Kim Hardy v. Tournament Players Club at Southwind, Inc. d/b/a "TPC Southwind" ( 2015 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
May 12, 2015 Session
KIM HARDY v. TOURNAMENT PLAYERS CLUB AT SOUTHWIND, INC.
D/B/A “TPC SOUTHWIND”, ET AL.
Appeal from the Circuit Court for Shelby County
No. CT00120114 Donna M. Fields, Judge
________________________________
No. W2014-02286-COA-R9-CV – Filed July 2, 2015
_________________________________
This is an interlocutory appeal pursuant to Rule 9 of the Tennessee Rules of Appellate
Procedure. In March 2014, Plaintiff food server/bartender filed an action alleging, in
relevant part, that Defendants violated Tennessee Code Annotated § 50-2-107 by failing
to pay her and other similarly situated employees all of the gratuities that they earned.
Plaintiff further alleged that Defendants caused the gratuities to be shared with non-
tipped employees. The trial court dismissed Plaintiff‘s claim under § 50-2-107 upon
determining that the section does not permit a private cause of action in light of
amendments to § 50-2-101 in 2013. We reverse and remand for further proceedings.
Tenn. R. App. P. 9 Interlocutory Appeal; Judgment of the Circuit Court Reversed
and Remanded
ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which J. STEVEN
STAFFORD, P.J., W.S., joined. BRANDON O. GIBSON, J., filed a dissenting opinion.
Bruce S. Kramer, Amy E. Strickland, and Patrick H. Morris, Memphis, Tennessee, for
the appellant, Kim Hardy.
Todd P. Photopulos and Diana M. Comes, Memphis, Tennessee, for the appellees,
Tournament Players Club at Southwind, Inc. d/b/a ―TPC Southwind‖, PGA Tour Golf
Course Properties, Inc. and PGA Tour, Inc.
OPINION
This appeal requires us to revisit whether Tennessee Code Annotated § 50-2-107,
a section of the Tennessee Wage Regulation Act (―the TWRA‖), provides a private right
of action. The facts relevant to our disposition of the question certified for appeal
pursuant to Rule 9 of the Tennessee Rules of Appellate Procedure are not disputed.
Beginning November 2004, Plaintiff Kim Hardy (―Ms. Hardy‖) was employed as a food
server/bartender by Defendant Tournament Players Club at Southwind (―TPC
Southwind‖), a private club with restaurant and banquet facilities. In March 2014, Ms.
Hardy filed a class action complaint under Rule 23 of the Tennessee Rules of Civil
Procedure against TPC Southwind, the PGA Tour, Inc. (―PGA Tour‖), and PGA Golf
Course Properties, Inc. (―PGA Properties‖; collectively, ―Defendants‖) in the Circuit
Court for Shelby County.1
In her complaint, Ms. Hardy alleged that Defendants knowingly, willfully,
fraudulently, maliciously, and/or with reckless disregard failed to pay her and other
similarly situated employees all of the tips, gratuities, and/or service charges
(collectively, ―tips‖) to which they were entitled. She further alleged that Defendants
distributed the tips among tipped employees and non-tipped employees, including kitchen
workers and managers, in contravention of the TWRA and governing law. Ms. Hardy
asserted claims for vicarious liability on the part of PGA Tour and PGA Tour Golf
Course Properties; violation of the TWRA as codified at Tennessee Code Annotated §
50-2-101, et seq., specifically § 50-2-107; breach of contract; conversion; fraud in
procuring employment in violation of § 50-1-102; negligent misrepresentation in
procuring employment in violation of § 50-1-102; aiding and abetting; and civil
conspiracy. She sought compensatory and punitive damages.
Defendants filed a motion to dismiss in April 2014. Defendants asserted six
grounds for dismissal in their motion, including the absence of a private right of action
under the TWRA. Ms. Hardy filed a response in July 2014, and the trial court heard the
matter on September 5, 2014. By corrected order entered November 12, 2014, the trial
court determined that Tennessee Code Annotated § 50-2-107 does not provide a private
right of action in light of the General Assembly‘s 2013 amendment to § 50-2-101, which
provides for enforcement of the section by the Department of Labor and Workforce
Development. The trial court further concluded that whether a private right of action
exists under § 50-2-107 was an appropriate question to be determined by interlocutory
appeal under Rule 9(a)(2) of the Rules of Appellate Procedure. It granted Defendants‘
motion to dismiss Ms. Hardy‘s claims under the TWRA and granted Ms. Hardy
permission to appeal pursuant to Rule 9. Ms. Hardy filed an application for permission
for interlocutory appeal, which we granted on December 19, 2014.
1
Ms. Hardy alleged in her complaint that TPC Southwind is one club within a network of clubs regulated,
overseen, supervised, and/or controlled by the PGA Tour and PGA Properties. That allegation is not an
issue for the purposes of this interlocutory appeal.
2
Issue Presented
The question certified for interlocutory appeal in this case is whether Tennessee
Code Annotated § 50-2-107 provides a private right of action notwithstanding the 2013
amendment to § 50-2-101 providing for enforcement of that section by the Department of
Labor and Workforce Development (―the Department‖).
Standard of Review
A motion to dismiss for failure to state a claim under Rule 12.02(6) of the
Tennessee Rules of Civil Procedure ―challenges only the legal sufficiency of the
complaint, not the strength of the plaintiff‘s proof or evidence.‖ Webb v. Nashville Area
Habitat for Humanity, Inc., 346 S.W.3d 422, 426 (Tenn. 2011) (citations omitted). It
should be granted ―‗only when it appears that the plaintiff can prove no set of facts in
support of the claim that would entitle the plaintiff to relief.‘‖ Id. (quoting Crews v.
Buckman Labs. Int’l, Inc., 78 S.W.3d 852, 857 (Tenn. 2002)) (additional citations
omitted). Whether dismissal for failure to state a claim is appropriate is a question of
law. Id.
Whether a private right of action exists under a statute is a matter of statutory
interpretation. Brown v. Tennessee Title Loans, Inc., 328 S.W.3d 850, 855 (Tenn. 2010)
(citation omitted). The interpretation of a statute also is a question of law. Id. Appellate
review of a trial court‘s conclusions on questions of law is de novo with no presumption
of correctness. Shore v. Maple Lane Farms, LLC, 411 S.W.3d 405, 414 (Tenn. 2013)
(citations omitted).
Discussion
We begin our discussion with the well-settled principle that our goal when
construing a statute is to give full effect to the intent of the General Assembly, neither
exceeding nor restricting the intended purpose of the statute. Lee Med., Inc. v. Beecher,
312 S.W.3d 515, 526 (Tenn. 2010) (citations omitted). We must begin with the natural
and ordinary meaning of the words used in the text, construing them in light of the
general purpose of the statute and the context in which they appear. Id. (citations
omitted). When the text is clear and unambiguous, we interpret the statute without going
beyond the statutory language itself. Id. at 527 (citations omitted). If the text is
ambiguous, however, we will resort to the familiar rules of statutory construction to
ascertain the intent of the General Assembly. Id. (citations omitted).
If provisions within a statute create ambiguity, we endeavor to harmonize them in
order to effectuate the overall purpose of the statute. Id. (citations omitted). We must
construe the separate provisions reasonably in context of the statute, giving effect to each
word, phrase, and sentence without basing our interpretation on any single one. Id.
3
(citations omitted). We will also endeavor to construe the statute so as to facilitate ―the
harmonious operation of the law.‖ Id. (citations omitted.)
When attempting to resolve ambiguity in a statute, the courts may consider
sources beyond the text of the statute itself, including public policy, contemporaneous or
preceding historical facts, and the background and purpose of the legislation. Id. at 527-
28 (citations omitted). We also may consider prior versions of the statute, legislative
history, the caption of the act, and the overall statutory scheme. Id. at 528 (citations
omitted). ―However, no matter how illuminating these non-codified external sources
may be, they cannot provide a basis for departing from clear codified statutory
provisions.‖ Id. (citation omitted).
Additionally, the courts employ several presumptions with respect to the
legislative process. Id. at 527. We may presume that the General Assembly chose each
word deliberately, that each word has a purpose and specific meaning, and that the statute
has an intended purpose. Id. (citations omitted). We also presume that the General
Assembly is aware of existing law and its own prior enactments regarding the subject of
the statute and ―knows the ‗state of the law[,]‘‖ including the way in which the statutes
have been interpreted by the courts. Id. (quoting Murfreesboro Med. Clinic, P.A. v.
Udom, 166 S.W.3d 674, 683 (Tenn. 2005)). We may also presume ―that the General
Assembly ‗did not intend an absurdity.‘‖ Id. (quoting Fletcher v. State, 951 S.W.2d 378,
382 (Tenn. 1997)).
In this case, Defendants urge that Owens v. University Club of Memphis, No.
02A01-9705-CV-00103, 1998 WL 719516 (Tenn. Ct. App. Oct. 15, 1998) (no perm. app.
filed), in which this Court determined that Tennessee Code Annotated § 50-2-107
(―section 107‖ or ―the section‖) permits a private cause of action, no longer is good
authority in light of the 2013 amendment to § 50-2-101 (―section 101‖) and subsequent
case law construing that section. Defendants‘ argument, as we perceive it, is that Owens
is not binding and should be overruled. Thus, with the principles of statutory
construction in mind, we turn first to the statutory text.
The Statutory Text
Prior to the 2013 amendment to section 101, sub-section 101(b) provided:
(b) It is unlawful for any proprietor, foreman, owner or other person to
employ, permit or suffer to work for hire, in, about, or in connection with
any workshop or factory any person whatsoever without first informing the
employee of the amount of wages to be paid for the labor. The amount
agreed upon between employer and employee, or employee representative,
shall constitute a basis for litigation in civil cases. This does not apply to
farm labor. Nothing in this section shall apply to railroad companies
4
engaged in interstate commerce and subject to the federal Railway Labor
Act, compiled in 45 U.S.C. § 151 et seq.
Tenn. Code Ann. § 50-2-101(b) (2012) (emphasis added). The 2013 amendment to
section 101 amended sub-section 101(b) to delete the reference to ―litigation in civil
cases.‖ Sub-section 101(b) as amended in 2013 provides:
It is unlawful for any proprietor, foreman, owner or other person to employ,
permit or suffer to work for hire, in, about, or in connection with any
workshop or factory any person whatsoever without first informing the
employee of the amount of wages to be paid for the labor. This shall not
apply to farm labor. Nothing in this section shall apply to railroad
companies engaged in interstate commerce and subject to the federal
Railway Labor Act, compiled in 45 U.S.C. § 151 et seq.
Tenn. Code Ann. § 50-2-101(b) (2014). The 2013 amendment also added subsection
101(d), which provides:
The department of labor and workforce development shall enforce this
section.
Tenn. Code Ann. § 50-2-101(d) (2014).
Tennessee Code Annotated § 50-2-107 currently provides, in relevant part:
(a)(1) If a business, including a private club, lounge, bar or restaurant,
includes on the bill presented to and paid by a customer, member or patron
an automatic percentage or specific dollar amount denominated as a service
charge, tip, gratuity, or otherwise, which amount is customarily assumed to
be intended for the employee or employees who have served the customer,
member or patron, that amount shall be paid over to or distributed among
the employee or employees who have rendered that service. The payment
shall be made at the close of business on the day the amount is received or
at the time the employee is regularly paid, or, in the case of a bill for which
credit is extended to a customer, member or patron, payment shall be made
at the close of business on the day the amount is collected or on the first
day the employee is regularly paid occurring after the amount is collected.
(2) The payment shall not be reduced, docked or otherwise diminished to
penalize an employee for any actions in connection with the employee‘s
employment, if it is derived from a mandatory service charge or tip
collected from customers, members or patrons.
5
(3)(A) This section does not apply to bills for food or beverage served in a
banquet, convention or meeting facility segregated from the public-at-large,
except banquet, convention or meeting facilities that are on the premises of
a private club.
***
(b) A violation of this section is a Class C misdemeanor. Each failure to
pay an employee constitutes a separate offense.
Tenn. Code Ann. § 50-2-107 (2014). Section 107 contains no provision either limiting
enforcement to the Department or explicitly creating a private right of action.
The trial court in this case determined that section 107 does not confer a private
right of action in light of the 2013 legislative amendments to section 101, the first section
of the TWRA. The trial court concluded that the General Assembly ―removed any
reference to the TWRA constituting a basis for litigation in civil cases‖ when it amended
sub-section (b) of section 101, and that it added sub-section (d) to provide for
enforcement by the Department. The trial court relied on federal and state court
interpretations of section 101 after the 2013 amendment for the proposition that ―there
was never a private right of action under the TWRA.‖
In its November 2014 order, the trial court quoted Abadeer v. Tyson Foods, Inc.,
975 F. Supp. 2d 890 (M. D. Tenn. 2013) in support of its determination that the TWRA
―‗has never afforded a private right of action.‘‖ (emphasis in the original.) The trial court
observed that the express language of section 107 specifies a criminal sanction only; that
the section does not expressly create a private right of action; and that the statutory
language of section 107 is similar to the language of the Tennessee Title Pledge Act (―the
Title Pledge Act‖ or ―the TTPA‖), which the Tennessee Supreme Court determined does
not provide a private right of action. Noting that, in the absence of an express statutory
provision providing a private right of action, a plaintiff bears the burden of establishing
that the General Assembly intended to imply such a right, the trial court determined that
Ms. Hardy failed to carry her burden on the question.
Ms. Hardy submits that the trial court erred by construing the amendment to
section 101 as precluding a private right of action under section 107. She asserts that
section 101, which applies to ―workshops and factories,‖ is not relevant to a claim under
section 107, which commonly is referred to as ―the Tip Statute.‖ She contends that the
General Assembly chose not to amend section 107 when it amended section 101, and that
sub-section (d) in section 101 applies only to section 101, not to the entire TWRA.
Ms. Hardy cites Carver v. Citizen Utilities Company, 954 S.W.2d 34 (Tenn.
1997), for the proposition that, when separate sections of an act address different topics, a
private right of action may exist under one section of an act although precluded by
another. She asserts that section 101 clearly is not ―a section of general provisions
6
applicable to the entire TWRA[,]‖ but specifically pertains to the right of employees
covered by the section to be informed of the wages they are to receive. She further
asserts that other sections of the TWRA, including §§ 50-2-103 & 104, contain
provisions providing for exclusive enforcement by the Department, and that the General
Assembly did not intend to preclude a private right of action under section 107. Ms.
Hardy submits that this Court previously determined in Owens that a private right of
action may be inferred in section 107. She further asserts that Owens remains good law
because the General Assembly has not legislatively overruled it. Ms. Hardy also
observes that the cases on which the trial court relied addressed section 101 and did not
address section 107.
Defendants, on the other hand, assert that, because section 107 contains a criminal
penalty and does not specifically provide a private right of action, no private right of
action exists under the section. They also assert that the 2013 amendment to section 101
evidences legislative intent to reserve the right of enforcement of the TWRA to the
Department, and cite the Abadeer court‘s review of the legislative history of the 2013
amendment to section 101 in support of their argument. Defendants also assert that the
TWRA is ―substantially similar to‖ the Title Pledge Act, which provides for enforcement
through criminal and administrative penalties; that the TWRA as a whole provides for
regulation of wage disputes, including disputes involving tips; that Ms. Hardy cannot rely
on Owens, an unpublished case, in light of subsequent state and federal case-law; and that
section 107 has never contained a reference to a private right of action. Defendants
submit that the trial court correctly determined that Ms. Hardy failed to carry her burden
of proof to demonstrate legislative intent to provide a private right of action in section
107 in light of the 2013 amendments and case-law since Owens. With the parties‘
arguments in mind, we consider whether the trial court erred by determining that a
private cause of action may not be maintained under section 107 the TWRA.
Owens v. University Club of Memphis
We turn first to Owens v. University Club of Memphis, No. 02A01-9705-CV-
00103, 1998 WL 719516 (Tenn. Ct. App. Oct. 15, 1998) and the analysis to be employed
by the courts when determining whether a statute indicates legislative intent to create a
private right of action. Defendants contend that Ms. Hardy cannot rely on Owens to
demonstrate that section 107 creates a private right of action. Defendants contend that
Owens is not binding because it is an unpublished case and ―respectfully submit[]‖ that
the Owens court‘s analysis was ―incomplete‖ in light of Brown v. Tennessee Title Loans,
Inc., 328 S.W.3d 850 (Tenn. 2010), and Premium Financial Corporation of America v.
Crump Insurance Services of Memphis, Inc., 978 S.W.2d 91 (Tenn. 1998). They assert,
―[u]nder the proper analysis, contained within the Brown decision, [Ms.] Hardy bears the
burden of showing legislative intent to imply a private right of action. She cannot point
to Owens to do so.‖
7
The plaintiffs in Owens were food and beverage servers at the University Club of
Memphis (―the Club‖). Owens, 1998 WL 719516, at *1. Like the Plaintiff in the current
case, the plaintiffs in Owens were paid an hourly wage and received tips. Id. Like the
Defendants in the current case, the Club added a surcharge to its bill when certain events
were held at the Club. Id. The Club withheld a portion of the surcharge from the tipped
employees and distributed part of the reserved amount to non-tipped employees. Id. The
plaintiffs in Owens asserted, inter alia, that the Club‘s practices violated section 107. Id.
at *5. The trial court denied the Club‘s motions for a directed verdict and for a judgment
notwithstanding the verdict on the jury‘s decision in favor of the plaintiffs‘ claims under
section 107. Id. at *5, 10.
On appeal in Owens, the Club asserted, in relevant part, that the trial court erred by
denying its motions with respect to the plaintiffs‘ claims under section 107. Like
Defendants in the case now before us, the Club contended that section 107 is a criminal
statute and that no private right of action exists under it. Id. at *10. Relying on the
standard set-forth in Buckner v. Carlton, a published opinion of this Court that relied, in
turn, on the United States Supreme Court‘s decision in Cort v. Ash, the Owens court
stated that, when determining whether a private right of action exists for the violation of a
criminal statute, the court must consider three primary factors:
First, is the plaintiff one of the class for whose especial benefit the statute
was enacted. Second, is there any indication of legislative intent, explicit
or implicit, either to create or deny a private cause of action. Third, is the
private cause of action consistent with the underlying purposes of the
legislation.
Owens, 1998 WL 719516, at *10 (quoting Buckner v. Carlton, 623 S.W.2d 102, 105
(Tenn. App. 1981) (quoting Cort v. Ash, 422 U.S. 66, 78, 95 S. Ct. 2080, 2088, 45
L. Ed. 2d 26 (1975))) (internal citations omitted). The Owens court stated, ―‗These factors
are pertinent to determine whether the legislature intended for there to be a private right
of action under the statute.‘‖ Id. (citing see Touche Ross & Co. v. Redington, 442 U.S.
560, 99 S. Ct. 2479, 61 L. Ed. 2d 82 (1979)). The Owens court noted that, unlike statutes
intended to protect the public in general (including the statute at issue in Buckner),2
2
The plaintiff in Buckner v. Carlton alleged a violation of Tennessee Code Annotated § 39-3203 (re-
codified, as amended, at Tennessee Code Annotated § 39-16-403), which then provided:
If any person, by color of his office, willfully and corruptly oppresses any person, under
pretense of acting in his official capacity, he shall be punished by fine not exceeding one
thousand dollars ($1,000.00), or imprisonment in the county jail not exceeding one (1)
year.
Buckner v. Carlton, 623 S.W.2d 102, 105 (Tenn. Ct. App. 1981). The Buckner court held that no private
cause of action existed under the statute. The Buckner court opined that, although ―[a] private right of
action would probably not interfere with the underlying purpose of the oppression statute, . . . the factor
8
section 107 ―is intended to protect the rights of a certain class of people – service
employees who receive tips as part of their compensation.‖ Id. at *11. The court opined:
On its face, the Tennessee Tip Statute is clearly intended to protect such
employees by forbidding employers from keeping their tips. While the
statute contains no express indication of legislative intent to create or deny
a private right of action, a private action is consistent with the purpose of
the legislation, and indeed complements the remedy in the statute by
providing a mechanism to make employees whole.
Id. Thus, the Owens court determined that, although there was no express indication of
legislative intent to create a private right of action in section 107, a private right of action
could be inferred where the plaintiffs were within the class of people for whose benefit
the statute was designed and where a private right of action was consistent with the
purpose of the statute.
Accordingly, notwithstanding Defendants‘ assertion to the contrary, whether
section 107 permits a private cause of action is not an issue of first impression. This
Court‘s holding in Owens has not been overruled; the General Assembly did not amend
section 107 when it amended section 101 in 2013; and the General Assembly amended
section 107 in 2012 and did not legislatively overrule our holding in Owens.3 Further,
although not binding on this Court for the purpose of stare decisis, unpublished decisions
are nevertheless persuasive authority in this Court. Fortune v. Unum Life Ins. Co. of
America, 360 S.W.3d 390, 398 (Tenn. Ct. App. 2010); Brown v. Knox Cnty., 39 S.W.3d
585, 589 (Tenn. Ct. App. 2000) (citing see Allstate Ins. Co. v. Watts, 811 S.W.2d 883,
886 n.2 (Tenn. 1991)). Additionally, trial courts ―are not free to disregard‖ an appellate
court decision when it ―speaks directly on the matter.‖ Holder v. Tennessee Judicial
Selection Comm’n, 937 S.W.2d 877, 882 (Tenn. 1996). As we recently observed:
Historically, moreover, ―many outstanding opinions of our intermediate
appellate courts [were] consigned to oblivion and much scholarly research
[was] lost to the profession.‖ Allstate Ins. Co. v. Watts, 811 S.W.2d 883,
886 n.2 (Tenn. 1991). Today, although many ―outstanding opinions‖
remain unpublished, the internet and on-line legal resources have rescued
those opinions from oblivion. Additionally, as the courts have noted in the
context of dicta, ―inferior courts are not free to disregard . . . the
pronouncement of a superior court when it speaks directly on the matter
weighing most heavily against an implied right of action is that the oppression statute as well as the
criminal statutes concerning conspiracy and solicitation are intended for the protection of the general
public.‖ Id. The court observed, “[w]hen courts have implied a private right of action from a criminal
statute, the statute invariably is intended to protect a particular class of people.” Id. (emphasis added)
3
The 2012 amendment to section 107 added the provision currently codified at sub-section 107(a)(3)(B).
9
before it, particularly when the superior court seeks to give guidance to the
bench and bar.‖ Holder v. Tennessee Judicial Selection Comm’n, 937
S.W.2d 877, 882 (Tenn. 1996); Monday v. Thomas, No. M2012–01357–
COA–R3–CV, 2014 WL 1852958, at *3 n.2 (Tenn. Ct. App. May 5, 2014).
―[T]rial courts must follow the directives of superior courts, particularly
when the superior court has given definite expression to its views in a case
after careful consideration.‖ Holder, 937 S.W.2d at 881; see also Adbur–
Rahman v. Bredesen, No. M2003–01767–COA–R3–CV, 2004 WL
2246227, at *6 (Tenn. Ct. App. Oct. 6, 2004), aff’d 181 S.W.3d 292 (Tenn.
2005) (cert. denied 547 U.S. 1147, 126 S. Ct. 2288 (2006)) (holding: the
lower courts must adhere to the Tennessee Supreme Court‘s decisions,
regardless of whether those decisions are published.). Unpublished
opinions of this court ―shall be considered persuasive authority.‖ Sup. Ct.
Rule 4(G)(1).
State v. Anderson, No. W2014-01971-COA-R3-CV, 2015 WL 2374575, at *5 (Tenn. Ct.
App. May 15, 2015) (footnotes omitted).
Defendants‘ argument, as we perceive it, is that the Tennessee Supreme Court‘s
analysis in Brown v. Tennessee Title Loans has displaced the analysis of this Court in
Owens. In Brown, the Tennessee Supreme Court considered whether the Tennessee Title
Pledge Act codified at Tennessee Code Annotated §§ 45-15-101 to 120, permits a private
cause of action against title pledge lenders.4 The court determined that ―the TTPA is a
regulatory statute enforced through governmental remedies‖ and that ―the implication of
a private right of action would be inconsistent with [its] purposes as set forth by the
4
The section allegedly violated in Brown was § 45-15-111(a), which provides:
(a) A title pledge lender shall contract for and receive an effective rate of interest not to
exceed two percent (2%) per month; additionally, the title pledge lender may charge,
contract for, and receive a customary fee to defray the ordinary costs of operating a title
pledge office, including, but not limited to, investigating the title, appraising the titled
personal property, insuring the personal property when in the physical possession of the
title pledge lender, documenting and closing the title or property pledge transaction,
making required reports to local law enforcement officials, for all other services provided
by the title pledge lender, advertising, for losses on title pledge or property pledge
transactions, salaries, and for all other expenses incurred by the title pledge lender except
those in subsection (b). The fee shall not be deemed interest for any purpose of law, and
the fee may equal no more than one fifth (1/5) of the original principal amount of the title
pledge agreement or property pledge agreement, or of the total unpaid balance due at the
inception of any renewal of the agreement. The interest and fees shall be deemed to be
earned, due and owing as of the date of the title pledge agreement or property pledge
agreement and a like sum shall be deemed earned, due and owing on the same day of
each subsequent thirty-day period.
Tenn. Code Ann. § 45-15-111(a) (2007).
10
legislature.‖ Brown, 328 S.W.3d at 861. In reaching its decision, the Brown court
recognized, first, that the TTPA contains no express language creating a private right of
action in favor of a title pledger against a title pledge lender. Id. at 855. It then set-forth
three non-exclusive factors to be considered by the court when determining ―whether the
legislature otherwise intended an intention to imply such a right in the statute.‖ Id.
(citations omitted). The factors identified by the court were:
(1) whether the party bringing the cause of action is an intended beneficiary
within the protection of the statute, (2) whether there is any indication of
legislative intent, express or implied, to create or deny the private right of
action, and (3) whether implying such a remedy is consistent with the
underlying purposes of the legislation.
Id. As the Tennessee Supreme Court noted in Brown, it employed the factors set-forth by
the United States Supreme Court in Cort v. Ash. Id. at n.4 (noting that the fourth factor
articulated by the Court in Cort v. Ash – whether the action traditionally is relegated to
state law – was not applicable).
The Brown court observed that the plaintiffs in that case were ―within the
protection of the TTPA and [stood] to benefit from its provisions[,]‖ but found nothing in
the legislative history of the TTPA that implied legislative intent to imply a private right
of action. Id. at 858. The court then examined the ―underlying purposes‖ of the TTPA,
noting that it ―was enacted to establish a ‗sound system of making title pledge loans
through licensing of title pledge lenders,‘ which included the creation of ‗licensing
requirements.‘‖ Id. at 859 (quoting Tenn. Code Ann. § 45–15–102(1)–(2)). The court
observed that the TTPA imposed a criminal sanction and that it also provided for
suspension and revocation of the licenses of lenders who violate the statute. Id. The
court held: ―In short, the TTPA was designed to regulate the title pledge lending industry,
especially through the licensure of lenders, and was governmentally enforced through
criminal and administrative sanctions.‖ Id.
We applied the Cort v. Ash test in Owens, and the Tennessee Supreme Court
specifically applied that test in Brown. Thus, to the extent that Defendants suggest that
this Court‘s analysis in Owens should be disregarded as displaced by Brown, we must
disagree.
We accordingly turn to Defendants‘ assertion that cases construing the TWRA
following the 2013 amendment to section 101 support the trial court‘s judgment in this
case. Defendants‘ argument, as we construe it, is that Owens has effectively been
overruled, at least implicitly, by decisions subsequent to Owens and the 2013 amendment
to section 101.
11
Post-Owens Decisions and the 2013 Amendment
In their brief, Defendants assert that Abadeer v. Tyson Foods, Inc., 975 F. Supp. 2d
890 (M.D. Tenn. 2013); Cannon v. Citicorp Credit Services, Inc., No. 2:12-CV-88, 2014
WL 1267279 (E.D. Tenn. Mar. 26, 2014); and Harris v. Tennessee Rehabilitation
Initiative in Correction, No. M2013-01858-COA-R3-CV, 2014 WL 1887302 (Tenn. Ct.
App. May 8, 2014), cases construing the TWRA after the 2013 amendment that added
sub-section (d) to section 101, support their argument that that no private remedy is
available under section 107. Indeed, Defendants assert that these cases stand for the
proposition that a private cause of action was never available under the TWRA. They
further assert in their brief that ―[t]he overall structure of the TWRA, too, lends weight to
the inference that the Tennessee General Assembly intended for the Department of Labor
and Workforce Development to regulate wage disputes.‖ Defendants also contend that
wage disputes include ―tip-based wage disputes.‖
We begin our discussion of this argument with several observations. First, we
note that decisions of federal courts on questions of state law, while persuasive, are not
binding on this Court. As we previously have stated:
When a federal court undertakes to decide a state law question in the
absence of authoritative state precedent, the state courts are not bound to
follow the federal court‘s decision.
Townes v. Sunbeam Oster Co., Inc., 50 S.W.3d 446, 452 (Tenn. Ct. App. 2001)
(declining to adopt the Sixth Circuit Court of Appeals‘ construction of Tenn. Code Ann.
§ 20-1-119). Thus, although we reaffirm the Townes court‘s expression of respect for the
federal courts and the Sixth Circuit Court of Appeals in particular, we also reaffirm its
statement that a federal court‘s ―interpretation and application of state law is not binding
on this [C]ourt.‖ Id. (citing see State ex rel. Elvis Presley Int’l Mem. Found. v. Crowell,
733 S.W.2d 89, 97 (Tenn.Ct.App.1987) (declining to follow the United States Court of
Appeals for the Sixth Circuit‘s construction of state property law)). Second, we observe
that, like Owens, one of the federal court decisions and all of the state court decisions
relied upon by Defendants are not published in the official reporter. Thus, all of the
decisions relied upon by Defendants carry persuasive weight only in this Court.
Third, we note that section 107 was not the focus of any of the cases relied upon
by Defendants. The plaintiffs in Abadeer sought to assert an action under section 101(b).
Abadeer, 975 F. Supp. 2d at 915. Section 101(b) requires that employees in workshops
and factories be informed of the amount of wages to be paid for their labor. Tenn. Code
Ann. § 50-2-101(b). Cannon similarly was an action brought pursuant to section 101(b).
Cannon, 2014 WL 1267279, at *2. Tennessee Rehabilitative was an action filed in the
Tennessee Claims Commissions by inmates who alleged that they were employees for
purposes of the TWRA. Tennessee Rehabilitative, 2014 WL 1887302, at *1. The
12
plaintiffs in Tennessee Rehabilitative sought relief under section 101(b) and § 50-2-104,
alleging that the Tennessee Department of Correction failed to inform them of the
amount of their wages and misrepresented the amount of wages they were to receive. Id.
at *2.
Fourth, as noted above, section 101 of the TWRA, as amended in 2013, contains
an explicit provision with respect to enforcement. Section 101(d) unambiguously
provides, ―The department of labor and workforce development shall enforce this
section.‖ Tenn. Code Ann. § 50-2-101(d) (emphasis added). Section 107 contains no
such enforcement provision. Additionally, the General Assembly amended section 107
as recently as 2012 to add a provision that the ―section does not apply to bills presented
or charges paid by guests for accommodations and activities at a guest ranch.‖ Tenn.
Code Ann. § 50-2-107(a)(3)(B). With these observations in mind, we turn to the cases
relied upon by Defendants.
The plaintiffs in Abadeer were hourly production employees at meat processing
plants owned by Tyson Foods, Inc., and Tyson Fresh Meats, Inc. (collectively, ―Tyson‖)
in Tennessee. Abadeer, 975 F. Supp. 2d at 895. When plaintiffs were hired, Tyson
assured them they would be paid an hourly wage for all hours worked. Id. However,
Tyson did not pay plaintiffs for time spent performing preparatory tasks that they were
required to complete before clocking-in for their shifts (including donning sanitized
coverings, sanitizing work areas, and collecting knives and other supplies) or for time
spent on tasks they were required to perform after clocking-out (including cleaning-up
and replacing gear and equipment). Id. at 896. Plaintiffs asserted that the pre-shift and
post-shift tasks required a total of approximately 24-30 minutes; Tyson asserted the tasks
required no more than 14 minutes. Id. The parties also disagreed as to whether plaintiffs
performed production work for part of their meal periods. Id. at 898.
In November 2002, after considerable action by the United States Department of
Labor, plaintiffs filed their action and asserted claims under the Fair Labor Standards
Act, a claim for breach of contract, and claims under section 101. Id. at 899. The district
court granted plaintiffs‘ motion for partial summary judgment on their breach of contract
claim; denied plaintiffs‘ motion for summary judgment on their claims under the Fair
Labor Standards Act; and denied plaintiffs‘ claim under Tennessee Code Annotated § 50-
2-101(b) as moot. Id. at 919.
The portion of Abadeer relied on by Defendants in the current case relates to the
Abadeer court‘s analysis of Tyson‘s motion asking the court to reconsider its earlier
(2009) order denying Tyson‘s motion to dismiss plaintiffs‘ section 101(b) claim. Id. at
915. In its 2009 order, the district court concluded that section 101 provided a private
right of action. Id. Tyson directed the court to the 2013 amendment to section 101,
which provided for enforcement by the Department. Id. Tyson argued that the
amendment should be applied retroactively; plaintiffs maintained that Tennessee‘s ban on
13
retrospective application of law prohibited applying the amendment to dismiss their
claim. Id. Plaintiffs asserted that ―the private right of action [was] a substantive right
that cannot be eliminated retrospectively.‖ Id. at 916.
The district court noted that when the Tennessee General Assembly amended
section 101 in 2013 it did two things. First, it ―removed language specifying that the
wage amount agreed upon between employer and employee ‗shall constitute a basis for
litigation in civil cases[.]‘‖ Id. (quoting Tenn. Code Ann. § 50–2–101 (2012)). Second,
it ―added language directing that ‗[t]he department of labor and workforce development
shall enforce this section[.]‘‖ Id. (quoting 2013 Tenn. Pub. Acts Ch. 240 § 2). The
district court noted that one of the co-sponsors of the 2013 amendment stated in a
committee hearing that
a federal court decision ... changed the legislative intent of what the
legislature originally intended when [it] passed the Wage Regulation Act
years ago.... [T]he court said that [it] interpreted that section of the law to
give employees a private right of action to sue their employer when there‘s
[sic] wage disputes. The law has always been, in this state, that ... the
Department of Labor would regulate that. So, we‘re just changing that
back into compliance with ... what the original legislative intent was.
The district court stated:
In this case, the pre-amendment version of § 50-2-101 did not expressly
provide a private right of action. While it explicitly contemplated civil
litigation, the pre-amendment statute did not specify who had the right to
bring suit. If, as here, a statute does not expressly create a private right of
action, the ―next inquiry is whether the legislature otherwise indicated an
intention to imply such a right in the statute.‖. . . . In 2009, presented with
an ambiguous statute and only a modicum of circumstantial evidence as an
interpretive guide, [the previous district court judge] drew a reasonable
inference that the legislature intended to provide a private right of action.
Id. at 917 (quoting Brown, 328 S.W.3d at 855). After careful analysis of the factors to be
considered by the court when determining whether a statutory amendment clarifies or
changes a statutory provision, the district court concluded that the 2013 amendment was
clarifying in nature. Id. at 918. The court concluded:
Given that the 2013 amendment clarified the legislative intent behind an
ambiguous law without substantively modifying it, the Court concludes that
the remedial amendment applies retroactively.
Id. at 918-19. The court opined:
14
The employees do not have a vested right to enforce the statute because the
statute does not—and never did—include a private right of action. [The
court‘s] 2009 order inferred a right to sue, evidently contrary to legislative
intent; the legislature has now made clear that employees may only file a
complaint with the state agency to vindicate the substantive right § 50–2–
101 grants. Accordingly, the Court will dismiss the employees § 50–2–
101(b) claim. The employees do not have a vested right to enforce the
statute because the statute does not—and never did—include a private right
of action.
In Cannon, the plaintiffs worked at the defendant‘s call center in Tennessee.
Cannon, 2014 WL 1267279, at * 1. In May 2013, they filed an action alleging that
defendant forced them to work off-the-clock and during their lunch and rest periods but
did not pay them for those hours. Id. Plaintiffs asserted claims for breach of contract,
conversion, and unjust enrichment in addition to claims under the Fair Labor Standards
Act and the TWRA. Id. The trial court stated that it ―plan[ned] to dismiss [the TWRA
claim] sua sponte‖ upon determining that the TWRA does not provide for a private right
of action. Id. at *2. In so holding, the Cannon court relied on Abadeer that ―there has
never been a private action pursuant to the TWRA.‖ Id.
We note, however, that the plaintiffs in Cannon, like the plaintiffs in Abadeer,
relied on language contained in section 101(b) prior to the 2013 amendment to assert
their cause of action. Like Abadeer, Cannon was not a section 107 action. We
additionally observe that the Cannon court‘s interpretation of the Abadeer court‘s
statement was somewhat overbroad. Read in context, the court‘s conclusion in Abadeer
was limited to section 101 and cannot be fairly construed to encompass the entire TWRA.
Tennessee Rehabilitative, also cited by Defendants, is not particularly instructive where
we affirmed the trial court‘s dismissal of inmates‘ action for relief under section 101(b)
and § 50-2-104 upon determining that they were not ―employees‖ within the meaning of
TWRA. Tennessee Rehabilitative, 2014 WL 188730, at *2.
We additionally observe that the district court‘s holding in Abadeer in 2009 ―was
the first time a court had interpreted § 50-2-101(b) as creating a private right of action.‖
Edward G. Phillips and Brandon L. Morrow, The Evolution of “Abadeer”: The General
Assembly’s Clarification of the Wage Regulations Act, Tenn. B.J. at 28 (Feb. 2014). The
General Assembly responded by amending section 101 in 2013, deleting a phrase in
subsection 101 (b) that referred to ―litigation in civil cases‖ and adding subsection 101(d)
to provide for enforcement by the Department. 2013 Tenn. Pub. Acts, c. 240 §§ 1, 2
(effective April 23, 2013). Thus, the only avenue currently available to a worker seeking
to enforce section 101 is to file a complaint with the Department. Phillips, supra, at 29.
Thus, we turn to Defendants‘ contention that the 2013 amendment to section 101 must be
construed as encompassing section 107 in light of the overall structure of the TWRA.
15
The Structure of the TWRA
In their brief, Defendants characterize section 107 as ―dealing with tip-related
wage disputes[.]‖ Their argument, as we perceive it, is that a dispute concerning tips
under section 107 is equivalent to a dispute concerning wages under section 101, and that
the provisions of sub-section 101(d) are equally applicable to section 107. Defendants
further assert that the legislative history of the TWRA indicates that all wage regulations
are to be enforced by the Department and that this interpretation is supported by the
overall structure of the TWRA. They additionally contend that the Owens court‘s
analysis of the structure of the TWRA was incomplete; that the TWRA is similar in
structure to the TTPA; and that, like the TTPA, the TWRA does not provide a private
right of action.
Section 101 applies to those wages that are paid to employees employed in ―any
workshop or factory . . . or any kind of establishment where labor is employed or
machinery is used[,]‖ excepting ―domestic service or agricultural pursuits[.]‖ Tenn. Code
Ann. § 50-2-101(a) & (b). In general, it requires employers to ―inform [an] employee of
the amount of wages to be paid for the labor[,]‖ before permitting the employee to ―work
for hire.‖ Tenn. Code Ann. § 50-2-101(b). By its terms, section 101 mandates pre-
determined amounts that are to be paid for an employee‘s labor.
Section 107, on the other hand, is commonly called ―the Tip Statute.‖ Owens,
1998 WL 719516, at *1. In general, it requires employers in certain businesses who
include on their bill amounts ―customarily assumed to be intended for the employee or
employees who have served the customer,‖ to pay or distribute those amounts to the
employee(s) who rendered the service. Tenn. Code Ann. § 50-2-107(a)(1). Unlike the
pre-determined wage amounts required by section 101, a tip is ―[a] gratuity for service
given.‖ Black’s Law Dictionary 1712 (10th ed. 2014). A gratuity generally is defined as
something ―[d]one or performed without obligation to do so[.]‖ Id. at 816. We must
disagree with Defendants‘ contention that ―tips‖ under section 107 are equivalent to
―wages‖ under section 101 for the purposes of the TWRA.
This distinction between wages and tips is underscored by the federal Fair Labor
Standards Act (―FLSA‖), which permits employers to pay employees who receive tips
less than the minimum wage. 29 U.S.C.A. §§ 206(a)(1), 203(m). This ―tip credit‖
provision provides, in relevant part, that all tips received by a tipped-employee must be
retained by the employee, except that tips may be pooled ―among employees who
customarily and regularly receive tips.‖ 29 U.S.C.A. § 203(m). On appeal of an action
filed in the United States District Court for the Eastern District of Tennessee, the Sixth
Circuit Court of Appeals observed that employees who may be defined as those who
―customarily and regularly receive tips‖ are those employees who ―are ‗engaged in an
occupation in which [they] customarily and regularly receive[ ] ... tips‘ because they
sufficiently interact with customers in an industry (restaurant) where undesignated tips
16
are common.‖ Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294, 301 (6th
Cir. 1998) (quoting 29 U.S.C.A. § 203(t) and citing 29 C.F.R. § 531.54).
We additionally observe that the General Assembly specifically provided for
enforcement by the Department in other sections of the TWRA, including §§ 50-2-103
and 50-2-104. Tenn. Code Ann. §§ 50-2-103(j) & 50-2-104. Other sections of the
TWRA, on the other hand, specifically §§ 50-2-102 and 50-2-110, explicitly create
private rights of action. Tenn. Code Ann. §§ 50-2-102(b) & 50-2-110(b). Like section
107, § 50-2-106 provides that violation of that section of the TWRA is a Class C
misdemeanor but neither explicitly creates nor explicitly prohibits a private right of
action. Tenn. Code Ann. § 50-2-106(c). The courts have permitted private actions under
§ 50-2-106 (as currently numbered), however, noting that ―it is apparent that the evil
sought to be corrected [by the section, which was first enacted in 1887,] was the paying
of . . . employees for labor performed with coupons, scrip, punchouts, store orders, or
other evidences of indebtedness.‖5 Cambria Coal Co. v. Cooper, 54 S.W.2d 708, 709
(Tenn. 1932); see also Dayton Coal & Iron Co., Ltd., v. Barton, 53 S.W. 970 (Tenn.
1899). Clearly, both the courts and the General Assembly have treated the different
sections of the TWRA as separate and distinct, and the courts have never construed the
provisions of section 101 as applicable to the entire TWRA. Rather, each section of the
TWRA must be construed in light of the General Assembly‘s intent when enacting it.
With respect to Defendants‘ assertion that the ―overall structure‖ of the TWRA is
similar to the Title Pledge Act, we observe that the Title Pledge Act includes a section
specifically providing for the suspension or revocation of any license by the
Commissioner of Financial Institutions for violation of ―any provision[] of [the] chapter
or any administrative regulation issued pursuant to [the] chapter,‖ or for violation of ―any
law in the course of the title pledge lender‘s dealings as a title pledge lender.‖ Tenn.
Code Ann. § 45-15-107(a)(7) (2007 & Supp.2014) (emphasis added). Section 45-15-118,
moreover, explicitly grants the Commissioner extensive authority to enforce the chapter,
5
Tennessee Code Annotated § 50-2-106 currently provides:
(a) It is not lawful for any employer, or agent, clerk or superintendent of the employer,
who owns or controls a store for the sale of general merchandise in connection with the
employer‘s manufacturing or other business, to attempt to control the employer‘s
employees or laborers in the purchase of goods and supplies at the store, by withholding
the payment of wages longer than the usual time of payment, whereby the employee
would be compelled to purchase supplies at the employer‘s store.
(b) No employee shall be required, as a condition of employment, to trade at a store
specified by the employer.
(c) Any person violating this section commits a Class C misdemeanor.
17
to enter into consent orders, and to seek civil and criminal penalties. Tenn. Code Ann. §
45-15-118(a) & (b). The section also provides:
Any person aggrieved by the conduct of a title pledge lender under this
chapter, in connection with the title pledge lender‘s regulated activities,
may file a written complaint with the commissioner, who may investigate
the complaint.
Tenn. Code Ann. § 45-15-118(c)(1) (emphasis added). It grants the Commissioner the
authority to subpoena witnesses, administer oaths, examine any individual under oath,
and to compel the production of any document relevant to an investigation. Tenn. Code
Ann. § 45-15-118(c)(2). The section further provides:
(3) If any person fails to comply with a subpoena of the commissioner
under this chapter, or to testify concerning any matter about which the
person may be interrogated under this chapter, the commissioner may
petition any court of competent jurisdiction for enforcement.
(4) The license of any title pledge lender under this chapter, who fails to
comply with a subpoena of the commissioner, may be suspended pending
compliance with the subpoena.
(5) The commissioner shall have exclusive administrative power to
investigate and enforce any and all complaints filed by any person that are
not criminal in nature, which complaint relates to the business of title
pledge lending.
Tenn. Code Ann. § 45-15-118(c)(3)-(5) (emphasis added). It also grants the
Commissioner the authority, under circumstances identified by the section, to censure,
suspend or bar any ―person from any position of employment, management or control of
any title pledge lender[.]‖ Tenn. Code Ann. § 45-15-118(d)(1). In short, the TTPA sets-
forth a comprehensive regulatory system applicable to a narrowly defined industry,
includes extensive enforcement provisions, grants the Commissioner broad enforcement
authority, and prescribes penalties for violations of the act.
The TWRA, by contrast, does not contain similar enforcement provisions
applicable to the entire act. Indeed, section 101(d) provides for enforcement by the
Department of ―this section.‖ Tenn. Code Ann. § 50-2-101(d) (emphasis added). As
noted above, some sections of the TWRA explicitly create a private right of action, some
explicitly provide for enforcement by the Department, and other sections are silent with
respect to enforcement.
18
The stated purpose of the regulatory scheme established by the TTPA, moreover,
is explicit. As amended in 2005, the stated purpose of the TTPA is to:
(1) Ensure a sound system of making title pledge loans through
statewide licensing of title pledge lenders by the department of
financial institutions;
(2) Establish licensing requirements;
(3) Provide for the examination and regulation of title pledge lenders
by the department of financial institutions; and
(4) Ensure financial responsibility to the public.
Tenn. Code Ann. § 45-15-102 (2007), 2005 Tenn. Pub. Acts, ch. 440, § 1. Prior to the
2005 amendment, § 45-15-102 as originally enacted stated that the purpose of the TTPA
was to:
(1) Ensure a sound system of making title pledge loans through licensing of
title pledge lenders;
(2) Provide for licensing requirements;
(3) Ensure financial responsibility to the public;
(4) Assist local governments in the exercise of their police power.
Tenn. Code Ann. § 45-15-102 (2000), 1995 Tenn. Pub. Acts, ch. 186, § 13. The TTPA
sets-forth a regulatory scheme that ―legalizes loans by licensed title pledge lenders on
pledges of personal property certificates of title and pledges of titled personal property.‖
Brown, 328 S.W.3d at 856 (citing Premium Fin. Corp. of Am. v. Crump Ins. Servs. of
Memphis, Inc., 978 S.W.2d 91, 94 (Tenn. 1998)); Tenn. Code Ann. § 45-15-104(a)
(2000)). It is a comprehensive scheme that ―provide[s] for . . . regulation of title pledge
lenders by the department of financial institutions[.]‖ Tenn. Code Ann. § 45-15-102.
The varied sections of the TWRA, on the other hand, do not regulate a particular
industry. Unlike the TTPA, the TWRA does not reflect a comprehensive regulatory
scheme. Section 107, by its express terms, is applicable only to gratuities that are
―customarily assumed to be intended for the employee or employees who have served the
customer[.]‖ Tenn. Code Ann. § 50-2-107(a)(1). As noted above, section 107 simply
does not contain a provision limiting enforcement to the Department. Significantly, as
also noted above, the General Assembly amended section 107 in 2012, 14 years after this
Court‘s decision in Owens holding that a private right of action may be inferred under
section 107, and did not legislatively overrule Owens. It is well-settled that the courts
19
must presume that the General Assembly is aware of the state of the law when it enacts a
statute. E.g., Rodriguez v. State, 437 S.W.3d 450, 453 (Tenn. 2014). The General
Assembly has had ample opportunity to amend section 107 since this Court‘s holding in
Owens and has chosen not to do so. We cannot agree with Defendants that the 2013
amendments to section 101 are indicative of legislative intent with respect to section 107.
Burden of Proof
Throughout their brief, Defendants emphasize that a plaintiff bears the burden of
proof to demonstrate a private right of action under a statute that does not explicitly
create one, and they strenuously submit that the trial court correctly concluded that Ms.
Hardy failed to carry that burden in this case. ―Determining whether a statute creates a
private right of action is a matter of statutory construction[]‖ for the court, and ―[t]he
burden ultimately falls on the plaintiff to establish that a private right of action exists
under the statute.‖ Brown, 328 S.W.3d at 856; Premium Fin. Corp. of America v. Crump
Ins. Servs. of Memphis, Inc., 978 S.W.2d 91, 93 (Tenn. 1998). This burden of proof
comports with ―well established . . . Tennessee case law that the burden of proof is on the
party having the affirmative of an issue, and that burden does not shift.‖ Big Fork Min.
Co. v. Tennessee Water Quality Control Bd., 620 S.W.2d 515, 520 (Tenn. Ct. App. 1981)
(citations omitted).
As noted above, whether a private right of action may be inferred in section 107 is
not an issue of first impression. As discussed, this Court held that a private cause of
action may be maintained under the section in Owens; the General Assembly amended
section 107 in 2012 and did not legislatively overrule Owens; and under the plain
language of section 101(d), the sub-section applies specifically to enforcement of section
101. The issue in this case is whether sub-section 101(d) may be inferred as legislatively
overruling Owens.
In light of the lack of legislative action with respect to section 107, Owens remains
good law. Further, as stated above, the trial court was not free to disregard Owens
regardless of whether it is binding on this Court. Therefore, Ms. Hardy‘s reliance on
Owens was not displaced, and she carried her burden to demonstrate that a private right
of action exists under section 107.
Like the plaintiff in Owens, the plaintiff in this case is a member of the class that
section 107 was enacted to protect – tipped-employees. Additionally, permitting a
private cause of action under the section is consistent with the section‘s purpose ―by
providing a mechanism to make employees whole‖ and the statute does not provide a
comprehensive regulatory scheme to protect the class of employees that the statute was
enacted to protect. Owens, 1998 WL 719516, at *11. Most significantly, the General
Assembly‘s decision not to overrule Owens when it amended section 107 in 2012 is
compelling evidence of legislative intent on the issue. Accordingly, under the test set-
20
forth by the United States Supreme Court in Cort v. Ash and applied by the Tennessee
Supreme Court in Brown, the existence of a private right of action may be inferred in
section 107.
Finally, we are compelled to respond to our good friend and colleague‘s
thoughtful dissent, with which we disagree. The Dissent disagrees with the Majority
because ―Tennessee Code Annotated section 50-2-107 does not provide for a private
cause of action for at least three reasons: (1) the Tennessee Supreme Court, in Brown,
determined that a substantially similar statute did not confer a private cause of action; (2)
Title 50, Chapter 2, Part 1, as a whole, generally provides only for governmental
enforcement, which is inconsistent with a legislative intent to incorporate a private cause
of action; and (3) the Tennessee General Assembly (―General Assembly‖) knows how to
create a private cause of action in addition to governmental enforcement and chose not to
do so with respect to the Tennessee Wage Regulation Act.‖
First, as more fully discussed in the Majority opinion, the statute that was analyzed
by the Tennessee Supreme Court in Brown, the Tennessee Title Pledge Act, is clearly not
substantially similar and could be said to be inapposite to the Tennessee ―Tip Statute‖,
the statute at issue in this case and in Owens. As stated by the Majority, the Brown court
found that the legislature created a comprehensive governmental regulatory scheme in the
TTPA and that it provided for governmental enforcement. In fact, each of the cases
referenced by the Dissent as being favorably discussed in Brown are also cases involving
statutes that have a comprehensive regulatory scheme with specific governmental
enforcement. Unlike the TTPA and the other statutes referenced in Brown, the TWRA is
an amalgam of separate sections that were enacted for separate specific purposes related
to the protection of employees. As the Dissent acknowledges, there are different
enforcement mechanisms in almost every section of the TWRA. Some sections provide
that the Department of Labor will provide enforcement, others do not. We think it is
telling that the Supreme Court in Brown, after discussing the several cases addressing
statutes setting forth comprehensive regulatory schemes, footnoted the Owens case with a
―but see‖ footnote6 and offered no disapproval of the Owens court‘s holding. The
Tennessee Supreme Court, like the General Assembly, recognized that the ―Tip Statute‖
is not a comprehensive regulatory statute and that Owens, which found that a private right
of action exists under section 107, was decided 12 years earlier and was the state of the
law.
Second, the Dissent states that Title 50, Chapter 2, Part 1, as a whole, generally
provides only for governmental enforcement, which is inconsistent with a legislative
intent to incorporate a private cause of action. As stated above, Title 50, Chapter 2, Part
1, is an amalgam of various sections, some enacted as early as 1887, and was enacted to
ameliorate various workplace conditions. Its disparate sections include provisions
6
Brown, 328 S.W.3d at 860 n.12.
21
addressing: informing the employee of the amount of wages to be paid for the labor (§
101) (1915); payment of employees using coupons, scrip, store orders or other evidence
of indebtedness (§ 102) (1899); requiring employees to trade at the company store (§
106) (1887); the distribution of service charges or gratuities (§ 107, the ―Tip Statute‖)
(1983). The various sections were enacted over a 100 year period to protect specific
groups of employees and, as the Dissent acknowledges, they contain different methods of
enforcement. Moreover, that a private right of action exists under section 107 was
determined by this court in Owens more than 17 years ago and that decision has never
been overruled. We, therefore, believe it is incorrect to say that the chapter ―as a whole,
generally provides only for governmental enforcement.‖
Third, we agree with the Dissent that the General Assembly ―chose not to create a
private right of action with respect to the Tennessee Wage Regulation Act as a whole.‖
We disagree, however, that the General Assembly did not do so with regard to section
107. The General Assembly can create a private right of action both by direct action and
by inaction, and ―the legislature's failure to ‗express disapproval of a judicial construction
of a statute is persuasive evidence of legislative adoption of the judicial construction.‘‖
Freeman Industries, LLC v. Eastman Chem. Co., 172 S.W.3d 512, 519 (Tenn. 2005)
(quoting Hamby v. McDaniel, 559 S.W.2d 774, 776 (Tenn.1977) citing see Forman, Inc.
v. Nat'l Council on Comp. Ins., Inc., 13 S.W.3d 365, 373 (Tenn. Ct. App. 1999)). As we
previously stated, this Court decided that the General Assembly intended a private right
of action in section 107 in Owens in 1998. Since 1998, the General Assembly amended
chapter 107 in 2012 and chapter 101 in 2013. In 2012, the General Assembly was aware
of both Owens and Brown but chose not to disallow a private right of action to employees
under the ―Tip Statute‖ or to create any comprehensive regulatory scheme to protect and
enforce the rights of these employees. On the other hand, when the General Assembly
amended section 101 in 2013, it specifically removed the private right of action language
previously contained in the statute and added: ―The department of labor and workforce
development shall enforce this section.‖ We agree with the Dissent that the General
Assembly knows how to provide for a specific method of enforcement. It simply chose
not to limit enforcement in section 107.
It is clear that the Dissent is not persuaded by this Court‘s 1998 decision in Owens
and finds it irreconcilable with the Tennessee Supreme Court‘s decision in Brown. We
respectfully disagree with the Dissent, however, that Brown compels us to overrule
Owens. The Brown court had an opportunity to disavow Owens in it‘s ―but see‖ footnote
and chose not to do so. Surely, we cannot infer a disavowal of Owens when each of the
cases referenced by the Supreme Court in Brown involved a statute with a comprehensive
regulatory scheme that provided for governmental enforcement. The Dissent appears to
urge that Owens should be overruled. We respectfully disagree.
22
Holding
In light of the foregoing, we reverse dismissal of Ms. Hardy‘s claims under
Tennessee Code Annotated § 50-2-107. Costs on appeal are taxed to the Appellees,
Tournament Players Club at Southwind, Inc. d/b/a ―TPC Southwind,‖ PGA Tour Golf
Course Properties, Inc., and PGA Tour, Inc. This matter is remanded to the trial court for
the collection of costs and for further proceedings consistent with this Opinion.
_________________________________
ARNOLD B. GOLDIN, JUDGE
23