Matter of Marzovilla v. New York State Industrial Board of Appeals , 8 N.Y.S.3d 681 ( 2015 )

State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: April 16, 2015 519470
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In the Matter of NICOLA
MARZOVILLA et al.,
Petitioners,
v MEMORANDUM AND JUDGMENT
NEW YORK STATE INDUSTRIAL
BOARD OF APPEALS et al.,
Respondents.
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Calendar Date: February 9, 2015
Before: Lahtinen, J.P., McCarthy, Egan Jr. and Clark, JJ.
__________
Office of Daniel Silverman, LLP, New York City (Daniel
Silverman of counsel), for petitioners.
Eric T. Schneiderman, Attorney General, New York City (C.
Michael Higgins of counsel), for respondents.
__________
Lahtinen, J.P.
Proceeding pursuant to CPLR article 78 (transferred to this
Court by order of the Supreme Court, entered in Albany County) to
review a determination of respondent Industrial Board of Appeals
which found that petitioners violated Labor Law § 196-d by
misappropriating tips.
Petitioner Nicola Marzovilla is the owner of petitioner
Valodome, Inc., which, during the time period at issue here,
owned and operated an Italian restaurant in New York City known
as iTrulli. Tips at iTrulli were subject to mandatory "tip
pooling" (12 NYCRR 146-2.16 [b]), with each waiter receiving a
full share, and busboys, runners, the wine steward and head
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waiter receiving a half share. This proceeding centers on
petitioners' challenge to a finding by respondent Industrial
Board of Appeals (hereinafter IBA) that from January 2001 to
September 2005 petitioners misappropriated the tips, in violation
of Labor Law § 196-d, by distributing them to Gianni Linardic and
Alex Steidl, senior employees of iTrulli and described by
Marzovilla as the head waiter and wine steward, respectively.
Several servers filed complaints in 2006 alleging that
portions of iTrulli's tip pool were misappropriated by Marzovilla
and paid to Linardic and Steidl. The Department of Labor
(hereinafter DOL) ultimately found that petitioners owed
approximately $221,000 for misappropriated tips, plus interest
and a civil penalty, for a total of approximately $407,000 and
issued an order to comply. Following a hearing, the IBA modified
that wage order to reflect the correct date that the improper tip
distribution ceased and suspended interest for a five-month
period due to unreasonable delay attributable to DOL, and
otherwise affirmed. Petitioners then commenced this proceeding.
We confirm. The governing statute, Labor Law § 196-d,
provides that "[n]o employer or his [or her] agent . . . shall
demand or accept, directly or indirectly, any part of the
gratuities, received by an employee, or retain any part of a
gratuity or of any charge purported to be a gratuity for an
employee. . . . Nothing in this subdivision shall be construed
as affecting . . . the sharing of tips by a waiter with a busboy
or similar employee." Recently, the Court of Appeals clarified
that eligibility to participate in a tip pool "'shall be based
upon duties and not titles'" (Barenboim v Starbucks Corp., 21
NY3d 460, 471 [2013], quoting 12 NYCRR 146-2.14 [e]), and the
Court held that "employer-mandated tip splitting should be
limited to employees who, like waiters and busboys, are
ordinarily engaged in personal customer service, a rule that
comports with the 'expectation[s] of the reasonable customer'"
(Barenboim v Starbucks Corp., 21 NY3d at 471-472, quoting
Samiento v World Yacht Inc., 10 NY3d 70, 79 [2008]; see 12 NYCRR
146-2.16 [b]; 146-3.4 [a]). Consistent with longstanding DOL
policy, the Court further observed that "employees who regularly
provide direct service to patrons remain tip-pool eligible even
if they exercise a limited degree of supervisory responsibility"
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(Barenboim v Starbucks Corp., 21 NY3d at 472). The Court
concluded, however, "that there comes a point at which the degree
of managerial responsibility becomes so substantial that the
individual can no longer fairly be characterized as an employee
similar to general wait staff within the meaning of Labor Law
§ 196-d" (id. at 473). The Court determined that "the line
should be drawn at meaningful or significant authority or control
over subordinates" (id.). The Court explained that "[m]eaningful
authority might include the ability to discipline subordinates,
assist in performance evaluations or participate in the process
of hiring or terminating employees, as well as having input in
the creation of employee work schedules, thereby directly
influencing the number and timing of hours worked by staff as
well as their compensation" (id.).
Here, the IBA's determination is supported by the testimony
of waiters that, despite their complaints, Linardic sometimes
told them that they had to give him a full share of the tip pool
when a large amount of money had been collected. Two waiters,
Alex Burgos and Enrique Arias, further explained that, when he
served customers, Linardic received personal tips that were not
shared with any other waiters. This testimony was credited by
the IBA and is sufficient under Barenboim v Starbucks Corp.
(supra) to establish meaningful authority because it established
that Linardic "directly influenc[ed] . . . the[] compensation"
received by other waiters, in addition to his own (id. at 473).
In addition, seven servers claimed that Linardic was a manager
who gave orders, supervised and instructed them while they were
working, and two servers indicated that he introduced himself as
a manager. Linardic also extensively "participate[d] in the
process of hiring . . . employees" (id.) and had input in the
creation of employee work schedules. While petitioners assert
that Linardic was required to check with Marzovilla to see if
jobs were open before interviewing an employee, and petitioners'
witnesses testified that either Marzovilla or his sister had
final authority to make hiring decisions, the Court of Appeals
emphasized in Barenboim that "final authority" is not the
standard, and that "the power to hire and fire is not the
exclusive test" (id.). Given the foregoing, the IBA properly
concluded that Linardic exercised "meaningful authority" over
other servers under the test set forth in Barenboim, and
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testimony to the contrary presented a credibility issue for the
IBA to resolve (see Matter of Garcia v Heady, 46 AD3d 1088, 1090
[2007], lv denied 10 NY3d 705 [2008]).
The IBA's determination that Steidl was ineligible to
participate in the tip pool was based on its conclusion that
Steidl was not a food service worker in the first instance and
his personal service to patrons was not a principal and regular
part of his duties (see 12 NYCRR 146-2.14 [e]; 146-2.16 [b]). As
the IBA noted, Steidl's own description of his job revealed that
much of his work involved initially programming – and then
maintaining and improving – the restaurant's computer system, as
well as maintaining and updating the restaurant's massive wine
list and wine cellar. Moreover, the IBA credited the testimony
of servers that Steidl was rarely on the floor during lunch
shifts and, during dinner, his service duties were limited – he
sometimes discussed wine with customers, but rarely opened and
poured wine unless the bottle was expensive or the customer was
high-profile or a regular. While Steidl did testify that he was
employed primarily as a service worker and the majority of his
time was spent on the floor during dinner shifts helping
customers with the extensive wine list, and inasmuch as the
resolution of conflicting evidence and credibility questions is
within the sole province of the IBA (see Matter of Garcia v
Heady, 46 AD3d at 1090; see also Matter of CNP Mech., Inc. v
Angello, 31 AD3d 925, 927 n [2006], lv denied 8 NY3d 802 [2007]),
substantial evidence supports the determination that Steidl's
service duties were occasional or incidental to his functions at
the restaurant and, thus, he was not a food service worker "whose
personal service to patrons [was] a principal or regular part of
his . . . duties" (Barenboim v Starbucks Corp., 21 NY3d at 473).
Petitioners' remaining arguments do not require extended
discussion. Contrary to petitioners' assertion, "DOL is
obligated to impose interest at the statutory rate" (Matter of
Garcia v Heady, 46 AD3d at 1090; see Matter of Marchionda v
Industrial Bd. of Appeals of State of N.Y., Dept. of Labor, 119
AD3d 1342, 1343 [2014]; see also Matter of CNP Mech., Inc. v
Angello, 31 AD3d at 928). With respect to their contention that
interest should be suspended for certain additional periods,
petitioners have not met their burden of making "a showing of
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unreasonable delay" on the part of DOL (Matter of Pascazi v
Gardner, 106 AD3d 1143, 1145 [2013], appeal dismissed 21 NY3d
1057 [2013], lv denied 22 NY3d 857 [2013]). Finally, the civil
penalty of 25% of wages due was not "so disproportionate to the
underlying offense as to be shocking to one's sense of fairness"
(Matter of Garcia v Heady, 46 AD3d at 1090 [internal quotation
marks and citation omitted]), given the existence of a previous
violation, the size of the employer and the gravity of the
violation.
Petitioners' remaining argument is not properly before us.
McCarthy, Egan Jr. and Clark, JJ., concur.
ADJUDGED that the determination is confirmed, without
costs, and petition dismissed.
ENTER:
Robert D. Mayberger
Clerk of the Court