In the United States Court Of Appealscirc9-datastore.s3.amazonaws.com/datastore/uploads/...Jahan C....

Nos. 15-15791(L), 15-15794, 15-16561, 15-16659 16-15003, 16-15004, 16-15005, 16-15118, 16-16033

In the

United States Court Of Appeals For the

Ninth Circuit

__________________________

_________________________

Appeal from a Decision of the United States District Court for the District of Arizona (Phoenix), No. 2:14-cv-00465-SMM

Honorable Stephen M. McNamee, Senior District Judge

PLAINTIFFS-APPELLANTS’ PETITION FOR EN BANC REVIEW

Jahan C. Sagafi Outten & Golden LLP One Embarcadero Center, 38th Floor San Francisco, CA 94111 (415) 638-8800 [email protected]

Douglas M. Werman Werman Salas P.C. 77 W. Washington St., Ste. 1402 Chicago, IL 60602 (312) 419-1008 [email protected]

ALEC MARSH, CRYSTAL SHEEHAN, SILVIA ALARCON, SAROSHA HOGAN, NICHOLAS JACKSON, SKYLAR VAZQUEZ, THOMAS ARMSTRONG, PHILIP TODD, MARIA HURKMANS, STEPHANIE FAUSNACHT, NATHAN LLANOS,

KRISTEN ROMERO, ANDREW FIELDS, ALTO WILLIAMS

Plaintiffs-Appellants, v.

J. ALEXANDER’S LLC, ROMULUS INCORPORATED, ARRIBA ENTERPRISES

INCORPORATED, AMERICAN MULTI-CINEMA INC., LION DEN’S MANAGEMENT LLC, P.F. CHANG’S CHINA BISTRO, INC., AMERICAN BLUE

RIBBON HOLDINGS LLC

Defendants-Appellees.

Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, of 21

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TABLE OF CONTENTS

STATEMENT OF THE CASE ............................................................................... 1

ARGUMENT ............................................................................................................ 2

I. BACKGROUND .............................................................................................. 2

A. Congress Defined “Tipped Employees” Ambiguously, Inviting the DOL To Promulgate a Regulation (the Dual Jobs Rule). ............................................. 2

B. The DOL Has Interpreted Its Own Regulation Through the Field

Operations Handbook (the 20 Percent Rule). ............................................... 4

C. Plaintiffs-Appellants Performed a Range of Non-Tipped Duties. ................. 6

D. The Majority Opinion Splits With Eighth Circuit, Rejecting the DOL Interpretation. ................................................................................................ 6

II. En Banc Rehearing Is Warranted. ................................................................. 7

A. The Majority Opinion Presents a Question of Exceptional Importance for Hundreds of Thousands of Employees. ........................................................... 7

B. The Majority Opinion Directly Conflicts with Another Circuit’s Existing

Opinion and Affects a Rule of National Application in Which There Is an Overriding Need for Uniformity ……………………………….….………..9

1. The Majority Opinion Expressly Creates a Split With the Eight Circuit .. 9

2. The Court Should Have Deferred to the DOL Interpretation .................... 9

3. The Majority Adopts a Wooden Interpretation of the Regulation that

Allows Employers to Escape Accountability by Rearranging When Non-Tippable Duties Are Performed During the Day .................................... 10

CONCLUSION ....................................................................................................... 13


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TABLE OF AUTHORITIES

Cases Page(s)

Auer v. Robbins, 519 U.S. 452 (1997) ...................................................................................... 4, 7, 9

Barcellona v. Tiffany English Pub, Inc., 597 F.2d 464 (5th Cir. 1979) .............................................................................. 11

Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156 (2012) .......................................................................................... 9

Driver v. AppleIllinois, LLC, 739 F.3d 1073 (7th Cir. 2014) ........................................................................ 6, 11

Fast v. Applebee’s International, Inc., 638 F.3d 872 (8th Cir. 2011) .......................................................................passim

Montano v. Montrose Rest. Assoc., Inc., 800 F.3d 186 and 10 (5th Cir. 2015) .............................................................. 6, 11

Oregon Rest. and Lodging Ass’n v. Perez, 816 F.3d 1080 (9th Cir. 2016) .......................................................................... 3, 8

Robbins v. Blazin Wings, Inc., 2016 WL 1068201 (W.D.N.Y. Mar. 18, 2016) .................................................. 13

Romero v. Top-Tier Colorado LLC, 849 F.3d 1281 (10th Cir. 2017) ............................................................................ 5

Schaefer v. Walker Bros. Enter., 829 F.3d 551 (7th Cir. 2016) ................................................................................ 5

Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036 (2016) ........................................................................................ 12

Statutes

29 U.S.C. § 203(t) ...................................................................................................... 3


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29 U.S.C. § 211(c) ................................................................................................... 12

FLSA, 29 U.S.C. § 203(m) .............................................................................. 2, 3, 11

Pub. L. No. 89-601, § 602, 80 Stat. 830, 844 ............................................................ 3

Wage Payments Under The Fair Labor Standards Act of 1938 ................................ 3

Other Authorities

29 C.F.R. § 516.28(a) ............................................................................................... 12

29 C.F.R. § 531.52 ................................................................................................... 11

29 C.F.R. § 531.56(e) ........................................................................................passim

29 C.F.R. § 541.2 ....................................................................................................... 5

32 FR 13575, 13580 (Sept. 28, 1967) ........................................................................ 3

Bureau of Labor Stats., U.S. Dep’t of Labor, Labor Force Statistics from the Current Population Survey (2016), available at https://www.bls.gov/cps/cpsaat11.htm ................................................................. 8

Bureau of Labor Stats., U.S. Dep’t of Labor, Occupational Outlook Handbook: Waiters and Waitresses (2015), available at https://www.bls.gov/ooh/food-preparation-and-serving/ waiters-and-waitresses.htm ............................................................................................... 7

Bureau of Labor Stats., U.S. Dep’t of Labor, Occupational Outlook Handbook: Waiters and Waitresses (2015), https://www.bls.gov/ooh/ food-preparation-and-serving/bartenders.htm .......................................................................................... 8

H.R. Rep. No. 93-913 (1974) reprinted in 1974 U.S.C.C.A.N. 2811 ....................... 8

Patience Haggin, How Should Companies Handle Data From Employees’ Wearable Devices?, WALL STREET J. (May 22, 2016 10:00 PM), https://www.wsj.com/articles/how-should-companies-handle-data-from-employees-wearable-devices-1463968803 ........................... 13


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Ryan Derousseau, The Tech That Tracks Your Movements at Work (June 14, 2017), BBC http://www.bbc.com/capital/story/20170613-the-tech-that-tracks-your-movements-at-work .................................................................................... 13

U.S. Dep’t of Labor, Bureau of Labor Stats., Table B-1a, Employees on nonfarm payrolls by industry sector and selected industry detail, seasonally adjusted, available at https://www.bls.gov/web/empsit/ceseeb1a.htm ................................................... 7

White House Report, The Impact of Raising the Minimum Wage on Women (March 26, 2014), available at https://obamawhitehouse.archives.gov/the-press-office/2014/03/26/new-white-house-report-impact-raising-minimum-wage-women-and-importance ............................................................. 7

WIKIPEDIA, United States Court of Appeals for the Ninth Circuit, https://en.wikipedia.org/wiki/United_States_Court_of_Appeals_for_the_Ninth_Circuit ............................................................................................... 7


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STATEMENT OF THE CASE

This request for a rehearing en banc involves at least two questions of

exceptional importance. First, the majority decision conflicts with the Eighth

Circuit’s decision in Fast v. Applebee’s International, Inc., 638 F.3d 872 (8th Cir.

2011); it is also in stark tension with related decisions by the Fifth, Sixth, Seventh,

and Tenth Circuits. Second, the majority opinion creates unprecedented appellate

authority to justify restaurants, bars, and other businesses lowering workers’ wages

from the traditional $7.25 hourly minimum wage to $2.13 per hour even where the

workers spend a substantial – or overwhelming – percentage of time performing

the duties of non-tipped employees, such as janitors and cooks. As a result, the

majority opinion injures millions of low-income employees who depend on tips to

survive by allowing their employers to deny them the full minimum wage and the

opportunity to earn tips, by requiring them to spend significant chunks of the day

doing non-tipped tasks. Furthermore, the majority opinion also injures non-tipped

workers (e.g., janitors, cooks, etc.) earning the traditional $7.25 minimum wage by

displacing their hours, as employers are tempted to reassign their tasks to cheaper

workers (e.g., waitresses) paid $2.13 per hour.

Plaintiffs-Appellants, servers and bartenders working for various restaurants

and other businesses, allege they were paid less than minimum wage (only $2.13

per hour) for non-tipped duties that their employers required them to perform

throughout the workday. While the relevant regulation grants businesses some

flexibility to assign non-tipped duties to tipped workers (e.g., requiring waitresses

to scrub floors), Plaintiffs-Appellants allege that the Appellee-employers abused

that latitude by heaping on the tipped workers task after task that do not generate

tips (e.g., cleaning the walls, taking out trash, scraping gum from underneath

tables, sweeping floors, cleaning soft drink machines part by part, cleaning

silverware, restocking cups and condiments, cutting fruit, etc.), 2 ER 63-65, 83-85,


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104, 107, 125, 128, while still taking advantage of the tip credit to pay them $2.13

per hour.

Specifically, these consolidated cases raise the question of whether

Appellees violated the Fair Labor Standards Act (“FLSA”) by: (1) paying

employees less than $7.25 per hour for performing non-tipped duties unrelated to

the employees’ tipped work; and (2) paying such sub-minimum wages for non-

tipped duties related to employees’ tipped work that exceeded 20 percent of the

employees’ work hours each week. Plaintiffs assert that these practices violate the

FLSA, 29 U.S.C. § 203(m), the applicable regulation, 29 C.F.R. § 531.56(e), and

the U.S. Department of Labor’s (DOL) interpretive guidance in the DOL

Handbook, § 30d00.

While five sister circuits have crafted a unanimous body of consistent

authority giving proper deference to the DOL and recognizing Congress’s intent in

establishing the FLSA to prevent the chiseling of workers’ wages, the majority

decision here creates a split. It does so by rejecting this Court’s well-established

principles of agency deference and liberal interpretation of the FLSA, substituting

its own construction of the regulation that would eviscerate its effectiveness.

Plaintiffs-Appellants request that the opinion be vacated and the cases be

reviewed en banc.

ARGUMENT

I. BACKGROUND

A. Congress Defined “Tipped Employees” Ambiguously, Inviting the DOL To Promulgate a Regulation (the Dual Jobs Rule).

When Congress amended the FLSA to extend wage and overtime

protections to restaurant employees in 1966, Congress allowed employers in that

sector to “utilize a limited amount of its employees’ tips as a credit against its


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minimum wage obligations.” Oregon Rest. and Lodging Ass’n v. Perez, 816 F.3d

1080, 1083 (9th Cir. 2016) (citation omitted). Under Section 203(m) of the FLSA,

29 U.S.C. § 203(m), an employer may pay a “tipped employee” a sub-minimum

$2.13 hourly wage if the employee’s tips bring the employee’s effective hourly rate

up to the federal minimum wage of $7.25 or more. The “tip credit” is only

available as to wages of tipped employees. Id. A “tipped employee” is a person

“engaged in an occupation in which he customarily and regularly receives more

than $30 a month in tips.” 29 U.S.C. § 203(t). “The tip credit does not apply to

just any employee who ever received a tip. . . . [A]n employee is a tipped employee

if two things occur: 1) he is engaged in an occupation, and 2) the occupation is one

in which he regularly and customarily receives at least $30 in tips per month.”

Fast, 638 F.3d at 876 (citing 29 U.S.C. § 203(t)).

The 1966 amendments neither defined “occupation,” nor addressed the

situation of an employee who “is engaged in” more than one “occupation” at the

job. The DOL issued regulations one year later to interpret and implement this

language. See Wage Payments Under The Fair Labor Standards Act of 1938, 32

FR 13575, 13580 (Sept. 28, 1967) (to be codified at 29 C.F.R. pt. 531); see also

Fair Labor Standards Amendments of 1966, Pub. L. No. 89-601, § 602, 80 Stat.

830, 844 (DOL “to promulgate necessary rules, regulations, or orders with regard

to the amendments made”).

Through 29 C.F.R. § 531.56(e), the DOL set a standard for when employers

could claim a tip credit when a tipped employee performs what is termed “dual

jobs”:

In some situations an employee is employed in a dual job, as for example, where a maintenance man in a hotel also serves as a waiter. In such a situation the employee, if he customarily and regularly receives at least $30 a month in tips for his work as a waiter, is a tipped employee only with respect to his employment as a waiter. He


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is employed in two occupations, and no tip credit can be taken for his hours of employment in his occupation of maintenance man. Such a situation is distinguishable from that of a waitress who spends part of her time cleaning and setting tables, toasting bread, making coffee and occasionally washing dishes or glasses. It is likewise distinguishable from the counterman who also prepares his own short orders or who, as part of a group of countermen, takes a turn as a short order cook for the group. Such related duties in an occupation that is a tipped occupation need not by themselves be directed toward producing tips.

Id. (emphasis added). Because this “dual jobs” rule is not in the statute, it is “a

creature of the [DOL’s] own regulations.” Auer v. Robbins, 519 U.S. 452, 461

(1997).

Even this language eventually required further clarification.

B. The DOL Has Legitimately Interpreted Its Own Regulation Through the Field Operations Handbook (the 20 Percent Rule).

The limited illustrative examples and the “part of her time” and

“occasionally” language in the regulation cried out for further clarification by the

DOL. See Fast, 638 F.3d at 879 (Section 531.56(e) is itself ambiguous because it

does not address an employee performing related duties more than “part of [the]

time” or more than “occasionally”). The DOL carefully grappled with the issue in

a series of opinion letters in the 1970s and 80s, culminating in a more

comprehensive assessment in section 30d00(e) (later (f)) of its Field Operations

Handbook (“FOH”):

29 CFR 531.56(e) permits the employer to take a tip credit for time spent in duties related to the tipped occupation of an employee, even though such duties are not by themselves directed toward producing tips, provided such related duties are incidental to the regular duties of the tipped employees and are generally assigned to the tipped employee. For example, duties related to the tipped occupation may include a server who does preparatory or closing activities, rolls silverware and fills salt and pepper shakers while the restaurant is open, cleans and sets tables, makes coffee, and occasionally washes


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dishes or glasses. However, where the facts indicate that tipped employees spend a substantial amount of time (i.e., in excess of 20 percent of the hours worked in the tipped occupation in the workweek) performing such related duties, no tip credit may be taken for the time spent in those duties. All related duties count toward the 20 percent tolerance.

Id. (emphasis added) (hereinafter the “20 percent rule.”).

The DOL thus interpreted its regulation to refer to tipped and non-tipped

duties that the same worker may perform during the workday, consistent with the

notion that an employee may be engaged in multiple activities or occupations1 in a

single work arrangement with an employer. The DOL relied on this interpretation

in an amicus brief to the Eighth Circuit. See DOL Brief at 12-13, Fast v.

Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir. 2011) (Nos. 10-1725/26), 2010 WL

3761133. In Fast, the Eighth Circuit deferred to the DOL’s 20 percent rule

announced in the FOH. Fast, 638 F.3d at 880.

The DOL’s focus on actual duties performed makes sense.2 Otherwise, an

employer could avoid hiring janitors, require waitresses to work in a hybrid role

(but call them “waitresses”), and take advantage of the tip credit for all hours

worked. Focusing on actual job duties is an approach uniformly embraced by

sister circuits. See Romero v. Top-Tier Colorado LLC, 849 F.3d 1281, 1284 (10th

Cir. 2017) (deferring to the FOH); Schaefer v. Walker Bros. Enter., 829 F.3d 551,

555 (7th Cir. 2016) (“the right question is whether the tasks are ‘related’ or

1 While “occupation” is often thought to signify “vocation,” the primary dictionary definition is more literal – what occupies one’s time, i.e., “an activity in which one engages.” MERRIAM-WEBSTER, Occupation, available at https://www.merriam-webster.com/dictionary/occupation (last visited Sept. 20, 2017). 2 This Court recognizes the importance of duties rather than job titles in FLSA cases, because of the danger that an employer will use a title to avoid compliance. 29 C.F.R. § 541.2 (“Job titles insufficient. A job title alone is insufficient to establish the exempt status of an employee.”).


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‘incidental’ to tipped duties under the regulation and [FOH]”); Montano v.

Montrose Rest. Assoc., Inc., 800 F.3d 186, 190-91 & nn.8 and 10 (5th Cir. 2015)

(deferring to the FOH); Driver v. AppleIllinois, LLC, 739 F.3d 1073, 1075 (7th Cir.

2014) (if “tipped employees also perform non-tipped duties” unrelated to tipped

work, “they are entitled to the full minimum wage for the time they spend at that

work”). Until the majority’s opinion, no circuit has held to the contrary.

C. Plaintiffs-Appellants Performed a Range of Non-Tipped Duties.

Plaintiffs-Appellants allege that during each workweek, their employers

required them to perform non-tipped duties before, during, and after their shifts

that consumed a huge portion of their work time. 2 ER 102-03 (69% of time on

non-tipped duties); 2 ER 81-82 (61%); 2 ER 124-25 (38%); 2 ER 62- 63 (33%).

This can hardly be deemed as “occasional” or “part of [the] time” under the

regulation.

D. The Majority Opinion Splits With Eighth Circuit, Rejecting the DOL Interpretation.

The majority opinion is the first on the circuit level to reject the DOL’s

interpretation. It rejects the Eighth Circuit’s holding in Fast deferring to the 20

percent rule. It holds that the “dual jobs” regulation, 29 C.F.R. § 531.56(e), is

limited to interpreting § 203(t)’s reference to workers “engaged in an occupation,”

i.e., as employed in a particular “job.” Maj. Op. at 28-31. Thus the statute and

regulation, in the majority’s view, provide no basis for dividing duties performed

by workers into tippable and non-tippable work, as the 20 percent rule does. Id. It

holds that “[b]ecause the dual jobs regulation is concerned with when an employee

has two jobs, not with differentiating between tasks within a job, the FOH’s

approach is inapposite and inconsistent with the dual jobs regulation.” Id. at 31.


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In dissent, Judge Paez would follow the Eighth Circuit Fast decision and

defer to the FOH interpretation of the rule. “Because the DOL’s guidance

interpreted an ambiguous regulation, and did so in a manner that was not ‘plainly

erroneous or inconsistent,’ it is entitled to Auer deference.” Dissent at 51.

II. En Banc Rehearing Is Warranted.

A. The Majority Opinion Presents a Question of Exceptional Importance for Hundreds of Thousands of Employees.

The majority opinion reaches into the pockets of hundreds of thousands of

workers in this Circuit: the people we see on a daily basis serving coffee, food, and

refreshments.3 These workers are among America’s lowest-paid and most

economically vulnerable. See White House Report, The Impact of Raising the

Minimum Wage on Women (March 26, 2014), available at

https://obamawhitehouse.archives.gov/the-press-office/2014/03/26/new-white-

house-report-impact-raising-minimum-wage-women-and-importance- (last visited

Sept. 20, 2017) (bartenders and servers are twice to three times as likely to

experience poverty, respectively, as other American workers); Bureau of Labor

Stats., U.S. Dep’t of Labor, Occupational Outlook Handbook: Waiters and

Waitresses (2015), available at https://www.bls.gov/ooh/food-preparation-and-

serving/waiters-and-waitresses.htm (last visited Sept. 20, 2017) (2016 median pay

3 This Circuit includes approximately 20% of the population. See WIKIPEDIA, United States Court of Appeals for the Ninth Circuit, https://en.wikipedia.org/wiki/United_States_Court_of_Appeals_for_the_Ninth_Circuit) (last visited Sept. 20, 2017). Over 5,000,000 employees nationwide work in restaurants, with approximately 400,000 more in bars. See U.S. Dep’t of Labor, Bureau of Labor Stats., Table B-1a. Employees on nonfarm payrolls by industry sector and selected industry detail, seasonally adjusted (Last Modified Date: Sept. 1, 2017), available at https://www.bls.gov/web/empsit/ceseeb1a.htm (last visited Sept. 20, 2017).


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$9.61 per hour and $19,990 per year for wait staff); Bureau of Labor Stats., U.S.

Dep’t of Labor, Occupational Outlook Handbook: Waiters and Waitresses (2015),

available at https://www.bls.gov/ooh/food-preparation-and-serving/bartenders.htm

(last visited Sept. 20, 2017) (2016 median hourly pay $9.61 for wait staff, $10.00

for bartenders, $17.81 for nation’s workforce as a whole).

The problem of under-compensation is especially acute for women, who

represent over 80% of food servers and 56% of bartenders nationwide. Bureau of

Labor Stats., U.S. Dep’t of Labor, Labor Force Statistics from the Current

Population Survey (2016), available at https://www.bls.gov/cps/cpsaat11.htm (last

visited Sept. 20, 2017).

Plaintiffs-Appellants contend that the food-and-beverage-service industry

chisels its workers by extracting untold millions of hours of non-tipped labor—

cleaning, preparing, and straightening-up—while the employer claims a tip credit

for those services to slash their paid wage from $7.25 to $2.13 per hour. Although

this Court has described this sector as a “high-violation industry,” Oregon

Restaurant and Lodging, 816 F.3d at 1085 (quoting 76 Fed. Reg. 18,832, 18,840),

the majority opinion provides further means to nickel-and-dime low-wage

workers.4 First, tipped workers make far less per hour while engaged in non-tipped

labor than they would otherwise in wages. Second, tipped workers miss out on

opportunities to earn tips, since the non-tipped work involves no customer

interaction. Third, the cooks and janitors who would normally perform the non-

tipped work are either not hired or they get correspondingly fewer work hours.

4 A main goal of the FLSA is to ensure “a fair day’s pay for a fair day’s work” and to prevent the “chiseling [of] workers’ wages.” H.R. Rep. No. 93-913 (1974) reprinted in 1974 U.S.C.C.A.N. 2811, 2818.


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B. The Majority Opinion Directly Conflicts with Another Circuit’s Existing Opinion and Affects a Rule of National Application in Which There Is an Overriding Need for Uniformity.

1. The Majority Opinion Expressly Creates a Split With the Eight Circuit.

The majority opinion opens a new circuit split on the question of the degree

of deference due to the DOL’s interpretation of 29 C.F.R. § 531.56(e). The Eighth

Circuit’s Fast decision deferred to the DOL. Fast, 638 F.3d at 879. The majority

expressly rejects Fast. Maj. Op. at 37. If the circuit split is allowed to stand,

tipped workers in P.F. Chang’s’ San Diego and Omaha locations will be governed

by two inconsistent sets of rules and timekeeping standards.5

2. The Court Should Have Deferred to the DOL Interpretation.

Although the regulation provides that employers may take a tip credit for

tipped employees performing non-tipped duties “occasionally” and “part of [the]

time,” it does not quantify about how much of the day this might mean. See, e.g.,

Fast, 638 F.3d at 877 (recognizing ambiguity of “part of [the] time” and

“occasionally”). There is no clear rule, but rather concepts and illustrations, which

by nature provide vague and incomplete guidance. And as the dissent notes, the

two illustrations’ actual conflict exacerbates the ambiguity. Dissent at 45-46.

The Secretary has the “power to resolve ambiguities in his own regulations.”

Auer, 519 U.S. at 463. Courts deem an agency’s interpretation of its own

regulations “controlling unless plainly erroneous or inconsistent with the

regulation.” Id. at 461; see also Christopher v. SmithKline Beecham Corp., 132 S.

Ct. 2156, 2166 (2012) (Auer deference appropriate unless “interpretation is plainly

5 More generally, the majority rejects the holdings of the Fifth, Seventh, and Tenth Circuits cases cited above that analyze tipped and non-tipped duties, not “jobs.”


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erroneous or inconsistent with the regulation” or “there is reason to suspect that the

agency’s interpretation does not reflect the agency’s fair and considered

judgment”).

Here, the DOL issued an interpretation of section 531.56(e) consistent with

prior interpretations and provides a considered, clear standard that is fair to

workers and employers alike and useful in decision-making. The DOL has

adhered consistently to its focus on tippable duties (rather than on formal

occupations as job titles or careers) for decades. Dissent at 46-47 (“Since 1979,

the DOL has issued opinion letters, fact sheets, amicus briefs, and the FOH which

have consistently placed temporal limits on untipped work.”); Long Island Care at

Home, Ltd. v. Coke, 551 U.S. 158, 170-71 (deferring to DOL interpretation of

regulations through opinion letters that changed over time). The 20 percent rule

also mirrors other provisions of the FLSA and regulations imposing comparable

temporal limits. See Dissent at 47-48 (citing 29 U.S.C. § 213(c)(6)(G); 29 C.F.R. §

552.5; 29 C.F.R. § 552.6(b); 29 C.F.R. § 786.150; 29 C.F.R. § 786.1; 29 C.F.R. §

786.100; 29 C.F.R. § 786.200). The majority turns its back on well-settled

principles of deference.

3. The Majority Adopts a Wooden Interpretation of the Regulation That Allows Employers To Take Advantage of the Tip Credit with No Corresponding Benefit to the Worker.

In addition to getting the agency deference issue wrong, the majority opinion

adopts—in the place of the DOL’s informed interpretation—a wooden construction

of section 531.56(e) that vitiates its usefulness. It holds that “dual jobs” under the

regulation refers not to the variety of occupations (i.e., activities) that occupy

workers’ time throughout the day, but only to the rare situation where workers are

engaged in multiple discrete “occupations” (i.e., vocations) separated by a “clear


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dividing line.” Maj. Op. at 28-30, 36. If allowed to remain the law, the majority

opinion would give employers a roadmap to take the tip credit for all work hours,

even when they assign workers a significant amount (even a majority) of non-

tipped work.

It is impossible to square this interpretation with the statute and DOL

regulations. The section 203(m) tip credit applies only to tipped work, the

touchstone of which is customer interaction. See 29 C.F.R. § 531.52 (defining tip

as “a sum presented by a customer as a gift or gratuity in recognition of some

service performed for him”); Montano, 800 F.3d at 193 (“in determining whether

an employee customarily and regularly receives tips, a court — or a factfinder —

must consider the extent of an employee’s customer interaction”); Shahriar v.

Smith & Wollensky Rest. Grp., Inc., 659 F.3d 234, 240 (2d Cir. 2011) (tippable

work involves customer interactions); Kilgore v. Outback Steakhouse of Florida,

Inc., 160 F.3d 294, 300-01 (6th Cir. 1998) (work tippable because hosts “interact

with customers” and “perform important customer service functions”).

Conversely, non-public-facing duties are not tippable. Id. at 301 (contrasting the

work of hosts with “restaurant employees like dishwashers, cooks, or off-hour

employees like an overnight janitor who do not directly relate with customers at

all”); Driver, 739 F.3d at 1075 (“washing dishes, preparing food, mopping the

floor, or cleaning bathrooms” not tippable); Barcellona v. Tiffany English Pub,

Inc., 597 F.2d 464, 467 n.3 (5th Cir. 1979) (granting waiters full minimum wage

“for those hours worked in a non-tipped capacity, such as laying tables, cleaning

up, and other duties preparing the restaurant for business”). When tipped

employees perform non-tipped duties, they are not earning tips and not engaged in

tipped work. The DOL’s focus on actual work duties is thus firmly rooted in the

FLSA § 203(m).


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Rather than take up the task foregrounded by the statute and regulation, and

examine the substance of the duties actually performed for the employer, the

majority’s approach rests on a spurious factor controlled entirely by the employer:

whether the non-tippable tasks are somehow “clearly divided” from tippable

duties, such as whether the employer grouped the tasks together to be performed

during one period of the day. Maj. Op. at 24 (employee “engaged in two different

occupations when there was a ‘clear dividing line’ between two different types of

duties, such as when one set of duties was performed in a distinct part of the

workday”); id. at 36. Under the majority approach, an employer—who structures

the workplace and fully controls when and how job tasks are performed—can take

the tip credit for all hours, and avoid keeping records of non-tippable work, simply

by sprinkling the non-tippable work throughout the workday as the Plaintiffs-

Appellants allege Appellees-employers have done here. By unbalancing the DOL

regulation widely in favor of employers, the majority also defies this Court’s

narrow-construction principle that applies to exemptions from FLSA coverage.

Haro v. City of L.A., 745 F.3d 1249, 1256 (9th Cir. 2014) (“FLSA is to be

construed liberally in favor of employees [and] exemptions are narrowly construed

against employers”); see also Dissent at 50-51.

The majority opinion, in defense of its version of the rule, writes that making

employers accountable for paying correct wages for duties performed outside of

customer interaction would “requir[e] an employer to analyze every minute of its

employee’s workday.” Maj. Op. at 32. Yet there is nothing remarkable about this.

Under 29 U.S.C. § 211(c), employers must “make, keep, and preserve such records

of the persons employed by him and of the wages, hours, and other conditions and

practices of employment maintained by him.” See Tyson Foods v. Bouaphakeo,

136 S. Ct. 1036, 1047 (2016) (noting employers’ duty to keep track of work

hours); 29 C.F.R. § 516.28(a) (employers must maintain records of each hour an


-13-

employee receives tips and each hour she does not). Technological solutions are at

hand to capture employees’ activities in real time, some of which are already in

use. See Ryan Derousseau, The Tech That Tracks Your Movements at Work, BBC

(June 14, 2017), http://www.bbc.com/capital/story/20170613-the-tech-that-tracks-

your-movements-at-work; Patience Haggin, How Should Companies Handle Data

From Employees’ Wearable Devices?, WALL STREET J. (May 22, 2016 10:00 PM),

https://www.wsj.com/articles/how-should-companies-handle-data-from-

employees-wearable-devices-1463968803. And there are other means to measure

non-tipped work time. One chain requires servers to clock in at the regular

minimum wage, then shift to the tipped-worker wage when they get their first

table. See Robbins v. Blazin Wings, Inc., No. 15 Civ. 6340 CJS, 2016 WL

1068201, at *4-5 (W.D.N.Y. Mar. 18, 2016). Employers can control their

workers’ job duties and comply with their obligation to record workers’ time

properly. Indeed, employers must do so in seven states of the Eighth Circuit.

Until the majority’s opinion, no circuit has held to the contrary.

CONCLUSION

For the foregoing reasons, the Court should grant en banc review.

Dated: September 20, 2017 By: /s/ Jahan C. Sagafi Jahan C. Sagafi OUTTEN & GOLDEN LLP One Embarcadero Center, 38th Floor San Francisco, CA 94111 Telephone: (415) 638-8800 Facsimile: (415) 638-8810 E-Mail: [email protected]


-14-

Douglas M. Werman WERMAN SALAS P.C. 77 W. Washington St., Ste. 1402 Chicago, IL 60602 Telephone: (312) 419-1008 E-Mail: [email protected]


-15-

CERTIFICATE OF COMPLIANCE

This brief complies with the type-volume limitation of Fed. R. App. P. 32-

2(b), because it contains 3,837 words, as determined by Microsoft Word 2010,

excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

This brief complies with the typeface requirements of Fed. R. App.

P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because it

has been prepared in a proportionally-spaced typeface using Microsoft Word 2010

in 14-point Times New Roman. Dated: September 20, 2017 OUTTEN & GOLDEN LLP

By: /s/ Jahan C. Sagafi Jahan C. Sagafi

Jahan C. Sagafi (Cal. Bar No. 224887)

OUTTEN & GOLDEN LLP

One Embarcadero Center, 38th Floor

San Francisco, CA 94111

Telephone: (415) 638-8800 Facsimile: (415) 638-8810 E-Mail: [email protected]

Counsel for Plaintiffs-Appellants


-16-

CERTIFICATE OF SERVICE

I hereby certify that on September 20, 2017, I electronically filed the

foregoing with the Clerk of the Court for the United States Court of Appeals for

the Ninth Circuit by using the appellate CM/ECF system. Participants in the case

who are registered CM/ECF users will be served by the appellate CM/ECF system.

Dated: September 20, 2017 OUTTEN & GOLDEN LLP

By: /s/ Jahan C. Sagafi Jahan C. Sagafi

Jahan C. Sagafi (Cal. Bar No. 224887)

OUTTEN & GOLDEN LLP

One Embarcadero Center, 38th Floor

San Francisco, CA 94111

Telephone: (415) 638-8800 Facsimile: (415) 638-8810 E-Mail: [email protected]

Counsel for Plaintiffs-Appellants


Nos. 15-15791, 15-15794, 15-16561, 15-16659, 16-15003, 16-15004, 16-15005, 16-15118, 16-16033

United States Court of Appeals for the Ninth Circuit ________________

ALEC MARSH, Plaintiff-Appellant,

v.

J. ALEXANDER’S LLC, Defendant-Appellee,

(For Continuation of Captions, See Next Two Pages) _______________________________________________

On Appeal from the United States District Court for the District of Arizona No. USDC No. 2:14-cv-01038-SMM

DEFENDANT-APPELLEE J. ALEXANDER’S LLC’S RESPONSE TO PETITION FOR EN BANC REVIEW

Eric M. Fraser, AZ Bar No. 027241 OSBORN MALEDON, P.A. 2929 North Central Avenue, 21st Floor Phoenix, Arizona 85012-2793 (602) 640-9000 [email protected]

Robert W. Horton TN Bar No. 017417 Mary Leigh Pirtle TN Bar No. 026659 Bass, Berry & Sims, PLC 150 Third Avenue South, Suite 2800 Nashville, TN 37201 (615) 742-6000 [email protected] [email protected]

Attorneys for Defendant-Appellee J. Alexander’s LLC

Case: 15-15791, 10/11/2017, ID: 10613652, DktEntry: 102, Page 1 of 7

CRYSTAL SHEEHAN,

Plaintiff-Appellant,

v.

ROMULUS INCORPORATED, DBA International House of Pancakes,

Defendant-Appellee.

No. 15-15794

D.C. No. 2:14-cv-00464-SMM

SILVIA ALARCON,


v.

ARRIBA ENTERPRISES INCORPORATED, DBA Arriba Mexican Grill,

Defendant-Appellee.

No. 15-16561

D.C. No. 2:14-cv-00465-SMM

SAROSHA HOGAN; NICHOLAS JACKSON; SKYLAR VAZQUEZ; THOMAS ARMSTRONG; PHILIP TODD; MARIA HURKMANS,

Plaintiffs-Appellants,

v.

AMERICAN MULTI-CINEMA, INC., DBA AMC Theatres Esplanade 14,

Defendant-Appellee.

No. 15-16659

D.C. Nos. 2:14-cv-00051-SMM

2:14-cv-00766-SMM

2:14-cv-00768-SMM

2:14-cv-00769-SMM

2:14-cv-01243-SMM

2:14-cv-01244-SMM

NATHAN LLANOS, an individual,


v.

P.F. CHANG’S CHINA BISTRO, INC.,

Defendant-Appellee.

No. 16-15003

D.C. No. 2:14-cv-00261-SMM

2


KRISTEN ROMERO, an individual,


v.


Defendant-Appellee.

No. 16-15004

D.C. No. 2:14-cv-00262-SMM

ANDREW FIELDS, an individual,


v.


Defendant-Appellee.

No. 16-15005

D.C. No. 2:14-cv-00263-SMM

ALTO WILLIAMS,


v.

AMERICAN BLUE RIBBONS HOLDINGS LLC,

Defendant-Appellee.

No. 16-15118

D.C. No. 2:14-cv-01467-SMM

STEPHANIE R. FAUSNACHT,


v.

LION’S DEN MANAGEMENT, LLC, DBA Denny’s,

Defendant-Appellee.

No. 16-16033

D.C. No. 2:15-cv-01561-SMM

3


Appellant Alec Marsh’s (“Appellant”) Petition for Rehearing En Banc

should be denied. Appellant argues that en banc review is necessary because the

majority decision conflicts with the 8th Circuit’s decision in Fast v. Applebee’s

International, Inc., 638 F.3d 872 (8th Cir. 2011). Appellee J. Alexander’s, LLC

(“J. Alexander’s”) acknowledges that a circuit split exists with respect to whether

the Department of Labor’s (“DOL”) dual jobs regulation, 29 C.F.R. § 531.56(e),

interpreting the Fair Labor Standards Act’s (“FLSA”) tip credit provision is

ambiguous and whether the DOL’s Field Operation Handbook interpreting this

regulation must be afforded Auer deference. However, en banc review is

unnecessary because, as pointed out in the majority opinion, the DOL is not

prevented from attempting to promulgate through rulemaking (or seeking

legislation) to codify the DOL’s apparent insistence in the Field Operation

Handbook that an employer is responsible for engaging in tracking time and

accounting for minutes its employees spend in diverse tasks while working as

tipped employees before claiming a tip credit. (Maj. Op. at 38).

Moreover, Appellant’s Petition attempts to create a question of exceptional

importance where none exists by continuing to mischaracterize the purpose of the

FLSA and the impact of the tip credit on employees—the same faulty argument

previously raised before the District Court and this Court. As fully briefed by J.

Alexander’s in its Answering Brief, the purpose of the FLSA is to ensure that all

4


employees receive a wage rate of not less than $7.25, and contrary to Appellant’s

argument, the majority opinion does not create unprecedented appellate authority

to deny employees the right to full minimum wage. At no point does the majority

opinion require or support an employee receiving less than $7.25 per hour worked.

As the majority opinion makes clear, “tipped employees always earn at least the

federal minimum wage.” (Maj. Op. at 11).

For these reasons, Appellant’s Petition for Rehearing En Banc should be

denied.

RESPECTFULLY SUBMITTED this 11th day of October, 2017.

OSBORN MALEDON, P.A. By s/ Eric M. Fraser

Eric M. Fraser 2929 North Central Avenue, Suite 2100 Phoenix, Arizona 85012-2794

BASS, BERRY & SIMMS, PLC Robert W. Horton Mary Leigh Pirtle 150 Third Avenue South, #2800 Nashville, TN 37201

Attorneys for Defendant-Appellee J. Alexander’s LLC

5


CIRCUIT FORM 11. CERTIFICATE OF COMPLIANCE PURSUANT TO CIRCUIT RULES 35-4 AND 40-1

Form Must be Signed by Attorney or Unrepresented Litigant

and Attached to the Back of Each Copy of the Petition or Answer

I certify that pursuant to Circuit Rule 35-4 or 40-1, the attached petition for panel rehearing/petition for rehearing en banc/answer to petition (check applicable option) Contains __________ words (petitions and answers must not exceed 4,200 words), and is prepared in a format, type face, and type style that complies with Fed. R. App. P. 32(a)(4)-(6). or X Is in compliance with Fed. R. App. P. 32(a)(4)-(6) and does not exceed 15 pages.

Dated this 11th day of October, 2017.

s/ Eric. M. Fraser Attorneys for Defendant-Appellee J. Alexander’s LLC

6



I hereby certify that I electronically filed the foregoing with the Clerk of the

Court for the United States Court of Appeals for the Ninth Circuit by using the

appellate CM/ECF system on October 11, 2017.

Participants in the case who are registered CM/ECF users will be served by

the appellate CM/ECF system.

I further certify that there is no participant in the case who is not a registered

CM/ECF user.

s/ Eric M. Fraser Attorneys for Defendant-Appellee J. Alexander’s LLC

7


Case Nos.: 15-15794

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

CRYSTAL SHEEHAN,


v.

ROMULUS, INC. dba International House of Pancakes,

Defendant-Appellee.

DEFENDANT/APPELLEE'S ROMULUS, INC.'S RESPONSE TO PLAINTIFFS-APPELLANTS'

PETITION FOR EN BANC REVIEW

JULIEA. PACE

DAVID A. SELDEN

HEIDI NUNN-GILMAN

THE CA V ANAGH LA W FIRM 1850 North Central Avenue

Suite 2400 Phoenix, Arizona, 85004

Telephone: (602) 322-4046 Facsimile: (602) 322-4101

Attorneys for Defendant-Appellee Romulus, Inc.


TABLE OF CONTENTS

PAGE

I. INTRODUCTION AND BACKGROUND ................................................. 1

II. ARGUMENT .................................................................................................. 4

A. This Case Doest Not Present a Question of Exceptional Importance Warranting En Banc Review ................................................................ 4

B. The Court Properly Declined To Defer to the DOL's Interpretation in the FOR ................................................................................................. 6

C. The Panel Opinion's Rejection of Imposing on Restaurants and their Employees the Burden of Parsing Servers' Time into Minute-ByMinute Activities Is Consistent with the Position Taken by Other Circuits and DOL Opinion Letters ....................................................... 9

D. The Cases Described by Plaintiffs-Appellants as Analyzing Tasks Rather Than an Occupation Are Not to the Contrary ......................... 11

E. The Minute-By-Minute Task Analysis Suggested By the FOR Is Unworkable ......................................................................................... 13

III. CONCLUSION ............................................................................................ 14

11



Cases

Auer v. Robbins, 519 U.S. 452, 117 S.Ct. 905 (1977) ................................ 1, 4, 6, 11

Christensen v. Harris County, 529 U.S. 576,588,120 S.Ct. 1655, 1664 (2000).2, 8

Cumbie v Woody Woo, Inc., 596 F.3d 577,580 (9th Cir. 2010) ............................... 2

Driver v. AppleIllinois, LLC, 739 F.3d 1073, 1075 (7th Cir. 2014) ....................... 12

Fast v. Applebee's International, Inc., 638 F.3d 872 (8th Cir. 2011) .................. 3, 12

Makaeffv. Trump Univ., LLC, 736 F.3d 1180 (9th Cir. 2013) ................................. 4

Montano v. Montrose Rest. Assoc., Inc., 800 F.3d 186, 190-92 (5th Cir. 2015) ..... 12

Myers v. Copper Cellar Corp., 192 F .3d 546 (6th Cir. 1999) ................................ 10

Pellon v. Business Representation International, Inc., 291 Fed. Appx. 310 (11 th

Cir. 2008) ............................................................................................................. 10

Romero v. Top Tier Colorado, LLC, 849 F.3d 1281 (10th Cir. 2017) .................... 11

Rose v. Locke, 423 U.S. 48, 50, 96 S. Ct. 243, 245 (1975) ..................................... 14

Schaefer v. Walker Bros. Enter., 829 F.3d 551,554 (7th Cir. 2016) ....................... 11

United States v Klingenhoffer Bros. Realty Corp, 285 F.2d 487 (2d Cir. 1960) .... 11

United States v. Am.-Foreign s.s. Corp., 363 U.S. 685, 689 (1960) ........................ 4

Statutes

1996 U.S.C.C.A.N. 3002, 3004 ................................................................................. 3

29 U.S.C. § 203(m) .................................................................................................. 11

29 U.S.C. § 203(t) ...................................................................................................... 8

29 C.F.R. § 531.56 ............................................................................................... 7,10

Other Authorities

Department of Labor, Wage and Hour Division Field Operations Handbook ("FOH") § 30dOO(f) ............................................................................. 1, 4, 6, 7, 11

Dept. of Labor FLSA Opinion Letter, Wage and Hour Div. 1980 DOL WH LEXIS 1 (3/28/80) ............................................................................................................ 10

O*NET Resource Center, https:llwww.onetcenter.org/overview.html .................... 7

O*NET, Summary Reportfor 35-3031.00 Waiters and Waitresses, http://www.onetonline.org/link/summary/35-3031.00 .......................................... 9

111


S. Rep. No. 89-1487 .................................................................................................. 3

Rules

Fed. R. App. P. 35(a) ............................................................................................. 3,4

IV


I. INTRODUCTION AND BACKGROUND l

The question presented in this case is whether Section 30dOO(f) of the Field

Operations Handbook ("FOH") of the Department of Labor ("DOL"), Wage and

Hour Division2 is entitled to Auer deference. See Auer v. Robbins, 519 U.S. 452,

117 S.Ct. 905 (1977). In the circumstances of this appeal, the DOL created a new

standard (limiting non-tipped work to 20% of the workweek) under the guise of

interpreting a regulation, without going through notice-and-comment rulemaking.

Moreover, the new standard is contrary to the law, is inconsistent with prior DOL

guidance dating back to 1980, and even changed during the pendency of the cases at

issue.3

Contrary to Appellants' urgings, this is neither a novel nor a unique question.

Indeed, the Panel's Opinion is consistent with Ninth Circuit and Supreme Court

precedent in holding that Auer deference is not appropriate in such circumstances.

I This brief is submitted by Romulus, Inc., Defendant/Appellee in Case No. 15-15794. Romulus' counsel have collaborated with counsel for P.F. Chang's China Bistro, Inc., Defendant/Appellee in Case Nos. 16-15003, 16-15004 and 16-15005, and understands that it will be filing a joinder to this brief.

2 Prior to 2012, the dual jobs guidance was located in Section 30dOO(e) of the FOH. With the 2012 revisions, which were not publicly released until 2016, the Section was renumbered 30dOO(f).

3 The 1998 version of the FOH expressly allowed maintenance activities for tipped employees, while the 2012 FOH, released publically in 2016, specifically identified maintenance duties as "not related to the tipped occupation."


See, e.g., Cumbie v Woody Woo, Inc., 596 F.3d 577, 580 (9th Cir. 2010) (rejecting

DOL's interpretation of tip pooling regulations as "plainly erroneous and unworthy

of deference"); see also Christensen v. Harris County, 529 U.S. 576, 588, 120 S.Ct.

1655, 1664 (2000) at 1662-63 (rejecting deference to an agency position when to do

so would "permit the agency, under the guise of interpreting a regulation, to create

de facto a new regulation").

The Panel Opinion is also consistent with cases from other jurisdictions that

reject the minute-by-minute tracking and classification of duties, but allow for the

potential application of different rates (tipped or non-tipped) if an entire shift is spent

performing a non-tipped occupation or the employee is otherwise no longer engaged

in a "tipped occupation."

Appellants' request for en banc rehearing is based on a specious scenario in

which, if the Panel Opinion is allowed to stand, restaurant employers would shift all

duties to servers and pay only $2.13 per hour for all hours worked, displacing non-

tipped employees such janitors, cooks, etc. and reducing wages for servers.4

4 In Arizona, the location of all employment at issue in this case, State law limits the tip credit to a $3.00 per hour reduction of the state minimum wage, currently $10.00 per hour, and increasing to $10.50 per hour on January 1,2018 and gradually to $12.00 per hour by January 1, 2020. A.R.S. § 23-363. Thus, all plaintiffs in these cases currently receive a wage ($7.00 per hour), after the employer takes the state tip credit, that is nearly the full federal minimum wage ($7.25 per hour) and by January 1,2018 will be $7.50 and exceed the federal minimum wage. Further, due to the lucrative tips they receive, servers typically receive wages far in excess of the wages received by employees working in the kitchen who are ineligible to share in tips received by

2


Appellants' Petition for En Banc Review ("Pet.") at 1. But, contrary to the Petition's

fondness for Chicken Little's refrain that "the sky is falling!," the Panel Opinion

merely reflects existing practices that have been in place for the past 50 years-ever

since Congress created the tip credit in 1966. And the legislative history shows that

the FLSA amendments were not intended to disrupt "the continuance of existing

practices with respect to tips." S. Rep. No. 89-1487, reprinted in 1996 U.S.C.C.A.N.

3002, 3004. Over the past 50 years (and before), the restaurant industry has

employed cooks, janitors, and other non-tipped employees, and contrary to

Appellants' urgings, the existing tip-credit practice has not resulted in either dire

circumstances or any "question of exceptional importance." En bane review is

disfavored and used only in exceptional circumstances, Fed. R. App. P. 35(a). This

is not such a case. While the Eighth Circuit cited the FOB approvingly, its analysis

was thin, and the Eighth Circuit did not substantively grapple with the issues, in

contrast to the through and lengthy Panel Opinion. Accordingly, the Panel was

correct not to defer to the Eighth Circuit's limited analysis of the issue.

The Panel Opinion in this matter correctly rejected the Eighth Circuit opinion

in Fast v. Applebee's Int'l, Inc., 638 F.3d 872 (8th Cir. 2011), and left open the

servers if servers are paid using a tip credit rate. Roberto A. Ferdman, The Problem That's Tearing Restaurants Apart, THE WASHINGTON POST (August 20, 2015), available at https:llwww.washingtonpost.comlnewslwonklwpI201510S120Itheres-aserious-problem-with-how-restaurants-pay-their-staffl?utm _term =. c5c541 ba6033.

3


question of whether, as set forth consistently in DOL Opinion letters, tipped

employees who perform duties "for an extended period before or after customer

interaction began or ended rises to the level of a dual job." Panel Op. at 40.

Rejecting a claim under FLSA § 206(a) based on duties that are dispersed and

intermingled with the tipped duties and generally assigned to servers is consistent

with decades-old guidance from the DOL and case law from other Circuit Courts of

Appeals.

II. ARGUMENT

A. This Case Does Not Present a Question of Exceptional Importance Warranting En Banc Review.

This Court hears a case en banc only when extraordinary circumstances exist

that call for the authoritative consideration and decision by a majority of the Court.

United States v. Am.-Foreign s.s. Corp., 363 U.S. 685, 689 (1960). "En banc courts

are the exception, not the rule. They are 'not favored,' Fed. R. App. P. 35." Makaeff

v. Trump Univ., LLC, 736 F.3d 1180 (9th Cir. 2013) (Wardlaw & Callahan, JJ,

concurring in the denial of rehearing en banc) (citation omitted). The Court "only

invoke [ s] the en banc process to secure or maintain uniformity of [its] decisions or

because a question of exceptional importance is involved." Id. at 1187; see also Fed.

R. App. P. 35(a). This is not such a case.

The question presented is whether FOR § 30dOO(f) is entitled to Auer

deference. This question is neither exceptional nor unique. Appellants suggest,

4


without any supporting evidence in the record, that the issue "reaches into the

pockets of hundreds of thousands of workers," and will result in the abuse of millions

of workers. Pet. at 7. The Panel Opinion, however, merely affirms and continues

more than 50 years of consistent practice in the restaurant industry. Tipped

employees will continue to receive tips in the same manner that they have for the

past 50+ years for time spent in a tipped occupation.

Appellants argue that "tipped workers miss out on opportunities to earn tips,

since the non-tipped work involves no customer interaction." Id. at 8. This is

misleading, however, because when a tipped employee has customers, he serves the

customers, and his other work is interspersed with the service to customers. If he

has enough customers to keep him serving customers for four hours straight, then he

serves customers for four hours straight. If he does not have sufficient customers to

keep him fully occupied with direct customer service, he engages in tasks that do not

involve direct customer interaction, but which are typically performed by servers

and which undoubtedly contribute to the satisfactory experiences of customers that

are reflected in the tip income that servers receive.

Appellants' speculation that restaurants will reduce the hours or hire fewer

cooks and janitors is not supported by any evidence and, indeed, is belied by the last

50+ years of industry practice. Id. If any change to the law is required (and there is

no evidence of any abuses to warrant such change), that change should result either

5


from review-and-comment rulemaking by DOL, or legislatively by Congress. The

en banc petition should be denied.

B. The Court Properly Declined to Defer to the DOL's Interpretation in the FOH.

A court should not defer to DOL's interpretation when that interpretation is

clearly erroneous or inconsistent with the regulation being interpreted. Auer v.

Robbins, 519 U.S. 452, 461, 117 S.Ct. 905, 911 (1997). Appellants themselves

concede that the FOR contradicts the regulations. Specifically, they concede that

"the relevant regulation grants businesses some flexibility to assign non-tipped

duties to tipped workers (e.g., requiring waitresses to scrub floors)." Pet. at 1.

Appellants then argue that restaurant employers "abuse" this latitude.

This concession that the regulation allows the assignment of non-tipped duties

to tipped workers contradicts the 2012 FOR, § 30dOO(f)(4), which provides that "an

employer may not take a tip credit for the time that a tipped employee spends on

work that is not related to the tipped occupation, for example, maintenance work

(e.g., cleaning bathrooms and washing windows) .... " FOR § 30dOO(f)(4) (formerly

subsection (e)). So, for example, the FOR indicates no tip credit is allowed for

scrubbing floors, which Appellants say is permitted to be performed by a tipped

worker under the regulation.

Appellants misconstrue the Panel Opinion and suggest that it has not

considered the actual duties performed by the servers. Pet. at 5. To the contrary, the

6


Panel Opinion considered whether the duties performed could be part of the same

occupation or whether, as DOL has suggested in its FOR, certain duties are per se

exempted from the occupation of server. See Panel Op. 31 ("Under the FOR §

3 OdOO( f)( 4), an employee is per se engaged in two jobs if the employee has spent

any time at all on tasks not related to the tipped occupation."). The Panel Opinion

correctly held that an interpretation that duties were per se not part of the server

occupation was inconsistent with the regulation, which allows the performance of

duties that are not directed towards producing tips. See 29 C.F.R. § 531.56; Panel

Op.30.

Appellants suggest that DOL's interpretation of its regulation and the 20%

rule in the FOR are "consistent with the notion that an employee may be engaged in

multiple activities or occupations in a single work arrangement with an employer."

Pet. at 5. No one is disputing that a single employee may be engaged in dual

occupations for the same employer. The FOR, however, suggests, improperly, that

an individual employed in the occupation of a server performing the regular duties

of a server as even described by the DOL itself in O*NET (a DOL publication that

identifies the duties of various occupations)5 can somehow be construed to engaged

5 O*NET, which is sponsored by the U.S. Department of Labor, contains "hundreds of standardized and occupation-specific descriptors on almost 1,000 occupations" and "is continually updated from input by a broad range of workers in each occupation." O*NET Resource Center, https://www.onetcenter.org/ overview.html (last visited Oct. 5,2017).

7


in separate occupations, and that certain activities can never be part of the server

occupation A server who wipes down a table is not somehow transformed into a

"maintenance worker" nor is a server who cuts a lemon or lime transformed into a

sous chef, just as an attorney who decides to make his or her own photocopies is not

transformed into a secretary.

The FOR suggests that an employee can vacillate between different

occupations nearly every few minutes-acting as a tipped employee for 12 minutes

when taking an order and delivering a drink to a customer, then becoming a

maintenance worker for the 5 minutes it takes to clean the nozzles on the drink

dispenser, then assuming the tipped employee occupation again when taking a desert

order, and then putting on the "chef' hat when cutting the cake. This flip-flopping

between occupations conflicts with the very definition of "occupation" as used in 29

U.S.c. § 203(t) and 29 C.F.R. § 531.56.6

When an interpretative guidance de facto makes a new regulation or standard,

it is not entitled to deference. Christensen v. Harris County, 529 U.S. 576, 588, 120

S.Ct. 1655, 1664 (2000). DOL's O*NET description of the server occupation

6 Appellants wrongly conflate the Panel Opinion's analysis of the definition of "occupation" with an emphasis on "job titles." Pet. at 5 n.2. The Panel Opinion did not focus on the job title; rather, it focused on the question of whether disparate duties could fall within the same occupation or whether a duty, by definition, was outside of the occupation.

8


(waiter/waitress) demonstrates that the FOH is attempting to make a new standard

or regulation that previously did not exist in the regulation. According to research

from real world servers, DOL's list of duties of the occupation of Waiters and

Waitresses includes these tasks: "perform[ing] cleaning duties, such as sweeping and

mopping floors, vacuuming carpet, tidying up server station, taking out trash, or

checking and cleaning bathroom." O*NET, Summary Report for 35-3031.00

Waiters and Waitresses, http://www.onetonline.org/linklsummary/35-3031.00 (last

visited Oct. 5, 2017). The fact that these duties have been considered part of the

server occupation for decades demonstrates that the FOR's categorical exclusion of

these duties from those of a tipped employee constitutes a new standard, different

from the regulations that have been in place since 1967. The Court should deny the

Petition for Rehearing En Banc.

c. The Panel Opinion's Rejection of Imposing on Restaurants and their Employees the Burden of Parsing Servers' Time into Minute-ByMinute Activities Is Consistent with the Position Taken by Other Circuits and DOL Opinion Letters.

The Panel Opinion's rejection of imposing upon restaurants and their

employees the burden of parsing servers' duties into minute-by-minute activities is

consistent with the position taken by other circuit courts and DOL opinion letters.

The Panel Opinion left open the possibility of tipped and non-tipped rates applying

when there is a clear dividing line between the duties, such as when servers are

temporally separated from serving customers. Panel Op. at 39.

9


The Panel Opinion is in accord with the Eleventh Circuit's decision in Pellon

v. Business Representation Int 'I, Inc., which rejected the 20% guidance in the FOH

and found a minute-by-minute analysis unworkable. See 291 Fed. App'x 310 (11th

Cir. 2008). In Myers v. Copper Cellar Corp., 192 F .3d 546 (6th Cir. 1999), the Sixth

Circuit held that when an employee worked an entire shift preparing salad, he was

not a tipped employee, but the court left intact the tip credit for servers who made

salads for the tables that they were serving, noting that 29 C.F.R. § 531.56(e)

"illustrat[ es] that an employee who discharges distinct duties on diverse work shifts"

may qualify as a tipped employee on one shift but not another. 192 F.3d at 550.

In its opinion letters, DOL has explained that only where there is a clear

dividing line between when an employee is engaged in a tipped versus non-tipped

occupation, would the tip credit not apply. See, e.g., U.S. Dept. of Labor, Wage &

Hour Div. Op. Ltr. WH-502, (March 28, 1980) ("[W]here there is a clear dividing

line between the type of duties performed by a tipped employee, such as between

maintenance duties and waitress duties, no tip credit may be taken for the time spent

by a waitress performing maintenance duties.") (emphasis added); U.S. Dept. of

Labor, Wage & Hour Div. Op. Ltr. FLSA-854 (Dec. 20, 1985) (job assigned to single

server before opening was non-tipped). The Panel's decision is in accord with these

cases and opinion letters and should be left in place. The en banc petition should be

denied.

10


D. The Cases Described by Appellants as Analyzing Tasks Rather Than an Occupation Are Not to the Contrary.

Appellants categorize the Panel Opinion as "rejecting the holdings of the

Fifth, Seventh, and Tenth Circuits ... that analyze tipped and non-tipped duties, not

jobs." Pet. at 9 n. 5. The cases cited by Appellants, however, do not support

Appellants' arguments because the other circuits have not directly examined the

issue before this Court, which is the deference due to FOR § 30dOO(f) and its 20%

limitations or, addressed specifically, FLSA § 3(m), 29 U.S.C. § 203(m) (allowing

a tip credit for tipped "occupations.").

For example, Romero v. Top Tier Colorado, LLC, 849 F.3d 1281 (lOth Cir.

2017), did not examine the question of what deference, if any, is due to "FOR" §

30dOO. Rather, the question in Romero was whether, under United States v

Klingenhoffer Bros. Realty Corp, 285 F.2d 487 (2d Cir. 1960), the plaintiff failed to

establish a claim by neglecting to allege that she received less than the minimum

wage when including all tips. The Tenth Circuit held that the District Court had to

answer the threshold question of whether the tips were "wages" for the hours worked

(i.e., whether plaintiff was engaged in dual jobs) before it could apply Klingenhoffer.

The Tenth Circuit did not suggest deference to the FOR, but merely required the

District Court to address the plaintiff s arguments. Id.

The Seventh Circuit in Schaefer v. Walker Bros. Enter., 829 F.3d 551, 554

(7th Cir. 2016), did not examine the deference due to the FOR because Auer

11


deference was not contested. The Court rejected the argument that certain tasks were

not "related to" tipped work. It did not identify the standard to use in making the

distinction between tip-related or non-tip-related work, not did it analyze the 20%

standard or the server "occupation." However, the Court did state:

The Supreme Court told us in Sandifer v. United States Steel Corp. , - U.S. --, 134 S.Ct. 870, 880, 187 L.Ed.2d 729 (2014), that the Fair Labor Standards Act does not "convert federal judges into time-study professionals" and require every minute to be accounted for. Sandifer holds that, when the "vast majority" of employees' time qualifies for a particular treatment under the Act, that treatment can be applied to the entire period. Id. at 881.

Id. at 555. This suggests that the Seventh Circuit would reject a minute-by-minute

analysis of the tasks being performed.

The Seventh Circuit in Driver v. AppleIllinois, LLC, 739 F.3d 1073, 1075 (7th

Cir. 2014), which addressed class certification, also did not analyze the 20% limit or

the deference due, but merely cited the FOR and Fast v. Applebee's Int'l, Inc., 638

F .3d 872 (8th Cir. 2011), in discussing the class certification and definition. 739

F.3d 1073, 1075 (7th Cir. 2014). Any analysis of the FOR was entirely absent from

the opinion.

In Montano v. Montrose Rest. Assoc., Inc., 800 F.3d 186, 190-92 (5th Cir.

2015), the Fifth Circuit addressed tip pooling and whether the "coffeeman

occupation" was a tipped occupation. 800 F .3d at 192. The Court concluded that

determining whether the employee works in an occupation that "customarily and

12


regularly receives tips" reqmres a case-by-case analysis of the work being

performed, but it addressed the question as whether the occupation was a tipped

occupation, not a minute-by-minute accounting of the time spent in the various tasks

that are performed by the occupation. 800 F.3d 186, 190-92 (5th Cir. 2015). These

cases cited by Appellants do not justify further argument, and their petition for

rehearing en banc should thus be denied.

E. The Minute-By-Minute Task Analysis Suggested by the FOH Is Unworkable.

Appellants suggest that there is "nothing remarkable" about an employer

being required to analyze minute-by-minute every moment of an employee's work

day, noting that employers are required to keep track of hours worked. Pet. at 12.

Nothing, however, in the FLSA or regulations require employers to keep track of

each minute worked by the employee, itself a fact that supports that no such

requirement exists. Appellants suggest that wearable devices that track movement

or inactive time could be the solution. Id. at 13. But there is no definition of what

constitutes a "tipped duty" versus a "non-tipped duty" nor does the FLSA require

servers to spend their day with a stop watch tracking each, even if such a list could

be prepared and all servers trained on the fine distinctions of duties that has eluded

DOL and Appellants.7

7 For example, if a server cleans a spill during the service, the task is presumably a tipped duty. But what if the customer spills a drink while paying the bill and leaving

l3


Finally, due process reqUIres that parties have sufficient notice of the

standards to which they must comply to allow them to identify the actions and

comply thereto. See Rose v. Locke, 423 U.S. 48, 50 (1975). The existing standard,

which has been in place for a half-century, gives parties the benefit of that

predictability. Appellants' standard, in contrast, is subject to the vagaries of the

particular case and to countless variable circumstances. By leaving the settled

standard in place and denying the Petition for En Banc Review, the Court avoids

these eventualities.

III. CONCLUSION.

For all of the foregoing reasons, this Court should deny the Petition for

a tip and the server is required to clean the spill before the customer leaves-tipped or non-tipped. And must a server track the minutes spent in each activity?

Appellant Crystal Sheehan's proposed Amended Complaint in Case No. 2:14-cv-00464-SMM alleges that in working the graveyard shift in an IHOP restaurant that is open 2417, she was required to perform non-tipped related duties, including washing coffee pots and placing them on tables, washing cups in the dishwasher, sweeping carpets, sweeping rugs and mats, moving rugs and sweeping and mopping floors, cleaning and restocking restrooms, and cleaning walls. 2-ER-136 ~ 23. Ms. Sheehan also alleges that she was required to perform the very same tasks as nontipped unrelated duties, including washing coffee pots and placing them on tables, washing cups in the dishwasher, sweeping and mopping floors after moving rugs, cleaning and restocking restrooms, cleaning and scrubbing walls, and sweeping carpets. 2-ER-145-146 ~ 41. The fact that Appellant Sheehan, with the benefit of counsel, lists the same duties as both related and unrelated to her tipped duties demonstrates the infeasibility of classifying duties as tipped, non-tipped related, and non-tipped unrelated duties.

14


Rehearing En Banc.

Respectfully submitted this 12th day of October, 2017.

15

THE CAVANAGH LAW FIRM

s IDavid A. Selden David A. Selden Julie A. Pace Heidi Nunn-Gilman Counsel for Defendant-Appellee Romulus, Inc.


CERTIFICATE OF COMPLIANCE PURSUANT TO FED. R. APP. P. 32(a)(7)(C) AND CIRCUIT RULE 32-1

I certify that this response complies with the requirements of Fed. R. App. P.

40(b) and Ninth Circuit Rule 40-1 because it contains 3,075 words. This brief

complies with the typeface requirements pursuant to FED. R. ApP. P. 32(a)(5) and

Ninth Circuit Rule 32-1 because it has been prepared using proportionately spaced

Times New Roman typeface of 14 points. Microsoft Office Professional Edition

2013 is the word-processing software that was used to prepare the brief.

October 12,2017 slDavid A. Selden Date David A. Selden

16



I hereby certify that I electronically filed the foregoing Defendant-Appellee's Response to the Petition for Rehearing En Banc with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the Appellate CMJECF system on October 12,2017.

I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the Appellate CMJECF system.

sf David A. Selden David A. Selden

17


CERTIFICATE OF SAMENESS

I, Sharon Damon, certify that this brief is identical to the version submitted

electronically on October 12, 2017, pursuant to Rule 6(c) of the Administrative

Order Regarding Electronic Filing in All Ninth Circuit Cases.

Date: October 12,2017

Signature: s/Sharon Damon

18


Nos. 15-15791, 15-15794, 15-16561, 15-16659,

16-15003, 16-15004, 16-15005, 16-15118, 16-16033

IN THE

United States Court of Appeals

for the Ninth Circuit _____________________________

NATHAN LLANOS, KRISTEN ROMERO, AND ANDREW FIELDS,


v.


Defendant-Appellee.

_____________________________

On Appeal from the United States District Court

For the District of Arizona

Nos. CV-14-00261-PHX-SMM, CV-14-00262-PHX-SMM,

CV-14-00263-PHX-SMM

_____________________________

APPELLEE P.F. CHANG’S CHINA BISTRO, INC.’S RESPONSE TO

PETITION FOR EN BANC REVIEW

_____________________________

Stephanie M. Cerasano

Jackson Lewis P.C.

2398 East Camelback Road

Suite 1060

Phoenix, Arizona 85016

(602) 714-7056

[email protected]


2

Appellee P.F. Chang’s China Bistro, Inc. joins in the following

responses filed in Ninth Circuit Docket No. 15-15791 (lead case),

incorporated here by reference:

Appellee Lion's Den Management, LLC’s Response to Petition for

Rehearing En Banc [Document 103 in Ninth Circuit Docket No. 15-

15791];

Appellee J. Alexander's LLC’s Response to Petition for Rehearing

En Banc [Document 102 in Ninth Circuit Docket No. 15-15791]; and

Appellee Romulus, Inc.’s Response to Petition for En Banc Review

[Document 104 in Ninth Circuit Docket No. 15-15791].

Respectfully submitted,

/s/ Stephanie M. Cerasano

STEPHANIE M. CERASANO

JACKSON LEWIS P.C.

2398 East Camelback Road

Suite 1060


(602) 714-7056

[email protected]

Counsel for Defendant-Appellee

October 12, 2017


3


I hereby certify that on October 12, 2017, an electronic copy of the

foregoing Appellee’s Response was filed with the Clerk of Court for the

United States Court of Appeals for the Ninth Circuit using the Court’s

CM/ECF system and was served electronically by the Notice of Docket

Activity upon registered CM/ECF participants.

/s/ Stephanie Cerasano

JACKSON LEWIS P.C.

2398 E. Camelback Rd.

Suite 1060


October 12, 2017

4849-2187-9633, v. 1


Nos. 15-15791, 15-15794, 15-16561, 15-16659,16-15003, 16-15004, 16-15005, 16-15118, 16-16033

United States Court of Appeals for the Ninth Circuit

ALEC MARSH,Plaintiff-Appellant,

v .

J. ALEXANDER’S LLC,Defendant-Appellee,

(For continuation of captions, see next two pages)

On Appeal from the United States District Court for the District of ArizonaNo. 2:14-cv-01038-SMM

DEFENDANT-APPELLEE’S RESPONSE TO PLAINTIFFS-APPELLANTS’PETITION FOR EN BANC REVIEW

Caroline Larsen, SBA 022547Alexandra J. Gill, SBA 027506OGLETREE, DEAKINS, NASH,SMOAK & STEWART, P.C.2415 E. Camelback Road, Suite 800Phoenix, Arizona 85016(602) [email protected]@ogletreedeakins.comAttorneys for Defendant-Appellee AmericanBlue Ribbon Holdings, LLC


CRYSTAL SHEEHAN,


v.

ROMULUS INCORPORATED, DBAInternational House of Pancakes,

Defendant-Appellee.

No. 15-15794

D.C. No. 2:14-cv-00464-SMM

SILVIA ALARCON,


v.

ARRIBA ENTERPRISESINCORPORATED, DBAArriba Mexican Grill,

Defendant-Appellee.

No. 15-16561

D.C. No. 2:14-cv-00465-SMM

SAROSHA HOGAN;NICHOLAS JACKSON;SKYLAR VAZQUEZ; THOMASARMSTRONG; PHILIP TODD;MARIA HURKMANS,


v.

AMERICAN MULTI-CINEMA, INC.,DBA AMC Theatres Esplanade 14,

Defendant-Appellee.

No. 15-16659

D.C. Nos. 2:14-cv-00051-SMM2:14-cv-00766-SMM 2:14-cv-00768-SMM 2:14-cv-00769-SMM 2:14-cv-01243-SMM2:14-cv-01244-SMM

NATHAN LLANOS, an individual,


v.

P.F. CHANG’S CHINA BISTRO,

INC., Defendant-

Appellee.

No. 16-15003

D.C. No. 2:14-cv-00261-SMM


KRISTEN ROMERO, an individual,


v.


INC., Defendant-

Appellee.

No. 16-15004

D.C. No. 2:14-cv-00262-SMM

ANDREW FIELDS, an individual,


v.


INC., Defendant-

Appellee.

No. 16-15005

D.C. No. 2:14-cv-00263-SMM

ALTO WILLIAMS,


v.

AMERICAN BLUE RIBBONSHOLDINGS LLC,

Defendant-Appellee.

No. 16-15118

D.C. No. 2:14-cv-01467-SMM

STEPHANIE R. FAUSNACHT,


v.

LION’S DEN MANAGEMENT, LLC,DBA Denny’s,

Defendant-Appellee.

No. 16-16033

D.C. No. 2:15-cv-01561-SMM


i

CORPORATE DISCLOSURE STATEMENT

Pursuant to Fed. R. App. P. 26.1, Appellee American Blue Ribbon Holdings,

LLC (“ABRH”) states that it is wholly owned by Fidelity Newport Holdings, LLC.

Fidelity Newport Holdings, LLC is majority owned by Fidelity National Financial,

Inc. (NYSE: FNFV), which is publicly traded.


TABLE OF CONTENTS

CORPORATE DISCLOSURE STATEMENT.................................................. i

TABLE OF AUTHORITIES .................................................................... …iii-iv

I. EN BANC REVIEW IS NOT WARRANTED IN THIS CASE. ... ……1

II. THE PANEL’S ANALYSIS AND DECISION ARE CONSISTENTWITH THE FAIR LABOR STANDARDS ACT AND ITSIMPLEMENTING REGULATIONS ...................................................... 2

III. CONCLUSION .......................................................................................... 4



CASES PAGE

Auer v. Robbins,519 U.S. 452 (1997).................................................................................................

STATUTES PAGE

29 U.S.C. § 203(m) ......................................................................................................

REGULATIONS PAGE

29 C.F.R. § 531.56(e)...................................................................................................

OTHER ........................................................................................................... PAGE

Dep’t of Labor Field Operations Handbook § 30d00(e) .............................................


I. EN BANC REVIEW IS NOT WARRANTED IN THIS CASE.

An en banc hearing is not favored, and should not be granted in this case.

“An en banc hearing . . . ordinarily will not be ordered unless: (1) en banc

consideration is necessary to secure or maintain uniformity of the court’s

decisions; or (2) the proceeding involves a question of exceptional importance.”

Fed. R. App. P. 35(a). Neither factor exists in this case. The Court does not take

cases en banc merely because of disagreement with a panel’s decision, or to review

a panel opinion for error. Hart v. Massanari, 266 F.3d 1155, 1172 n.29 (9th Cir.

2001) (citations omitted). Appellants have not demonstrated that this case involves

any “issues of transcendent public significance” that would warrant undertaking

such an unwieldy and time-consuming endeavor. Id. Accordingly, Appellants’

petition should be denied.

II. THE PANEL’S ANALYSIS AND DECISION ARE CONSISTENTWITH THE FAIR LABOR STANDARDS ACT AND ITSIMPLEMENTING REGULATIONS.

The panel decision does not conflict with a decision of the United States

Supreme Court or this Court; therefore, Appellants must demonstrate that “the

proceeding involves one or more questions of exceptional importance, [such as] an

issue on which the panel decision conflicts with the authoritative decisions of other

United States Courts of Appeals that have addressed the issue.” Fed. R. App. P.


35(b)(1)(B). In an attempt to satisfy this standards, Appellants argue that a

rehearing en banc should be granted because the panel decision conflicts with the

Eighth Circuit’s decision in Fast v. Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir.

2011). Their argument, however, disregards the thorough, well-reasoned analysis

offered by the panel to explain its disagreement with the Eighth Circuit’s analysis

of whether the Department of Labor’s interpretations in the Wage and Hour

Division’s Field Operations Handbook (FOH), specifically § 30d00(f), merit

controlling deference under the standards articulated in Auer v. Robbins, 519 U.S.

452, 462 (1997). This Court should not grant a rehearing en banc simply because

Appellants disagree with the well-founded decisions of the district court and the

panel.

Appellants also assert that the panel’s decision may prompt restaurants, bars,

and other businesses to allocate more side duties to tipped employees, and could

result in tipped employees “displacing” non-tipped employees. First, this

speculative concern is hardly a matter that “substantially affects a rule of national

application in which there is an overriding need for national uniformity” that

warrants a rehearing en banc. See R. 40-1(a), Local Rules of the U.S. States Court

of Appeals for the Ninth Circuit; see also Watson v. Geren, 587 F.3d 156, 160 (2d

Cir. 2009) (“En banc review should be limited generally to only those cases that


raise issues of important systemic consequences for the development of the law

and the administration of justice.”). Second, Appellants overlook the fact that 29

C.F.R. § 531.56(e) permits employers to assign side duties to tipped employees

without defeating the tip credit permitted under 29 U.S.C. § 203(m). Appellants

also disregard the fact that none of the Appellants have alleged, or can allege, that

their total compensation ever fell below the Fair Labor Standards Act’s guaranteed

minimum. Appellants’ references to the median pay and poverty rates among

bartenders and servers make it clear that they are seeking to exceed the rights

secured by the FLSA and its implementing regulations to fashion a cause of action

for unpaid wages where none exists. The panel’s decision properly declined to

allow them to do so.

III. CONCLUSION

For the reasons stated herein, and the arguments asserted by the responses to

Plaintiffs-Appellants’ Petition for En Banc Review submitted by the other

Defendant-Appellees, which are incorporated by reference herein, this Court

should deny the Petition for En Banc Review.


RULE 40-1 CERTIFICATE OF COMPLIANCE

Counsel of Record hereby certifies that pursuant to Rule 40-1(a) of the Local

Rules of the United States Court of Appeals for the Ninth Circuit, the enclosed

brief is produced using a proportionately spaced typeface, Times New Roman, 14

point, including footnotes and does not exceed 15 pages, as permitted by this Rule.

Dated: October 12, 2017

Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

By s/Caroline LarsenCaroline LarsenAlexandra J. Gill2415 East Camelback Road, Suite 800Phoenix, Arizona 85016Telephone: (602) 778-3700Facsimile: (602) 778-3750Attorneys for Appellee American Blue RibbonHoldings, LLC



I hereby certify that I electronically filed the foregoing with the Clerk of the

Court for the United States Court of Appeals for the Ninth Circuit by using the

appellate CM/ECF system on the 12th day of October 2017. I certify that counsel

for all parties are participants in this Court’s electronic filing system and service of

the forgoing will be accomplished by the CM/ECF system, which will send notice

to all users registered with CM/ECF.

s/Caroline LarsenAttorneys for Appellee American Blue RibbonHoldings, LLC


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