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Alverson v. BL Restaurant Operations LLC

United States District Court, W.D. Texas, San Antonio Division

April 3, 2018




The Honorable Chief United States District Judge Orlando Garcia:

         This Report and Recommendation concerns the Motion to Certify Order for Interlocutory Appeal and to Stay All Proceedings filed by Defendant BL Restaurant Operations LLC d/b/a Bar Louie. See Dkt. No. 60. This Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq., putative collective action was referred to the undersigned for disposition of all pretrial matters pursuant to Rules CV-72 and Appendix C to the Local Rules for the United States District Court for the Western District of Texas. The undersigned has authority to enter this report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B).

         For the reasons discussed below, BL's Motion to Certify Order for Interlocutory Appeal and to Stay All Proceedings, Dkt. No. 60, should be DENIED. BL has failed to show that an immediate appeal is warranted under § 1292(b), and it can appeal after entry of final judgment. In light of this recommendation and the undersigned's concern that this case has been at a virtual standstill since conditional certification was granted over four months ago, the undersigned will DENY BL's request for a stay. See, e.g., Sweet Lake Land & Oil Co., LLC v. Exxon Mobil Corp., No. 2:09-CV-01100, 2011 WL 6300343, at *6 (W.D. La. Dec. 16, 2011) (finding that the imposition of a stay is within a federal magistrate judge's § 636(b)(1)(A) authority). Accordingly, the undersigned will issue an amended scheduling order to govern the remainder of this action.

         I. Factual and Procedural Background

         On August 26, 2016, Plaintiff Bradley Alverson initiated this action against Defendant BL on behalf of himself and all others similarly situated. Plaintiffs allege that BL violated the FLSA's minimum-wage requirements and improperly claimed the federal “tip credit” by: (1) requiring that its bartenders participate in an improper tip-pooling arrangement; (2) deducting more than the actual credit card fees associated with liquidated credit card tips; (3) failing to provide employees with adequate notice of BL's intent to claim the tip credit (the “notification claim”); (4) requiring tipped employees to perform non-tipped side work unrelated to the tipped profession (the “dual-jobs claim”); and (5) requiring tipped employees to spend more than 20% of their work time engaged in non-tipped “side work” (the “20% claim”). See Amend. Compl. ¶ 3(a)-(e).

         On June 7, 2017, BL filed a motion for partial judgment on the pleadings, attacking the 20% and dual-jobs claims. It argued that the 20% claim fails because it is based solely on nonbinding provisions of the Department of Labor (DOL) Field Operations Handbook, which it says are “infeasible” and should not receive deference. See Dkt. No. 24 at 6-1; see also DOJ Wage and Hour Division, Field Operations Handbook § 30d00(f)(2) & (3) (2016). BL argued the dual-jobs claim fails because the specific non-tipped tasks upon which the claim is based-tasks like sweeping, cleaning bathrooms, washing dishes, cutting fruit, etc.-are not different jobs at all. They are, according to BL, instead directly related and incidental to Plaintiffs' tipped occupations. See Dkt. No. 24 at 2, 13-15.

         On July 6, 2017, with BL's motion for partial judgment pending, Plaintiffs filed their motion for conditional certification. See Dkt. No. 34. Plaintiffs sought conditional certification of a national class of all current and former tipped BL employees who were employed from August 26, 2013 to the present, including servers, bartenders, and “other tipped employees.” In support of their motion, Plaintiffs argued that as a result of BL's “uniform compensation policies, timekeeping practices, and aggressive attempts to reduce labor costs, all tipped employees are: (1) not properly notified of the FLSA tip credit; (2) required to perform a substantial amount of non-tip producing side work while being paid less than the full minimum wage; and (3) engaged in a dual job as a result of performing non-tip producing side work unrelated to the tipped profession.” Id. at 1.

         On August 8, 2017, Magistrate Judge Primomo addressed BL's motion for partial judgment and recommended that it be denied, reasoning that Plaintiffs' allegations “are plausible on their face and raise a right to relief above the speculative level.” See Dkt. No. 39 at 9, 16, 18. Specifically, Judge Primomo determined that the 20% and dual-job claims are essentially one and the same, id. at 17-18, and noted that “the 20% exception to the tip credit found in [the DOL handbook] is recognized by various courts.” Id. at 15. In support of his conclusion, Judge Primomo referred to the Eighth Circuit's decision in Fast v. Applebee's Intl, Inc., 638 F.3d 872, 879 (8th Cir. 2011), where the court afforded Auer deference to the DOL handbook's interpretation of the DOL dual-job regulation, and decisions from several other district and circuit courts that followed that same reasoning. Id. at 7-15. BL timely objected to Judge Primomo's memorandum and recommendation. See Dkt. No. 43. Nearly one month after Judge Primomo issued his recommendation, a Ninth Circuit 3-judge panel ruled that the DOL handbook's interpretation did not merit deference because it was inconsistent with the regulation and constituted “de facto a new regulation” masquerading as an interpretation. See Marsh v. J. Alexander's LLC, 869 F.3d 1108, 1123 (9th Cir. 2017). BL subsequently filed a Notice of Supplemental Authority, arguing that “[t]he Marsh opinion is on all fours with the facts before the Court” and re-urging its motion and objections. See Dkt. No. 46.

         On November 15, 2018, while BL's objections to Judge Primomo's memorandum and recommendation were still pending, the undersigned issued a memorandum and opinion, conditionally certifying a collective action consisting of “all current and former tipped servers or bartenders employed by BL from August 26, 2013 to the present, who did not receive the full minimum wage and who (1) did not receive notice of the tip credit as required by 29 U.S.C. § 203(m); (2) performed non-tip producing side work more than 20% of the time; or (3) were engaged in dual jobs.” Dkt. No. 50. In conditionally certifying this collective action, the undersigned rejected BL's request to stay the conditional-certification determination pending a ruling on BL's objections. The following three reasons supported that ruling: (1) “[e]ven if the motion for partial judgment were granted, conditional certification would still apply to the notification claim”; (2) “the status of the 20% and dual-jobs claims is uncertain and could remain so for quite some time” in light of the split in authorities; and (3) “a delay in resolving Plaintiffs' motion for conditional certification threatens unfair prejudice to potential plaintiffs who might desire to opt-in to this action . . . because the statute of limitations in FLSA actions ordinarily continues to run against potential collective action members until they affirmatively opt-in to the litigation.” Id. at 11-12.

         The undersigned then ordered the parties to meet and confer regarding the substance of a proposed notice and the method of its delivery, and further ordered the parties to submit a proposed notice for Court approval. Id. at 13. BL meanwhile challenged the Certification Order in the District Court, as it is entitled to do. See Dkt. No. 51. This effectively stayed the issue of approval and distribution of notice, although the District Court ordered the parties to meet and confer on the issues related to notice while BL's appeal was pending. See Dkt. No. 52. The parties conferred and then submitted to the Court several issues regarding the form of notice and its dissemination for the undersigned to resolve once the District Court ruled on the Certification Order appeal. See Dkt. No. 54.

         On February 22, 2018, the District Court adopted Judge Primomo's memorandum and recommendation regarding the viability of Plaintiffs' 20% and dual-job claims. See Dkt. No. 57. In that order, the District Court rejected BL's reliance on the Ninth Circuit's Marsh decision, noting that Marsh “was a 2-1 decision and the Ninth Circuit has granted rehearing en banc.” Id. (citing Marsh v. J. Alexander's LLC, 882 F.3d 777, 778 (Feb. 16, 2018)). The District Court then explained that “[i]n the absence of controlling Fifth Circuit authority, the Eighth Circuit holding in Fast v. Applebee's Intern., Inc., 638 F.3d 872, 878 (8th Cir. 2011), is persuasive, and numerous other federal courts have followed the same logic.” Id. (citing Romero v. Top-Tier Colorado LLC, 849 F.3d 1281, 1284 (10th Cir. 2017); Driver v. AppleIllinois, LLC, 739 F.3d 1073, 1075 (7th Cir. 2014); Plewinski v. Luby's Inc., No. H-07-3529, 2010 WL 1610121, at *5 (S.D. Tex. Apr. 21, 2010); Flood v. Carlson Rests., Inc., 94 F.Supp.3d 572, 584 (S.D.N.Y. 2015)).

         On February 26, 2018, the District Court denied BL's appeal of the undersigned's Certification Order. See Dkt. No. 58. Accordingly, on March 12, 2018, the undersigned issued an order approving the dissemination of notice-and-consent forms in this action, and ordered the parties to confer and jointly submit scheduling recommendations to govern the remainder of this action. See Dkt. No. 59. Four days later, BL filed the instant Motion to Certify the District Court's February 22, 2018 Order for Interlocutory Appeal and to Stay All Proceedings pending the Fifth Circuit's ruling on any interlocutory appeal, see Dkt. No. 60. The parties then timely filed their joint scheduling recommendations, subject to a ruling on BL's request for an interlocutory appeal. See Dkt. No. 62.

         II. ...

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