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
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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
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
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
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
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
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
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
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.
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.”).
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).
$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.
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.
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.”
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
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]
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
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
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
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
The question presented in this case is whether Section 30dOO(f) of the Field
Operations Handbook ("FOH") of the Department of Labor ("DOL"), Wage and
Hour Division2 is entitled to Auer deference. See Auer v. Robbins, 519 U.S. 452,
117 S.Ct. 905 (1977). In the circumstances of this appeal, the DOL created a new
standard (limiting non-tipped work to 20% of the workweek) under the guise of
interpreting a regulation, without going through notice-and-comment rulemaking.
Moreover, the new standard is contrary to the law, is inconsistent with prior DOL
guidance dating back to 1980, and even changed during the pendency of the cases at
issue.3
Contrary to Appellants' urgings, this is neither a novel nor a unique question.
Indeed, the Panel's Opinion is consistent with Ninth Circuit and Supreme Court
precedent in holding that Auer deference is not appropriate in such circumstances.
I This brief is submitted by Romulus, Inc., Defendant/Appellee in Case No. 15-15794. Romulus' counsel have collaborated with counsel for P.F. Chang's China Bistro, Inc., Defendant/Appellee in Case Nos. 16-15003, 16-15004 and 16-15005, and understands that it will be filing a joinder to this brief.
2 Prior to 2012, the dual jobs guidance was located in Section 30dOO(e) of the FOH. With the 2012 revisions, which were not publicly released until 2016, the Section was renumbered 30dOO(f).
3 The 1998 version of the FOH expressly allowed maintenance activities for tipped employees, while the 2012 FOH, released publically in 2016, specifically identified maintenance duties as "not related to the tipped occupation."
See, e.g., Cumbie v Woody Woo, Inc., 596 F.3d 577, 580 (9th Cir. 2010) (rejecting
DOL's interpretation of tip pooling regulations as "plainly erroneous and unworthy
of deference"); see also Christensen v. Harris County, 529 U.S. 576, 588, 120 S.Ct.
1655, 1664 (2000) at 1662-63 (rejecting deference to an agency position when to do
so would "permit the agency, under the guise of interpreting a regulation, to create
de facto a new regulation").
The Panel Opinion is also consistent with cases from other jurisdictions that
reject the minute-by-minute tracking and classification of duties, but allow for the
potential application of different rates (tipped or non-tipped) if an entire shift is spent
performing a non-tipped occupation or the employee is otherwise no longer engaged
in a "tipped occupation."
Appellants' request for en banc rehearing is based on a specious scenario in
which, if the Panel Opinion is allowed to stand, restaurant employers would shift all
duties to servers and pay only $2.13 per hour for all hours worked, displacing non-
tipped employees such janitors, cooks, etc. and reducing wages for servers.4
4 In Arizona, the location of all employment at issue in this case, State law limits the tip credit to a $3.00 per hour reduction of the state minimum wage, currently $10.00 per hour, and increasing to $10.50 per hour on January 1,2018 and gradually to $12.00 per hour by January 1, 2020. A.R.S. § 23-363. Thus, all plaintiffs in these cases currently receive a wage ($7.00 per hour), after the employer takes the state tip credit, that is nearly the full federal minimum wage ($7.25 per hour) and by January 1,2018 will be $7.50 and exceed the federal minimum wage. Further, due to the lucrative tips they receive, servers typically receive wages far in excess of the wages received by employees working in the kitchen who are ineligible to share in tips received by
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.
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).
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.
(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.
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
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
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.
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.
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
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