Session May 25, 2016 
by Permission from the Court of Appeals Circuit Court for
Shelby County No. CT00120114 Donna M. Fields, Judge
granted this interlocutory appeal to address whether an
employee may assert a private right of action against her
employer under Tennessee Code Annotated section 50-2-107,
referred to as the Tennessee Tip Statute, for the
employer's failure to properly pay tips, gratuities, and
service charges. The trial court granted the defendant
employers' motion to dismiss the plaintiff employee's
claim pursuant to section 50-2-107 for failure to state a
claim, on the ground that there was no private right of
action under the statute. In a divided opinion, the Court of
Appeals reversed, based in part on a 1998 Court of Appeals
decision recognizing a private cause of action under the Tip
Statute. On appeal, we find that the 1998 Court of Appeals
decision is inconsistent in part with subsequent Tennessee
Supreme Court jurisprudence on implying a private right of
action under a statute. For this reason, we decline to apply
the doctrine of legislative inaction to presume that the
legislature knew of the 1998 Court of Appeals' holding,
recognizing a private right of action under the statute, and
acquiesced in it. We hold instead that the employee has no
private right of action under section 50-2-107 and overrule
the 1998 Court of Appeals decision to the extent that it is
inconsistent with our holding herein. Accordingly, we reverse
the judgment of the Court of Appeals and affirm the trial
court's judgment granting the motion to dismiss the
employee's cause of action under section 50-2-107 for
failure to state a claim.
R. App. P. 11 Appeal by Permission; Judgment of the Court of
Appeals Reversed; Judgment of Circuit Court Affirmed; Case
P. Photopulos and Diana M. Comes, Memphis, Tennessee, for the
appellants, Tournament Players Club at Southwind, Inc., PGA
Tour Golf Course Properties, Inc., and PGA Tour, Inc.
S. Kramer, Amy E. Strickland, and Patrick H. Morris, Memphis,
Tennessee, for the appellee, Kim Hardy.
Kirby, J., delivered the opinion of the court, in which
Jeffrey S. Bivins, C.J., and Cornelia A. Clark, Sharon G.
Lee, and Roger A. Page, JJ., joined.
and Procedural Background
an interlocutory appeal from the trial court's grant of a
motion to dismiss for failure to state a claim upon which
relief can be granted under Rule 12.02(6) of the Tennessee
Rules of Civil Procedure. In reviewing a dismissal for failure to
state a claim, the appellate court must take the allegations
in the complaint as true. First Cmty. Bank, N.A. v. First
Tenn. Bank, N.A., 489 S.W.3d 369, 382 (Tenn. 2015),
cert. denied sub nom. Fitch Ratings, Inc. v. First Cmty.
Bank, N.A., 136 S.Ct. 2511 (U.S. June 27, 2016).
Accordingly, our recitation of the facts is taken from the
complaint filed in this case and, for purposes of this
appeal, we accept them as true.
Tournament Players Club at Southwind, Inc. ("TPC
Southwind"), hired plaintiff Kim Hardy as a food
server/bartender on November 14, 2004. She eventually became
a Service Captain/Lead Server. TPC Southwind is a private
club with dining and banquet facilities.
Southwind customarily adds a mandatory service charge to
every bill at its bars and restaurants. In addition, TPC
Southwind patrons may also pay separate gratuities, or
"add-on tips, " to the servers and bartenders who
serve them. TPC Southwind placed all of the mandatory service
charges in a pool. It disbursed a portion of the service
charges to Ms. Hardy and other food-serving employees in
their paychecks, along with their hourly wages. The add-on
tips were not disbursed immediately; they were also included
in the employees' paychecks.
to Ms. Hardy, instead of paying the service charges and
add-on tips to the employees who rendered the services that
gave rise to them, as required under Tennessee Code Annotated
section 50-2-107 (the "Tip Statute"),
Southwind distributed a portion of the monies to
"non-tipped" employees, that is, employees who did
not render the services that gave rise to the service charges
and add-on tips. These non-tipped employees included kitchen
staff who did not serve the patrons, and they even included
salaried management. In this way, Ms. Hardy alleged, she and
the other food-serving employees did not receive their full
portion of the service charge/add-on tip pool.
March 18, 2014, Ms. Hardy filed this lawsuit against
Defendants TPC Southwind, PGA Tour, Inc., and PGA Tour Golf
Course Properties, Inc. (collectively,
"Defendants"). Ms. Hardy filed it as a putative
class action on behalf of past and present employees of the
Defendants whose employment income was derived from
gratuities, tips, or service charges. In the lawsuit, Ms.
Hardy alleged that the Defendants' failure to pay her and
other similarly situated employees all of the tips,
gratuities, and/or service charges they earned, and the
practice of paying a portion of them to non-tipped employees,
violated the Tip Statute. Ms. Hardy also asserted breach of
contract, conversion, fraud and negligent misrepresentation
in procuring employment in violation of the Tip Statute,
aiding and abetting, and civil conspiracy. Ms. Hardy sought
class-action certification and compensatory and punitive
damages on behalf of Ms. Hardy and other similarly situated
April 2014, the Defendants filed a motion to dismiss for
failure to state a claim. Among other things, the Defendants
argued that Tennessee Code Annotated section 50-2-101,
another statute in the so-called "Tennessee Wage
Regulation Act, " does not afford a private remedy. They
pointed to a 2013 amendment to section 50-2-101 that omitted
prior language that referred to a private right of action
arising out of section 50-2-101.The Defendants contended that
the 2013 amendment to section 50-2-101 was retroactive, so
Ms. Hardy had no private right of action under section
50-2-107 in the instant case.
response, Ms. Hardy argued first that the 2013 amendment to
section 50-2-101 applied only to that section and not to
section 50-2-107, so it would not affect her lawsuit. Second,
Ms. Hardy cited a 1998 Court of Appeals opinion, Owens v.
University Club of Memphis, which found that a private
right of action exists under section 50-2-107, the Tip
Statute. No. 02A01-9705-CV-00103, 1998 WL 719516, at *11
(Tenn. Ct. App. Oct. 15, 1998).
October 2014, the trial court issued an order holding that a
private right of action does not exist under section 50-1-107
and dismissing Ms. Hardy's claims under the Tip Statute.
Citing Brown v. Tenn. Title Loans, Inc., 328 S.W.3d
850, 855 (Tenn. 2010), the trial court noted that section
50-2-107 does not contain express language granting a private
right of action, and it held that Ms. Hardy had not carried
her burden to show legislative intent to imply a private
right of action. In the spirit of judicial economy, the trial
court refrained from addressing the arguments regarding the
plaintiffs remaining claims and granted Ms. Hardy's
request for permission to seek an interlocutory appeal
pursuant to Rule 9 of the Tennessee Rules of Appellate
Court of Appeals granted Ms. Hardy's Rule 9 application
for permission to appeal. The issue presented was
"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." Hardy v. Tournament Players Club at
Southwind, Inc., No. W2014-02286-COA-R9-CV, 2015 WL
4042490, at *2 (Tenn. Ct. App. July 2, 2015), perm. app.
granted (Dec. 9, 2015).
divided opinion, the Court of Appeals found an implied
private right of action. Id. at *14-16. Citing the
1998 Owens opinion, the majority observed:
"This Court's holding in Owens has not been
overruled; the General Assembly did not amend section 107
when it amended section 101 in 2013; and the General Assembly
amended section 107 in 2012 and did not legislatively
overrule our holding in Owens." Id. at
*6. On this basis, the Court of Appeals reversed the trial
court's grant of the motion to dismiss the claims under
section 50-2-107. Id. at *16.
Brandon Gibson filed a dissent, stating: "I do not
believe this Court's decision in Owens can be
reconciled with the Tennessee Supreme Court's analysis in
Brown v. Tennessee. Title Loans, Inc., especially
considering the lack of any discussion of legislative intent
in Owens." Id. (Gibson, J.,
dissenting). In line with the trial court, the dissent urged
that the proper outcome was to "adopt the reasoning
utilized by the Tennessee Supreme Court in Brown and
determine that Tennessee Code Annotated section 50-2-107 does
not provide a private cause of action." Id. The
dissent noted that the only remedy provided in the statute
was a criminal penalty, and it asserted that the court's
role was to enforce that remedy, not to create a new one.
Id. We granted the Defendants' application for
permission to appeal to this Court.
on Appeal and Standard of Review
issue certified for interlocutory appeal is:
[W]hether 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.
addition, the Defendants raise two issues as
embraced within the certified issue:
1. Whether the majority opinion of the Court of Appeals erred
in relying on the standard contained within Owens v.
University Club of Memphis, No. 02A01-9705-CV-00103,
1998 WL 719516 (Tenn. Ct. App. Oct. 15, 1998), an unpublished
opinion, to find a private right of action under Tenn. Code
Ann. § 50-2-107?
2. Whether, under the correct standard contained within
Premium Fin. Corp. v. Crump Ins. Servs., 978 S.W.2d
91 (Tenn. 1998), and Brown v. Tenn. Title Loans,
Inc., 328 S.W.3d 850 (Tenn. 2010), a private right of
action exists under Tenn. Code Ann. § 50-2-107?
indicated above, this interlocutory appeal arises from the
trial court's grant of the Defendants' motion to
dismiss the complaint for failure to state a claim. Filed
pursuant to Rule 12.02(6) of the Tennessee Rules of Civil
Procedure, this motion tests the legal sufficiency of the
plaintiff's complaint. See Mortg. Elec. Registration
Sys., Inc. v. Ditto, 488 S.W.3d 265, 275 (Tenn. 2015)
(citing Harman v. Univ. of Tenn., 353 S.W.3d 734,
736 (Tenn. 2011)).
whether a statute creates a private right of action requires
statutory construction. We review the lower courts'
interpretation of statutes de novo, with no
presumption of correctness. See Am. Heritage Apartments,
Inc. v. Hamilton Cnty. Water & Wastewater Treatment
Auth., 494 S.W.3d 31, 40 (Tenn. 2016) (citing Hayes
v. Gibson Cnty., 288 S.W.3d 334, 337 (Tenn. 2009));
see also Brown, 328 S.W.3d at 855 (citing Tenn. R.
App. P. 13(d); Stein v. Davidson Hotel Co., 945
S.W.2d 714, 716 (Tenn. 1997)).
private right of action is the right of an individual to
bring suit to remedy or prevent an injury that results from
another party's actual or threatened violation of a legal
requirement." Wisniewski v. Rodale, Inc., 510
F.3d 294, 296 (3d Cir. 2007). Some statutes provide a private
remedy by their express terms; others define legal duties and
"are silent about whether an individual may bring suit
to enforce them." Id. at 297.
Tip Statute, Tennessee Code Annotated section 50-2-107,
outlines how businesses like TPC Southwind are to handle
payments from customers such as service charges, tips, and
gratuities. It details the employer's duty to pay them to
or distribute them among the employees who served the
customer. Tenn. Code Ann. § 50-2-107(a). Violation of
the Tip Statute is deemed a Class C misdemeanor and each
failure to pay an employee constitutes a separate offense.
Tenn. Code Ann. § 50-2-107(b).
Hardy seeks to assert a private right of action against the
Defendants based on the Tip Statute. It is undisputed that
the Tip Statute does not expressly grant employees such as
Ms. Hardy the right to file a lawsuit against an employer to
enforce its provisions. The question becomes, then, whether Ms.
Hardy and the other putative class members have an implied
private right of action under the Tip Statute.
Court addressed the implication of a private right of action
in Premium Fin. Corp. of Am. v. Crump Ins. Servs. Of
Memphis, Inc., 978 S.W.2d 91, 93 (Tenn. 1998). In
Premium Finance, the plaintiff premium finance
company filed suit against the defendant insurance companies
for damages resulting from the defendants' failure to
return unearned premiums to the plaintiff after cancellation
of underlying insurance contracts. Id. at 92. The
plaintiff sought to assert a private cause of action against
the insurers under a provision of the Premium Finance Company
Act, Tennessee Code Annotated section 56-37-111. Id.
outset of its analysis, the Court in Premium Finance
cautioned: "Where a right of action is dependent upon
the provisions of a statute, our courts are not privileged to
create such a right under the guise of liberal interpretation
of the statute. Only the legislature has authority to create
legal rights and interests." Id. at 93 (citing
Hogan v. McDaniel, 319 S.W.2d 221, 223 (Tenn.
1958)). Premium Finance noted that the plaintiff
bears the burden of establishing the existence of a private
right of action. Id. (citing Ergon, Inc. v.
Amoco Oil Co., 966 F.Supp. 577, 585 (W.D. Tenn. 1997)).
Where the statute does not expressly grant a private right of
action, the Court directed courts to examine the statutory
language to ascertain whether the legislature intended to
create an implied right of action. Id. "To do
this, " Premium Finance held, "we consider
whether the person asserting the cause of action is within
the protection of the statute and is an intended
beneficiary." Id. (citing Carter v.
Redmond, 218 S.W. 217, 218 (1920); Chattanooga Ry.
& Light Co. v. Bettis, 202 S.W. 70, 71 (1918)). It
advised courts to look at the structure of the statute at
issue and its legislative history. Id.
examining the Premium Finance Company Act, the Court in
Premium Finance found no private cause of action
under section 56-37-111. Id. at 94. It added:
"Where an act as a whole provides for governmental
enforcement of its provisions, we will not casually engraft
means of enforcement of one of those provisions unless such
legislative intent is manifestly clear. We do not find such
clear intention in the statute under review."
question of when a court may imply a private right of action
under a statute was considered further in Brown v.
Tennessee Title Loans, Inc. In Brown, the
complaint alleged that the plaintiffs and putative class
members were charged a prohibited "redemption premium
fee" in violation of the Tennessee Title Pledge Act
(TTPA). Brown v. Tenn. Title Loans, Inc., 328 S.W.3d
850, 853 (Tenn. 2010) (citing Tenn. Code Ann. §
45-15-111(a) (2000)). The TTPA did not expressly provide for
a private cause of action to enforce its terms, so the Court
considered whether the plaintiffs had an implied private
right of action under the Act against title pledge lenders
who allegedly charged the prohibited fees. Brown,
328 S.W.3d at 854. The Court framed the issue as
"whether the legislature otherwise indicated an
intention to imply such a right in the statute."
Id. at 855 (citing Premium Fin. Corp., 978
S.W.2d at 93; Reed v. Alamo Rent-A-Car, Inc., 4
S.W.3d 677, 689 (Tenn. Ct. App. 1999)).
ascertain whether the legislature intended to imply a private
cause of action, Brown stated, "[W]e look to
the statutory structure and legislative history."
Id. (citing Premium Fin. Corp., 978 S.W.2d
at 93; Reed, 4 S.W.3d at 689). Brown then
outlined several factors for courts to use to discern
Appropriate factors to consider include (1) whether the party
bringing the cause of action is an intended beneficiary
within the protection of the statute, (2) whether there is
any indication of legislative intent, express or implied, to
create or deny the private right of action, and (3) whether
implying such a remedy is consistent with the underlying
purposes of the legislation.
Id. at 855-56 (citing Ergon, 966 F.Supp. at
583-84; Buckner v. Carlton, 623 S.W.2d 102, 105
(Tenn. Ct. App. 1981), superseded by statute on other
grounds, Act of May 24, 1984, ch. 972, 1984 Tenn. Pub.
Acts 1026, as recognized in Lucas v. State, 141
S.W.3d 121, 129, 137 (Tenn. Ct. App. 2004)). Brown
emphasized, "The burden ultimately falls on the
plaintiff to establish that a private right of action exists
under the statute." Brown, 328 ...