Green et al v. Perry's Restaurants LTD et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 21-cv-00023-WJM-NRN
LANCE GREEN and
ANDERSON KHALID, individually and on behalf of all others similarly situated,
Plaintiffs,
v.
PERRY’S RESTAURANTS LTD; and
PERRY’S STEAKHOUSE OF COLORADO, LLC, collectively d/b/a PERRY’S
STEAKHOUSE AND GRILLE
Defendants.
ORDER GRANTING PLAINTIFFS’ MOTION TO COMPEL DISCOVERY
(ECF No. 157)
N. REID NEUREITER
United States Magistrate Judge
This case is before the Court pursuant to an order issued by Judge William J.
Martinez, ECF No. 159, referring Plaintiffs Lance Green and Anderson Khalid’s
(“Plaintiffs”) Motion to Compel Discovery, ECF No. 157. Defendants Perry’s Restaurants
LTD and Perry’s Steakhouse of Colorado, LLC (“Perry’s” or “Defendants”), filed a
response, ECF No. 168, and Plaintiffs replied, ECF No. 176. The Court heard argument
from the parties and testimony from Defendants’ representative. See ECF No. 184. The
Court ordered the parties to further confer, and they filed a Status Report on July 26,
2024. ECF No. 185. Now, having taken judicial notice of the Court’s file, and considered
the applicable federal and state statutes and case law, the Court GRANTS the Motion
to Compel Discovery, ECF No. 157, as follows.
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I. BACKGROUND
This is a wage-and-hours action brought under the Fair Labor Standards Act
(“FLSA”) and Colorado wage laws. See generally ECF No. 1. Plaintiffs were servers at
Perry’s restaurants in Colorado, Alabama, North Carolina, or Florida. Perry’s pays its
servers subminimum hourly wages and claims a “tip credit” for a portion of the tips its
servers earn to offset Perry’s obligation to pay the minimum wage required by Section
206 of the FLSA. Servers are paid a subminimum hourly wage plus tips and are
required to contribute a portion of their earned tips to a mandatory tip pool—fixed at
4.5% of each server’s food and alcohol sales during their shift—which Perry’s uses to
offset the servers’ subminimum hourly wage and bring their effective rate of pay up to
the required minimum hourly wage. However, Plaintiffs allege that Perry’s does not
distribute the pooled tips solely among customarily and regularly tipped employees, in
violation of the FLSA’s tip credit.
On November 7, 2022, Judge Martinez granted Plaintiffs’ motion to conditionally
certify this action to proceed as an FLSA collective action. ECF No. 91. The Court held
a Scheduling Conference on January 24, 2023. See ECF No. 106. Numerous discovery
disputes and hearings followed. At a Status Conference held on May 30, 2024, the
parties discussed issues raised in Status Reports and responses thereto submitted to
the Court at ECF Nos. 148, 149, and 150. See ECF No. 151. The Court ordered
Plaintiffs to file a formal motion with the Court. Id. The subject Motion to Compel
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followed, the heart of which is the production of clock-in/clock-out records for tip-pool
recipients in Colorado, Alabama, North Carolina, and Florida from 2018 to the present.1
The Court held an in-person hearing on the Motion to Compel. Plaintiffs
reiterated that the clock-in/clock-out records are highly relevant in demonstrating that
Perry’s used the tip pool to pay employees engaged in non-tipped work, which
invalidates Perry’s tip credit affirmative defense. Indeed, according to Plaintiffs, the
small sample of these records that they do possess shows that some tip pool recipients
worked before the restaurants were even open for guests.
The Court also heard testimony from a Perry’s representative who testified
regarding the difficulties of assembling, reviewing, and producing the all the clock-
in/clock-out records Plaintiffs seek. In short, Perry’s contends that the database in which
the time clock records are kept are not easily searchable or sortable, especially given
the volume of documents sought by Plaintiffs.
The Court stated that it was inclined to conclude that Perry’s clock-in/clock-out
records were relevant under Rule 26(b)(1), but credited Perry’s claim that producing
them would be time-consuming and excessively burdensome. The Court ordered the
parties to meet and confer regarding the production of a sample of tip pool recipients’
time records, rather than an all-or-nothing approach.
The parties filed a Status Report indicating that they could not come to an
agreement. ECF No. 185. Plaintiffs maintain that,
[g]iven that it is Defendants’ burden to demonstrate that it operated a lawful
tip pool, and given that Defendants purported to operate a weekly tip pool,
1 The Motion to Compel also references the production of employee schedules,
but Plaintiffs’ counsel stated at the hearing that these documents would not be that
useful and instead focused on the time-clock records.
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all of the clock-in/out records of tip pool recipients from the relevant time
period are discoverable in this case and, in fact, Defendants cannot carry
their burden on their tip credit defense in the absence of these records for
each week.
Id. at 3. However, as a compromise, Plaintiffs agreed to accept the clock-in/clock-out
records for all tip pool recipients for the first two weeks of each month for a three-year
period, except during COVID wherein Plaintiffs requested the time clock records for all
tip pool recipients for a bi-weekly pay period in each month.
Perry’s declined this offer, stating that “[c]onducting such varied searches for
partial weeks of each month over the more than five year timeframe would only
exacerbate the undue burden of searching for each time clock record for each of the tip
pool recipients and reviewing them to ensure their accuracy and completeness.” Id. at 5.
Instead, Perry’s made the following sampling proposal:
• Defendants agreed to provide the time clock records for up to 35% of all tip
pool recipients (approximately 385 employees) in each of years 2021, 2022,
and 2023.
• The sampling of up to 35% of tip pool recipients would be selected by
Plaintiffs’ counsel, and Defendants agreed to provide a pivot chart showing
the following information for all tip pool recipients for 2021, 2022, and 2023
to enable plaintiffs counsel’s informed selection of the individual employees
who would make up that sampling: file number, first and last name, and job
code (Defendants have produced the list of job codes/positions at ECF 168-
1 at p. 33–34).
• Defendants agreed to provide these time clock records within 60 days from
the date the Court enters the agreed order.
• After the receipt and review of such records, Plaintiffs would reserve their
right to seek further time clock records, and Defendants would reserve their
right to raise objections to Plaintiffs’ subsequent requests/motion to compel.
Id. at 6.
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Plaintiffs contend that it is not practical for them to select the names of tip pool
recipients at random and this will “turn the discovery process into a game of chance.” Id.
at 4.
II. RULING
Federal Rule of Civil Procedure 26(b)(1) states that “parties may obtain discovery
regarding any nonprivileged matter that is relevant to any party’s claim or defense and
proportional to the needs of the case, considering . . . the importance of discovery
resolving the issues, and whether the burden or expense of the proposed discovery
outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1).
The Court finds that the clock-in/clock-out records are relevant to Plaintiffs’ wage
claims and Perry’s tip credit defense. The Court also finds that, based on the
declarations submitted by Perry’s, ECF Nos. 168-1 and 168-2, and the hearing
testimony, it would be unduly burdensome and not proportional to the needs of the case
to require Perry’s to produce the weekly clock-in/clock-out records for over 1,000 tip
pool recipients from 2018 onwards. Therefore, the Court will order the production of a
sample of the clock-in/clock-out records. In doing so, the Court will give Plaintiffs the
following option. They can either
(1) Accept Perry’s proposal, except that Perry’s will provide the clock-in/clock-out
records for at least 50% of all tip pool recipients for the years 2021, 2022, and
2023. This will reduce the probability that Plaintiffs will be “unlucky” in the records
they receive; the likelihood of which already appears low given the “smoking gun”
evidence they obtained from the small sample of time clock records they already
obtained; or
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(2) request specific weekly clock-in/clock-out for all tip pool recipients, but
Plaintiffs are limited to a total of 52 weeks over the relevant period. After the
receipt and review of such records, Plaintiffs would reserve their right to seek
further time clock records, and Perry’s would reserve their right to raise
objections to Plaintiffs’ subsequent requests/motion to compel.
Plaintiffs will inform Defendants of their choice on or before October 11, 2024.
The parties shall file a Status Report with the Court on or before October 25, 2024
regarding how this discovery will proceed and any adjustments that need to be made to
the Scheduling Order.
SO ORDERED.
Date: October 9, 2024 ____________________
N. Reid Neureiter
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