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Rocksmore v. Hanson

United States District Court, D. Oregon, Portland Division

February 24, 2015

MICHELLE ROCKSMORE, both in her capacity as an individual and, in addition, on behalf of others similarly situated, Plaintiffs,


MICHAEL W. MOSMAN, District Judge.


Plaintiff Michelle Rocksmore was employed as a server at Pal's Shanty, a bar and restaurant owned and operated by brother and sister James and Sharon Hanson ("Defendants"). Ms. Rocksmore brings two claims against her former employers. Her first claim is for alleged minimum wage violations. Ms. Rocksmore says that she and other employees were forced to pool their tips with managers, including Ms. Hanson, and other "back-of-the-house staff, " none of whom were traditionally tipped employees. (Pl.'s Compl. [1] ¶ 7.) She says this practice makes the tip pool "invalid" and violates the minimum wage provision of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 206 (2012).

Ms. Rocksmore's second claim is for retaliation. Ms. Rocksmore says she spoke out in opposition to the tip pool, making verbal complaints to her employer at a staff meeting on August 26, 2013. Four days later, she was terminated. She claims this was a violation of the FLSA's anti-retaliation provision, 29 U.S.C. § 215(a)(3) (2012).

Defendants moved for summary judgment on both claims. On the minimum wage claim, they assert that Ms. Rocksmore was paid an hourly cash wage that exceeded the federal minimum. Defendants argue that this alone fulfilled their minimum wage obligations, making the details of the tip pool essentially irrelevant to the inquiry. On the retaliation claim, Defendants argue that because the tip pool was not regulated by the FLSA, Ms. Rocksmore's complaints about it are not protected activity under the statute. Alternatively, they say Ms. Rocksmore released all of her claims for retaliation in a set of prior settlement agreements between the parties.

For the reasons explained below, I GRANT Defendants' motion with respect to the minimum wage claim, but DENY it with respect to the retaliation claim.


I. Background

Pal's Shanty was a traditional tavern style bar and restaurant located in northeast Portland, Oregon, until it was destroyed by fire in November of 2013. Ms. Rocksmore was employed there from roughly August of 2012 to October of 2013. According to Defendants, she worked an average of two shifts per week. (Defs.' Mem. Supp. Summ. J. [24] at 3.) She was paid on an hourly basis, and also kept at least some of her tips. In 2012, Ms. Rocksmore's hourly pay rate was $8.80 an hour, the Oregon minimum wage. (Hanson Dec. [26] ¶ 7, Ex. B & C.) In 2013, her rate was $9.00 an hour, just above the Oregon minimum wage for that year of $8.95. Id. Any tips she received were an addition to those wages. Throughout Ms. Rocksmore's employment, the federal minimum wage was $7.25 an hour. 29 U.S.C. § 206(a)(1)(C).

Ms. Rocksmore alleges that she and other employees were forced to pool their tips with kitchen staff and managers, including Ms. Hanson. For their part, Defendants admit that Ms. Rocksmore participated in a tip pool with other employees. Defendants say only that "the staff responsible for preparing and serving food and drinks did share tips among themselves in accordance with an agreement that was known to the employees throughout their employment." (Second Hanson Dec. [38] ¶ 6.) Beyond that, the facts are in dispute. Ms. Rocksmore says nothing beyond the allegations in the complaint, only asserting that discovery is necessary to determine the nature and validity of any tip-pooling agreement. ( See Pl.'s Resp. to Summ. J. [31] at 9-10.)

A. Termination

Ms. Rocksmore says she complained about and opposed the "illegal tip pool" to her employer, publicly with other employees, and at a staff meeting on August 26, 2013. (Pl.'s Compl. [1] ¶ 9.) She claims she was terminated on August 30, 2013, in retaliation for that opposition and complaint. Again, Defendants admit Ms. Rocksmore complained about the tip pool, but assert that she was terminated for non-retaliatory reasons-poor performance and because another server wanted more hours. (Defs.' Mem. Supp. Summ. J. [24] at 3.)

Following her termination, Ms. Rocksmore, through her attorney, wrote a wage demand letter to Pal's Shanty alleging numerous violations of wage and hour laws and asserting that the tip pool was illegal. (Second Shults Dec. [37] Ex. G.) Defendants disagreed with these allegations, and disagreed that Ms. Rocksmore was not paid all wages due and owing at the time of her termination. However, they issued two checks totaling $400 (minus applicable withholdings) allegedly in satisfaction of all wages due and owing and any associated state law penalties. (Shults Dec. [25] Ex. B.)

B. NLRB Charge

On January 14, 2014, Ms. Rocksmore, again through her attorney, filed a charge with the NLRB alleging that Defendants "discriminated against, retaliated against, and terminated [her] for engaging in protected activity, including but not limited to (1) discussing with other servers and employees whether the employer's wage-and-hour policies and tip sharing provisions were common in the industry, and whether they were fair and legal, and (2) raising the issue to the employer during a staff meeting." (Shults Dec. [25] Ex. C.)

C. Settlement Agreements

Defendants disputed the charge, but entered into settlement agreements with both the NLRB and Ms. Rocksmore. These are embodied in two separate agreements.

1. NLRB Settlement

Under the NLRB Settlement, Defendants agreed to pay Ms. Rocksmore $2000, supposedly the full amount of backpay to which the NLRB determined she could have lost. (Shults Dec. [25] Ex. D.) The scope of this settlement agreement was limited to the allegations in the NLRB case. Id.

2. Settlement & Mutual Release

In a separately negotiated "Settlement Agreement and Mutual Release of Claims" ("Release"), Defendants agreed to pay Ms. Rocksmore $2500 in lieu of reinstatement and in exchange for a release of certain claims. (Shults Dec. [25] Ex. E.) The Release was structured with paragraph one stating the purpose of the agreement, paragraph two containing a general release of any and all claims, and paragraph three carving out an exception to the Release for certain state law and FLSA claims:

1. In addition to the $2, 000 provided for in the Settlement Agreement in [NLRB] Case No. 117155, the parties have separately negotiated for and agree that Company agrees to pay Employee $2, 500... in lieu of any reinstatement she would be entitled to under the NLRB settlement and in exchange for the release contained herein.
2. Except as expressly stated in Item 3 of this Settlement Agreement and Mutual Release of Claims, Employee releases Company and Jim Hanson and Sharon Hanson from any and all claims, known or unknown, relating to issues arising out of Employee's employment and separation from employment with Company up to the date of this Settlement Agreement and Mutual Release of Claims, including but not limited to any and all damages, attorney fees, back or front pay, interest, or emotional distress, based on any claim of any nature, including but not limited to any claim under any state or federal statute including ORS 659A, the Oregon Fair Employment Practices Act, the [ADA, Title VII, FMLA, NLRA, etc...] all claims for discrimination, retaliation, wrongful termination, whistleblowing, all claims for pay or compensation, as well as claims under any contract (express or implied), tort, common law, or any other claim of any nature. This release includes but is not limited to those claims and matters which have been asserted in NLRB case No. 19-CA-117155.
* * *
3. The mutual release described in Item 2 of this [Settlement & Release] DOES NOT include any claims, defenses or offsets for any violations of ORS Chapters 652 or 653 or the federal Fair Labor Standards Act. As stated in Item 2, Employee, the Company and other executing parties release each other from all other full claims, actions or suits (whether past or present, known or unknown, asserted or unasserted) they may have against each other and agree that this [Settlement & Release] will act as a complete bar to any such claims.
4. Employee agrees to waive any right or claimed right to reinstatement with Company....

Id. at 1-2.

The agreement was signed by Pal's Shanty and Defendants on May 5, 2014. Ms. Rocksmore signed the agreement on May 8, 2014. Counsel for both parties signed that they had "reviewed and approved" the agreement "as to form." Id. at 2. Although the parties offer competing interpretations, neither argues the agreement is invalid.

D. Lawsuits

Ms. Rocksmore subsequently filed suit in both state and federal court. Her state court suit alleges violations of state wage and hour laws. (Shults Dec. [25] Ex. F.) This federal suit asserts claims under the FLSA. Plaintiff initially moved for a stay of this federal suit, pending the appeal to the Ninth Circuit of Oregon Restaurant & Lodging, et al. v. Solis, 948 F.Supp.2d 1217 (D. Or. 2013). However, Ms. Rocksmore withdrew that request, opting to proceed on a slightly modified theory.[1] Defendants filed their Motion for Summary Judgment.


I. FLSA Minimum ...

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