Perez v. Ocean View Seafood Rest., Inc.

• Decision Date: 17 November 2016
• Docket Number: CIVIL ACTION NO. 3:13–03613–MGL
• Court: U.S. District Court — District of South Carolina
• Parties: Thomas E. PEREZ, Secretary of Labor, United States Department of Labor, Plaintiff, v. OCEAN VIEW SEAFOOD RESTAURANT, INC. ; Charlambos I. Syrigos, an Individual; and Polizonis M. Skeparnis, an Individual; Defendants.

217 F.Supp.3d 868

Thomas E. PEREZ, Secretary of Labor, United States Department of Labor, Plaintiff,

v.OCEAN VIEW SEAFOOD RESTAURANT, INC. ; Charlambos I. Syrigos, an Individual; and Polizonis M. Skeparnis, an Individual; Defendants.

CIVIL ACTION NO. 3:13–03613–MGL

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

Signed November 17, 2016

Barbara Murcier Bowens, US Attorneys Office, Columbia, SC, Karen E. Mock, Monica Renee Moukalif, US Department of Labor, Atlanta, GA, for Plaintiff.

Charles F. Thompson, Jr., Lake E. Summers, Michael D. Malone, Malone Thompson Summers and Ott, Katherine Anne Phillips, SC Department of Health and Environmental Control, Columbia, SC, for Defendants.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS' AND PLAINTIFF'S MOTIONS FOR PARTIAL SUMMARY JUDGMENT

MARY GEIGER LEWIS, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Plaintiff filed this case under § 17 of the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 217, against Defendants Ocean View Seafood Restaurant, Inc. (Ocean View or the Restaurant), Charalambos I. Syrigos, and Polizonis M. Skeparnis (collectively Defendants) to recover unpaid minimum wages and overtime compensation, together with an equal amount of liquidated damages, and to enjoin Defendants from violating certain provisions of the FLSA, as amended, 29 U.S.C. §§ 201 –19 ; as well as § 16(c) of the FLSA, 29 U.S.C. § 216(c). This Court has jurisdiction over the matter under §§ 16(c) and 17 of the FLSA as well as 28 U.S.C. §§ 1331 and 1345.

Pending before the Court are Defendants' and Plaintiff's Motions for Partial Summary Judgment, ECF Nos. 45 & 44. Having considered the motions, the responses, the replies, the record, and the relevant law, the Court will grant Defendants' and Plaintiff's Motions for Partial Summary Judgment.

II. FACTUAL AND PROCEDURAL BACKGROUND

Ocean View is a corporation with its principal place of business in Columbia, South Carolina. ECF No. 44 at 5. Syrigos and Skeparnis are business partners, who own 63% and 37% of Ocean View respectively. Id. The Restaurant has an annual gross revenue of at least $500,000. Id. Skeparnis is responsible for the day-to-day operations of the Restaurant and makes decisions about the business; keeps track of food and supplies; places necessary orders; pays the bills; supervises the staff; arranges the employees' schedules; has the authority to hire, fire and discipline employees; and collects the time cards and enters the information into the data entry sheet submitted to the accountant for payroll. Id. at 7–8; ECF No. 49 at 4.

Syrigos, on the other hand, describes himself as a "silent partner," who has never made a schedule, trained an employee, hired an employee, calculated payroll, paid the bills, or ordered food and supplies. ECF No. 44 at 6–7. He, however, possesses the authority to perform all of these tasks. Id . at 8–9.

Syrigos comes into Ocean View every Friday and Sunday evenings from 6:00 PM until closing and checks to see if orders from vendors came in or the Restaurant needs supplies. He also occasionally works in the kitchen and supervises staff. ECF Nos. 49 at 4–5; 44 at 9.

On one occasion, Syrigos and Skeparnis met to discuss a hostess's salary. ECF No. 44 at 9. They decided to start her at the minimum wage with the opportunity for raises pending good job performance. Id. Ocean View's food and supplies come from businesses both inside and outside of South Carolina. Id . at 7. For instance, their seafood is from Atlanta, Georgia. Id.

On December 14, 2011, the Department of Labor, Wage and Hour Division, commenced an investigation (Investigation) of Defendants to determine Ocean View's compliance with the minimum wage, overtime, child labor, and recordkeeping provisions of the FLSA. Id . at 1. The Investigation concluded Defendants had failed to comply with multiple sections of the FLSA. Id. at 2.

First, the Investigation concluded Defendants had violated § 6, the minimum wage provision, by failing to properly calculate hours worked by employees from the time cards, resulting in employees being uncompensated for some hours worked. Id. Moreover, and critical to Defendants' Motion for Partial Summary Judgment, Defendants allegedly paid tipped employees less than the full minimum wage required for tipped positions, which is $2.13 per hour, and failed to compensate properly for employee overtime. Nevertheless, the employees still received all tips they collected from work. Id. at 12–13.

The Investigation also found violations of § 7, the overtime mandates, due to Defendants calculating overtime based on a bi-weekly basis for employees who exceeded eighty hours per week, instead of a weekly basis for employees who exceeded forty hours per week. Id. at 2–3. Finally, the Investigation discovered Ocean View failed to maintain records as required by § 11(c) of the FLSA. Id. at 3. The Investigation failed to uncover any violations of the child labor provisions of the FLSA.

During the Investigation, the lead investigator informed Skeparnis his payment and record keeping practices were in violation of the FLSA. Id. at 11. Nevertheless, Defendants continued to pay employees pursuant to these improper methods. Id.

On December 31, 2013, Plaintiff filed its Complaint against Defendants alleging minimum wage, overtime, and record keeping FLSA violations. ECF No. 1. Plaintiff and Defendants both moved for partial summary judgment. ECF Nos. 44 & 45. Both parties filed their responses and replies. Defendants filed a sur-reply to Plaintiff's reply. The Court, having been fully briefed on the relevant issues, now turns to discussing the merits of the Motions.

III. STANDARD OF REVIEW

Summary judgment should be granted where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c) ; Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material if it might "affect the outcome of the suit under the governing law." Id.

On a motion for summary judgment, all evidence must be viewed in the light most favorable to the nonmoving party. Perini Corp v. Perini Constr., Inc. , 915 F.2d 121, 123–24 (4th Cir. 1990) ; see also Pulliam Inv. Co. v. Cameo Props. , 810 F.2d 1282, 1286 (4th Cir. 1987) ("[The Court] views all facts, and all reasonable inference to be drawn from them, in the light most favorable to the non-moving party."). When both parties file motions for summary judgment, as is the case here, the court applies the same standard of review to both motions, and considers "each motion separately on its own merits to determine whether either [side] deserves judgment as a matter of law." Rossignol v. Voorhaar , 316 F.3d 516, 523 (4th Cir. 2003).

IV. DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT

A. Background Law

The current minimum wage established by the FLSA is $7.25 per hour. 29 U.S.C. § 206(a)(1). For "tipped employees," however, the FLSA allows the employer to pay them a reduced minimum wage of $2.13 per hour and then "credit" the other $5.12 per hour from the tips the employees receive, so long as these employees collect at least $5.12 in tips. See 29 U.S.C. § 203(m). This is termed the "tip credit." If the tipped employee fails to collect enough in tips to meet the $7.25 minimum wage, however, the employer shall pay the tipped employee the amount needed to meet the $7.25-per-hour requirement. Id.

According to the FLSA, to take advantage of the "tip credit," the employer must ensure:

[t]he tipped 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.

29 U.S.C.A. § 203(m). No other prerequisites exist in the FLSA.

B. Contentions of the Parties

The dispute in Defendants' Motion for Partial Summary Judgment centers around the statutory interpretation of the FLSA's tip credit provision, 29 U.S.C. § 203(m). According to Defendants, the Court should follow the FLSA, which they maintain entitles tipped employees who have been improperly compensated to recover "the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and [ ] an additional equal amount as liquidated damages." 29 U.S.C. § 216(b). Defendants allege not letting them take advantage of the tip credit is contradictory to the language of the FLSA, as there are only two requirements the statute places on employers—an employer inform its employees of their intent to use the tip credit and employees retain all tips they receive—both of which Defendants assert they have met. Defendants advance there is no requirement to pay the $2.13 per hour wage and overtime wages in full for every hour worked before an employer is entitled to claim the tip credit. Further, Defendants deny all of Plaintiff's evidentiary objections to exhibits and contend they properly attached each exhibit to their motions and responses.

In response to Defendants' tip credit contentions, Plaintiff asserts an employer is unable to take advantage of the tip credit provisions of the FLSA unless they have paid a tipped employee the $2.13 minimum wage and applicable overtime required for all hours worked in that position. Therefore, because Defendants failed to pay their tipped employees the required $2.13 minimum wage and overtime for every hour worked, Plaintiff contends Defendants are unable to take advantage of the tip credit provision when calculating back wages and liquidated damages owed. Instead, according to Plaintiff, Defendants should pay damages for the full $7.25 federal minimum wage...