimum wage.” Richard v. Marriott Corp., 549 F.2d 303, 304 (4th Cir.1977) (internal quotation marks omitted).

Here, the Plaintiffs argue that, because they were never informed of the FLSA's tip-credit provision and the tip-pooling arrangement includes employees that are not regularly tipped ...