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Camara v. Mastros Restaurants LLC

United States District Court, District of Columbia

October 24, 2018

KOLY CAMARA, et al., Plaintiffs,
v.
MASTRO'S RESTAURANTS LLC, Defendant.

          MEMORANDUM OPINION

          JAMES E. BOASBERG UNITED STATES DISTRICT JUDGE

         From 2015 to 2017, Plaintiff Koly Camara worked as a server at Defendant Mastro's Steakhouse here in Washington. He subsequently brought this lawsuit, alleging that the company's manner of paying its servers violated the Fair Labor Standards Act and the D.C. Minimum Wage Revision Act. His allegations focus on Defendant's use of a so-called “tip credit” - a method of compensation in which an employer pays its employees a base wage below the minimum level set by law; this is permissible so long as the employees' tips ultimately bring their wages up to the minimum. Here, however, Plaintiff claims that Mastro's violated the law by employing a tip-credit system while requiring servers to share tips with employees - e.g., wine runners and baristas - who did not “customarily and regularly receive tips.” 29 U.S.C. § 203(m)(2)(A). In this opening salvo, Defendant moves to compel arbitration and for dismissal, and Plaintiff moves for conditional certification of a collective action under the FLSA and the DCMWRA. Finding merit in Plaintiff's arguments on both issues, the Court denies Defendant's Motion and grants Plaintiff's.

         I. Background

         The Court starts by describing the legal framework that applies to Plaintiff's lawsuit and then explains the factual and procedural background of this case.

         A. Legal Background

         For a good while now, federal and local law have required employers to pay their employees a minimum wage. See Fair Labor Standards Act of 1938 § 6, 29 U.S.C. § 206; District of Columbia Minimum Wage Revision Act of 1992, D.C. Code § 32-1003. Currently, the federal minimum wage is $7.25 an hour, while D.C.'s stands at $13.25. See 29 U.S.C. § 206(a)(1)(C); D.C. Code § 32-1003(a)(5)(A)(iii).

         These laws make special provision for “tipped employees” - viz., employees who “customarily and regularly receive more than $30 a month in tips.” 29 U.S.C. § 203(t). Employers may pay such employees a lower base hourly wage on the understanding that their tips will bring their total wage up to the minimum. Federal law now requires a base wage of $2.13; D.C. law $3.89. See 29 U.S.C. § 203(m)(2)(A); D.C. Code § 32-1003(f)(1)(C); see also 123 Am. Jur. Trials 1, § 8 (Sept. 2018). If an employee's tips do not make up the difference between the base and minimum wages, the employer must pay the difference. See 29 U.S.C. § 203(m)(2)(A); D.C. Code § 32-1003(f)(1). As mentioned at the outset, this arrangement is known as a tip credit.

         An employer may only avail itself of the tip credit if it informs its employees of the arrangement and allows them to retain all of their tips, except that an employer may require employees to pool their tips with other employees who “customarily and regularly receive tips.” See 29 U.S.C. § 203(m)(2)(A). This exception for tip pooling is at the heart of this case. T o determine whether an employee customarily and regularly receives tips, so as to allow her to share in another's tips, courts typically look to “the extent of an employee's customer interaction.” Montano v. Montrose Rest. Assocs., Inc., 800 F.3d 186, 192-93 (5th Cir. 2015). If an employer keeps an employee's tips or requires an employee to share tips with non-tipped employees, it loses the ability to invoke the tip credit. See 29 U.S.C. § 203(m)(2)(A); see also Montano, 800 F.3d at 189 & n.6; Ventura v. Bebo Foods, Inc., 738 F.Supp.2d 1, 7 (D.D.C. 2010). Employees may sue to recover underpaid wages in violation of these requirements under the Fair Labor Standards Act and the D.C. Minimum Wage Revision Act.

         B. Factual Background

         Given the stage of the proceedings, the Court recites the facts in the light most favorable to Plaintiff. See Aliron Int'l, Inc. v. Cherokee Nation Indus., Inc., 531 F.3d 863, 865 (D.C. Cir. 2008) (applying summary-judgment standard to motion to compel arbitration); Dinkel v. MedStar Health, Inc., 880 F.Supp.2d 49, 52 (D.D.C. 2012) (explaining that at conditional-certification stage plaintiffs need only offer “modest factual showing” and that court should refrain from resolving factual disputes) (quoting Myers v. Hertz Corp., 624 F.3d 537, 555 (2d Cir. 2010)).

         Plaintiff worked as a server at Mastro's in D.C. from the summer of 2015 to November 2017. See ECF No. 1 (Compl.), ¶ 16. During his time there, the company compensated Camara and other servers like him using a tip credit, paying them a base hourly wage below the federal minimum with servers' tips credited against the remainder of the minimum. Id., ¶¶ 17-18. At the same time, Mastro's required servers to pool more than 40% of their tips with other employees like wine runners, food runners, and baristas. Id., ¶ 19. Certain of those employees, according to Plaintiff, did not regularly and customarily interact with customers. Id., ¶¶ 20-23. Wine runners, for instance, “spend almost all their time working in or near the restaurant's wine cellar and have little to no interaction with restaurant customers.” Id., ¶ 21. And baristas “spend almost all their time working in or near the kitchen and have no interaction with restaurant customers.” Id., ¶ 23. (Defendant disputes Plaintiff's allegations about wine runners and baristas, see ECF No. 18 (Def. Opp.), Exh. A (Declarations), but its disagreements are left for another day in light of the posture of the case.)

         C. Procedural Background

         Plaintiff filed this lawsuit against Mastro's on May 25, 2018. See Compl. He alleges that it violated the FLSA and the DCMWRA when it paid servers using a tip credit while requiring them to share tips with some employees who do not ordinarily receive tips. Id., ¶¶ 40- 42, 48. Although not at issue in these Motions, Camara also appears to argue that Mastro's violated the DCMWRA by failing to pay him for overtime work and the D.C. Wage Payment and Wage Collection Law for similar reasons. Id., ¶¶ 28-29, 47, 50-57.

         Both parties now seek the Court's intervention. Defendant has filed a Motion to Compel Arbitration and for Dismissal. See ECF No. 17. It asserts that Plaintiff previously signed a binding arbitration agreement and that the Court should therefore compel arbitration and dismiss the case. Id. Plaintiff has simultaneously filed a Motion for Notice to Similarly Situated Persons, which the Court refers to as a Motion for Conditional Certification of a Collective Action. See ECF No. 14. Based on his factual allegations and declarations from servers at other Mastro's locations around the country, he asks the Court to certify under the FLSA and DCMWRA (limited to D.C. servers) a collective action of “[a]ll employees who worked as servers and received an hourly wage less than $7.25 an hour at any Mastro's location in the United States from May 22, 2015 to the present.” ECF No. 21 (Pl. Reply) at 2 (emphasis omitted).

         II. Analysis

         As a threshold issue, the parties debate which Motion the Court should address first. Defendant insists that it should start with the Motion to Compel Arbitration because its resolution could moot Plaintiffs Motion. See Def Mot. at 10-12. Plaintiff rejoins that the Court should rule first on its Motion for Conditional Certification. See Pl. Reply. at 5. Since the Court denies Defendant's Motion, it does not matter in which order the issues are addressed. In any event, the Court believes it simpler to begin with arbitration before moving on to conditional certification.

         A. Arbitration

         Defendant asks the Court to compel arbitration under the Federal Arbitration Act and dismiss the case. The Court starts with the applicable legal standard and then turns to the merits.

         1. Legal Standard

         The Federal Arbitration Act provides that certain arbitration agreements are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The Act “is a congressional declaration of a liberal federal policy favoring arbitration agreements.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). Courts must therefore “‘rigorously enforce' arbitration agreements according to their terms.” Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013) (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221 (1985)).

         The Act comes into play, however, only when there is an enforceable arbitration agreement. Id (“[Arbitration is a matter of contract.”). “Accordingly, the first task of a court asked to compel arbitration . . . is to determine whether the parties agreed to arbitrate that ...


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