Crumbling v. Miyabi Murrells Inlet, LLC

• Decision Date: 16 June 2016
• Docket Number: C.A. No.: 2:15-cv-4902-PMD
• Citation: 192 F.Supp.3d 640
• Court: U.S. District Court — District of South Carolina
• Parties: Krista CRUMBLING; William Stone; Christopher Rich ; and Anthony Girard, on behalf of themselves and all others similarly situated, Plaintiffs, v. MIYABI MURRELLS INLET, LLC; Charleston Miyabi, Inc.; Columbia Miyabi, Inc.; Fantasy Far East, Inc.; United Will Kyoto USA, Inc. ; Miyabi Greenville, Inc.; Fayetteville Miyabi, Inc.; Augusta Miyabi, Inc. ; Savannah Miyabi, Inc. ; Capital Japan, Inc. d/b/a Miyabi; Koichiro Hirao, individually; Koichiro Maeda, individually; and John Does 1–10, individually, Defendants.

192 F.Supp.3d 640

Krista CRUMBLING; William Stone; Christopher Rich ; and Anthony Girard, on behalf of themselves and all others similarly situated, Plaintiffs,

v.MIYABI MURRELLS INLET, LLC; Charleston Miyabi, Inc.; Columbia Miyabi, Inc.; Fantasy Far East, Inc.; United Will Kyoto USA, Inc. ; Miyabi Greenville, Inc.; Fayetteville Miyabi, Inc.; Augusta Miyabi, Inc. ; Savannah Miyabi, Inc. ; Capital Japan, Inc. d/b/a Miyabi; Koichiro Hirao, individually; Koichiro Maeda, individually; and John Does 1–10, individually, Defendants.

C.A. No.: 2:15-cv-4902-PMD

United States District Court, D. South Carolina, Charleston Division.

Signed June 16, 2016

Bruce E. Miller, Bruce E. Miller Law Office, Charleston, SC, for Plaintiffs.

Emma Ruth H. Brittain, Thomas and Brittain, Henrietta U. Golding, James Keith Gilliam, McNair Law Firm, Myrtle Beach, SC, Mary Hughes Cherry, Melissa Ashley Fried, Nexsen Pruet, Charleston, SC, for Defendants.

ORDER

PATRICK MICHAEL DUFFY, United States District Judge

This matter is before the Court on several motions to dismiss filed by various Defendants (ECF Nos. 36, 39, 40, 51, 68, 70, 74).¹ Also before the Court are three motions to stay filed by various Defendants (ECF Nos. 69, 71, 76), and Plaintiffs' Motion to Certify (ECF No. 65). For the reasons set forth herein, the motions to dismiss are granted in part and denied in part, and the other motions are denied as moot.

BACKGROUND

On December 10, 2015, Plaintiffs commenced this action on behalf of themselves and all others similarly situated, seeking unpaid minimum wages and unpaid overtime wages pursuant to the collective action provision of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b). Plaintiffs also seek relief for unauthorized deductions from their wages pursuant to the South Carolina Payment of Wages Act ("SCPWA"), S.C. Code Ann. § 41–10–10, et seq. Plaintiffs are former servers at several Miyabi restaurant locations in South Carolina, North Carolina, and Georgia.

Plaintiffs primarily allege that Defendants used tip pools that violated the FLSA. Specifically, Plaintiffs assert that Defendants paid some of their employees an hourly wage lower than the statutory minimum wage using the FLSA's Tip Credit provision, 29 U.S.C. § 203(m). Plaintiffs further assert that while Defendants were paying less than the statutory minimum wage using the Tip Credit provision, they required servers to contribute a portion of their tips to tip pools to compensate other employees. Finally, Plaintiffs allege that some of the employees who received money from the tip pools were non-tipped employees who did not qualify to share in the tip pools because they did not customarily and ordinarily receive tips. Because these non-tipped employees did not customarily and ordinarily receive tips, as required by the Tip Credit provision, Plaintiffs allege that the tip pools they and the other potential class members shared with the non-tipped employees violated the FLSA.

LEGAL STANDARD

Defendants' standing argument implicates this Court's subject matter jurisdiction and is governed by Rule 12(b)(1). Usually, "questions of subject matter jurisdiction must be decided ‘first, because they concern the court's very power to hear the case.’ " Roman v. Guapos III, Inc. , 970 F.Supp.2d 407, 411 (D.Md.2013) (quoting Owens–Ill., Inc. v. Meade , 186 F.3d 435, 442 n. 4 (4th Cir.1999) ). The plaintiff bears the burden of proof on questions of subject matter jurisdiction. See Evans v. B.F. Perkins Co. , 166 F.3d 642, 647 (4th Cir.1999). "When a defendant challenges subject matter jurisdiction pursuant to Rule 12(b)(1), ‘the district court is to regard the pleadings as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.’ " Id. (quoting Richmond, Fredericksburg & Potomac R.R. Co. v. United States , 945 F.2d 765, 768 (4th Cir.1991) ). "The district court should grant the Rule 12(b)(1) motion to dismiss ‘only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.’ " Id. (quoting Richmond, Fredericksburg & Potomac R.R. Co. , 945 F.2d at 768 ).

DISCUSSION²

Plaintiffs filed their initial complaint on December 10, 2015. Then, on February 1, 2016, Plaintiffs filed their first amended complaint. Without Defendants' consent or the Court's leave, Plaintiffs then filed second and third amended complaints on March 8 and March 10, respectively. Defendants filed three different motions to dismiss Plaintiffs' first amended complaint pursuant to Rule 12(b)(6) on February 22, 2016.

Although the Court has concerns about whether Plaintiffs' second and third amended complaints were filed in compliance with Rule 15, the Court may look beyond the pleadings in its evaluation of standing. Accordingly, without deciding whether those amended complaints are valid, the Court will consider the allegations contained therein. In their various motions to dismiss, Defendants first contend that the Greenville, Fayetteville, and Augusta Miyabi locations should be dismissed because no plaintiff alleges that he or she worked at those locations. Second, Defendants question whether or not Plaintiffs have standing to bring this entire action in its current form. Because standing is a threshold question, the Court will address it first. See Roman , 970 F.Supp.2d at 411.

Standing

"As the party invoking federal jurisdiction, Plaintiffs bear the burden of establishing standing under Article III of the Constitution." Roman , 970 F.Supp.2d at 412 (quoting McBurney v. Cucinelli , 616 F.3d 393, 410 (4th Cir.2010) ). As explained by the Fourth Circuit:

The irreducible constitutional minimum of standing requires (1) an injury in fact—a harm suffered by the plaintiff that is concrete and actual or imminent, not conjectural or hypothetical; (2) causation—a fairly traceable connection between the plaintiff's injury and the complained-of conduct of the defendant; and (3) redressability—a likelihood that the requested relief will redress the alleged injury.

McBurney , 616 F.3d at 402 (quoting Steel Co. v. Citizens for a Better Env't , 523 U.S. 83, 102–03, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) ) (internal quotation marks omitted). Here, Plaintiffs have clearly alleged a sufficient injury-in-fact: the failure to properly be compensated for hours worked. However, whether those injuries may be traced to, or redressed by, the various Defendants remains in question.

Defendants make two separate standing arguments. First, Defendants assert that Plaintiffs lack standing to maintain any claims against the Miyabi restaurant entities with which Plaintiffs had no employer–employee relationship. As discussed above, standing requires both traceability and redressability. See McBurney , 616 F.3d at 402. Thus, Plaintiffs must trace their injury to the allegedly wrongful conduct of the Defendants and must be able to recover from those Defendants in the event of a favorable decision. In order for Defendants to be liable under the FLSA, they must have an employer–employee relationship with Plaintiffs. Roman , 970 F.Supp.2d at 412. Accordingly, "Plaintiffs' injuries are only traceable to, and redressable by, those who employed them." Id. Therefore, the Court must conduct an employer analysis to determine whether Plaintiffs may trace their injuries to each Defendant.

An employer under the FLSA is "any person acting directly or indirectly in the interest of an employer in relation to an employee." 29 U.S.C. § 203(d). Under that provision, " ‘[s]eparate persons or entities that share control over an individual worker may be deemed joint employers....' " Roman , 970 F.Supp.2d at 413 (quoting Schultz v. Capital Int'l. Sec., Inc. , 466 F.3d 298, 305 (4th Cir.2006) ). The applicable federal regulations provide several examples of joint employment:

Where the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employment relationship generally will be considered to exist in situations such as:

(1) Where there is an arrangement between the employers to share the employee's services, as, for example, to interchange employees;

(2) Where one employer is acting directly or indirectly in the interest of the other employer (or employers) in relation to the employee; or

(3) Where the employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.

29 C.F.R. § 791.2(b). If the employer–employee relationship does not match one of these examples, "courts are to consider the ‘economic realities' of the relationship between the employee and the putative employer." Roman , 970 F.Supp.2d at 413 (citing Schultz , 466 F.3d at 304 ). To examine the economic realities of the relationship, the Fourth Circuit has used the factors discussed in Bonnette v. California Health & Welfare Agency , 704 F.2d 1465 (9th Cir.1983), and Zheng v. Liberty Apparel Co. , 355 F.3d 61 (2d Cir.2003). Those factors include the "(1) authority to hire and fire employees; (2) authority to supervise and control work schedules or employment conditions; (3) authority to determine the rate and method of payment; and (4) maintenance of employment records." Roman , 970 F.Supp.2d at 413. However, " ‘the determination of joint-employment must be based upon the circumstances of the whole activity.’ " Id. (quoting Quinteros v. Sparkle Cleaning, Inc. , 532 F.Supp.2d 762, 775 (D.Md.2008) ).

Defendants do not dispute that the Miyabi restaurant entities in this case are employers of each of the employees who worked for their specific restaurant. For example, Defendants do not contest that Miyabi Murrell's Inlet is the employer of Krista Crumbling and...