Thursday, April 3, 2008, 12:55 PM

How Sweet It Is

For a circular journey through the court system, consider Chandler v. The Cheesecake Factory. On February 16, 2006, Christopher Michael Chandler sued his employer, The Cheesecake Factory, in the Superior Court of Durham County (NC), claiming to represent both himself and "other similarly situated persons." At issue was the employer's tip pooling policy, which Chandler claimed violated the North Carolina Wage and Hour Act and its regulations pertinent to the subject. On March 24, the employer filed a notice of removal to the US District Court for the Middle District of North Carolina, on the basis that the Fair Labor Standards Act preempted the state regulations since the state statute exempts employees whose employment is covered by the FLSA. Chandler filed a motion to remand on April 3, then amended his complaint the next day to narrow the issues to those governed only by the state's tip pooling regulations. Magistrate Judge Wallace Dixon remanded the case on July 5, saying, "even if Defendant has a valid defense to Plaintiff's state law claim, which requires reference to federal law, this does not mean that Plaintiff's claims 'arise under' the Constitution or the laws of the United States."

Once the case got back to Durham Superior, the employer's motion to dismiss, which had traveled back from federal court with the rest of the file, had to be re-filed; the renewed motion was dated August 7, 2006. Seven months later, Superior Court Judge Ripley Rand denied Chandler's motion for class certification and dismissed the complaint because plaintiff's employment was exempt from state law coverage. Plaintiff appealed.

On March 18, 2008 - more than two years after the suit began, and nearly a year after the trial court's dismissal - a three-judge panel of the North Carolina Court of Appeals rendered an unpublished decision in favor of The Cheesecake Factory. Rejecting plaintiff's highly-technical arguments as semantic quibbles, the court concluded that if the employment relationship was governed by the FLSA and the state tip pooling regulation depended on a state law which was preempted by the FLSA, the facts of the case didn't matter - the state court had no ability to proceed further. See this link for a full-text version.

This seemingly straightforward result - uncomplicated by other issues regarding tipped employees which grow out of differences in the North Carolina and federal minimum wages, a topic well beyond this discussion - was reached only after more than two years in three courts, and substantial expenditures for defense. As we keep saying, there's gotta be a better way!

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