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Rivera v. Mo's Fisherman Exchange, Inc.

United States District Court, D. Maryland

May 1, 2018

ERICK RIVERA et al., Plaintiffs, on behalf of themselves and others similarly situated,
v.
MO'S FISHERMAN EXCHANGE, INC. et al., Defendants.

          MEMORANDUM OPINION

          Ellen Lipton Hollander United States District Judge.

         In a Second Amended Complaint (ECF 108), plaintiffs Erick Rivera, Edwin Garcia Sosa, Pierre Etheridge, and Dallas Royer, on behalf of themselves and others similarly situated, filed a wage action against seven corporations that operate six restaurants at which plaintiffs previously worked: Mo's Fisherman's Exchange, Inc. (d/b/a Mo's and Mo's Towson); Mo's Pulaski Highway Corp. (d/b/a Mo's White Marsh, Mo's Seafood Restaurant, and Mo's); Mo's Crab and Pasta Factory, Inc. (d/b/a Mo's Crab & Pasta and Mo's Little Italy); Mo's Belair Seafood, Inc. (d/b/a Mo's Fisherman's Wharf and Mo's Inner Harbor);[1] Mo's Fisherman's Ritchie Highway, Inc. (d/b/a Mo's Seafood Factory); Mo's Eastern Avenue, Inc. (d/b/a Mo's Seafood Factory Neighborhood Bar & Grill, and Mo's Neighborhood Bar & Grill); and Fisherman's Wharf Inner Harbor, Inc. (d/b/a Mo's Fisherman's Wharf and Mo's Inner Harbor). ECF 108, ¶¶ 12-18. Plaintiffs also sued defendant Mohammed S. Manocheh, who owns and operates each of the restaurants. Id. ¶¶ 19, 28. I shall refer to defendants collectively as “Mo's.”

         In particular, plaintiffs allege violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq.; the Maryland Wage and Hour Law (“MWHL”), Md. Code (2016 Repl. Vol.), §§ 3-401 et seq. of the Labor and Employment Article (“L.E.”); and the Maryland Wage Payment and Collection Law (“MWPCL”), L.E. §§ 3-501 et seq. ECF 108, ¶ 1. They assert, inter alia, that defendants willfully failed to pay plaintiffs the wages due and owing, including minimum wages and overtime wages. Id.

         Plaintiffs subsequently moved to certify the FLSA claim as a collective action under 29 U.S.C. § 216(b). ECF 25. The motion was vigorously litigated. See ECF 28; ECF 33. By Memorandum Opinion (ECF 37) and Order (ECF 38) of June 23, 2016, I granted conditional certification.[2] Thereafter, numerous individuals opted into the suit. The case has also been voluntarily dismissed as to many plaintiffs, including the original named plaintiff, Melvin Mendoza. See ECF 112.

         Four motions are now pending; this Memorandum Opinion addresses three of them. Defendants have filed a motion to decertify the collective action, asserting that plaintiffs are not similarly situated. ECF 139. The motion is supported by a memorandum of law (ECF 139-2) (collectively, “Motion to Decertify”) and voluminous exhibits. Plaintiffs oppose the Motion to Decertify (ECF 144) and have submitted many exhibits. Defendants replied. ECF 145.

         Also pending are the parties' cross-motions for partial summary judgment. Plaintiffs moved for partial summary judgment on the issues of defendant Manocheh's personal liability under the FLSA and defendants' ability to claim a “tip credit” under the FLSA. ECF 140 (motion); ECF 140-1 (memorandum of law) (collectively, “Plaintiffs' Motion”). Plaintiffs' Motion is accompanied by thirty-four exhibits. Defendants have filed a combined opposition to Plaintiffs' Motion and a cross-motion for partial summary judgment on the issues of defendants' eligibility for the “tip credit” and plaintiffs' entitlement to overtime wages prior to July 1, 2014. ECF 142 (“Defendants' Motion”). Defendants' Motion is accompanied by thirty-seven exhibits. Plaintiffs oppose Defendants' Motion, and replied in support of their own, with several exhibits. ECF 146. Thereafter, defendants replied. ECF 147.

         In addition, plaintiffs have filed a Motion for Sanctions for Spoliation of Evidence. ECF 132. That motion is not addressed in this Memorandum Opinion.

         No hearing is necessary to resolve the three motions. See Local Rule 105.6. For the reasons that follow, I shall deny the Motion to Decertify; I shall grant Plaintiffs' Motion in part and deny it in part; and I shall grant Defendants' Motion in part and deny it in part.

         I. Background

         A. Factual and Procedural Background

         Plaintiffs Melvin Mendoza, Erick Rivera, and Armando Portillo filed the initial Complaint on May 19, 2015. ECF 1. Defendants answered on November 3, 2015. ECF 13. The action was conditionally certified on June 22, 2016. ECF 38. An Amended Complaint was filed on March 21, 2017 (ECF 87), and the Second Amended Complaint was docketed July 19, 2017. ECF 108. Since then, quite a number of named and opt-in plaintiffs were voluntarily dismissed. See ECF 111, ECF 112, ECF 114.

         According to plaintiffs, there are currently 30 plaintiffs in the case, all of whom are former employees of Mo's. See ECF 140-1 at 18. They were employed in various positions, including as servers, bartenders, busboys, food preparers, cooks, and dishwashers. See ECF 144 at 12, 12-13 n.29-34.[3] The majority of plaintiffs received tips. Therefore, those individuals were paid at a below-minimum wage rate. See ECF 140-3 (defendants' responses to plaintiffs' interrogatories) at 6-8. However, they allege that their tips were frequently withheld or taken by defendants, either because defendants deducted a 3% credit card processing fee from their tips, or because plaintiffs were required to reimburse the restaurants for their customers' unpaid bills. See ECF 144 at 14, 14 n.41, 14 n.42.

         Many plaintiffs claim unpaid overtime wages. They allege that during certain weeks they worked more than forty hours, but were not paid time-and-a-half wages for their overtime hours. See Id. at 12, 12 n.27-28. In addition, plaintiffs allege that they were denied their straight-time wages for extended periods. See Id. at 16, 16 n.52.[4] For example, several plaintiffs have alleged that they were not paid any wages during their training periods, which often lasted multiple weeks. Id. at 16 n.53-54.

         Additional facts are included in the Discussion.

         B. Wage Statutes

         1. The FLSA

         Congress enacted the FLSA in 1938 “to protect all covered workers from substandard wages and oppressive working hours, ‘labor conditions [that are] detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers.'” Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739 (1981) (quoting 29 U.S.C. § 202(a)) (alterations in Barrentine); see Encino Motorcars, LLC v. Navarro, ___ U.S.___, 136 S.Ct. 2117, 2121 (2016); Morrison v. Cnty. of Fairfax, Va., 826 F.3d 758, 761 (4th Cir. 2016); see also McFeeley v. Jackson Street Entertainment, LLC, 825 F.3d 235, 240 (4th Cir. 2016) (“Congress enacted the FLSA to protect ‘the rights of those who toil, of those who sacrifice a full measure of their freedom and talents to the use and profit of others.'”) (citations omitted).

         Among its provisions, “the FLSA requires employers to pay overtime to covered employees who work more than 40 hours in a week.” Encino Motorcars, LLC v. Navarro, ___ U.S.___, 138 S.Ct. 1134, 1138 (2018) (citation omitted); see Perez v. Mortgage Bankers Ass'n, ___ U.S. ___, 135 S.Ct. 1199, 1204 (2015), Integrity Staffing Solutions, Inc. v. Busk, ___ U.S. ___, 135 S.Ct. 513, 516 (2014); see also Harbourt v. PPE Casino Resorts Md., LLC, 820 F.3d 655, 658 (4th Cir. 2016) (“The FLSA requires that employers pay employees the minimum hourly wage ‘for all hours worked.'”) (quoting Perez v. Mountaire Farms, Inc., 650 F.3d 350, 363 (4th Cir. 2011)). In particular, the FLSA has established the “general rule that employers must compensate each employee ‘at a rate not less than one and one-half times the regular rate' for all overtime hours that an employee works.” Darveau v. Detecon, Inc., 515 F.3d 334, 337 (4th Cir. 2008) (quoting 29 U.S.C. § 207(a)(1)).

         Thus, the FLSA is now “best understood as the ‘minimum wage/maximum hour law.” Trejo v. Ryman Hospitality Properties, Inc., 795 F.3d 442, 446 (4th Cir. 2015) (citation omitted). As the Fourth Circuit said in Monahan v. Cnty. of Chesterfield, Va., 95 F.3d 1263, 1266-67 (4th Cir. 1996): “The two central themes of the FLSA are its minimum wage and overtime requirements. . . . The FLSA is clearly structured to provide workers with specific minimum protections against excessive work hours and substandard wages.” (Internal quotations omitted).

         2. State Statutes

         Generally, the MWHL governs minimum wages and overtime. See L.E. §§ 3-413, 3-415, 3-420. It authorizes an employee to bring an action against an employer to recover unpaid wages due under the statute. L.E. § 3-437. See generally Friolo v. Frankel, 373 Md. 501, 819 A.2d 354 (2005). The term “wage” is defined as “all compensation that is due to an employee for employment.” L.E. § 3-401(d).

         The MWPCL, also known as the Wage Act, “sets specific terms for payment mandated elsewhere in the Wage and Hour Law.” Campusano v. Lusitano Construction, LLC, 208 Md.App. 29, 37, 56 A.2.3d 303, 308 (2012) (emphasis in Campusano). Like the MWHL, the MWPCL provides an employee with the right to bring a civil suit against an employer to recover unpaid wages. See L.E. § 3-507.2(a);[5] Baltimore Harbor Charters, Ltd. v. Ayd, 365 Md. 366, 382-83, 780 A.2d. 303, 312-13 (2001); Mohiuddin v. Doctor's Billing & Management Solutions, Inc., 196 Md.App. 439, 446, 9 A.3d 859, 863 (2010) (citations omitted).

         The Wage Act “protects employees from wrongful withholding of wages upon termination.” Stevenson v. Branch Banking and Trust Corporation, t/a BB&T, 159 Md.App. 620, 635, 861 A.2d 735, 743 (2004) (citing L.E. § 3-505). “The principal purpose of the Act ‘was to provide a vehicle for employees to collect, and an incentive for employers to pay, back wages.'” Medex v. McCabe, 372 Md. 28, 39, 811 A.2d 297, 304 (2002) (citation omitted). The Wage Act does not focus on “the amount of wages payable but rather the duty to pay whatever wages are due on a regular basis and to pay all that is due following termination of the employment.” Friolo, 373 Md. at 513, 819 A.2d at 362.

         The term “wage” includes commissions, bonuses when they are compensation for services and not a gratuity, and work-related incentive fees. L.E. § 3-501(c)(2); see Medex, 372 Md. at 35-37, 811 A.2d at 302; Whiting-Turner v. Fitzpatrick, 366 Md. 295, 306; 783 A.2d 667, 673 (2001). If “a court finds that an employer withheld the wages of an employee in violation of [the MWPCL] and not as a result of a bona fide dispute, the court may award the employee an amount not exceeding 3 times the wage, and reasonable counsel fees and other costs.” L.E. § 3-507.1(b).

         II. Motion to Decertify

         “Under the FLSA, plaintiffs may maintain a collective action against their employer for violations under the act pursuant to 29 U.S.C. § 216(b).” Quinteros v. Sparkle Cleaning, Inc., 532 F.Supp.2d 762. 771 (D. Md. 2008). Section 216(b) states, in pertinent part:

An action . . . may be maintained against any employer . . . in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No. employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.

         Thus, § 216(b) “establishes an ‘opt-in' scheme, whereby potential plaintiffs must affirmatively notify the court of their intentions to be a party to the suit.” Quinteros, 532 F.Supp.2d at 771.

         Pursuant to § 216(b), “[d]eterminations of the appropriateness of conditional collective action certification and court-facilitated notice are left to the court's discretion.” Syrja v. Westat, Inc., 756 F.Supp.2d 682, 686 (D. Md. 2010). Generally, when assessing whether to certify a collective action pursuant to the FLSA, district courts in this circuit adhere to a two-stage process. See, e.g., Butler v. DirectSAT USA, LLC, 876 F.Supp.2d 560, 566 (D. Md. 2012); see also Flores v. Unity Disposal & Recycling, LLC, GJH-15-196, 2015 WL 1523018, at *2-3 (D. Md. Apr. 2, 2015); Rawls v. Augustine Home Health Care, Inc., 244 F.R.D. 298, 300 (D. Md. 2007).

         “In the first stage, commonly referred to as the notice stage, the court makes a threshold determination of whether the plaintiffs have demonstrated that potential class members are similarly situated, such that court-facilitated notice to putative class members would be appropriate.” Butler, 876 F.Supp.2d at 566 (internal quotations omitted). The second stage is sometimes referred to as the decertification stage. Id. “In the second stage, following the conclusion of discovery, the court engages in a more stringent inquiry to determine whether the plaintiff class is [in fact] similarly situated in accordance with the requirements of § 216, and renders a final decision regarding the propriety of proceeding as a collective action.” Syrja, 756 F.Supp.2d at 686 (internal quotations and citations omitted) (alterations in Syrja). The Motion to Decertify pertains to the second stage.

         “Generally, plaintiffs bear the burden of showing that their claims are ‘similarly situated, ' but courts have ruled that ‘similarly situated' need not mean ‘identical.'” Gionfriddo v. Jason Zink, LLC, 769 F.Supp.2d 880, 886 (D. Md. 2011) (citation omitted). “Essentially, collective action members are similarly situated when there are ‘issues common to the proposed class that are central to the disposition of the FLSA claims and that such common issues can be substantially adjudicated without consideration of facts unique or particularized as to each class member.'” Randolph v. PowerComm Const, Inc., 309 F.R.D. 349, 368 (D. Md. 2015) (quoting LeFleur v. Dollar Tree Stores, Inc., 30 F.Supp.3d 463, 468 (E.D. Va. 2014)).

         District courts have “broad discretion to determine whether a collective action is an appropriate means for prosecuting an FLSA cause of action.” Gionfriddo, 769 F.Supp.2d at 886. In making this determination, “courts have considered three factors: (1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendant which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.” Randolph, 309 F.R.D. at 368 (citation and internal quotation marks omitted).

         Defendants argue that all three of these factors point toward decertification. See ECF 139-2.

         A. Factual and Employment Settings of the Plaintiffs

         Defendants maintain that plaintiffs cannot prove they were '"victims of a common policy or plan that violated the law'” because, in essence, plaintiffs' allegations rest on multiple, partially overlapping violations of the FLSA. See ECF 139-2 at 11 (quoting Marroquin v. Canales, 236 F.R.D. 257, 260 (D. Md. 2006)). According to defendants, plaintiffs “cannot prove that Mo's used a company-wide policy of failing to advise Plaintiffs of their tip credit rights . . . because a large number of Plaintiffs admitted they . . . were properly advised of their tip credit rights.” ECF 139-2 at 12-13. It appears that, of the 25 tipped-employee plaintiffs, nine were timely informed of their tip credit rights, six plaintiffs were belatedly informed of their tip credit rights, and ten never received notice at all. See ECF 144 at 13-14.

         Further, defendants claim that there is “no evidence that Mo's implemented or used a company-wide policy of refusing to pay overtime to employees, ” because “several Plaintiffs . . . were paid overtime wages, at least during certain weeks, and seven Plaintiffs are not even pursuing unpaid overtime claims.” ECF 139-2 at 13. Defendants also assert that many of plaintiffs' overtime claims are contradicted by defendants' records for their Point-of-Sale system. Id. at 14.

         According to defendants, there could not have been a company-wide policy of not paying straight wages for non-overtime hours because “less than half of the Plaintiffs claim that they were not paid their straight wages for several weeks or months” (ECF 139-2 at 16), and not all plaintiffs (25 of 30) claim that they were not paid their straight wages for the hours they worked. Id. at 14. Defendants make the same argument as to claims based on tip misappropriation and deductions, emphasizing: “Plaintiffs tell different stories about how Defendants violated the law, but none of the allegations apply to more than a handful of Plaintiffs.” Id. at 16-17.

         Plaintiffs nimbly deflect these assertions, observing: “If pursuing multiple FLSA claims were a bar to collective liability, Defendants would be rewarded for violating the law in numerous ways.” ECF 144 at 7. Nor does the fact that not all plaintiffs join in all claims require decertification. “If common questions predominate, the plaintiffs may be similarly situated even though the recovery of any given plaintiff may be determined by only a subset of those common questions.” Alvarez v. City of Chicago, 605 F.3d 445, 449 (7th Cir. 2010).

         At its core, this case concerns three issues: the denial of overtime pay; the misappropriation of plaintiffs' tips; and the failure to pay a minimum wage. Plaintiffs have presented evidence that, of the 24 plaintiffs who allegedly worked more than forty hours in a week, all of them were denied at least some of their overtime pay. See ECF 144 at 19, 19 n.59. Defendants cannot defeat this claim by citing a few instances in which overtime was paid. Rather, as plaintiffs point out, “[i]f some Plaintiffs did in fact receive overtime pay sporadically, their recovery will be reduced by that amount.” ECF 144 at 25.

         Plaintiffs also present evidence that defendants systematically (if not universally) underpaid plaintiffs by (1) improperly taking a tip credit to reduce their hourly wage, in violation of 29 U.S.C. § 203(m) (either through the failure to inform plaintiffs of their tip credit rights or by unlawfully retaining portions of their tips) (see ECF 144 at 27-30), or (2) simply failing to pay wages earned for hours worked. Id. at 31-32. The former set of alleged minimum wage violations allegedly affected 24 of the 25 ...


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