Business Law 9th Edition by Henry Cheeseman

Exercise 1

FEDERAL COURT CASE Class Action
Matamoros v. Starbucks Corporation
699 F.3d 129, 2012 U.S. App. Lexis 23185 (2012)
United States Court of Appeals for the First Circuit
"Consideration of fairness and judicial economy are well-served by resolving the baristas' claims in a class action."
-Selya, Circuit Judge
Facts
Starbucks Corporation operates a national chain of upscale coffee houses including outlets in Massachusetts. Employees are divided into four subcategories: store managers, assistant managers, shift supervisors, and baristas. Baristas are frontline employees who serve food and beverages to customers, are paid wages for hours worked, and have no management responsibilities. Starbucks stores maintain tip con-tamers in which customers may deposit tips. The accumulated tips are distributed weekly to baristas and shift supervisors within the store in proportion to the number of hours worked that week by each individual. Massachusetts Tips Act, applicable to the restaurant industry, stipulates that wait-staff employees shall not be required to share tips with anyone who is not a wait-staff employee. Starbucks baristas filed a class action lawsuit against Starbucks alleging that Starbucks's policy of permitting shift supervisors to share in pooled tips violated the Tips Act. The plaintiffs alleged that their class consists of baristas who worked during an identified class period of six years. The U.S. district court certified the class, found that Starbucks had violated the Tips Act, and awarded damages of $14 million to the baristas plus prejudgment interest of 12 percent. Starbucks appealed, alleging that the court erred by certifying the class action.
Issue
Was the case properly certified as class action?
Language of the Court
The civil rules establish four elements that must be present in order to obtain class certification: number of claims, commonality of legal or factual questions, typicality of representative claims, and adequacy of representation. Consideration of fairness and judicial economy are well-served by resolving the baristas' claims in a class action. We conclude, therefore, that a class action is superior to other alternative ways of adjudicating this controversy.
Decision
The U.S. court of appeals upheld the U.S. district court's decision certifying the class action and the award of $14 million to the class of baristas. Because the shift supervisors who shared in the tips were not made defendants in the case, they were not required to reimburse any funds that they had received from the tip pools.
Did Starbucks act ethically in paying money to its shift supervisors from customers' tips? Why did Massachusetts pass the Tips Act?