Israel Rosell, et al v. VMSB, LLC

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 23-12658
Non-Argument Calendar
____________________
ISRAEL ROSELL,
ROBERTO GONZALEZ,
for themselves and on behalf of those similarly
situated,
Plaintiffs-Appellants,
ALLAN CHOW, et al.,
Plaintiffs,
versus
VMSB, LLC,
a Florida Limited Liability Company
d.b.a. Gianni's
d.b.a. CASA CASUARINA,
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Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 1:20-cv-20857-KMW
____________________
Before G RANT, BRASHER , and A BUDU , Circuit Judges.
PER CURIAM:
Israel Rosell and Roberto Gonzalez—a bartender and a
server at Gianni’s, an upscale restaurant housed in the former
Versace Mansion in Miami Beach, Florida—sued their employer
and owner of the restaurant, VMSB, LLC, for alleged violations of
the Fair Labor Standards Act and the Florida Minimum Wage Act.
Their claim that VMSB paid less than minimum wage turns on
whether an automatic charge applied to all customer bills counts
as a tip or as a mandatory service charge. We have previously held,
in a case with nearly identical facts, that such a fee is a service
charge, not a tip, and can lawfully be used to offset an employer
restaurant’s wage obligations under the Fair Labor Standards Act.
Compere v. Nusret Miami, LLC, 28 F.4th 1180, 1182 (11th Cir. 2022).
Rosell and Gonzalez’s contrary arguments are foreclosed by
Compere. Accordingly, we affirm.
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I.
Customers at Gianni’s are automatically assessed a fixed
percentage of the total sales price of their food and drink as a
service charge. This service charge was set at 20% from 2015 until
mid-2017, after which it was increased to 22%. VMSB instructs
waitstaff to inform customers of the automatic service charge upon
presentation of the menu; restaurant policy also prohibits
employees from removing this charge from the bill. Despite this
policy, restaurant staff occasionally removed the service charge
anyway in response to customer complaints about service.
On a customer’s bill, the restaurant’s point-of-sale system
displays the service charge as its own line item. Separately from
this entry, the final check also contains a line for the customer to
include a discretionary tip. Service charges are shared between the
restaurant and employees: 90% of the total goes to front-of-house
employees, while 10% is retained by the restaurant. On the other
hand, 100% of any gratuity paid by a customer is kept by the
employee who served that guest.
The federal minimum wage set by the Fair Labor Standards
Act is $7.25 per hour. During the relevant period, Florida’s
minimum wage was higher, starting at $8.10 per hour in 2017 and
rising to $8.65 per hour in 2020. VMSB paid both Rosell and
Gonzalez a direct wage of $5.65 per hour, plus their share of the
service charges imposed on each customer’s check. They also kept
any gratuities from customers they individually received. It is
undisputed that, while the direct wage of $5.65 per hour was below
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4 Opinion of the Court 23-12658
the state and federal minimums, if the service charge distributions
are counted as well, both Rosell and Gonzales were paid well in
excess of minimum wage.
Rosell and Gonzales sued VMSB on three counts: a violation
of the federal minimum wage under the Fair Labor Standards Act,
a violation of Florida’s state minimum wage under the Florida
Minimum Wage Act, and a violation of the Fair Labor Standards
Act’s overtime pay obligations. The district court granted partial
summary judgment to VMSB on both minimum wage counts, and
the parties settled the overtime count. This is Rosell and
Gonzales’s second attempt to appeal their minimum wage claims;
the first time around, their attempt to voluntarily dismiss the
settled overtime count was procedurally defective, leaving it
pending before the district court and depriving this Court of
appellate jurisdiction. See Rosell v. VMSB, LLC, 67 F.4th 1141 (11th
Cir. 2023). This time, Rosell and Gonzales have fixed the problem
by amending their complaint to drop the overtime claim, meaning
they have obtained a final judgment as to all their outstanding
claims. We may now exercise jurisdiction over the appeal.
II.
We review a district court’s grant of summary judgment de
novo, viewing the evidence in the light most favorable to the
nonmoving party and drawing all reasonable inferences in its favor.
Sutton v. Wal-Mart Stores East, LP, 64 F.4th 1166, 1168 (11th Cir.
2023). Summary judgment is appropriate when “there is no
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23-12658 Opinion of the Court 5
genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
III.
Rosell and Gonzalez’s minimum wage claims turn on
whether their service charge distributions can count toward
VMSB’s minimum wage obligations, or whether the charge should
count as a tip and be excluded from the minimum wage
calculation. In Compere v. Nusret Miami, LLC, we analyzed another
restaurant’s nearly identical service charge arrangement. There,
we explained that “the critical feature of a ‘tip’ is that ‘[w]hether a
tip is to be given, and its amount, are matters determined solely by
the customer.’” Compere, 28 F.4th at 1186 (quoting 29 C.F.R.
§ 531.52(a)). “Distinct from ‘a payment of a charge, if any made for
the service,’ a tip is presented by a customer ‘as a gift or gratuity in
recognition of some service performed for the customer.’” Id.
(quoting 29 C.F.R. § 531.52(a)). By contrast, a “compulsory charge
for service,” like a flat percent applied to the total amount of a bill,
“imposed on a customer by an employer’s establishment, is not a
tip.” Id. at 1187 (quoting 29 C.F.R. § 531.55(a)).
Applying these principles, we held that the defendant-
restaurant’s mandatory service charge of 18% automatically
applied to all customer bills qualified as “a bona fide service charge
and not a tip,” and thus “could lawfully be used to offset [the
restaurant’s] wage obligations under the FLSA.” Id. at 1182, 1189.
Compere answers this nearly identical case: VMSB’s mandatory fee
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6 Opinion of the Court 23-12658
of 20–22%, applied to all customers’ bills, is a service charge, not a
tip, and can count towards VMSB’s minimum wage obligations.
Rosell and Gonzalez attempt to escape Compere’s holding by
arguing that VMSB had reported the service charge fees as
employee tips rather than as part of its gross receipts on its federal
tax returns. They argue that VMSB should be estopped in this
Court from now arguing that the same fees were actually not tips,
for purposes of the Fair Labor Standards Act.
Compere has already answered this objection. The
employees there also argued that the classification of a fee as a
service charge or a tip turned on the restaurant’s tax returns: they
argued that “a service charge is a tip unless an employer includes
the service charges in their gross receipts for tax purposes.” Id. at
1187 (alteration adopted) (quotation omitted). We rejected this
argument, stating that an employer’s “tax returns are irrelevant to
determining whether the service charge is a tip.” Id. at 1188 n.14.
Whether the charge was a tip turned on whether the customer had
any discretionary say in whether to pay the charge or its amount,
not how the restaurant had reported the charge to the IRS. Id. at
1185–88.
Rosell and Gonzalez argue that Compere’s statements about
the relevance of tax returns are dicta because the “Compere court
did not have the sworn tax returns before it.” As we have explained
many times, “a statement that neither constitutes the holding of a
case, nor arises from a part of the opinion that is necessary to the
holding of the case is dicta” and “not binding on anyone for any
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purpose.” Rudolph v. United States, 92 F.4th 1038, 1045 (11th Cir.
2024) (quotations omitted). And it is true that the record in Compere
did not include whether the restaurant there had reported its
service charge to the IRS as tips or as part of its gross receipts.
Compere, 28 F.4th at 1184.
But that does not render Compere’s rejection of the relevance
of tax returns dicta. The employees in Compere argued that the fact
that the record did not answer how the restaurant was treating the
service charge on its tax returns meant that summary judgment
was premature, and they sought to take the deposition of the
restaurant’s accountant, who they said would testify about how the
restaurant characterized the charge in its tax filings. Id. at 1184,
1189. We affirmed the district court’s grant of summary judgment
to the restaurant even without this information, reasoning that the
tax returns were “irrelevant” to the inquiry and that summary
judgment was appropriate because there existed no genuine
dispute on any material facts. Id. at 1187. That conclusion was
therefore “necessary to the holding of” Compere, meaning that it is
not dicta and is binding on the Court in this case. Rudolph, 92 F.4th
at 1045 (quotation omitted).
Rosell and Gonzalez also attempt to distinguish Compere by
arguing that VMSB occasionally waived the service charge in
response to customer complaints about service. They argue that if
a restaurant ever removes the service charge, it is not “mandatory”
and therefore is properly characterized as a discretionary tip.
Again, Compere forecloses this argument. There, as here, restaurant
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“managers had discretion to remove the charges on the bills of
dissatisfied customers.” Id. at 1188. We wrote that that fact was
“irrelevant,” because “the relevant question is whether the decision
to pay the given sum is ‘determined solely by the customer’” and the
“customers had no ability to determine on their own whether they
would pay the service charge.” Id. (quoting 29 C.F.R. § 531.52(a)).
So too here.
* * *
VMSB’s service charge is identical to that analyzed in
Compere in all material respects. Consistent with Compere, then, we
hold that VMSB’s service charge is not a discretionary tip for
purposes of the Fair Labor Standards Act and that distributions
from the service charge to employees may be lawfully counted
against VMSB’s minimum wage obligations. The district court’s
grant of summary judgment to VMSB on Rosell and Gonzalez’s
minimum wage claims is thus AFFIRMED.
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