Labor & Employment – Class Action – Restaurant Franchises – Tip Policy

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The plaintiff-server filed this purported class action, alleging that Ladles Soups restaurants had a policy of withholding their servers’ credit card tips. The Ladles Soups restaurant for which plaintiff worked is not a party to this appeal. Since plaintiff had no employment relationship with appellants (other Ladles Soups restaurants and franchisors), he lacks standing to sue them under the South Carolina Payment of Wages Act (SCPWA).

We affirm summary judgment for appellants while certification of the purported class remained pending.

The Ladles Soups franchise agreement is devoid of any reference to franchisees’ compensation policies. The owner of Ladles Soups-James Island, the franchise at which plaintiff worked testified in her deposition that her restaurant operates as an independent contractor separate and apart from the Franchising Respondents; the Franchising Respondents had no authority to set Ladles Soups-James Island’s compensation policy; and the Franchising Respondents did not have a policy for how to handle credit card or cash tips.

Corey Paul, another franchise owner, testified in his deposition that the franchise agreement did not direct owners how to compensate employees and there was no policy on how to handle credit card or cash tips. Julie Dyke, owner of Ladlessoups Mount Pleasant, also testified in her deposition that there was no franchise-wide policy about handling credit card tips.

Even if all franchises had a policy of withholding tips, we find no evidence an agency relationship existed that changed the relationship of plaintiff to employee-employer with any of the Respondents. Therefore, we find the circuit court did not err in granting summary judgment to Respondents on plaintiff’s SCPWA claim because none of the Respondents were plaintiff’s employer.

As to the Franchising Respondents, plaintiff further asserts the circuit court erred in granting summary judgment because there was a genuine issue of material fact as to whether Respondents came into possession of credit card tips claimed by plaintiff through their royalty fees from Ladles Soups franchisees, including Ladles Soups-James Island. We disagree.

For even a percentage of the tips claimed by plaintiff to have come into the Franchising Respondents’ possession, they would have to have been first collected by plaintiff’s employer, Ladles Soups-James Island, who would have then had to have paid a portion of the tips to Ladles Franchising, Inc. The owner of Ladles Soups-James Island testified in her deposition that she did not pay a percentage of the tips to the franchise, and plaintiff has not provided a scintilla of evidence to the contrary.

Viewing the evidence and its reasonable inferences in the light most favorable to plaintiff, we find the evidence as a whole is susceptible of only one reasonable inference: that the Franchising Respondents never came into possession of plaintiff’s credit card tips. Thus, no jury issue existed.

Affirmed.

Chappell v. Ladles Soups – James Island, LLC (Lawyers Weekly No. 012-034-23, 14 pp.) (Per Curiam) Appealed from Charleston County Circuit Court (Bentley Price, J.) Benjamin Scott Whaley LeClercq and David Ashley for appellant; Peter Brandt Shelbourne, Kerry Koon, Michael Evan Lacke, Paul Ferrara and Janet Kleinhardt Ferrara for respondents. South Carolina Court of Appeals (unpublished)