Matamoros v. Starbucks Corporation

United States Court of Appeals
For the First Circuit

Nos. 12-1189
12-1277

HERNAN MATAMOROS ET AL.,

Plaintiffs, Appellees/Cross-Appellants,

v.

STARBUCKS CORPORATION,

Defendant, Appellant/Cross-Appellee.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Nathaniel M. Gorton, U.S. District Judge]

[Hon. Leo T. Sorokin, U.S. Magistrate Judge]

Before

Thompson, Selya and Lipez,
Circuit Judges.

Rex S. Heinke, with whom Daniel L. Nash, Nathan J. Oleson,
Gregory W. Knopp, Akin Gump Strauss Hauer & Feld LLP, James C.
Rehnquist, Elianna J. Nuzum, Robert M. Hale and Goodwin Procter LLP
were on brief, for defendant.
Shannon Liss-Riordan, with whom Hillary Schwab and Lichten &
Liss-Riordan, P.C. were on brief, for plaintiffs.

November 9, 2012
 SELYA, Circuit Judge. As society matures and employment

law evolves, legislatures have lavished more attention on the

policies and practices used by employers with respect to customer

gratuities. Massachusetts is in the regulatory forefront on these

cutting-edge issues.

In the matter at hand, the district court, applying

Massachusetts law in a class-action diversity case, concluded that

the most recent version of the Tips Act, Mass. Gen. Laws ch. 149,

§ 152A, says what it means and means what it says. Consequently,

the court ruled that the defendant's policy regarding pooled

gratuities violated the Act, certified a class, and awarded damages

in an amount exceeding $14,000,000. After careful consideration of

a fundamental (and previously unanswered) interpretative question,

we hold that the plain language of the Tips Act prohibits the

defendant's tip-pooling policy. We also reject the parties' other

claims of error. When all is said and done, we leave the

combatants where we found them.

I. BACKGROUND

We sketch the background and travel of the case,

reserving salient details for our discussion of the substantive

issues.

Starbucks Corporation operates a national chain of

upscale coffee houses including approximately 150 outlets in

Massachusetts. Starbucks euphemistically describes the employees

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who staff its shops as "partners." Within that designation,

however, employees are divided into four subcategories: store

managers, assistant managers, shift supervisors, and baristas.

Both shift supervisors and baristas are hourly wage employees,

often working part-time. There are both similarities and

differences between these two classifications: baristas are front-

line employees who serve food and beverages to customers; shift

supervisors perform those functions and other functions as well.

The classifications are hierarchical, and shift supervisors are

usually promoted from the ranks of baristas.

Pursuant to company policy, Starbucks' stores maintain

tips containers in which customers may deposit tips. These

containers are normally positioned alongside the store's cash

registers. The accumulated tips are distributed weekly to baristas

and shift supervisors within a store in proportion to the number of

hours worked that week by each individual.

The named plaintiffs are former Starbucks baristas. They

filed a putative class action in a Massachusetts state court

against Starbucks on behalf of themselves and others similarly

situated. Starbucks removed the case to federal court, alleging

class-action diversity jurisdiction. See 28 U.S.C. § 1332(d).

We fast-forward to the plaintiffs' filing of a second

amended complaint. That complaint asserted, among other things,

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that Starbucks' policy violated the Tips Act because it allowed

shift supervisors to share in the pooled gratuities.

In due course, the plaintiffs moved to certify a class of

current and former baristas, and the parties cross-moved for

summary judgment. The district court referred the motions to a

magistrate judge. Thereafter, the magistrate judge issued reports

and recommendations.

In his first report, the magistrate judge recommended

that the court grant partial summary judgment in the plaintiffs'

favor on count 1 (the Tips Act count), reasoning that the inclusion

of shift supervisors among the persons eligible to profit from the

tips pools violated the Tips Act. Matamoros v. Starbucks Corp.

(Starbucks I), No. 08-10772, 2011 U.S. Dist. LEXIS 28597 (D. Mass.

Feb. 8, 2011). In that same report, the magistrate judge

recommended that the court grant summary judgment for Starbucks on

all other counts.1 Id. at *28. In his second report, the

magistrate judge recommended that the court grant class

certification. Matamoros v. Starbucks Corp. (Starbucks II), No. 08-

10772, 2011 U.S. Dist. LEXIS 28572 (D. Mass. Feb. 8, 2011). Over

Starbucks' objections, the district court, adding its own gloss,

adopted the magistrate judge's recommended findings and conclusions

in all respects. Matamoros v. Starbucks Corp. (Starbucks III), No.

1
These counts sound in quantum meruit, breach of implied
contract, and tortious interference with advantageous
relationships. The appeals before us do not implicate any of them.

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08-10772, 2011 U.S. Dist. LEXIS 28227 (D. Mass. Mar. 18, 2011). It

then allowed further discovery on issues related to damages.

In subsequent proceedings, the district court ruled that

a jury trial was unnecessary because damages could readily be

calculated based on the amount of tips allocated to shift

supervisors during the class period (March 25, 2005 to March 18,

2011). The parties stipulated that the shift supervisors had

garnered $7,500,000 in allocated tips during that period. This

amount comprised $4,186,729 in tips received through July 11, 2008,

and $3,313,271 in tips received during the remainder of the class

period.

The court accepted these stipulated figures, awarded

damages accordingly, and trebled the damages that accrued on or

after July 12, 2008. The district court entered judgment for the

plaintiff class in the aggregate amount of $14,126,542, plus

prejudgment interest at a rate of 12% per annum.2 These timely

appeals followed.

II. ANALYSIS

Starbucks' principal claim of error presents an unsettled

question as to the meaning of the current version of the Tips Act.

This question turns on whether, as Starbucks exhorts, the district

2
The award of prejudgment interest was made applicable only
to the damage award before any multiplication of damages took
place. This aspect of the judgment is not challenged on appeal and
we do not discuss it further.

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court took too crabbed a view in holding that the company's tip-

pooling policy violated the Tips Act because shift supervisors were

included among the beneficiaries of the tips pools. We start

there. We then address Starbucks' challenge to the class

certification order. Finally, we mull the parties' competing

objections to the treble damages award.

A. The Tips Act.

The Tips Act contains specific provisions applicable to

the restaurant industry. It provides in pertinent part that "wait

staff" employees shall not be required to share tips with anyone

who is not a "wait staff employee." Mass. Gen. Laws ch. 149,

§ 152A(b), (c). The Act defines a "wait staff employee" as:

a person, including a waiter, waitress, bus person, and
counter staff, who: (1) serves beverages or prepared food
directly to patrons, or who clears patrons' tables; (2)
works in a restaurant, banquet facility, or other place
where prepared food or beverages are served; and (3) who
has no managerial responsibility.

Id. § 152A(a) (emphasis supplied).

It is clear beyond peradventure that Starbucks' shift

supervisors satisfy the first two requirements for "wait staff

employees." The question, then, reduces to whether shift

supervisors satisfy the third requirement; that is, whether shift

supervisors can fairly be said to possess "no managerial

responsibility."

Starbucks insists that shift supervisors do not have

managerial responsibility within the meaning of the Tips Act. In

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support, it points out that "[a] shift supervisor spends the vast

majority of his or her time, up to ninety percent, performing

functions which baristas also perform." Starbucks I, 2011 U.S.

Dist. LEXIS 28597, at *9. Moreover, shift supervisors — like

baristas — report to store managers and assistant managers, and

Starbucks asserts that shift supervisors lack the actual authority

either to enforce directives or to hire, fire, discipline, or

promote baristas. And even though shift supervisors admittedly

perform some duties that baristas do not, Starbucks labors to draw

a surpassingly fine distinction between these "limited supervisory

tasks" and "managerial responsibility."

In an effort to justify this hair-splitting, Starbucks

notes that in defining a different term — "employer" — the Tips Act

uses the disjunctive phrase "management or supervision of wait

staff employees." Mass. Gen. Laws ch. 149, § 152A(a). It

suggests, therefore, that the terms "management" and "supervision"

must be given wholly distinct meanings. With this in mind,

Starbucks declares that a shift supervisor can exercise supervisory

powers without assuming managerial responsibilities.

The plaintiffs resist this analysis. They argue that the

definition of "wait staff employee" forges a bright-line standard,

which excludes employees possessing any level of managerial

responsibility, however slight. Building on this foundation, the

plaintiffs maintain that shift supervisors, whose job descriptions

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include some managerial tasks, are simply not "wait staff

employees" within the purview of the Tips Act.

Our inquiry into the meaning of the Tips Act engenders de

novo review. See Inmates of Suffolk Cnty. Jail v. Rouse, 129 F.3d

649, 653 (1st Cir. 1997). Such an inquiry always starts with the

language of the statute itself. Id. (citing Stowell v. Ives, 976

F.2d 65, 69 (1st Cir. 1992)). We assume that the ordinary meaning

of the statutory language expresses the legislature's intent, and

we resort to extrinsic aids to statutory construction (such as

legislative history) only when the wording of the statute is

freighted with ambiguity or leads to an unreasonable result. See

Stowell, 976 F.2d at 69.

In this case, the unvarnished text of the statute cuts

sharply in favor of a bright-line rule. The Tips Act states

unequivocally that only employees who possess "no managerial

responsibility" may qualify as "wait staff." Mass. Gen. Laws ch.

149, § 152A(a). "[N]o" means "no," and we interpret that easily

understood word in its ordinary sense: "not any." Merriam-

Webster's Collegiate Dictionary 839 (11th ed. 2003); The American

Heritage Dictionary of the English Language 1192 (4th ed. 2000);

The Random House Dictionary of the English Language 1303 (2d ed.

1987). "Courts are free to use standard dictionary definitions to

assist in determining the ordinary meaning of statutory language,"

Riva v. Mass., 61 F.3d 1003, 1008 n.4 (1st Cir. 1995), and there is

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no reason to refrain from doing so here. Unless we are prepared to

ignore both the legislature's use of the word "no" and the commonly

accepted meaning of that word — and we are not — it follows that if

an employee has any managerial responsibility, she does not qualify

as "wait staff" eligible to participate in tips pools under the

provisions of the Tips Act.

Nor is this construction of the statute unreasonable.

While the legislature could have chosen a different way to grapple

with the vexing problem of pooled tips, a bright-line rule has

obvious virtues.

The legislative history and what little case law there is

confirm the conclusion that the Tips Act should be read to bar

employees who possess any managerial responsibilities from

participating in tips pools with "wait staff" employees. Under an

earlier version of the Tips Act, Mass. Gen. Laws ch. 149, § 152A

(2003) (amended 2004), Massachusetts courts generally applied a

"primary duty" test to determine whether an employee was eligible

to participate in a tips pool. If an employee's primary duty was

to serve customers, she was eligible to participate. See, e.g.,

Williamson v. DT Mgmt., Inc., No. 021827D, 2004 WL 1050582, at *11

(Mass. Super. Ct. Mar. 10, 2004). Conversely, if her primary duty

was to manage, she was ineligible to participate. See, e.g.,

Fernandez v. Four Seasons Hotels, Ltd., No. 024689F, 2007 WL

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2705723, at *3 (Mass. Super. Ct. July 18, 2007) (interpreting pre-

amendment version of Tips Act).

In 2004, the Massachusetts legislature amended the Tips Act.

See 2004 Mass. Legis. Serv. ch. 125, § 13 (West). One apparent

purpose of these amendments was to replace the primary duty test

with a more precise standard. As one Massachusetts court

explained, "[i]n the 2004 version of the Tips Act, the Legislature

rendered the primary duty analysis moot by expressly limiting the

statute's protection to employees with 'no managerial

responsibility.'" Black v. Cranwell Mgmt. Corp., No. 2007-00122,

slip op. at 13 (Mass. Super. Ct. Oct. 21, 2009). In its new

incarnation, "[t]he Tips Act is unambiguous and does not

distinguish between employees who have many managerial

responsibilities and those who have few." Id. at 13-14; see also

DePina v. Marriott Int'l, Inc., No. SUCV200305434G, 2009 WL

8554874, at *10-11 (Mass. Super. Ct. July 28, 2009) (applying

current version of Tips Act to bar banquet captains from

participating in tips pools with servers).

Viewed against this backdrop, Starbucks' emphasis on the

predominant service responsibilities of the shift supervisors and

its downplaying of their managerial responsibilities is a line of

argument that time has overtaken. Stripped of rhetorical

flourishes, Starbucks' position invites us to repudiate both the

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precise language and the clear intent of the 2004 amendments and to

resurrect the primary duty test. We decline the invitation.

If more were needed — and we doubt that it is — the

interpretive guidance of the Massachusetts Attorney General

presents a formidable obstacle to Starbucks' position. See

Advisory 2004/3, An Advisory from the Attorney General's Fair Labor

and Business Practices Division on an Act Protecting the Wages and

Tips of Certain Employees (the Advisory). The Attorney General is

charged with enforcing the Tips Act, see Mass. Gen. Laws ch. 149,

§ 152A(f), and her interpretation is entitled to "substantial

deference." DiFiore v. Am. Airlines, Inc., 910 N.E.2d 889, 897

n.11 (Mass. 2009). Courts must honor such an interpretation as

long as it is "reasonable." Id.

The Advisory could not be more clear; it states with

conspicuous clarity that "[w]orkers with limited managerial

responsibility, such as shift supervisors . . . do not qualify as

wait staff employees." Advisory at 2. The Attorney General issued

the Advisory with specific reference to the restaurant industry,

and in that narrow context, "shift supervisors" appears to be a

term of art. While job titles ordinarily are not dispositive in an

inquiry into the application of a statute, they are not irrelevant.

Where, as here, an employer "has the right to define jobs within

its own hierarchy," its "designation of [a] position as

supervisory, while not itself determinative, is certainly a

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significant factor in ascertaining employee status." S. Ind. Gas

& Elec. Co. v. NLRB, 657 F.2d 878, 886 (7th Cir. 1981).

The Advisory also elaborates on the meaning of

"managerial responsibility" — a phrase not defined in the Tips Act

itself. The Advisory states that managerial responsibilities

encompass "supervising employees and assigning servers to their

posts." Advisory at 2. The Attorney General explains that she

"will look to 29 C.F.R. [§] 541.1 . . . and relevant law for

interpretive guidance to define the term 'managerial

responsibility.'" Id. at 2 n.3. Part 541 of Title 29 of the Code

of Federal Regulations, which pertains directly to the federal

overtime exemption for managerial and executive employees,

identifies "directing the work of employees," "apportioning the

work among the employees," and "providing for the safety and

security of the employees or the property" as management

activities. 29 C.F.R. § 541.102.

This interpretive guidance undermines Starbucks'

argument. Its shift supervisors wear two hats; while they spend

much of their time waiting on customers, they also have managerial

responsibilities. For example, a shift supervisor is charged with

opening and closing the store, handling and accounting for cash,

and ensuring that baristas take their scheduled breaks. Indeed,

whenever there is no store manager or assistant manager on duty in

a particular emporium, the shift supervisor is the ranking employee

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in the store. In this capacity, the shift supervisor is

responsible for deploying baristas to their work stations, opening

the store's safe, and handling cash register tills.

Starbucks' own sources lend strong support to the

proposition that a shift supervisor possesses some managerial

responsibility. When deposed, Starbucks' designated corporate

representative, see Fed. R. Civ. P. 30(b)(6), acknowledged that a

shift supervisor is responsible for "running the shift."

Starbucks' internal documentation is even more revealing; its

written job description for the position explains that each shift

supervisor "directly manage[s]" three to six other employees while

on shift. Shift supervisors' specific responsibilities include

"direct[ing] partners to various workstations" and "providing

. . . coaching and feedback." These are party admissions, see Fed.

R. Evid. 801(d)(2), and party admissions are potent evidence of

employee status.

Starbucks has a number of fallback arguments. The first

of these suggests that a trial is necessary to determine whether

shift supervisors actually possess managerial responsibility within

the meaning of the Act. Starbucks is correct, of course, that the

work actually performed by an employee is the most important factor

to be considered when determining an employee's proper

categorization in a statutory framework. Our earlier discussion of

the relevance of job titles and descriptions does not suggest the

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contrary. Here, however, Starbucks' argument lacks force.

Although there may be some minor discrepancies in the record, the

relevant evidence is largely undisputed. After careful

perscrutation, we can discern no genuine issue as to any material

fact that might require jury intervention.

At any rate, the evidence canvassed above describing the

work actually performed by the shift supervisors makes it pellucid

that shift supervisors possess managerial responsibility. Any

other conclusion would blink reality.3

Starbucks has yet another shot in its sling. It

asseverates that if shift supervisors are not wait staff, then the

monies given by customers to recognize their service are not "tips"

within the meaning of the Tips Act. See Mass. Gen. Laws ch. 149,

§ 152A(a) (defining a "[t]ip" as "a sum of money, including any

amount designated by a credit card patron, a gift or a gratuity,

given as an acknowledgment of any service performed by a wait staff

employee, service employee, or service bartender"). This

asseveration is too clever by half and, in the bargain, confuses

two separate issues: what is a tip and who is eligible to share in

tips pools. To begin, it is up to the customer — who is not in any

way regulated by the Tips Act — to decide whether and how much to

3
We have no need to trace the fine line that Starbucks seeks
to draw between "management" and "supervision." The
responsibilities assigned to the shift supervisors, while perhaps
supervisory in some respects, include plainly managerial
activities.

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tip. He acts on this intention by choosing a sum of money and

placing it in the tips container. So viewed, there is simply no

question but that the money placed in a tips container by a

grateful Starbucks patron is a tip, regardless of who waited on

him. Such sums are, in the idiom of the statute, gratuities "given

as an acknowledgment of . . . service performed." Mass. Gen. Laws

ch. 149, § 152A(a).

Here, the issue is not whether the monies collected in

the tips containers are tips; it defies reason to think of them as

anything else. Rather, the issue is which employees may receive

distributions from the communal tips pools. It is this issue that

the Tips Act resolves. In doing so, the Act prohibits a system in

which wait staff and employees who have managerial responsibilities

share in the same reservoir of tips.

Starbucks makes a plethora of other arguments, none of

which requires extensive discussion. We reject these arguments out

of hand, pausing only to make three additional points.

First, Starbucks protests that it is inequitable to cut

shift supervisors out of the tips pools when they spend the

majority of their time serving customers alongside baristas. This

protest is disingenuous. Starbucks is the architect of these tips

pools, which flout the law and lump together eligible and

ineligible employees. If there is an inequity, the fault lies with

Starbucks — not with the Tips Act.

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 Second, Starbucks criticizes both the wisdom and the

fairness of the Tips Act as we have interpreted it. This criticism

is misdirected. The Massachusetts legislature enacted the statute

and it is not our place to second-guess either the wisdom or the

fairness of policy judgments made in the public interest by a state

legislature. See Vote Choice, Inc. v. DiStefano, 4 F.3d 26, 40

(1st Cir. 1993).

Third, Starbucks says that the district court's decision

threatens to create a windfall for baristas. That is true as far

as it goes — but it does not take Starbucks very far. The windfall

comes about only because Starbucks put in place a policy that

transgressed the Tips Act, so Starbucks is not in a position to

complain. In any event, "in devising a type of 'strict liability'

to achieve its goal — letting employees keep tips, gratuities, and

fees called 'service charges' — the Legislature must be presumed to

have factored into its calculus the risk of" some service employees

"reap[ing] seemingly unfair benefits." See Cooney v. Compass Grp.

Foodserv., 870 N.E.2d 668, 673-74 (Mass. App. Ct. 2007).

In this case, all roads lead to Rome. The plain language

of the Act, the legislative purpose underlying it, and the Attorney

General's interpretive guidance coalesce to counsel in favor of the

conclusion that Starbucks' Massachusetts-based shift supervisors

are not "wait staff" within the meaning of the Tips Act. The

evidence, even when viewed in the light most favorable to

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Starbucks, admits of no other plausible conclusion. Since shift

supervisors are not "wait staff," the district court did not err in

holding them ineligible to share in tips pools with baristas.

B. Class Certification.

In its certification order, the district court

established a class of "[a]ll individuals who were employed as

baristas at any Starbucks store located in the Commonwealth of

Massachusetts at any time between March 25, 2005, and [March 18,

2011], inclusive." Starbucks II, 2011 U.S. Dist. LEXIS 28572, at

*2. Starbucks laments that the district court erred in certifying

this class. We review the grant or denial of class certification

for abuse of discretion. Waste Mgmt. Holdings, Inc. v. Mowbray,

208 F.3d 288, 295 (1st Cir. 2000). An abuse occurs when a court,

in making a discretionary decision, relies upon an improper factor,

neglects a factor entitled to substantial weight, or considers the

correct mix of factors but makes a clear error of judgment in

weighing them. Id.

We begin with first principles. The Civil Rules

establish four elements that must be present in order to obtain

class certification. This taxonomy comprises numerosity of claims,

commonality of legal or factual questions, typicality of

representative claims or defenses, and adequacy of representation.

Fed. R. Civ. P. 23(a); see also Amchem Prods., Inc. v. Windsor, 521

U.S. 591, 613-14 (1997). Starbucks trains its sights primarily on

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the fourth element, contending that an insurmountable intra-class

conflict destroys any hope of adequacy of representation. In

elaboration, Starbucks explains that the designated class

representatives (the named plaintiffs) are baristas who, in its

view, cannot protect the interests of over 450 former baristas who

became shift supervisors at some point during the class period

(and, thus, would be financially disadvantaged by a decision

striking down Starbucks' current policy).4

The district court rejected this contention, reasoning

that "an interest by certain putative class members in maintaining

the allegedly unlawful policy is not a reason to deny class

certification." Starbucks III, 2011 U.S. Dist. LEXIS 28227, at *3.

We agree.

We do not gainsay that the class, as certified, is not

monolithic; it embodies a potential for conflict. But perfect

symmetry of interest is not required and not every discrepancy

among the interests of class members renders a putative class

action untenable. "Only conflicts that are fundamental to the suit

and that go to the heart of the litigation prevent a plaintiff from

meeting the Rule 23(a)(4) adequacy requirement." 1 William B.

Rubenstein, Newberg on Class Actions § 3:58 (5th ed. 2012). Put

4
To place Starbucks' estimate of the number of baristas-
turned-shift supervisors into perspective, we note that the
plaintiff class as a whole is estimated to number approximately
11,200 individuals.

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another way, to forestall class certification the intra-class

conflict must be so substantial as to overbalance the common

interests of the class members as a whole. See, e.g., In re NASDAQ

Mkt.-Makers Antitrust Litig., 169 F.R.D. 493, 514-15 (S.D.N.Y.

1996).

We think that the district court acted within the realm

of its discretion in determining that there was no intractable

conflict here. A barista-turned-shift supervisor will only be

considered a member of the class (and entitled to damages) for the

period during which she was a barista. She will share in the

awarded class-wide damages for that period. And inasmuch as shift

supervisors are not named as defendants, a barista-turned-shift

supervisor will not be required to reimburse any funds that she may

have received from the tips pools after she was promoted. Last but

not least, if a barista-turned-shift supervisor is uncomfortable

with the attack launched by the plaintiff class on Starbucks' tips

policy, she — like every other class member — has the right to opt

out of the class. The availability of this option is an important

factor in weighing the effect of a largely hypothetical conflict on

a class-certification decision. See Smilow v. Sw. Bell Mobile

Sys., Inc., 323 F.3d 32, 43 (1st Cir. 2003).

Taking a different tack, Starbucks argues that the

certified class is unascertainable and overbroad because certain

experienced baristas provide coaching and direction to less

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experienced co-workers. This assistance, Starbucks argues, renders

those baristas ineligible to receive tips under the district

court's construction of "wait staff." This argument trenches on

the frivolous.

The class is ascertainable under the objective standard

of job titles and includes those who worked as baristas during the

class period. The presence of such an objective criterion

overcomes the claim that the class is unascertainable. See 5 James

Wm. Moore et al., Moore's Federal Practice § 23.21[3][a] (3d ed.

2012) ("For a class to be sufficiently defined, the court must be

able to resolve the question of whether class members are included

or excluded from the class by reference to objective criteria.").

At the risk of belaboring the obvious, we add that even

if some baristas occasionally render the same sort of assistance to

co-workers as shift supervisors are required to do, they are not

responsible for rendering that assistance. A barista's job

description does not contain any managerial responsibilities.

Thus, baristas remain "wait staff" eligible to participate in tips

pools, notwithstanding their volunteered activities. Starbucks'

claim of overbreadth is, therefore, bogus.

In a last-ditch effort to defeat class certification,

Starbucks posits that a class action will not resolve the rights of

all interested parties in the absence of shift supervisors. This

prognostication constitutes little more than whistling past the

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graveyard. It is true, of course, that the maintenance of this

class action, in its present form, leaves open the possibility of

additional litigation at the behest of shift supervisors. Cf.

Winans v. Starbucks Corp., 796 F. Supp. 2d 515, 517 (S.D.N.Y. 2011)

(describing putative class action brought by former assistant store

managers, claiming that Starbucks' tip distribution policy

improperly precludes them from participating in the tips pools).

But the mere fact that a class action will not resolve every

conceivable issue touching upon a challenged policy or practice

does not require a court to throw out the baby with the bath water.

So it is here: considerations of fairness and judicial economy are

well-served by resolving the baristas' claims in a class action.

In particular, the questions of law and fact common to class

members and presented by the plaintiffs' complaint greatly

predominate over any questions affecting individual members. We

conclude, therefore, that a class action is superior to other

alternative ways of adjudicating this controversy. See Fed. R.

Civ. P. 23(b).

C. Treble Damages.

Guided by the parties' stipulation, the district court

determined that the amount of damages owed to the class — that is,

the total amount of funds unlawfully paid to shift supervisors from

the tips pools during the class period — was $7,500,000. The court

then trebled the damages that had accrued after July 11, 2008

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($3,313,271). Starbucks challenges the trebling of this portion of

the damages. The plaintiffs cross-appeal, contending that all of

the damages should have been trebled.

The district court's award of treble damages rests on a

provision of the Massachusetts Wage Act, Mass. Gen. Laws ch. 149,

§ 150. This provision was amended effective July 12, 2008, see

2008 Mass. Legis. Serv. ch. 80, § 5 (West), and the district court

concluded that the amended verison of the law required the

automatic trebling of damages from that point forward. Starbucks

does not contest this interpretation but, rather, insists that the

amended provision transgresses due process by requiring the

automatic imposition of punitive damages without a finding of

reprehensibility. We review this claim of constitutional error de

novo. See, e.g., United States v. Morales-De Jesús, 372 F.3d 6, 8

(1st Cir. 2004).

Starbucks premises its argument on the Supreme Court's

decision in State Farm Mutual Automobile Insurance Co. v. Campbell,

538 U.S. 408 (2003). There, the Court held that "punitive damages

should only be awarded if the defendant's culpability, after having

paid compensatory damages, is so reprehensible as to warrant the

imposition of further sanctions to achieve punishment or

deterrence." Id. at 419. Starbucks' premise is faulty: the

decision in Campbell — which addressed jury-awarded punitive

damages in civil tort actions — is inapposite.

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 Here — unlike in Campbell — there is no cause for concern

about the "imprecise manner in which punitive damages systems are

administered" by juries. Id. at 417. To the contrary, the current

treble damages provision in the Massachusetts Wage Act reflects a

reasoned legislative judgment. This is an important distinction.

See, e.g., Cook Cnty., Ill. v. U.S. ex rel. Chandler, 538 U.S. 119,

132 (2003) (noting that "[t]reble damages certainly do not equate

with classic punitive damages, which leave the jury with open-ended

discretion over the amount").

At any rate, the Massachusetts legislature has made clear

that the current provision allowing treble damages under the Wage

Act is a liquidated damages provision. See Mass. Gen. Laws ch.

149, § 150 (stating that "[a]n employee so aggrieved who prevails

in such an action shall be awarded treble damages, as liquidated

damages, for any lost wages and other benefits" (emphasis

supplied)). The Supreme Court has held in an analogous context

that liquidated damages "constitute[] compensation for the

retention of a workman's pay which might result in damages too

obscure and difficult of proof for estimate other than by

liquidated damages." Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697,

707 (1945) (construing Fair Labor Standards Act). By definition,

therefore, liquidated damages are not punitive damages. See

Marshall v. Brunner, 668 F.2d 748, 753 (3d Cir. 1982).

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 That ends this aspect of the matter. Because an award of

treble damages pursuant to the current version of the Massachusetts

Wage Act is neither an award of punitive damages nor fairly

analogous to such an award, Starbucks' due process concerns are

misplaced.

The plaintiffs' cross-appeal is no more persuasive. They

argue that the district court abused its discretion in failing to

award treble damages for that portion of the class period prior to

July 12, 2008. During that interval, an earlier version of the

Wage Act was in place. Under this version, the decision about

whether to award treble damages lay entirely within the discretion

of the trial court. See Wiedmann v. The Bradford Grp., Inc., 831

N.E.2d 304, 313 (Mass. 2005).

The Massachusetts Supreme Judicial Court explained that

such an award was "appropriate where conduct is 'outrageous,

because of the defendant's evil motive or his reckless indifference

to the rights of others.'" Rosnov v. Molloy, 952 N.E.2d 901, 905

(Mass. 2011) (quoting Wiedmann, 831 N.E.2d at 313). Applying this

standard, the district court ruled ore sponte that, with respect to

the period prior to July 12, 2008, "the defendant's conduct was not

outrageous enough to warrant treble damages."

This ruling passes muster. The district court cited the

correct legal standard, and its refusal to impose treble damages

for the earlier part of the class period was not unreasonable.

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After all, the Tips Act was amended in 2004 and had not been

authoritatively construed during the relevant time frame. Although

Starbucks fashioned a policy that, after litigation, was found to

run afoul of the Tips Act, there is no compelling evidence that it

either violated the statute willfully or acted with reckless

indifference to the rights of others. By the same token, the

record contains no evidence suggesting that Starbucks harbored an

evil motive.

In an effort to overcome these considerations, the

plaintiffs point out that the district judge, in disallowing their

claim, said that Starbucks' "conduct was not outrageous enough to

warrant treble damages." They say, a fortiori, that the conduct

must have been outrageous to some degree, thus paving the way for

an award of treble damages. This is sheer persiflage.

We do not read the Massachusetts cases as requiring

treble damages under the earlier version of the Wage Act whenever

some hint of outrageousness exists. Outrageousness is often a

matter of degree. Most people would think that bilking a widow out

of her life's savings is outrageous; some would think that charging

$5.25 for a salted caramel mocha frappuccino is outrageous. But

everyone would agree that the two acts are qualitatively different,

and are not deserving of the same level of opprobrium. It is for

the district court, exercising its informed discretion, to

determine when particular conduct sinks to a level that warrants

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the multiplication of damages. See, e.g., N.J. Coal. of Rooming &

Boarding House Owners v. Mayor & Council of City of Asbury Park,

152 F.3d 217, 224-25 (3d Cir. 1998).

III. CONCLUSION

The parties, represented by skilled counsel, have tried

valiantly to show us how and why the district court committed some

reversible error. In the end, however, their efforts fail.

We need go no further. For the reasons elucidated above,

we affirm the judgment of the district court in all respects.

Affirmed.

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