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, Page 1 of 21
- ii -
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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 2 of 21
- iii -
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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 3 of 21
- iv -
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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 4 of 21
- v -
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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 5 of 21
-1-
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,
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 6 of 21
-2-
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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 7 of 21
-3-
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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 8 of 21
-4-
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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 9 of 21
-5-
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.”).
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 10 of 21
-6-
‘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.
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 11 of 21
-7-
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).
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 12 of 21
-8-
$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.
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 13 of 21
-9-
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.”
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 14 of 21
-10-
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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 15 of 21
-11-
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).
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 16 of 21
-12-
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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 17 of 21
-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]
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 18 of 21
-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]
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 19 of 21
-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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 20 of 21
-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
Case: 15-15791, 09/20/2017, ID: 10588576, DktEntry: 98-1, Page 21 of 21
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,
Plaintiff-Appellant,
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,
Plaintiff-Appellant,
v.
P.F. CHANG’S CHINA BISTRO, INC.,
Defendant-Appellee.
No. 16-15003
D.C. No. 2:14-cv-00261-SMM
2
Case: 15-15791, 10/11/2017, ID: 10613652, DktEntry: 102, Page 2 of 7
KRISTEN ROMERO, an individual,
Plaintiff-Appellant,
v.
P.F. CHANG’S CHINA BISTRO, INC.,
Defendant-Appellee.
No. 16-15004
D.C. No. 2:14-cv-00262-SMM
ANDREW FIELDS, an individual,
Plaintiff-Appellant,
v.
P.F. CHANG’S CHINA BISTRO, INC.,
Defendant-Appellee.
No. 16-15005
D.C. No. 2:14-cv-00263-SMM
ALTO WILLIAMS,
Plaintiff-Appellant,
v.
AMERICAN BLUE RIBBONS HOLDINGS LLC,
Defendant-Appellee.
No. 16-15118
D.C. No. 2:14-cv-01467-SMM
STEPHANIE R. FAUSNACHT,
Plaintiff-Appellant,
v.
LION’S DEN MANAGEMENT, LLC, DBA Denny’s,
Defendant-Appellee.
No. 16-16033
D.C. No. 2:15-cv-01561-SMM
3
Case: 15-15791, 10/11/2017, ID: 10613652, DktEntry: 102, Page 3 of 7
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
Case: 15-15791, 10/11/2017, ID: 10613652, DktEntry: 102, Page 4 of 7
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
Case: 15-15791, 10/11/2017, ID: 10613652, DktEntry: 102, Page 5 of 7
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
Case: 15-15791, 10/11/2017, ID: 10613652, DktEntry: 102, Page 6 of 7
CERTIFICATE OF SERVICE
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: 15-15791, 10/11/2017, ID: 10613652, DktEntry: 102, Page 7 of 7
Case Nos.: 15-15794
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
CRYSTAL SHEEHAN,
Plaintiff-Appellant,
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.
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 1 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 2 of 22
TABLE OF AUTHORITIES
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 3 of 22
S. Rep. No. 89-1487 .................................................................................................. 3
Rules
Fed. R. App. P. 35(a) ............................................................................................. 3,4
IV
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 4 of 22
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."
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 5 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 6 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 7 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 8 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 9 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 10 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 11 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 12 of 22
(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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 13 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 14 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 15 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 16 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 17 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 18 of 22
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.
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 19 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 20 of 22
CERTIFICATE OF SERVICE
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 21 of 22
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
Case: 15-15794, 10/12/2017, ID: 10615800, DktEntry: 108, Page 22 of 22
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,
Plaintiffs-Appellants,
v.
P.F. CHANG’S CHINA BISTRO, INC.,
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
Case: 15-15791, 10/12/2017, ID: 10615881, DktEntry: 105, Page 1 of 3
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
Phoenix, Arizona 85016
(602) 714-7056
Counsel for Defendant-Appellee
October 12, 2017
Case: 15-15791, 10/12/2017, ID: 10615881, DktEntry: 105, Page 2 of 3
3
CERTIFICATE OF SERVICE
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
Phoenix, Arizona 85021
October 12, 2017
4849-2187-9633, v. 1
Case: 15-15791, 10/12/2017, ID: 10615881, DktEntry: 105, Page 3 of 3
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
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 1 of 11
CRYSTAL SHEEHAN,
Plaintiff-Appellant,
v.
ROMULUS INCORPORATED, DBAInternational House of Pancakes,
Defendant-Appellee.
No. 15-15794
D.C. No. 2:14-cv-00464-SMM
SILVIA ALARCON,
Plaintiff-Appellant,
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,
Plaintiffs-Appellants,
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,
Plaintiff-Appellant,
v.
P.F. CHANG’S CHINA BISTRO,
INC., Defendant-
Appellee.
No. 16-15003
D.C. No. 2:14-cv-00261-SMM
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 2 of 11
KRISTEN ROMERO, an individual,
Plaintiff-Appellant,
v.
P.F. CHANG’S CHINA BISTRO,
INC., Defendant-
Appellee.
No. 16-15004
D.C. No. 2:14-cv-00262-SMM
ANDREW FIELDS, an individual,
Plaintiff-Appellant,
v.
P.F. CHANG’S CHINA BISTRO,
INC., Defendant-
Appellee.
No. 16-15005
D.C. No. 2:14-cv-00263-SMM
ALTO WILLIAMS,
Plaintiff-Appellant,
v.
AMERICAN BLUE RIBBONSHOLDINGS LLC,
Defendant-Appellee.
No. 16-15118
D.C. No. 2:14-cv-01467-SMM
STEPHANIE R. FAUSNACHT,
Plaintiff-Appellant,
v.
LION’S DEN MANAGEMENT, LLC,DBA Denny’s,
Defendant-Appellee.
No. 16-16033
D.C. No. 2:15-cv-01561-SMM
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 3 of 11
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.
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 4 of 11
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
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 5 of 11
TABLE OF AUTHORITIES
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) .............................................
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 6 of 11
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.
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 7 of 11
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
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 8 of 11
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.
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 9 of 11
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
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 10 of 11
CERTIFICATE OF SERVICE
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
Case: 15-15791, 10/12/2017, ID: 10616338, DktEntry: 107, Page 11 of 11
Top Related