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Perez v. Yama, Inc.

United States District Court, E.D. Virginia, Norfolk Division

December 28, 2016

THOMAS E. PEREZ SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, Plaintiff,
v.
YAMA, INC., d/b/a YAMA SUSHI RESTAURANT, and JING LIN, Defendants.

          MEMORANDUM ORDER

          REBECCA BEACH SMITH CHIEF JUDGE

         This matter is before the court on the Defendants' Motion for Summary Judgment ("Motion"), filed on October 13, 2016. ECF No. 15. On the same day, the Defendants also filed an accompanying Memorandum in Support ("Defendants' Memorandum"). ECF No. 16. On November 7, 2016, the Plaintiff filed an Opposition to Defendants' Motion for Summary Judgment, ECF No. 20, and a Memorandum in Support ("Plaintiff's Memorandum"), ECF No. 21. On November 14, 2016, the Defendants filed a Response in Support of their Motion for Summary Judgment. ECF No. 22.

         On November 16, 2016, this court referred the Motion to United States Magistrate Judge Douglas E. Miller, pursuant to the provisions of 29 U.S.C. § 636(b) (1) (B) and Federal Rule of Civil Procedure 72(b), to conduct necessary hearings, and to submit to the undersigned district judge proposed findings of fact and recommendations of law for the disposition of the Motion for Summary Judgment. ECF No. 27. The Magistrate Judge filed a Report and Recommendation ("R&R") on December 6, 2016. ECF No. 28. The Magistrate Judge recommended denying the Defendants' Motion for Summary Judgment. Id. at 2. On December 16, 2016, the Defendants filed Objections to the Magistrate Judge's Report and Recommendation. ECF No. 31. On December 21, 2016, the Plaintiff filed a Response to the Defendants' Objections. ECF No. 32.

         I. LEGAL STANDARDS

         A. Motion for Summary Judgment

         Summary judgment under Federal Rule of Civil Procedure 56 is appropriate when the court, viewing the record as a whole and in the light most favorable to the nonmoving party, finds that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). "[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249. A court should grant summary judgment if the nonmoving party, after adequate time for discovery, has failed to establish the existence of an essential element of that party's case, on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In essence, the nonmovant must present "evidence on which the [trier of fact] could reasonably find" for the nonmoving party. Anderson, 477 U.S. at 252.

         To defeat a motion for summary judgment, the nonmoving party must go beyond the facts alleged in the pleadings, and rely instead on affidavits, depositions, or other evidence to show a genuine issue for trial. See Celotex, 477 U.S. at 324; see also M & M Med. Supplies & Serv., Inc. v. Pleasant Valley Hosp., Inc., 981 F.2d 160, 163 (4th Cir. 1993) ("A motion for summary judgment may not be defeated by evidence that is 'merely colorable' or 'is not sufficiently probative.'") (quoting Anderson, 477 U.S. at 249-50). Conclusory statements, without specific evidentiary support, do not suffice, Causey v. Balog, 162 F.3d 795, 802 (4th Cir. 1998), nor does "[t]he mere existence of a scintilla of evidence in support of the plaintiff's position." Anderson, 477 U.S. at 252. Rather, "there must be evidence on which the jury could reasonably find for the plaintiff." Id.

         B. Review of Magistrate Judge's R&R

         Pursuant to Rule 72(b) of the Federal Rules of Civil Procedure, the court, having reviewed the record in its entirety, shall make a de novo determination of those portions of the R&R to which the Plaintiff has specifically objected. Fed.R.Civ.P. 72(b). Objections must be "specific and particularized." United States v. Midqette, 478 F.3d 616, 621 (4th Cir. 2007). The court may accept, reject, or modify, in whole or in part, the recommendation of the Magistrate Judge, or recommit the matter to him with instructions. 28 U.S.C. § 636(b)(1).

         II. ANALYSIS

         A. First Objection

         The Defendants object to the Magistrate Judge's determination that there is a genuine dispute of material fact as to whether the restaurant utilized a tip credit. Obj. at 1. The Defendants state that there is "undisputed evidence . that the employers did not keep any of the tips and Yama did not seek a credit." Id.

         The Fair Labor Standards Act ("FLSA") allows employers of "tipped employees"[1] to satisfy the federal minimum wage requirement by paying a base hourly rate of at least $2.13 and accounting for the difference through tips the employee receives. 29 U.S.C. § 203 (m) . The use of tips to account for a portion of the minimum wage is known as a "tip credit." 29 C.F.R. § 531.51. To utilize the tip credit, the employer must notify employees that their tips are being counted toward the minimum wage. 29 U.S.C. § 203(m). All such tips must be "retained by the employee." Id. Participation in a "tip pool, " in which some or all employees' tips are collected for redistribution among a group of employees, provides an exception to this retention requirement. Id.; 29 C.F.R. § 531.54. Where participation in a tip pool is mandatory, the pool must only include employees who customarily and regularly receive tips, and the employer must notify the employees of any required contribution amount, only take a tip credit for the amount each employee ultimately receives, and may not retain any of the tips for any other purpose. See 29 C.F.R. § 531.54.

         The Defendants argue that servers were not tipped employees, and that the restaurant did not utilize the tip credit. Obj. at 1. The Defendants have produced evidence that servers were paid a flat hourly rate and were not allowed to retain tips. Jiang Aff. ¶¶ 19-20. According to the Defendants, this practice was memorialized at some point in its Employee Handbook, id. at ¶ 25, and accordingly, § 203 (m) does not apply because the ...


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