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Levi v. Gulliver's Tavern, Inc.

United States District Court, D. Rhode Island

February 10, 2016

RUBI LEVI and EMILY CHICOINE, on behalf of themselves and others similarly situated, Plaintiffs,
v.
GULLIVER’S TAVERN INCORPORATED, SOLID GOLD PROPERTIES, INC., THOMAS TSOUMAS, and PATRICIA TSOUMAS, all d/b/a THE FOXY LADY, Defendants.

MEMORANDUM AND ORDER

WILLIAM E. SMITH, CHIEF JUDGE.

This case involves a Providence night club’s alleged misclassification of its exotic dancers as independent contractors. Plaintiffs allege that this misclassification deprived them of overtime wages and violated the Fair Labor Standards Act (“FLSA”), Rhode Island Minimum Wage Act (“RI MWA”), and the Rhode Island Payment of Wages Law (“RI PWL”).

Before the Court is Defendants’ Partial Motion to Dismiss (“Motion”) (ECF No. 15) in which they seek dismissal of two claims - Count II, alleging a violation of the FLSA’s tip credit provision, and Count V, alleging a violation of the RI PWL - and three defendants - Thomas Tsoumas, Patricia Tsoumas, (collectively the “Tsoumases”), and Solid Gold Properties, Inc. (“Solid Gold”). For the reasons that follow, Defendants’ Motion is GRANTED in part and DENIED in part.

I. Background[1]

Rubi Levi (“Levi”) and Emily Chicoine (“Chicoine”) (collectively, “Plaintiffs”) are former exotic dancers at the Foxy Lady (the “Club”) in Providence. (Am. Compl. ¶¶ 1-2, ECF No. 13.) As dancers, Plaintiffs provided “adult” entertainment to customers. According to Plaintiffs, they were “part of the Defendants’ usual business operations, ” and subject to significant control from the Club. (Id. ¶¶ 18(a)-18(h).) For example, Plaintiffs allege that the Club controlled their schedules by requiring Plaintiffs to work at least three shifts per week, to work holiday parties throughout the year, and to report their availability to management for scheduling purposes. (Id. ¶¶ 18(e), 18(g), 18(h).) Plaintiffs also allege that the Club controlled how they worked during their shifts by requiring them to perform a certain number of dances on stage each shift, and encouraging them to solicit private dances from customers. (Id. ¶ 18(d).) And Plaintiffs allege that the Club supervised them by, among other things, employing “house moms” to make sure the dancers followed house rules and adhered to their schedules. (Id. ¶¶ 18(c), 18(f).) Plaintiffs’ Amended Complaint, however, is notably silent on who supervised them and who set the policies and schedules to which dancers had to abide.

As compensation, Plaintiffs allege that the Club allowed dancers to keep the tips they received from customers but never paid them an hourly wage. (Id. ¶ 19.) Additionally, the Club required Plaintiffs to pay the Club a $40 per week “shift fee, ” “tip out” certain club employees, and pay fines when Plaintiffs violated Club rules. (Id. ¶¶ 20-22.)

II. Standard of Review

When considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6), courts must view the facts contained in the pleadings in the light most favorable to the non-moving party and draw all reasonable inferences in that party’s favor. Perez-Acevedo v. Rivero-Cubano, 520 F.3d 26, 29 (1st Cir. 2008). To survive the motion, however, the plaintiff must present “factual allegations that ‘raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007)). Put another way, “[w]hile detailed factual allegations are not required, ‘a formulaic recitation of the elements of a cause of action’ is not sufficient. DeLucca v. Nat’l Educ. Ass’n of Rhode Island, No. C.A. 13-155L, 2015 WL 2037547, at *1 (D.R.I. May 5, 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

III. Discussion

A. Count II - Unlawful Tip Sharing Under the FLSA

Count II of the Amended Complaint alleges that Defendants violated the FLSA’s “tip credit” provision when they required Plaintiffs to share their tips with employees who were ineligible to receive tips. The FLSA allows employers to pay certain service employees a reduced minimum wage, provided the employees earn the full minimum wage through tips. See 29 U.S.C. § 203(m). The difference between the full minimum wage and the tipped employees’ minimum wages is commonly referred to as a tip credit. See Perez v. Lorraine Enters., Inc., 769 F.3d 23, 27 (1st Cir. 2014). Generally, employers lose the right to take the tip credit if they require employees to share their tips with ineligible employees, giving rise to a claim under § 203(m). Id. For such a tip credit claim to exist, however, employers must actually take the tip credit. See Cumbie v. Woody Woo, Inc., 596 F.3d 577, 581 (9th Cir. 2010) (“Since [defendant] did not take a tip credit, we perceive no basis for concluding that [defendant’s] tip pooling arrangement violated section 203(m) [of the FLSA].”). If employers deduct from employees’ tips and still pay them the full minimum wage, the sharing of tips does not implicate § 203(m) of the FLSA. See Stephenson v. All Resort Coach, Inc., No. 2:12-CV-1097 TS, 2013 WL 4519781, at *5 (D. Utah Aug. 26, 2013) (“Courts interpreting § 203(m) have held that where an employer does not take a tip credit, no § 203(m) violation has occurred. It is only when an employer takes a tip credit that compliance with § 203(m) is required.”).

Here, Plaintiffs allege that Defendants did not pay them a base wage at all. (Am. Compl. ¶ 19.) They do not allege that they received a reduced minimum wage that the Club offset by the dancers’ tips. Consequently, Plaintiffs have failed to plead an essential element of a claim under §203(m) and Count II fails to state a claim upon which relief can be granted.

At oral argument, Plaintiffs suggested that their real reason for bringing Count II was preemptive; they included it to protect against Defendants reducing their damages by claiming the tip credit. Plaintiffs’ concern is well founded and the Court dismisses Count II without prejudice. Plaintiffs are free to raise this argument as ...


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