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Benavidez v. Greenwich Hotel Limited Partnership

United States District Court, D. Connecticut

March 15, 2019

EDGAR BENAVIDEZ, ALI KAZI, MARVIN CASTANEDA, IVAN PERALTA-CABRERA, LUIS VICTORIA, PATRICK DESROSIERS, ROCIO RIBEIRO, DOUGLAS MOLINA, WILLIAM ACAPANA, RODOLPHO OYARIDE, FERNANDO FAJARDO, JAIME DIAZ, ALBERTO GONZALES, KLEVER ORDONEZ, AMIR SOTO, MARCELO VILLACIS, ANGEL CAMPOVERDE, JAMES LOPEZ, IVAN P. ABRIL, MARIA JARILLO, FREDI SOTO, and NILO HUYHUA, on behalf of themselves and others similarly situated, Plaintiffs,
v.
GREENWICH HOTEL LIMITED PARTNERSHIP d/b/a Hyatt Regency Greenwich, HYATT EQUITIES, L.L.C., and HYATT CORPORATION, Defendants.

          RULING AND ORDER ON MOTION FOR SUMMARY JUDGMENT

          VICTOR A. BOLDEN UNITED STATES DISTRICT JUDGE

         On March 7, 2018, Greenwich Hotel Limited Partnership, Hyatt Equities, L.L.C., and the Hyatt Corporation (collectively, “Defendants”) moved for summary judgment against Edgar Benavidez, Ali Kazi, Marvin Castaneda, Ivan Peralta-Cabrera, Luis Victoria, Patrick Desrosiers, Rocio Ribeiro, Douglas Molina, William Acapana, Rodolpho Oyaride, Fernando Fajardo, Jaime Diaz, Alberto Gonzales, Klever Ordonez, Amir Soto, Marcelo Villacis, Angel Campoverde, James Lopez, Ivan P. Abril, Maria Jarillo, Fredi Soto, and Nilo Huyhua (“Plaintiffs”). See Motion for Summary Judgment, dated Mar. 7, 2018 (“Mot. Summ. J.”), ECF No. 101; Defendants' Memorandum of Law in Support of Mot. Summ. J., dated Mar. 7, 2018 (“Defs.' Mem.”), ECF No. 101-1; Defendants' Local Rule 56(a)(1) Statement of Undisputed Material Facts in Support of Mot. Summ. J., dated Mar. 7, 2018 (“Defs.' SMF”), ECF No. 101-2.

         On April 25, 2018, Plaintiffs opposed Defendants' motion. See Plaintiffs' Memorandum in Opposition to Mot. Summ. J., dated Apr. 25, 2018 (“Pls.' Opp.”), ECF No. 106-1; Plaintiffs' Local Rule 56(a)(2) Statement of Facts in Opposition to Mot. Summ. J., dated Apr. 25, 2018 (“Pls.' SMF”), ECF No. 106.

         For the following reasons, Defendants' motion for summary judgment is GRANTED IN PART AND DENIED IN PART.

         Defendants' motion is granted with respect to the federal claims, but denied with respect to the Connecticut law claims, which are dismissed without prejudice to refiling in state court.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         A. Factual Allegations [1]

         Plaintiffs have all been employed as banquet servers at the Hyatt Regency Greenwich hotel, located at 1800 East Putnam Avenue in Old Greenwich, Connecticut. First Amended Complaint, dated Sept. 19, 2016 (“Am. Compl.”), ECF No. 37-3, ¶ 1. Edgar Benavidez, Ali Kazi, Marvin Castaneda, Ivan Peralta-Cabrera, Luis Victoria, Patrick Desrosiers, William Acapana, Rodolfo Oyaride, Fernando Fajardo, Jaime Diaz, Alberto Gonzales, Amir Soto, Marcelo Villacis, Angel Campoverde, James Lopez, Maria Jarillo, and Fredi Soto have all been employed by Defendants as banquet servers for at least ten years. See Am. Compl. ¶¶ 46-51, 54- 58, 60-63, 65-66. Rocio Ribeiro, Douglas Molina, Klever Ordonez, and Nilo Huyhua have all been employed as banquet servers for at least six years. Id. ¶¶ 52, 53, 59, 67.

         Plaintiffs allege that Ivan P. Abril has been employed as a banquet server at the hotel for approximately eighteen years. Id. ¶ 64. Defendants admit that he was previously employed as a banquet server, but deny that he has been employed for eighteen years. Answer to First Amended Complaint, dated Dec. 16, 2016 (“Am. Ans.”), ECF NO. 62, at 14. They do not provide an alternative estimate of the length of his employment. Id.

         Plaintiffs all reside in either Fairfield County, Connecticut or Westchester County, New York. Am. Compl. ¶¶ 6-27.

         Greenwich Hotel Limited Partnership is a limited partnership organized under the laws of Connecticut, and is the owner of the Hyatt Regency Greenwich hotel. Answer to First Amended Complaint, dated Dec. 16, 2016 (“Am. Ans.”), ECF NO. 62, at 8. Hyatt Equities, L.L.C. (“Hyatt Equities”) is a limited liability corporation incorporated in Delaware, and is the general partner of Greenwich Hotel Limited Partnership. Id. at 9. The Hyatt Corporation (“Hyatt Corp.”) is a limited liability corporation incorporated in Delaware, and is the agent of Greenwich Hotel Limited Partnership. Id. at 9.

         Plaintiffs allege that, at all relevant times, they were employees of Defendants, and were jointly employed by Defendants. Am. Compl. ¶¶ 28, 40. Defendants deny that they were joint employers, and admit only that “Plaintiffs were employees of Hyatt Corporation d/b/a Hyatt Regency Greenwich.” Am. Ans. at 7.

         1. Allegations as to Job Duties

         As banquet servers, Plaintiffs have served at special events held at the Hyatt Regency Greenwich, such as conferences, weddings, and other life celebrations. Their regular duties include: “the collecting and setting up of equipment needed for the event; setting up tables; taking orders from customers; carrying trays to tables; serving food to customers; all other general service that customers need and require; cleaning tables after events; breaking down the room after events; and all other work needed to physically set up events and clean up after them.” Am. Compl. ¶ 76.

         Three other categories of employees also have job functions related to these events: housemen, bartenders, and banquet captains. Am. Compl. ¶¶ 71-85.

         A houseman's regular duties include “the setting up of banquet rooms; the resetting of them to their original state after the event has concluded; and during the event, assisting banquet servers and transporting tables and equipment.” Am. Compl. ¶ 77.

         A bartender's regular duties include “the setting up of the bar for the event; making drinks during the event, and the breaking down of the bar after the event.” Id. ¶ 78.

         The parties dispute the scope of the regular duties of a banquet captain.

         Plaintiffs generally allege that banquet captains “have had, and continue to have, the power to control the banquet servers, bartenders and housemen employed within the banquet department at the Hotel, including Plaintiffs.” Id. ¶ 71. Plaintiffs have identified four specific individuals as banquet captains in their Amended Complaint: Dan Ridell, George Mickaiel, Dennis Carrington, and Francis Tobias. Id. ¶ 70.

         Specifically, they allege that the banquet captains are “the supervisors of the banquet events and supervise the banquet servers, bartenders and housemen[2] while these employees perform their work; i.e., the Captains are the bosses of these employees during the set-up of the banquets, the actual banquets, and breakdown of them.” Id. ¶ 72. At pre-shift meetings, Plaintiffs allege that “the Captains advise the banquet servers and housemen of all pertinent information concerning the upcoming events including the menu.” Id. ¶ 73.

         Plaintiffs allege that “at pre-shift meetings, as well as during the events, the Captains assign particular tables to each banquet server, and assign various duties to banquet servers including the service of hors d'oeuvres, the cleanup of the reception area, the final work needed to set up the room, the refilling of water glasses, the supplying of bread and butter to tables, and the maintenance of candles on the tables.” Id. ¶ 74. Plaintiffs also allege that “at pre-shift meetings, as well as during the events, the Captains assign the housemen duties with respect to the setting up and refreshing of the conference and food and beverage rooms.” Id. ¶ 75.

         Plaintiffs allege that “[t]he Captains do not perform any banquet server, houseman or bartender duties; rather, they only perform supervisor duties by which they supervise those types of employees.” Id. ¶ 79. Plaintiffs also allege that “[p]rior to and after the events, the Captains occasionally have superficial, de minimus contacts with the customers; however, once the event begins the Captains do not provide any service to the customers, and have typically secluded themselves within the banquet office during the term of the banquets while the banquet servers serve the customers as needed, and the housemen and bartenders perform their regular duties.” Id. ¶ 80. Plaintiffs further allege that “Captains have had the power to discipline employees, including banquet servers, bartenders and housemen, and have in fact done so by, among other things, ‘writing them up', sending employees home when they are late, ordering employees to work through lunch, and punishing them by assigning them difficult tasks and to difficult events.” Id. ¶ 81.

         Plaintiffs allege, on information and belief, that “all of the Captains participate in the evaluation of employees, including Plaintiffs, by collecting the pertinent information that is needed to assess the performance of the employees, and Ridell collects and synthesizes all the reported information with respect to the evaluation that is eventually presented to the employee.” Id. ¶ 82. Plaintiffs further allege that “Captains have controlled the schedules of housemen, bartenders and banquets servers, including Plaintiffs, by among other things, setting their schedules; changing their schedules including sending employees home early from events; calling them at any time, even as late as only hours before an event is to occur, to advise then that they are not needed; and requiring housemen to work as banquet servers, ” id. ¶ 83, and that “[a]t least one of the Captains has had the power to approve or deny vacation requests or requests for days off for personal reasons, ” id. ¶ 84.

         Defendants deny nearly all of these allegations as to the banquet captains' duties. See Am. Ans. at 16-19. They admit only that “[a]t pre-shift meetings, the Captains advise the banquet servers and housemen of all pertinent information concerning the upcoming events including the menu.” Id. at 16 (quoting Am. Compl. ¶ 73).

         2. The Agreement with Plaintiffs' Union

         The parties do not dispute that, since September 1, 2014, the terms and conditions of Plaintiffs' employment have generally been defined according to the collective bargaining agreement between Plaintiffs' union, UNITE HERE Local 217 and the Hyatt Corporation, as an agent of the Greenwich Hotel Limited Partnership, doing business as the Hyatt Regency Greenwich. Defs.' SMF ¶ 6; Pl.'s SMF ¶ 6. That agreement recognizes that UNITE HERE Local 217 is the “sole and exclusive bargaining representative with respect to wages, hours and other conditions of employment for all full-time and regular part-time employees” employed by the Hyatt Regency Greenwich in the job classifications specified in Appendix A of the agreement.[3]See Labor Agrmt. between Hyatt Corp., as an agent of Greenwich Hotel Ltd. P'ship d/b/a Hyatt Regency Greenwich, and UNITE HERE, Local 217, effective Sept. 1, 2014-Aug. 31, 2020 (“CBA”), annexed as Ex. B to Declaration of Marvin Castaneda, annexed to Pls.' Opp., ECF No. 106-4, at § 1.1.

         Appendix A specifies the contract hourly rates for three “commissioned classifications”: banquet servers/bartenders, banquet captains, and IRD [in-room dining] servers. CBA at App'x A. Under the contract, the base hourly pay rates for banquet servers/bartenders increase biannually as follows:

9/1/14

9/1/15

3/1/16

9/1/16

3/1/17

9/1/17

3/1/18

9/1/18

3/1/19

9/1/19

3/1/20

Banquet Server/ Bartender

4.90

5.01

5.12

5.23

5.35

5.47

5.60

5.72

5.85

5.97

6.10

Banquet Captain

7.40

7.51

7.62

7.73

7.85

7.97

8.10

8.22

8.35

8.47

8.60

         CBA at App'x A.

         Under the CBA, events requiring banquet services shall normally be subject to a service charge of twenty-three percent of food, beverage, and room rental costs. CBA § 30.6. Those service charges are then placed into what the agreement describes as a service charge pool. Id. In addition, the CBA requires that fifty percent of fees charged for any carving and pasta stations, corkage fees, and extra staffing fees shall be allocated to the service charge pool. Id. Finally, the CBA dictates that all of the tips received by banquet servers, captains, and bartenders are placed into the service charge pool. Id.

         The CBA further provides that the service charge pool is then allocated among the workers as follows: 69% to banquet servers and banquet captains, 3% to convention services housemen and convention services supervisors, and 28% to the Hyatt Regency Greenwich as an administrative fee. Id.

         According to the CBA, banquet captains' duties “are to facilitate the event and work with the kitchen and stewarding to ensure the function is prepared properly.” Id. In addition, absent unusual circumstances, banquet captains are not to be scheduled for work more than two hours before an event's starting time. Id.

         3. Plaintiffs' Allegations as to Defendants' Pay Practices

         Plaintiffs allege that the above-described service charge pool arrangement, as well as the pool used prior to the CBA's effective date, results in two allegedly illegal pay practices.

         First, Plaintiffs argue that Defendants “unlawfully required Plaintiffs to pool their tips with banquet captains who have, and continue to, manage and supervise Plaintiffs.” Am. Compl. ¶ 70. Second, they allege that Defendants used that same pool to take a tip credit against the hourly minimum wage rate. Am. Compl. ¶ 87.

         As a result, they contend that Defendants failed to pay Plaintiffs a minimum wage for all hours worked, in violation of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., and specifically §§ 203(m), 206, and 215(a)(2). Plaintiffs therefore seek “their unpaid minimum wages including the amount of the tip credits that were taken by Defendants, damages for unreasonably delayed payment of wages, liquidated damages, reasonable attorneys' fees[, ] and costs and disbursements of the action[, ] pursuant to 29 U.S.C. § 216(b).” Id. ¶ 93.

         Plaintiffs further claim that Defendants unlawfully diverted “portions of Plaintiffs' wages, the tips/gratuities they were entitled to, ” in violation of Connecticut General Statute § 31-71e, and seek to recover “the tips/gratuities that [Defendants] diverted from Plaintiffs, damages for unreasonably delayed payment of those tips/gratuities, liquidated damages, reasonable attorneys' fees[, ] and costs and disbursements of the action” under Connecticut General Statute § 31-72. Id. ¶¶ 95-96 (citing Conn. Gen. Stat. §§ 31-71e, 31-72).

         Defendants dispute Plaintiffs' characterizations. They argue, rather, that the pay structure is not a “tip pool” at all, because the charges at issue are not tips, but mandatory service charges. Defs.' Mem. at 3 (“Under the FLSA, there is a clear distinction between tips, on the one hand, and commissions or service charges, on the other. A tip is voluntarily paid by a guest, while a service charge is imposed upon the guest by the hotel or restaurant.”); see also Declaration of Tony Centrone, dated Feb. 27, 2018 (“Centrone Decl.”), annexed as Ex. 1 to Defs.' SMF, ¶¶ 2-3 (“Hyatt imposes a service charge on its customers for banquet events at the Hyatt Regency Greenwich. The service charge is normally 23% of the food and beverage and room rental charges, though there are some variations. For example, some customers have negotiated a different service charge percentage, such as 21% or 22% . . . . The service charge is not optional for customers; rather, the service charge is a mandatory term of the banquet contract, agreed to in advance by Hyatt and its customers.”) (citing Sample Contract, dated Feb. 17, 2016, annexed as Ex. A, ECF No. 101-4).

         Defendants point to applicable federal and state guidance indicating that service charges may be used to satisfy minimum wage obligations. Defs.' Mem. at 4 (“The service charge is not optional for customers; rather, it is mandatory. The service charge is then included in the hotel's gross receipts. The distribution from service charges therefore are not tips, so they may be counted toward minimum wage.”) (citing 29 C.F.R. § 531.55(b) and Conn. Dep't of Labor, Gratuities in the Restaurant Industry, https://www.ctdol.state.ct.us/wgwkstnd/wage-hour/restaurant.htm).

         Defendants therefore argue that they have paid Plaintiffs “through a combination of hourly wages (currently $5.35 per hour) and distributions from the mandatory service charges from banquet events at which they are employed as banquet servers.” Defs.' SMF ¶ 4. This results, they contend, in a “regular rate of pay for each Plaintiff in every workweek in excess of $7.25 per hour through December 9, 2017.” Id. ¶ 5. They therefore contend that they are not only in full compliance with their obligations to pay minimum wage, but almost always exceed it. Id. ¶ 4. Thus, Defendants argue that “[b]ecause the undisputed evidence shows that Plaintiffs were paid at least minimum wage and that the banquet service charges they seek are not wages that are due to them, ” they are entitled to summary judgment on Plaintiffs' FLSA claims. Defs.' Mem. at 1-2. They further contend that Plaintiffs have no claim under Connecticut law “because they cannot show that Hyatt failed to pay them the wages that it agreed to pay them under the applicable agreement or point to any source giving rise to their entitlement to the portion of the service charges that were retained by Hyatt or paid to banquet captains.” Id. at 2.

         B. Procedural History

         On February 5, 2016, Edgar Benavidez, Ali Kazi, Marvin Castaneda, Ivan Peralta-Cabrera, Luis Victoria, Patrick Desrosiers, Rocio Ribeiro, and Douglas Molina (collectively, the “originally-named Plaintiffs”) sued Defendants for failure to pay a minimum wage in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and for diversion of portions of their tips and gratuities in violation of Connecticut Wage Payment Law § 31-71e. See Complaint, dated Feb. 5, 2016 (“Compl.”), ECF No. 1, ¶¶ 58-68.

         On March 14, 2016, Defendants answered, asserting three affirmative defenses: (1) that they acted in good faith and had reasonable grounds for believing that they were in good faith compliance with the FLSA and Connecticut Wage Payment Law; (2) that Plaintiffs' claims and those of potential collective members were barred by applicable statutes; and (3) that Plaintiffs' claims and those of potential collective members were barred, in whole or in part, by statutory exclusions, exceptions, setoffs, or credits under ...


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