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Fuentes v. Compadres, Inc.

United States District Court, D. Colorado

March 2, 2018

JAIME FUENTES, individually and on behalf of others similarly situated, Plaintiffs,
v.
COMPADRES, INC., d/b/a Tequila's (Golden), TEQUILAS THORNTON NUMBER 6, LLC, d/b/a Tequila's (Thornton), TEQUILAS OF THORNTON, LLC d/b/a Tequila's (Thornton), EL AGAVE AZUL, INC. d/b/a El Tequileno (Arvada), EL NOPAL, INC. d/b/a El Tequileno (Lakewood), EL TEQUILENO #1 d/b/a El Tequileno (Aurora), JOSE RAIGOZA DeJESUS GARCIA, and RODRIGO SANCHEZ, Defendants.

          RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          Michael E. Hegarty, United States Magistrate Judge.

         Plaintiff Jaime Fuentes, on behalf of himself and others similarly situated (“Plaintiff”), initiated this action on May 12, 2017 and filed the operative Second Amended Complaint on September 15, 2017 alleging, inter alia, that the Tequila Defendants[1] and the Tequileno Defendants, [2]which are restaurants and alleged owners/managers of the restaurants, failed to pay the proper overtime rate for hours over 40 worked in the workweek, retained tips for management, failed to provide adequate notice related to the tip credit, and over-reported his tips on paystubs in violation of the Fair Labor Standards Act (“FLSA”) and the Colorado Wage Claim Act (“CWCA”).

         Here, Plaintiff primarily seeks an order requiring Defendants to provide Plaintiff a list of all non-management employees who may be similarly situated to the Plaintiff, approval of the Plaintiff's proposed Notice and Consent to Join forms, authorization to distribute the Notice and Consent to Join forms, and the appointment of Plaintiff's counsel as “counsel for the collective.” He also moves for conditional certification as a collective action pursuant to the Fair Labor Standards Act, 29 U.S.C. § 216(b) (“FLSA”) only as “the Court deems necessary” to support Plaintiff's primary requests. Finally, Plaintiff seeks an order granting his request to “equitably toll” the FLSA's statute of limitations for putative opt-in members of the collective.

         Defendants counter that discovery is stayed in this case and Plaintiff's motion is an improper request for discovery and, otherwise, that Plaintiff asserts insufficient allegations to determine persons similarly situated and to warrant conditional certification in this case. Defendants also contend that Plaintiff has not met his burden to establish extraordinary circumstances or wrongdoing sufficient to warrant equitable tolling.

         The Court finds that Plaintiff asserts substantial allegations demonstrating he and others similarly situated are the victims of certain policies, plans, or practices sufficient to grant conditional certification for Plaintiff's minimum wage and overtime claims; Plaintiff should be permitted to seek certain contact information from putative collective action members; Plaintiff's Notice and Consent to Join, with this Court's suggested modifications, is proper; and equitable tolling of the FLSA claims is proper to a certain extent. Accordingly, the Court recommends that the Honorable Christine M. Arguello grant in part and deny in part the Plaintiff's motions.

         BACKGROUND

         Plaintiff alleges in the operative Second Amended Complaint that he worked for Tequila's Family Mexican Restaurant as a waiter/bartender from October 24, 2016 to February 22, 2017. In addition to waiting tables, Plaintiff was tasked with “side work” such as loading ice into the soda machine, making iced tea, slicing lemons, stocking the salt and pepper racks, cleaning the tables and floors, writing the daily lunch specials for customers, and rolling silverware. In his position, Plaintiff regularly interacted with customers who were from all across the United States. He handled food and other supplies that originated outside of Colorado, and he utilized Defendants' credit card machine to process payments.

         Plaintiff estimates that he worked between 45-to-55 hours per week, six days per week, or every day of the week except Tuesday, and he almost always worked both the lunch and dinner shifts. He also worked “off the clock, ” meaning the Defendants required Plaintiff to perform work before clocking in and/or after clocking out. Specifically, Defendants regularly required Plaintiff to clock out, then perform the “side work” and cleaning activities, which took approximately twenty-to-thirty minutes per day to perform. Defendants did not pay Plaintiff for this time in wages, nor did he receive any tips related to this time.

         In this position, Plaintiff's pay scheme was sub-minimum wage plus tips. In 2016 (and the first pay period of 2017), his regular hourly rate was $5.28 per hour and his overtime rate was $7.92 per hour. Thereafter in 2017, his hourly wage rate was $6.28 per hour and the overtime rate was $9.14 per hour. Thus, Plaintiff claims he was paid an incorrect rate for all hours over 40 worked in a workweek. In addition, Plaintiff, like others similarly situated, was never informed about or provided notice of any tip credit claimed by the Defendants. He asserts management retained tips intended for Plaintiff and others similarly situated. In around mid-February 2017, Plaintiff complained to Defendant Garcia about the over-reporting of his tips. Approximately one week later, the manager (“Alejandro”) accused Plaintiff of stealing tequila and fired him.

         Based on these factual allegations, Plaintiff claims on behalf of himself and others similarly situated willful violations of the FLSA including minimum wage violations; failures to compute overtime properly for sub-minimum wage tipped workers; and incorrect payment of overtime and minimum wages due to incorrect accounting of hours worked. Am. Compl., ECF No. 63. Plaintiff also claims violations of the CWCA, including failures to pay minimum wages and weekly overtime premiums; improper payment of tips, failure to pay wages when due, failure to pay all earned wages, failure to properly keep records, and willful failure to respond to a wage demand. Id.

         Both the Tequila Defendants and the Tequileno Defendants responded to the operative pleading by filing motions to dismiss, which were referred to this Court for a Report and Recommendation. The Court recommended that Judge Arguello grant the motions with respect to Plaintiff's CWCA claims against the individual Defendants but, otherwise, deny the motions to dismiss the remaining claims. The parties filed objections to the recommendation on January 9, 2018 and it is now pending before Judge Arguello.

         ANALYSIS

         I. Motion for Contact Information and Possible Conditional Certification

         Plaintiff asks the Court to order Defendants to produce a list of names and contact information of all current and former employees who worked in non-management positions for Defendants at any time on or after May 12, 2014, and to approve a Notice and Consent to Join form for distribution to potential opt-in plaintiffs. Mot. 1. Plaintiff argues that at least one judge in this district has found conditional certification unnecessary before issuing such order; however, to the extent the Court determines conditional certification necessary here, Plaintiff asserts he has met the applicable standard under the FLSA for conditional certification of a “collective action” and defines the class as “all non-management employees who were/are employed by Defendants at any of the five restaurants at issue at any time on or after May 12, 2014.” Mot. 10, 12.

         “Under the FLSA, . . . ‘conditional certification' does not produce a class with an independent legal status, or join additional parties to the action. The sole consequence of conditional certification is the sending of court-approved written notice to employees.” Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 75 (2013) (citing Hoffman-La Roche Inc. v. Sperling, 493 U.S. 164, 171-72 (1989)). Judge Arguello has explained the legal framework for conditionally certifying a collective action under FLSA:

Courts take a two-step approach to certifying FLSA collective actions. See Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102-05 (10th Cir. 2001). At the first step, prior to the completion of discovery, the district court makes a “notice stage” determination of whether potential claimants are similarly situated. (Id.) For conditional certification at the notice stage, the Tenth Circuit “require[s] nothing more than substantial allegations that the putative class members were together the victims of a single decision, policy, or plan.” Id. at 1102 (quotation omitted). “This initial step creates a lenient standard which typically results in conditional certification of a representative class.” Renfro v. Spartan Computer Servs., Inc., 243 F.R.D. 431, 432 (D. Kan. 2007). At this notice stage, “a court need only consider the substantial allegations of the complaint along with any supporting affidavits or declarations.” Id. at 434.
The second step for class certification under § 216(b) demands a higher level of scrutiny. At the second step, which occurs after discovery is complete and usually prompted by a motion to decertify, a district court examines, inter alia, any disparate factual and employment settings of the individual plaintiffs, the various defenses available to defendant that appear to be individual to each plaintiff, and fairness and procedural considerations. See Thiessen, 267 F.3d at 1103.

Beltran v. InterExchange, Inc., No. 14-cv-03074-CMA, 2017 WL 4418684, at *3-*4 (D. Colo. Apr. 28, 2017). The first “notice” stage, for which the present motion is filed, is a matter of facilitating notice to potential opt-in plaintiffs and conducting specific discovery for that purpose. See Hoffman-La Roche Inc., 493 U.S. at 170-71.

         This Court has already found that Plaintiff's allegations against Defendants are sufficient to withstand a challenge pursuant to Fed.R.Civ.P. 12(b)(6), which requires “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also R. & R., ECF No. 14. The standard here requires that the allegations be “substantial” and demonstrate that the putative class members were together the victims of a single decision, policy, or plan. See Beltran, 2017 WL 4418684 at *4 (noting that the court had already ruled on the motions to dismiss and concluding that the pleadings satisfactorily alleged an agreement among the defendants to fix wages at an unlawful level).

         Plaintiff contends he has “met the requirement of providing ‘substantial allegations' in the Second Amended Complaint and attached Declarations” arguing that the putative collective members were/are subject to a “uniform decision, policy, or plan, ” which he defines as Defendants' “fail[ure] to pay the proper overtime rate for hours over 40 worked in the workweek, ret[ention of] tips for management, fail[ure] to provide adequate notice related to the tip credit, and over-report[ing of] tips on paystubs.” Mot. 2, 12. Plaintiff supports his contention with the operative Second Amended Complaint and the attached declarations of the Plaintiff and two former employees who worked in the Thornton, Golden, Arvada, and Lakewood restaurants. Pl.'s Exs. B, C, D, ECF Nos. 94-2, 94-3, and 94-4.

         Defendants[3] counter that the Court should, in fact, construe Plaintiff's motion as seeking conditional certification, rather than discovery, and find that the proposed class is “overly broad”; Plaintiff's allegations are conclusory and fail to meet the standard for “substantial allegations”; Plaintiff's declarations reveal that the employees worked at different restaurants at different times and, thus, Plaintiff has failed to establish any single decision, policy or plan consistent among any of the Defendants; the motion is premature and should be considered after an order on the motions to dismiss and some discovery; and, Plaintiff's proposed notice is overly broad and would impose undue burden on the Defendants. Resp., ECF No. 110.

         Plaintiff replies that Defendants misapply and misconstrue certain case law supporting Plaintiff's motion; Plaintiff's motion is bolstered by the undersigned's findings in the Recommendation issued December 12, 2017; and, the contact information sought is reasonable and the notice language is proper.

         Mindful of the “lenient” standard for conditional certification and persuaded by the cases cited by Plaintiff, the Court concludes that its only function here is to review the record to determine whether “the substantial allegations of the complaint along with any supporting affidavits or declarations” demonstrate Plaintiff and putative collective action members were “together the victims of a single policy, plan, or practice.” Beltran, 2017 WL 4418684 at *3-*4. Based on Plaintiff's proposed class definition, the Court will analyze whether Plaintiff and putative collective action members are similarly situated-i.e., whether Plaintiff has asserted substantial allegations that they together were victims of minimum wage and/or overtime violations.

         A. Minimum Wage Claims

         In the Second Amended Complaint, Plaintiff alleges that his hourly wage rates were $5.28 in 2016 and $6.28 in 2017[4]; he and others similarly situated were never informed about nor provided with notice of any tip credit claimed by the Defendants; customers would regularly leave tips on credit cards, but tips were only paid to servers in cash at the end of the shift, not in paychecks; on the pay stubs, all the tips were reported as cash tips; while in Golden, Plaintiff realized that the tips reported on his paystub were more than he actually received; and Plaintiff believes management retained tips intended for Plaintiff and others similarly situated. Am. Compl. ¶¶ 70, 72-75.

         Plaintiff also filed a declaration in which he attests that he was regularly required to clock out, then perform “side work” and cleaning activities, which took about twenty-to-thirty minutes and for which he was not paid in wages or tips. Declaration of Jaime Fuentes, May 11, 2017 (“Fuentes Decl.”) ¶ 12, ECF No. 94-2. Plaintiff also declares that he received tips in cash each work day and paystubs reflecting his wages twice a month, and he never received oral or written notice that his tips counted as part of the minimum wage. Id. ¶¶ 15, 16. On his paystubs, all tips were reported as cash tips and, although customers paid tips on credit cards, he was only paid tips in cash and received no additional tip money in his paychecks. Id. ¶ 20. While working at the Golden restaurant, Plaintiff realized that the amount of tips reported on the paystubs was more than he actually received in cash. Id. ¶ 21. In February 2017, Plaintiff complained to the restaurant owner about the over-reporting of tips; approximately one week later, the restaurant manager, “Alejandro, ” accused Plaintiff of stealing tequila and fired him. Id. ¶¶ 23, 24.

         Additionally, a former employee of the Defendants who worked as a “cook” in the Golden, Arvada, and Lakewood restaurants attested that he worked, on average, sixty hours per week at the restaurants and was paid $510 per week between 2009 and August 2015 and $650 per week from August to October 2015. Declaration of Ismael Orejel, June 6, 2017 (“Orejel Decl.”) ¶¶ 10-12, 18. Orejel also declared that he received no tips as part of his compensation. Id. ¶ 20.

         Defendants filed no declarations rebutting Plaintiff's arguments, but contend that Plaintiff's declarations do not support conditional certification since Plaintiff worked at only two of the five restaurants named as Defendants, and Orejel worked at none of the party restaurants within the applicable limitations period in this case. Resp. 6. Even if Defendants are correct, the Court finds that Orejel's testimony does not support conditional certification for the Plaintiff's minimum wage claim, since it demonstrates he was paid more than the minimum wage of $7.25 per hour since 2009, even without the payment of tips. See Orejel Decl. ΒΆΒΆ 10-12, 18 ($8.50 per hour from ...


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