Etheridge v. Reins International California, Inc.

• Decision Date: 27 March 2009
• Docket Number: No. B205005.,B205005.
• Citation: 172 Cal.App.4th 908,91 Cal. Rptr. 3d 816
• Court: California Court of Appeals Court of Appeals
• Parties: BRAD ETHERIDGE, Plaintiff and Appellant, v. REINS INTERNATIONAL CALIFORNIA, INC., Defendant and Respondent.

172 Cal.App.4th 908

91 Cal. Rptr. 3d 816

BRAD ETHERIDGE, Plaintiff and Appellant, v. REINS INTERNATIONAL CALIFORNIA, INC., Defendant and Respondent.

No. B205005.

Court of Appeals of California, Second District, Division Three.

March 27, 2009.

[172 Cal.App.4th 910]

Kingsley & Kingsley, Eric B. Kingsley, Darren M. Cohen and Brian Levine for Plaintiff and Appellant.

Spiro Moss Barness and Dennis F. Moss for California Employment Lawyers Association as Amicus Curiae on behalf of Plaintiff and Appellant.

Thomas & Associates and Russell J. Thomas, Jr., for Defendant and Respondent.

Law Offices of Steven Drapkin and Steven Drapkin; Paul, Hastings, Janofsky & Walker and Stephen L. Berry for California Restaurant Association and California Hotel & Lodging Association as Amici Curiae on behalf of Defendant and Respondent.

OPINION

CROSKEY, J.—

Tip pooling, a practice by which tips left by patrons at restaurants and other establishments are shared among employees, is a common practice throughout California and the nation. No California statutes expressly address the practice. In this case, restaurant servers challenge the legality of a mandatory tip-pooling arrangement, whereby, as a condition of their employment, the servers must share tips with certain other employees at the restaurant. While the servers do not contest the requirement that bussers share in the tip pool, they challenge the inclusion of employees who do not provide "direct table service." The trial court sustained the demurrer of the restaurant without leave to amend, on the basis that employees who do not provide direct table service may, nonetheless, participate in mandatory tip pools. We agree and, therefore, affirm.

FACTUAL AND PROCEDURAL BACKGROUND¹

Defendant Reins International California, Inc. (Reins), operates several restaurants in California. Brad Etheridge and Hannah L. Hannah are, or were, employed by Reins as servers; they brought their complaint on behalf of the class of all persons who are, or have been, employed as servers by Reins within the four years immediately prior to the filing of their complaint.² The complaint alleged that Reins has a mandatory tip-pooling policy by which its servers are required to "tip out" certain categories of Reins's employees who do not provide direct table service. Specifically, it is alleged that servers are required to pay a share of their tips to the kitchen staff, bartender, and dishwashers.

Believing that requiring them to share tips with employees who do not provide direct table service violates the Labor Code, Etheridge brought suit. The operative complaint is his second amended complaint.³ He alleges three causes of action for unlawful and unfair business practices (Bus. & Prof. Code, § 17200), based on the allegedly unlawful and unfair tip-pooling practices described above.⁴ The fourth cause of action sought civil penalties under Labor Code sections 2698 and 2699, for violations of the Labor Code.⁵ Each cause of action was based on Labor Code section 351, governing gratuities, and Etheridge's interpretation of that statute as prohibiting mandatory tip pooling benefitting employees who do not deliver direct table service to patrons.⁶

Reins demurred, arguing that Labor Code section 351 does not limit tip-pooling participation to employees who provide direct table service. Reins argued that as long as tips were not shared with management (which Etheridge did not allege), the tip pool was permissible.

On August 9, 2007, the trial court sustained the demurrer without leave to amend. The court's order stated, "the entire action is dismissed with prejudice." On October 5, 2007, Etheridge filed a notice of appeal. Etheridge ultimately filed two notices of appeal in this case. After the first notice of appeal was filed, this court indicated that the appeal was in default for failure to pay the filing fee. In the apparent belief that the first notice of appeal was premature in the absence of a judgment, he chose not to pursue the first appeal, which was dismissed by this court on November 7, 2007. Instead, Etheridge returned to the trial court and obtained a judgment. Judgment was entered on December 27, 2007; notice of entry was served on January 8, 2008. On January 10, 2008, Etheridge filed his second notice of appeal, specifically indicating that he was appealing from the December 27, 2007 judgment.

Reins filed a motion to dismiss the second appeal, on the basis that a second appeal could not be taken from the same appealable order. We denied the motion without prejudice to its renewal based on, among other things, copies of the relevant documents from the trial court record. Reins did not renew its motion; instead, Reins included the relevant documents in a respondent's appendix and briefly addressed the issue in its respondent's brief.

Oral argument was heard on August 13, 2008. After argument, the court invited amicus curiae briefing on the issue of the legality of a mandatory tip pool requiring tips to be shared with employees who do not provide direct table service. The California Employment Lawyers Association filed an amicus curiae brief on behalf of Etheridge. The California Restaurant Association and the California Hotel & Lodging Association filed a joint brief as amici curiae on behalf of Reins. The parties were permitted to file responsive briefs to the briefs of the amici curiae.

ISSUES ON APPEAL

There are two issues presented by this appeal: (1) whether Etheridge is barred from proceeding on the second notice of appeal by the dismissal of the first appeal; and (2) whether a mandatory tip pool, whereby restaurant tips are shared with employees who do not provide direct table service, is violative of Labor Code section 351.

DISCUSSION

1. The Appeal May Proceed

(1) The August 9, 2007 order sustaining the demurrer states that "the entire action is dismissed with prejudice." It is signed by the trial court. "All dismissals ordered by the court shall be in the form of a written order signed by the court and filed in the action and those orders when so filed shall constitute judgments and be effective for all purposes . . . ." (Code Civ. Proc., § 581d.) As a judgment, a dismissal is appealable. (Code Civ. Proc., § 904.1, subd. (a)(1).) Etheridge's first notice of appeal, taken from the August 9, 2007 dismissal order, was therefore properly taken from a judgment. His belief that the appeal had been prematurely taken from a nonappealable order was mistaken; he should have pursued the appeal, rather than allow it to be dismissed for failure to submit the filing fee.

Etheridge's second notice of appeal was filed on January 10, 2008, after he had obtained a document entitled "Judgment." There is no question that if we construe this notice of appeal as being taken from the earlier filed dismissal,⁷ the appeal is timely.⁸ The only question is whether the dismissal of the first appeal, for failure to pay the filing fee, bars Etheridge from pursuing a second appeal of the same dismissal. It does not.

Guidance is supplied by our Supreme Court's decision in Swortfiguer v. White et al. (1901) 6 Cal.Unrep. 779 . In that case, the plaintiff filed a notice of appeal from a superior court judgment. While that appeal was pending, the trial court attempted to modify its judgment; the plaintiff then filed a notice of appeal from the modified judgment, and attempted to pursue the second (but apparently not the first) appeal. As the purported modification to the judgment was made without jurisdiction, the modified judgment was void. The court therefore dismissed the second appeal on defendant's motion. The plaintiff was ultimately permitted to pursue her appeal with the first notice of appeal and the record she had filed in the second appeal. Defendant's argument against this was considered "too technical to prevail against the consideration that the plaintiff, having a valid appeal and a printed transcript of the record on file, ought not to be deprived of a hearing by the harmless mistake she made in seeking to prosecute the second appeal." (Ibid.) Similar considerations apply here. Etheridge filed two notices of appeal, as did the plaintiff in Swortfiguer, and mistakenly chose to proceed on the notice that was invalid. He should not be deprived of the right to appeal by the harmless mistake he made in seeking to prosecute the second, instead of the first, appeal. Were it necessary, this court would issue an order, nunc pro tunc, vacating the dismissal of the first appeal, in order to enable him to proceed to a resolution on the merits.

2. Tip Pool Participants Are Not Limited to Employees Who Provide Direct Table Service

a. Standard of Review

"In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. `We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.' [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff." (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [216 Cal.Rptr. 718, 703 P.2d 58].)

b. The Practice of Tipping

The practice of "tipping the providers of personal service has endured and is now a well-accepted part of our day-to-day lives." (Searle v. Wyndham Internat., Inc. (2002) 102 Cal.App.4th 1327, 1331 .)...