U.S. District Judge Laura Taylor Swain in Manhattan said the plaintiffs failed to show that they had a right to share in money left in the plexiglass cube containers, known as tip boxes, that Starbucks places beside cash registers.

She also said the plaintiffs did not support their claim that Seattle-based Starbucks coerced or else required them to put tips that customers left them personally into the boxes.

According to the opinion, Starbucks’ written policy on tips lets baristas and shift supervisors, who are typically part-time hourly workers, handle and receive tip box proceeds.

In contrast, store managers and assistant store managers, who are typically salaried, full-time workers receiving other benefits such as holiday and sick pay and life insurance, do not handle tips. The policy is silent about individual tips.

Adam Klein, a lawyer for the workers, did not immediately return a request for comment. Starbucks spokesman Alan Hilowitz had no immediate comment.

The 2008 lawsuit was brought by five former assistant store managers who worked in Starbucks stores in New York City or Long Island and sought class-action status.

They said Starbucks violated state labor law by denying them tips, given that they performed similar duties to eligible workers, and forcing them to contribute to tip pools.

But Swain said the “plain language” of state labor law does not grant workers any right to share in such pools.

“Plaintiffs’ claims that Starbucks improperly retained gratuities that plaintiffs were entitled to receive fail as a matter of law,” she wrote.

The case is Winans et al v. Starbucks Corp, U.S. District Court, Southern District of New York, No. 08-03734.

Store owners say existing law contains ambiguous language about who is eligible to receive tips, making owners vulnerable to lawsuits over how the money is shared. But workers argue that making supervisors part of the tip pool dilutes crew members’ pay and allows owners to pay supervisors less by offsetting lower salaries with tip earnings.

“Employers want to use the tip pool to fund as many managers as they can, because it will reduce their labor costs,’’ said Shannon Liss-Riordan, a lawyer representing Dunkin’ Donuts workers in a class-action lawsuit that seeks to keep supervisors and managers from sharing tips.

But shift supervisors often work side by side with the crew and should be eligible for tips, said Jim Coen, president of DD Independent Franchise Owners Inc., a Bellingham trade group that represents owners of 2,700 Dunkin’ Donuts shops. Shift supervisors generally earn only about 50 cents to $1 an hour more than crew members, Coen said, and don’t have much authority beyond creating the schedule and assigning work.

“That person very often is the one giving you your coffee,’’ he said. “They’re playing a role in the crew, so they should share in the tips.’’

Coen, of the franchise owners’ group, said the proposed changes would only apply to shift supervisors and make it clear that store managers are not eligible for tips.

On March 3, 2008, Kreutz chased down then 19-year-old Aaron Poisson after seeing the culprit nab a tip jar with less than $5 inside it. The two physically struggled outside Poisson’s car, but Poisson eventually broke free. He then backed his Ford out of a parking spot and over Kreutz, who later died of head injuries.

Kuertz’s family filed a wrongful-death lawsuit in St. Louis County Circuit Court on Monday, but not against Poisson. They’re blaming Starbucks, who they allege “invited criminal behavior” by leaving tip jars “within reach of customers.” According to the St. Louis Post Dispatch:

[The lawsuit] alleges that Starbucks “did not employ security to prevent the perpetration of such crimes” and that it “invited the act of perpetration of said crime” by having a tip jar.As a “direct and proximate” result of this, Kreutz was killed after he was hit by the car, the filing claims.

It says Starbucks had a duty to “exercise reasonable care” to protect Kreutz or give him adequate warning against harm.

Read more at  The Huffington Post

He writes about the new marketing campaign:

Dunkin’ Donuts launched a multimillion-dollar national marketing campaign yesterday that features everyday Joes drinking its iced and hot coffee drinks.

The new campaign, which includes print, TV, and digital ads, is the chain’s latest effort to one-up its biggest rivals, Starbucks and McDonald’s, in the java wars. The ads mostly feature everyday people who were picked as part of a nationwide casting call in November, which drew 1,000 people.

Among the ads’ pitchmen are two firefighters from Georgia who, when asked, “What are you drinkin’?’’ respond: “I’m drinkin’ Dunkin’.’’

Dan Saia, vice president of consumer engagement at Dunkin’ Donuts, a unit of privately owned Dunkin’ Brands Inc. in Canton, said the campaign is designed to let real customers tell the Dunkin’ Donuts story.

He writes about “Tip pooling”:

Separately, advocates for a “tip pooling’’ bill that would change the way tips are pooled at quick service restaurants, such as Dunkin’ Donuts, have one more chance today to get the Massachusetts state Legislature to work on new language that would clarify the law regarding what types of employees can share in the proceeds of tip jars that are fixtures on counters of many Dunkin’ Donut franchises.

The bill, backed by a group of Massachusetts Dunkin’ Donuts franchisees, would allow shift supervisors, or crew leaders, who often wait on customers, to share in the collected tips.

As it stands, the law is ambiguous on whether crew leaders are managers, and hence ineligible to share tips.

Yesterday, the bill was sent to the Senate after the House adopted an amendment offered by Governor Deval Patrick that refined the definition of manager, but state Senator Steven A. Tolman of Brighton objected to considering the bill in an informal session.

During informal sessions, a single objection is enough to stop consideration of a bill. Today is the last day the tip pooling bill can be considered before it has to be refiled in the next session, which starts tomorrow and would entail starting the process all over again.

Tolman, who also objected to the bill when it came up in an informal session last Thursday, said the bill “is of a magnitude that it should be considered in full formal session, where it can be debated, and where there would be the potential for a roll call vote.’’

Jim Coen, president of Dunkin’ Donuts Independent Franchise Owners Inc., an organization that represents the business interests of Dunkin’ Donuts franchisees, said the bill “is simply an attempt to help our hardworking crew leaders get a share of the tips they deserve.’’

In recent years, quick service restaurants, including Dunkin’ Donuts, have been sued by employees who contend that tips are being shared illegally with managers. Coen said that a new law is necessary to help clarify exactly which employees should be classified as managers.

“Because crew leaders do not have the authority to hire and fire and they actively participate in the service of customers, they are not part of management,’’ said Coen, who added that if the bill is not passed today, a new version will be introduced later this year.

Michelle King, a spokeswoman for Dunkin’ Brands, said any policies regarding tipping are made by franchise owners.

Read more at: The Boston Globe

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The 9th U.S. Court of Appeals this week rejected arguments by a waitress at a Portland restaurant who claimed the pooling arrangement violated the Fair Labor Standards Act.

Misty Cumbie argued that because the tip pool at the Vita Cafe included employees who are not “customarily and regularly tipped employees,” it was invalid under the labor act.

The cafe requires its servers to contribute their tips to a pool shared by kitchen staff such as cooks and dishwashers, who got more than half the pool. The remainder was returned to servers in proportion to their hours worked.

But the owners of the cafe, Woody and Aaron Woo, argued the tip pool that included kitchen staff was allowed because the labor act applied only to employers who take a “tip credit” toward meeting the minimum wage by counting a portion of tips as wages.

The appeals court, in an opinion by Judge Diarmuid O’Scannlain, noted the restaurant did not take a tip credit and paid servers wages before tips that met or exceeded the Oregon minimum wage, which was $2.10 above the federal minimum wage at the time.

“Therefore, only the tips redistributed to Cumbie from the pool ever belonged to her, and her contributions to the pool did not, and could not, reduce her wages below the statutory minimum,” O’Scannlain wrote.

As a result, the opinion said, “Cumbie received a wage that was far greater than the federally prescribed minimum, plus a substantial portion of her tips.”

O’Scannlain added that “naturally, she would prefer to receive all of her tips,” but the court ruled the labor act does not restrict tip pooling when no tip credit is taken.

Although the appeals court noted it was the first time it had dealt with the issue of tip pools, Bill Perry, spokesman for the Oregon Restaurant Association, said he doubted the ruling would have much impact on Oregon restaurants.

“This will supplement the back of the house for some restaurants,” Perry said, “but you still want to reward your sales people.”

On Feb. 8, Superior Court Judge Margaret R. Hinkle, who heads the Business Litigation Session, determined in Hernandez, et al. v. Hyatt Corp. that a 2008 amendment to the state’s controversial tip law – G.L.c.149, §150 – was intended to be applied prospectively only.

Two months earlier, U.S. District Court Judge William G. Young, who served as chief of the court from 1997 to 2005, came to the same conclusion in DiFiore, et al. v. American Airlines, Inc.

“There was a point in time [when] the plaintiffs’ bar had some authority on their side that made them feel they had leverage over us during settlement discussions,” said Brigitte M. Duffy, the Boston lawyer who represented the defendants in Hernandez. “There’s no question that now having the chief of the [BLS] and a former presiding judge of the federal court saying what they’ve said here carries some extra weight.”

Duffy, who practices at Seyfarth Shaw, added that DiFiore and Hernandez are “evidence of a definite trend which swings the pendulum back in our direction. It’s been a good couple of months for defense attorneys in Massachusetts – and we don’t always get good months in wage and hour litigation.”

‘Confused’ judges

Scott E. Adams of Groveland, who represented the plaintiffs in Hernandez, said the uncertainty on retroactivity started in 2005 when the Supreme Judicial Court held in Weidmann v. The Bradford Group that treble damages could be awarded only on a finding that an employer had willfully committed an infraction.

That test was struck down by Chapter 80 of the Acts of 2008, which made Massachusetts the first state in the country to impose automatic treble damages for wage and hour law violations. What remained unclear was whether the Legislature intended for damages to apply to cases that pre-dated the passage of the bill.

Adams said judges across the state have been split on the question ever since. For example, he said, Superior Court Judges Raymond J. Brassard and Leila R. Kern have ruled opposite of Hinkle and Young.

“These are significant matters of law that have some important philosophical questions underlying them, and there is clearly a problem with the implementation and enforcement of them,” Adams said. “There are a number of judges in Massachusetts who seem to be very confused about why these laws were developed in the first place and what they were intended to do.”

Adams also criticized the Hernandez ruling for dismissing his clients’ breach of contract claims on grounds that the statute, which has a three-year statute of limitations, preempts any common law remedies. The common law claims, which were based on the premise that the tip statute creates an implied contract between employers and employees, carry a six-year statute of limitations, he said.   

Read more at: Dolan Media Newswire

Rep. Linda Forry ((D-Dorchester), sponsor of the proposed change to what was described as “ambiguous language” in the law, testified before the Joint Committee on Labor and Workforce Development. She was flanked by Dunkin’ Donuts Independent Franchise Owners (DDIFO) President Jim Coen and franchise owners Robert Branca and Clayton Turnbull.

Coen told the committee, chaired by Sen. Thomas McGee (D-Middlesex/Essex) and Rep. Cheryl Coakley-Rivera (D-Hampden), that the current law was intended to prevent managers and executives from siphoning tips away from their lower-wage employees. But he said the law has resulted in unintended consequences because it “denies tips to nearly everyone in the team service environment that many quick service restaurants such as Dunkin’ Donuts utilizes, because at some point during most shifts, even when a shop manager is present, some crewmembers perform at least one managerial function.”  
The issue is the law’s definition of “managerial authority.”
 
Passed in 2004, the law says, “Tip sharing is permitted, provided that the distribution of the tips is limited to wait staff employees, service employees and service bartenders.”
The Massachusetts Attorney General, interpreting the legislation, ruled that “Anyone who has any superiority in rank over another employee cannot share or receive any tips or service charge, whether or not part of their work includes working alongside or with the employees serving the patrons directly. This includes shift leaders, supervisors, managers, assistant managers and anyone who can direct another employee on his or her job responsibilities.”

Forry’s proposal would define managerial authority to limit it to managers, who:
1) have hiring and firing authority,
2) regularly oversee at least two employees, and
3) work in an establishment where some employees are paid below minimum wage and derive much of their income from tips.

The committee took no action on the proposed revisions to the law. The committee staff told the Dunkin’ Donuts team that it may set up a working group of restaurant owners to hammer out the language of the revised legislation. DDIFO government affairs consultant Joe Giannino said he was told the legislators do not want to cause restaurants other unintentional problems.

Branca, who owns Dunkin’ franchises in Worcester and serves as the DDIFO’s Legislative Affairs Coordinator, told the committee that “the law is ambiguous. Franchise owners want to comply with the law, but we need to know what the law is.”
In his and other many Dunkin’ Donuts franchises, he said a shift supervisor “is often a teenager with three months more experience than the other teenagers.”

Branca and Turnbull told the legislators that at Dunkin’ Donuts, shift leaders work the counter to maintain good customer service during peak periods “They are there to make sure a customer who orders black coffee gets black coffee,” said Turnbull, who owns several Boston franchises including several at Logan Airport.

In addition, many shift leaders at Dunkin’ shops do not have the authority to hire or fire employees, the said. Branca and Turnbull asked the legislators “to make it simple.”
Turnbull said the tips add about $2 an hour for his employees. “This is not small beans.”

Branca said the confusion in the definition of managerial authority has resulted in class action law suits against franchise owners. Other suits have been filed on behalf of employees across the country in New York and California. In Massachusetts, “the statute mandates triple damages plus 12% interest and attorney fees, even where there was no intent to violate the statute and where no actual manager shared in any tip pool,” Coen said in prepared remarks given to the legislators.

As a result of the 2004 law, many quick service restaurants—Dunkin’ Donuts included—have removed tip jars and will not allow employees to accept tips.

Coen told the committee that Dunkin’ Donuts franchisees operate 1,350 shops in the state and employ more than 25,000 workers statewide. The sales tax revenues to the state collected from Dunkin’ operations is more than $67 million. And the total investment by Dunkin’ franchise owners in the state exceeds $3 billion.

Ironically, Dunkin’ helped create “the culture of tipping at coffee and donut shops” when the chain was founded in the 1950s and waitresses served coffee in ceramic cups at the counter, Coen said.

In spite of Judge Schiltz’s unequivocal declaration of the policy’s illegality, Starbucks has yet to change its policy. E. Michelle Drake, attorney for the Plaintiffs, noted the high-risk nature of the strategy Starbucks has decided to pursue. “Minnesota law provides for a $1,000 civil penalty per violation. By not changing its policy, Starbucks may have already subjected itself up to civil penalties in excess of a million dollars — just in the past few weeks alone.”

While Judge Schiltz denied the present Plaintiffs’ bid for class certification, individuals may still bring their own cases, either by filing individually or by filing in groups. Such individuals would be eligible to recover damages, liquidated damages, and attorneys’ fees and costs.

Read more at: Smartbrief