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Goodson v. OS Restaurant Services, LLC

United States District Court, M.D. Florida, Ocala Division

May 9, 2017



          ROY B. DALTON JR, United States District Judge

         This matter is before the Court on the following: (1) Defendant OS Restaurant Services, LLC's Motion to Dismiss Counts I and II and Supporting Memorandum of Law (Doc. 5), filed January 18, 2017; and (2) Plaintiff's Response to Defendants [sic] Motion to Dismiss Count I and II of the Complaint (Doc. 11), filed January 31, 2017.

         I. Background

         In a five-count Complaint, restaurant server Virgil Goodson claims that his former employer, Defendant OS Restaurant Services, LLC, violated overtime and minimum wage provisions of the Fair Labor Standards Act (“FLSA”), Article X, § 24(c) of the Florida Constitution (“Article X”), and the Florida Minimum Wage Act, Florida Statutes (“FMWA”). (See Doc. 2.) Alleging that Defendant improperly took a “tip credit” against Plaintiff's wages while requiring Plaintiff to spend more than 20% of his time in non-tipped work activities, Plaintiff asserts “Incidental Non-Tipped Labor” minimum wage claims under the FMWA and Article X (“Non-Tipped Labor Claims”). (See id. ¶¶ 17-52 (“Count I”); id. ¶¶ 35-52 (“Count II”).) Defendant moved to dismiss these claims as legally insufficient (Doc. 5 (“Motion”)), and Plaintiff responded (Doc. 11 (“Response”)).

         There is no dispute that legally insufficient claims are subject to dismissal under Federal Rule of Civil Procedure 12(b)(6).[1] Here, the legal sufficiency of Plaintiff's two Non-Tipped Labor Claims turn on the following question:

Can tipped employees state unpaid wage claims under Article X and the FMWA based on the “20% Rule” set forth in § 30d00(e) of the Field Operations Handbook (“Handbook”) issued by the U.S. Department of Labor (“DOL”)?

(See Doc. 5; see also Doc. 11, pp. 4-5.) Defendant answers no. (See Doc. 5.) Plaintiff answers yes. (See Doc. 11.) Although this Court and others have previously applied the 20% Rule in several unpublished opinions, no binding precedent dictates which answer is correct.[2]

         To resolve the issue as a matter of first impression, the Court must answer the following administrative law question: Is the 20% Rule entitled to deference as a permissible interpretation of the FLSA? For the reasons set forth below, the Court finds that the answer to this question is yes; thus, the Motion is due to be denied.

         II. Administrative Law

         When Congress has not directly spoken to a specific issue through legislative enactment, administrative agencies like the DOL “often must interpret the enactments Congress has charged them with enforcing and implementing.” Gonzales v. Or., 546 U.S. 243, 255 (2006).[3] An agency's interpretations may issue as: (1) formal “Rules” or “Regulations, ” which are published in the Code of Federal Regulations (“Code”); and (2) informal “Sub-Regulations, ” which may appear in opinion letters, handbooks, and other papers issued by the DOL.

         When a Rule is promulgated in accordance with the formal “notice and comment” rule-making provisions of the Administrative Procedure Act (“APA”), [4] it is a “Legislative Rule, ” which has the “force and effect of law.”[5] A Rule that issues without formal notice and comment rule-making is an “Interpretive Rule” that is merely intended to “advise the public of the agency's construction of the statutes and rules which it administers.”[6] Rules, Regulations, and Sub-Regulations are entitled to varying degrees of deference, which courts must discern. See Coke, 551 U.S. at 165 (advising that courts must accept administrative “policy” and “rules” that “reasonably” fill “any gap left, implicitly or explicitly by Congress” to the agency”).

         A. Chevron Deference

         Under Chevron, U.S.A., Inc. v. Natural Resource Defense Council, Inc., 467 U.S. 837, 844 (1984), courts afford the highest degree of deference-Chevron Deference-to regulations “when an agency properly exercises its authority, expressly or implicitly delegated by Congress, to interpret an ambiguous statute” by promulgating “rules and regulations carrying the force of law.” See Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1320 (11th Cir. 2011) (declining to afford deference to a regulation that concerned an unambiguous statutory provision).[7] Regulations afforded Chevron Deference are “controlling . . . unless they are arbitrary, capricious, or manifestly contrary to the statute.” See Chevron, 467 U.S. at 844.

         B. Auer Deference

         Under Auer v. Robbins, 519 U.S. 452, 461-63 (1997), courts afford “substantial deference”-“Auer Deference”-to administrative pronouncements that interpret “the issuing agency's own ambiguous regulation.” See Gonzalez, 546 U.S. at 255. Courts do not afford Auer Deference to interpretations of regulations that merely “restate the terms of the statute itself.” See id. at 256. Rather, the interpreted regulation must give “specificity to a statutory scheme [that the agency] was charged with enforcing” and it must reflect “the considerable experience and expertise [the agency] had acquired over time with respect to the [statute].” See id. Administrative pronouncements that are entitled to Auer Deference are “controlling unless plainly erroneous or inconsistent with the regulation.” See Auer, 519 U.S. at 461; Falken v. Glynn Cty., Ga., 197 F.3d 1341, 1350 (11th Cir. 1999) (“We must defer to the DOL's interpretation of its FLSA regulations unless the interpretation is ‘plainly erroneous or inconsistent with the regulation.'”).

         C. Skidmore Deference

         Under Skidmore v. Swift & Company, 323 U.S. 134, 140 (1944), courts defer to Interpretive Rules and Sub-Regulations-but only to the extent that such pronouncements have the “power to persuade” (“Skidmore Deference”). See Christensen v. Harris Cty., 529 U.S. 576, 587 (2000) (citing Reno v. Koray, 515 U.S. 50, 61 (1995)).[8] The “power to persuade” turns on “Skidmore Factors, ” including: (1) the “thoroughness” evident in the agency's consideration of its interpretation and the validity of its reasoning, see Skidmore, 323 U.S. at 140; (2) how consistent the interpretation is “with earlier and later pronouncements, ” see id.; (3) the level of “expertise” the agency has in the regulated area, see Gonzales, 546 U.S. at 269; (4) the “length of time” the agency has maintained its interpretation;[9] (5) whether the interpretation has been accepted by the federal courts, see Schuman, 803 F.3d at 1209; and (6) “all those factors which give [the interpretation] power to persuade, if lacking power to control, ” see Skidmore, 323 U.S. at 140.

         III. Discussion

         According to Defendant, it cannot be held liable for violating the 20% Rule because the “so-called rule” does not “carry the force of law” and it deserves no “respect or deference whatsoever.” (Doc. 5, pp. 3, 7.) In support, Defendant contends that:

(1) “Congress never specified in the text of the FLSA itself that the use of the tip credit was subject to a ‘20% rule'” (id. at 6);
(2) no “official interpretive bulletins issued by the Secretary” has referenced the 20% ...

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