Matamoros v. Starbucks Corporation , 699 F.3d 129 ( 2012 )

United States Court of Appeals
For the First Circuit
Nos. 12-1189
12-1277
HERNAN MATAMOROS ET AL.,
Plaintiffs, Appellees/Cross-Appellants,
v.
STARBUCKS CORPORATION,
Defendant, Appellant/Cross-Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
[Hon. Leo T. Sorokin, U.S. Magistrate Judge]
Before
Thompson, Selya and Lipez,
Circuit Judges.
Rex S. Heinke, with whom Daniel L. Nash, Nathan J. Oleson,
Gregory W. Knopp, Akin Gump Strauss Hauer & Feld LLP, James C.
Rehnquist, Elianna J. Nuzum, Robert M. Hale and Goodwin Procter LLP
were on brief, for defendant.
Shannon Liss-Riordan, with whom Hillary Schwab and Lichten &
Liss-Riordan, P.C. were on brief, for plaintiffs.
November 9, 2012
SELYA, Circuit Judge. As society matures and employment
law evolves, legislatures have lavished more attention on the
policies and practices used by employers with respect to customer
gratuities. Massachusetts is in the regulatory forefront on these
cutting-edge issues.
In the matter at hand, the district court, applying
Massachusetts law in a class-action diversity case, concluded that
the most recent version of the Tips Act, Mass. Gen. Laws ch. 149,
§ 152A, says what it means and means what it says. Consequently,
the court ruled that the defendant's policy regarding pooled
gratuities violated the Act, certified a class, and awarded damages
in an amount exceeding $14,000,000. After careful consideration of
a fundamental (and previously unanswered) interpretative question,
we hold that the plain language of the Tips Act prohibits the
defendant's tip-pooling policy. We also reject the parties' other
claims of error. When all is said and done, we leave the
combatants where we found them.
I. BACKGROUND
We sketch the background and travel of the case,
reserving salient details for our discussion of the substantive
issues.
Starbucks Corporation operates a national chain of
upscale coffee houses including approximately 150 outlets in
Massachusetts. Starbucks euphemistically describes the employees
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who staff its shops as "partners." Within that designation,
however, employees are divided into four subcategories: store
managers, assistant managers, shift supervisors, and baristas.
Both shift supervisors and baristas are hourly wage employees,
often working part-time. There are both similarities and
differences between these two classifications: baristas are front-
line employees who serve food and beverages to customers; shift
supervisors perform those functions and other functions as well.
The classifications are hierarchical, and shift supervisors are
usually promoted from the ranks of baristas.
Pursuant to company policy, Starbucks' stores maintain
tips containers in which customers may deposit tips. These
containers are normally positioned alongside the store's cash
registers. The accumulated tips are distributed weekly to baristas
and shift supervisors within a store in proportion to the number of
hours worked that week by each individual.
The named plaintiffs are former Starbucks baristas. They
filed a putative class action in a Massachusetts state court
against Starbucks on behalf of themselves and others similarly
situated. Starbucks removed the case to federal court, alleging
class-action diversity jurisdiction. See 28 U.S.C. § 1332(d).
We fast-forward to the plaintiffs' filing of a second
amended complaint. That complaint asserted, among other things,
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that Starbucks' policy violated the Tips Act because it allowed
shift supervisors to share in the pooled gratuities.
In due course, the plaintiffs moved to certify a class of
current and former baristas, and the parties cross-moved for
summary judgment. The district court referred the motions to a
magistrate judge. Thereafter, the magistrate judge issued reports
and recommendations.
In his first report, the magistrate judge recommended
that the court grant partial summary judgment in the plaintiffs'
favor on count 1 (the Tips Act count), reasoning that the inclusion
of shift supervisors among the persons eligible to profit from the
tips pools violated the Tips Act. Matamoros v. Starbucks Corp.
(Starbucks I), No. 08-10772, 2011 U.S. Dist. LEXIS 28597 (D. Mass.
Feb. 8, 2011). In that same report, the magistrate judge
recommended that the court grant summary judgment for Starbucks on
all other counts.1 Id. at *28. In his second report, the
magistrate judge recommended that the court grant class
certification. Matamoros v. Starbucks Corp. (Starbucks II), No. 08-
10772, 2011 U.S. Dist. LEXIS 28572 (D. Mass. Feb. 8, 2011). Over
Starbucks' objections, the district court, adding its own gloss,
adopted the magistrate judge's recommended findings and conclusions
in all respects. Matamoros v. Starbucks Corp. (Starbucks III), No.
1
These counts sound in quantum meruit, breach of implied
contract, and tortious interference with advantageous
relationships. The appeals before us do not implicate any of them.
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08-10772, 2011 U.S. Dist. LEXIS 28227 (D. Mass. Mar. 18, 2011). It
then allowed further discovery on issues related to damages.
In subsequent proceedings, the district court ruled that
a jury trial was unnecessary because damages could readily be
calculated based on the amount of tips allocated to shift
supervisors during the class period (March 25, 2005 to March 18,
2011). The parties stipulated that the shift supervisors had
garnered $7,500,000 in allocated tips during that period. This
amount comprised $4,186,729 in tips received through July 11, 2008,
and $3,313,271 in tips received during the remainder of the class
period.
The court accepted these stipulated figures, awarded
damages accordingly, and trebled the damages that accrued on or
after July 12, 2008. The district court entered judgment for the
plaintiff class in the aggregate amount of $14,126,542, plus
prejudgment interest at a rate of 12% per annum.2 These timely
appeals followed.
II. ANALYSIS
Starbucks' principal claim of error presents an unsettled
question as to the meaning of the current version of the Tips Act.
This question turns on whether, as Starbucks exhorts, the district
2
The award of prejudgment interest was made applicable only
to the damage award before any multiplication of damages took
place. This aspect of the judgment is not challenged on appeal and
we do not discuss it further.
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court took too crabbed a view in holding that the company's tip-
pooling policy violated the Tips Act because shift supervisors were
included among the beneficiaries of the tips pools. We start
there. We then address Starbucks' challenge to the class
certification order. Finally, we mull the parties' competing
objections to the treble damages award.
A. The Tips Act.
The Tips Act contains specific provisions applicable to
the restaurant industry. It provides in pertinent part that "wait
staff" employees shall not be required to share tips with anyone
who is not a "wait staff employee." Mass. Gen. Laws ch. 149,
§ 152A(b), (c). The Act defines a "wait staff employee" as:
a person, including a waiter, waitress, bus person, and
counter staff, who: (1) serves beverages or prepared food
directly to patrons, or who clears patrons' tables; (2)
works in a restaurant, banquet facility, or other place
where prepared food or beverages are served; and (3) who
has no managerial responsibility.
Id. § 152A(a) (emphasis supplied).
It is clear beyond peradventure that Starbucks' shift
supervisors satisfy the first two requirements for "wait staff
employees." The question, then, reduces to whether shift
supervisors satisfy the third requirement; that is, whether shift
supervisors can fairly be said to possess "no managerial
responsibility."
Starbucks insists that shift supervisors do not have
managerial responsibility within the meaning of the Tips Act. In
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support, it points out that "[a] shift supervisor spends the vast
majority of his or her time, up to ninety percent, performing
functions which baristas also perform." Starbucks I, 2011 U.S.
Dist. LEXIS 28597, at *9. Moreover, shift supervisors — like
baristas — report to store managers and assistant managers, and
Starbucks asserts that shift supervisors lack the actual authority
either to enforce directives or to hire, fire, discipline, or
promote baristas. And even though shift supervisors admittedly
perform some duties that baristas do not, Starbucks labors to draw
a surpassingly fine distinction between these "limited supervisory
tasks" and "managerial responsibility."
In an effort to justify this hair-splitting, Starbucks
notes that in defining a different term — "employer" — the Tips Act
uses the disjunctive phrase "management or supervision of wait
staff employees." Mass. Gen. Laws ch. 149, § 152A(a). It
suggests, therefore, that the terms "management" and "supervision"
must be given wholly distinct meanings. With this in mind,
Starbucks declares that a shift supervisor can exercise supervisory
powers without assuming managerial responsibilities.
The plaintiffs resist this analysis. They argue that the
definition of "wait staff employee" forges a bright-line standard,
which excludes employees possessing any level of managerial
responsibility, however slight. Building on this foundation, the
plaintiffs maintain that shift supervisors, whose job descriptions
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include some managerial tasks, are simply not "wait staff
employees" within the purview of the Tips Act.
Our inquiry into the meaning of the Tips Act engenders de
novo review. See Inmates of Suffolk Cnty. Jail v. Rouse, 129 F.3d
649, 653 (1st Cir. 1997). Such an inquiry always starts with the
language of the statute itself. Id. (citing Stowell v. Ives, 976
F.2d 65, 69 (1st Cir. 1992)). We assume that the ordinary meaning
of the statutory language expresses the legislature's intent, and
we resort to extrinsic aids to statutory construction (such as
legislative history) only when the wording of the statute is
freighted with ambiguity or leads to an unreasonable result. See
Stowell, 976 F.2d at 69.
In this case, the unvarnished text of the statute cuts
sharply in favor of a bright-line rule. The Tips Act states
unequivocally that only employees who possess "no managerial
responsibility" may qualify as "wait staff." Mass. Gen. Laws ch.
149, § 152A(a). "[N]o" means "no," and we interpret that easily
understood word in its ordinary sense: "not any." Merriam-
Webster's Collegiate Dictionary 839 (11th ed. 2003); The American
Heritage Dictionary of the English Language 1192 (4th ed. 2000);
The Random House Dictionary of the English Language 1303 (2d ed.
1987). "Courts are free to use standard dictionary definitions to
assist in determining the ordinary meaning of statutory language,"
Riva v. Mass., 61 F.3d 1003, 1008 n.4 (1st Cir. 1995), and there is
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no reason to refrain from doing so here. Unless we are prepared to
ignore both the legislature's use of the word "no" and the commonly
accepted meaning of that word — and we are not — it follows that if
an employee has any managerial responsibility, she does not qualify
as "wait staff" eligible to participate in tips pools under the
provisions of the Tips Act.
Nor is this construction of the statute unreasonable.
While the legislature could have chosen a different way to grapple
with the vexing problem of pooled tips, a bright-line rule has
obvious virtues.
The legislative history and what little case law there is
confirm the conclusion that the Tips Act should be read to bar
employees who possess any managerial responsibilities from
participating in tips pools with "wait staff" employees. Under an
earlier version of the Tips Act, Mass. Gen. Laws ch. 149, § 152A
(2003) (amended 2004), Massachusetts courts generally applied a
"primary duty" test to determine whether an employee was eligible
to participate in a tips pool. If an employee's primary duty was
to serve customers, she was eligible to participate. See, e.g.,
Williamson v. DT Mgmt., Inc., No. 021827D, 2004 WL 1050582, at *11
(Mass. Super. Ct. Mar. 10, 2004). Conversely, if her primary duty
was to manage, she was ineligible to participate. See, e.g.,
Fernandez v. Four Seasons Hotels, Ltd., No. 024689F, 2007 WL
-9-
2705723, at *3 (Mass. Super. Ct. July 18, 2007) (interpreting pre-
amendment version of Tips Act).
In 2004, the Massachusetts legislature amended the Tips Act.
See 2004 Mass. Legis. Serv. ch. 125, § 13 (West). One apparent
purpose of these amendments was to replace the primary duty test
with a more precise standard. As one Massachusetts court
explained, "[i]n the 2004 version of the Tips Act, the Legislature
rendered the primary duty analysis moot by expressly limiting the
statute's protection to employees with 'no managerial
responsibility.'" Black v. Cranwell Mgmt. Corp., No. 2007-00122,
slip op. at 13 (Mass. Super. Ct. Oct. 21, 2009). In its new
incarnation, "[t]he Tips Act is unambiguous and does not
distinguish between employees who have many managerial
responsibilities and those who have few." Id. at 13-14; see also
DePina v. Marriott Int'l, Inc., No. SUCV200305434G, 2009 WL
8554874, at *10-11 (Mass. Super. Ct. July 28, 2009) (applying
current version of Tips Act to bar banquet captains from
participating in tips pools with servers).
Viewed against this backdrop, Starbucks' emphasis on the
predominant service responsibilities of the shift supervisors and
its downplaying of their managerial responsibilities is a line of
argument that time has overtaken. Stripped of rhetorical
flourishes, Starbucks' position invites us to repudiate both the
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precise language and the clear intent of the 2004 amendments and to
resurrect the primary duty test. We decline the invitation.
If more were needed — and we doubt that it is — the
interpretive guidance of the Massachusetts Attorney General
presents a formidable obstacle to Starbucks' position. See
Advisory 2004/3, An Advisory from the Attorney General's Fair Labor
and Business Practices Division on an Act Protecting the Wages and
Tips of Certain Employees (the Advisory). The Attorney General is
charged with enforcing the Tips Act, see Mass. Gen. Laws ch. 149,
§ 152A(f), and her interpretation is entitled to "substantial
deference." DiFiore v. Am. Airlines, Inc., 910 N.E.2d 889, 897
n.11 (Mass. 2009). Courts must honor such an interpretation as
long as it is "reasonable." Id.The Advisory could not be more clear; it states with
conspicuous clarity that "[w]orkers with limited managerial
responsibility, such as shift supervisors . . . do not qualify as
wait staff employees." Advisory at 2. The Attorney General issued
the Advisory with specific reference to the restaurant industry,
and in that narrow context, "shift supervisors" appears to be a
term of art. While job titles ordinarily are not dispositive in an
inquiry into the application of a statute, they are not irrelevant.
Where, as here, an employer "has the right to define jobs within
its own hierarchy," its "designation of [a] position as
supervisory, while not itself determinative, is certainly a
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significant factor in ascertaining employee status." S. Ind. Gas
& Elec. Co. v. NLRB, 657 F.2d 878, 886 (7th Cir. 1981).
The Advisory also elaborates on the meaning of
"managerial responsibility" — a phrase not defined in the Tips Act
itself. The Advisory states that managerial responsibilities
encompass "supervising employees and assigning servers to their
posts." Advisory at 2. The Attorney General explains that she
"will look to 29 C.F.R. [§] 541.1 . . . and relevant law for
interpretive guidance to define the term 'managerial
responsibility.'" Id. at 2 n.3. Part 541 of Title 29 of the Code
of Federal Regulations, which pertains directly to the federal
overtime exemption for managerial and executive employees,
identifies "directing the work of employees," "apportioning the
work among the employees," and "providing for the safety and
security of the employees or the property" as management
activities. 29 C.F.R. § 541.102.
This interpretive guidance undermines Starbucks'
argument. Its shift supervisors wear two hats; while they spend
much of their time waiting on customers, they also have managerial
responsibilities. For example, a shift supervisor is charged with
opening and closing the store, handling and accounting for cash,
and ensuring that baristas take their scheduled breaks. Indeed,
whenever there is no store manager or assistant manager on duty in
a particular emporium, the shift supervisor is the ranking employee
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in the store. In this capacity, the shift supervisor is
responsible for deploying baristas to their work stations, opening
the store's safe, and handling cash register tills.
Starbucks' own sources lend strong support to the
proposition that a shift supervisor possesses some managerial
responsibility. When deposed, Starbucks' designated corporate
representative, see Fed. R. Civ. P. 30(b)(6), acknowledged that a
shift supervisor is responsible for "running the shift."
Starbucks' internal documentation is even more revealing; its
written job description for the position explains that each shift
supervisor "directly manage[s]" three to six other employees while
on shift. Shift supervisors' specific responsibilities include
"direct[ing] partners to various workstations" and "providing
. . . coaching and feedback." These are party admissions, see Fed.
R. Evid. 801(d)(2), and party admissions are potent evidence of
employee status.
Starbucks has a number of fallback arguments. The first
of these suggests that a trial is necessary to determine whether
shift supervisors actually possess managerial responsibility within
the meaning of the Act. Starbucks is correct, of course, that the
work actually performed by an employee is the most important factor
to be considered when determining an employee's proper
categorization in a statutory framework. Our earlier discussion of
the relevance of job titles and descriptions does not suggest the
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contrary. Here, however, Starbucks' argument lacks force.
Although there may be some minor discrepancies in the record, the
relevant evidence is largely undisputed. After careful
perscrutation, we can discern no genuine issue as to any material
fact that might require jury intervention.
At any rate, the evidence canvassed above describing the
work actually performed by the shift supervisors makes it pellucid
that shift supervisors possess managerial responsibility. Any
other conclusion would blink reality.3
Starbucks has yet another shot in its sling. It
asseverates that if shift supervisors are not wait staff, then the
monies given by customers to recognize their service are not "tips"
within the meaning of the Tips Act. See Mass. Gen. Laws ch. 149,
§ 152A(a) (defining a "[t]ip" as "a sum of money, including any
amount designated by a credit card patron, a gift or a gratuity,
given as an acknowledgment of any service performed by a wait staff
employee, service employee, or service bartender"). This
asseveration is too clever by half and, in the bargain, confuses
two separate issues: what is a tip and who is eligible to share in
tips pools. To begin, it is up to the customer — who is not in any
way regulated by the Tips Act — to decide whether and how much to
3
We have no need to trace the fine line that Starbucks seeks
to draw between "management" and "supervision." The
responsibilities assigned to the shift supervisors, while perhaps
supervisory in some respects, include plainly managerial
activities.
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tip. He acts on this intention by choosing a sum of money and
placing it in the tips container. So viewed, there is simply no
question but that the money placed in a tips container by a
grateful Starbucks patron is a tip, regardless of who waited on
him. Such sums are, in the idiom of the statute, gratuities "given
as an acknowledgment of . . . service performed." Mass. Gen. Laws
ch. 149, § 152A(a).
Here, the issue is not whether the monies collected in
the tips containers are tips; it defies reason to think of them as
anything else. Rather, the issue is which employees may receive
distributions from the communal tips pools. It is this issue that
the Tips Act resolves. In doing so, the Act prohibits a system in
which wait staff and employees who have managerial responsibilities
share in the same reservoir of tips.
Starbucks makes a plethora of other arguments, none of
which requires extensive discussion. We reject these arguments out
of hand, pausing only to make three additional points.
First, Starbucks protests that it is inequitable to cut
shift supervisors out of the tips pools when they spend the
majority of their time serving customers alongside baristas. This
protest is disingenuous. Starbucks is the architect of these tips
pools, which flout the law and lump together eligible and
ineligible employees. If there is an inequity, the fault lies with
Starbucks — not with the Tips Act.
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Second, Starbucks criticizes both the wisdom and the
fairness of the Tips Act as we have interpreted it. This criticism
is misdirected. The Massachusetts legislature enacted the statute
and it is not our place to second-guess either the wisdom or the
fairness of policy judgments made in the public interest by a state
legislature. See Vote Choice, Inc. v. DiStefano, 4 F.3d 26, 40
(1st Cir. 1993).
Third, Starbucks says that the district court's decision
threatens to create a windfall for baristas. That is true as far
as it goes — but it does not take Starbucks very far. The windfall
comes about only because Starbucks put in place a policy that
transgressed the Tips Act, so Starbucks is not in a position to
complain. In any event, "in devising a type of 'strict liability'
to achieve its goal — letting employees keep tips, gratuities, and
fees called 'service charges' — the Legislature must be presumed to
have factored into its calculus the risk of" some service employees
"reap[ing] seemingly unfair benefits." See Cooney v. Compass Grp.
Foodserv., 870 N.E.2d 668, 673-74 (Mass. App. Ct. 2007).
In this case, all roads lead to Rome. The plain language
of the Act, the legislative purpose underlying it, and the Attorney
General's interpretive guidance coalesce to counsel in favor of the
conclusion that Starbucks' Massachusetts-based shift supervisors
are not "wait staff" within the meaning of the Tips Act. The
evidence, even when viewed in the light most favorable to
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Starbucks, admits of no other plausible conclusion. Since shift
supervisors are not "wait staff," the district court did not err in
holding them ineligible to share in tips pools with baristas.
B. Class Certification.
In its certification order, the district court
established a class of "[a]ll individuals who were employed as
baristas at any Starbucks store located in the Commonwealth of
Massachusetts at any time between March 25, 2005, and [March 18,
2011], inclusive." Starbucks II, 2011 U.S. Dist. LEXIS 28572, at
*2. Starbucks laments that the district court erred in certifying
this class. We review the grant or denial of class certification
for abuse of discretion. Waste Mgmt. Holdings, Inc. v. Mowbray,
208 F.3d 288, 295 (1st Cir. 2000). An abuse occurs when a court,
in making a discretionary decision, relies upon an improper factor,
neglects a factor entitled to substantial weight, or considers the
correct mix of factors but makes a clear error of judgment in
weighing them. Id.We begin with first principles. The Civil Rules
establish four elements that must be present in order to obtain
class certification. This taxonomy comprises numerosity of claims,
commonality of legal or factual questions, typicality of
representative claims or defenses, and adequacy of representation.
Fed. R. Civ. P. 23(a); see also Amchem Prods., Inc. v. Windsor, 521
U.S. 591, 613-14 (1997). Starbucks trains its sights primarily on
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the fourth element, contending that an insurmountable intra-class
conflict destroys any hope of adequacy of representation. In
elaboration, Starbucks explains that the designated class
representatives (the named plaintiffs) are baristas who, in its
view, cannot protect the interests of over 450 former baristas who
became shift supervisors at some point during the class period
(and, thus, would be financially disadvantaged by a decision
striking down Starbucks' current policy).4
The district court rejected this contention, reasoning
that "an interest by certain putative class members in maintaining
the allegedly unlawful policy is not a reason to deny class
certification." Starbucks III, 2011 U.S. Dist. LEXIS 28227, at *3.
We agree.
We do not gainsay that the class, as certified, is not
monolithic; it embodies a potential for conflict. But perfect
symmetry of interest is not required and not every discrepancy
among the interests of class members renders a putative class
action untenable. "Only conflicts that are fundamental to the suit
and that go to the heart of the litigation prevent a plaintiff from
meeting the Rule 23(a)(4) adequacy requirement." 1 William B.
Rubenstein, Newberg on Class Actions § 3:58 (5th ed. 2012). Put
4
To place Starbucks' estimate of the number of baristas-
turned-shift supervisors into perspective, we note that the
plaintiff class as a whole is estimated to number approximately
11,200 individuals.
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another way, 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. See, e.g., In re NASDAQ
Mkt.-Makers Antitrust Litig., 169 F.R.D. 493, 514-15 (S.D.N.Y.
1996).
We think that the district court acted within the realm
of its discretion in determining that there was no intractable
conflict here. A barista-turned-shift supervisor will only be
considered a member of the class (and entitled to damages) for the
period during which she was a barista. She will share in the
awarded class-wide damages for that period. And inasmuch as shift
supervisors are not named as defendants, a barista-turned-shift
supervisor will not be required to reimburse any funds that she may
have received from the tips pools after she was promoted. Last but
not least, if a barista-turned-shift supervisor is uncomfortable
with the attack launched by the plaintiff class on Starbucks' tips
policy, she — like every other class member — has the right to opt
out of the class. The availability of this option is an important
factor in weighing the effect of a largely hypothetical conflict on
a class-certification decision. See Smilow v. Sw. Bell Mobile
Sys., Inc., 323 F.3d 32, 43 (1st Cir. 2003).
Taking a different tack, Starbucks argues that the
certified class is unascertainable and overbroad because certain
experienced baristas provide coaching and direction to less
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experienced co-workers. This assistance, Starbucks argues, renders
those baristas ineligible to receive tips under the district
court's construction of "wait staff." This argument trenches on
the frivolous.
The class is ascertainable under the objective standard
of job titles and includes those who worked as baristas during the
class period. The presence of such an objective criterion
overcomes the claim that the class is unascertainable. See 5 James
Wm. Moore et al., Moore's Federal Practice § 23.21[3][a] (3d ed.
2012) ("For a class to be sufficiently defined, the court must be
able to resolve the question of whether class members are included
or excluded from the class by reference to objective criteria.").
At the risk of belaboring the obvious, we add that even
if some baristas occasionally render the same sort of assistance to
co-workers as shift supervisors are required to do, they are not
responsible for rendering that assistance. A barista's job
description does not contain any managerial responsibilities.
Thus, baristas remain "wait staff" eligible to participate in tips
pools, notwithstanding their volunteered activities. Starbucks'
claim of overbreadth is, therefore, bogus.
In a last-ditch effort to defeat class certification,
Starbucks posits that a class action will not resolve the rights of
all interested parties in the absence of shift supervisors. This
prognostication constitutes little more than whistling past the
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graveyard. It is true, of course, that the maintenance of this
class action, in its present form, leaves open the possibility of
additional litigation at the behest of shift supervisors. Cf.
Winans v. Starbucks Corp., 796 F. Supp. 2d 515, 517 (S.D.N.Y. 2011)
(describing putative class action brought by former assistant store
managers, claiming that Starbucks' tip distribution policy
improperly precludes them from participating in the tips pools).
But the mere fact that a class action will not resolve every
conceivable issue touching upon a challenged policy or practice
does not require a court to throw out the baby with the bath water.
So it is here: considerations of fairness and judicial economy are
well-served by resolving the baristas' claims in a class action.
In particular, the questions of law and fact common to class
members and presented by the plaintiffs' complaint greatly
predominate over any questions affecting individual members. We
conclude, therefore, that a class action is superior to other
alternative ways of adjudicating this controversy. See Fed. R.
Civ. P. 23(b).
C. Treble Damages.
Guided by the parties' stipulation, the district court
determined that the amount of damages owed to the class — that is,
the total amount of funds unlawfully paid to shift supervisors from
the tips pools during the class period — was $7,500,000. The court
then trebled the damages that had accrued after July 11, 2008
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($3,313,271). Starbucks challenges the trebling of this portion of
the damages. The plaintiffs cross-appeal, contending that all of
the damages should have been trebled.
The district court's award of treble damages rests on a
provision of the Massachusetts Wage Act, Mass. Gen. Laws ch. 149,
§ 150. This provision was amended effective July 12, 2008, see
2008 Mass. Legis. Serv. ch. 80, § 5 (West), and the district court
concluded that the amended verison of the law required the
automatic trebling of damages from that point forward. Starbucks
does not contest this interpretation but, rather, insists that the
amended provision transgresses due process by requiring the
automatic imposition of punitive damages without a finding of
reprehensibility. We review this claim of constitutional error de
novo. See, e.g., United States v. Morales-De Jesús, 372 F.3d 6, 8
(1st Cir. 2004).
Starbucks premises its argument on the Supreme Court's
decision in State Farm Mutual Automobile Insurance Co. v. Campbell,
538 U.S. 408 (2003). There, the Court held that "punitive damages
should only be awarded if the defendant's culpability, after having
paid compensatory damages, is so reprehensible as to warrant the
imposition of further sanctions to achieve punishment or
deterrence." Id. at 419. Starbucks' premise is faulty: the
decision in Campbell — which addressed jury-awarded punitive
damages in civil tort actions — is inapposite.
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Here — unlike in Campbell — there is no cause for concern
about the "imprecise manner in which punitive damages systems are
administered" by juries. Id. at 417. To the contrary, the current
treble damages provision in the Massachusetts Wage Act reflects a
reasoned legislative judgment. This is an important distinction.
See, e.g., Cook Cnty., Ill. v. U.S. ex rel. Chandler, 538 U.S. 119,
132 (2003) (noting that "[t]reble damages certainly do not equate
with classic punitive damages, which leave the jury with open-ended
discretion over the amount").
At any rate, the Massachusetts legislature has made clear
that the current provision allowing treble damages under the Wage
Act is a liquidated damages provision. See Mass. Gen. Laws ch.
149, § 150 (stating that "[a]n employee so aggrieved who prevails
in such an action shall be awarded treble damages, as liquidated
damages, for any lost wages and other benefits" (emphasis
supplied)). The Supreme Court has held in an analogous context
that liquidated damages "constitute[] compensation for the
retention of a workman's pay which might result in damages too
obscure and difficult of proof for estimate other than by
liquidated damages." Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697,
707 (1945) (construing Fair Labor Standards Act). By definition,
therefore, liquidated damages are not punitive damages. See
Marshall v. Brunner, 668 F.2d 748, 753 (3d Cir. 1982).
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That ends this aspect of the matter. Because an award of
treble damages pursuant to the current version of the Massachusetts
Wage Act is neither an award of punitive damages nor fairly
analogous to such an award, Starbucks' due process concerns are
misplaced.
The plaintiffs' cross-appeal is no more persuasive. They
argue that the district court abused its discretion in failing to
award treble damages for that portion of the class period prior to
July 12, 2008. During that interval, an earlier version of the
Wage Act was in place. Under this version, the decision about
whether to award treble damages lay entirely within the discretion
of the trial court. See Wiedmann v. The Bradford Grp., Inc., 831
N.E.2d 304, 313 (Mass. 2005).
The Massachusetts Supreme Judicial Court explained that
such an award was "appropriate where conduct is 'outrageous,
because of the defendant's evil motive or his reckless indifference
to the rights of others.'" Rosnov v. Molloy, 952 N.E.2d 901, 905
(Mass. 2011) (quoting Wiedmann, 831 N.E.2d at 313). Applying this
standard, the district court ruled ore sponte that, with respect to
the period prior to July 12, 2008, "the defendant's conduct was not
outrageous enough to warrant treble damages."
This ruling passes muster. The district court cited the
correct legal standard, and its refusal to impose treble damages
for the earlier part of the class period was not unreasonable.
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After all, the Tips Act was amended in 2004 and had not been
authoritatively construed during the relevant time frame. Although
Starbucks fashioned a policy that, after litigation, was found to
run afoul of the Tips Act, there is no compelling evidence that it
either violated the statute willfully or acted with reckless
indifference to the rights of others. By the same token, the
record contains no evidence suggesting that Starbucks harbored an
evil motive.
In an effort to overcome these considerations, the
plaintiffs point out that the district judge, in disallowing their
claim, said that Starbucks' "conduct was not outrageous enough to
warrant treble damages." They say, a fortiori, that the conduct
must have been outrageous to some degree, thus paving the way for
an award of treble damages. This is sheer persiflage.
We do not read the Massachusetts cases as requiring
treble damages under the earlier version of the Wage Act whenever
some hint of outrageousness exists. Outrageousness is often a
matter of degree. Most people would think that bilking a widow out
of her life's savings is outrageous; some would think that charging
$5.25 for a salted caramel mocha frappuccino is outrageous. But
everyone would agree that the two acts are qualitatively different,
and are not deserving of the same level of opprobrium. It is for
the district court, exercising its informed discretion, to
determine when particular conduct sinks to a level that warrants
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the multiplication of damages. See, e.g., N.J. Coal. of Rooming &
Boarding House Owners v. Mayor & Council of City of Asbury Park,
152 F.3d 217, 224-25 (3d Cir. 1998).
III. CONCLUSION
The parties, represented by skilled counsel, have tried
valiantly to show us how and why the district court committed some
reversible error. In the end, however, their efforts fail.
We need go no further. For the reasons elucidated above,
we affirm the judgment of the district court in all respects.
Affirmed.
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