Court Opinion

ID: 9750133
Source: CourtListenerOpinion
Date Created: 2023-08-28 14:22:21.314492+00
Date Added: 2024-06-11T07:26:03.258478
License: Public Domain

KLEIN, P. J., Concurring and Dissenting.
I concur in part 1. of the majority opinion, allowing plaintiff and appellant Brad Etheridge (Etheridge) to pursue the instant appeal. I otherwise dissent.
It is my view that employees who do not render direct table service may not share in the proceeds of an employer-mandated tip pool. I would hold Etheridge properly pled a cause of action against the employer for its mandatory tip-pooling policy which required him to share tips with employees who “do not provide direct table service and are back of the house employees.” Because the complaint is well pled, the trial court should have overruled the employer’s demurrer.
The judicial underpinning of the majority opinion here, which broadly expands the scope of employer-mandated tip pooling, is Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062 [268 Cal.Rptr. 647] (Leighton). Leighton held employer-mandated tip pooling is not prohibited by Labor Code section 351. (Leighton, supra, at p. 1067.)1 However, Leighton flies in the face of section 351, which provides “[ejvery gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.” (Italics added.) Because section 351 guarantees that the gratuity is the “sole” property of the employee or employees for whom it was left, section 351 clearly prohibits the employer from appropriating any portion of the server’s gratuity and diverting it to other employees.
I recognize the Legislature acquiesced in Leighton’s interpretation of section 351 by amending the statute without altering the portion previously construed by Leighton. (Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1156 [278 Cal.Rptr. 614, 805 P.2d 873] (Harris).) Regrettably, given that principle of statutory construction, this court is guided by Leighton’s interpretation that section 351 does not prohibit mandatory tip pooling and redistribution “among those employees, who directly provide table service to a patron . . . .” (Leighton, supra, 219 Cal.App.3d at p. 1067, italics added.)
However, the majority opinion does more than merely reiterate Leighton. It now extends Leighton to authorize employer-mandated tip pooling “when the participants in the tip pool contribute to the patron’s service, even if not *929providing direct table service.” (Maj. opn., ante, at p. 923, italics added.) Because I believe Leighton was wrongly decided in the first instance, and was cut out of whole cloth without any factual basis as to the intent of the patron in leaving the gratuity, I decline to join the majority opinion’s extension of Leighton to the class of employees who do not provide direct table service. As explained below, the instant majority’s extension of Leighton to include in the tip pool any employees who “contribute to a patron’s service” or who “participate in the chain of service” is unwarranted and simply compounds the error made by the Leighton majority in the first instance.
The majority opinion here eviscerates section 351’s guarantee that a gratuity belongs to the employee or employees for whom it was left. The majority opinion authorizes the employer to confiscate a portion of the gratuities left for servers and to redistribute those monies to other employees, so as to subsidize the wages of nontipped employees, in accordance with the employer’s self-interest and priorities.
For these reasons, the propriety and parameters of employer-mandated tip pooling warrant the prompt attention of the California Supreme Court or the Legislature.
1. The Leighton Majority Disregarded the Plain Language of Section 35L, Which Declares the Gratuity to Be the Sole Property of the Employee or Employees for Whom Lt Was Left; Leighton Dispensed with the Patron’s Lntent in Leaving the Gratuity As Unknowable or Irrelevant.
The majority opinion here begins with a scholarly history of tip crediting and tip pooling in California. However, that discussion does not elucidate the critical issue in this case—does section 351, which guarantees the gratuity is the “sole” property of the employee or employees for whom it was left, prohibit the employer from appropriating a portion of the gratuity and diverting it to other employees?
The Leighton majority, and the majority of this court, hold section 351 does not prohibit employer-mandated tip pooling, and therefore the practice is permitted. However, a plain reading of section 351 reveals the statute does not give a green light for employer-mandated tip pooling. To the contrary, the statute prohibits it.
Section 351, which is found in division 2, part 1 of the Labor Code, relating to compensation, states in relevant part: “No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an *930employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Every such gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for. . . .” (Italics added.) The significance of the property guarantee of section 351 is that it prohibits an employer from taking any portion of the gratuity left for a server and redistributing it to other employees.2
Case law demonstrates section 351 was enacted to prevent an employer from-using the employee’s tips to reduce the employer’s minimum wage obligation. Prior to Leighton, “decisions . . . focus[]ed on whether this section prohibits employers from using an employee’s tip income to discharge the employer’s obligation to pay an employee the minimum wage. Thus, in Industrial Welfare Commission v. Superior Court (1980) 27 Cal.3d 690, 730 [166 Cal.Rptr. 331, 613 P.2d 579] the California Supreme Court held section 351 contemplated ‘that tips received by an employee would not reduce an employer’s minimum wage obligation, either directly or indirectly.’ And in Henning v. Industrial Welfare Commission (1988) 46 Cal.3d 1262 [252 Cal.Rptr. 278, 762 P.2d 442] the court struck down a regulation establishing a lower minimum wage for employees who receive tips than for those who do not on grounds it violated section 351.” (Leighton, supra, 219 Cal.App.3d at p. 1080 (dis. opn. of Johnson, J.), italics added.)
It is astounding that section 351, aimed at prohibiting an employer from using an employee’s tips to reduce the employer’s minimum wage obligation, was twisted by the Leighton majority into a legislative authorization for employer-mandated tip pooling.
Section 351 explicitly declares the gratuity is the sole property of the employee or employees for whom it was left. Inherent in that language is that the patron’s intent in leaving the tip is controlling.
Despite section 351’s focus on the intent of the patron in leaving the gratuity, the Leighton majority dismissed the patron’s intent as irrelevant or unknowable, speculating: “We dare say that the average diner has little or no idea and does not really care who benefits from the gratuity he leaves, as long as the employer does not pocket it, because he rewards for good service no matter which one of the employees directly servicing the table renders it. *931This, and the near impossibility of being able to determine the intent of departed diners in leaving a tip, in our view, account for the Legislature’s use of the term ‘employees’ in declaring that ‘[e]very such gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.’ (§351, [certain] italics added.)” (Leighton, supra, 219 Cal.App.3d at p. 1069, first italics added, fn. omitted.)
In a feat of judicial activism, the Leighton majority asserted, “an employer-mandated tip pooling policy is one of common sense and fairness, and protects the public, the employees and the restaurant employer.” (Leighton, supra, 219 Cal.App.3d at p. 1070.) In so doing, the Leighton majority substituted its own judgment for that of the Legislature, which declared in section 351 that the gratuity is the sole property of the employee or employees for whom it was left.
The Leighton majority seized on the fact that section 351 refers to the employee “or employees” for whom the gratuity is left as some sort of legislative authority for employer-mandated tip pooling. However, as Justice Johnson pointed out in his well-reasoned dissenting opinion in Leighton, the Leighton majority made too “much of the presence of the plural word ‘employees’ in the clause containing the personal property guarantee in section 351. This language is necessary to accommodate situations where a customer intends and expressly declares that a given gratuity is intended for two or more employees or where a given customer is actually served by first one waiter then another (because of a change of shifts) and intends that both of them share in the gratuity or where a banquet giver pays a large gratuity intended to be shared by all the waiters who served those attending the banquet. But this does not mean it is up to the employer in the ordinary situation, without the customers’ knowledge, to require the waitress to whom the customer gave the tip to divide that gratuity with other employees the employer deems to have been the intended recipient of the customers’ largess. HD It is apparent in both sections 351 and 356 the Legislature intends that the customers’ intent be implemented and that gratuities remain the personal property of the individual employee for whom the customer intended the gratuity to represent additional income. If and only if, the customer intends to reward more than one employee should a given gratuity be deemed the personal property of more than one employee.” (Leighton, supra, 219 Cal.App.3d at pp. 1083-1084 (dis. opn.), certain italics added.)
Justice Johnson correctly concluded, “There is nothing in section 351 which reasonably can be read to support the proposition the employer is empowered to decide which employees the restaurant’s customers intended to receive the tips they left. The statute sets this up as a matter between the giver—the restaurant customer—and the receiver—the employee (or employees)—for whom the gratuity is left. It would be contrary to the intent that tip *932income be the ‘personal property’ of the employees involved to give that kind of discretion to the employer.” (Leighton, supra, 219 Cal.App.3d at p. 1083 (dis. opn.), certain italics added.)
2. Leighton Further Erred by Misapplying Summary Judgment Principles.
In addition to its statutory construction error, the Leighton majority erred in assigning the burden on summary judgment to the party opposing summary judgment, i.e., the employee/appellant.
In 1990, at the time Leighton was decided (as well as today), a defendant moving for summary judgment had the burden to show an entitlement to summary judgment. (Biljac Associates v. First Interstate Bank (1990) 218 Cal.App.3d 1410, 1421 [267 Cal.Rptr. 819]; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849 [107 Cal.Rptr.2d 841, 24 P.3d 493].) Therefore, the burden rested with the employer in Leighton to make a proper showing in its moving papers in the trial court. As Justice Johnson demonstrated in his dissenting opinion in Leighton, the majority opinion therein contravened this rudimentary principle.
In Leighton, the employer “claim[ed] when a customer leaves a tip he or she leaves .it not just for the waiter but for the busboy and the bartender. . . . However, [the employer] submitted no evidence at the summary judgment hearing to support this contention about the intent of customers who leave tips. Indeed the only evidence which either side attempted to introduce was a declaration by the appellant’s attorney. He testified to having conducted a poll of approximately 30 restaurant customers all of whom said that when they left a tip it was solely for the waiter or waitress who had served them and not for the busboy or other restaurant employees. This evidence was ruled inadmissible, and properly so.” (Leighton, supra, 219 Cal.App.3d at p. 1082 (dis. opn.), italics added.)
Nonetheless, “it was not appellant’s burden to prove restaurant customers do not intend the tips they leave are to be divided among the waiter, the busboy and the bartender. Instead it was [the employer’s] burden to prove they do intend that result. So the fact the appellant’s evidence on this question is inadmissible does not constitute affirmative evidence on the opposite side of the issue. Accordingly, this remains a triable issue.” (Leighton, supra, 219 Cal.App.3d at p. 1083 (dis. opn.), certain italics added.)
In short, Leighton affirmed a grant of summary judgment in favor of the defendant employer/movant, despite the absence of any evidence in the defendant’s moving papers to support the employer’s claim that the patron’s *933intent, in leaving the gratuity, was to benefit not only the server but also other employees who provided direct table service to the patron.
3. This Court’s Decision Is Informed by Leighton’s Interpretation of Section 351 Due to Legislative Acquiescence Therein; However, the Majority Opinion Errs in Expanding Leighton by Extending Tip Pool Participation to All Employees Who “Contribute to the Service of a Patron” or Who “Participate in the Chain of Service. ”
In 2000, 10 years after Leighton was decided, the Legislature amended section 351 by adding a provision relating to credit card processing fees.3 The 2000 amendment did not alter the provision interpreted by Leighton. Although Leighton was wrongly decided, by amending section 351 without altering the language construed by Leighton, the Legislature is deemed to have acquiesced in Leighton’s interpretation. (Harris, supra, 52 Cal.3d at p. 1156 [“ ‘[W]hen the Legislature amends a statute without altering portions of the provision that have previously been judicially construed, the Legislature is presumed to have been aware of and to have acquiesced in the previous judicial construction. Accordingly, reenacted portions of the statute are given the same construction they received before the amendment.’ ”].)
However, the majority opinion here does more than merely reiterate the holding of Leighton. Instead, it rewrites Leighton by replacing its “direct table service” requirement (Leighton, supra, 219 Cal.App.3d at p. 1067) with a new standard—any employee who “ ‘contributes to the service of a patron’ ” or who “ ‘participates in the chain of service’ ” is entitled to share in the proceeds of the employer-mandated tip pool. This newly enunciated “chain of service” standard derives solely from footnote 6 of Leighton. (See maj. opn., ante, at p. 921, citing Leighton, supra, 219 Cal.App.3d at p. 1072, fn. 6.)
Nonetheless, footnote 6 of Leighton is no authority for that proposition. The language in footnote 6 that the gratuity “belongs to the employee who contributed to the service of that patron” (Leighton, supra, 219 Cal.App.3d at p. 1072, fn. 6) is merely a restatement of the Leighton majority’s premise that the gratuity belongs to the employee or employees who “directly provide table service to a patron.” {Id. at p. 1067.)
*934Footnote 6 of Leighton is a thin reed upon which the majority opinion here attempts to lean. That footnote must be read in the context of the Leighton majority’s description of the practice of tip pooling in the California restaurant industry, to wit: “the restaurant business has long accommodated this practice which, through custom and usage, has become an industry policy or standard, a ‘house rule and is with nearly all Restaurants,’ by which the restaurant employer, as part of the operation of his business and to ensure peace and harmony in employee relations, pools and distributes among those employees, who directly provide table service to a patron . . . .” (Leighton, supra, 219 Cal.App.3d at p. 1067, italics added.)
In reliance on footnote 6 of Leighton, the majority opinion here has rewritten and expanded the holding of Leighton to replace its “direct table service” requirement with a nebulous “participate^] in the chain of service” standard (maj. opn., ante, at p. 923), so as to include peripheral employees in the tip pool. However, the “chain of service” standard is not grounded in Leighton and is potentially so broad as to encompass everyone from the restaurant designer to the individual who irons the napkins—all of whom, in one way or another, enhance the patron’s dining experience.
Moreover, contrary to the majority opinion’s reading of footnote 6, said footnote does not support an expansive “chain of service” approach to tip pooling. In footnote 6, the Leighton majority stated in pertinent part: “We are just as much concerned about wages and working conditions for and the property rights of waiters and waitresses in eating establishments as is the author of the dissent, but we are just as concerned with the other employees, i.e., busboys and bartenders, who, as well, render service to the same patron.” (Leighton, supra, 219 Cal.App.3d at p. 1072, fn. 6, italics added.) It therefore follows, for example, that if a particular dining patron did not order a drink from the bar, the restaurant’s bartender did not render service to said patron and therefore, the Leighton majority would exclude said bartender from sharing in the tip left by that patron. The Leighton majority’s view of permissible employer-mandated tip pooling is far narrower than what is endorsed by the majority opinion here.
Additionally, by supplanting the “direct table service” standard with an open-ended “chain of service” standard, the majority opinion here further dilutes the property rights of the employee or employees for whom the gratuity was left.
*9354. Employer-mandated Tip Pooling Is Prohibited by Section 351 Because the Statute Guarantees the Gratuity Is the Sole Property of the Employee or Employees for Whom It Was Left; Employer-mandated Tip Pooling Also Works a Fraud on Consumers in Violation of Section 356.
It is troubling the Leighton majority and the majority here have strayed so far from the clear directive of section 351, which sought to guarantee the employees’ right to a full minimum wage by declaring the gratuity the sole property of the employee or employees for whom it was left.
In protecting the property rights of the employee, section 351 also seeks to effectuate the intent of the patron in leaving the gratuity by declaring the gratuity the property of the employee or employees for whom it was left. In contravention of section 351, the majority opinion here vests the presumed “benevolent and fair-minded” employer with the sole discretion to determine “in advance” the share of tips to be received by each employee (maj. opn., ante, at p. 920), even before the patron has been seated. In so doing, the majority opinion nullifies section 351 by substituting the intent of the employer, as embodied in the employer’s tip-pooling policy, for the intent of the patron. The majority opinion cuts the patron out of the loop and leaves the patron without a say in how the tip is allocated.
The majority opinion’s interpretation empowers the employer to appropriate a portion of the tips left for a particular server and then redirect those tips to other employees whom the employer deems somehow to have enhanced the patron’s dining experience. This redistribution rests on the fiction that all employees in the chain of service are the “employees to whom [the gratuity] was paid, given, or left for” (§ 351) and the further fiction that employer-mandated confiscation and reallocation of tips “ ‘protects the public, the employees and the restaurant employer.’ ” (Maj. opn., ante, at p. 923, quoting Leighton, supra, 219 Cal.App.3d at p. 1070.)
Additionally, the instant majority’s interpretation of section 351 conflicts with section 356, the purpose of which is “to prevent fraud upon the public in connection with the practice of tipping . . . .” (§ 356.) Although it is the patron who is supposed to decide to whom the tip is to be “paid, given to, or left for” (§ 351), there is nothing to show the average patron is even aware that a portion of the tip the patron leaves for his or her server is being taken by the employer and redistributed, according to the employer’s self-interest and priorities.
*9365. Recent Cases Have Compounded the Error of Leighton.
For two decades, Leighton lay dormant and was not relied upon by appellate courts to justify expansion of employer-mandated tip pooling. Suddenly, this year, various appellate courts have revisited Leighton and broadened its application.
In Lu v. Hawaiian Gardens Casino, Inc. (2009) 170 Cal.App.4th 466, 478 [88 Cal.Rptr.3d 345], this court, relying on Leighton, held section 351 does not prohibit tip pooling in the casino industry.
Thereafter, the First Appellate District issued its opinion in Grodensky v. Artichoke Joe’s Casino (2009) 171 Cal.App.4th 1399 [91 Cal.Rptr.3d 732] (Grodensky). The Grodensky court, relying on Leighton, concluded a casino’s policy of requiring a tip pool for dealers did not violate section 351. (Grodensky, supra, at pp. 1443-1449.) Grodensky held “[t]he statute permits an employer to require an employee to share the tips with all of the employees serving or attending to the customers.” (Id. at p. 1446.) Grodensky reached this conclusion despite its recognition “that some customers may not have known that tips were shared” (id. at p. 1446, fn. 8), and that “the statute’s clear intent is to prevent the public from being defrauded.” (Id. at p. 1449.)
Another recent decision is Budrow v. Dave & Buster’s of California, Inc. (2009) 171 Cal.App.4th 875, 884 [90 Cal.Rptr.3d 239] (Budrow), in which Division Eight of this district held that “bartenders . . . may participate in tip pools established pursuant to section 351,” without regard to “whether the bartenders themselves bring to the patron’s table the drink they have poured or mixed.”
In support of its expansive reading of section 351, Budrow stated that “section 351 is clear and unambiguous and makes no reference to ‘direct table service.’ ” (Budrow, supra, 171 Cal.App.4th at p. 883.) That statement reflects a misunderstanding with respect to the role of section 351 in the statutory scheme. The reason section 351 makes no reference to “direct table service” is self evident—section 351 is not a tip-pooling statute. As explained above, section 351 declares the gratuity to be the sole property of the employee or employees for whom it was left in order to ensure that “tips received by an employee would not reduce an employer’s minimum wage obligation, either directly or indirectly.” (Industrial Welfare Com. v. Superior Court, supra, 27 Cal.3d at p. 730, italics added.)
Budrow correctly recognized, “It is, in the final analysis, the patron who decides to whom the tip is to be ‘paid, given to, or left for.’ ” (Budrow, supra, *937171 Cal.App.4th at p. 883, italics added.) Although Budrow paid lip service to the restaurant patron’s intent, it actually endorsed an employer’s policy requiring servers to contribute a fixed percentage of their gross sales to bartenders and other employees (id. at p. 881), an amount which is totally unrelated to the patron’s intent in leaving the gratuity.4
Now, the instant majority opinion extends employer-mandated tip pooling in restaurants far beyond Leighton’s direct table service standard, to include all participants in the “chain of service.”
The confused state of the law flows from the grievous error of the Leighton court in misconstruing section 351, which was enacted to protect the employees’ right to a full minimum wage, as a legislative imprimatur for employer-mandated tip pooling.
In sum, Leighton and its recent progeny have abrogated the guarantee of section 351 that the gratuity is the sole property of the employee or employees for whom it was left. Today, the gratuity is deemed a business asset and a part of the employer’s cash flow, which the employer may take and apply toward its payroll to augment the wages of nontipped employees, in lieu of a pay raise for those employees.
The employer is now given unfettered discretion to redistribute gratuities in any amount the employer sees fit, and the tipped employee is left without a remedy. The separate concurring opinion of Justice Croskey asserts, “a mandatory tip pool should only be sustained under Labor Code, section 351 when it works a fair and equitable distribution among the employees who participate in the tip pool.” (Cone. opn. of Croskey, J., at p. 927, italics added.) Despite that lament by Justice Croskey, the “fair and equitable” limitation is not part of the majority opinion and therefore is not the holding of this court. Therefore, an aggrieved employee has no recourse even if the employer’s redistribution of tips is completely arbitrary.5
In addition to denigrating the property rights of tipped employees, the practice of employer-mandated tip pooling works a fraud on consumers. *938(§ 356.) Unbeknownst to the average patron, it is now the employer, not the patron, who designates the recipients of gratuities. If a restaurant were to advise its patrons of the existence and particulars of its employer-mandated tip pooling policy, that disclosure may well affect the tipping practices of individual patrons. A fundamental flaw, ignored by the majority opinion, is that consumers are not being duly advised as to what happens to the gratuities they leave for their servers. (§ 356.)
Notwithstanding the Legislature’s failure to address Leighton at the time it amended section 351 in 2000, in view of the chaos Leighton has now spawned, there is profound reason for the Supreme Court to grant review in this case in order to clarify the import of section 351.
Appellant’s petition for review by the Supreme Court was denied June 17, 2009, S172761. Kennard, J., and Werdegar, J., were of the opinion that the petition should be granted.

 All further statutory references are to the Labor Code, unless otherwise specified.

 If I were writing on a clean slate, I would hold section 351 gives rise to a presumption that irrespective of whether a tip is handed to an employee or left on the table, the tip is the sole property of the employee or employees who waited on the patron. Without an affirmative showing that the patron intended the gratuity be shared with other employees, the gratuity should be deemed the sole property of the employee or employees for whom it was left (§ 351), which in the usual case would be the server or servers who waited on the patron.

 The 2000 amendment to section 351 added the following language: “An employer that permits patrons to pay gratuities by credit card shall pay the employees the full amount of the gratuity that the patron indicated on the credit card slip, without any deductions for any credit card payment processing fees or costs that may be charged to the employer by the credit card company. Payment of gratuities made by patrons using credit cards shall be made to the employees not later than the next regular payday following the date the patron authorized the credit card payment.” (Stats. 2000, ch. 876, § 9.)

 The majority opinion here and Budrow are at odds with respect to the import of Leighton. As discussed, the majority opinion takes the position that Leighton, in its footnote 6, recognized a “chain of service” standard. (Maj. opn., ante, at p. 921.) In contrast, Budrow views Leighton as silent on this issue. Budrow states Leighton “did not decide what [the] limitations are [on the types of employees who can be included in a tip pool], nor did it address the criteria or standards under which those limitations should be set.” (Budrow, supra, 171 Cal.App.4th at p. 882.)

 The “fair and equitable” limitation is a condition expressly imposed by Leighton, supra, 219 Cal.App.3d at pages 1070-1071. Therefore, if employer-mandated tip pooling is the law in California, obviously it should be implemented in a fair and equitable manner.