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Shehata v. Sobe Miami, LLC

United States District Court, S.D. Florida

June 14, 2018

Stephane R. Shehata and Michael A. Olson, Plaintiffs,
v.
Sobe Miami, LLC, dba Palace Bar, and Thomas J. Donall, Defendants.

          ORDER DENYING MOTION FOR SUMMARY JUDGMENT

          Robert N. Scola, Jr. United States District Judge

         Stephane R. Shehata and Michael A. Olson both worked as servers at Palace Bar in Miami Beach, Florida. They have sued Defendants Sobe Miami, LLC, doing business as Palace Bar, and Thomas J. Donall, the owner of the bar (collectively “Palace Bar”), for minimum-wage and overtime payment violations under the Fair Labor Standards Act.[1] Palace Bar claims entitlement to summary judgment on the Plaintiffs' overtime claims because the Plaintiffs are exempt employees under the FLSA. Defendant Donall also contends he cannot be held individually liable for any FLSA violations because he was not an “employer” as defined by the FLSA. The Plaintiffs counter that genuine issues of material fact preclude summary judgment on either basis. After a thorough review of the record, the Court agrees with the Plaintiffs and therefore denies Palace Bar's motion for summary judgment (ECF No. 24).

         1. Factual Background

         Olson worked as a server at Palace Bar from December 31, 2015 through May 20, 2017. (Pls.' Resp. ¶ 2, ECF No. 28, 1.) Shehata was also a server, within that same timeframe, from February 16, 2016 through January 24, 2017. (Id. at ¶ 1.) Donall owns the Palace Bar but the parties dispute the level of his involvement with the operation of the bar. (E.g., id. at ¶¶ 4-5, 9.) The Palace Bar's general manager's responsibilities included managing its servers, bussers, food runners, and “housemen”: hiring and firing them; determining their pay; setting their schedules; and generally supervising them. (Id. at ¶ 6.) All servers at the bar were paid an hourly wage plus three-quarters of a 20% charge that is added to every customer's bill. (Id. at ¶ 10.) The parties dispute whether this charge was mandatory or merely a suggestion. (Id. at ¶ 16-18.) In addition, servers kept any tips that customers might decide to leave on top of the 20% charge. (Id. at ¶¶ 11, 19.) The remaining quarter of the 20% charge was divided among various other Palace Bar employees: one-fifth each to the host, the food runner, and the bartender; and the remaining two-fifths to the manager and the housemen (with the manager getting one-third and the housemen splitting the other two-thirds). (Id. at ¶¶ 21-23.)

         The minimum wage in 2016 was $8.05 an hour. (Id. at ¶ 12.) The corresponding applicable cash wage for tipped employees in 2016 was $5.03 an hour. (Id.) In 2017 the minimum wage was $8.10 an hour and the corresponding applicable cash wage was $5.08 an hour. (Id. at ¶ 13.) Palace Bar paid both the Plaintiffs the minimum applicable cash wage for tipped employees for their regular hourly wages, plus their share of the 20% charge as well as any gratuity on top of that charge. (Id. at ¶¶ 12-13, 23-24.) Both the additional gratuity as well as the server's portion of the 20% charge were recorded on each server's pay stub as either “Reported Tips” or “Credit Card Tips.” (Id. at ¶ 26.) Both of the Plaintiffs worked overtime hours from time to time. (Id. at ¶¶ 54, 92.) Their hourly wages combined with their additional pay amounts always amounted to at least one-and-a-half times the minimum wage for those overtime hours (anywhere between $15 to $52 an hour). (Id.)

         2. Legal Standard

         Summary judgment is proper if following discovery, the pleadings, depositions, answers to interrogatories, affidavits and admissions on file show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Fed.R.Civ.P. 56. “An issue of fact is ‘material' if, under the applicable substantive law, it might affect the outcome of the case.” Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259-60 (11th Cir.2004). “An issue of fact is ‘genuine' if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party.” Id. at 1260. All the evidence and factual inferences reasonably drawn from the evidence must be viewed in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970); Jackson v. BellSouth Telecomms., 372 F.3d 1250, 1280 (11th Cir. 2004).

         Once a party properly makes a summary judgment motion by demonstrating the absence of a genuine issue of material fact, whether or not accompanied by affidavits, the nonmoving party must go beyond the pleadings through the use of affidavits, depositions, answers to interrogatories, admissions on file and other documents, and designate specific facts showing that there is a genuine issue for trial. Celotex, 477 U.S. at 323-24. The nonmovant's evidence must be significantly probative to support the claims. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The Court will not weigh the evidence or make findings of fact. Anderson, 477 U.S. at 249; Morrison v. Amway Corp., 323 F.3d 920, 924 (11th Cir. 2003). Rather, the Court's role is limited to deciding whether there is sufficient evidence upon which a reasonable juror could find for the nonmoving party. Id. “If more than one inference could be construed from the facts by a reasonable fact finder, and that inference introduces a genuine issue of material fact, then the district court should not grant summary judgment.” Bannum, Inc. v. City of Fort Lauderdale, 901 F.2d 989, 996 (11th Cir. 1990).

         3. Analysis

         Palace Bar argues it is entitled to summary judgment on the Plaintiffs' overtime claims because the Plaintiffs received commissions as part of their compensation and are therefore exempt from the FLSA's overtime requirements. Palace Bar, in its motion, does not expressly seek summary judgment on the Plaintiffs' minimum wage claims, but only obliquely incorporates these claims in some of their arguments. Donall also seeks summary judgment with respect to both claims against him, claiming that although he owns the bar, he was not the Plaintiffs' “employer” as defined under the FLSA.

         A. The Plaintiffs have presented genuine issues of material fact regarding Palace Bar's claim that they are exempt employees under the FLSA.

         Palace Bar insists the Plaintiffs were commissioned employees and therefore it was not required to comply with the FLSA's overtime wage provisions. As set forth by Palace Bar, under the FLSA, this exemption is applied when three requirements are met: (1) the employee's regular rate of pay exceeds one and one-half times the minimum applicable hourly rate in a workweek in which overtime hours are worked; (2) more than half of the employee's compensation for a representative period (not less than one month) must represents commissions on goods or services; and (3) the employee must work in a “retail or service establishment.” (Def.'s Mot. at 5 (citing 29 U.S.C. § 207(i) (the “§ 7(i) exemption”)).) At the center of the parties' dispute, with respect to the exemption, is whether the charge that was added to customers' bills constitutes a “commission” for purposes of the § 7(i) exemption.[2]

         Palace Bar maintains that the 20% service charge added to every customer's bill qualifies as a commission, and not a gratuity, for the purposes of applying the § 7(i) exemption. The FLSA does not itself define either “gratuity” or “commission.” Its implementing rules, however, as Palace Bar points out, offer some guidance:

A tip is a sum presented by a customer as a gift or gratuity in recognition of some service performed for him. It is to be distinguished from payment of a charge, if any, made for the service. Whether a tip is to be given, and its amount, are matters determined solely by the customer, who ...

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