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Black v. P.F. Chang'S China Bistro, Inc.

United States District Court, N.D. Illinois, Eastern Division

May 15, 2017

RYAN BLACK and DAYNIA McDONALD, on behalf of themselves and all other persons similarly situated, Plaintiffs,


          Robert M. Dow, Jr. United States District Judge

         Before the Court is Plaintiffs Ryan Black and Daynia McDonald's motion for step-one notice of their Fair Labor Standards Act collective action [26]. For the reasons set forth below, Plaintiffs' motion for step-one notice [26] is granted in part and denied in part. This case is set for further status on June 13, 2017, at 9:30 a.m.

         I. Background

         Plaintiffs Ryan Black and Daynia McDonald worked as servers at P.F. Chang's China Bistro, an “Asian-inspired” casual restaurant operated by Defendant with 218 locations in the United States. [1, ¶¶ 5, 31, 35.] Black worked at a P.F. Chang's restaurant in Lombard, Illinois from August 2012 through June 2014. [27-12, ¶ 1.] McDonald worked at Defendant's restaurant in Westbury, New York from November 2013 through February 14, 2014. [27-13, ¶ 1.] Plaintiffs bring collective action claims on behalf of all similarly situated current and former tipped workers (such as servers, bussers, runners, and bartenders) for violations of the Fair Labor Standards Act, 29 U.S.C. §§ 201-19 (“FLSA”), at fourteen separate P.F. Chang's locations-five in Illinois and nine in New York.

         Plaintiffs allege that Defendant committed at least four distinct FLSA violations, the first three of which, Plaintiffs argue, precluded Defendant from paying a sub-minimum wage or tip credit rate of pay to its employees. [27, at 10.] First, Plaintiffs allege that Defendant failed to provide employees with statutorily required notice of the FLSA's tip-credit provisions because Defendant provides “incorrect and misleading” information about the amount of the minimum cash wage and maximum tipped credit that a tipped employee must receive according to 29 U.S.C. § 203(m). Id. at 5. Second, Plaintiffs allege that they were paid as “tipped” employees for all hours worked (that is, they were paid an hourly rate that is less than the minimum wage, but is subsidized by customer tips), even though they performed “non-tipped” duties such as washing dishes and sweeping floors that are outside the scope of their tipped occupation for more than 20 percent of their shifts. According to Plaintiffs, Defendant was required to pay an employee the full minimum wage for time spent performing non-tipped duties instead of taking a “tip credit” for that time. Third, Plaintiffs allege that tipped employees were improperly required to share their tips with non-tipped employees performing “quality assurance” (“QA”) work, such as assisting with plating food in the kitchen and loading finished plates onto trays. [27, at 7.] Fourth, Plaintiffs allege that Defendant required employees to work “off-the-clock” or perform “side work” in violation of the FLSA's overtime and minimum wage provisions. Id. at 8.

         Plaintiffs have moved for step-one notice for their putative collective action under the FLSA pursuant to 29 U.S.C. § 216(b). [See 26.] In support, Plaintiffs offer two main categories of evidence. On the one hand, Plaintiffs submit evidence of Defendant's nationwide operations and management. This evidence-which touches on wage and hour policy at only a high level of generality-comes predominately from a 2010 lawsuit against Defendant involving claims under the Americans with Disabilities Act and the Family and Medical Leave Act. See Meinelt v. P.F. Chang's China Bistro, Inc., 787 F.Supp.2d 643 (S.D. Tex. 2011).

         Relying on filings from this other lawsuit, Plaintiffs note that Defendant's “wage and hour policies are detailed in its employee handbook.” [27, at 3.] Moreover, Defendant's company charter, which states, “Your Management Team will: Pay employees for all hours worked, ” is framed and posted in every P.F. Chang's restaurant. [27-3, at 4.] Plaintiffs also contend that Defendant hires employees through a single website, all employees receive the same new employee paperwork, [1] and some work at more than one location during their tenure working for Defendant. [27, at 3.] Defendant's Managers (who oversee a section of a restaurant, like the bar or the front of the house) receive a Manager's Handbook, which has a section on federal wage and hour compliance. [27-2, ¶ 4.] Defendant's Operating Partners (the restaurant's general manager) also attend an eight-week management development program. [27-7, at 3.] And Defendant's Market Partners (managers who oversee Operating Partners at multiple restaurants in a geographic region) are responsible for conducing semi-annual financial audits, which may include review of the restaurants payroll controls, timeclock reports, and “edited punch reports.” [27-1, ¶ 4; 27-11.] None of this evidence relates specifically to any of the four FLSA violations that Plaintiffs assert here.

         On the other hand, Plaintiffs provide declarations from Plaintiffs Black [27-12] and McDonald [27-13] addressing the particular FLSA violations that they allegedly observed at the Lombard, Illinois and Westbury, New York locations: (1) that they and other employees spent more than 20 percent of their time engaged in non-tipped worked; (2) that they and other employees routinely performed off-the-clock work at the direction of their managers; and (3) that they had a mandatory tip share arrangement with QAs. Plaintiffs also submit excerpts of server training materials indicating that servers engage in non-tipped work like clearing dishes; cleaning tables, candle containers, and cruets; and brewing tea and cleaning teapots. [27-15.]

         Plaintiffs also submit three Tip Reporting Agreement forms signed by Black, McDonald, and another employee that Plaintiffs contend are deficient Section 203(m) notices. [See 27-14; 27, at 5.] These documents contain a table listing the state, state abbreviation, “current minimum wage, ” “current tip wage, ” and “current cash wage.” [27-14, at 3, 5, 7, 8.] According to Plaintiffs, these agreements “incorrectly inverse and mislabel” these categories. [27, at 5.] For example, in Illinois, the minimum cash wage that an employer must pay an employee is $4.95, but this number appears under the column titled “current tip wage” in Defendant's form. The maximum tip credit that an employer can claim in Illinois is $3.30 (i.e., the difference between the state's minimum wage and the minimum cash wage), but this number appears under the column titled “current cash wage.” Moreover, the 2015 version of the Tip Reporting Agreement [27-14, at 8] lists $5.65 as the “current tip wage” for New York but the minimum cash wage in New York for food service workers at the time was $5.00. Finally, the 2011 version of the Tip Reporting Agreement omits any notification that “tips received are to be retained by the employee except for a valid tip pooling arrangement.” [27, at 11.]

         In response, Defendant submits an affidavit from the Operating Partner of the P.F. Chang's restaurant in Buffalo, New York. [31-1, ¶ 2.] That affidavit describes how he reviews the Tip Reporting Agreement in person with employees, explains the differences between tipped wage and the state minimum wage, “make[s] sure employee knows that they will always receive at least state minimum wage for all hours worked, ” and explains how “P.F. Chang's will increase their compensation to meet the state minimum wage” if their “tips earned are not enough to raise their hourly pay to minimum wage.” Id. ¶¶ 5, 7. This affidavit also discusses how the tip pool in his restaurant works, that “each individual will retain all tips they receive, except that servers and bartenders will contribute a small percentage of their daily sales to bussers, runners, and bartenders, ” and that “other restaurants may run their own tip pool differently.” Id. ¶¶ 5, 6. Relying on this affidavit and Plaintiffs' evidence, Defendant opposes Plaintiffs' request for step-one notice in its entirety.

         II. Legal Standard

         29 U.S.C. § 216(b) permits a collective action “against any employer * * * by any one or more employees for and on behalf of himself or themselves and other employees similarly situated.” Id. “A collective action under § 216(b) differs from a class action under Federal Rule of Civil Procedure 23 in that Rule 23 binds class members unless they opt out, whereas collective action members are bound under § 216(b) only if they opt in to the action by providing their written consent.” Franks v. MKM Oil, Inc., 2012 WL 3903782, at *9 (N.D. Ill. Sept. 7, 2012) (citation omitted). “The FLSA does not specify the details of how collective actions are to proceed, and thus, the management of these actions has been left to the discretion of the district courts.” Jirak v. Abbott Labs., Inc., 566 F.Supp.2d 845, 847 (N.D. Ill. 2008).

         “The majority of courts in this circuit have adopted a two-step process for determining whether an FLSA lawsuit should proceed as a collective action.” Soto v. Wings ‘R U.S. Romeoville, Inc., 2016 WL 4701444, at *5 (N.D. Ill. Sept. 8, 2016) (citation and internal quotation marks omitted); accord Jirak, 566 F.Supp.2d at 847 (collecting cases). “Step one involves a conditional certification, and step two, a final certification. Plaintiffs' burden increases with each, directly proportional to discovery progress.” Briggs v. PNC Fin. Servs. Grp., Inc., 2016 WL 1043429, at *1 (N.D. Ill. Mar. 16, 2016); Blakes v. Ill. Bell Telephone Co., 2013 WL 6662831, at *4 (N.D. Ill.Dec. 17, 2013) (“District courts typically follow a two-step process * * * involving conditional certification of a class pre-discovery followed by a second look at whether collective treatment is appropriate after the parties have engaged in discovery.”).

         As one court in this district explained:

The certification of an FLSA collective a1ction typically proceeds in two stages. The first stage * * * involves conditionally certifying a class for notice purposes. There is a low standard of proof. The court does not make merits determinations, weigh evidence, determine credibility, or specifically consider opposing evidence presented by a defendant. * * * The second stage * * * comes after any opt-ins have appeared and discovery has been finished. Then the defendant is given an opportunity to move for decertification. At that stage, if requested to do so, the court makes a more rigorous examination of the facts relating to whether or not the case may appropriately continue as a collective action.

Bergman v. Kindred Healthcare, Inc., 949 F.Supp.2d 852, 855-56 (N.D. Ill. 2013) (internal citations omitted).

         This case is at the first stage. “The purpose of conditional certification is to determine the size and contour of the group of employees who may become collective members and whether these potential members are ‘similarly situated.'” Briggs, 2016 WL 1043429, at *2; Gomez v. PNC Bank, Nat'l. Assoc., 306 F.R.D. 156, 173 (N.D. Ill. 2014) (“The first step focuses on determining whether ‘similarly situated' plaintiffs do in fact exist such that a notice can be sent to them” (internal quotation marks and alterations omitted)). The step-one analysis is preliminary in nature and a plaintiff need only make a “minimal showing” that the potential class members are similarly situated. Creal v. Grp. O, Inc., 155 F.Supp.3d 831, 837 (N.D. Ill. 2016) (citation omitted). Putative collective action members need not be identically situated, only similarly situated. Briggs, 2016 WL 1043429, at *2.

         Because the parties have not engaged discovery at the time of filing, Plaintiffs need only make a “modest factual showing sufficient to demonstrate that they and potential plaintiffs together were victims of a common policy or plan that violated the law.” Id. (citation omitted); accord Steger v. Life Time Fitness, Inc., 2016 WL 245899, at *2 (N.D. Ill. Jan. 21, 2016); Strait v. Belcan Eng'g Grp., Inc., 911 F.Supp.2d 709, 718 (N.D. Ill. 2012). “Affidavits, declarations, other documents, or deposition testimony can support this modest factual showing.” Briggs, 2016 WL 1043429, at *2 (citation and internal quotation marks omitted). However, “[t]he court does not make merits determinations, weigh evidence, determine credibility, or specifically consider opposing evidence presented by a defendant.” Bergman, 949 F.Supp.2d at 855-56 (citation omitted); see also Briggs, 2016 WL 1043429, at *2; Larsen v. Clearchoice Mobility, Inc., 2011 WL 3047484, at *1 (N.D. Ill. July 25, 2011) (“[T]he court does not resolve factual disputes or decide substantive issues going to the merits.”); Nehmelman v. Penn Nat'l Gaming, Inc., 822 F.Supp.2d 745, 751 (N.D. Ill. 2011) (“[T]he court does not consider the merits of a plaintiff's claims, or witness credibility.”).

         However, “conditional certification is not automatic.” Briggs, 2016 WL 1043429, at *2. A plaintiff must “demonstrate[] similarity among the situations of each plaintiff beyond simply claiming that the FLSA has been violated; an identifiable factual nexus that binds the plaintiffs together as victims of a particular violation of the [FLSA] generally must be present.” Id. (citation and internal quotation marks omitted). If step one's “low burden is met, notice may be issued to prospective plaintiffs who may opt into the action, with discovery to follow.” Creal, 2016 WL 98566, at *4.

         III. Analysis

         Plaintiffs seek conditional certification of all four of their FLSA claims on behalf of current and former employees at fourteen restaurants in Illinois and New York. The Court takes each FLSA claim separately, and then discusses the appropriate scope of the Section 216(b) notice that Plaintiffs request. But before turning to Plaintiffs' substantive allegations, the Court addresses Defendant's threshold arguments as to why the Court should deny Plaintiffs' motion in its entirety.

         A. Plaintiffs' Declarations and ...

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