{"id":1659,"date":"2024-07-16T08:46:16","date_gmt":"2024-07-16T12:46:16","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=1659"},"modified":"2024-07-16T08:46:16","modified_gmt":"2024-07-16T12:46:16","slug":"maryland-federal-court-refuses-to-certify-class-of-one-in-erisa-bar-tips-case","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2024\/07\/16\/maryland-federal-court-refuses-to-certify-class-of-one-in-erisa-bar-tips-case\/","title":{"rendered":"Maryland Federal Court Refuses To Certify \u201cClass Of One\u201d In ERISA Bar Tips Case"},"content":{"rendered":"

\"\"<\/a>By Gerald L. Maatman, Jr., Zachary J. McCormack, and Jesse S. Stavis<\/b><\/p>\n

Duane Morris Takeaways:<\/i><\/b> On July 10, 2024, Judge Peter J. Messitte of the U.S. District Court for the District of Maryland denied<\/a> a bartender\u2019s motion to certify a class of approximately 2,300 restaurant workers in Frankenstein v. Host Int\u2019l, Inc., No. 8:20-CV-01100, 2024 U.S. Dist. LEXIS 120678 (D. Md. July 10, 2024). Plaintiff alleged that his employer violated the Employee Retirement Income Security Act (\u201cERISA\u201d) by forcing tipped workers to accept gratuities in cash which prevented them from making pre-tax contributions to retirement accounts. The Court held that Plaintiff could not represent the class because he failed to show that any other employees opposed the policy. The ruling serves as a reminder to employers about the importance of considering conflicts within a putative class when opposing class certification. <\/i><\/p>\n

Case Background <\/b><\/p>\n

Defendant Host International, Inc. (\u201cHost\u201d), headquartered in Bethesda, Maryland, operates restaurants and bars, many of which are located in airports. Id<\/i>. at *2. The company has a longstanding practice of paying out credit card tips in cash at the end of workers\u2019 shifts. Id<\/i>. at *4. While employees tend to support this policy, it has one unintended effect: An employee aiming to contribute a large percentage of his or her income to a 401(k) account is not able to do so using pre-tax earnings. Id<\/i>. A bartender, Dan Frankenstein, objected to this policy, claiming his inability to contribute these pre-tax earnings to his retirement account prevented him from meeting his retirement goals. Id<\/i>. at *8. This policy, he argued, violated \u00a7 502 of the ERISA, which allows plan participants to sue for breach of fiduciary duties. Id<\/i>. at *9. He further claimed Host\u2019s refusal to permit employees to defer credit card tips amounted to discrimination against tipped-employee participants, and that Host\u2019s decision to prevent such deferrals is arbitrary and capricious. Id<\/i>. at *10.<\/p>\n

After the Court denied Host\u2019s motion to dismiss, Frankenstein filed a motion to certify a class that would include all tipped workers who participated in the 401(k) plan and who had elected to defer some of their income. Id<\/i>. The Court ordered evidentiary hearings and limited discovery to determine both the parameters of the class and the extent of any objections by its putative members. Id<\/i>. at *11. Ultimately, Host presented witnesses who testified that many employees, and the unions that represented them, supported the tips-in-cash policy. Id<\/i>. at *14. In response, Frankenstein was unable to present any evidence that other workers were unhappy with the policy. Id<\/i>. at *15.<\/p>\n

The Court\u2019s Ruling<\/b><\/p>\n

The Court denied Frankenstein\u2019s motion for class certification. It held that Plaintiff had failed to demonstrate numerosity, commonality, typicality, and adequacy of representation under Rule 23(a). Id<\/i>. at *17-18.<\/p>\n

According to the Court, Frankenstein could not represent a class of aggrieved workers because he appeared to be the only aggrieved worker. Id<\/i>. at *32. In fact, the tips-in-cash policy was exceptionally popular among Host\u2019s employees. Id<\/i>. at *33. When the company tried to change the policy by paying tips through an electronic debit card, many workers complained and the union representing employees filed an unfair labor practices charge with the National Labor Relations Board. Id<\/i>. at *9. Despite Frankenstein\u2019s yearlong opportunity to identify other employees who shared his complaints, he failed to present even one other individual. Id<\/i>. at *28. The Court opined that the existence of an \u201cintraclass conflict\u201d proved fatal to Frankenstein\u2019s motion for class certification. Id<\/i>. at *22. Considering that Plaintiff appeared to present what the Court called as a \u201cclass of one,\u201d he could not establish numerosity. Id<\/i>. at *32. Further, due to his inability to point to other workers who shared his grievances, the Court concluded that he could not establish commonality or typicality. Id<\/i>. at *28. Finally, considering Frankenstein\u2019s views differed from those shared by other members of the putative class, the Court ruled that Plaintiff could not adequately represent the interests of the class. Id<\/i>. at *25.<\/p>\n

Implications Of The Decision <\/b><\/p>\n

Frankenstein <\/i>highlights the importance of investigating and considering potential intra-class conflicts when responding to motions for class certification. Evidence showing that members of the putative class disagree on fundamental issues in a lawsuit can help defendants establish that a class action is not appropriate. While Frankenstein <\/i>presents a particularly dramatic example \u2014 the named plaintiff appeared to the only <\/i>employee in the country who opposed his employer\u2019s policy \u2014 this strategy also should be considered when different groups of putative class members disagree with one another.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Gerald L. Maatman, Jr., Zachary J. McCormack, and Jesse S. Stavis Duane Morris Takeaways: On July 10, 2024, Judge Peter J. Messitte of the U.S. District Court for the District of Maryland denied a bartender\u2019s motion to certify a class of approximately 2,300 restaurant workers in Frankenstein v. Host Int\u2019l, Inc., No. 8:20-CV-01100, 2024 … <\/p>\n

Continue reading “Maryland Federal Court Refuses To Certify \u201cClass Of One\u201d In ERISA Bar Tips Case”<\/span><\/a><\/p>\n","protected":false},"author":583,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[97],"tags":[],"ppma_author":[30],"class_list":["post-1659","post","type-post","status-publish","format-standard","hentry","category-erisa-class-actions"],"authors":[{"term_id":30,"user_id":583,"is_guest":0,"slug":"classactiondefense","display_name":"Class Action Defense","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2020\/10\/dmlogo.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/1659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/users\/583"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/comments?post=1659"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/1659\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/media?parent=1659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/categories?post=1659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/tags?post=1659"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/ppma_author?post=1659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}