Tipping Point: In a hand-slap to Starbucks, a judge says the coffee house supervisors can't dip into baristas' gratuity jars.

Daily Journal Supplement January 28, 2009

By Dhyana Levey

Word about a class action law didnt take long to percolate through the ranks of Starbucks Corp. employees.

The class size grew and grew to eventually include 100,000 California baristas. These coffees servers were steamed that the Seattle-based company made them share tips with their shift supervisors.

They initially took their case to Coronado attorney Terry J. Chapko and A. Eric Aguilera of Costa Mesas Bohm Matsen Kegal & Aguilera. But the case spilled into San Francisco plaintiffs lawyer David A. Lowes lap after Chapko and Aguilera realized they needed assistance.

Quite honestly, we didnt know how large the case was when we first started, Chapko said. We didnt know (Starbucks) would continue the practice.

Lowe, a partner at Rudy, Exelrod Zieff & Lowe, became lead trial counsel in the two month bench trial, San Diego County Superior Court Judge Patricia A. Yim Cowett sided with him and his clients on March 19.

She ruled that Starbucks must repay $86.7 million plus interest in restitution totaling 105 million to baristas who worked for the company from 2000 through the trial decision.

I felt that if the evidence came in the way we expected it to we had a good shot, said Lowe, who worked closely on the case with Chapko, Aguilera and Laura L. Ho of Oaklands Goldstein, Demchak, Baller, Borgen & Dardarian.

At issue was how to apply state statues that prohibit employers or their agents from sharing in the tip pool left for employees. The question really is what is an agent? Lowe said. Are Starbucks supervisors agents?

According to California Labor Code 350(d), an agent is anyone other than the employer who has authority to hire, fire, supervise or direct employees.

Lowe argued that, yes, shift supervisors are agents because they monitor employees so, no they should not have access to tips. The judge appeared to have a good grasp of the law from the first day of the trial, he said, so he was optimistic early in the case that she understood and supported his theory.

The case appeared to make a definitive move in his favor when Starbucks executives and shift supervisors testified that the shift supervisors delegate the duties of employees. There was this consistency between the corporate supervisors, shift supervisors and baristas that added up to this mosaic that was one picture of what authority shift supervisors have, he said.

Starbucks continues to disagree with the Lowes arguments and the judges ruling.

Shift supervisors are not managers, and have no managerial authority, according to an e-mailed statement by a Starbucks spokesperson.

Both baristas and shift supervisors are hourly store partners who serve our customers and provide the Starbucks experience in our store, the company statement said. We do not believe customers differentiate between them, because they provide the same customer service.

This is one of the arguments behind Starbucks appeal, said Los Angeles defense attorney Catherine A. Conway, a partner in Akin Gump Strauss Hauer & Feld. She worked on the case along with the case along with lead defense counsel Daniel L. Nash and partner Joel M. Cohen, both of the firms Washington D.C. office, and Gregory W. Knopp, a partner in Los Angeles.

Starbucks shift supervisors are not agents within the meaning of the statue because they have no power to enforce supervision and direction, according to an opening brief filed Dec.9 in the 4th District Court of Appeal.

And even if the shift supervisors are agents, the trial court sill misinterpreted the rules because they cannot read to exclude agents who are also employees from taking tips that customers unquestionably left for them, the brief stated.

However, the defenses argument dont make sense, Lowe said adding that store managers and assistant store managers, who are not allowed access to gratuities, also provide customer service.

They grind beans, clean, take orders do all the same customer service stuff but they dont get tips from the tip jar, he said.