Trial Court: Santa Clara County Superior Court Trial Judge: Hon. James P. Kleinberg (Santa Clara County Super. Ct. No. 1-07-CV080689)
The opinion of the court was delivered by: Elia, J.
CERTIFIED FOR PUBLICATION
Plaintiff Haim Avidor is the lead plaintiff in this class action by current and former card dealers employed by defendant Sutter's Place, doing business as Bay 101 (often abbreviated by the parties as Bay 101 or the casino), which operated a cardroom in San Jose. Bay 101 required its dealers to contribute a set amount of the gratuities they received from players to a common account, which was distributed to other casino employees each payday. In this action plaintiff has contended that Bay 101 violated Labor Code section 351 by compelling its dealers to participate in this tip-pooling arrangement, thereby creating a cause of action for unfair business practices under Business and Professions Code section 17200, et seq. Plaintiff further contends that this withholding of the dealers' property amounted to violations of the minimum wage law (Lab. Code, § 1197), conversion, and the common count of money had and received. Because we disagree with plaintiff's interpretations of the statutory language applicable to the casino's tip-pooling arrangement, we must affirm the judgment in Bay 101's favor.
There were two sides to Bay 101's gaming operation: a poker side and a California games, or "Cal games," side. Patrons paid a fee to play against other patrons rather than against the house. The facility also housed a deli, a hair salon, and a sports bar, all part of Bay 101's business. At the time of trial, Bay 101 employed about 705 employees, of which about 260 were dealers.
The members of the class were dealers who were employed from August 8, 1998 through August 4, 2006. Plaintiff, a dealer on the California games side, was employed by Bay 101 from September 1994 until August 2002. Dealers worked in shifts consisting of 40-minute (previously 30-minute) rounds, or "downs," during which they dealt multiple hands to players before moving to the next table in their rotation schedule. A dealer would average six to eight downs per shift.
The rotation schedule was set by the "lead" floor person, or "lead floor," and maintained by the "floor person" during the dealer's shift. A key role of the floor person was to settle disputes or questions that arose during play at the tables. Dealers were not permitted to become involved in any disputes or challenges; when those occurred, or if the dealer made a mistake, he or she had to summon a floor person (or if that person was unavailable, the lead floor or the shift manager), who had the authority to decide the matter. Dealers were not to question the decision of the floor person at the table, but could pursue the matter later, by discussing it with the lead floor, shift manager, casino coordinator, or dealer coordinator.
Players customarily tipped dealers when they won a hand, by tossing, sliding, or pushing a chip or chips from the pot toward the dealer. Both patrons and dealers occasionally tipped other employees as well. Plaintiff, for example, might tip a porter or waitress when he or she performed a service for him while he was dealing. Customers gave tips to floor people, chip runners, porters, waitresses, and anyone else whom they "felt like tipping," even cashiers.
For several years dealers were required to contribute a set amount per hour ($2.50 by poker dealers, $5.00 by Cal games dealers) into a tip pool, which was distributed to nondealer employees. The contribution was referred to as the "drop." In 2007 and part of 2008, all dealers dropped $2.50 per hour. Thereafter the casino's policy changed to require dealers to drop $2.50 per down, only for the downs in which they dealt, not for "dead spreads," periods in which no games were played. The parties stipulated that dealers received between $750 and $1,500 in tips per week, and that on any given day they dropped no more than 15 percent of the tips they received from customers.
The recipients of the money in the tip pool changed periodically as Ronald Werner, the general manager, decided both the categories and amount of distributions. In 1998, for example, the recipient categories included floor people, card control, shift managers, surveillance director, surveillance personnel, casino host, porters, and tip pool administrator. After 1998, certain categories were removed, such as the shift manager and surveillance director in February 2001, other surveillance personnel at the end of March 2005, and tip pool administrator at the end of November 1998. Housekeepers were included by early March of 2003. As of trial the designated categories were specified floor persons, casino hosts, porters, card control employees, and housekeeping employees.
Although dealers were not always aware of who was in the tip pool, they were all informed of the policy during the orientation before beginning work at Bay 101. As early as 1995 dealers were instructed to sign a "Tip Pooling Agreement," which they signed in acknowledgment of and agreement to the drop policy.
This case began in December 2004, when plaintiff filed class proofs of claims in Bay 101's bankruptcy proceeding. The contested matter was later converted to an adversary proceeding, but eventually the parties stipulated to a dismissal designed to help effect a transfer of the dispute to state court. Plaintiff initiated this action in February 2007, generally alleging that Bay 101 illegally took tips patrons had given to dealers by compelling the dealers to participate in a tip pool.
Plaintiff's second amended complaint, filed on September 3, 2008, alleged seven causes of action: money had and received; breach of contract; collecting and receiving employee wages, in violation of Labor Code section 221; violation of the minimum wage law, Labor Code section 1197; unfair business practices in violation of the Unfair Competition Law (UCL), Business and Professions Code section 17200, et seq.; conversion; and failure to indemnify employees, in violation of Labor Code section 2802.*fn1 Bay 101 successfully demurred to the second (contract) and third (section 221) causes of action and later moved for summary judgment, or alternatively, summary adjudication. The court's grant of summary adjudication on the fourth (minimum wage), sixth (conversion), and seventh (indemnification) allegations left only two claims for the May 2011 trial: the first cause of action for money had and received, which was tried to a jury; and the section 17200 claim of unfair business practices, which was tried to the court.
After plaintiff rested, the trial court granted non-suit on the first cause of action and thereafter granted Bay 101's motion for judgment on the remaining cause of action, pursuant to Code of Civil Procedure section 631.8. On July 12, 2011, the court entered judgment for Bay 101.
Discussion 1. Plaintiff's Contentions on Appeal
The foundation of plaintiff's position is section 351, which states: "No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for. An employer that permits patrons to pay gratuities by credit card shall pay the employees the full amount of the gratuity that the patron indicated on the credit card slip, without any deductions for any credit card payment processing fees or costs that may be charged to the employer by the credit card company. Payment of gratuities made by patrons using credit cards shall be made to the employees not later than the next regular payday following the date the patron authorized the credit card payment."
In reviewing the legislative history of the statute, our Supreme Court noted that in its earliest form the statute permitted an employer to deduct tips from an employee's wages as long as the employer conspicuously displayed a notice informing the public of that practice. (See Henning v. Industrial Welfare Com. (1988) 46 Cal.3d 1262, 1271-1272; see also Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal.4th 592, 599 [reviewing legislative history in determining whether statute affords plaintiffs a private right of action].) In its current form, however, section 351 clearly prohibits an employer from paying an employee less than minimum wage because that employee receives additional income in the form of tips. (Henning v. Industrial Welfare Com., supra, 46 Cal.3d at p. 1278.) And the statute expressly states that a tip is "the sole property of the employee or employees to whom it was paid, given, or left for."
Plaintiff essentially argues that Bay 101 has continued to appropriate dealers' property -- their tips -- in order to "fund part of the costs of employing other employees," those who were "not intended recipients of the tips." He draws a distinction between "given to" and "left for," pointing out that in the casino context, unlike a restaurant setting, customers give tips directly to dealers rather than leaving money on the table for all those who provided service during the visit. Plaintiff maintains that withholding a tip that was "given by a patron to an employee ...