Metropolitan News-Enterprise


Monday, January 26, 2009


Page 1


C.A. Revives Portion of Lawsuit Over Tip Pooling in Casinos




Card dealers who object to being required to share their tips with other casino employees have a valid claim for unfair business practices to the extent that supervisors are allowed to share in those tips, but not otherwise, the Court of Appeal for this district has ruled.

Div. Three Thursday reinstated a portion of a class action brought by former dealer Louie Hung Kwei Lu on behalf of all dealers who worked at the Hawaiian Gardens Casino between Nov. 27, 1999 and the date of notice to the class. Los Angeles Superior Court Judge David Minning had granted summary judgment to the casino’s owner, rejecting all claims under the Labor Code and Unfair Competition Law and for conversion. 

Under the casino’s policy, dealers are required to segregate 15 or 20 percent of their tips—depending on the location of the table and that game dealt—and pay them into a pool. The pool is distributed to various service workers, including chip runners, coordinators, hosts, “floormen,” and concierges.

Sharing Prohibited

Ownership does not take any part of the tip money and bears the expense of distributing the tips itself, and prohibits employees whom it classifies as supervisors or managers from sharing in the tips. Two employees, however, testified that floormen, otherwise known as customer service representatives, are also referred to as “relief supervisors” and write evaluations, handle complaints about dealers, and otherwise oversee dealer work performance.

Minning concluded that all causes of action were precluded under Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, which upheld the legality of a tip pooling arrangement by which a restaurant’s owner required waiters and waitresses to share tips with bartenders and busboys. The court held in that case that since the employer was not keeping any of the money for itself, there was no violation of Labor Code Sec. 351, which prohibits employers from obtaining access to their workers’ tips and gratuities.

Justice Richard Aldrich, writing for the Court of Appeal, said that Minning was largely, but not entirely, correct.

‘Salutary Effect’

The justice rejected the plaintiff’s effort to distinguish Leighton on the ground that dealers receive their tips directly from the customer, rather than having them left on tables as in restaurants. As in restaurants, Aldrich wrote, tip pooling has long been the practice in the casino industry and has the “salutary effect” of promoting good service by all employees who share in the pool.

The practice, he noted, has never been outlawed in either the restaurant or casino context, and there is nothing in the legislative history of Sec. 351, or in the policy behind it, indicating an intent to prohibit tip pools. 

The jurist elaborated:

“The purpose of section 351 is to prevent employers from collecting, taking, or receiving any part of a gratuity as part of the employers’ daily gross receipts....That purpose is not contravened by allowing tip pooling in casinos.  The fact that employees, other than dealers, receive tips does not undermine the stated goals of section 351.”

Aldrich also rejected the contention that workers may sue their employers directly under Sec. 351 or Sec. 450, which prohibits an employer from coercing an employee “to patronize his or her employer, or any other person, in the purchase of any thing of value.”

The justice noted that Sec. 351 and 450 are among the statutes enforced by the Division of Labor Standards Enforcement, and are also among those listed in the Labor Code Private Attorneys General Act, which allows a private citizen to sue for civil penalties if the DLSE does not.

“The enactment of PAGA as an enforcement vehicle implies a legislative recognition that a direct, private cause of action under sections 351 and 450 is not viable,” Aldrich wrote. Besides, the jurist concluded, there was no evidence of a violation of Sec. 450.

The justice went on to say, however, that a violation of Sec. 351 may constitute an unfair business practice under the Unfair Competition Law, and that there was sufficient evidence to create a triable issue as to whether such a violation occurred. He cited the portion of the statute prohibiting payment of an employee’s tips to an “agent” of the employer, defined as “every person other than the employer having the authority to hire or discharge any employee or supervise, direct, or control the acts of employees.”

If the customer service representatives or floormen had the duties that some of the employees attributed to them in their depositions, and that Lu reported in his declaration, Aldrich declared, they were agents within the meaning of the statute and their sharing in the tips violated Sec. 351 and was an unfair and illegal business practice under the UCL.

Attorneys on appeal were Dennis F. Moss of Spiro Moss Barness for the plaintiff and Tracey A. Kennedy of Sheppard, Mullin, Richter & Hampton, along with Redondo Beach attorney Michael St. Denis, for the casino’s owner and general manager.

The case is Lu v. Hawaiian Gardens Casino, Inc., 09 S.O.S. 422.


Copyright 2009, Metropolitan News Company