Kim Hardy v. Tournament Players Club at Southwind, Inc., d/b/a "TPC Southwind,"
513 S.W.3d 427
| Tenn. | 2017Background
- Kim Hardy, a server at TPC Southwind, sued her employers alleging they withheld or redirected mandatory service charges and add-on tips, distributing portions to non-tipped staff and management in violation of Tenn. Code Ann. § 50-2-107 (the Tip Statute).
- The Tip Statute prescribes how service charges, tips and gratuities must be distributed to employees and makes violations a Class C misdemeanor, but contains no express private cause of action.
- Hardy brought a putative class action asserting violations of § 50-2-107 and related common-law claims; defendants moved to dismiss the statutory claim for failure to state a claim, arguing no private right of action exists.
- The trial court granted the motion to dismiss under Rule 12.02(6); the Court of Appeals reversed, relying in part on Owens v. University Club of Memphis (1998), which had recognized a private right of action under § 50-2-107.
- The Tennessee Supreme Court granted permission to appeal to decide whether § 50-2-107 implies a private right of action and whether legislative inaction since Owens signals acquiescence.
- The Supreme Court held that no private right of action exists under § 50-2-107, overruled Owens to the extent inconsistent with that holding, and affirmed dismissal of Hardy’s statutory claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tenn. Code Ann. § 50-2-107 creates an implied private right of action | Hardy: § 50-2-107 protects tipped employees and thus supports an implied private remedy | Defendants: Statute provides criminal enforcement only; no express private remedy so none should be implied | No implied private right of action under § 50-2-107; claim dismissed |
| Whether Owens (1998) controlling and legislative inaction ratifies Owens | Hardy: Owens recognized the private remedy and Legislature’s failure to amend the statute (including 2012 amendment) shows acquiescence | Defendants: Owens conflicts with later Supreme Court jurisprudence; legislative inaction doctrine is inapplicable | Owens overruled insofar as inconsistent with Premium Finance and Brown; legislative inaction not applied here |
| Proper standard for implying a private cause of action | Hardy: courts may infer a private remedy where statute benefits the plaintiff and purpose aligns | Defendants: Apply Premium Finance/Brown standard requiring manifest legislative intent, especially when governmental remedies exist | Apply Premium Finance and Brown factors; plaintiff bears burden and must show manifest legislative intent; not met here |
| Whether statutory structure and legislative history support implying a private remedy | Hardy: Tip Statute’s purpose and history show intended beneficiaries (tipped employees) and no express bar to private suits | Defendants: Legislative history and criminal penalty indicate enforcement through government remedies, not private suits | Although employees are intended beneficiaries, legislative history, statute structure, and existing criminal remedy do not manifestly indicate a private remedy; implication denied |
Key Cases Cited
- Premium Fin. Corp. of Am. v. Crump Ins. Servs. of Memphis, Inc., 978 S.W.2d 91 (Tenn. 1998) (articulates Tennessee approach to implying private causes of action and cautions against engrafting remedies where statute provides governmental enforcement)
- Brown v. Tennessee Title Loans, Inc., 328 S.W.3d 850 (Tenn. 2010) (applies factors for implying a private remedy and requires manifest legislative intent where statutory scheme provides governmental remedies)
- Hamby v. McDaniel, 559 S.W.2d 774 (Tenn. 1977) (discusses presumption of legislative acquiescence where legislature amends a statute in other particulars without altering prior judicial construction)
- Freeman Indus., LLC v. Eastman Chem. Co., 172 S.W.3d 512 (Tenn. 2005) (holds legislative inaction is generally irrelevant to statutory interpretation; limits application of Hamby)
- Alexander v. Sandoval, 532 U.S. 275 (U.S. 2001) (federal precedent emphasizing that statutory intent to create a private remedy is determinative)
- Correctional Services Corp. v. Malesko, 534 U.S. 61 (U.S. 2001) (notes judicial retreat from implying causes of action where Congress has not provided one)