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SJC-11618

  RON MESHNA & others1      vs.   CONSTANTINE SCRIVANOS & another.2



         Suffolk.     December 1, 2014. - April 10, 2015.

  Present:   Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk,
                           & Hines, JJ.



                    Tips.    Employment.   Notice.



     Civil action commenced in the Superior Court Department on
May 18, 2011.

     The case was heard by Thomas P. Billings, J., on a motion
for summary judgment, and questions of law were reported by him
to the Appeals Court.

     The Supreme Judicial Court granted an application for
direct appellate review.


     Shannon Liss-Riordan for the plaintiffs.
     Diane M. Saunders (Andrew E. Silvia with her) for the
defendants.

    1
       Ileana Ortiz, Ralph Sherrick, and Karen White. The
plaintiffs sued on behalf of themselves and all others similarly
situated.
    2
        NGP Management, LLC.
                                                                   2


     The following submitted briefs for amici curiae:
     Harris Freeman & Audrey R. Richardson for Labor Relations
and Research Center, University of Massachusetts, Amherst,
& another.
     Christopher J. Anasoulis for DD Independent Franchise
Owners, Inc.
     Ben Robbins & Martin J. Newhouse for New England Legal
Foundation.
     Richard L. Alfred, Ariel D. Cudkowicz, C.J. Eaton, &
Jessica S. Lieberman for Seyfarth Shaw LLP.


     DUFFLY, J.   The plaintiffs are current and former employees

at Dunkin' Donuts stores who brought suit in the Superior Court

against Constantine Scrivanos, a Dunkin' Donuts franchisee of

stores that employed the plaintiffs, and NGP Management, LLC

(NGP), which performs management functions for those stores.

Among other claims, the plaintiffs maintained that the

defendants had implemented a no-tipping policy at certain of

their Dunkin' Donuts stores,3 and that the implementation of that

policy, as well as the method of enforcing it, violated G. L.

c. 149, § 152A (Tips Act).4   The Tips Act provides that no

employer "shall . . . accept . . . any . . . deduction from a

tip" given to any wait staff, service, or bartender employee, or


     3
       Constantine Scrivanos holds franchises for approximately
sixty-six Dunkin' Donuts stores in Massachusetts; approximately
forty-four of these stores had a no-tipping policy in place
during the period relevant to the plaintiffs' claims.
     4
       The plaintiffs also asserted claims of tortious
interference with contractual or advantageous relations and
unjust enrichment. The claim for unjust enrichment was
dismissed, and is not before us.
                                                                     3


"retain . . . any tip" given to the employer directly.   G. L.

c. 149, § 152A (b).

     Concluding that the no-tipping policy was not a violation

of the Tips Act, a Superior Court judge allowed the defendants'

motion for summary judgment on that claim.    The judge denied the

motion on the claims alleging that the defendants' policy of

placing money left as tips in the cash register, and a later

policy of placing money left as tips in "abandoned change" cups,

violated the Tips Act, because he determined that these claims

raised triable issues of fact.    At the plaintiffs' request, the

judge then reported two questions to the Appeals Court, pursuant

to Mass. R. Civ. P. 64 (a), as amended, 423 Mass. 1403 (1996),

and we allowed the plaintiffs' petition for direct appellate

review.5

     The judge reported the following questions:

           "1.   Does G. L. c. 149, § 152A allow an employer to
                 maintain a no-tipping policy?

           "2.   If a no-tipping policy is permitted under
                 Massachusetts law, may an employer be liable
                 under G. L. c. 149, § 152A if:

                      "a. The employer fails to communicate the
                 no-tipping policy clearly to customers, who
                 consequently leave tips that are retained by the

     5
       We acknowledge the amicus briefs submitted by DD
Independent Franchise Owners, Inc.; the Labor Relations and
Research Center, University of Massachusetts, Amherst, and the
Massachusetts Fair Wage Campaign; the New England Legal
Foundation; and Seyfarth Shaw LLP.
                                                                     4


                 employer; and/or

                      "b. The employer clearly communicates the
                 no-tipping policy to customers, who nonetheless
                 leave tips that are retained by the employer?"

We answer the first question, "Yes."    We answer question 2(a),

"Yes," and 2(b), "No."

    Background.     We summarize the facts set forth in the

judge's memorandum of decision, supplemented by the parties'

joint statement of material facts, reserving some facts for

later discussion.    Scrivanos is a franchisee operating

approximately sixty-six Dunkin' Donuts stores in the

Commonwealth.    He has established various limited liability

companies and S corporations that own the stores for which he is

a franchisee, and he is the manager of each of these

corporations.    Scrivanos also established NGP, which manages and

operates all of Scrivanos's Dunkin' Donuts locations in

Massachusetts.    The plaintiffs are current and former employees

of Scrivanos's Dunkin' Donuts stores.    They were paid on an

hourly basis.    All of the plaintiffs earned at least the minimum

wage under the Wage Act, G. L. c. 151, § 1.

    Sometime in 2003, the defendants instituted a no-tipping

policy at all of their stores, but later withdrew the policy as

to some stores.    When the plaintiffs' complaint was filed, the

policy remained in effect in approximately two-thirds of
                                                                    5


Scrivanos's Massachusetts stores, including all of the stores in

which the plaintiffs worked.   Under the no-tipping policy, an

employee is not permitted to accept a tip from a customer, even

if the customer wants to leave a tip, and is required to inform

a customer who attempts to leave a tip of the policy.

    The defendants have instituted various mechanisms for

enforcing the no-tipping policy, including the placement of

signs in the stores stating "no tipping" or "thank you for not

tipping."   The size and location of the signs vary from store to

store.   Additionally, the defendants instruct employees to

inform customers of the no-tipping policy and to refuse to

accept tips.   The defendants have communicated to employees that

the acceptance of tips "will result in disciplinary action, up

to and including termination."   Before commencement of this

litigation, the defendants instructed employees to place "tips"

that had been left by customers, notwithstanding the

instructions about the no-tipping policy, in the cash register.

After the filing of the plaintiffs' complaint in the Superior

Court, an "abandoned change" policy was adopted.   Employees in

stores with a no-tipping policy were instructed to place the

money in abandoned change cups located near the cash register.

Employees also were instructed to inform customers that the

"abandoned change" cups were not for tips, and that any money
                                                                    6


placed in the cups would be used to discount future customers'

purchases, similar to a "take-a-penny, leave-a-penny" container.

    The plaintiffs asserted in their original complaint that

both the defendants' no-tipping policy, and the policy of

placing money left as "tips" in the cash register, violate the

Tips Act.    After the implementation of the "abandoned change"

policy, the plaintiffs filed an amended complaint asserting that

this new policy also violates the Tips Act.

    The defendants filed a motion for judgment on the

pleadings.    After a hearing on the motion, a Superior Court

judge held that the Tips Act did not prohibit implementation of

a no-tipping policy, but that, if customers nonetheless left

tips, those tips belonged to the employees, and an employer's

retention of them would constitute a violation of the Tips Act.

Concluding that a full record would be helpful for any appeal,

the judge denied the plaintiffs' motion to report the case to

the Appeals Court.    Discovery was conducted, and the defendants

thereafter filed a motion for summary judgment.    A different

Superior Court judge denied the motion in part, allowed it in

part, and reported the questions to the Appeals Court.       We

allowed the plaintiffs' petition for direct appellate review.

    Discussion.     The reported questions require that we

construe the language of the Tips Act, and we apply familiar
                                                                   7


principles of statutory construction to guide our

interpretation.    "We look to the intent of the Legislature

'ascertained from all its words construed by the ordinary and

approved usage of the language, considered in connection with

the cause of its enactment, the mischief or imperfection to be

remedied and the main object to be accomplished, to the end that

the purpose of its framers may be effectuated.'"    DiFiore v.

American Airlines, Inc., 454 Mass. 486, 490 (2009), quoting

Industrial Fin. Corp. v. State Tax Comm'n, 367 Mass. 360, 364

(1975).    "In addition, our respect for the Legislature's

considered judgment dictates that we interpret the statute to be

sensible, rejecting unreasonable interpretations unless the

clear meaning of the language requires such an interpretation."

Bednark v. Catania Hospitality Group, Inc., 78 Mass. App. Ct.

806, 811 (2011), citing Commonwealth v. Dodge, 428 Mass. 860,

865 (1999).

       We note, as an initial matter, that it is undisputed that

the plaintiffs are employees entitled to the protections of the

Tips Act.    The Tips Act "protect[s] the wages and tips of

certain employees who fall within the ambit of the statute."

Bednark v. Catania Hospitality Group, Inc., 78 Mass. App. Ct. at

809.    These employees include service employees, service

bartenders, and wait staff employees.    G. L. c. 149, § 152A (a).
                                                                      8


Wait staff employees include counter staff who "serve[]

beverages or prepared food directly to patrons," "work[] in a

restaurant . . . or other place where prepared food or beverages

are served," and have "no managerial responsibility."     Id.   The

parties agree that the plaintiffs are "wait staff employees"

within the meaning of the Tips Act.

    1.   Whether G. L. c. 149, § 152A, permits an employer to

maintain a no-tipping policy.   General Laws c. 149, § 152A (b),

provides that

         "[n]o employer or other person shall demand, request
    or accept from any wait staff employee, service employee,
    or service bartender any payment or deduction from a tip or
    service charge given to such wait staff employee, service
    employee, or service bartender by a patron. No such
    employer or other person shall retain or distribute in a
    manner inconsistent with this section any tip or service
    charge given directly to the employer or person."

    Relying on language in this provision, the plaintiffs

contend that the plain language of the Tips Act prohibits an

employer from instituting a no-tipping policy.   They argue that

G. L. c. 149, § 152A (b), does not permit an employer to take

any "deduction from a tip," and that the defendants' prohibition

on employees accepting tips in effect results in a "deduction

from a tip" that the employee would have received absent the no-

tipping policy.

    The plaintiffs' interpretation is contrary to several

tenets of statutory construction.   It would require that we
                                                                    9


disregard the plain meaning of the words "retain" and

"deduction" as used in G. L. c. 149, § 152A (b).   Moreover,

because the statute explicitly concerns tips that have been

"given," either directly to employees or to employers, the

plaintiffs' interpretation distorts the syntax of that section,

in order to read into it a provision the Legislature did not

include.

    In the first sentence of G. L. c. 149, § 152A (b), an

employer is prohibited from demanding, requesting, or accepting

a "deduction" from a tip "given to [a covered] employee."    In

construing a statute, where a word is commonly understood, it

can "be given its ordinary meaning."   Flemings v. Contributory

Retirement Appeal Bd., 431 Mass. 374, 375 (2000), quoting

Commonwealth v. Woods Hole, Martha's Vineyard & Nantucket S.S.

Auth., 352 Mass. 517, 518 (1967).   According to several

dictionary definitions, the word "deduct" means "to take away,

as from a sum or amount."   See Webster's New Universal

Unabridged Dictionary 520 (2003); 3 Oxford English Dictionary

115 (1978).   A "deduction" is commonly defined as "something

that is or may be deducted."   Webster's New Universal Unabridged

Dictionary, supra.   See Black's Law Dictionary 501 (10th ed.

2014) ("The act or process of subtracting or taking away"); 3

Oxford English Dictionary, supra at 116 ("That which is deducted
                                                                   10


or subtracted").

     Thus, in the plain and unambiguous language of the statute,

an employer may not take away any amount from a "service charge,

tip[, or] gratuity," G. L. c. 149, § 152A (a), that was "given

to" a wait staff employee.    A tip that was "given to" an

employee would include a tip that was handed directly to the

employee or left on a counter for the employee, or a sum

designated as a tip or gratuity on a customer's credit card

slip.6   This reading of the first sentence of § 152A (b) is

"consonant with sound reason and common sense."     Harvard

Crimson, Inc. v. President & Fellows of Harvard College, 445

Mass. 745, 749 (2006).    See DiGiacomo v. Metropolitan Prop. &

Cas. Ins. Co., 66 Mass. App. Ct. 343, 346 (2006).

     The Tips Act also contemplates that tips intended for

employees may be given directly to an employer.     An employer may

"submit[] a bill, invoice or charge to a patron or other person

that imposes a service charge or tip," G. L. c. 149, § 152A (d),

for instance by submitting an invoice in connection with a

private function at which the employer provides food and


     6
         Under G. L. c. 149, § 152A (a), a "[t]ip" is defined 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 [covered
     employee]."
                                                                   11


beverages.7   See Cooney v. Compass Group Foodservice, 69 Mass.

App. Ct., 632, 635 (2007).    The second sentence of G. L. c. 149,

§ 152A (b), addresses an employer's obligation in such a

situation.    The sentence states that "[n]o . . . employer or

other person shall retain" a tip or service charge "given

directly to the employer."    The common definition of the word

"retain" is "to keep possession of."    Webster's New Universal

Unabridged Dictionary, supra at 1643.    Accordingly, the second

sentence of G. L. c. 149, § 152A (b), addresses the circumstance

in which tipping is permitted and a tip is actually given,

albeit not directly to the employee; if payment of a tip or

service charge is made to an employer, "the statute requires

that the proceeds be remitted to the [covered] employees."

Cooney v. Compass Group Foodservice, supra at 637.    The Tips Act

is explicit in this regard, and prohibits an employer from

retaining a service charge or tip that was paid to the employer




     7
       Under G. L. c. 149, § 152A (a), a "[s]ervice charge" is
defined as

          "a fee charged by an employer to a patron in lieu of a
     tip to any [covered employee], including any fee designated
     as a service charge, tip, gratuity, or a fee that a patron
     or other consumer would reasonably expect to be given to a
     [covered employee] in lieu of, or in addition to, a tip."
                                                                   12


rather than to the wait staff employee.8

      No language in G. L. c. 149, § 152A (b), or elsewhere in

the Tips Act, see G. L. c. 149, § 152A (a)-(g), prohibits an

employer from imposing a no-tipping policy.9   The Tips Act

addresses circumstances in which tipping is permitted and wait

staff employees have been given tips, directly or indirectly; it

prescribes what the employer is required to do with such tips.

Id.

      In support of their argument that a no-tipping policy is

prohibited under the Tips Act, the plaintiffs point to the fact

that the Legislature considered, but did not adopt, legislation

      8
       An employer also may impose a fee that is not a tip or
service charge, invoice a customer directly for such a fee, and
retain that amount.

           "Nothing in this section shall prohibit an employer
      from imposing on a patron any house or administrative fee
      in addition to or instead of a service charge or tip, if
      the employer provides a designation or written description
      of that house or administrative fee, which informs the
      patron that the fee does not represent a tip or service
      charge for wait staff employees, service employees, or
      service bartenders."

G. L. c. 149, § 152A (d).
      9
       As noted, all of the plaintiffs were paid at least the
statutory minimum wage; we are not called upon here to consider
circumstances governed by G. L. c. 151, § 7, pursuant to which
an employer may pay a "tipped employee" an hourly wage which is
lower than the statutory minimum wage, provided that specific
conditions have been met, and that the employer pays an
"additional amount" if the hourly wage combined with the
employee's tips falls below the minimum wage established in
G. L. c. 151, § 1.
                                                                  13


proposed in 2010 House Doc. No. 4814, which stated that

"[n]othing in [the Tips Act] shall prohibit any employer from

establishing a policy prohibiting tipping."   We have

consistently rejected similar arguments, recognizing that "[t]he

practicalities of the legislative process furnish many reasons

for the lack of success of a measure other than legislative

dislike for the principle involved in the legislation."   Suffolk

Constr. Co. v. Division of Capital Asset Mgt., 449 Mass. 444,

457 n.18 (2007), quoting Franklin v. Albert, 381 Mass. 611,

615B616 (1980).   See United States v. Craft, 535 U.S. 274, 287

(2002), quoting Central Bank of Denver, N.A. v. First Interstate

Bank of Denver, N.A., 511 U.S. 164, 187 (1994) ("several equally

tenable inferences may be drawn from such inaction").

     Finally, the plaintiffs find support for their view in

DiFiore v. American Airlines, Inc., 454 Mass. 486, 496 (2009),

where we stated that the "express purpose of the [Tips] Act [is]

to protect gratuity payments given to, or intended for,

[covered] employees."   The plaintiffs suggest that this language

indicates that G. L. c. 149, § 152A, protects not only tips

actually given, but also tips that customers intended covered

employees to have, and would have given to those employees had

they not been prevented from doing so by imposition of a no-

tipping policy.
                                                                   14


       We are not persuaded.   In that case, we addressed a

question certified to us by the United States District Court for

the District of Massachusetts concerning the definition of the

term "service charge" in G. L. c. 149, § 152A (d).      We

determined that the Legislature intended by this provision "to

ensure that service employees receive all the proceeds from

[assessed] service charges," DiFiore v. American Airlines, Inc.,

supra at 493, and interpreted the term "service charge" to

include a tip or gratuity as "nonexclusive examples of fees that

constitute service charges."     Id. at 495.   Nothing in that

decision supports the view that the Tips Act applies to tips

that customers intended to give to employees but, because of a

no-tipping policy, did not give.

       In sum, we do not construe G. L. c. 149, § 152A, to require

that employers of wait staff employees must permit customers to

give tips to such employees.

       2.   Liability under G. L. c. 149, § 152A, where a no-

tipping policy is in effect.     We turn to consideration of the

second reported question, which relies upon a determination that

imposition of a no-tipping policy is not contrary to the Tips

Act.    The second reported question asks that we consider the

circumstances in which an employer seeking to enforce a no-

tipping policy may be held in violation of the Tips Act if,
                                                                   15


notwithstanding the implementation of such a policy,

"customers . . . leave tips that are retained by the employer."

For reasons we discuss, we conclude that, if an employer has not

clearly communicated its no-tipping policy to customers, tips

left by customers where service is provided by wait staff belong

to those employees, and may not be retained by the employer.    On

the other hand, where the employer has clearly communicated to

customers that a no-tipping policy is in effect, money left by

customers in establishments where service is provided by wait

staff is not a tip that was given to wait staff employees,

regardless of a customer's intent.

    a.   Tips retained by employer who has failed to communicate

its no-tipping policy clearly to customers.   As discussed, the

Tips Act defines particular circumstances in which a fee that is

assessed by an employer is not a tip or service charge subject

to the provisions of the Tips Act.   G. L. c. 149, § 152 (d).

See note 8, supra.   In those circumstances, an employer must

"inform[] the patron that the fee does not represent a tip or

service charge for [covered employees]."   G. L. c. 149,

§ 152 (d).   This requirement reflects the Legislature's concern

that, absent such information, customers charged a fee by

employers of wait staff employees will assume that the employer

will remit that amount to its wait staff employees.
                                                                   16


    Similarly, unless an employer who has implemented a no-

tipping policy clearly conveys to customers that money they

leave when paying their bill does not represent a tip for wait

staff employees, it is readily conceivable that customers will

have the reasonable expectation that the money they leave will

be given to the wait staff employees.   The absence of a clear

communication to customers of a no-tipping policy could permit

employers to pocket sums not intended for them, and would

facilitate "an 'end run' around the [Tips] Act."   DiFiore v.

American Airlines, Inc., 454 Mass. at 496.

    General Laws c. 149, § 152A (b), prohibits employers of

wait staff employees from "demand[ing], request[ing] or

accept[ing]" a payment or deduction from a tip "given to" such

employees.   Although an employer may adopt a no-tipping policy,

it "may not escape [this] prohibition in . . . the [Tips] Act,"

DiFiore v. American Airlines, Inc., supra at 494, by failing to

communicate to customers that the policy is in effect, and that

the money they leave will not be kept by the employee as a tip.

In the absence of such a communication of the no-tipping policy

to customers, we conclude that "a sum of money . . . , given as

an acknowledgment of any service performed by a [covered]

employee," remains a "tip . . . that a patron . . . would

reasonably expect to be given to a [covered] employee."   G. L.
                                                                    17


c. 149, § 152A (a).    An employer who, in those circumstances,

"demand[s], request[s] or accept[s]" any portion of such sums

does so in contravention of the Tips Act.     See G. L. c. 149,

§ 152A (b).

     b.   Tips retained by employer who has clearly communicated

no-tipping policy to customers.     Where an employer who employs

wait staff employees has clearly communicated a no-tipping

policy that effectively conveys that money left by a customer

will not be received by any wait staff employee as a tip, we

conclude that any money that is nonetheless left by a customer

is not a tip "given to" the wait staff employees because a

customer cannot reasonably expect that this money has been given

to the employees.     Accordingly, where there has been a clear

communication of a no-tipping policy to customers, the employer

has not violated G. L. c. 149, § 152A (b), if the sums of money

that nonetheless have been left by customers are retained by the

employer, or placed in an "abandoned change" cup for use by

other customers.10

     Conclusion.     For the reasons stated, we answer the first

     10
       A clear communication of the no-tipping policy could be
accomplished through the posting of signs such as those
conveying that employees may not accept tips. In addition,
employers could instruct wait staff employees to convey to
customers orally the existence of a no-tipping policy, and could
provide training regarding the content of the communication, as
well as when during the various points of interaction with a
customer the information should be conveyed.
                                                                  18


reported question, "Yes."   We answer question 2(a), "Yes," and

we answer question 2(b), "No."   The matter is remanded to the

Superior Court for further proceedings consistent with this

opinion.

                                    So ordered.
