Opinion ID: 2739045
Heading Depth: 3
Heading Rank: 3

Heading: The Minimum Wage Violation.

Text: The Secretary moved for summary judgment on the minimum wage claim asserting, inter alia, that the defendants were ineligible for the tip credit. The Secretary posited both that the waiters had not received proper notice of the restaurant's intent to credit their tips against the minimum wage and that, in any event, deductions taken from waiters' pay were invalid for FLSA purposes. The district court granted the motion. See Lorraine Enters., 907 F. Supp. 2d at 192. 2 The defendants insinuate that the Department's failure to follow its own investigative protocol contributed to the alleged ambush. But the defendants offer no proof of any particular investigative protocol that the Department ignored, and, in all events, the fact that the Department notified the defendants during the investigation that it was alleging minimum wage violations sufficed to alert them that tip-credit notice was in issue. See Benihana, 275 F.R.D. at 171. -10- Because the district court supportably found the notice point dispositive, we start and stop there. The Secretary's assertion of lack of notice was based in part on the deposition testimony of Gonzalez. Gonzalez testified that when he was first hired as a waiter at the restaurant, he was not told that any portion of his tips would count toward the minimum wage. He further testified that, after he became general manager in 2006, newly hired waiters were not informed that any portion of their tips would count toward their wages. Finding this testimony undisputed, the district court concluded that no notice had been given and that, therefore, paying the waiters at a rate below the minimum wage violated the statute. See id. at 191-92. The defendants maintain that the district court blundered because a genuine issue of material fact existed with respect to notice. This claim of error engenders de novo review. See Tropigas de P.R., Inc. v. Certain Underwriters at Lloyd's of London, 637 F.3d 53, 56 (1st Cir. 2011). We begin with bedrock: a court may grant summary judgment only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). A genuine issue is one on which the evidence would enable a reasonable jury to find the fact in favor of either party. See Vasapolli, 39 F.3d at 32. A material fact is one that is relevant in the sense that it has the capacity to change -11- the outcome of the jury's determination. See Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010). As to issues on which the party opposing summary judgment would bear the burden of proof at trial, that party may not simply rely on the absence of evidence but, rather, must point to definite and competent evidence showing the existence of a genuine issue of material fact. See Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir. 2008); McCarthy v. Nw. Airlines, Inc., 56 F.3d 313, 315 (1st Cir. 1995). Definite, competent evidence is evidence that is sufficiently probative of an issue that a factfinder could resolve that issue in favor of the nonmoving party based on that evidence. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986). In the case at hand, the defendants fault the court's reliance on Gonzalez's testimony because the Secretary did not show that Gonzalez was present for the hiring of each of the waiters whom the Secretary alleged were underpaid. But this evidentiary void does not aid the defendants. At the summary judgment stage, the absence of evidence on an issue redounds to the detriment of the party who bears the burden of proof on that issue. See McCarthy, 56 F.3d at 315. On the issue of notice, the defendants bore the burden of proof. See 29 U.S.C. § 203(m); Barcellona, 597 F.2d at 467. Thus, to defeat summary judgment on this issue, the defendants had to do more than point to a dearth of evidence. They had to adduce definite, competent evidence showing that waiters -12- were informed of the tip credit, see Vineberg, 548 F.3d at 56; Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991), and they did not do so. The defendants resist this conclusion. Their best effort to identify such evidence involves Lago's testimony that her husband informed waiters, prior to hiring them, that a portion of their tips would be counted as wages. Lago added that when the restaurant first opened, a written notice went out to some (unspecified) employees that dealt (in some unspecified manner) with tips.3 This testimony is not sufficient to constitute definite, competent evidence establishing the existence of a genuine issue of material fact. To block summary judgment, the defendants had to identify evidence in the record from which a jury could reasonably resolve the dispute at issue in their favor. See Anderson, 477 U.S. at 252; Davric Me. Corp. v. Rancourt, 216 F.3d 143, 147 (1st Cir. 2000). Lago, however, never laid a proper basis for these assertions and, thus, such assertions lack sufficient force to influence the summary judgment calculus. See Squibb v. Mem'l Med. Ctr., 497 F.3d 775, 784 (7th Cir. 2007). 3 The record contains no copy of any such written notice, nor does it contain any description of the contents of such a notice. Thus, even if we were to credit Lago's testimony that a written notice was sent to some employees, there is no way to tell whether the notice comported with the statutory requirements. -13- Perhaps most important, the record is devoid of any evidence that Lago had any personal knowledge of her husband's actions. She was not involved in management when the restaurant first opened. She did not say — and there is no evidence to support a finding — that she was present when her husband either hired waiters or distributed written notices to them. She did not say — and there is no evidence to support a finding — that she at any time participated directly in the hiring process. While it is true that Lago testified that she was generally familiar with the restaurant's payroll practices, she offered no testimony suggesting that she had personal knowledge regarding whether her husband had informed employees about the tip credit. For aught that appears, her testimony was based upon out-of-court statements that her late husband (or others) made to her and, as such, was not admissible for the truth of the matters asserted. See Fed. R. Evid. 802; Garside v. Osco Drug, Inc., 895 F.2d 46, 49-50 (1st Cir. 1990). In short, Lago's testimony was not significantly probative on the notice issue and, thus, could not thwart summary judgment. See Anderson, 477 U.S. at 249-50, 252. The defendants have a fallback position. They say that the record contains evidence adequate to show that the waiters had actual or constructive knowledge of the restaurant's intention to claim the tip credit and that this knowledge sufficed to pave the way for the minimum wage exception. The waiters' pay stubs, the -14- defendants aver, should have served to put the waitstaff on notice that the restaurant was claiming a tip credit against minimum wage because those stubs reflected a wage lower than the statutory minimum and tip amounts sufficient to bring the waiters' wages up to the minimum. Furthermore, the waiters reported their credit card tips to the restaurant at the end of every shift and then cashed out.4 Consequently, they either knew or should have known that their tips were meant to serve as part of their wages. This argument is unconvincing. The FLSA requires that employees be informed by their employer that the employer intends to treat tips as satisfying a portion of the minimum wage. See 29 U.S.C. § 203(m); Martin, 969 F.2d at 1322. While information on pay stubs might have tended to corroborate direct evidence of notice, the pay stubs themselves are not in evidence and the meager testimony about them is insufficient to support a finding that the defendants had complied with the FLSA's notice requirement. Moreover, the duty to inform is an affirmative duty placed upon the employer, which cannot be satisfied by the mere hope or assumption that employees will either divine their employer's intentions or figure out their statutory entitlements from the way in which the employer conducts its business. See Kilgore, 160 F.3d at 298; see also Dorsey v. TGT Consulting, LLC, 888 F. Supp. 2d 670, 682 (D. 4 Cashed out is a shorthand for the process by which waiters receive in cash from the restaurant tips left by customers on credit card vouchers. -15- Md. 2012) (concluding that employee earning statements that did not contain reference to the federal minimum wage were insufficient to inform employees of tip credit).