Last week, in Matamoros et al. v. Starbucks Corporation, the
First Circuit Court of Appeals affirmed decisions of the District
of Massachusetts (Hon. Nathanial M. Gorton), granting class
certification to a group of Starbucks baristas and awarding damages
in excess of $14 million under Massachusetts' Tips Act. The decision is a blow to
Massachusetts employers like Starbucks that face dramatically
increased exposure for wage and hour violations in light of
Massachusetts' mandatory treble damages law, which the First
Circuit upheld against constitutional challenge.
The Tips Act prohibits tip pooling among wait staff employees
and non-wait staff employees, and defines a wait staff employee as
a person who serves goods or beverages directly to patrons or
clears patrons' tables, works in a restaurant or similar
facility, and has "no managerial responsibility."
Defending its policy of pooling tips among baristas and shift
supervisors, Starbucks argued that there was a difference between
"supervision" and "management," and its shift
supervisors—who spent 90% of their time serving customers and
only about 10% of their time directing the work and "[running]
the shift"— did not have "managerial
responsibility." Considering that the current version of the
Tips Act replaced a "primary duty test" similar to what
Starbucks advocated, and that the Massachusetts Attorney
General's Fair Labor and Business Practices Division had issued
an Advisory stating that restaurant "shift
supervisors" possess "managerial responsibility" and
are therefore not "wait staff," Starbucks had an uphill
battle. Citing the legislative history, the Advisory, and the plain
language of the statute, the First Circuit held that the statute
prohibits tip pooling among employees with even a modicum of
"managerial responsibility," and that Starbucks'
policy of tip pooling among baristas and shift supervisors
therefore ran afoul of the Tips Act.
Turning to the issue of class certification, the Court also
rejected Starbucks' challenge to the adequacy of
representation. Starbucks argued that the designated class
representatives, baristas, could not protect the interests of those
class members who were promoted to the position of shift supervisor
at some point during the class period and who therefore would be
financially disadvantaged if Starbucks' tip pooling policy were
declared unlawful. The Court dismissed this argument, reasoning
that "perfect symmetry of interest" was not required and
that, to forestall class certification, "the intra-class
conflict must be so substantial as to overbalance the common
interests of the class members as a whole."
Perhaps most noteworthy about this decision for Massachusetts
employers is the Court's analysis of the treble damages provision of the Massachusetts
Wage Act, which increased the judgment against Starbucks
significantly. In 2008, the Massachusetts legislature amended the
wage and hour statute, making treble damages for Wage Act
violations mandatory and labeling them "liquidated
damages." Under the previous version of the statute, awards of
treble damages were discretionary, and depended on a finding of an
employer's outrageous conduct. Citing the Supreme
Court's decision in State Farm Mutual Automobile Insurance Co. v.
Campbell, Starbucks argued that, because these damages were
mandatory and not based upon proof of reprehensibility, they
deprived Starbucks of due process. The First Circuit rejected this
argument too, holding that State Farm was not controlling
because the damages were liquidated damages, not punitive damages,
and were designed to compensate workers whose pay had been
Since 2008, the mandatory treble damages provision of
Massachusetts' Wage Act has raised the stakes
significantly for even relatively minor wage payment violations,
regardless of whether the employer acted in good faith. After
Matamoros, employers that violate the Massachusetts Wage
Act should not expect to find relief from its harsh provisions in
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Just over a year ago, I authored a Product Liability Advocate blog entry and a Law360 article explaining appropriate methods for asserting objections under Federal Rule of Civil Procedure 34, as amended on December 1, 2015
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