First Circuit Rules that Starbucks Owes $14 million to Massachusetts Baristas

Many cafes – including Starbucks – have tips jars near the registers. Pleased customers typically tip thinking that their tips are going to the barista that just served them. Many customers would be surprised to find out that sometimes managers and supervisors share in the proceeds of the tip jar.

In Massachusetts from 2005 to 2011, the proceeds of Starbucks tip jars were shared between baristas as well as shift managers. The problem was that a Massachusetts statute – the Tip Act – bars managers from taking tips from the tip jar. Starbucks employees became upset at having to share tips with shift supervisors, prompting them to bring a class action lawsuit against Starbucks in 2008. The Boston Globe reports that over 11,000 former and current baristas sued Starbucks for violating the Tip Act. The baristas argued that Starbucks violated Massachusetts law by allowing non-waitstaff employees to dip into the tip jar. Starbucks countered that shift supervisors were not really managers because their job function was very similar to baristas.

The federal district court sided with the baristas, and ordered Starbucks to pay more than $14 million for the lost tips. Starbucks timely appealed the decision to the First Circuit. On appeal, the First Circuit sided again with the baristas, and ruled that a Starbucks shift manager is a manager for the purpose of the Massachusetts tip law:

The Tips Act states unequivocally that only employees who possess “no managerial responsibility” may qualify as “wait staff.” Mass. Gen. Laws ch. 149, § 152A(a). “[N]o” means “no,” and we interpret that easily understood word in its ordinary sense: “not any.” Merriam- Webster’s Collegiate Dictionary 839 (11th ed. 2003); The American Heritage Dictionary of the English Language 1192 (4th ed. 2000); The Random House Dictionary of the English Language 1303 (2d ed. 1987). …

 Unless we are prepared to ignore both the legislature’s use of the word “no” and the commonly accepted meaning of that word — and we are not — it follows that if an employee has any managerial responsibility, she does not qualify as “wait staff” eligible to participate in tips pools under the provisions of the Tips Act.

Bad Online Review of Doctor Leads to Defamation Lawsuit Before Minnesota Supreme Court

Nowadays, there are many online rating sites – such as Angie’s List and Yelp – that allow people to rate the service that they received from skilled professionals. For many consumers searching for professional services, such reviews can be instrumental in choosing one professional over another. Negative reviews on these sites are hardly uncommon and rarely provoke a response from the reviewed professional.

Recently, however, a Minnesota neurologist took an unusually aggressive step to deal with a negative online review. Dr. David McKee took offense to an online review where a patient’s son, Dennis Laurion, made several critical remarks about the doctor – including calling reporting that a nurse allegedly called the doctor “a real tool.” In response, McKee sued the son for defamation. The AP reports that the lawsuit has now made its way to the Minnesota Supreme Court, which will consider whether the lawsuit should advance to trial.

At issue in the litigation are six statements made by Laurion – especially the comment involving the nurse. McKee has argued that the anonymous nurse does not exist and that Laurion invented her to give cover for his false and malicious comments. Laurion claims that the nurse if real, but cannot apparently recall her name. Overall, McKee maintains that Laurion’s comments were knowingly false and that they damaged McKee’s professional reputation.

In contrast, Laurion asserts that his comments were legally protected opinion regarding how McKee treated Laurion’s father, who had suffered a stroke. According to the AP:

The review said McKee seemed upset that after Laurion’s father had been moved from intensive care to a regular hospital room, the doctor “had to spend time finding out if you transferred or died.”

Laurion also complained that McKee treated them brusquely and was insensitive to the family’s concerns about the patient being seen in public in a gown that gaped open in the back.”


Bankruptcy Judge Throws Out Marijuana Dispensary’s Chapter 11 Case

A San Diego Bankruptcy judge recently dismissed a Chapter 11 case involving medical-marijuana dispensary Mother Earth Alternative Healing Cooperative. The Wall Street Journal reports that the dispensary was earlier evicted from its building and filed for Chapter 11 bankruptcy. At issue was whether a medical-marijuana dispensary – which engages in operations that violate federal, but not California state law – would be permitted to reorganize or liquidate under the Bankruptcy Code.

Judge Laura Taylor ruled that the dispensary could not proceed in Chapter 11 and must be dismissed. The judge explained, “[c]ause for dismissal exists where the only bankruptcy purpose is to attempt to preserve a lease and to otherwise support a business that is engaged in activity that is prohibited, indeed criminal, under federal law.”

Even more, bankruptcy liquidation or reorganization would present problems because the proceeds of the dispensary’s business would be subject to forfeiture and would thus be illusory. Liquidation would be even worse: it would require a chapter 7 trustee to effective sell the cooperative’s marijuana.

The Wall Street Journal also reports that both the dispensary and the U.S. trustee supported the dismissal. The dispensary supported the dismissal because it was unable to propose a reorganization plan – due to the difficulties described above. The U.S. trustee supported the dismissal, but demanded that the dispensary pay its trustee fees, which the judge confirmed.

Federal Court Rules that NYC Consumer Agency Can’t Regulate Lawyer Conduct

In 2009, New York City passed Local Law 15, which expanded the definition of “debt collection agency” to include attorneys that engage in collection proceedings. All debt collection agencies in the city are regulated by the city’s Department of Consumer Affairs (DCA), and must follows DCA’s regulations or face sanctions or suspension. Consequently, the 2009 statute raised the prospect that the DCA could sanction an attorney who didn’t comply with DCA regulations by barring the attorney from appearing in State Court.

Thompson Reuters reports that attorney Eric Berman, the law firm Lacy Katzen and another company filed a federal lawsuit against New York City in 2009 asserting that Local Law was unconstitutional under both the New York state and U.S. Constitution.

U.S. District Court Judge Eric Vitaliano recently granted summary judgment for the plaintiffs on the claim that the debt collection law violates the New York Judiciary Law, which charges the judiciary with admitting, supervising, and regulating attorneys. The court ruled that the debt collection law improperly put the DCA in the position of gatekeeper to state courts in New York. The city tried to argue it could legitimately regulate lawyers engaging in non-legal activities, such as debt collecting. However, the court rejected this argument because Local Law 15 would “directly regulate core aspects of the practice of law.”

Consequently, the court rejected the Plaintiff’s motion for summary judgment on the claim that the debt collection law violates the Commerce Clause of the U.S. Constitution by imposing New York law on debt-buying companies in other states. The court determined the Local Law 15 would be unconstitutional to the extent that it regulates contracts formed entirely outside of New York. However, the court found that there was a genuine issue of material fact as to whether and where one of the plaintiff’s contracts were formed.  

Three Schneider & Onofry Attorneys Featured in Arizona Attorney for Recent Jury Verdicts

Schneider & Onofry attorneys Chuck Onofry, Luane Rosen, and Tim O’Connor were recently recognized in Arizona Attorney Magazine Jury Verdicts Section for significant recent jury verdicts. Onofry and Rosen were featured in the “Case of the Month,” while O’Connor’s verdict was featured in a Weekly Highlight.

In Arellano v. Primerica Life Ins., Onofry and Rosen served as co-counsels for plaintiff Miriam Arellano in a life insurance dispute claim. There, plaintiff’s husband applied for a 15-year $100,000 life insurance policy with Primerica Life Insurance company in October 2006. The benefit was subsequently increased to $150,000 and $106.28 in claims were paid by the plaintiff in November 2006. In March 2007, the plaintiff’s husband died and Primerica Life denied the plaintiff’s $150,000 claim for benefits. The insurer denied the claim on the grounds that the insured had failed to disclose a history of a heart condition and had failed to provide blood and urine samples as required by the policy.

Following denial of the claim, the plaintiff brought an action against Primerica and its agents in Maricopa County Superior Court alleging breach of contract, bad faith, insurer producer malpractice, breach of contract to procure insurance, forgery, promissory estoppel, waiver, doctrine of reasonable expectations, consumer fraud, negligence and fraud. The jury returned a verdict in favor of the plaintiff on the negligence, breach of contract, bad faith, insurance producer malpractice, forgery and promissory estoppel counts for a total of $591,786 in damages. In addition, the jury awarded the plaintiff $1,117,572 in punitive damages.

Similarly, in Barrio v. Alan Masonry, et al., Tim O’Connor serve as counsel to the general contractor in a case involving injuries sustained from falling from a scaffolding. There, the plaintiff alleged that the general contractor and the masonry subcontractor, failed to provide a safe workplace, causing the plaintiff to fall from the scaffolding. While the jury returned a $108,263 verdict for the plaintiff, the jury placed the majority of fault on Plaintiff, Plaintiff’s employer, and the masonry subcontractor.

Lightning Strikes!!! – U.S. Supreme Court Decides to Hear Two Pro Se Cases


Statistically speaking, it if very hard to have an appeal heard by the U.S. Supreme Court. According to the court’s own figures, every year the court receives around 10,000 petitions for writ of certiorari but grants and hears oral argument in only 75-80 cases. In other words, less than 1% of petitions for certiorari are granted. Many of the petitions denied involve important legal issues of national significance, and those appeals are often handled by top appellate lawyers.

For people who choose to represent themselves pro se – either because they can’t afford a lawyer or do not want one – the odds of having an appeal heard by the Supreme Court are even more remote. In the federal court system, it might come as a surprise that more than half of appeals filed at the federal appellate level are filed pro se. According to the Associated Press, in 2010, nearly 28,931 pro se appeals were filed in the federal appellate courts. 

Against this background, the statistical equivalent of getting struck by lightening happened this week. The US Supreme Court announced that it had granted certiorari to two pro se cases that both involve questions of sovereign immunity.

The first case – which was filed in longhand in pencil and submitted by inmate Kim Lee Millbrook from a federal prison in Philadelphia – involves a federal prisoner suing the government after accusing prison guards of sexually assaulting him. While the lower courts threw out Millbrook’s claim, the Supreme Court indicated that it would hear his appeal to determine the narrow question of when the government can be sued for claims of abuses by federal prison guards.

The second case involves Steven Alan Levin of Guam, who sued the government over medical malpractice and battery stemming from an unsuccessful cataract surgery at a naval hospital. Levin claims that he withdrew his consent for the surgery before it began but doctors still performed the operation. As a result of the operation, Levin suffered complications that require ongoing treatment.

The district court threw out Levin’s medical malpractice claim but kept the battery charge. The Ninth Circuit Court of Appeals, however, threw out the battery claim upon ruling that the government is also immune from being sued for battery. The Supreme Court indicated that it will decide the question of whether the government can be sued for improper actions committed by military medical personal acting within the scope of employment. 

Oregon Attorney Loses Pro Se Case Over Backyard Swimming Pool And Could Face $360k Fine

When the real estate market fell in 2007 and 2008 across the country, many homeowners either put on hold or tabled altogether plans to sell their houses. Some homeowners opted to improve their properties to increase their value in a tough market. However, improving property can have its pitfalls, especially if one goes about improving without the necessary permits…

The Oregonian reports that Oregon attorney Troy Bundy and his wife Gina Bundy wanted to build a swimming pool in their West LInn backyard. The Bundy’s house was located on wetlands such that a special permit was required to build a swimming pool. The Bundy’s applied for the special permit, but the city denied their application. The Bundys then contacted the mayor at the time, Patti Galle, who visited their home to see the yard. The mayor then allegedly assured the Bundys that they didn’t need to worry about the permit because they could deal with her directly. Galle then allegedly gave the couple the green light to start constructing their swimming pool.

The Bundys, with no approved permit, then spent $100,000 constructing a 1,110 square-foot-pool. The city soon discovered the swimming pool, and pressured the Bundys to remove it. Attempts at settlement failed, leading the West Linn Police Department to issue each of the Bundys a citation with fines for $2,000 a day that the pool remains in the ground, but retroactive to 2009!

Consequently, the Bundys disputed the matter in Municipal court, where Troy represented himself and his wife pro se. The Bundy’s main defense was that the city officials – and particularly the mayor – mislead them on whether a building permit was needed.

A municipal court judge rejected Bundys’ argument and found that the couple was guilty for building without the special permit. The judge found that the mayor did not have authority to unilaterally allow the Bundys to build without a permit. Even more, the judge wrote:

“Further, Mr. Bundy is an experienced attorney and should have been wary of proceeding in this fashion to make modifications on his property without the city’s approval in advance.”

Perhaps the one silver lining for the Bundys was that the judge ruled that the city failed to file the building citations within the six-month statute of limitations period. As a result, the city was limited to levying a maximum fine of $360,000 against the Bundys.

Both Bundy and the city will submit their recommendations for resolving this case, and the judge may decide the matter at a September 20 hearing.