Court Opinion

ID: 9960105
Source: CourtListenerOpinion
Date Created: 2024-04-15 14:01:24.395756+00
Date Added: 2024-06-11T08:19:11.243139
License: Public Domain

USCA11 Case: 23-12658     Document: 36-1     Date Filed: 04/15/2024   Page: 1 of 8

                                                   [DO NOT PUBLISH]
                                    In the
                United States Court of Appeals
                         For the Eleventh Circuit

                           ____________________

                                 No. 23-12658
                           Non-Argument Calendar
                           ____________________

       ISRAEL ROSELL,
       ROBERTO GONZALEZ,
       for themselves and on behalf of those similarly
       situated,
                                                    Plaintiﬀs-Appellants,
       ALLAN CHOW, et al.,
                                                               Plaintiﬀs,
       versus
       VMSB, LLC,
       a Florida Limited Liability Company
       d.b.a. Gianni's
       d.b.a. CASA CASUARINA,
USCA11 Case: 23-12658     Document: 36-1     Date Filed: 04/15/2024   Page: 2 of 8

       2                     Opinion of the Court                23-12658

                                                     Defendant-Appellee.

                           ____________________

                 Appeal from the United States District Court
                     for the Southern District of Florida
                    D.C. Docket No. 1:20-cv-20857-KMW
                          ____________________

       Before GRANT, BRASHER, and ABUDU, Circuit Judges.
       PER CURIAM:
               Israel Rosell and Roberto Gonzalez—a bartender and a
       server at Gianni’s, an upscale restaurant housed in the former
       Versace Mansion in Miami Beach, Florida—sued their employer
       and owner of the restaurant, VMSB, LLC, for alleged violations of
       the Fair Labor Standards Act and the Florida Minimum Wage Act.
       Their claim that VMSB paid less than minimum wage turns on
       whether an automatic charge applied to all customer bills counts
       as a tip or as a mandatory service charge. We have previously held,
       in a case with nearly identical facts, that such a fee is a service
       charge, not a tip, and can lawfully be used to offset an employer
       restaurant’s wage obligations under the Fair Labor Standards Act.
       Compere v. Nusret Miami, LLC, 28 F.4th 1180, 1182 (11th Cir. 2022).
       Rosell and Gonzalez’s contrary arguments are foreclosed by
       Compere. Accordingly, we affirm.
USCA11 Case: 23-12658     Document: 36-1     Date Filed: 04/15/2024    Page: 3 of 8

       23-12658              Opinion of the Court                        3

                                        I.
              Customers at Gianni’s are automatically assessed a fixed
       percentage of the total sales price of their food and drink as a
       service charge. This service charge was set at 20% from 2015 until
       mid-2017, after which it was increased to 22%. VMSB instructs
       waitstaff to inform customers of the automatic service charge upon
       presentation of the menu; restaurant policy also prohibits
       employees from removing this charge from the bill. Despite this
       policy, restaurant staff occasionally removed the service charge
       anyway in response to customer complaints about service.
              On a customer’s bill, the restaurant’s point-of-sale system
       displays the service charge as its own line item. Separately from
       this entry, the final check also contains a line for the customer to
       include a discretionary tip. Service charges are shared between the
       restaurant and employees: 90% of the total goes to front-of-house
       employees, while 10% is retained by the restaurant. On the other
       hand, 100% of any gratuity paid by a customer is kept by the
       employee who served that guest.
              The federal minimum wage set by the Fair Labor Standards
       Act is $7.25 per hour. During the relevant period, Florida’s
       minimum wage was higher, starting at $8.10 per hour in 2017 and
       rising to $8.65 per hour in 2020. VMSB paid both Rosell and
       Gonzalez a direct wage of $5.65 per hour, plus their share of the
       service charges imposed on each customer’s check. They also kept
       any gratuities from customers they individually received. It is
       undisputed that, while the direct wage of $5.65 per hour was below
USCA11 Case: 23-12658     Document: 36-1     Date Filed: 04/15/2024    Page: 4 of 8

       4                     Opinion of the Court                 23-12658

       the state and federal minimums, if the service charge distributions
       are counted as well, both Rosell and Gonzales were paid well in
       excess of minimum wage.
              Rosell and Gonzales sued VMSB on three counts: a violation
       of the federal minimum wage under the Fair Labor Standards Act,
       a violation of Florida’s state minimum wage under the Florida
       Minimum Wage Act, and a violation of the Fair Labor Standards
       Act’s overtime pay obligations. The district court granted partial
       summary judgment to VMSB on both minimum wage counts, and
       the parties settled the overtime count. This is Rosell and
       Gonzales’s second attempt to appeal their minimum wage claims;
       the first time around, their attempt to voluntarily dismiss the
       settled overtime count was procedurally defective, leaving it
       pending before the district court and depriving this Court of
       appellate jurisdiction. See Rosell v. VMSB, LLC, 67 F.4th 1141 (11th
       Cir. 2023). This time, Rosell and Gonzales have fixed the problem
       by amending their complaint to drop the overtime claim, meaning
       they have obtained a final judgment as to all their outstanding
       claims. We may now exercise jurisdiction over the appeal.
                                       II.
              We review a district court’s grant of summary judgment de
       novo, viewing the evidence in the light most favorable to the
       nonmoving party and drawing all reasonable inferences in its favor.
       Sutton v. Wal-Mart Stores East, LP, 64 F.4th 1166, 1168 (11th Cir.
       2023). Summary judgment is appropriate when “there is no
USCA11 Case: 23-12658      Document: 36-1       Date Filed: 04/15/2024     Page: 5 of 8

       23-12658                Opinion of the Court                          5

       genuine dispute as to any material fact and the movant is entitled
       to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
                                         III.
               Rosell and Gonzalez’s minimum wage claims turn on
       whether their service charge distributions can count toward
       VMSB’s minimum wage obligations, or whether the charge should
       count as a tip and be excluded from the minimum wage
       calculation. In Compere v. Nusret Miami, LLC, we analyzed another
       restaurant’s nearly identical service charge arrangement. There,
       we explained that “the critical feature of a ‘tip’ is that ‘[w]hether a
       tip is to be given, and its amount, are matters determined solely by
       the customer.’” Compere, 28 F.4th at 1186 (quoting 29 C.F.R.
       § 531.52(a)). “Distinct from ‘a payment of a charge, if any made for
       the service,’ a tip is presented by a customer ‘as a gift or gratuity in
       recognition of some service performed for the customer.’” Id.
       (quoting 29 C.F.R. § 531.52(a)). By contrast, a “compulsory charge
       for service,” like a flat percent applied to the total amount of a bill,
       “imposed on a customer by an employer’s establishment, is not a
       tip.” Id. at 1187 (quoting 29 C.F.R. § 531.55(a)).
              Applying these principles, we held that the defendant-
       restaurant’s mandatory service charge of 18% automatically
       applied to all customer bills qualified as “a bona fide service charge
       and not a tip,” and thus “could lawfully be used to offset [the
       restaurant’s] wage obligations under the FLSA.” Id. at 1182, 1189.
       Compere answers this nearly identical case: VMSB’s mandatory fee
USCA11 Case: 23-12658      Document: 36-1     Date Filed: 04/15/2024     Page: 6 of 8

       6                      Opinion of the Court                 23-12658

       of 20–22%, applied to all customers’ bills, is a service charge, not a
       tip, and can count towards VMSB’s minimum wage obligations.
              Rosell and Gonzalez attempt to escape Compere’s holding by
       arguing that VMSB had reported the service charge fees as
       employee tips rather than as part of its gross receipts on its federal
       tax returns. They argue that VMSB should be estopped in this
       Court from now arguing that the same fees were actually not tips,
       for purposes of the Fair Labor Standards Act.
              Compere has already answered this objection.             The
       employees there also argued that the classification of a fee as a
       service charge or a tip turned on the restaurant’s tax returns: they
       argued that “a service charge is a tip unless an employer includes
       the service charges in their gross receipts for tax purposes.” Id. at
       1187 (alteration adopted) (quotation omitted). We rejected this
       argument, stating that an employer’s “tax returns are irrelevant to
       determining whether the service charge is a tip.” Id. at 1188 n.14.
       Whether the charge was a tip turned on whether the customer had
       any discretionary say in whether to pay the charge or its amount,
       not how the restaurant had reported the charge to the IRS. Id. at
       1185–88.
              Rosell and Gonzalez argue that Compere’s statements about
       the relevance of tax returns are dicta because the “Compere court
       did not have the sworn tax returns before it.” As we have explained
       many times, “a statement that neither constitutes the holding of a
       case, nor arises from a part of the opinion that is necessary to the
       holding of the case is dicta” and “not binding on anyone for any
USCA11 Case: 23-12658     Document: 36-1      Date Filed: 04/15/2024    Page: 7 of 8

       23-12658               Opinion of the Court                        7

       purpose.” Rudolph v. United States, 92 F.4th 1038, 1045 (11th Cir.
       2024) (quotations omitted). And it is true that the record in Compere
       did not include whether the restaurant there had reported its
       service charge to the IRS as tips or as part of its gross receipts.
       Compere, 28 F.4th at 1184.
               But that does not render Compere’s rejection of the relevance
       of tax returns dicta. The employees in Compere argued that the fact
       that the record did not answer how the restaurant was treating the
       service charge on its tax returns meant that summary judgment
       was premature, and they sought to take the deposition of the
       restaurant’s accountant, who they said would testify about how the
       restaurant characterized the charge in its tax filings. Id. at 1184,
       1189. We affirmed the district court’s grant of summary judgment
       to the restaurant even without this information, reasoning that the
       tax returns were “irrelevant” to the inquiry and that summary
       judgment was appropriate because there existed no genuine
       dispute on any material facts. Id. at 1187. That conclusion was
       therefore “necessary to the holding of” Compere, meaning that it is
       not dicta and is binding on the Court in this case. Rudolph, 92 F.4th
       at 1045 (quotation omitted).
              Rosell and Gonzalez also attempt to distinguish Compere by
       arguing that VMSB occasionally waived the service charge in
       response to customer complaints about service. They argue that if
       a restaurant ever removes the service charge, it is not “mandatory”
       and therefore is properly characterized as a discretionary tip.
       Again, Compere forecloses this argument. There, as here, restaurant
USCA11 Case: 23-12658     Document: 36-1     Date Filed: 04/15/2024    Page: 8 of 8

       8                     Opinion of the Court                 23-12658

       “managers had discretion to remove the charges on the bills of
       dissatisfied customers.” Id. at 1188. We wrote that that fact was
       “irrelevant,” because “the relevant question is whether the decision
       to pay the given sum is ‘determined solely by the customer’” and the
       “customers had no ability to determine on their own whether they
       would pay the service charge.” Id. (quoting 29 C.F.R. § 531.52(a)).
       So too here.
                                 *      *      *
              VMSB’s service charge is identical to that analyzed in
       Compere in all material respects. Consistent with Compere, then, we
       hold that VMSB’s service charge is not a discretionary tip for
       purposes of the Fair Labor Standards Act and that distributions
       from the service charge to employees may be lawfully counted
       against VMSB’s minimum wage obligations. The district court’s
       grant of summary judgment to VMSB on Rosell and Gonzalez’s
       minimum wage claims is thus AFFIRMED.