Erickson v. Fellini Soho Corp

Background

Vance Erickson, Peyton Allen, and Hannah Everett brought claims under the Fair Labor Standards Act and New York Labor Law against Fellini Soho Corp., Fellini Chelsea Corp., Pyramid Apex Corp., and Franco Noriega. The opinion states that the three corporations operate coffeeshops in Manhattan and that Noriega owns each establishment. The defendants did not appear or respond to the complaint, and the clerk entered a certificate of default against each defendant.

The plaintiffs alleged that the defendants improperly withheld tips from tipped employees, including by retaining five percent of tips, taking $50 per week from each location to pay the defendants’ accountant, and requiring tipped employees to share tips with management-level employees. They also alleged that the defendants paid tipped employees every two weeks rather than weekly and failed to provide wage notices and wage statements required by New York law.

The plaintiffs sought certification of a class consisting of all tipped food-service employees, other than managers, who worked for the defendants at the Soho, Chelsea, and West Village locations on or after February 14, 2019. The motion was unopposed.

Class certification for tip-retention claim

The court granted certification under Federal Rule of Civil Procedure 23 for the claim under New York Labor Law § 196-d. That law prohibits an employer or certain other persons from demanding, accepting, or retaining an employee’s gratuities.

The court found that the plaintiffs met Rule 23’s requirements. The proposed class was sufficiently numerous; the plaintiffs alleged more than 50 members, and evidence from a four-month period showed that more than 30 employees had received tips. The court also found common questions because the plaintiffs alleged that the defendants used uniform policies involving the five-percent retention, the accountant’s payment, and tip-sharing with management employees. Evidence indicated that the practices had been used from the beginning of Fellini and across its locations.

The court found the named plaintiffs’ claims typical of the proposed class and found no known conflict between the representatives and other class members. It also found that the proposed class was identifiable and that class counsel was qualified. Finally, common issues predominated over individual issues because liability would turn on the defendants’ allegedly common policies, even though individual damages would vary according to the tips withheld from each employee. The court also found that a class action was the superior way to resolve the claims because many employees could have relatively small damages compared with the burden of bringing separate lawsuits.

The court certified the class for the NYLL § 196-d claim and appointed the plaintiffs’ counsel as class counsel.

Certification denied for other claims

The court denied class certification for the remaining claims. First, the plaintiffs alleged that the defendants violated New York Labor Law § 191 by paying tipped employees biweekly instead of weekly. That provision requires weekly pay for “manual workers.” The plaintiffs described their own physical duties as baristas and servers, but they did not provide enough information about the work performed by other tipped food-service employees. Because different jobs could involve different levels of physical activity, determining whether each employee was a manual worker would require individual, case-by-case decisions. The court therefore found that common issues did not predominate.

Second, the plaintiffs alleged that the defendants failed to provide notices required by New York Labor Law § 195. The court noted that none of the plaintiffs’ declarations addressed the missing notices and that the pleadings did not adequately show a uniform or nearly uniform practice affecting the proposed class. The court therefore found that the plaintiffs had not met the commonality or predominance requirements for this claim.

Class discovery and order

The plaintiffs also sought discovery from the defendants and their payroll providers to identify tipped employees and determine the amount of tips allegedly withheld. Federal Rule of Civil Procedure 26(d)(1) generally restricts discovery before the parties confer, but the court found good cause for limited discovery because the defendants had not appeared and the information was needed to identify class members and calculate damages.

The court granted the motion for class discovery and authorized discovery needed to determine the amount of tips allegedly withheld from tipped food-service employees during the class period. The plaintiffs have 120 days from the date of the Opinion and Order to complete that discovery.

Disposition

The court granted the motion for class certification as to the NYLL § 196-d claim and denied it as to the remaining claims. The court granted the motion for class discovery. It also directed the Clerk to amend the caption to replace “Everett Heather” with “Hannah Everett.”