Matamoros v. Starbucks: First Circuit Upholds
$14-Million Judgment in Tip Pooling Class Action

Emboldened by having successfully reversed a massive verdict in a similar case, Starbucks appealed a Massachusetts trial court’s $14-million judgment resulting from allegations that shift supervisors impermissibly shared tips that properly belonged to Starbucks’ baristas. See Matamoros v. Starbucks Corp., Nos. 12-1189, 12-1277 (1st Cir. Nov. 9, 2012).

In an opinion sprinkled with sardonic asides about Starbucks’ purportedly employee-friendly work atmosphere, the court noted that, while Starbucks “euphemistically describes the employees who staff its shops as ‘partners’”, there is a sharp division between the baristas who actively receive and process customer orders and the shift supervisors who predominantly manage the baristas. Id. at 2-3.

In 2009, Starbucks succeeded in reversing a nearly $100 million judgment concerning essentially the same issue. See Chau v. Starbucks, 174 Cal. App. 4th 688 (2009). California’s Fourth Appellate district held that “the trial court erred in ruling that Starbucks’s tip-allocation policy violated California law. The applicable statutes do not prohibit Starbucks from permitting shift supervisors to share in the proceeds placed in collective tip boxes.” Id. at 691. The same team of Akin Gump attorneys that represented Starbucks in the California action joined forces with local counsel from Boston-based Goodwin Procter, which included James Rehnquist, son of the former Chief Justice. This time, however, they failed to win a victory for the coffee behemoth.

The First Circuit focused principally on that portion of the Massachusetts Tips Act providing that only those with “no managerial responsibility” are eligible to share in tips. After addressing and disposing of each of Starbucks’ arguments supporting the notion that its shift supervisors lack managerial responsibility — arguments that were by turns characterized as “hair-splitting” and “disingenuous” — the First Circuit’s de novo review concluded that “the evidence canvassed above describing the work actually performed by the shift supervisors makes it pellucid that shift supervisors possess managerial responsibility. Any other conclusion would blink reality.” Matamoros at 14.