Court Opinion

ID: 4320661
Source: CourtListenerOpinion
Date Created: 2018-10-12 20:00:17.23714+00
Date Added: 2024-06-11T13:28:14.606647
License: Public Domain

NOT PRECEDENTIAL

            UNITED STATES COURT OF APPEALS
                 FOR THE THIRD CIRCUIT
                      _____________

                          No. 17-3646
                         _____________

                NANCY LIVI, on behalf of herself
                 and all others similarly situated,
                                   Appellant

                                v.

  HYATT HOTELS CORPORATION; HYATT CORPORATION,
       DBA Hyatt At The Bellevue; BELLEVUE INC.;
              BELLEVUE ASSOCIATES
                     _____________

          On Appeal from the United States District Court
              for the Eastern District of Pennsylvania
                 District Court No. 2-15-cv-05371
            Trial Judge: The Honorable Anita B. Brody
                          _____________

                   Argued September 27, 2018

Before: SMITH, Chief Judge, McKEE and RESTREPO, Circuit Judges

                     (Filed: October 12, 2018)
Noah I. Axler      [ARGUED]
Marc A. Goldich
Axler Goldich
1520 Locust Street
Suite 301
Philadelphia, PA 19102
                   Counsel for Appellant

Noah A. Finkel    [ARGUED]
Cheryl A. Luce
Seyfarth Shaw
233 South Wacker Drive
Suite 8000
Chicago, IL 60606
                  Counsel for Appellees

                             _____________________

                                   OPINION
                            _______________________

SMITH, Chief Judge.

      Nancy Livi appeals the District Court’s award of summary judgment to

Hyatt Hotels Corporation, et al. (hereinafter, “Hyatt”). For the reasons that follow,

we will affirm.

                                          I.

      Livi was employed as a banquet server at the Bellevue, a Hyatt hotel in

Philadelphia, from 1986 until 2014. In 2015, she filed a class action complaint in

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
                                          2
the United States District Court for the Eastern District of Pennsylvania on behalf

of herself and those similarly situated in which she alleged that: (1) she often

worked more than 40 hours per week but was never paid overtime (one-and-a-half

times her hourly wage) for time in excess of 40 hours; and (2) she was entitled to a

contractual service charge of either 20% or 21% of the banquet cost, but Hyatt

always retained a portion of the service charge for itself and did not pay the

entirety to the banquet servers. Based upon these allegations, Livi brought claims

for the unpaid wages and service charges pursuant to the Pennsylvania Minimum

Wage Act (“PMWA”), 43 Pa. Stat. §§ 333.101–333.115, the Pennsylvania Wage

Payment and Collection Law (“WPCL”), 43 Pa. Stat. §§ 260.1–260.12, and on

grounds of unjust enrichment.1

      In a thoughtful opinion, the District Court awarded summary judgment to

Hyatt on all claims. Livi timely appealed.2

1
 Livi also raised claims under the Fair Labor Standards Act and the Philadelphia
Administrative Code, but later declined to pursue them.

2
 The District Court exercised jurisdiction under 28 U.S.C. § 1332(d). We have
jurisdiction to review the District Court’s final decision pursuant to 28 U.S.C.
§ 1291. We review the grant of summary judgment de novo, applying the same
standard as the District Court. Azur v. Chase Bank, USA, 601 F.3d 212, 216 (3d
Cir. 2010). Viewing the evidence in a light most favorable to the non-movant and
drawing all inferences in her favor, a district properly grants summary judgment
where there is no genuine dispute as to any material fact and the moving party is
entitled to judgment as a matter of law. Daubert v. NRA Group, LLC, 861 F.3d
382, 388–89 (3d Cir. 2017).
                                           3
                                         II.

      In Pennsylvania, a service establishment (such as a hotel) is not required to

pay overtime to employees working more than 40 hours per week if it is exempt

from the overtime requirement under 34 Pa. Code § 231.43(f):

       No employer may be deemed to have violated these §§ 231.41–
       231.43 by employing an employee of a retail or service establishment
       for a workweek in excess of 40 hours if:

       (1) The regular rate of pay of the employee is in excess of 1½ times
       the minimum hourly rate applicable.

       (2) More than half of the employee’s compensation for a
       representative period, not less than 1 month, represents commissions
       on goods or services.

      It is undisputed that Livi’s regular rate of pay at Hyatt was more than 1½

times the minimum wage and that the service charges that Hyatt paid her

comprised more than half of her compensation. Livi argues, however, that Hyatt is

not exempt from the overtime requirement because the service charges do not

“represent[] commissions on goods or services” under 34 Pa. Code § 231.43(f).

      As Livi correctly observes, the relevant Pennsylvania statutes do not define

“commissions.” See 34 Pa. Code § 231.1; 43 Pa. Stat. § 333.103. But, looking to

the law as interpreted by the Supreme Court of Pennsylvania, we must attempt to

predict how that court would likely rule as to the meaning of commissions. See

Gares v. Willingboro Twp., 90 F.3d 720, 725 (3d Cir. 1995). And, in the absence

of direct guidance from Pennsylvania’s Supreme Court, we may look to
                                        4
Pennsylvania’s intermediate appellate courts for assistance in making that

prediction. Id.

         Here, the District Court correctly observed that Pennsylvania’s

Commonwealth Court, in a decision affirmed by the Supreme Court of

Pennsylvania, has instructed that, when the PMWA substantially parallels the

federal Fair Labor Standards Act (“FLSA”), Pennsylvania courts look to federal

courts’ interpretation of the parallel FLSA provision for guidance. Commonwealth

Dep’t of Labor & Indus. v. Stuber, 822 A.2d 870, 873 (Pa. Commw. Ct. 2003) (“In

the past, this Court has indicated that it is proper to give deference to federal

interpretation of a federal statute when the state statute substantially parallels it.”),

aff’d 859 A.2d 1253 (2004); see also Mazzarella v. Fast Rig Support, LLC, 823
F.3d 786, 790 n.5 (3d Cir. 2016) (“This analysis applies equally to the FLSA and

PMWA claims, given the similarities between the [Motor Carrier Act overtime

exemption] in each statute.”).

         In this instance, the state and federal exemptions are worded nearly

identically.3 It cannot be doubted that the two provisions are parallel.

3
    The relevant portion of the FLSA provides:

         No employer shall be deemed to have violated subsection (a) by
         employing any employee of a retail or service establishment for a
         workweek in excess of the applicable workweek specified therein, if
         (1) the regular rate of pay of such employee is in excess of one and
                                              5
Accordingly, Pennsylvania law instructs that interpretation of the PMWA’s

exemption is informed by case law interpreting the parallel FLSA exemption.

      Looking to the FLSA’s overtime exemption, we agree with the District

Court that banquet service charges represent commissions. See Parker v.

NutriSystem, Inc., 620 F.3d 274, 283–84 (3d Cir. 2010) (payments represent

commissions when they are proportional to the cost to the consumer, decoupled

from the actual time worked, and do not offend the purposes of the FLSA).4 In

      one-half times the minimum hourly rate applicable to him under
      section 206 of this title, and (2) more than half his compensation for a
      representative period (not less than one month) represents
      commissions on goods or services.

29 U.S.C. § 207(i).

4
 In Mechmet v. Four Seasons Hotels, Ltd., 825 F.2d 1173, 1177 (7th Cir. 1987),
the Seventh Circuit concluded that banquet service charges are “commissions” for
purposes of the FLSA exemption. While we agree with that result, we do not
adopt the Seventh Circuit’s reasoning.
                                         6
addition, the Department of Labor has issued guidance to this effect,5 and Livi has

not identified a single case adopting a contrary interpretation.6

      We are reasonably confident in predicting that the Pennsylvania Supreme

Court would conclude, consistent with the federal interpretation of the parallel

FLSA provision, that the banquet service charges represent commissions for

purposes of the PMWA’s overtime exemption. The District Court therefore

appropriately awarded summary judgment to Hyatt on this claim.

                                          III.

      Livi next contends that the banquet service charges are “gratuities,” and that

the PMWA mandates that gratuities are the property of the employee. Specifically,

Livi relies upon a provision of the PMWA exempting employers from paying the

5
 See Dep’t of Labor Op. Ltr., 1997 WL 971257 (Aug. 29, 1997) (“A service charge
levied on a customer by an establishment such as a hotel or restaurant for services
by waiters or waitresses may qualify as a commission under section 7(i) since such
charge bears a direct relationship to the sale of goods or services by the
establishment.”); Dep’t of Labor Op. Ltr., 1996 WL 1031770 (Apr. 3, 1996)
(payment based on a percentage of the total cost is a commission for purposes of
the FLSA exemption, but a flat fee payment is not).
6
 At oral argument, Livi relied upon Unemployment Compensation Board of
Review v. Churchill Valley Country Club, 338 A.2d 738 (Pa. Commw. Ct. 1975), a
case concerning the calculation of a wait server’s salary at a country club for
purposes of setting her unemployment benefits. There, the Commonwealth Court
determined that service charges collected by an employer and later redistributed to
service employees are not “tips” (which are not considered wages), and therefore
must be included in calculating the amount of wages paid to the employee for
unemployment purposes. Id. at 741. That case does not concern the PMWA, nor
does its holding provide support for Livi’s position.
                                          7
minimum wage to certain tipped employees, 43 Pa. Stat. § 333.103(d)(2), which

provides:

         All tips received by such employe have been retained by the employe
         and shall not be surrendered to the employer to be used as wages to
         satisfy the requirement to pay the current hourly minimum rate in
         effect; where the gratuity is added to the charge made by the
         establishment, either by the management, or by the customer, the
         gratuity shall become the property of the employe; except that this
         subsection shall not be construed to prohibit the pooling of tips among
         employes who customarily and regularly receive tips.7

(emphasis added).

         Livi contends that, because banquet service charges are “added to the charge

made by the establishment,” they must be paid, in their entirety, to banquet servers,

making Hyatt’s retention of a portion of the service charge unlawful.

         As the District Court correctly determined, this provision of the PMWA is

inapplicable. Section 103(d) of the PMWA, known as the “tip credit” provision,

permits an employer to pay tipped employees an hourly wage substantially lower

than the minimum wage by taking a “credit” for the amount of tips received by the

employee. 43 Pa. Stat. § 333.103(d). It is undisputed that Livi’s hourly wage was

well above the minimum wage and Hyatt never invoked the tip credit provision.

Livi presents no basis for us to conclude that the provision extends to her

7
    The “employe” spelling appears in the original.
                                           8
circumstances. Accordingly, the District Court correctly granted summary

judgment to Hyatt on this claim.8

                                         IV.

      Finally, Livi contends she is entitled to unpaid overtime and additional

service charge payments on two additional theories: (1) as a third-party

beneficiary to Hyatt’s banquet contracts, which she claims entitles her to pursue a

claim for the additional portion of the service charge under the WPCL, 43 Pa. Stat.

§ 260.9a(a);9 and (2) on a theory of unjust enrichment. The District Court disposed

of both claims in Hyatt’s favor. We agree, and have nothing to add to the District

Court’s analysis.

                                         V.

      Livi has not identified an unsettled issue of Pennsylvania law of sufficient

import to warrant certification to the Supreme Court of Pennsylvania. See Pa. R.

App. P. 3341(c). We therefore decline to certify a question to that Court. We will

8
 Even if the tip credit provision applied to her, we do not share Livi’s view that
banquet service charges are “gratuities.” The PMWA provides that “‘[g]ratuities’
means voluntary, monetary contributions received by an employe from a guest,
patron or customer for services rendered.” 43 Pa. Stat. § 333.103(i). Banquet
service charges do not fall within the plain terms of this definition because they are
not voluntary, they are not paid to the employee, and they are not paid after
services are rendered.
9
 Pennsylvania’s WPCL provides a civil remedy for an employee to recover wages
to which she is entitled. It does not independently establish an entitlement to any
particular wages.
                                           9
affirm the grant of summary judgment to Hyatt for substantially the same reasons

set forth in the District Court’s opinion.10

10
  Judge McKee does not join Part III of this opinion. He concludes that there is a
genuine issue of material fact as to whether the service charge was intended as a
‘tip’ or ‘commission.’ He therefore believes that the District Court erred in
granting summary judgment to Appellees on the PMWA claim. He joins Part IV
only insofar as it rejects the Appellants’ third party beneficiary contract claim.
                                           10