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Karl v. Uptown Drink, LLC

Supreme Court of Minnesota

August 14, 2013

Jana Karl, et al., Appellants,
v.
Uptown Drink, LLC, et al., Respondents.

Court of Appeals Office of Appellate Courts

Steven Andrew Smith, Megan I. Brennan, Katherine M. Vander Pol, Nichols Kaster, PLLP, Minneapolis, Minnesota, for appellants.

Lori Swanson, Attorney General, Kelly S. Kemp, Jackson Evans, Assistant Attorneys General, Saint Paul, Minnesota, for amicus curiae Commissioner of Minnesota Department of Labor and Industry.

Richard L. Kaspari, Metcalf, Kaspari, Engdahl & Lazarus, P.A., Saint Paul, Minnesota, for amicus curiae Unite Here Local 17.

Gildea, C.J. Took no part, Lillehaug, J.

SYLLABUS

1. Under Minn. Stat. § 181.79 (2012), the term "wages" is defined by the Equal Pay for Equal Work Law, Minn. Stat. § 181.66 (2012), and gratuities are included within "wages" under that definition.

2. In order to prove a violation of Minn. Stat. § 181.79, employees do not have to show that because of deductions their wages fell below the minimum wage in Minn. Stat. § 177.24 (2012).

Reversed and remanded.

Considered and decided by the court without oral argument.

OPINION

GILDEA, Chief Justice.

Appellants, roughly 750 servers, bartenders, and security guards ("the employees"), brought a class action against their employers, respondents Uptown Drink, LLC, Drink, Inc., Downtown Entertainment Ventures LLC d/b/a Spin Night Club, the parent corporation Fun Group, Inc., and the parent corporation's president Michael Whitelaw ("the employers"). The employees alleged five causes of action, including "Unlawful Deductions" made in violation of Minn. Stat. § 181.79 (2012). Before closing arguments, the employees moved for a directed verdict on their section 181.79 claim. The district court denied the motion and submitted the section 181.79 claim to the jury. The jury found that the employers did not violate section 181.79.

After the verdict, the employees requested judgment as a matter of law ("JMOL") pursuant to Minn. R. Civ. P. 50.02 on their section 181.79 claim. The district court denied the motion. The court of appeals affirmed. Karl v. Uptown Drink, LLC, No. A12-0166, 2012 WL 3262974, at *5 (Minn.App. Aug. 6, 2012). Because we conclude that the employees were entitled to judgment as a matter of law on their section 181.79 claim, we reverse and remand to the district court with instructions to enter judgment as a matter of law in favor of the employees on liability under section 181.79 and for further proceedings to determine appropriate damages.

The employees filed a class action complaint against the employers, alleging violations of the Minnesota Fair Labor Standards Act ("MFLSA"), Minn. Stat. §§ 177.21-.44 (2012), and Minn. Stat. § 181.79. At trial, witnesses—including the employers' witnesses—testified that the employees were required to pay for register shortages, and the bills of customers who walked out without paying ("walkouts") or failed to sign credit-card receipts ("unsigned credit-card receipts"), from their gratuities. Some of the witnesses indicated that employees who failed to make these payments could face employment termination. The employers did not dispute that the employees were required to pay for shortages "on occasion, " but argued that the payments were not deductions because the employees on ...


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