Starbucks Battles Appeal in $14.1M Class-Action Employment Lawsuit
10/16/2012 // San Francisco, CA, USA // Keller Grover LLP // Eric Grover San Francisco attorney // (press release)
San Francisco, CA — Coffeehouse giant Starbucks Corp. is appealing a judgment that ordered them to pay $14.1 million in a class-action employment lawsuit that challenged Massachusetts’ tip rules and whether or not it allows shift supervisors to split tips from customers with the baristas, reports Eric Grover, a Bay Area wage-and-hour attorney at Keller Grover LLP.
Oral arguments began on September 11th in the Matamoros v. Starbucks Corp. case, where Starbucks is appealing the $14.1 award for the plaintiffs and certification of their proposed class. Judge Nathaniel Gorton handed down the ruling in March 2011, which certified the class and granted the plaintiffs’ partial summary judgment, finding that Starbuck’s shift supervisors are prohibited from receiving money from any tip pools under Massachusetts’ tip laws, as reported by The National Law Journal.
In January 2012, Gorton made his final ruling, awarding the plaintiffs $7.5 million in damages, as well as prejudgment interest at a rate of 12 percent per annum. The plaintiffs were also awarded triple damages for more recent violations, totaling $6.6 million that were made mandatory by current state wage-and-hour claims, as amended in July 2008.
Starbucks maintains that their shift supervisors are correctly classified as “wait staff,” because they only have “limited supervisory” tasks and no actual “managerial responsibility.” The coffeehouse giant also asserts that the ruling is contradictory to the law on tips in Massachusetts, which is to ensure that service employees are the ones that receive the tips from customers. Furthermore, they claim that the plaintiffs named in the lawsuit don’t actually represent the interests of the numerous former baristas that have been promoted to shift supervisors and who now reap the benefits of the current tip policy.
In addition, Starbucks maintains that the court erred with the treble damages provision because the law allows punitive damages without showing that the punished conduct was reprehensible.
Attorneys representing the plaintiffs claim that, “There’s a Starbucks policy that a shift supervisor, assistant manager or manager must be on the premises of a store at all time. Just because a management style or a company’s philosophy may be a quote more collaborative style doesn’t mean that there aren’t people who have a managerial responsibility.”
“Interestingly, in many cases the misclassification is the opposite of what is alleged here. Hourly staff is often classified as management to avoid overtime payments. It seems that in this case supervisory staff has been classified as wait staff to pay a lower hourly rate because of the anticipated tip sharing, notes Eric Grover, a San Francisco wage and hour attorney.
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