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finding that the plaintiffs could not escape the preemption clause of N.C. Gen.Stat. Ann. § 95–25.14 by asserting their tip-pooling claim under the payday statute, because tip-pooling was regulated by the minimum wage provision, N.C. Gen.Stat. Ann. § 95–25.3(f), and was therefore subject to N.C. Gen.Stat. Ann. § 95–25.14
Summary of this case from Charlot v. Ecolab, Inc.Opinion
No. 07-809.
Filed March 18, 2008.
Durham County No. 06CVS724.
Appeal by plaintiff from judgment entered 5 April 2007 by Judge Ripley E. Rand in Durham County Superior Court. Heard in the Court of Appeals 9 January 2008.
Law Offices of Robert J. Willis, by Robert J. Willis, for plaintiff-appellant. Jackson Lewis, LLP, by Paul H. Derrick, for defendant-appellee.
Where the trial court considered matters outside of the pleadings, defendant's motion to dismiss is treated as a motion for summary judgment under Rule 12(b) of the North Carolina Rules of Civil Procedure. Where there exists no genuine issue of material fact and defendant was entitled to judgment as a matter of law, the trial court did not err in dismissing plaintiff's complaint.
I. Factual Background
Christopher Chandler (plaintiff) is a waiter employed by The Cheesecake Factory Restaurants, Inc. d/b/a The Cheesecake Factory (defendant) in its Durham and Raleigh, North Carolina restaurants. Plaintiff filed this action on 16 February 2006 in Durham County Superior Court, on behalf of himself and a class of similarly situated current and former employees of defendant, alleging that defendant's mandatory tip-pooling arrangement violates provisions of the North Carolina Wage and Hour Act ("NCWHA"). The amended complaint alleges that defendant failed to pay all wages and tips accruing to those employees on their regular payday in violation of N.C. Gen. Stat. § 95-25.6 and 95-25.22 and the "tip pooling" provisions of 13 N.C. Admin. Code 12 § .0303(h)(2). "Tip pooling" is defined as "an arrangement in which all or a part of the tips of the contributing employees are combined into a common pool and then divided among the participating employees according to a pre-determined formula." 13 N.C. Admin. Code 12 § .0303(h). Plaintiff asserted that North Carolina laws require that under any tip-pooling arrangement, the tipped employee must retain at least 85% of the tips. Plaintiff contended that under defendant's mandatory tip-pooling arrangement, tipped employees retain less than 85% of their tips. According to plaintiff, this mandatory tip contribution was in the form of a required server tip pool contribution of at least 4.1% of the gross sales generated at each server's tables. Plaintiff alleges that this arrangement violates section 95-25.6 of the NCWHA as well as the administrative regulations promulgated there under.
Plaintiff's complaint included a cause of action for compensatory damages arising from defendant's alleged failure to pay wages and tips pursuant to N.C. Gen. Stat. 95-25.6 and 95-25.22, and for liquidated damages and interest pursuant to N.C. Gen. Stat. 95-25.22(a1) and N.C. Gen. Stat. 95-25.22(a). Plaintiff requested declaratory relief that defendant had violated its obligations under the NCWHA. Plaintiff also sought costs, attorney's fees, and pre and post judgment interest. On 24 March 2006, the action was removed to the U.S. District Court for the Middle District of North Carolina pursuant to 28 U.S.C. 1446(d). On 4 April 2006, plaintiff filed an amended complaint in federal court. In the amended complaint, plaintiffs alleged only state claims and remedies against defendant. On the same day, plaintiff also filed a motion for class certification pursuant to Fed.R.Civ.P. 23(b)(3).
In July 2005, the federal court determined that it lacked jurisdiction over the matter because plaintiff's cause of action did not "arise under" federal law and granted plaintiff's motion to remand the case to the Superior Court of Durham County. Defendant filed a motion to dismiss in state court on 7 August 2006. Judge Rand granted defendant's motion to dismiss and denied plaintiff's motion for class certification. Plaintiff appeals.
II. Disposition of Case by Trial Court and Our Standard of Review
We first address the applicable standard of review. On 5 April 2007, Judge Rand entered an order dismissing plaintiff's complaint for failure to state a claim upon which relief could be granted under N.C. R. Civ. P. 12(b)(6). The court also denied
plaintiff's motion for partial summary judgment and denied plaintiff's motion for class certification.
Rule 12(b) of the North Carolina Rules of Civil Procedure states that:
If, on a motion asserting the defense numbered (6), to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
N.C. Gen. Stat. 1A-1, Rule 12(b) (2007). It is clear from the trial court's order that the scope of the court's review of plaintiff's and defendant's motions was not restricted to the pleadings, and the court did not limit its consideration to the legal sufficiency of allegations contained in plaintiff's amended complaint. The fact that the trial court phrased its order in terms of the granting of a motion to dismiss is not controlling. We look to the entire order to determine the nature of the trial court's ruling. See Bailey v. Handee Hugo's, Inc., 173 N.C. App. 723, 728-29, 620 S.E.2d 312, 316 (2005); see also Stanback v. Stanback, 297 N.C. 181, 205, 254 S.E.2d 611, 627 (1979). We hold that the proper standard of review of the trial court's order is as an order granting summary judgment under Rule 56 of the North Carolina Rules of Civil Procedure.
Our standard of review of a trial court's ruling on a motion for summary judgment is de novo, and "this Court's task is to determine, on the basis of the materials presented to the trial court, whether there is a genuine issue as to any material fact and whether the moving party is entitled to judgment as a matter of law." Coastal Plains Utils., Inc. v. New Hanover Cty, 166 N.C. App. 333, 340, 601 S.E.2d 915, 920 (2004) (citations omitted).
III. The North Carolina Wage and Hour Act
In his first argument, plaintiff contends the trial court erred in dismissing his complaint. We disagree.
Defendant's motion to dismiss was based on the assertion that plaintiff's employment by defendant was exempt from the NCWHA, and that plaintiff's amended complaint fails to state a claim upon which relief could be granted.
"The NCWHA is modeled after the Federal Fair Labor Standards Act ("the FLSA"), 29 U.S.C. § 201 et seq.," Whitehead v. Sparrow Enter., Inc., 167 N.C. App. 178, 181, 605 S.E.2d 234, 237 (2004), and contains provisions governing wages.
N.C. Gen. Stat. 95-25.6 governs wage payment and states:
Every employer shall pay every employee all wages and tips accruing to the employee on the regular payday. Pay periods may be daily, weekly, bi-weekly, semi-monthly, or monthly. Wages based upon bonuses, commissions, or other forms of calculation may be paid as infrequently as annually if prescribed in advance.
N.C. Gen. Stat. 95-25.6 (2007). The NCWHA also contains provisions addressing tips. N.C. Gen. Stat. § 95-25.3 provides that "[t]ips . . . may be counted as wages . . . if the tipped employee is notified in advance, is permitted to retain all tips and the employer maintains accurate and complete records of tips received by each employee . . ." N.C. Gen. Stat. § 95-25.3(f) (2007). The section further provides that "[t]ip pooling shall also be permissible among employees who customarily and regularly receive tips; however, no employee's tips may be reduced by more than fifteen percent (15%) under a tip pooling arrangement." Id.
The regulations for tips and tip credits under the NCWHA are set forth in the North Carolina Administrative Code. Section 12.0303(h) of 13 N.C. Admin. Code governs "tip pooling," and provides that:
"Tip pooling" as used in G.S. 95-25.3(f) is an arrangement in which all or a part of the tips of the contributing employees are combined into a common pool and then divided among the participating employees according to a pre-determined formula. An employee's share of a tip pool is that portion of the total amount in the pool which the employee receives. A tip pooling arrangement is valid under G.S. 95-25.3(f) when:
(1) the contributing employees are notified of the arrangement before the pay period in which it will be used;
(2) the share of each contributing employee is at least 85% of the employee's tips before the employee contributes to the tip pool; and
(3) only employees who customarily and regularly receive tips receive a share from the pool.
The section further provides that: [t]he requirement of 95-25.6 that the employer pay "tips accruing to the employee" shall be satisfied if the employee in a tip pooling arrangement receives 85% of the employee's actual tips before pooling or the employee's share received from the pool, whichever is greater. By complying with Subparagraph (h)(2) of this Rule, the employer has also satisfied the provision of G.S. 95-25.3(f) requiring the employer to allow the tipped employee to retain all tips.
13 N.C. Admin. Code 12.0303(h) (2006).
The NCWHA also contains exemptions from state wage and hour regulation in favor of coverage under the FLSA. N.C. Gen. Stat. 95-25.14 states in part:
The provisions of G.S. 95-25.3 (Minimum Wage), G.S. 95-25.4 (Overtime), and G.S. 95-25.5 (Youth Employment), and the provisions of G.S. 95-25.15(b) (Record Keeping) as they relate to these exemptions, do not apply to:
(1) Any person employed in an enterprise engaged in commerce or in the production of goods for commerce as defined in the Fair Labor Standards Act[.]
N.C. Gen. Stat. 95-25.14(a)(1) (2007).
Plaintiff's amended complaint acknowledges that plaintiff is an individual and that defendant is a corporation existing "for the purpose, among others, of operating restaurants in and around North Carolina and other states located in the United States of America." Plaintiff does not dispute that his employment is covered under the provisions of the FLSA. Rather, plaintiff contends that the exemptions contained in. 95-25.14 are implicated only when a cause of action is brought under 95-25.3. Plaintiff argues that he is asserting claims solely under N.C. Gen. Stat. 95-25.6, 95-25.22, and 13 N.C. Admin. Code 12.0303(h), and that his claims do not implicate the minimum wage provisions of 95-25.3 or the exemptions of 95-25.14.
We disagree with plaintiff's arguments. On its face, N.C. Admin. Code § 12.0303(h) incorporates § 95-25.3(f) and therefore the accompanying § 95-25.14(a)(1) exemption. As the federal court noted in its order granting plaintiff's motion to remand, "[i]ndeed, the `History Note' to § 12.0303(h) specifically cites § 95-25.3, among other sections, as `Authority' for the § 12.0303 regulations." Chandler v. Cheesecake Factory Rests., Inc., footnote 3 (2006). Further, in order to determine whether a tip-pooling arrangement is in compliance with 95-25.6, the statutory scheme dictates a review of 95-25.3(f).
Neither party contends that a genuine issue of material fact exists. We agree, and further hold that defendant was entitled to judgment as a matter of law. The trial court did not err in dismissing plaintiff's complaint. This argument is without merit.
Because we affirm the trial court's dismissal of plaintiff's claims, plaintiff's request for class certification is moot and we do not address that issue.
Affirmed.
Judges McCULLOUGH and GEER concur.
Report per Rule 30(e).