Matamoros v. Starbucks Corp.

• Decision Date: 09 November 2012
• Docket Number: Nos. 12–1189,12–1277.,s. 12–1189
• Citation: 699 F.3d 129
• Parties: Hernan MATAMOROS et al., Plaintiffs, Appellees/Cross–Appellants, v. STARBUCKS CORPORATION, Defendant, Appellant/Cross–Appellee.
• Court: U.S. Court of Appeals — First Circuit

699 F.3d 129

19 Wage & Hour Cas.2d (BNA) 1540

Hernan MATAMOROS et al., Plaintiffs, Appellees/Cross–Appellants,

v.STARBUCKS CORPORATION, Defendant, Appellant/Cross–Appellee.

Nos. 12–1189, 12–1277.

United States Court of Appeals, First Circuit.

Heard Sept. 11, 2012.

Decided Nov. 9, 2012.

Rex S. Heinke, with whom Daniel L. Nash, Nathan J. Oleson, Gregory W. Knopp, Akin Gump Strauss Hauer & Feld LLP, James C. Rehnquist, Elianna J. Nuzum, Robert M. Hale and Goodwin Procter LLP, were on brief, for defendant.

Shannon Liss–Riordan, with whom Hillary Schwab and Lichten & Liss–Riordan, P.C., were on brief, for plaintiffs.

Before THOMPSON, SELYA and LIPEZ, Circuit Judges.

SELYA, Circuit Judge.

As society matures and employment law evolves, legislatures have lavished more attention on the policies and practices used by employers with respect to customer gratuities. Massachusetts is in the regulatory forefront on these cutting-edge issues.

In the matter at hand, the district court, applying Massachusetts law in a class-action diversity case, concluded that the most recent version of the Tips Act, Mass. Gen. Laws ch. 149, § 152A, says what it means and means what it says. Consequently, the court ruled that the defendant's policy regarding pooled gratuities violated the Act, certified a class, and awarded damages in an amount exceeding $14,000,000. After careful consideration of a fundamental (and previously unanswered) interpretative question, we hold that the plain language of the Tips Act prohibits the defendant's tip-pooling policy. We also reject the parties' other claims of error. When all is said and done, we leave the combatants where we found them.

I. BACKGROUND

We sketch the background and travel of the case, reserving salient details for our discussion of the substantive issues.

Starbucks Corporation operates a national chain of upscale coffee houses including approximately 150 outlets in Massachusetts. Starbucks euphemistically describes the employees who staff its shops as “partners.” Within that designation, however, employees are divided into four subcategories: store managers, assistant managers, shift supervisors, and baristas. Both shift supervisors and baristas are hourly wage employees, often working part-time. There are both similarities and differences between these two classifications: baristas are front-line employees who serve food and beverages to customers; shift supervisors perform those functions and other functions as well. The classifications are hierarchical, and shift supervisors are usually promoted from the ranks of baristas.

Pursuant to company policy, Starbucks' stores maintain tips containers in which customers may deposit tips. These containers are normally positioned alongside the store's cash registers. The accumulated tips are distributed weekly to baristas and shift supervisors within a store in proportion to the number of hours worked that week by each individual.

The named plaintiffs are former Starbucks baristas. They filed a putative class action in a Massachusetts state court against Starbucks on behalf of themselves and others similarly situated. Starbucks removed the case to federal court, alleging class-action diversity jurisdiction. See28 U.S.C. § 1332(d).

We fast-forward to the plaintiffs' filing of a second amended complaint. That complaint asserted, among other things, that Starbucks' policy violated the Tips Act because it allowed shift supervisors to share in the pooled gratuities.

In due course, the plaintiffs moved to certify a class of current and former baristas, and the parties cross-moved for summary judgment. The district court referred the motions to a magistrate judge. Thereafter, the magistrate judge issued reports and recommendations.

In his first report, the magistrate judge recommended that the court grant partial summary judgment in the plaintiffs' favor on count 1 (the Tips Act count), reasoning that the inclusion of shift supervisors among the persons eligible to profit from the tips pools violated the Tips Act. Matamoros v. Starbucks Corp. ( Starbucks I ), No. 08–10772, 2011 WL 1044654, 2011 U.S. Dist. LEXIS 28597 (D.Mass. Feb. 8, 2011). In that same report, the magistrate judge recommended that the court grant summary judgment for Starbucks on all other counts.¹Id. at *9, 2011 U.S. Dist. LEXIS 28597 at *28. In his second report, the magistrate judge recommended that the court grant class certification. Matamoros v. Starbucks Corp. ( Starbucks II ), No. 08–10772, 2011 WL 2555760, 2011 U.S. Dist. LEXIS 28572 (D.Mass. Feb. 8, 2011). Over Starbucks' objections, the district court, adding its own gloss, adopted the magistrate judge's recommended findings and conclusions in all respects. Matamoros v. Starbucks Corp. ( Starbucks III ), No. 08–10772, 2011 WL 1002740, 2011 U.S. Dist. LEXIS 28227 (D.Mass. Mar. 18, 2011). It then allowed further discovery on issues related to damages.

In subsequent proceedings, the district court ruled that a jury trial was unnecessary because damages could readily be calculated based on the amount of tips allocated to shift supervisors during the class period (March 25, 2005 to March 18, 2011). The parties stipulated that the shift supervisors had garnered $7,500,000 in allocated tips during that period. This amount comprised $4,186,729 in tips received through July 11, 2008, and $3,313,271 in tips received during the remainder of the class period.

The court accepted these stipulated figures, awarded damages accordingly, and trebled the damages that accrued on or after July 12, 2008. The district court entered judgment for the plaintiff class in the aggregate amount of $14,126,542, plus prejudgment interest at a rate of 12% per annum.² These timely appeals followed.

II. ANALYSIS

Starbucks' principal claim of error presents an unsettled question as to the meaning of the current version of the Tips Act. This question turns on whether, as Starbucks exhorts, the district court took too crabbed a view in holding that the company's tip-pooling policy violated the Tips Act because shift supervisors were included among the beneficiaries of the tips pools. We start there. We then address Starbucks' challenge to the class certification order. Finally, we mull the parties' competing objections to the treble damages award.

A. The Tips Act.

The Tips Act contains specific provisions applicable to the restaurant industry. It provides in pertinent part that “wait staff” employees shall not be required to share tips with anyone who is not a “wait staff employee.” Mass. Gen. Laws ch. 149, § 152A(b), (c). The Act defines a “wait staff employee” as:

a person, including a waiter, waitress, bus person, and counter staff, who: (1) serves beverages or prepared food directly to patrons, or who clears patrons' tables; (2) works in a restaurant, banquet facility, or other place where prepared food or beverages are served; and (3) who has no managerial responsibility.

Id. § 152A(a) (emphasis supplied).

It is clear beyond peradventure that Starbucks' shift supervisors satisfy the first two requirements for “wait staff employees.” The question, then, reduces to whether shift supervisors satisfy the third requirement; that is, whether shift supervisors can fairly be said to possess “no managerial responsibility.”

Starbucks insists that shift supervisors do not have managerial responsibility within the meaning of the Tips Act. In support, it points out that “[a] shift supervisor spends the vast majority of his or her time, up to ninety percent, performing functions which baristas also perform.” Starbucks I, 2011 WL 1044654, at *3, 2011 U.S. Dist. LEXIS 28597, at *9. Moreover, shift supervisors—like baristas—report to store managers and assistant managers, and Starbucks asserts that shift supervisors lack the actual authority either to enforce directives or to hire, fire, discipline, or promote baristas. And even though shift supervisors admittedly perform some duties that baristas do not, Starbucks labors to draw a surpassingly fine distinction between these “limited supervisory tasks” and “managerial responsibility.”

In an effort to justify this hair-splitting, Starbucks notes that in defining a different term—“employer”—the Tips Act uses the disjunctive phrase “management or supervision of wait staff employees.” Mass. Gen. Laws ch. 149, § 152A(a). It suggests, therefore, that the terms “management” and “supervision” must be given wholly distinct meanings. With this in mind, Starbucks declares that a shift supervisor can exercise supervisory powers without assuming managerial responsibilities.

The plaintiffs resist this analysis. They argue that the definition of “wait staff employee” forges a bright-line standard, which excludes employees possessing any level of managerial responsibility, however slight. Building on this foundation, the plaintiffs maintain that shift supervisors, whose job descriptions include some managerial tasks, are simply not “wait staff employees” within the purview of the Tips Act.

Our inquiry into the meaning of the Tips Act engenders de novo review. See Inmates of Suffolk Cnty. Jail v. Rouse, 129 F.3d 649, 653 (1st Cir.1997). Such an inquiry always starts with the language of the statute itself. Id. (citing Stowell v. Ives, 976 F.2d 65, 69 (1st Cir.1992)). We assume that the ordinary meaning of the statutory language expresses the legislature's intent, and we resort to extrinsic aids to statutory construction (such as legislative history) only when the wording of the statute is freighted with ambiguity or leads to an unreasonable result. See Stowell, 976 F.2d at 69.

In this case, the unvarnished text of the statute cuts sharply in favor of a bright-line rule. The Tips Act states unequivocally that only employees who possess “no managerial responsibility” may qualify as “wait staff.” Mass. Gen. Laws ch. 149, § 152A(a). “[N]o” means “no,” and we interpret that easily understood word in its ordinary sense: “not any.”...