Session Date May 12, 2015
Appeal from the Circuit Court for Shelby County No. CT00120114 Donna M. Fields, Judge
Bruce S. Kramer, Amy E. Strickland, and Patrick H. Morris, Memphis, Tennessee, for the appellant, Kim Hardy.
Todd P. Photopulos and Diana M. Comes, Memphis, Tennessee, for the appellees, Tournament Players Club at Southwind, Inc. d/b/a "TPC Southwind", PGA Tour Golf Course Properties, Inc. and PGA Tour, Inc.
Arnold B. Goldin, J., delivered the opinion of the Court, in which J. Steven Stafford, P.J., W.S., joined. Brandon O. Gibson, J., filed a dissenting opinion.
ARNOLD B. GOLDIN, JUDGE
This appeal requires us to revisit whether Tennessee Code Annotated § 50-2-107, a section of the Tennessee Wage Regulation Act ("the TWRA"), provides a private right of action. The facts relevant to our disposition of the question certified for appeal pursuant to Rule 9 of the Tennessee Rules of Appellate Procedure are not disputed. Beginning November 2004, Plaintiff Kim Hardy ("Ms. Hardy") was employed as a food server/bartender by Defendant Tournament Players Club at Southwind ("TPC Southwind"), a private club with restaurant and banquet facilities. In March 2014, Ms. Hardy filed a class action complaint under Rule 23 of the Tennessee Rules of Civil Procedure against TPC Southwind, the PGA Tour, Inc. ("PGA Tour"), and PGA Golf Course Properties, Inc. ("PGA Properties"; collectively, "Defendants") in the Circuit Court for Shelby County.
In her complaint, Ms. Hardy alleged that Defendants knowingly, willfully, fraudulently, maliciously, and/or with reckless disregard failed to pay her and other similarly situated employees all of the tips, gratuities, and/or service charges (collectively, "tips") to which they were entitled. She further alleged that Defendants distributed the tips among tipped employees and non"tipped employees, including kitchen workers and managers, in contravention of the TWRA and governing law. Ms. Hardy asserted claims for vicarious liability on the part of PGA Tour and PGA Tour Golf Course Properties; violation of the TWRA as codified at Tennessee Code Annotated § 50-2-101, et seq., specifically § 50-2-107; breach of contract; conversion; fraud in procuring employment in violation of § 50-1-102; negligent misrepresentation in procuring employment in violation of § 50-1-102; aiding and abetting; and civil conspiracy. She sought compensatory and punitive damages.
Defendants filed a motion to dismiss in April 2014. Defendants asserted six grounds for dismissal in their motion, including the absence of a private right of action under the TWRA. Ms. Hardy filed a response in July 2014, and the trial court heard the matter on September 5, 2014. By corrected order entered November 12, 2014, the trial court determined that Tennessee Code Annotated § 50-2-107 does not provide a private right of action in light of the General Assembly's 2013 amendment to § 50-2-101, which provides for enforcement of the section by the Department of Labor and Workforce Development. The trial court further concluded that whether a private right of action exists under § 50-2-107 was an appropriate question to be determined by interlocutory appeal under Rule 9(a)(2) of the Rules of Appellate Procedure. It granted Defendants' motion to dismiss Ms. Hardy's claims under the TWRA and granted Ms. Hardy permission to appeal pursuant to Rule 9. Ms. Hardy filed an application for permission for interlocutory appeal, which we granted on December 19, 2014.
The question certified for interlocutory appeal in this case is whether Tennessee Code Annotated § 50-2-107 provides a private right of action notwithstanding the 2013 amendment to § 50-2-101 providing for enforcement of that section by the Department of Labor and Workforce Development ("the Department").
Standard of Review
A motion to dismiss for failure to state a claim under Rule 12.02(6) of the Tennessee Rules of Civil Procedure "challenges only the legal sufficiency of the complaint, not the strength of the plaintiffs proof or evidence." Webb v. Nashville Area Habitat for Humanity, Inc., 346 S.W.3d 422, 426 (Tenn. 2011) (citations omitted). It should be granted "''only when it appears that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief'" Id. (quoting Crews v. Buckman Labs. Int'l, Inc., 78 S.W.3d 852, 857 (Tenn. 2002)) (additional citations omitted). Whether dismissal for failure to state a claim is appropriate is a question of law. Id.
Whether a private right of action exists under a statute is a matter of statutory interpretation. Brown v. Tennessee Title Loans, Inc., 328 S.W.3d 850, 855 (Tenn. 2010) (citation omitted). The interpretation of a statute also is a question of law. Id. Appellate review of a trial court's conclusions on questions of law is de novo with no presumption of correctness. Shore v. Maple Lane Farms, LLC, 411 S.W.3d 405, 414 (Tenn. 2013) (citations omitted).
We begin our discussion with the well"settled principle that our goal when construing a statute is to give full effect to the intent of the General Assembly, neither exceeding nor restricting the intended purpose of the statute. Lee Med, Inc. v. Beecher, 312 S.W.3d 515, 526 (Tenn. 2010) (citations omitted). We must begin with the natural and ordinary meaning of the words used in the text, construing them in light of the general purpose of the statute and the context in which they appear. Id. (citations omitted). When the text is clear and unambiguous, we interpret the statute without going beyond the statutory language itself Id. at 527 (citations omitted). If the text is ambiguous, however, we will resort to the familiar rules of statutory construction to ascertain the intent of the General Assembly. Id. (citations omitted).
If provisions within a statute create ambiguity, we endeavor to harmonize them in order to effectuate the overall purpose of the statute. Id. (citations omitted). We must construe the separate provisions reasonably in context of the statute, giving effect to each word, phrase, and sentence without basing our interpretation on any single one. Id (citations omitted). We will also endeavor to construe the statute so as to facilitate "the harmonious operation of the law." Id. (citations omitted.)
When attempting to resolve ambiguity in a statute, the courts may consider sources beyond the text of the statute itself, including public policy, contemporaneous or preceding historical facts, and the background and purpose of the legislation. Id. at 527"28 (citations omitted). We also may consider prior versions of the statute, legislative history, the caption of the act, and the overall statutory scheme. Id. at 528 (citations omitted). "However, no matter how illuminating these non"codified external sources may be, they cannot provide a basis for departing from clear codified statutory provisions." Id. (citation omitted).
Additionally, the courts employ several presumptions with respect to the legislative process. Id. at 527. We may presume that the General Assembly chose each word deliberately, that each word has a purpose and specific meaning, and that the statute has an intended purpose. Id. (citations omitted). We also presume that the General Assembly is aware of existing law and its own prior enactments regarding the subject of the statute and "knows the "state of the law[, ]'" including the way in which the statutes have been interpreted by the courts. Id. (quoting Murfreesboro Med Clinic, P.A. v. Udom, 166 S.W.3d 674, 683 (Tenn. 2005)). We may also presume "that the General Assembly "did not intend an absurdity.'" Id. (quoting Fletcher v. State, 951 S.W.2d 378, 382 (Tenn. 1997)).
In this case, Defendants urge that Owens v. University Club of Memphis, No. 02A01"9705"CV"00103, 1998 WL 719516 (Tenn. Ct. App. Oct. 15, 1998) (no perm. app. filed), in which this Court determined that Tennessee Code Annotated § 50"2"107 ("section 107" or "the section") permits a private cause of action, no longer is good authority in light of the 2013 amendment to § 50"2"101 ("section 101") and subsequent case law construing that section. Defendants' argument, as we perceive it, is that Owens is not binding and should be overruled. Thus, with the principles of statutory construction in mind, we turn first to the statutory text.
The Statutory Text
Prior to the 2013 amendment to section 101, sub"section 101(b) provided:
(b) It is unlawful for any proprietor, foreman, owner or other person to employ, permit or suffer to work for hire, in, about, or in connection with any workshop or factory any person whatsoever without first informing the employee of the amount of wages to be paid for the labor. The amount agreed upon between employer and employee, or employee representative, shall constitute a basis for litigation in civil cases. This does not apply to farm labor. Nothing in this section shall apply to railroad companies engaged in interstate commerce and subject to the federal Railway Labor Act, compiled in 45 U.S.C. § 151 et seq.
Tenn. Code Ann. § 50"2"101(b) (2012) (emphasis added). The 2013 amendment to section 101 amended sub"section 101(b) to delete the reference to "litigation in civil cases." Sub"section 101(b) as amended in 2013 provides:
It is unlawful for any proprietor, foreman, owner or other person to employ, permit or suffer to work for hire, in, about, or in connection with any workshop or factory any person whatsoever without first informing the employee of the amount of wages to be paid for the labor. This shall not apply to farm labor. Nothing in this section shall apply to railroad companies engaged in interstate commerce and subject to the federal Railway Labor Act, compiled in 45 U.S.C. § 151 et seq.
Tenn. Code Ann. § 50"2"101(b) (2014). The 2013 amendment also added subsection 101(d), which provides:
The department of labor and workforce development shall enforce this section.
Tenn. Code Ann. § 50"2"101(d) (2014).
Tennessee Code Annotated § 50"2"107 currently provides, in relevant part:
(a)(1) If a business, including a private club, lounge, bar or restaurant, includes on the bill presented to and paid by a customer, member or patron an automatic percentage or specific dollar amount denominated as a service charge, tip, gratuity, or otherwise, which amount is customarily assumed to be intended for the employee or employees who have served the customer, member or patron, that amount shall be paid over to or distributed among the employee or employees who have rendered that service. The payment shall be made at the close of business on the day the amount is received or at the time the employee is regularly paid, or, in the case of a bill for which credit is extended to a customer, member or patron, payment shall be made at the close of business on the day the amount is collected or on the first day the employee is regularly paid occurring after the amount is collected.
(2) The payment shall not be reduced, docked or otherwise diminished to penalize an employee for any actions in connection with the employee's employment, if it is derived from a mandatory service charge or tip collected from customers, members or patrons.
(3)(A) This section does not apply to bills for food or beverage served in a banquet, convention or meeting facility segregated from the public"at"large, except banquet, convention or meeting facilities that are on the premises of a private club.
(b) A violation of this section is a Class C misdemeanor. Each failure to pay an employee constitutes a separate offense.
Tenn. Code Ann. § 50"2"107 (2014). Section 107 contains no provision either limiting enforcement to the Department or explicitly creating a private right of action.
The trial court in this case determined that section 107 does not confer a private right of action in light of the 2013 legislative amendments to section 101, the first section of the TWRA. The trial court concluded that the General Assembly "removed any reference to the TWRA constituting a basis for litigation in civil cases" when it amended sub"section (b) of section 101, and that it added sub"section (d) to provide for enforcement by the Department. The trial court relied on federal and state court interpretations of section 101 after the 2013 amendment for the proposition that "there was never a private right of action under the TWRA."
In its November 2014 order, the trial court quoted Abadeer v. Tyson Foods, Inc., 975 F.Supp.2d 890 (M. D. Tenn. 2013) in support of its determination that the TWRA ""has never afforded a private right of action.'" (emphasis in the original.) The trial court observed that the express language of section 107 specifies a criminal sanction only; that the section does not expressly create a private right of action; and that the statutory language of section 107 is similar to the language of the Tennessee Title Pledge Act ("the Title Pledge Act" or "the TTPA"), which the Tennessee Supreme Court determined does not provide a private right of action. Noting that, in the absence of an express statutory provision providing a private right of action, a plaintiff bears the burden of establishing that the General Assembly intended to imply such a right, the trial court determined that Ms. Hardy failed to carry her burden on the question.
Ms. Hardy submits that the trial court erred by construing the amendment to section 101 as precluding a private right of action under section 107. She asserts that section 101, which applies to "workshops and factories, " is not relevant to a claim under section 107, which commonly is referred to as "the Tip Statute." She contends that the General Assembly chose not to amend section 107 when it amended section 101, and that sub"section (d) in section 101 applies only to section 101, not to the entire TWRA.
Ms. Hardy cites Carver v. Citizen Utilities Company, 954 S.W.2d 34 (Tenn. 1997), for the proposition that, when separate sections of an act address different topics, a private right of action may exist under one section of an act although precluded by another. She asserts that section 101 clearly is not "a section of general provisions applicable to the entire TWRA[, ]" but specifically pertains to the right of employees covered by the section to be informed of the wages they are to receive. She further asserts that other sections of the TWRA, including §§ 50-2-103 & 104, contain provisions providing for exclusive enforcement by the Department, and that the General Assembly did not intend to preclude a private right of action under section 107. Ms. Hardy submits that this Court previously determined in Owens that a private right of action may be inferred in section 107. She further asserts that Owens remains good law because the General Assembly has not legislatively overruled it. Ms. Hardy also observes that the cases on which the trial court relied addressed section 101 and did not address section 107.
Defendants, on the other hand, assert that, because section 107 contains a criminal penalty and does not specifically provide a private right of action, no private right of action exists under the section. They also assert that the 2013 amendment to section 101 evidences legislative intent to reserve the right of enforcement of the TWRA to the Department, and cite the Abadeer court's review of the legislative history of the 2013 amendment to section 101 in support of their argument. Defendants also assert that the TWRA is "substantially similar to" the Title Pledge Act, which provides for enforcement through criminal and administrative penalties; that the TWRA as a whole provides for regulation of wage disputes, including disputes involving tips; that Ms. Hardy cannot rely on Owens, an unpublished case, in light of subsequent state and federal case"law; and that section 107 has never contained a reference to a private right of action. Defendants submit that the trial court correctly determined that Ms. Hardy failed to carry her burden of proof to demonstrate legislative intent to provide a private right of action in section 107 in light of the 2013 amendments and case"law since Owens. With the parties' arguments in mind, we consider whether the trial court erred by determining that a private cause of action may not be maintained under section 107 the TWRA.
Owens v. University Club of Memphis
We turn first to Owens v. University Club of Memphis, No. 02A01-9705-CV-00103, 1998 WL 719516 (Tenn. Ct. App. Oct. 15, 1998) and the analysis to be employed by the courts when determining whether a statute indicates legislative intent to create a private right of action. Defendants contend that Ms. Hardy cannot rely on Owens to demonstrate that section 107 creates a private right of action. Defendants contend that Owens is not binding because it is an unpublished case and "respectfully submit" that the Owens court's analysis was "incomplete" in light of Brown v. Tennessee Title Loans, Inc., 328 S.W.3d 850 (Tenn. 2010), and Premium Financial Corporation of America v. Crump Insurance Services of Memphis, Inc., 978 S.W.2d 91 (Tenn. 1998). They assert, ...