18th Annual Workplace Class Action Report - 2022 Edition

382 Annual Workplace Class Action Litigation Report: 2022 Edition the trial court properly dismissed those claims as well. In sum, the Court of Appeals affirmed the judgment of the trial court dismissing Plaintiff’s complaint. Hovagimian, et al. v. Concert Blue Hill, LLC, 488 Mass. 237 (Mass. 2021). Plaintiffs, a group tipped servers, filed a class action alleging that Defendant failed to remit to them patron charges that should have been provided as tips in violation of the Massachusetts Tip Act. Id . at 237. The trial court granted Defendant’s motion for judgment on the pleadings. On appeal, the Supreme Judicial Court of Massachusetts reversed and remanded the trial court’s ruling. Defendant was an establishment that hosted banquets and other events requiring food and beverage services. Banquet contracts contained a provision stating that the patron would be charged a 10% gratuity that was remitted to waitstaff employees, as well as an additional 10% “administrative” or “overhead” charge that was retained by Defendant. Id. at 239. However, in the final bill to a patron, the category labeled “Service & Tax Charges” listed three separate categories of charges, including “tax,” “gratuity,” and “service,” and did not reference the 10% administrative charge described in the contract. Id. at 240. The Supreme Judicial Court held that the contract described the disputed fee as an “administrative” or “overhead” charge, which would to be retained by the club, and listed a separate fee as a “gratuity” that was to be distributed entirely to waitstaff, but the final bill it clearly listed the disputed fees as a “service” charge. Id. The phrase “service charge” was also a term that a person reasonably would assume referred to proceeds that would be paid to an employee for “services” rendered. Id . at 243. Accordingly, the Supreme Judicial Court determined that the disputed fee was characterized most appropriately within the meaning of G. L. ch. 149, § 152A(a) as a “service charge” that must be paid to Plaintiffs. Id . The Supreme Judicial Court explained that it had consistently held that unambiguous terms impose liability on employers who fail to remit employer- designated “service” charges to their employees. Id . at 734. As the Supreme Judicial Court previously had noted, the Legislature “intended to ensure that service employees receive all the proceeds from service charges, and any interpretation of the definition of ‘service charge’ must reflect that intent.” Id . The Supreme Judicial Court reasoned that patrons should know when they receive a bill whether any portion of the amount billed will be going to the employees, or whether they must be tipped separately. Id . at 245. The Supreme Judicial Court therefore reversed and remanded the trial court’s ruling granting Defendant’s motion for summary judgment. Hovagimian, et al. v. Concert Blue Hill, LLC, 2021 Mass. LEXIS 507 (Mass. Aug. 23, 2021). Plaintiffs, a group of service employees, brought a class action alleging that Defendant violated Massachusetts labor law by failing to remit to the service employees the sums identified as a “service” charge on invoices paid by patrons. Id . at *1. A contract described the disputed fee as an “administrative” or “overhead” charge. Id . at *2. Section 152A of the Massachusetts Tips Act requires an employer or other person who collects a service charge or tip, as defined by the Act, to remit the total proceeds of that charge to waitstaff and service employees in proportion to the services provided. Id . at. 3. Plaintiffs alleged that Defendant violated the Act by failing to remit to them charges identified as a “service” charge on invoices sent to patrons, but previously described as an “administrative” or “overhead” charge in initial documents. Id . Defendant maintained that the term used on the invoices was simply poor drafting and that pursuant to the “safe harbor” provision of the Act, Defendant was permitted to retain the disputed charges. Id . at *2. The trial court granted Defendant’s motion for judgment on the pleadings and denied Plaintiffs’ cross-motion. Plaintiffs appealed, and a majority of the Massachusetts Appeals Court affirmed the trial court’s order on the ground that the safe harbor provision of the Act allowed Defendant to retain the proceeds from the disputed service charge. On Plaintiffs’ subsequent appeal, the Supreme Judicial Court of Massachusetts reversed the trial court’s order. It held that the plain meaning of the Act required Defendant to remit the disputed charge to Plaintiffs. The Supreme Judicial Court found that Plaintiffs’ interpretation of the Act was correct and consistent with the rules of statutory interpretation, since the term “service charge” was a defined term in the Act. Id . Pursuant to that clear definition, the Supreme Judicial Court held that the disputed charge was properly characterized as a “service charge.” Id . at *The Supreme Judicial Court opined that consistent with well-established principles of statutory construction, the Act required employers to proceed with due care in drafting bills, invoices, and charges to patrons. Even if an employer’s carelessness in drafting were to result in its employees unintendedly acquiring proceeds that the employer planned to retain, that result was mandated by a plain reading of the statute, which was consistent with the Legislature’s intent. Id . at *15. Further, the Supreme Judicial Court held that the safe harbor provision did not apply in these circumstances since the invoice at issue identified the disputed charge as a “service” charge. For