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Allison v. Dolich

United States District Court, D. Oregon, Portland Division

February 12, 2018

NANCY ALLISON and HOLLY BURNEY, both in their individual capacities and, in addition, as a collective action on behalf of others similarly situated, Plaintiffs,
v.
SCOTT DOLICH and ANNA JOSEPHSON, individuals, and PARK KITCHEN LLC, an Oregon limited liability company, Defendants.

          OPINION AND ORDER

          JOHN V. ACOSTA UNITED STATES MAGISTRATE JUDGE.

         Introduction

         Plaintiffs Nancy Allison (“Allison”) and Holly Burney (“Burney”) (collectively “Plaintiffs”) brought this collective action against their prior employer seeking damages for violations of the Fair Labor Standards Act (29 U.S.C. §§ 201 - 219) (the “Act”). In an opinion dated September 28, 2016, the court granted Plaintiffs' cross-motion for partial summary judgment on their minimum wage violation claim based on required participation in an invalid tip pool, with regard to liability only.[1]Plaintiffs now move for summary judgment on damages resulting from such claim. Plaintiffs also alleged individual claims for retaliation based on their termination after complaining about the illegality of the tip pool alleged to violate the Act. They move for summary judgment on these claims as well.

         The court finds the undisputed evidence, when viewed in a light most favorable to the employer, requires a finding that Burney has established a prima facie case of retaliation under the Act and that issues of material fact exist with regard to the causal connection between Allison's complaints and her termination, as well as the damages to which Plaintiffs are entitled on their retaliation claims. Accordingly, Burney is entitled to summary judgment on her retaliation claim for liability only and Allison's retaliation claim and damages related to both Plaintiffs' retaliation claims must be addressed by the ultimate fact finder. With regard to Plaintiffs' motion for summary judgment on the damages resulting from Defendants' minimum-wage violations, the summary of the payroll records provided by Defendants is not admissible and raises genuine issues of material fact, thereby defeating Plaintiffs' summary judgment motion in this regard. Finally, Plaintiffs are entitled to summary judgment only on Defendants' affirmative defenses of failure to state a claim and set-off or prior settlement.

         Background

         Plaintiffs, and the individuals who filed consents to join in this action, were employed during the relevant period by defendant Scott Dolich (“Dolich”), the owner of defendant restaurants Park Kitchen LLC (“Park”) and the Bent Brick, LLC (“Bent Brick”), in positions customarily entitled to receive tips. Defendant Anna Josephson (“Josephson”), was the general manager of Park and Bent Brick in charge of the “front of the house” during this period. (Allison Decl. dated June 12, 2017, ECF No. 192 (“Allison Decl.”), ¶ 6.) Dolich, Josephson, Park, and Bent Brick are collectively referred to as “Defendants.”

         I. Defendants' Tip-Pool Policy

         Employees at Park and Bent Brick have always worked under a tip-pooling policy, which required employees to contribute all tips received during a shift to a tip pool (the “ Pool”), with at least a portion of the Pool allocated to “back of house staff.” (Dolich Decl. dated June 30, 2017, ECF No. 206 (“Dolich Decl.”), ¶ 8.) No employee complained about this division of the Pool. (Dolich Decl. ¶ 8.)

         In early 2014, Dolich amended the then-existing tip-pool allocations and created the tip- pool policy at issue (the “Policy”). (Allison Decl. ¶ 6.) The Policy continued the previous division of the Pool among the servers, hosts, and kitchen staff working the shift. (Allison Decl. ¶ 6.) Specifically, servers were allotted five points, hosts were allotted two points, and the kitchen staff, as a whole, was allotted two points. (Allison Decl. ¶ 6.) However, Dolich also allotted Josephson one point in the Pool. (Dolich Decl. ¶ 3; Allison Decl. ¶ 6.) Josephson received a share of the Pool for every day Park and Bent Brick were open, even on days she did not work, host, serve, or manage the floor. (Allison Decl. ¶ 6; Rice[2] Decl. dated June 12, 2017, ECF No. 191 (“Rice Decl.”), ¶ 2.)

         The parties do not agree on when Dolich presented the Policy to his employees and when he asked them to provide a signed copy of the Policy to him. Dolich represents he explained the Policy to employees at a staff meeting on February 27, 2014, distributing a copy of the Policy to the employees and answering any questions. (Dolich Decl. ¶ 10.) Dolich also contends nearly all Park employees signed the Policy on or around that time. (Dolich Decl. ¶ 22). Allison agrees Dolich created the Policy sometime around February 2014, but states she did not sign the Policy until a March 20, 2014 staff meeting, and that all other Park employees, with the exception of Burney, signed the Policy at that time. (Allison Decl. ¶¶ 6, 10.) Burney concurs with Allison, asserting Dolich presented the Policy to the employees for signature on March 20, 2014, and she was the only employee who did not sign at that time. (Rice Decl. ¶ 6.) The Policy became effective March 1, 2014. (Dolich Decl. ¶ 9.)

         II. Alleged Retaliation

         A. Nancy Allison

         Dolich hired Allison as a server at Park in 2009. (Dolich Decl., ECF No. 206, ¶ 4.) Toward the end of her employment, Allison regularly worked Saturday, Sunday, and Monday, serving as manager on duty (“MOD”) on her Saturday and Sunday shifts, and was on call on Fridays. (Dolich Decl. ¶ 7.) The MOD is the lead of the front of the house and is expected to identify concerns and issues and share them with Dolich or a manager (Dolich Decl. ¶¶ 7, 12.) Allison was also the wine purchaser for Park and regularly attended Thursday management meetings. (Dolich Decl. ¶ 6.)

         In mid-2013, Allison requested a reduction in her schedule to allow her to devote more time to her personal business, Nan-Made Objects. (Dolich Decl. ¶ 18.) Dolich agreed and hired another server to assume Allison's old shifts. In the summer of 2013, Dolich offered Allison a floor manager position. (Dolich Decl. ¶ 6.) Allison declined the offer, explaining her obligations to Nan-Made prevented her from assuming management responsibilities at Park. (Dolich Decl. ¶ 6.) She did, however, offer to temporarily assist with such duties until a floor manager could be hired. (Dolich Decl. ¶ 6.) Dolich subsequently promoted Nate Smith (“Smith”) to the position. (Dolich Decl. ¶ 6.) Dolich noticed Allison and Smith did not have a good relationship and felt is was based, in part, on Allison's resistance to accepting Smith as her supervisor. (Dolich Decl. ¶ 6.)

         Starting in late 2013, Allison complained to Dolich, both on her own behalf and on behalf of co-workers, about the payment to managers and the back of the house of nearly half of the twenty-five per cent gratuity added to the bill of private parties. (Allison Decl., ¶¶ 2-3.) About this time, Allison also expressed concern that managers were entitled to share in tips despite not serving tables or hosting during their shifts. (Allison Decl. ¶ 4.) In early 2014, she continued to pass along to Dolich co-workers' concerns with regard to the Policy, Josephson, and Smith, as well as customer dissatisfaction in general. (Dolich Decl. ¶ 11.) Dolich investigated the complaints but was unable to substantiate them and concluded they were false. (Dolich Decl. ¶ 13.)

         Once the Policy was implemented in early 2014, Allison objected in a management meeting to Josephson receiving a share of the Pool on days she was not working. (Allison Decl. ¶ 7.) Allison asserts she complained on behalf of herself and others, but Dolich states Allison never expressed personal concerns about the Policy and, in fact, voiced support for the Policy during management meetings in which the Policy was discussed. (Allison Decl. ¶ 7; Dolich Decl. ¶¶ 9, 10; Dolich Dep. 41:13-21.[3]) Allison claims she was barred from attending future management meetings as a result of rasing the objection. (Allison Decl. ¶ 7) Dolich contends Allison continued to attend weekly management meetings through the date of her termination. (Dolich Decl. ¶ 7.)

         A few weeks later, Allison learned Smith had been awarded five points in the Pool as a manager/host during a private party. (Allison Decl. ¶ 8.) Allison expressed frustration to Smith, explaining she did not think it fair for a salaried employee to receive any tips and such accommodation was illegal. (Allison Decl. ¶ 8.) That same night she discovered a new employee had been given the Friday night shift she had recently requested from Josephson. (Allison Decl. ¶ 8.) Josephson had denied Allison's request, explaining the Friday night shifts were already full. (Allison Decl. ¶ 8.) Dolich explained the need to hire a new server to cover Allison's shifts made it impossible to comply with Allison's subsequent request to return to a shift when Nan-Made was not as successful as expected. (Dolich Decl. ¶ 18.) Dolich did allow Allison to increase her hours through on-call opportunities, which Allison regularly declined. (Dolich Decl. ¶ 18.)

         Dolich reports “Allison's performance on the restaurant floor and her interactions with fellow staff took a negative turn” about this time. (Dolich Decl. ¶ 14.) On March 2, 2014, Allison arrived at least an hour and a half late for her shift, necessitating arrangements for an on-call server to work the shift. (Dolich Decl. ¶ 14.) Allison treated the on-call server poorly, refusing to assist with table numbers or other general information, “cutting” him early, and reporting he was useless. (Dolich Decl. ¶ 14.) Dolich counseled Allison with regard to her behavior, called it “unacceptable.” (Dolich Decl. ¶ 14.) A few weeks later, two servers reported Allison exhibited a “negative attitude” while working as MOD, and requested they no longer be required to work with her. (Dolich Decl. ¶ 15.) Despite Dolich's request that Allison encourage employees to bring concerns directly to him, Allison continued to take “it upon herself to be the self-appointed liaison for other employees' ostensible (but never confirmed) concerns, and her presence on the floor grew increasingly sour.” (Dolich Decl. ¶ 16.)

         On March 20, 2014, Allison met privately with Dolich at his request. (Allison Decl. ¶ 9.) Dolich intended to discuss his investigation of her reported concerns and inform her that her attitude and performance while working as MOD were making her co-workers uncomfortable. (Dolich Decl. ¶ 19.) He expressed concern she was not happy at Park and asked if she felt she was able to continue performing her MOD and wine-buying duties. (Dolich Decl. ¶ 19; Allison Decl. ¶ 9.) Allison expressed a desire to relinquish her managerial duties and continue only in the role of a server in her then existing schedule. (Dolich Decl. ¶ 19.)

         Allison reports Dolich explained his reasons for the Pool at this meeting and asked Allison to refrain from discussing the legality of the Pool with other employees. (Allison Decl. ¶ 9.) He told Allison “your biggest failing is assuming that any tips belong to you. The tips belong to me, and I can do what I want with them.” (Allison Decl. ¶ 9.) Dolich asked Allison if she would still want to work at Park if she was relieved of the wine-buying job, and informed her she would only work Sunday and Monday nights moving forward, as he was making the Friday night shift available to new hires who were more committed to the restaurant. (Allison Decl. ¶ 9.)

         Allison felt Dolich was pressuring her to quit so he would not have to fire her, which is why she signed the Policy later that day. (Allison Decl. ¶¶ 9, 10.) Allison met with Burney that night to discuss whether allowing employees who were not traditionally tipped to participate in a tip pool was legal. (Allison Decl. ¶ 10.)

         Dolich terminated Allison the next day. (Allison Decl. ¶ 11.) Allison remembers Dolich stating “[t]he last thing I need is a labor union breathing down my neck.” (Allison Decl. ¶ 11.) Dolich denies making this comment. (Dolich Decl. ¶ 24.) Rather, he represents he lost confidence in Allison's ability to properly represent Park while working her shift, and told her she had become toxic and was negatively affecting morale. (Dolich Decl. ¶ 20.) Josephson later confirmed Allison was terminated because of her “toxic attitude.” (Allison Decl. ¶ 11.) Moreover, Defendants represent in their interrogatory response that Allison's “poor treatment of fellow employees and morale in front of customers was contrary to Park Kitchen's service methodology, and was the basis for defendants' decision to terminate her employment.” (Egan Decl., ECF No. 189 (“Egan Decl.”), Ex. 1 at 2.)

         After her termination, Allison spent time building Nan-Made and did not seek other employment. (Allison Decl. ¶ 12.) Allison asserts she would have continued working for Defendants while building her business on the side had she not been terminated. (Allison Decl. ¶ 12.) However, Dolich contends Allison informed him she was planning to transition out of Park within a month of her termination. (Dolich Decl. ¶ 20.)

         B. Holly Burney

         Burney worked at Park from 2008 until early 2014. (Dolich Decl. ¶ 4.) She regularly worked Friday and Saturday, and was on call on Mondays. (Dolich Decl. ¶ 5.) Burney expressed her concern about the legality of the Policy for the first time when Dolich began presenting it to his employees at staff meetings in early February, 2014. (Rice Decl. ¶ 2.) After discussing the Policy with Allison and other employees, who she stated all shared her concerns, Burney contacted the Wage and Hour Division and attorney Jon Egan to inquire into the legality of the Policy. (Rice Decl. ¶¶ 2, 3.)

         Burney became aware the Policy had been implemented in mid-March when she learned Smith had allocated five points in the Pool to himself as a manager and host. (Rice Decl. ¶4.) She “vigorously objected' to such allocation, but Smith explained Josephson told him “this is the way it has to be and he had no control over it.” (Rice Decl. ¶ 4.) Burney met privately with Dolich on March 20, 2014, at Burney's request. (Rice Decl. ¶ 5.) She informed Dolich she had discussed the Policy with the Wage and Hour Division and an attorney, and had been told it was not legal. (Rice Decl. ¶ 5.) Dolich responded he was aware of her concerns about the Policy and Smith's share, he designed and structured the Policy for his restaurants, he thought the Policy was legal and fair, he stood behind it, and it was not going to change. (Rice Decl. ¶ 5; Dolich Decl. ¶ 21; Dolich Dep. 42:25-43:3.) When Burney asked Dolich if he wanted her to leave Park, Dolich responded he could not answer that question but there was a job for her if she wanted to continue to work at Park. (Dolich Decl. ¶ 21.)

         Burney was the only employee who refused to sign the Policy. (Rice Decl. ¶ 6.) She objected to signing the Policy as it “states that I am voluntarily giving up my tips, and I don't voluntarily give up my tips, ” and because she thought the Policy was illegal. (Rice Decl. ¶ 6.) Burney left the meeting with a copy of the Policy, intending to show it to an attorney. (Rice Decl. ¶ 6.)

         On April 5, 2014, Smith asked Burney about her signed Policy. (Rice Decl. ¶ 7.) She told Smith she was not going to sign it because she did not agree with it and did not think it was legal. (Rice Decl. ¶ 7.) Smith told Burney that Dolich had an attorney review the Policy and was assured it was legal. (Rice Decl. ¶ 7.) Dolich and Josephson remember Burney explaining she was willing to continue working at Park and accept tips according to the Policy, but she would not sign the Policy. (Dolich Decl. ¶ 23; Dolich Dep. 99:18-22; Josephson Dep. 60:23-61:4.)

         Shortly thereafter, Smith asked Burney to come to the office, where Josephson waited. (Rice Decl. ¶ 8.) When Burney again explained her reasons for not signing the Policy, Josephson informed Burney she could either sign the Policy or terminate her employment. (Rice Decl. ¶ 9.) Josephson stated “legally you can't be employed by Park Kitchen if you don't agree to the tip pool. I really wish it didn't have to be this way. I don't understand why you won't just sign the damn paper.” (Rice Decl. ¶ 9; Dolich Decl. 43:13-24.) Burney then asked for her final checks, which were in a stack of papers on the desk, along with a “Park Kitchen Notice of Termination” (the “Notice”). (Rice Decl. ¶ 9.) The Notice read: “Park Kitchen has a tip pool system that has been clearly outlined for each employee in the system. All employees must sign the agreement in order to be employed at Park Kitchen. Holly Burney has refused to sign the document that makes it legal for her [to] work under the tip pool system of Park Kitchen.” (Rice Decl. Ex. 1.) The document provided spaces for Burney to answer two questions: “Do you wish to terminate your own employment at Park Kitchen?” and “Do you wish for Park Kitchen to terminate your employment?” (Rice Decl. Ex. 1.) Josephson asked Burney to sign the Notice, identifying it as an agreement to terminate. (Rice Decl. ¶ 10.) Initially, Burney refused to sign the Notice, but eventually executed it by answering each question with the word “No”. (Rice Decl. ¶¶ 10, 11.)

         Dolich represents “Burney was discharged because she would not sign what we believed to be a lawful, tip pool policy.” (Dolich Dep. 14:3-5.) Josephson testified Burney was terminated because she would not sign the Policy. (Josephson Dep. 50:24-51:5.) Similarly, Defendants acknowledge in an interrogatory response that Burneys' refusal to comply with Park's tip-pooling policy led to the decision to terminate her employment. (Egan Decl. Ex. 1 at 2.)

         III. Prior Court Rulings

         In the Second Amended Complaint filed on December 25, 2014 (the “Complaint”), Plaintiffs allege Defendants violated the Act by requiring Plaintiffs, and the collective members, to participate in a mandatory invalid tip pool in violation of 29 U.S.C. § 203(m) and, consequently, violated 29 U.S.C. § 206 by failing to pay them the federal minimum wage when such wage was due. (Second Am. Individual and Collective Allegation Compl., ECF No. 48 (“Second Am. Compl.”), ¶¶ 11, 13.) On December 7, 2015, the court granted Defendants' motion for partial summary judgment against Plaintiffs' minimum wage claim, relying on Judge Mosman's analysis in Rocksmore v. Hanson, No. 3:14-cv-01114-MO, 2015 WL 852938 (D. Or. Feb. 14, 2015), and Oregon Rest. & Lodging v. Solis, 948 F.Supp.2d 1217 (D. Or. 2013). Allison v. Dolich, 148 F.Supp.3d 1142, 1154-55 (D. Or. 2015)(“Allison I”). Judge Mosman rejected the formal rule promulgated by the Department of Labor (“Department”)[4] in 2011 (the “2011 Rule”) extending the tip credit and related restrictions found in 29 U.S.C. § 203(m) to all employers, not just those taking the tip credit, as contrary to clear congressional intent. In so ruling, Judge Mosman followed the Ninth Circuit's ruling in Cumbie v. Woody Woo, Inc., 596 F.3d 577, 583 (9th Cir. 2010), that employers who pay employees the federal minimum wage are not subject to, and therefore not in violation of, 29 U.S.C. § 203(m). Solis, 948 F.Supp.2d at 1224-27. Adopting Judge Mosman's reasoning, this court specifically found Defendants paid Plaintiffs a wage in excess of the federal minimum wage and did not take a trip credit under 29 U.S.C. § 203(m). Allison I, 148 F.Supp.3d at 1154. Therefore, Defendants were not subject to the tip-pool restriction found in that statute. Id.

         On February 23, 2016, the Ninth Circuit reversed Solis, finding the 2011 Rule was closely aligned with congressional intent, reasonable, and enforceable. Oregon Rest. & Lodging v. Perez, 816 F.3d 1080, 1090 (9th Cir. 2016). On March 4, 2016, this court granted Plaintiffs' oral motion to reinstate the tip pool claims and vacate the December 2015 opinion “to the extent inconsistent with the Ninth Circuit's recent decision in [Solis].” (Supp. Order dated March 4, 2016, ECF No. 91.) On September 28, 2015, the court granted Plaintiffs' cross-motion for partial summary judgment on their minimum wage claim with regard to liability only. Allison v. Dolich, 3:14-CV-1005-AC, 2016 WL 5539587 (D. Or. Sept. 28, 2016)(Allison II.) The court determined the practical outcome of the invalid tip pool effectively required Plaintiffs to pay Defendants for the right to work. Id. at *6. It then acknowledged undisputed evidence “that, in at least one payroll period, Defendants' tip-pool requirement decreased a plaintiff's effective hourly rate below the federal minimum wage based on a calculation involving the total tips accumulated during the payroll period, the amount paid to employees not customarily tipped, and the share of tips to which Plaintiffs were entitled based on hours worked” which it deemed “sufficient to find Defendants violated the minimum wage provision of the Act by requiring Plaintiffs to participate in an invalid tip pool, resulting in an effective hourly wage rate below the federal minimum in at least one instance.” Id. at *9. The court expressly noted it did not find that Plaintiffs “ method of calculation correctly establishes the proper apportionment of damages between Plaintiffs.” Id.

         Legal Standard

         Summary judgment is appropriate where the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a) (2017). Summary judgment is not proper if material factual issues exist for trial. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995).

         The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324. A nonmoving party cannot defeat summary judgment by relying on the allegations in the complaint, or with unsupported conjecture or conclusory statements. Hernandez v. Spacelabs Medical, Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). Thus, summary judgment should be entered against “a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

         The court must view the evidence in the light most favorable to the nonmoving party. Bell v. Cameron Meadows Land Co., 669 F.2d 1278, 1284 (9th Cir. 1982). All reasonable doubt as to the existence of a genuine issue of fact should be resolved against the moving party. Hector v. Wiens, 533 F.2d 429, 432 (9th Cir. 1976). Where different ultimate inferences may be drawn, summary judgment is inappropriate. Sankovich v. Life Ins. Co. of North America, 638 F.2d 136, 140 (9th Cir. 1981).

         However, deference to the nonmoving party has limits. A party asserting that a fact cannot be true or is genuinely disputed must support the assertion with admissible evidence. Fed.R.Civ.P. 56(c) (2017). The “mere existence of a scintilla of evidence in support of the [party's] position [is] insufficient.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Therefore, where “the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotations marks omitted).

         Discussion

         I. ...


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