Crumbling v. Miyabi Murrells Inlet, LLC
192 F. Supp. 3d 640
D.S.C.2016Background
- Plaintiffs are former servers at multiple Miyabi restaurant locations who sued as an FLSA collective for unpaid minimum and overtime wages and under the South Carolina Payment of Wages Act for improper wage deductions, alleging unlawful tip-pooling while defendants took a tip credit.
- Plaintiffs allege defendants required tip contributions into pools that included non-tipped employees who did not "customarily and ordinarily" receive tips, invalidating use of the FLSA tip credit.
- The suit named multiple Miyabi restaurant entities across SC, NC, and GA plus Capital Japan, Inc. and individual owners; plaintiffs and opt-ins worked only at certain locations (e.g., Miyabi Murrell’s Inlet).
- Defendants moved to dismiss, raising Article III standing and related jurisdictional challenges, arguing many named defendant entities never employed the named plaintiffs.
- The court analyzed joint-employer tests (29 C.F.R. § 791.2 factors and the Bonnette/Zheng economic-realities factors) to determine whether each defendant could be an employer for standing and liability purposes.
- The court concluded named plaintiffs lack standing to proceed against Miyabi locations for which no plaintiff worked (Fayetteville and Greenville) and that, absent sufficient joint-employer allegations, the case must be pared down; the case may proceed as to Miyabi Murrell’s Inlet, Capital Japan, Inc., and two individual defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue all named Miyabi entities | Collective action should allow adjudication against all locations and future opt-ins | Plaintiffs lack Article III standing against entities that never employed them | Plaintiffs lack standing against locations where no named plaintiff worked; those entities dismissed |
| Joint-employer liability across locations | Defendants form an integrated enterprise/joint employers; website and shared business purpose show unity | Plaintiffs failed to plead facts showing control (hire/fire, supervision, pay, records) needed for joint-employer finding | Bare assertions insufficient; joint-employment not established at pleading stage for restaurant locations |
| Use of tip credit with tip pools including non-tipped employees | Tip pools required of servers included non-tipped employees, invalidating tip credit and causing wage shortfalls | (Merits disputed but not fully resolved at this stage) | Court accepted plaintiffs’ injury theory as sufficient for injury-in-fact but limited who can sue which defendants; merits not decided here |
| Case management/next steps after standing ruling | Plaintiffs requested permission to proceed against some defendants and file additional suits with tolling | Defendants sought dismissal of non-related entities and other procedural relief | Court allowed suit to continue against specified defendants and permitted plaintiffs to file additional actions; equitable tolling to be considered later |
Key Cases Cited
- Roman v. Guapos III, Inc., 970 F. Supp. 2d 407 (D. Md. 2013) (standing requires plaintiffs show personal injury traceable to each defendant sued)
- McBurney v. Cucinelli, 616 F.3d 393 (4th Cir. 2010) (standing burden and Article III framework)
- Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298 (4th Cir. 2006) (joint-employer principles)
- Bonnette v. California Health & Welfare Agency, 704 F.2d 1465 (9th Cir. 1983) (economic realities factors for employer status)
- Zheng v. Liberty Apparel Co., 355 F.3d 61 (2d Cir. 2003) (economic realities/joint-employer analysis)
- Pashby v. Delia, 709 F.3d 307 (4th Cir. 2013) (named representatives must allege personal injury)