Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Dayton v. Fox Restaurant Venture, LLC

United States District Court, S.D. Indiana, Indianapolis Division

January 23, 2017

JACOB A. DAYTON individually and on behalf of all outs similarly situated, Plaintiff,
FOX RESTAURANT VENTURE, LLC, et al., Defendants.


          LARRY J. McKINNEY, United States District Court Judge

         This matter comes before the Court on Defendants', Fox Restaurant Venture, LLC, Fox NC Acquisition, LLC, and Fox S.C. Acquisition, LLC, all doing business as Jimmy John's (collectively “Fox”), Partial Motion to Dismiss[1] (Dkt. 24) Plaintiff Jacob A. Dayton's Amended Complaint (Dkt. 23) pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”) for failure to state a claim. Dayton is pursuing a collective claim against Fox to recover unpaid minimum wages under the Fair Labor Standards Act (“FLSA”) on behalf of similarly situated employees in Indiana. Dayton alleges that Fox's customer refund policy (“Refund Policy”) violates the FLSA by exerting unauthorized control over delivery drivers' tips. Dayton also alleges individual claims for conversion under Ind. Code. § 34-24-3-1 (conversion) and for illegally deducted tips and wages under the Indiana Wage Payment Statute (“IWPS”). Ind. Code § 22-2-5.

         For the reasons set forth below, the Court GRANTS IN PART AND DENIES IN PART Fox's Motion to Dismiss.

         I. BACKGROUND

         Fox is a franchise owner and operator of approximately twenty to thirty Jimmy John's restaurants. Dkt. 23, ¶ 3. Dayton worked for Fox as a food delivery driver at its restaurants in Bloomington, Indiana, from February 26, 2014, until May 10, 2016. Id., ¶ 4. Fox hires delivery drivers to transport food to its customers at their homes, businesses, and other locations. Id., ¶ 6. During his employment with Fox, Dayton was paid wages as a food deliverer on an hourly basis. Id., ¶ 5. Fox paid its delivery drivers at a rate less than the FLSA minimum wage of $7.25. Id., ¶ 7. Dayton made $5.50 per hour at the end of his employment in 2016. Id.

         Fox received a tip credit against its minimum wage obligations to its drivers, which enables Fox to pay its drivers, as tipped employees, less than the prevailing minimum wage. Id., ¶ 8; see also 29 U.S.C. § 203(m). Dayton alleges that Fox unlawfully claimed the tip credit for two reasons: (1) Fox failed to inform Dayton and other delivery drivers who were tipped employees of the tip credit provisions of the FLSA; and (2) Fox charged its delivery drivers, and used their tips, to cover Fox's own business expenses and costs. Id., ¶ 9. Fox requires delivery drivers to return a portion of their tips to the employer. Id., ¶ 11. Specifically, for purposes of this motion, Fox maintains a Refund Policy that provides for a full refund - including the amount of the tip designated for the driver - to any customer that lodges a complaint. Id., ¶ 12. Upon receipt of a complaint, Fox either cancelled the whole credit card transaction (including the tip) or required delivery drivers to return the cash that was received. Id.


         Rule 12(b)(6) permits the dismissal of an action for failure to state a claim upon which relief can be granted in the pleadings. Under Rule 12(b)(6), the Court must accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff. See Esekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995). A pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Federal Rule of Civil Procedure 8(a)(2). Detailed factual allegations are not required, but a plaintiff's complaint may not simply state “an unadorned, the defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The “allegations must be enough to raise a right to relief above the speculative level[.]” Bell Atlantic Corp. v. Twombly, 550, U.S. 544, 555 (2007). “[A] complaint must contain sufficient factual matter … to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged[, ]” not when the plaintiff only raises a “sheer possibility that the defendant has acted unlawfully.” Id. “[T]he height of the pleading requirement is relative to the circumstances[, ]” Cooney v. Rossiter, 583 F.3d 967, 971 (7th Cir. 2009), and “[d]etermining the plausibility of a claim is a context-specific task that requires [the Court] to draw on [its] judicial experience and common sense.” Brown v. JP Morgan Chase Bank, 334 Fed.Appx. 758, 759 (7th Cir. 2009).

         III. ANALYSIS

         Fox seeks dismissal on three separate grounds. First, Fox contends that Dayton never actually “received” the credit card tips, which is a prerequisite under the FLSA before money can be considered as a tip. Second, Fox argues that Dayton's wage claim must fail because tips are not considered “wages” under the IWPS. Finally, Fox moves to dismiss Dayton's conversion claims because the tips are not “special chattel.”

         A. Tip Credit Provisions of the FLSA

         Fox's first argument is predicated on whether or not the tip moneys were cancelled prior to the delivery drivers “receiving” the tip. Fox believes that its cancellation policy is consistent with the FLSA, which permits use of the tip credit if “all tips received by such employee have been retained by the employee.” 29 U.S.C. § 203(m). Fox cites to 29 C.F.R. § 531.52, which sets forth the general characteristics of “tips” and states: “Only tips actually received by an employee as money belonging to the employee may be counted in determining whether the person is a ‘tipped employee' within the meaning of the Act and in applying the provisions of section 3(m) which govern wage credits for tips.” Thus, Fox concludes that when a credit card transaction is cancelled pursuant to its refund policy, drivers never actually “received” money and therefore the Refund Policy does not preclude Fox's entitlement to a tip credit.

         Fox cites the Sixth Circuit case Myers v. The Copper Cellar Corporation, which reviewed whether an employer could deduct from credit card charged tips those fees charged by the credit card company. 192 F.3d 546 (6th Cir. 1999). Myers found that an employer could in fact deduct the amount it costs to process the credit card fee. Id. at 553-54. It also noted, in dicta, that “[b]efore an employee can be entitled to attain any funds on account of a charged customer gratuity, that debited obligation must be converted into cash.” Id. at 553.

         Myers recognized an exemption that allows for employers to require tipped employees to contribute to the liquidation of the money received by credit card, and nothing more. Although this decision has been relied upon by other courts, Fox cites to no case or statutory authority ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.