STACY NORRELL [Note 1] vs. SPRING VALLEY COUNTRY CLUB, INC., & others. [Note 2]

MILKEY, J. The Spring Valley Country Club hosts wedding receptions, golf outings, and other private events at its facility in Sharon. During the 2011-2016 time frame, the club charged the sponsors of such events (patrons) specified prices for the food and beverages it served to guests at the events, and then added a twenty-two percent supplemental charge that was listed on invoices as a "house charge." The club did not distribute the monies collected for the house charge to those who served the food and

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drinks, but kept the money itself. The named plaintiff, Stacy Norrell, worked as a server at some of the events. She brought a class action -- on behalf of herself and others similarly situated -- alleging that the house charge amounted to a "service charge" that, pursuant to the so-called Tips Act, G. L. c. 149, § 152A, the club was required to distribute to wait staff. Named as defendants were the club itself, and the two individuals who had served as the club's presidents during the relevant period (collectively, the club).

Following a nine-day trial, a Superior Court jury found that the club indeed had violated the Tips Act (act), but awarded the plaintiffs far less in damages than they had sought. [Note 3] Claiming that they were owed additional damages as a matter of law, the plaintiffs filed a motion entitled "Plaintiff's Motion for Judgment Notwithstanding Verdict or In the Alternative to Amend the Verdict or for a New Trial" (posttrial motion). On appeal, the plaintiffs principally challenge the denial of that motion. They additionally claim error in one of the judge's evidentiary rulings. For the reasons that follow, we affirm.

Background. 1. The act. a. The pre-2004 act. The Legislature enacted the act in 1952. As originally enacted, the act consisted of a single sentence that simply prohibited employers in the food and beverage industry from appropriating tips that patrons had given to service employees. St. 1952, c. 490. The Legislature amended the act many times, including by adding language to address the type of scenario presented here: where supplemental charges that might be considered tips were collected by the employer instead of being given directly to service employees. In the version of the act that was effective between 1983 and 2004, the relevant language stated as follows: "If an employer or other person submits a bill or invoice indicating a service charge, the total proceeds of such charge shall be remitted to the employees in proportion to the service provided by them." G. L. c. 149, § 152A, as amended through St. 1983, c. 343, prior to enactment of St. 2004, c. 125, § 13. The pre-2004 version did not define the term "service charge."

We addressed the meaning of the pre-2004 version of this language in Cooney v. Compass Group Foodserv., 69 Mass. App. Ct. 632 (2007). That case involved Northeastern University's Henderson House conference facility. The school sent invoices that billed customers for a supplemental charge calculated as a

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percentage of food and drink charges. Id. at 633. Even though Northeastern expressly labeled that charge a "service charge," the school argued that the charge was not subject to the act because it never had intended it to be a tip or gratuity, nor had the school made "other representations to that effect." Id. at 636. Northeastern also maintained that it orally had informed patrons who inquired about the charge that it "was not in the nature of a gratuity," and that the wait staff themselves did not understand it as such. Id. at 634. On cross motions for summary judgment, a Superior Court judge "concluded that material issues of fact were in dispute concerning whether Henderson House customers reasonably believed that the 'service charge' appearing on their invoices was a gratuity." Id. at 634-635. The parties filed renewed cross motions for summary judgment, which were, in relevant part, again denied. Id. at 635. Both decisions were subsequently reported to us pursuant to Mass. R. Civ. P. 64, as amended, 423 Mass. 1410 (1996). Id.

We held that in those instances where Northeastern had billed customers for a charge that it expressly had listed as a "service charge" on its invoices, the act applied as a matter of law, and the plaintiffs therefore were entitled to summary judgment. [Note 4] Characterizing the act as imposing a form of "strict liability," we held that in the circumstances presented, any factual dispute over whether or not patrons reasonably understood the charge to be in the nature of a gratuity was not material. Id. at 637-639 & n.6.

b. The 2004 amendments. The Legislature rewrote the act in 2004. Among other changes, the 2004 amendments expanded the scope of the act so that it applied not just to servers in the food and beverage industry, but to "all service employees who . . . 'work[] in an occupation in which employees customarily receive tips or gratuities, and who provide[] service directly to customers or consumers . . . and who [have] no managerial responsibility.'" DiFiore v. American Airlines, Inc., 454 Mass. 486, 492 (2009), quoting G. L. c. 149, § 152A (a), as inserted by St. 2004, c. 125, § 13 (applying act to skycaps). Unchanged was the overall purpose of the act, which was "to ensure that service

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employees receive the tips, gratuities, and service charges that customers intend them to receive." DiFiore, supra at 491. See Bednark v. Catania Hospitality Group, Inc., 78 Mass. App. Ct. 806, 809 (2011).

In rewriting the act, the Legislature for the first time added a definition of "service charge," defining it as:

"a fee charged by an employer to a patron in lieu of a tip to any wait staff employee, service employee, or service bartender, including any fee designated as a service charge, tip, gratuity, or a fee that a patron or other consumer would reasonably expect to be given to a wait staff employee, service employee, or service bartender in lieu of, or in addition to, a tip."

G. L. c. 149, § 152A (a). Under this definition, a charge can amount to a service charge in one of two ways. See DiFiore, 454 Mass. at 489 n.7, 497. [Note 5] First, those charges that the employer itself has labeled "a service charge, tip [or] gratuity" are automatically deemed service charges. This is the type of per se service charge that we considered in Cooney, 69 Mass. App. Ct. at 639, albeit under the earlier version of the act. [Note 6] Second, even if the employer calls the charge something else, it still can be a service charge where the employee demonstrates that "a patron or other consumer would reasonably expect [it] to be given to a wait

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staff employee, service employee, or service bartender in lieu of, or in addition to, a tip." G. L. c. 149, § 152A (a) (defining "service charge"). In other words, where the employer itself does not label the supplemental charge a service charge, tip, or gratuity, the question is whether a reasonable patron would have understood it as such.

The 2004 amendments also rewrote the language governing employer-collected charges so that it read, and continues to read, as follows:

"If an employer or person submits a bill, invoice or charge to a patron or other person that imposes a service charge or tip, the total proceeds of that service charge or tip shall be remitted only to the wait staff employees, service employees, or service bartenders in proportion to the service provided by those employees."

G. L. c. 149, § 152A (d), first par. Overall, the language used in this rewritten provision is similar to what came before. [Note 7] However, immediately following the just quoted text, the Legislature added the following:

"Nothing in this section shall prohibit an employer from imposing on a patron any house or administrative fee in addition to or instead of a service charge or tip, if the employer provides a designation or written description of that house or administrative fee, which informs the patron that the fee does not represent a tip or service charge for wait staff employees, service employees, or service bartenders."

G. L. c. 149, § 152A (d), second par. The addition of this language clarifies that an employer in the service industry who charges a supplemental fee will not be subject to the act if it both calls the charge a "house fee" or "administrative fee," and provides its patrons a "designation or written description" informing them that the charge is not a "tip or service charge" intended to go to the service employees. Because the new language charted a course as to how employers could impose a supplemental charge without

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running afoul of the act, we termed it a "safe harbor provision." Bednark, 78 Mass. App. Ct. at 808 n.8.

In Bednark, 78 Mass. App. Ct. at 807, the defendant was a hotel that had added a percentage-based "administrative fee" to its food and beverage charges. No written explanation of the fee was offered to patrons, and there was conflicting evidence in the summary judgment record about the extent to which the hotel orally explained that the administrative fee was not a gratuity intended for the wait staff. Id. at 807-808 & n.9. We rejected the hotel's argument that -- as a matter of law -- merely calling the charge an "administrative fee" entitled the hotel to protection under the safe harbor provision. [Note 8] Id. at 810-811. We therefore held that summary judgment had been improperly entered in the hotel's favor; whether the administrative fee was a "service charge" that had to be distributed to wait staff was a question appropriately left to the jury. Id. at 816. With this background in place, we turn to the facts before us.

2. Factual background. During the relevant time period, the club paid its wait staff an hourly wage at a fixed rate that varied from $12 to $15 per hour. It was uncontested that the club collected the twenty-two percent house charge from patrons and retained the money for itself. The dispute at trial was whether the charge amounted to a "service charge" that, pursuant to the act, the club was required to turn over to the wait staff. As set forth above, that question turns in great part on how the club characterized the charges to its patrons. We therefore turn to reviewing the evidence of that in some detail.

According to the trial exhibits, the club generally was consistent in referring to the supplemental charge as a "house charge" on the invoices it sent to its patrons. [Note 9] Beyond the invoices themselves, the club's practice as to how it referred to the charge varied. As the plaintiffs highlight, there was evidence that from 2011 to sometime in 2013 or 2014, the club regularly referred to the twenty-two percent charge as a "service fee" or "service charge"

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in brochures and sample menus that the club used to market the use of its facility as an event venue. During roughly that same time frame, the event planner at the club occasionally referred to the fee in the same terms in e-mails and at least one cover letter.

There was evidence that the club included standardized disclaimer language in some of its contracts to try to ensure that patrons would understand that the house charge was not intended to be a gratuity that would go to the wait staff. That language was inserted into the form pre-event contract that patrons were required to sign (specifically in the "prices" section of a standard attachment captioned "Exhibit A: Additional Terms and Conditions"). It stated as follows:

"A 22% house charge will be added to all food and beverage items. (Our house charge does not represent a tip or service charge for wait staff employees, service employees or service bartenders). Spring Valley is a non tipping facility; no tip is expected or accepted by the service staff."

Club employees testified that the club included Exhibit A as an addendum to all non-golf private events by 2008, and included similar language on the golf side of the club's operations by 2015. At trial the parties disputed how often patrons received or reviewed the disclaimer language. [Note 10] There also was testimony that the club would explain this policy to patrons orally. Moreover, because many of the club's patrons were also members, the club maintained that they separately would be aware of the club's no tipping policy through the club's by-laws.

3. The course of the trial proceedings. The plaintiffs filed a motion in limine seeking to exclude two categories of evidence. The first was testimony by patrons as to their subjective belief whether the supplemental charge was to go to the wait staff. The judge agreed with the plaintiffs that such evidence was irrelevant, and the judge's ruling on this point is not at issue before us. [Note 11] The second category of evidence the plaintiffs sought to exclude involved

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oral statements that the club had made to patrons about the nature of the house charge. The judge denied the motion in limine with regard to such evidence, and various patrons were allowed to testify as to what the club orally had told them.

At the close of evidence, the plaintiffs requested entry of a directed verdict in their favor as to two categories of events: (1) those that were held during the period in which the club had characterized the house fee as a "service charge" in promotional materials and pre-event communications, and (2) subsequent events for which the club had not provided patrons the disclaimer language set forth in Exhibit A. After cross motions for directed verdict were denied, the case went to the jury.

Through a verdict slip to which both parties assented, the jury were asked to answer only two questions. The first asked the following: "Between February 2011 and October 2016, did Defendants violate Mass. Gen. L. c. 149 § 152A (the Massachusetts 'Tip Law') by failing to pay the 22% fee on food and beverages at special events to the waitstaff?" The jury answered this question "yes." The second question asked, "How much money would compensate the class of Spring Valley waitstaff for the lost amount of service charges that they were not paid as a result of the Defendants' violation of Mass. Gen. L. c. 149 § 152A (the Massachusetts 'Tip Law')?" The jury responded with the figure $18,340.32.

Because the amount of damages was far less than the amount to which the plaintiffs believed they were entitled, they filed their posttrial motion. In that motion, the plaintiffs argued that they were entitled to far higher damages as a matter of law based on "undisputed evidence." The trial judge denied the motion but proceeded to treble the damages and to award attorney's fees pursuant to the Wage Act, G. L. c. 149, § 150. Together with prejudgment interest, this resulted in a judgment in the plaintiffs' favor of $176,307. The plaintiffs appealed; the club did not. Discussion. 1. Denial of the posttrial motion. a. Framing the question. We begin with some preliminary observations. As a general matter, a party seeking to undo a jury verdict based on a claim that the jury were required as a matter of law to come to a

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particular result faces a very formidable burden. In reviewing the denial of a motion for judgment notwithstanding the verdict (JNOV motion), we ask "whether anywhere in the evidence, from whatever source derived, any combination of circumstances could be found from which a reasonable inference could be drawn in favor of the nonmoving party" (citation omitted). Esler v. Sylvia-Reardon, 473 Mass. 775, 780 (2016). Moreover, the obstacles that such parties face are particularly daunting where, as here, they are the ones bearing the burden of proof. [Note 12] See Brunelle v. W.E. Aubuchon Co., 60 Mass. App. Ct. 626, 630 (2004), citing J. Edmund & Co. v. Rosen, 412 Mass. 572, 575 (1992) ("When a party has the burden of proof, it can rarely be ruled as matter of law that the burden has been sustained, especially when the burden-carrying party has relied upon oral testimony or inferences from circumstances"). That is because it may well be that the jury simply did not credit the evidence that the plaintiffs mustered to try to prove their case. [Note 13] Nevertheless, the case law recognizes that there may be "exceptional situations -- where the parties agree on all material facts and the reasonable inferences to be drawn therefrom and disagree only as to the legal effect of the controlling principles, or where the defendant's own binding testimony precludes a verdict in his favor -- that the burden-carrying party may obtain a directed verdict." Brunelle, supra at 630-631. See Hanover Ins. Co. v. Sutton, 46 Mass. App. Ct. 153, 171 (1999) (upholding allowance of plaintiff's JNOV

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motion). [Note 14] Without acknowledging the difficulty of the burden they face, the plaintiffs essentially argue that this is one of the "exceptional situations" recognized by the cases.

In the end, we need not resolve whether the plaintiffs could establish that this is one of those rarest of circumstances in which the jury were required to accept certain facts in the plaintiffs' favor absent a stipulation. As explained below, the plaintiffs' claim that based on "undisputed evidence" they necessarily prevail as a matter of law fails on its own terms. We turn then to examining the plaintiffs' legal arguments. [Note 15]

b. Analysis. In those instances where the club unambiguously notified its patrons in writing that the house charge was not intended as a tip or gratuity for the wait staff, the club could claim protection under the safe harbor provision. Given the clarity of the Exhibit A disclaimer language, the plaintiffs unsurprisingly make no claim on appeal that they were entitled -- as a matter of law -- to funds from events where the patrons had been sent a form contract that included Exhibit A. Rather, the plaintiffs focus their arguments, as they did in the trial court, on two categories of events: those events held during the period in which the club regularly had referred to the charge as a "service fee" in promotional materials or other pre-event communications, and those subsequent events where the club had not sent the Exhibit A disclaimer language to its patrons. [Note 16] We address these scenarios in order.

Relying principally on our decision in Cooney, the plaintiffs argue that in instances where the club itself had referred to the

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house charge as a service fee, it is per se liable under the act as a matter of law, regardless of whether there was evidence on which the jury could conclude that reasonable patrons would have understood that the funds collected would not go to the wait staff. This claim misperceives the reach of Cooney. There, the facility owner expressly had billed patrons for a "service charge." Cooney, 69 Mass. App. Ct. at 633. Here, by contrast, any actual invoices were for what was labeled a "house charge." To be sure, the club's use of the term "house charge" did not preclude the plaintiffs from arguing to the jury -- based on the club's use of the term "service charge" in its promotional materials or otherwise -- that patrons would have understood the house charge to be a service charge. See Bednark, 78 Mass. App. Ct. at 807. However, we discern nothing in the act itself, or in the case law interpreting it, that imposes per se liability on an employer merely because there was passing reference to a "service charge" during communications with patrons without the term otherwise appearing in any invoices. Under the facts presented, whether the house charge imposed by the club amounted to a service charge in a given circumstance was a question properly left to the jury to decide.

The plaintiffs' argument that the club was liable as a matter of law unless it provided patrons with the Exhibit A disclaimer language in writing also fails. The plaintiffs seek to frame the issue as whether the club proved its entitlement to relying on the safe harbor provision. In doing so, they mischaracterize the role of that provision. By enacting the safe harbor language, the Legislature did not thereby impose strict liability on employers unless they affirmatively proved full compliance with its terms. Put otherwise, even if employers had not quite reached the shelter offered by the statutory safe harbor, that would not mean that they necessarily would be shipwrecked on the shoals of the act. In circumstances where, as here, the plaintiffs are unable to make out a case of per se liability, it remains the plaintiffs' burden to demonstrate that the charge at issue is one "that a patron or other consumer would reasonably expect to be given to a wait staff employee, service employee, or service bartender in lieu of, or in addition to, a tip." G. L. c. 149, § 152A (a). Quite apart from the Exhibit A disclaimer language, there was ample evidence in the trial record on which the jury could conclude that reasonable patrons would have understood that the club intended to retain the

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house charge for itself. [Note 17]

In sum, the plaintiffs are unable to make out a claim that they were entitled to judgment as a matter of law as to the two categories of events on which they focus. The judge properly denied their posttrial motion.

2. Evidence of oral communications. The plaintiffs separately claim that the judge improperly admitted evidence of what the club orally had communicated to patrons regarding the house charge. This argument requires little discussion. Granted, such communications may be beside the point in circumstances where a plaintiff is able to make out a case of per se liability. See Cooney, 69 Mass. App. Ct. at 638 n.6. However, where a plaintiff has not made out a case of per se liability and therefore has been left to prove what a reasonable patron would have understood, what the patron in fact had been told about the fee would be a critical consideration for the jury to weigh. Indeed, Bednark at least implicitly recognizes this. See Bednark, 78 Mass. App. Ct. at 815-816.

Disposition. We affirm both the judgment and the order denying the plaintiffs' postjudgment motion.

So ordered.