Flood v. Carlson Restaurants Inc.
94 F. Supp. 3d 572
S.D.N.Y.2015Background
- Named plaintiffs are former TGI Friday’s tipped employees who worked in multiple states (including NY, NJ, MA, VA, FL) and allege companywide tipping/minimum-wage practices.
- Defendants are Carlson Restaurants entities with principal executive offices in Carrollton, Texas (N.D. Tex.).
- Plaintiffs claim Defendants took the FLSA tip credit while requiring tipped workers to perform substantial non-tip-producing “side work,” exceeding the DOL’s 20% threshold, and paid only the tipped wage.
- Plaintiffs brought collective FLSA claims and state-law claims (including multiple NYLL class claims); Defendants moved to transfer venue to N.D. Tex. and to partially dismiss the FLSA minimum-wage claim.
- The court evaluated § 1404(a) transfer factors and FLSA pleading standards under Rule 12(b)(6), accepting the second amended complaint as operative.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Motion to transfer venue under 28 U.S.C. § 1404(a) | Southern District of NY is proper (plaintiffs’ choice; material connections; many named plaintiffs local) | Transfer to N.D. Tex. is warranted because defendants’ HQ, key corporate witnesses, and many documents are in Texas | Denied — transfer factors (forum choice, locus of operative facts including NY state claims, witness convenience, process, familiarity with NY law) do not clearly favor transfer |
| Applicability of DOL “20% rule” (tip-credit loss if >20% non‑tipped time) | DOL rule permits pleading an FLSA claim where complaint plausibly alleges >20% non‑tipped time; collective action forum choice merits deference | Rule is not entitled to deference; plaintiffs cannot state an FLSA claim based solely on alleged 20% breach | Denied — court adopts authority deferring to DOL interpretation and accepts that plaintiffs may state a FLSA minimum-wage claim predicated on >20% side work |
| Specificity required to plead a 20%‑rule FLSA claim | Complaint need only plausibly allege >20% time on non‑tipped duties and that tip credit was claimed for all hours | Complaint fails for lack of precise quantification (how much over 20%, frequency, time periods, particular duties) | Denied — factual allegations (examples of duties, typical shift pre/post duties, assertions of >20% time) are sufficient at pleading stage |
| Weight of state-law (NYLL) claims in transfer analysis | NYLL claims connect the case to NY and favor retention in SDNY | State-law considerations are less important than corporate HQ location | Held that SDNY familiarity with NYLL weighs against transfer; state claims reinforce retention |
Key Cases Cited
- Driver v. AppleIllinois, 739 F.3d 1073 (7th Cir. 2014) (endorsing DOL 20% threshold and Auer deference to FOH interpretation)
- Fast v. Applebee’s Int’l, Inc., 638 F.3d 872 (8th Cir. 2011) (upholding DOL 20% rule as reasonable interpretation entitled to deference)
- Auer v. Robbins, 519 U.S. 452 (1997) (agency deference to an agency’s interpretation of its own regulations)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: plausibility under Rule 12(b)(6))
- New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d 102 (2d Cir. 2010) (transfer burden on movant; factors to evaluate convenience and interests of justice)