United States District Court, D. Maryland
March 2, 2016, Plaintiff Kristofer Prusin filed a complaint
against Defendants Canton's Pearls, LLC's (t/a
"Canton Dockside") and its owner, Eric K. Hamilton,
under the Fair Labor Standards Act ("FLSA") and
Maryland State law. [ECF No. 1]. Plaintiff, a former Canton
Dockside employee, alleged that Defendants failed to pay him
the statutory minimum wage and overtime wages due during his
employment. Id. In response, Defendants argue that
Plaintiff was paid all wages owed. [ECF No. 2]. Presently
pending is Defendants Motion for Protective Order and Motion
to Modify Subpoena. [ECF No. 17]. Plaintiff has filed an
opposition. [ECF No. 21]. No hearing is necessary.
See Local Rule 105.6 (D. Md. 2016). For the reasons
set forth herein, Defendants' Motion is GRANTED IN PART
and DENIED IN PART.
17, 2016, the Court entered a scheduling order providing a
discovery deadline of October 17, 2016. [ECF No. 7]. On May
18, 2016, Plaintiff served Defendants with initial discovery
requests. [ECF No. 9]. Although Defendants responded to
Plaintiff's interrogatories, Plaintiff contends that
Defendants failed to produce several of the documents
requested. Id. After conferring with Defendants'
counsel to address purported deficiencies, Plaintiff filed a
Motion to Compel. Id. On July 28, 2016, Judge Bredar
held a telephone conference to discuss Plaintiff's
Motion. [ECF No. 12]. Subsequently, Judge Bredar ordered
Defendants to produce "all payroll records relating to
Plaintiffs employment for the period extending from March 2,
2013, through March 2, 2016[, ]" and "any
documentary evidence reasonably relevant to Plaintiff's
wage claim, including written policies and procedural
documents to the extent such documents exist[.]"
Id. However, Judge Bredar, "[f]or the time
being...excused [Defendants] from producing the identities of
tip-credit witnesses, including tipped employees[.]"
Id. Additionally, Judge Bredar modified the
discovery deadline to November 17, 2016. Id.
October 7, 2016, Plaintiff served Defendants with a second
set of discovery requests, seeking the production of all
operating records, daily revenue records, service charge
records, gross income records, and tax records for the years
2013 through 2015. [ECF No. 17, Ex. 1]. On October 13, 2016,
Plaintiff served Defendants with a third set of discovery
requests, seeking all employee time card and job detail
reports, employee sales and tip totals reports, and all
documents relating to each sales transaction completed by
Plaintiff. [ECF No. 17, Ex. 2]. On October 14, 2016,
Plaintiff also served a Subpoena Deuces Tecum on Paychex,
Inc.,  requesting production of all payroll
records and several IRS forms for the years 2013 through
2015, all documents relating to the taking of credit under
Section 45(b) of the Internal Revenue code, all documents
provided to it by or on behalf of Defendants, and all
contracts or agreements with Defendants. [ECF No. 17, Ex. 3].
On October 27, 2016, Defendants filed the instant Motion for
Protective Order and Motion to Modify Subpoena. [ECF No. 17].
In its motions, Defendants argue that Plaintiff's
discovery requests are overly broad and request personally
identifiable information ("PII") of non-party
employees. Id. In opposition, on November 14, 2016,
Plaintiff filed a response contending that he is entitled to
the requested productions because they are necessary to
determine whether service charge payments may be counted
towards Defendants' wage obligations under the FLSA. [ECF
No. 21]. Finally, on December 5, 2016, the Court conducted a
telephone conference to discuss the instant motions.
initial matter, the FLSA requires employers to pay
"nonexempt employees" a $7.25 minimum wage for each
hour worked. 29 U.S.C. § 206(a). However, the FLSA
provides an exception, commonly referred to as a tip credit,
which allows employers to pay less than the minimum wage to
employees who receive tips or non-tip wages such as mandatory
service charges. 29 U.S.C. § 203(m); Morataya v.
Nancy's Kitchen of Silver Spring, Inc., No.
GJH-13-01888, 2015 WL 165305, at *7 (D. Md. Jan. 12, 2015).
"Under this provision, an employer may pay a tipped
employee less than $7.25 (but at least $2.13) an hour if the
combination of the employee's wages and tips equates to
at least $7.25 per hour." Morataya, 2015 WL
165305, at *6. Employers may "offset up to fifty percent
of all tips received" against its minimum wage
obligations. McFeeley v. Jackson St. Entm't,
LLC, No. DKC 12-1019, 2012 WL 5928769, at *4 (D. Md.
Nov. 26, 2012). In contrast, "service charges and other
similar sums which become part of the employer's gross
receipts are not tips, " but "may be used in their
entirety to satisfy the monetary requirements of the
[FLSA]." 29 C.F.R. § 531.55(b) (emphasis added).
"There are at least two prerequisites to counting
service charges as an offset to an employer's
minimum-wage liability. The service charge must have been
included in the establishment's gross receipts, and it
must have been distributed by the employer to its employees.
These requirements are necessary to ensure that employees
actually received the service charges as part of their
compensation as opposed to relying on the employer's
assertion or say-so." McFeeley v. Jackson St.
Entm't, LLC, 825 F.3d 235, 246 (4th Cir. 2016)
(internal citations and quotations omitted).
MOTION FOR PROTECTIVE ORDER
seeks discovery of Defendant Canton Dockside's financial
and personnel records in order to determine whether service
charge payments left by customers may be counted towards
Defendants' wage obligations under the FLSA. [ECF No.
21]. Defendants contend that the discovery at issue exceeds
the scope of Plaintiffs claim and discloses the personally
identifiable information ("PII") of non-party
employees. [ECF No. 17] (asserting that disclosure will
provide Plaintiff "access to Canton Dockside's
employees' social security numbers, home addresses, and
specific pay information."). In opposition, Plaintiff
argues that that he is entitled to the discovery because it
is necessary to determine whether service charge payments may
be counted towards Defendants' wage obligations under the
FLSA. [ECF No. 21].
Federal Rule of Civil Procedure 26(b), parties may obtain
discovery "regarding any non-privileged matter that is
relevant to any party's claim or defense."
Fed.R.Civ.P. 26(b)(1). Relevance, rather than admissibility,
governs whether information is discoverable. See id.;
Herchenroeder v. Johns Hopkins Univ. Applied Physics
Lab, 171 F.R.D. 179, 181 (D. Md. 1997). Information
sought need only "appear [to be] reasonably calculated
to lead to the discovery of admissible evidence" to pass
muster. See Innovative Therapies, Inc. v. Meents,
302 F.R.D. 364, 377 (D. Md. 2014) (citing Fed.R.Civ.P.
26(b)(1)). However, even in the case of relevant information,
"the simple fact that requested information is
discoverable under Rule 26(a) does not mean that discovery
must be had." Nicholas v. Wyndham Int'l,
Inc., 373 F.3d 537, 543 (4th Cir. 2004). Instead, Rule
26(b) inserts a proportionality requirement into the amount
and content of the discovery sought, and requires courts to
consider the "the importance of the issues at stake in
the action, the amount in controversy, the parties'
relative access to relevant information, the parties'
resources, the importance of the discovery in resolving the
issues, and whether the burden or expense of the proposed
discovery outweighs its likely benefit." Fed.R.Civ.P.
26(b)(1). Significantly, Rule 26(c)(1) permits courts to,
"for good cause, issue an order to protect a party or
person from annoyance, embarrassment, oppression, or undue
burden or expense." Fed.R.Civ.P. 26(c)(1). "This
undue burden category encompasses situations where [a party]
seeks information irrelevant to the case." U.S. Home
Corp. v. Settlers Crossing, LLC, No. DKC-08-1863, 2013
WL 553282, at *7 (D. Md. Oct. 3, 2013) (internal citations
and quotation marks omitted). "Thus, if the discovery
sought has no bearing on an issue of material
fact-i.e., if it is not relevant-a protective order
is proper." Id. (citations and quotation marks
protective order is sought, the moving party bears the burden
of establishing good cause. See Webb v. Green Tree
Servicing LLC, 283 F.R.D. 276, 278 (D. Md. 2012).
"Normally, in determining good cause, a court will
balance the interest of a party in obtaining the information
versus the interest of his opponent in keeping the
information confidential or in not requiring its
production." UAI Tech., Inc. v. Valutech, Inc.,
122 F.R.D. 188, 191 (M.D. N.C. 1988). In other words,
"the Court must weigh the need for the information
versus the harm in producing it." A Helping Hand,
LLC v. Baltimore Cnty., Md., 295 F.Supp.2d 585, 592 (D.
Md. 2003) (internal quotation marks omitted). The standard
for issuance of a protective order is high. Minter v.
Wells Fargo Bank, N.A., 258 F.R.D. 118, 125 (D. Md.
2009). However, trial courts have broad discretion to decide
"when a protective order is appropriate and what degree
of protection is required." Seattle Times Co. v.
Rhinehart, 467 U.S. 20, 36 (1984).
Plaintiff's Second Request for Production of Documents,
Request Numbers Two, Three, Four; and Third
Request for Production of Documents, Request Number
Second Request for Production of Documents, Request Numbers
Two, Three, and Four, ask Defendants to produce all documents
which refer or relate to: "daily revenues received,
including but not limited to, documents evidencing credit
card sales, credit card tips and payments of same, and cash
sales in total and by server/bartender;" "service
charges received, including but not limited to, credit card
receipts;" and "daily operations of Canton Dockside
restaurant, including any daily operating reports and/or
sales reports." [ECF No. 17, Ex. 1]. Plaintiff's
Third Request for Production of Documents, Request Number
One, asks Defendants to produce "all Employee Time Card
and Job Detail Reports and Employee Sales and Tip Totals
Reports for every employee[.]" [ECF No. 17, Ex. 2].
Plaintiff contends that this discovery permits Plaintiff to
"meaningfully examine whether the mandatory service
charges are reported as income on the employer's tax