Fredrickson v. Starbucks Corporation

Case 3:13-cv-00029-HU
. .. . .
Document 1-1
Filed 01/08/13
Page 2 of 70
Page ID#: 13
4
5
6 7
IN THE CIRCUI COURT OF THE STATE OF OREGON
FOR THE COUN OF MULTNOMA
HANNAH FREDRICKSON, ASHLEY Case No. 1212 -15734

KRNING and MAURIEE BRACKE,
vs.
Plaintiff,
CLAS ACTION COMPIANT

Oregon Wage and Hour Class Claims for an amount to be determined at tral and depending on several factors not currently ascertinable, but not less than $50,000 and not believed to exceed $5,000,000
8
9
10
11
ST ARUCKS CORPORATION, a Washington corporation,
Defendant.
Jury Trial Requested

NOT SUBJECT TO MADATORY ARBITRATION
12
13
Filng fee of $755 per ORS21.160(1)(d)
~ L
14 COMPLA-ClAS ACTION
16 This is an action under state wage and hour laws for certin present and former
17 employees of Starbucks Corporation (hereinafter "STARUCKS") to recover civil
18 penalties (and pre- and post-judgent interest thereon), as well as for declaratory
19 and injunctive relief. All allegations herein are made to the best of Plaintiffs' and their
20 counsel's good-faith knowledge, information and belief, based upon the evidence
21 adduced to date. Plaintiffs have in their possession several documents frm Hannah
22 Frdrickson's employment (including those prouced by STARUCKS), but do not
23 have any time or pay record from Ashley Krening or Maurialee Bracke's employment
Page 1 - CLAS ACTON COMPLAINT

JON M. EGAN. PC
240 SIX STREET

LA OSWEGO OR 97034.2931
'lU;PHON: (503) 697.3427 . FAX (866) 3 J i -5629 lNO(~EGANU;GALTEM.CO
EXHIBIT 1
Page 2 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 3 of 70
Page ID#: 14
1 (or any of
the other class members). Before this litigation wa filed, Plaintiffs and
2 their counsel requested additional documents, information and legal citations to

explain and/or substantiate STARUCKS's legal and factual positions. Some of
these
4 were provided; some were not The class action allegations made herein are therefore
5 founded upon STARUCKS documents specifically indicating that violations arise
6 from company-wide policies, as well as based on the reaonable information and

7 belief that certin other violations apparent from the documents could not have
8 happened if STARUCKS's computer system were not set up to allow and/or require
9 such violations to occur. Plaintiff intend to, and reserve the right to, amend their
10 Complaint to remove or add any individual and/or class violation allegations as
11 necessary after additional discovery. Based upon the facts now known, and/or to the
12 best of their information and belief arrived at after reasonable inquiry into the
13 circumstances, Hannah Fredrckson, Ashley Krening and MauIialee Bracke
14 (hereinafter "Employees") complain as follows against STARUCKS, on behalf of
15 themselves and all other Oregon STARUCKS employees who reported or were
16 imputed tips.
20 At all times material herein, Plaintiff were residents of
~ ~ 23 3.
22 reported or were imputed tips.
18 PARTIES
Multnomah County,
21 Oregon. The class members are or were Oregon employees of ST ARUCKS who
17
Page 2 - CLASS ACTION COMPLANT

JON M. EGAN. PC
240 SIX11 S'l tAKE OSWEG. OR 970342931 1lLE0N: (503) 697-3427. FAX; (866) 311-5629
1N00EGANLEOAL-nAM.COM
EXHIBIT 1
Page 3 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 4 of 70
Page ID#: 15
1 Defendant STARUCKS is a Washington corpration doing business in

2 Multnomah County, Oregon and elsewhere. At all times materil herein,
3 STARUCKS owned, operated and managed over 100 coffee servce establishments
4 in the State of Oregon, including many in Multnomah County.
6 COMMON FACT
7 4.
8 With the information available to them at this time, Plaintiff base this class
9 action on STARUCKS's wrongfl deduction of three categories of
taes from its
10 employees' wages based on imputed and other tip amounts. On information and
11 . belief, Hannah Fredrckson's records reveal additional potential violations regarding

12 the wrongfl overdeduction of
Workers' Benefit Fund asessments and wrongfl
13 failure to pay for breaks under 30 minutes. Afer additional discovery, Plaintiffs
14 reerve the right to allege an entitlement to damages and/or injunctie relief
based
15 upon these additional potential violations, and they hereby give notice of their intent
16 to do so in that event.
17
18 TIp Deduction Claims-Wrongf Deducton of Oregon mcome Taxes,
20 5.
Page 3 - CLAS ACTION COMPLANT
19 Federal mcome Taxes and FICA Taxes
21 STARUCKS customers leave a substantial amount of cah tips every day in
22 containers locted in all STARUCKS stores, tyically nea the cah registers.
23 STARUCKS doe not allow customers to put tips on their credit cards.
240 SIXTH ST
LAE OSWEG. OR 97034-293 i TELEPHom: (503) 697-3427. FAX: (866) 3 i 1-5629
JON M. EGAN. p
INFO('EGANU!GALllAM.CO
EXHIBIT 1
Page 4 of 70
Case 3:13-cv-00029-HU
.'~.. .'" ,~.""".'
Document 1-1
Filed 01/08/13
Page 5 of 70
Page ID#: 16
1 6.
2 The tip-eligible employees pool these tips eveiy week, distributing them amongst
3 themselves according to a common formula: each tip-eligible employee gets the same
4 proporton of the tip pool as their proporton of the total hours worked that week at
6 ~
S that loction.
7 For paycheck purposes, STARUCKS assign a phantom amount of tips to each
8 employee-soe for each hour they worked. STARBUCKS call these phantom tips
9 "imputed tips." The employees never reported that they had received that amount of
10 tips to STARUCKS-indeed, STARUCKS specifically discourages its employees

11 from reportng their tips. STARBUCKS just makes up that phantom number out of
12 thin air (50e per hour worked) and wrtes that down on the employee' pay stubs as
14 8.
13 the assumed amount of tips they received.
15 Oregon law prohibits an employer from taking any deductions out of an

16 employee's paycheck unless the employer is "required to do so by law" or the
17. employee voluntarily consents to the deduction in wrting. ORS 652.610(3). When
18 the Oregon Legilature enacted ORS 652.610(3) in 1977, there were laws on the books
19 in other states that allowed employers in those states to take deductions whenever
20 they were "required or permitted" or "required or empowered" to do so by law, or
21 when a deduction wa "in accordance with" or "authorized" by law. Oregon chose not
22 to adopt any of those constrctions. Instead, Oregon chose to allow only those
23 deductions that are "required" by law. That makes penect sense, since John W. Wolf,
Page 4 - CLASS AClION COMPLANT

JON M. EGAN. PC
240 SIXll SlR EET

LAKE OSWEGO. OR 97034-2931
TELEHCM: (503) 697-3427. FAX: (866)311.5629

INFoEGALEGIILTEAM.COM
EXHIBIT 1
Page 5 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 6 of 70
Page ID#: 17
1 Executive Assistant to the Commissioner of the Oregon Bureau of Labor, tetified to
2 both the House Committee on Labor and the Senate Committee on Labor, Consumer
3 and Business Afairs that part of that section's purpose wa "allowig the employee
4 some contrl over what can be deducted frm wages." It would be fully in keeping
5 with that purpose to require employers to get their employee' voluntary wrtten
6 consent before taking deductions from their paychecks that were merely allowed (not
8 9.
7 required) by law.
9 STARUCKS withholds Oregon income taes, federal income taes and federal
10 FICA taes frm its employees' paychecks for phantom amounts of tips it assigns
11 ("imputes") to the employees. The
employee have not voluntaly consented to those
12 deductions in wrting, so the deductions are ilegal unless STARUCKS is "reqired
13 ... by law" to make them. It is not.

14
16 10.
15 Oregon Income Tax Deducton Claims
17 Oregon tax law prohibits employers from withholding Oregon income ta based
18 on tips that are given directly to the employee by their customers (i.e., that are not
19 collected and distrbuted by the employer). ORS 316.162 defines wages for
20 withholding purposes as "remuneration for servces penormed by an employee for an
21 employer." Tips that are given directly by customers to employees do not fit into that
22 definition. STARUCKS should therefore not be withholding Oregon income ta
23 from its employees' wages based on any tip amounts (whether imputed or not). The
JON M. EGAN. PC
240 SlX S11EE

LAKBOSWEG. OR 97034-2931
'ILEPHONE: (503) 697-3427. FAX: (866) 311-5629
IN~EGALEGAL11AM.CO
EXHIBIT 1
Page 6 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 7 of 70
Page ID#: 18
1 Oregon Departent of Revenue's own Frequently Asked Withholding Questions,

2 oehtt://ww.oregon.gov/ DOR/BUS/faq-withhold.shbnb, for example, clealy
3 states, "8. How does Oregon treat withholdig on tip income? Tips paid by
4 the customer to the employee are not subject to withholding ta. Tips paid by the
5 customer to the employer who then distrbutes them to the employees are subjec to
6 witholding." "Wages" are defined identically in the unemployment benefits statute
7 (ORS 657.105), and the Oregon Court of Appeals has affrmed the Employment
8 Appeals Board's finding that, as stated in the Oregon Administrtive Rules, "Gift,
9 tips, or other gratuities received by an employee during the course of
his employment
10 from persons other than his employer are not wages." Callahan v. Employment Div.,
11 80 Or. App. 401, 403, 722 P.2d 1275,1276 review denied, 302 Or. 158,727 P.2d 128
12 (1986). All of
the tips in this case were paid directly by the customers to the
13 employees-cah only, no credit cards allowed, and the tips are never touched (or
14 even counted) by STARUCKS or its managers. Oregon withholding tax should
15 therefore not have been taken out. The deduction of Oregon income taes based on
16 employees'
17 11.
tips (both "imputed" and otherwse) is therefore ilegal under Oregon law.
18 STARUCKS hides those tip-based deductions in the employees' pay stubs, so

19 that they won't know what is being deducted or why. Oregon law requires employers
20 to issue pay stubs to their employees every pay period that are "suffciently itemized
21 to show the amount and purpose of the deductions made." ORS 652.610(1).
22 STARBUCKS does not do that. STARUCKS's own internal records do itemize the
23 employees' deductons, identifyng which deductions are wage-based deductions and

JON M. EGAN. p
240 SIX11 STREE

LAKE OSWEGO OR 97034-293 J 1lLEPHONE:(S03) 697-3427 . FAX: (866)311-5629
lNEGANLEGALlEAM.CO
EXHIBIT 1
Page 7 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 8 of 70
Page ID#: 19
1 which are tip-based deductions. For example, in STARUCKS's internal records
2 obtained by Plaintiffs' counsel, the following deductions are listed for Hannah
3 Fredckson's July 25, 2008 paycheck:
4
5 6
Total Tax EE: 98.50
FED Federal W/HEE:

OASDIEE: MedcarEE:
T:W/HEE:
7
T:OASDEE T:MedcEE:
34.92 26.83 6.27 3.92

1.62
0.38
21.82
OR Oregon
W/HEE:
9
10
WORCOMP:
T:W/HEE:
0.74 2.00
11 STARBUCKS's internal records separately list the taes on wages and the taes on
12 imputed tips, so they can tell which is which. Oregon income ta withholding for
13 wages, for example, is marked "W /H EE," while the Oregon income ta withheld for
14 tips is marked "T:W/H EE". The "T" stands for "tips." On the employees' pay stubs,
15 however, the deductions for wages and the deductions for tips are not separately
16 identified. They are combined with each other and mixed together. For example, in
17 the pay stub that was given to Hannah Fredrickson with that same July 25, 2008
18 paycheck, the following are listed as her deductons:

19
20
21
TX Withholding TTX EE Social SecTX Withholding TTX EE Medicare TTX EE Worker Com-
38.84 28.45 23.82

6.65 0.74
22 There are two entres on the pay stub that both read "TX Withholding T -", and both
23 of them combine both wage taes and imputed tip taes. We know that the first one is

JON M. EVN. PC
LAKE OSEGO. OR 97034.2931

TELEPHON: (503) 697-3427. FAX: (866)311-5629 INPO(EGANLEGALTBAM.CO
240 sixrn SlRT
EXHIBIT 1
Page 8 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 9 of 70
Page ID#: 20
1 for federal income ta deduction and the second one is for Oregon income ta
2 deduction, but we only know that because we already have ST ARUCKS's internal
3 document to figure it out from. The Oregon income ta is sandwiched between the
4 federal Social Security and federal Medicare deductions (both of which alo combine
5 both wage taes and imputed tip taes). It is impossible for any employee to figure
6 out from their pay stub what taxes are taken out for what amounts, since the
7 deductions are all
jumbled up and combined with each other. These pay stubs
8 therefore were not "suffciently itemized to show the amount and purpose of the
9 deductions made."
10
12 12.
11 Federal Income Tax Deduction Claims
13 STARUCKS is only required to withhold federal income taes on tip amounts

14 that its employees report in wrting that they have specifically received. "An employer
15 is required to collect employee ta on tips which constitute wages only in respect of
16 those tips which are reported by the employee to the employer in a wrtten statement
17 furnished to the employer pursuant to section 6053(a)." 26 CFR 3L.3402(k)-I(a)(2).

18 See IRS Chief Counsel Advice 200929004, 7/17/09 (holding that when employees
19 distrbute tip jar tips amongst themselves, any unreported tips are not subject to the
20 employer share of FICA ta unless and until the IRS makes a notice and demand for
21 the taes from the company). For an employer to deduct taes based on a tip
22 statement, it "must be signed by the employee and must disclose: (i) The name,
23 address, and social security number of the employee. (ii) The name and address of
JON M. EGAN. PC
240 SIXLL SlREET

1lLEPHONE: (503) 697.3421. fAX: (866) 311-5629 lNFO(EGANLEGAI.TEAM.CO
EXHIBIT 1
Page 9 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 10 of 70
Page ID#: 21
1 the employer. (iii) The period for which, and the date on which, the statement is
2 . furnished. !fthe statement is for a period ofless than 1 calendar month, the
3 beginning and ending dates of the period must be included (for example, Januaiy 1
4 through January 8,1998). (iv) The total amount of
tips received by the employee
5 during the period covered by the statement which are required to be reported to the
6 employer (see paragraph (a) of
this section)." 26 CFR 31.6053-1(b)(1). But
7 STARUCKS did not base its federal income ta withholding on any statutorily valid
8 tip statements. Plaintiffs never signed any paper tip statements at all. Before filing
9 this lawsuit, Plaintiffs requested 26 CFR 31.6053-1(d)(4) hard copies of any and all
10 tip statements that STARUCKS claims entitled or required it to withhold federal

11 income taes from wages for tips they received and reported. No such tip statements
13 13.
12 were ever provided.
14 Employers are allowed to use an electronic system for employees to report tips,
15 but that system "must ensure that the information received is the information
16 transmitted by the employee and must document all occasions of access that result in
17 the transmission of a tip statement. In addition, the design and operation of the
18 electronic system, including access procedures, must make it reaonably certin that
19 the person accessing the system and transmittng the statement is the employee
20 identified in the statement transmitted." 26 CFR 31.6053-1(d)(I). An employer
21 cannot deduct income taes based on an electronic tip statement unless it provides
22 the same information as a paper tip statement, and it must be signed by the
23 employee. 26 CFR 31.6053-1(d)(2)-(3). "The electronic signature must identify the

JON M. EGAN. PC
240 S1X11 S1lET

TILEPHON: (503) 697-3427. FAX: (866) 311-5629
1N00EGALEGALlEAM.CO
EXHIBIT 1
.~,
Page 10 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 11 of 70
Page ID#: 22
1 employee transmittng the electronic tip statement and must authenticate and verify
2 the transmission. For this purpose, the terms authenticate and verif have the same
3 meanings as they do when applied to a wrtten signature on a paper tip statement."

4 26 CFR 3i.6053-1(d)(3) (italics in original). Plaintiffs never signed any electronic
6 ~
5 tip statements either.
7 Before filing this lawsuit, Plaintiff requested 26 CFR 31.6053-1(d)(4) hard

8 copies of any and all electronic tip statements that STARBUCKS claims entitled or
9 required it to withhold federal income taes from wages for tips they received and
10 reported. No such tip statements were ever provided.
11 15.
12 Because the employees did not report their tip amounts to STARUCKS, the
13 "imputed" tip amounts on their paychecks ca only be phantom (made-up) amounts.
14 There are only two legal reasons for an employer to report a phantom (made-up)
15 amount of tips to the federal government for an employee- "allocated" tips (which
16 are sometimes required) and "estimated" tips (which are never required).
17 16.
18 "Allocated" tips apply to large food and beverage establishments. Each

19 STARBUCKS location is a large food and beverage establishment. Each large food
20 and beverage establishment must keep track of its aggegate gross sales. If all of the
21 tipped employees together report tips ofless than 8% of those aggegate gross sales,
22 the owner must "allocate" a phantom (made-up) amount of
tips to each employee to
23 make up the difference. The reported tips, plus the allocated tips, must total at least

JON M. EGAN. PC
240 SIXLL SlRET LAKEOSWI!. OR 97034-2931

1lLEPHONE: (503) 697-3427 . fAX: (866) 31 i -5629
INFO(lGANLEGALTEAM.COM
EXHIBIT 1
Page 11 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 12 of 70
Page ID#: 23
1 8% of the establishment's aggegate gross sales. Employers are not allowed to
2 withhold federal income taes or FICA taes from allocated tips. They simply report
3 the allocated tips to the government, as "allocated tips" in Box 8 of
the employee's W-
4 2. Only tips specificaly reported to the employer by the employee are supposed to be
S included with.the wages in box 1 of
the W-2. 26 CFR 31.60S1-i(a)(I)(VI) ("In the

tips received by an employee in the course of
6 cae of
remuneration in the form of
his
7 employment, the amounts required to be shown by paragraphs (3) and (S) of section
8 6051(a) (see paragraph (a)(l)(i)(C) and (e) of
this section) shall include only such tips
9 as are reported by the employee to the employer in a wrtten statement furnished to
10 the employer pursuant to section 6053(a)."). See also Instrctions for Box i on Forms
11 W-2 and W-3 ("Include the following ... (3) Total tips reported by the employee to the
12 employer (not allocated tips)."). If STARUCKS's "imputed" tips are "allocated" tips,
4 ~
16 the employees' W-2S, not in Box 8
13 it shouldn't be withholding taes from them.
15 STARUCKS reported all of its imputed tips with the employees' wages in Box 1 of
like it should have for allocated tips. Because
17 STARBUCKS did not report any allocated tips for the Class members, the only way it
18 is allowed to report a made-up amount of tips to the government is therefore through
19 "estimated" tips. As discused in furter detail below, STARUCKS did not follow the
20 proper procedures to report estimated tips for its employees. More importntly,
21 STARUCKS is never required to withhold federal income or FICA taes based on

22 estimated tip amounts, so that withholding is an ilegal deduction under Oregon
23 wage-and-hour law.

240 SIX SlRT
LAK OSWEGO. OR 97034-2931
1lLEPHON: (S03) 697.3427. FAX: (866) 311-S629 INO(~EGALEGALTEAM.COM
JON M. EGAN. PC
EXHIBIT 1
Page 12 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 13 of 70
Page ID#: 24
1 18.
2 Under certin circumstances, an employer is allowed to estimate the amount of
3 tips that its employees will report, and then withhold federal income taes based on
4 those estimated tip amounts. 26 CFR 31.3402(h)(1)-1(b)(1) ("(A)n employer may,

5 at his discretion, (withold the applicable ta) in respect of tips reported by an
6 employee to the employer on an estimated basis.") (emphasis added). Again, the

7 employer is never required to withhold federal income taes from estimated tips.
8 ORS 652.610(3) prohibits any deductions except for amounts authorized by the
9 employee in wrting or "required to do so by law" (emphasis added). Plaintiffs and

10 the class members did not authorize the withholding of federal income taes for the
11 tips that STARUCKS "imputed" to them, and STARBUCKS was never required by
12 law to withhold those taes. These deductions for federal income taes are therefore
4 ~
17 estimating tips for purposes of
13 ilegal under Oregon law.
15 STARUCKS also didn't follow the required procedures to estimate tips, so its
16 deductions from Plaintiffs' paychecks were not authoried by law, either. When
withholding
federal income taes, employers are only
18 allowed to estimate the amount of tips each employee will report during a given
19 calendar quarter. See 26 CFR 3L.3402(h)(1)-1(b)(1) ("(A)n employer may, at his
20 discretion, (withhold the applicable ta) in respect of tips reported by an employee to

21 the employer on an estimated basis.") (emphasis added). STARBUCKS specifically
22 instrcts employees not
to report any tips up to 50~ per hour, so it cannot in good
23 faith estimate that those same employees will report those tips.
JON M. EGAN. PC 24 SlXll StREET
LAKe osweGO. OR 97034-2931

1lU;PHONE: (503) 697-3427. FAX: (866) 311-5629 . INfO(EGANLEGALlEAM.COM
EXHIBIT 1
Page 13 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 14 of 70
Page ID#: 25
1 20.
2 STARUCKS also always "imputed" the same amount of tips to each and every
3 employee. It is supposed to estimate each employee's tip reportng separately. 26

4 CFR 31.3402(h)(1)-1(b )
(1)(i) ("In respect of each employee, make an estimate of the
5 amount of tips that will be reported ... by the employee to the employer in a calendar
6 quarter."). !f all affected employees share substntially the same circumstances and
7 working conditions, an employer is allowed to use the same initial estimate for all of
8 them, but that estimate is supposed to be individually revied for each employee after
9 their first quarter of reported tips. 26 CFR 31.3402(h)1-1(b)(2)(ii) ("If the quarterly
10 estimate of tips in respect to a partcular employee continues to differ substatially
11 from the amount of tips reported by the employee, ... the employer shall make an
12 appropriate adjustment of his estimate of the amount of tips that will be reported by
13 the employee."). Plaintiff never reported any tips to STARBUCKS (per
14 STARUCKS's own instrctions), so after each of their first quarters of work,

15 STARUCKS should not have been "estimating" any tips for them whatsoever. Before
16 this litigation was filed, Plaintiffs requested that STARBUCKS produce copies of any
17 tip report that they ever submitted, as well as the factors upon which it relied in
18 making its tip estimates and its reasons for believing that the estimates were
19 reasonable. 26 CFR 31.3402(h)1-1(b)(2)(iii). ("The employer must be prepared,
20 upon request ... to disclose the factors upon which he relied in making the estimate,
21 and his reaons for believing that the estimate is reasonable.") STARBUCKS never
22 produced any.
23 III
Page 13 - CLAS AClION COMPLANT
JON M. EGAN. PC
240 SIX11 SlRT

LAKE OSWEG. OR 97034-2931 1lU;PlION: (503) 697-3427' FAX: (866) 311-5629 l1lXGANLEGALlEAM.COM
EXHIBIT 1
Page 14 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 15 of 70
Page ID#: 26
1 21.
2 Tips ofless than $20 in a calendar month are not considered "wages" for federal
3 income ta withholding. 26 CFR 3l.3401(a)(16)-I(b). That means that any employee
4 working less than 40 hours in a given calendar month should not have federal income
5 taes withheld from their paycheck for that month (at the rate of 50q: of "imputed"
6 tips per hour, $20 in tips would equate to 40 hours for the month). "While $20 in
7 tips per month is not very much, employees who start employment, leave
8 employment, or take vacation or sick leave within a partcular month may well earn
9 less than that." Fior D1talia, Inc. v. United States, 242 F.3d 844, 847 n.5 (9th Cir.
10 2001). STARBUCKS withholds the same federa income taes from its employee'
11 paychecks for "imputed" tips whether or not those employees actually receive $20 in
12 tips in a given calendar month.

13
14 FICA Tax Deduction Claims

16 As with federal income taes, STARUCKS is only required to withhold federal
15 22.
17 FICA taes on tip amounts that its employees report in wrting that they have
18 specifically received. "An employer is required to collect employee ta on tips which
19 constitute wages only in respect of those tips which are reported by the employee to
20 the employer in a wrtten statement furnished to the employer pursuant to section
21 6053(a)." 26 CFR 31.3102-3(a)(2). See IRS Chief Counsel Advice 200929004,
22 7/17/09 (holding that when employees distrbute tip jar tips amongst themselves, any
23 unreported tips are not subject to the employer share of FICA ta unles and unti the

JON M. EGAN. PC
240 SIXTH STREE OR 97034.2931 1lUPIlONE: (503) 697-3427' FAX: (866) 3 i 1-5629
LAKE OSWEG.
l1QjEOANLEGALTEAM.COM
EXHIBIT 1
Page 15 of70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 16 of 70
Page ID#: 27
1 IRS makes a notice and demand for the taes from the company). For an employer to
2 deduct taes based on a tip statement, it "must be signed by the employee and must
3 disclose: (i) The name, address, and social security number of the employee. (ii) The
4 name and address of the employer. (iii) The period for which, and the date on which,
5 the statement is furnished. If the statement is for a period ofless than 1 calendar
6 month, the beginning and ending dates of the period must be included (for example,
7 January 1 through January 8, 1998). (iv) The total amount of
tips received by the
8 employee during the period covered by the statement which are required to be
9 reported to the employer (see paragraph (a) ofthis section)." 26 CFR 31.6053-
10 1(b )(1). But ST ARUCKS did not base its FICA withholding on any statutorily valid
11 tip statements. Plaintiffs never signed any paper tip statements at all. Before filing
12 this lawsuit, Plaintiffs requested 26 CFR 31.6053-1(d)(4) hard copies of any and all
13 tip statements that STARBUCKS claims entitled or required it to withhold federal
14 FICA taes from wages for tips they received and reported. No such tip statements
~ 23.
15 were ever provided.
17 Employers are alowed to use an electronic system for employees to report tips,
18 but that system "must ensure that the information received is the information
19 trsmitted by the employee and must document all occaions of access that result in
20 the transmission of a tip statement. In addition, the design and operation of the
21 electronic system, including access procedures, must make it reaonably certin that
22 the person accessing the system and transmittng the statement is the employee
23 identified in the statement trnsmitted." 26 CFR 31.6053-1(d)(i). An employer
JON M. EGAN. PC
240 SIXLL S1REE

LAKE OSWEGO, OR 91034-2931 TEU!HONE: (503) 697-3427. FAX: (866) 311-5629 lNo&EGAN LEGALTEAM.COM
EXHIBIT 1
Page 16 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 17 of 70
Page ID#: 28
1 cannot deduct FICA taxes based on an electronic tip statement unless it provides the
2 same information as a paper tip statement, and it must be signed by the employee.
3 26 CFR 3l.6053-1(d)(2)-(3). "The electronic signature must identify the employee
4 transmittng the electronic tip statement and must authenticate and verify the
5 transmission. For this purpose, the terms authenticate and verif have the same
6 meanings as they do when applied to a wrtten signature on a paper tip statement."

7 26 CFR 3l.6053-1(d)(3) (italics in original). Plaintiffs never signed any electronic
9 ~
8 tip statements either.
10 Before filing this lawsuit, Plaintiffs requested 26 CFR 3i.6053-1(d)(4) hard

11 copies of any and all electronic tip statements that STARUCKS claims entitled or
12 required it to withhold FICA taes from wages for tips they received and reported. No
~ 25.
13 such tip statements were ever provided.
15 As with federal income ta, an employer is allowed under certin circumstances to

16 estimate the amount of tips that its employees will report, and then withhold FICA
17 taes based on those estimated tip amounts. See 26 CFR 3L.3102-3(C)(1) ("(A)n
18 employer may, at his discretion, (withhold the applicable ta) in respect of tips
19 reported by an employee to the employer on an estimated basis.") (emphasis added).

20 Again, the employer is never required to withhold FICA taes frm estimated tips.
21 ORS 652.610(3) prohibits any deductions except for amounts authorized by the
22 employee in wrting or "required to do so by law" (emphasis added). Plaintiffs and

23 the class members did not authorize the withholding of FICA taes from the tips that
Page 16 - CLASS ACTON COMPLANT

JON M. EGAN. PC
240 SIXll S11EE

lELEPHON:(503) 697-3427 . FAX: (866) 31 1.5629
IN~EGANLEGALTEAM.COM
EXHIBIT 1
Page 17 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 18 of 70
Page ID#: 29
1 STARUCKS "imputed" to them, and STARBUCKS was never required by law to

2 withhold those taes. These deductions for FICA taes are therefore ilegal under
4 ~
3 Oregon law.
5 STARUCKS also didn't follow the required procedures to estimate tips, so its
6 deductions from Plaintiff' paychecks were not authoried by law, either. When
7 estimating tips for purposes of witholding FICA taes, employers are only allowed to
8 estimate the amount of tips each employee will report during a given calendar
9 quarter. See 26 CFR 31.3102-3(c)(I) ("(A)n employer may, at his discretion,
10 (withhold the applicable ta) in respect of tips reported by an employee to the

11 employer on an estimated basis.") (emphasis added). STARBUCKS specifically
12 instrcts employees not to report any tips up to 50~ per hour, so it cannot in good
14 27.
15 STARUCKS also always "imputed" the same amount of 17 CFR 3L.3102-3(c)(1)(i) ("In respect of each employee, make an estimate of
13 faith estimate that those same employees will report those tips.
tips to each and every
16 employee. It is supposed to estimate each employee's tip reportng separately. 26
the
18 amount of tips that will be reported ... by the employee to the employer in a calendar
19 quarter."). If all affected employee share substantially the same circumstances and
20 working conditions, an employer is allowed to use the same initial estimate for all of
21 them, but that estimate is supposed to be individually revied for each employee after
22 their first quarter of
reported tips. 26 CFR 31.3102-3(c)(2)(ii) ("!fthe quarerly
23 estimate of tips in respect to a partcular employee continues to differ substantially

ON M. EGAN. PC
240 SIXTH SlR

LAKE OSWEGO. OR 97034-293 i
FAX: (866) 311-5629 TEUlPHON:(S03)697-3427 . INPOCdlEGAIlUlGALTEAM.CO
EXHIBIT 1
Page 18 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 19 of 70
Page ID#: 30
1 from the amount of tips reported by the employee, ... the employer shall make an
2 appropriate adjustment of his estimate of the amount of tips that will be reported by 3 the employee. "). Plaintiff never reported any tips to STARBUCKS (per
their first quarters of 4 STARUCKS's own instrctions), so after each of
work,
S STARBUCKS should not have been "estimating" any tips for them whatsoever. Before
6 this litigation was filed, Plaintiffs requested that STARUCKS produce copies of any
7 tip report that they ever submitted, as well as the factors upon which it relied in
8 making its tip estimates and its reasons for believing that the estimates were
9 reasonable. 26 CFR 3L.3102-3(C)(2)(iii). ("The employer must be prepared, upon
10 request ... to disclose the factors upon which he relied in making the estimate, and his
11 reasons for believing that the estimate is reasonable." STARBUCKS never produced
13 28.
12 any.
14 Tips ofless than $20 in a calendar month are not considered "wages" for FICA
15 withholding. 26 CFR 31.3121(a)(12)-I(b). That means that any employee working
16 less than 40 hours in a given calendar month should not have FICA taes withheld
17 from their paycheck for that month (at the rate of soc of "imputed" tips per hour,
18 $20 in tips would equate to 40 hours for the month). "While $20 in tips per month is
19 not very much, employees who start employment, leave employment, or
take
20 vacation or sick leave within a partcular month may well earn less than that." Fior
21 D'Italia, Inc. v. United States, 242 F.3d 844, 847 n.s (9th Cir. 2001). STARUCKS
22 withholds the same FICA taes from its employees' paychecks for "imputed" tips
23 whether or not those employees actually receive $20 in tips in a given calendar

JON M. EGAN, PC
240 SIXLL SlRT

LAKE OSWECi, OR 97034-2931 TlHONE: (503) 697-3427. FAX: (866) 311-5629
INFO(EGANLEGALTEAM.COM
EXHIBIT 1
Page 19 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 20 of 70
Page ID#: 31
1 month.
2
3 Potential Additional Violation (Information and Beliet)-
5 29.
4 Workers' Benefit Fund Deduction Claims
6 The Workers' Benefit Fund is a program that provides various benefits to workers
7 injured on the job in Oregon. The program is funded by an assessment that every
8 employer and employee pays to the State of Oregon, based on the number of
hours
9 worked by that employee. The assessment rate is a number of cents for each hour
10 worked by the employee, split evenly between the employee and the employer. Since
11 2007, for example, the assessment rate has been 2.8~ per hour, with the employer
13 30.
12 paying 1.4~ per hour and the employee paying L.4(\ per hour.
14 In the first two pay periods of Hannah Fredrickson's employment, she had too
15 much money withheld from her paycheck for the Oregon Workers' Benefit Fund
16 assessment. STARUCKS deducted Workers' Benefit Fud assessment from her

17 check as if she had worked 80 hours more than she actually did in each of those two18 week pay periods. She did not authorize that overdeduction, and STARBUCKS was
20 3L
19 not required to deduct it by law, so the deduction was ilegaL.
21 The regular Workers' Benefit Fund amount is marked "WORCOMP" on
22 STARUCKS's internal records, and the additional overdeduction amount is marked

23 "T: WORCP". Because of the letter "T" in that code, the overdeducton may have
JON M. EGAN. PC
240 SIXLL SlRT

lAE OSWEGO. OR 97034-293 J 1lLEPHON: (S03) 697.3427 . FAX: (866) 3 JI.S629 1N00alEGANLIGALJEAM.CO
EXHIBIT 1
Page 20 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 21 of 70
Page ID#: 32
1 something to do with the tips imputed to Ms. Fredrickson. Al we know now is that
2 STARUCKS set up its computer system to allow that to happen; we won't know
3 whether it did the same thing to other Plaintiffs and class members until we have
4 obtained furter discovery on this issue (though Plaintiffs believe it to be likely).

5
6 Potential Additiona Violation (Information and Belief)-
8 3~
11 counted as part of
7 Unpaid Break Claims
9 Oregon law requires employers to pay for aU breaks tht are shorter than 30
10 minutes. Break shorter than 30 minutes are considered "rest periods," and they are
hours worked. A bona fide "meal period" is an uninterrpted
12 period of 30 minutes or more, where an employee does no work and has time to eat a
4 33.
13 full meaL. Bona fide meal periods are not counted as part of
hours worked.
15 On at least nine occasions, Hannah Fredrickson took a break of less than 30

16 minutes and was not paid for that time, totaling almost 2.5 unpaid hours. That is
17 ilegaL. Again, all we know now is that STARUCKS set up its computer system to
18 allow that to happen; we won't know whether it did the same thing to other Plaintiffs
19 and class members until we have obtained furter discovery on this issue (though
20 Plaintiff believe it to be likely).
21 III 22 III 23 III

Page 20 - CLAS ACTION COMPLAINT
JON M. EGAN. PC
240 SIX SlREET

LAK OSWEGO. OR 97034-2931
1lLEHONE: (503) 697-3427. FAX: (866) 3\ 1-5629 lNOfEGANLEOALTIAM.COM
EXHIBIT 1
Page 21 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 22 of 70
Page ID#: 33
2 U
7
1 CLA ALLEGATIONS
3 As enumerated above, STARUCKS engaged in acts and practices that violated

4 the Class members' rights under state wage and hour laws. The class that Plaintiffs
5 seek to represent is all current and former Oregon employees of STARUCKS who
6 reported or were imputed tips.
8 NUEROSIT
9 35.
10 The Class is so numerous that
joinder of all members is impractical. We estimate
11 that the class will potentially include hundreds or even thousands of employees.
12 STARUCKS's web site indicates that there are over 100 STARUCKS locations in
13 Oregon.
14
16 '36.
15 COMMONALIT
17 There are questions of law and fact common to the Class, which predominate over
18 any isues involving only individual class members. The principal questions include
19 whether tips (imputed or not) are "wages" for purposes of Oregon withholding law,
20 whether cah tips collected and distrbuted strctly according to an employer's wrtten
21 policies but never handled or counted by the employer or its managers count as being
22 given directly by a customer to an employee for purposes of Oregon withholding law,
23 whether the deduction of Oregon income taes from employees' paychecks for tips is

ION M.EGAN. PC
240 slXni S1REEl'

LAKE OSWEGO. OR 97034.2931
'TU!PHONE: (S03) 697.3427 . FAX: (866)311-5629 INO(EGANLEOALTEAM.COM
EXHIBIT 1
Page 22 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 23 of 70
Page ID#: 34
1 contrary to Oregon law, whether such deduction is willfl as that term is defined in
2 Oregon law, whether the tips that STARB UCKS "imputes" to the employees are
3 "allocated" tips or "estimated" tips, whether STARBUCKS violates ORS 652.610(1) by
4 jumbling and combining wage and tip taes on the employees' pay stubs, whether
5 STARUCKS and/or its individual locations meet the definition oflarge food and
6 beverage establishment, whether STARUCKS follows the requirements to report
7 estimated tips to the government for its employees, whether STARBUCKS is
8 "required" to withhold federal income and FICA taes from the taxes it imputes to the
9 employees, whether the deduction of an amount for taes that is under some
10 circumstances allowed (but not required) by federallaw violates ORS 652.610(3) and
11 (for all of
the alleged violations) what remedies are available to the affected
12 employees.
14 lYPICALI1
13
15 37.
17 a. Plaintiffs are members of
16 Plaintiffs' claims are tyical of those of the other Class members because:
the Class.
18 b. Plaintiffs' claims stem from the same practice or course of conduct that forms
19 the basis for the Class claims.

20 c. All of
the Class members' claims are based on the same facts and legal theories.
21 d. There is no antagonism between the interests of Plaintiffs and the Class

22 members, because their claims are for damages provided to each Class member
23 by statute.
JONM.EGAN.PC
240 SIX1H S11I

LAKE OSWEGO. OR 97034-2931 1lLEPHON: (503) 697-3427. FAX: (866) 311-5629 lNPC(a)GANLEGALTEAM.CO
EXHIBIT 1
Page 23 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 24 of 70
Page ID#: 35
e. The injuries that Plaintiffs suffered are similar to the injuries that the Clas
members suffered, and they are relatively small compared to the expense and
burden of individual prosecutions of this litigation.
4
5
f. The prosecution of separate actions by the Class members could either result in
inconsistent adjudications establishing incompatible pay practices or, as a

practical matter, dispose of the legal claims of Class members who are not
partes to such separate adjudications.
6
7
8 9
10
11
Plaintiffs will fairly and adequately protect the interests of
ADEQUACY OF REPREENTATION BY PlANTIFFS

38.
the Class because:

the other Class
12
13
a. There is no conflct between Plaintiffs' claims and those of
members.
b. Plaintiffs have retained counsel experienced in handling wage-and-hour class
actions, who has already devoted substantial time and resources to
14
15
16
17
investigating the Class members' claims and will vigorously prosecute this
litigation.
18
c. Plaintiffs' claims are tyical of the claims of Class members in that their claims
19
stem from the same practice and course of conduct that forms the basis of the
Class claims.
20
21
III III
III
22
23

IONM.EOAN.PC
240 SIX'I STREE

LAK OSWEGO. OR 97034.293 J
1lLEPHON: (503) 697.3427. FAX: (866) 31 1.5629
l1lXGANLEGALTEAM.COM
EXHIBIT 1
Page 24 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 25 of 70
Page ID#: 36
2 39.
1 SUPERIORI OF CLAS METHOD
3 A class action is superior to other available methods for the fair and effcient
4 adjudication of the controversy, for at least the following reasons:
5 a. The common questions of law and fact described in paragraph 36 predominate

6 over questions affecting only individual members, and the questions affecting
7 individuals primarily involve only caculations of individual damages;

8 b. Individual Class members would have little interest in controllng the
9 litigation due to the relatively small size of most claims and because the named
10 Plaintiffs and their attorney will vigorously pursue the claims on behalf of the
11 class members;
12 c. No other similar litigation has been commenced, but if commenced, it can be
13 coordinated under ORCP 32K;

14 d. This is a desirable forum because STARUCKS operates many locations in this
15 county and many class members reside here; and

16 e. A class action will be an effcient method of adjudicating the claims of the
17 Class member employees.

18
19 PRELmGATION NOTICE
20 Long before this lawsuit was filed, Plaintiffs' counsel exchanged numerous
21 documents and correspondence with STARUCKS's counseL. More than 30 days
22 prior to their filing this lawsuit, Plaintiffs served the prelitigation notice attched
23 hereto as Exhibit A (which includes the proofs of delivery). Plaintiffs' counsel and

JON M. EGA, PC
24 sixm SlRET
1lLEPHONE: (503) 697-3427 . FAX: (866) 311-5629 INO(EGANLEGALTEAM.COM
EXHIBIT 1
Page 25 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 26 of 70
Page ID#: 37
1 STARUCKS's counsel have exchanged correspondence and spoken via telephone

2 regarding Plaintiffs' prelitigation notice, but STARBUCKS has not undertken the
3 ORCP 321 safe harbor process of notification, compensation, correction, remedy and
4 cessation. Exhibit A satifies any and all prelitigation notice requirements in this
5 case, whether contained in ORS 652.150, ORS 652.200, ORCP 32H or otherwse.
7 FIRST ClAM FOR RELIEF
10 All previous paragraphs are incorporated by reference herein.
14 those wages were due, but willfully failed to do so.
9 40. 11 ~ 15 42.
8 (Oregon Minimum Wage Claim)
12 Pursuant to ORS 653.025, ST AR UCKS was required to pay Plaintiff and the
13 Class members at least the amount of the applicable Oregon minimum wage, when
16 For such violation(s), Plaintiffs and the Class members are entitled to collect the
17 difference between their wages received when due and the Oregon minimum wages
18 due in an amount to be proven at trial, together with attorney fees and costs, as well
19 as pre- and post-judgment interest and the 30 days of statutory penalty wages
20 provided by ORS 653.055 and 652.150.
21 III 22 III 23 III

JON M. EGAN. PC
240 SIXll SlRET

LAKE OSWEGO. OR 97034-293 i
TELEHON: (503) 697-3427. FAX: (866)3/1-5629 INFOCGANLlGALlEAM.CO
EXHIBIT 1
Page 26 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 27 of 70
Page ID#: 38
1 SECOND CLAM FOR REUEF
3 ~. 5 #
9 to do
2 (Oregon Overtme Claim)
4 All previous paragraphs are incorprated by reference herein.
6 Pursuant to DRS 653.261, STARUCKS wa required to pay Plaintiffs and the

7 Class members one and one half times their regular rate of pay for all hours worked
8 in excess of 40 in a given workweek, when those wages were due, but willfully failed
10 45.
so.
12 difference between the wages received when due and the overtme wages due in an
13 amount to be proven at tral, together with attorney fees and costs, as well as pre- and
14 post-judgment interest and the 30 days of statutory penalty wages provided by ORS
15 653.055 and 652.150.
16
17 THIRD CLA FOR REUEF
20 All previous paragraphs are incorporated by reference herein.
19 46. ~ ~
18 (Oregon Unpaid Wages Upon Termination Claim)
22 Pursuant to ORS 652.140, STARUCKS was required to pay Plaintiffs and the
23 Class members all wages due by the statutory deadline upon termination of their
Pa~ 26 - C~S ACDON COMPVNT

JON M. EGAN. p 240SLXLL STREET
LAKE OSWEGO. OR 97034.2931
TlLBPHON: (503) 697.3427. FAX: (866) 311.5629

lNP~BGANLEGAL TEAM.COM
EXHIBIT 1
Page 27 of
70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 28 of 70
Page ID#: 39
2 ~
7
1 employment but willfully failed to do so.
3 For such violation(s)~ Plaintiffs and the Class members are entitled to collect all
4 wages remaining due, in an amount to be proven at tral together with attorney fees
5 and costs, as well as pre- and post-judgment interest7 and the 30 days of statutory
6 penalty wages provided by ORS 652.150 and ORS 652.200.
8 FOURTH ClAM FOR RELIEF
10 49. 12 50. ~ 5L
19
9 (Oregon Wrongfl Deductions Claim)
11 Al previous paragrphs are incorporated by reference herein.
13 Pursuant to ORS 652.610, STARUCKS was prohibited from deducting certin
14 amounts from the paychecks of Plaintiff and the Class members but willfully did so.
16 For such violation(s), Plaintiffs and the Class members are entitled to the greater
17 of $200 or actual damages in an amount to be proven at tral, together with attorney

18 fees, costs and pre- and post-judgment interest7 pursuant to ORS 652.615.
20 FIFlH ClAM FOR RELIEF
22 52.
Pa~ 27 - CLASS ACTON COMPUUNT
21 (Oregon Unpaid Wages Claim)
23 All previous pargraphs are incorporated by reference herein.
JON M. EGAN, p
240 SLXLL SlRT

I.AKE OSWEGO. OR 97034-293 i 1'LEPHON:(503) 697-3427 . FAX (866) 311-5629 1N00GANLEGfoTEAM.COM
EXHIBIT 1
Page 28 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 29 of 70
Page ID#: 40
1 53. 5 ~
4 so.
9
2 Pursuant to ORS 652.120, STARUCKS wa required to pay Plaintiffs and the
3 Class members all wages due, when those wages were due, but willfully failed to do
7 wages due (if any) in an amount to be proven at trial, together with attorney fees and
8 costs, as well as pre- and post-judgment interest per ORS 652.200.
10 PRAYER FOR RELIEF

11 WHEREFORE, Plaintiffs request that the Court issue an order designating this
12 action as a class action and appointing the undersigned counsel as counsel for the
13 Class; issue a declaration that the Class members' rights under Oregon law have been
14 violated by STARBUCKS's policies as specified above; enjoin STARBUCKS from
15 deducting or withholding any Oregon income.
taes from its Oregon employees'
16 future paychecks for any tips whatsoever (whether "imputed" or otherwse); enjoin
17 STARUCKS from deducting or withholding any federal income taes or federal

18 FICA taes from its Oregon employees' future paychecks for "imputed" tips; award
19 such damages as set fort above and in amounts to be proven at tral; award the
20 attorney fees, costs and expenses of suit of Plaintiff and the other Class members;
21 order STARUCKS to pay pre-judgment and post-judgment interest on all amounts

22 due to Plaintiffs and the other Class members; and order such furter or alternatie
23 relief as the Court deems appropriate.

Page 28 - CLAS AClrON COMPLANT
JO!' M. EGAN. PC
240 SIX1 STREET

1lLEPHOI: (503) 697-3427. FAX: (866)311-5629 lNO(EGALEGALTEAM.CO
EXHIBIT 1
Page 29 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 30 of 70
Page ID#: 41
1 JURY
DEMD
2 Plaintiffs hereby demand a tral by jury.
4 DATED this 10th day of December, 2012
5 JON M. EGAN, P.C.

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22 23

240 S1Xll SlR
LAKE OSWEGO. OR 97034-2931 l'LEPllONE: (503) 697.3427 . FAX: (866) 311-5629
INf()EOANLEGALTEAM.COM
JON M. EGAN. p
EXHIBIT 1
Page 30 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 31 of 70
Page ID#: 42
Exhibit A to Complaint
Fredrickson et al. v. Starbucks Corporation
21 total pages in Exhibit A
Pa2es
1-8
9 10
11
Document
November 6,2012 Prelitigation Notice
12 1~ 14 15 16 17 18 19
November 6, 2012 fax cover sheet for same November 6, 2012 fax confirmation sheet for same November 6, 2012 cover email for same November 7, 2012 email read receipt for same November 6, 2012 Certfied Mail Receipt ending 5036 November 7, 2012 US Post Offce Track & Confirm ending 5036
November 7, 2012 Return Receipt ending 5036
November 6, 2012 Certfied Mail Receipt ending 8685 November 7, 2012 US Post Offce Track & Confirm ending 8685
20
21
November 6,2012 Certified Mail Receipt ending 8692 November 8, 2012 US Post Offce Track & Confirm ending 8692
JON M. EGAN. PC
240 SIX1H STREET LAKE OSWEGO. OR 97034-2931

1lU!PHONE:(S03) 697-3427. FAX: (866) 311-S629 INF0(EGANLEGALTEAM.COM
EXHIBIT 1
Page 31 of 70
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 32 of 70
Page ID#: 43
.Jon M. Egan, PC Attorney at Law

November 6,2012
240 Sixt Stree
Lake Osweo, OR 97034-2931
telephone: (503) 697-3427

facimile: (866) 311-5629
Jeganteganlegalteam.com
ww.egnlegalteam.com
Va Certified Frst-Class u.s. Mail, Return Receipt Requested
Starbucks Corporation Starbucks Corporation c/o Prentice-Hall Corporation System, Inc. 2401 Utah Ave. S., Ste. 800 Registered Agent MSS-LA1 285 Libert St. NE Seattle, WA 98134 Receipt No. 7008 2810 0001 1032 8692 Salem, OR 97301
Receipt No. 7008 2810 0001 1032 8685
Also faxed and emailed to: Christie Totten
Portand, OR 97201
Davis Wright Tremaine, LLP 1300 SW Fift Ave., Ste. 2400
Fax: (503) 778-5299
ChritIetotten~dwt.com
Receipt No. 7008 0150 0003 2549 S036
Re: Hannah Fredrickson, Ashley Krening and Maurialee Bracke v. 8tarbucks Corporation
Nonpayment, ORS 652.200 Written Notice ofa ORS 652.150 Written Notice of Wage Claim, ORCP 32H Notice of Alleged Causes of Action and Demand for Correction or Rectification of Aleged Wrongs, and Spoliation Notice
Dear Ms. Totten and Starbucks Corporation:
I write to give wrtten notice of non payment and written notice of a wage claim on behalf of my clients (Hannah Fredrickson, Ashley Krening and Maurialee Bracke) and the various respective class and subclass members who share their situation, and to give rectification ORCP 32H notice of alleged causes of action and demand for correction or of alleged wrongs. In order to more fully elucidate the issues, this letter begins by
addressing the claims in Ms. Totten's May 23, 2012 letter (copy enclosed), after which
the claimants' specific statutory allegations, damages and demands follow.
First, Ms. Totten claims in her letter (without citing any basis) that Starbucks is "excepted" from the definition oflarge food and beverage establishments (and therefore the requirement to allocate tips). I see no applicable exception in the statute or regulations. What is the basis for the claimed exception?
Second, Ms. Totten did not address Oregon law and its prohibition against withholding Oregon taxes from tips. Oregon law does not allow any withholding from tips received
direcly from customers. ORS 316.162 defines wages for witholding purposes as "remuneration for servces performed by an employee for an employer." The language of
OAR 150-267.380(2) that was operative throughout my clients' employment clearly
states that, "Tips are not treated as Wages since they are not subject to withholding
under ORS Chapter 316." And the Oregon Department of Revenue's Frequently Asked
Exibit Page 1 of
A
21
Exhibit 1 - 32
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 33 of 70
Page ID#: 44
Letter to Christie Totten and Starbucks Corporation November 6, 2012
Page20fs
Withholding Questions, ~http: / Jww.oregon.gov/DORJBUSJfaq-withhold.shtmb,
clearly states, "8. How does Oregon treat withholdig on tip income? Tips paid
by the customer to the employee are not subject to withholding tax. Tips paid by the
customer to the employer who then distributes them to the employees are subject to withholding.". All of the subject tips were paid directly by the customers to the
employees. Furter, "wages" are defined identically in the unemployment benefits
statute (ORS 657.105), and the Oregon Court of Appeals has affrmed the Employment Appels Board's fiding that, as stated in the Oregon Administrtive Rules, "Gifts, tips, or other gratuities received by an employee during the course of his employment from
persons other than his employer are not wages." Callahan v. Employment Div., 80 Or.
App. 401, 403, 722 P.2d 1275,1276 review denied, 302 Or.
158, 727 P.2d 128 (1986).
The deduction of Oregon income taxes from the employees' tips (both "imputed" and
otherwse) was therefore ilegal under Oregon law. ORS 652.610(3).
Third, Ms. Totten attempted to classify Starbucks's "imputed" tips as "estimated" tips under 26 CFR 31.3402(h)(i)-I(b), not "allocated" tips. Nice tr.
The fact that Starbucks reported employees' "imputed" tips in box 1 of their W-2S is not evidence of anyting except a(nother) violation offederal law. Only tips specifically
reported to the employer by the employee are supposed to be included with wages in
remuneration in the form the W-2. 26 CFR 31.6051-i(a)(1)(vi) ("In the cae of of tips received by an employee in the course of his employment, the amounts required to be shown by paragraphs (3) and (5) of section 6051(a) (see paragraph (a)(I)(i)(C) and
box 1 of
(e) of this section) shall include only such tips as are reported by the employee to the employer in a wrtten statement furnished to the employer pursuant to section 6053(a).''). See also Instructions for Forms W-2 and W-3 ("Include the following ... (3)
Total tips reported by the employee to the employer (not allocated tips). ").
withholding FICA and federal income taxes, employers are only allowed to estimate the amount of tips each employee will report during a given calendar quarter. See 26 CFR 3L.3102-3(c)(1), 31.3402(h)(i)-I(b)(i) ("(A)n employer tips reported by an may, at his discretion, (withhold the applicable tax) in respect of
Similarly, for purposes of
employee to the employer on an estimated basis.") (emphasis added). Starbucks's policy

specifically instrcts employees not
to report any tips up to 50C per hour, so it cannot in
good faith estimate that those same employees will report those tips.
Moreover, Starbucks has "imputed" the same amount of tips to each and every employee throughout the statute of limitations period, whereas it is supposed to estimate each employee's tip reporting separately. 26 CFR 3L.3i02-3(c)(I)(i), 31.3402(h)(i)l(b)(l)(i) ("In respect of each employee, make an estimate of the amount of tips that will be reported ... by the employee to the employer in a calendar quarer."). If all afected employees share substantially the same circumstances and working conditions, the employer can use the same initial estimate for all of them, but that estimate is supposed to be revised after each employee's first quarter of reported tips. 26 CFR
the quarterly estimate of tips in 31.3102-3(c)(2)(ii), 3i.3402(h)I-1(b)(2)(ii) ("If respect to a partcular employee continues to differ substantially from the amount of
tips reported by the employee, ... the employer shall make an appropriate adjustment of
his estimate of the amount of tips that Will be reported by the employee."). My clients
never reported any tips to Starbuks (per Starbucks's own instructions), so after their
first quarers, Starbucks should not have been "estimating" any tips for them
Exibit Page 2 of
A
21
Exhibit 1 ., 33
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 34 of 70
Page ID#: 45
Page
3 ofS
whatsoever. "The employer must be prepared, upon request ... to disclose the factors
upon which he relied in making the estimate, and his reasons for believing that the
estimate is reasonable." 26 CFR 3L.3lO2-3(c)(2)(iii).
Furter, tips ofless than $20 in a calendar month are not "wages" for the purposes of
federal withholding law. 26 CFR 3l.3121(a)(12)-1(b), 26 CFR 31.340i(a)(i6)-i(b).
That means that any employee working less than 40 hours in a given calendar month
should not have FICA or federal income taxes withheld from their paycheck for that month. "While $20 in tips per month is not very much, employees who start employment, leave employment, or take vacation or sick leave within a partcular month may well earn less than that." For D'Itala, Inc. v. United States, 242 F.3d 844, 847 n.s (9th Cir. 2001). Starbucks withholds the same taxes from its employees' "imputed" tips
whether or not those employees actually receive $20 in tips in a given calendar month.
Next, Starbucks did not base its witholding on any statutorily valid tip statements. Tip
statements "must be signed by the employee and must disclose: (i) The name, address,
and social security number of the employee. () The name and address of the employer. (iii) The period for which, and the date on which, the statement is furnished. If the statement is for a period of less than i calendar month, the beginning and ending dates of the period must be included (for example, January 1 through Januar 8, 1998). (iv) The total amount of tips received by the employee during the period covered:by the
statement which are required to be reported to the employer (see paragraph (a) of this
section)." 26 CFR 3i.6053-1(b)(i).

Since my clients never signed any paper tip statements (and Ms. Totten certainly has not provided me with any for Ms. Fredrickson), I can only assume that Starbucks is relying on some sort of electronic tip statement. Employers may use an electronic system for employee to report tips, but that system "must ensure that the information received is the information transmitted by the employee and must document all occasions of access that result in the transmission of a tip statement. In addition, the design and operation of the electronic system, including access procedures, must make it reasonably certain
that the person accessing the system and transmitting the statement is the employee identified in the statement transmitted." 26 CFR 3i.60S3-1(d)(I). An electronic tip
statement must provide the same information as a paper tip statement, and it must be signed by the employee. 26 CFR 3i.6053-i(d)(2)-(3). "The electronic signature must identify the employee transmitting the electronic tip statement and must authenticate and verify the transmission. For this purpose, the terms authenticate and veri have the same meanings as they do when applied to a written signature on a paper tip statement." 26 CFR 3i.6053-1(d)(3) (italics in original). Please provide me with
any and all electronic tip statements that 26 CFR 3i.6053-i(d)(4) hard copies of Starbucks claims entitled or required it to withhold taes from wages for tips my clients
received and reported, or upon which Starbucks based any estimate of such tips. See
also 26 CFR 3i.3102-3(c)(2)(ii) and 26 CFR 31.3402(h)1-2(iii) (''The
employer must
be prepared, upon request ... , to disclose the factors upon which he relied in makig the estimate, and his reasons for believing that the estimate is reasonable. ")
Most importntly of all, even if Starbucks were validly estimating its employees' quarterly tips, an employer is never required to withold on estimated tips. "An
employer is required to collect employee tax on tips which constitute wages only in
respect of those tips which are reported by the employee to the employer in a written
Exibit Page 3 of
A
21
Exhibit 1 - 34
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 35 of 70
Page ID#: 46
Page
4 oiS
statement furnished to the employer pursuant to section 6053(a)." 26 CFR 31.3102-3(a)(2), 3L.3402(k)-I(a)(2). See IRS Chief Counsel Advice 200929004, 7/17/09
(holding, in response to an inquiry alleging facts suspiciously identical to those in our cae, that when employees distribute tip jar tips amongst themselves, any unreported
tips are not subject to the employer share of FICA tax unless and until the IRS makes a notice and demand for the taxes from the company). ORS 652.610(3) prohibits any deductions except for amounts authorized by the employee in writing or "required to. do
so by law" (emphasis added). My clients did not authorize the withholding oftaxes from withhold those taxes. The deductions for FICA and federal income taxes are therefore ilegal under Oregon
their "imputed" tips, and Starbucks was not required by law to.
law.
Please consider this letter my clients' ORS 652.1S0 wrtten notice of nonpayment and my ORS 652.200 written notice of their wage claims and ORCP 32H notice of alleged
causes of action and demand of correction or rectification of alleged wrongs. Ms. Totten represented Starbucks in Hannah Fredrickson's Unfair Labor Practice claim (Case No.
36-CA-I080S), and she confirmed in her November 2, 2011 letter that her offce is acting as Starbucks's agent for purposes of receivig prelitigation notices and written requests
regarding wage-and-hour issues as well. In keeping with the requirements of ORCP business and registered 32H(2), I have copied this letter to Starbucks's principal place of
agent as currently lited with Oregon's Secretary of State. Because the violations were
system-wide, and to avoid any unnecessary disruption of Starbucks's business, I have not sent this notice to the individual store managers or physical locations throughout the state. Please let me know immediately if Starbucks does not consider this letter to have completely fulfied Plaintiff' prelitigation notice obligations under ORCP 32H; if you do so, I will immediately forward additional copies of this notice to various
additional locations and individuals as necessary.
Demand
My clients hereby demand that Starbucks immediately cease and desist withholding and/or deducting amounts for federal taxes from its employees' paychecks based upon amounts of tips "imputed" to them, and immediately cease and desist withholding
and/or deducting amounts for Oregon taxes from its Oregon employees' paychecks
based upon tips of any kind (whether "imputed" to them or not).
My clients furter hereby demand that Starbucks return to them and all other Starbucks employees and ex-employees who had Oregon taxes withheld or deducted from their
paychecks based upon tips for employment in Oregon at any time: all Oregon tax
amounts deducted or withheld from their paychecks based upon tips, along with all
applicable prejudgment interest.
My clients furter demand that Starbucks return to them and all other Starbucks employees and ex-employees who had federal taxes withheld or deducted from their
paychecks based upon amounts of tips "imputed" to them by Starbucks at any time: all
federal tax amounts deducted or withheld from their paychecks based upon amounts of tips "imputed" to them by Starbucks, along with all applicable prejudgment interest.
Finally, my clients demand that Starbucks pay them and all other Starbucks employees and ex-employees who had taxes withheld or deducted from their paychecks based upon
Exibit Page 4 of
A
21
Exhibit 1 - 35
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 36 of 70
Page ID#: 47
Pages ofS
tips (whether "imputed" to them by Starbucks or not) for employment in Oregon at any
time: statutory damages of $200.00 per paycheck for every pay period in which such
deductions were made (ORS 652.615); 240 hours of penalty wages, at their final hourly pay rate, for each employee whom any such deduction droppe below the thenapplicable Oregon minimum wage (ORS 653.055 and 652.150); 240 hours of penalty wages, at their final hourly pay rate, for each employee who experienced such a
deducton in any week in which the employee worked more than 40 hours (ORS 653.055
and 652.150); and 240 hours of penalty wages, at their final hourly pay rate, for each
employee whose employment has terminated at any time after such a deduction (ORS 652.150); along with all prejudgment interest applicable to each of these categories of damages.
Please make all checks payable to "Jon M. Egan, PC IOLTA Account."
Spoliation Notice
This will also remind you of Starbucks's duty under state and federal
law to immediately
institute a litigation hold, preservng any and all evdence that may be relevant to this
action in both physical and native electronic format. This includes, but is not limited to, for every employee in Oregon: all time sheets or other records of hours worked, all
employee handbooks and other policy documents, all records of pay and any amounts deducted or withheld therefrom, all paper or electonic tip statements, and all
documents forming the basis for Starbucks's "estimates" of the employees' tips, as well
as all internal or external memoranda or paper or electronic correspondence regarding any discussions, planning, communications, implementation or decision-making processes involving the imputation of tips to Starbucks employees; and any and all other
documents or other evidence that is or may be relevant to this action. This duty extends
to all documents, data and tangible things in Starbucks's possession, custody or control, and any employees, agents, contractors, carriers, bailees or other nonparties who possess such documents, data or tangible things.
I look foiward to working with you to resolve this matter as justly, speedily and as possible. If Starbucks would like to discuss resolution of this matter prior to my institutig litigation (or at any time thereafter), please let me know.
inexpensively Thank
you.
Sincerely,
JME/ml
EneL.
Exibit
Page S'Of21
Exhibit 1 -36
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 37 of 70
Suite
Page ID#: 48
2400 1300 SW Fift Avenue Portland. OR 9nOI-5630
1.11 Wright .. Davis Tremaine LLP
Christie S. Tottci
503-nS-5298 tel
503. nS.5299 fax
ChrisreidWl.om
May 23,2012
Via Enu: Jegananlegalteam.com

Original wnclosure via U.S. Mail
JonM.Egan
Jon M. Egan, PC
240 Six S1.
Lake Oswego, OR 97034
Re: Hanah FredrcksoIlStabucks

Dear Mr. Egan:
I wrte to follow up on your question regarding Imputed Tip Income on your client's pay records. As you know, you asked me to explain the basis for Stabucks' use of a 50-cents-per-hour rate. When we spoke by telephone, you clarfied that you were trg to determne whether Stabucks was makng an unawf witholding from tip income. When I fuer asked for the law upon which you relied, you sent me citations to varous soures regardig witholdings from allocated tips.
In fact, Stabucks does not allocate tips. (It is excepted from the definition of establishment" and therefore not required to fie Form 8027.) You can confirm this yourself
"large food and beverage

by reviwing
"Box 8" on your client's Form W-2. Because Starbucks doe not allocate tips, the varous sources you cite regarding alocations are irelevant.
Allocting tips is a different concept than imputing tips. For your reference, I am attchig languge from Stabucks' Parer Resources Manua that more fully explains imput tips. Stabucks' practice ofimput-
ing tips is wholly lawfl and appropriate. See e.g. 26 CFR 3L.3402(h)(1)-1(b). In addition to that witholding, of course, your client fuher had a legal obligation to accurately report her tips and pay income taxes on tips eared in excess of 50 cents per hour.
DWT i 9415287v I 0024663-002
Anchora
LoAng
inO....ilG)
BelllM
I NGYork SlFnl8o
Pola
Shnghai
I Wesinglon. Set1le D.C.
ww.dwtcom
A Page 6 Of21
Exibit
Exhibit 1 -37
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 38 of 70
Page ID#: 49
JonM.Egan
Re: Srbucks~redric~on May 23, 2012 2 Page
I trst this infonnation addresses your concerns and clarfies that SIabucks' practice of proper. Pleae feel fr to contact me if
imputing tips is
you have additiona quesions or concerns.
Sincerely,
~~~
Chrstie S. Totten
Davis Wright Tremaine LLP
CST:ss
Enclosure
cc: Client
OWT J94JSi87vl 0024663-OOZS02
Exibit
Page 7 Of2~
Exhibit 1-38
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 39 of 70
Page ID#: 50
Partner Resources Manual- U.S.
Pay I
Understanding
Imputed Tips
Federa
law requires that all U.S. parers who receive tips report tip income to
Stabucks. To assist parters in meetng their tip reportng responsbilites and help
ensure they receive Socia Secunty and other benefits, to which they are entitled on
their tips, Staucks imputes tip income at
the rc of$0.50 per hour.
Imputed TIps Policies

Staucks estates that tipped parers receive at lea S0.50 per hour in tips and
report this amoun to the Internal Revenue Servce (IR) on the parters' behaf
This relieves each parer of his or her responsibilty to report ths amoWlt. Parers
ar only responsible for reportg tips if
they eam more than $0.50 per hour in tip
income. The excess mus be reportd through the POS systm.

The $0.50 per hour estma and reportd on behalf of
parers is subject to the
sae wiolding laws as reguareaed income (e.g., hourly wages). Itappea as

a separte line ("Imputed Tip Income") under the Taxable Fringe Benefts secon
of
the paycheck stb. The "Report Tips" line breaks down tips report forile
currnt pay period and the YT amount.

Staucks only estimats and report $0.50 per hour in tips for hours worked when
tips would normally be received by parers. Accordingly, all paid leave including
holiday, vacon, personal days, sick tie, juiy dut and bereavemen as well as
time pad for fcilitating, trning or working events is excluded.

New stores are exempt frm the imputd tips process for their first 12 weeks of
business.
Process for Excluding a Store from Imputed TIps
This pro is in plac to exclude only those stores where parers averae less th
$0.50 per hour in eared tips.
1. The distct manager and stre manager detnnine the case oftl stre's
lower than average hourly tip ra.
2. If it is detennined that the stre has ben under the averae for four
consecutive weeks, the DM must complete the Store Tip Exclusion Fonn, have it signed by his or her regonal directr and submit it to the Corp Tax deparent, mailstop S- TAX, for approval. This form can be foun on
Starbuclc Online;; Refereces & Tools;; Fonns ;; Parer Acton Forms

3. Once aproved, the stre will be exempt from imput tips for the next 12
weeks. At-the eighth week of exemption, the Corp Tax deparent will
conta the DM to check on th sts of
the stre's averae eamed tips. If
the stre's tip aveia has reached the $0.50 perhourminmwn, the stre
the 12th week. Ifnot, the wil be set up to have tip income imputed afr Tax depaent will work with the DM to contiue the exemption.
4. Store paers in the excluded stres must report any ac tips received
via the POS systm.
e 2009 Stucl Cofee Coany. AI ~hts ni. Prte in USA. 6/09
000204
Exhibit Page 8 of
4.9
A
21
Exhibit 1 -49
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 40 of 70
Page ID#: 51
240 Sixth Stree

Lake Osweo, OR 97034-2931
telephoe (503) 697-3427
Jon M. Egan, PC
FACSIMILE
Name: Organization: Fax: Date: Subject:
facsmile (866) 311-5629 jegan(eganlegalteam.com
ww.egnlegalteam.com
TRANSM ITTAL
Christie Totten
Davis Wright Tremaine, LLP
(503) 778-5299 November 6, 2012
Hannah Fredrickson et af. v. Starbucks Corpration

Nonpayment, ORS 652.200 Written Notice of a Wage Claim, ORCP 32H Notice of Alleged Causes of Action and Demand for Correction or Rectification of Aleged Wrongs, and Spoliation Notice 9 (including this page)
ORS 652.150 Written Notice of
Pages:
Comments:
Originals ~ wil D will not follow

Via Certified U.S. Mail, Return Receipt Requested
Also sent via email
Exhibit Page 9 of
A
21
Exhibit 1 -40
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 41 of 70
Page ID#: 52
ue i
fv10n
\0 IVI i- i- Las e r -= i iocn
tor Report
Page: 1 (Last Page)
Loca i Name
Company Logo
..on M. Ega n. PC
..on M. Egan. PC
TOTa I Pages Scanned 9

Transmission Information
Remo t eSt' a "t ion
Tota I Pages Sent 9

Star t Time
5037785.299
11-06;19:38
Contents
Resu I 't
Done
The documents were
sent.
Li o.wi", OR 87llM1
240 Sbd si
. Jon M. Egan, PC
FACSIM rI.E
Jenieco _.~ii""
taml (ee) 311_0
Ill (601617-M7
TRANSMITTAL
Fax: Date: Subject:
Oiiztion:
Name:
Novembur 6. 2012
Chritle Tottn Davi Writ Trmaie. IJ.P (s03) 77-5299
Hannah Frdrckson et al. v. Starbucla Corpation

ORS 652..\0 Wrien Notice of Nonpament. ORS 652.200 Writtn
Notice of a Wage Claim ORCP 32H Notice of Aleg Cause of
Acton and Demand for Corron or Rectfication of Aleg Wrongi, and Spllation Noti
Pages:
9 (Incldi ti page)
Comments:
Originals i: will 0 wil not follow
Via Certed U.S. Mail, Return Recipt Requesed

Also sent via email
Exibit Page 10 of
A
21
Exhibit 1 -41
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 42 of 70
Page ID#: 53
From: To:
Michle Lauzier
Christe Tottn
Jon M. Egan
ec:
Subjec:
Date:
Fredrickson et al. v. Starbuck Corporaion / Notice

Tuesay, November 06, 2012 6:58:28 PM
12-11-06 JME Tottn (faxedl.pdf
Attchments:
Re: Hannah Fredrickson, Ashley Krening and Maurialee Bracke v. Starbucks

Nonpayment, ORS 652.200 Written Notice of a Wage Claim, ORCP 32H Notice of Alleged Causes of Action and Demand for Correction or Rectification of Alleged Wrongs, and Spoliation Notice
Corporation ORS 652.150 Written Notice of
Dear Ms. Totten:
Please see attached correspondence from Mr. Egan, which was also sent to you today by facsimile and Certfied u.s. Mail, Retun Receipt Requested.
Thank
you.
Michle Lauzier Paralegal
Jon M. Egan, PC 240 Sixth Street Lake Oswego, OR 97034-2931 (503) 697-3427 tel.
(866) 311-5629 fax
ww.eganlegalteam.com
Exibit Page 11 of
A
21
Exhibit 1 - 42
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 43 of 70
Page ID#: 54
From: To:
Totten, Christe
M Ichle Layzjer
Subjec:
Date:
Your mesge To: Totten, Chrlste
Read: Fredricksn et al. v. Starbuck Corporation I Notice

Thursay, November 08, 2012 3:48:19 PM
Subject: Frericksn et al. v. Starbucks Corporation I Notice
Sent: Tuesday, November 06, 2012 6:58: 17 PM (UTC-08:00) Pacic Time (US & canada)
was red on Wednesay, November 07, 2012 10:08:51 AM (UTC-08:00) Padflc Time (US & canada).
Exibit
Page 12 of 21
Exhibit 1 -43
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 44 of 70
Page ID#: 55
: ..
~ II
. ~ ti (
0. 8
..~ .. .
Q) -
'ill ...
ern
. Ql
E lIo
c i- Cl
lI~~
: LI '" l Ifii If o l I Ii . m S "i ll' l
i- .giLL c:
~ ~ I I i
60 ~~
.e.~ 8
.!!;:~'g .. II .! .
li:~ii
9EC5 6"52 ECOO 05~O ~OC
.'
Exbit Page 13 of
A
21
Exhibit 1 - 44
Case 3:13-cv-00029-HU
1118/12
English
Document 1-1
Filed 01/08/13
Page 45 of 70
Page ID#: 56
USPS.com:- Track & Confirm

Customer Service
USPS Mobile
Register I Sign In
ilUSPS.COM.
Quick Tools
Search USPS.com orTrack Packages
ShIp a ?ackage
Send Mall
Manage Your Mall
Shop
Buslnus SolutIons
Track & Confirm

GET EMI L UPDATES
PRINT OET~LS
SERVICE
STAIS OF YOUR ITEM
'rUR LABEL NUMBER

700U(\1 $000032~)49::n36
DATE & 'IME LOCA'I0N

i flvelTr 07, 2012, 4:23 am : RJTlNQ OR 97208
FEAlURES
. First.aass Mai~
A"ocessed at USPS
expected Delivery By:

. flvelTr 7, 2012
. Oriin Sort Facill
. Certfied Mail'"
. Return leipt
: Dspatched to Sort
flvelTr 06,2012,3:33 pm LAKE OS, OR
97034
: Facill
; Acceptance
flelTr 06, 2012, 3: 18 pm LAKE Clwa, OR 97034
Check on Another Item

VYafs your label (or receipt) number?
Find
LmAL
A"ivacy Policy) Terms of Use )
ONUSPS.COM
ON ABOUr.USPS.COM
Abou! USPS H:rr ,
OTHER USPS SITES
Governrrnt Services) Buy Stal1s & Shop)

A"int a Label with R:stage 1
Business Custorrr Gateway'

Postal Inspectors )
Newsroom)
Mlil Service Updates)
Forms & Pubcalions ,
FOI ) li FEAR Act EE Ita )
Inspector General,
Custorrr Service )
S~e Index)
Postal Ex plore, ,
Careers)
..: ,'Jpr~ ~ II it/\) ,.\.J :..' i. ~":i."': i\ II l.d~'ii,., !~I ,','.r ....":
Exibit
A
1/1
hltps:fltools.usps.comlgolTrackConfirmAction.acton
Page 14 of 21
Exhibit 1 -45
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 46 of 70
Page ID#: 57
I.~'. l ii ' Igl ..

~,~,~:i . ff
.....~url.~..:. . .~ . DO l. g! I
c; ~
..... L:rl" .",~~L. .........

.Ili~i . ::i. ':~gll . . l:'
LM .!
:i' . 'll'" :: N
.:.... "I 15 . Q. ..
:r '.' .41 ..;~ c i- g
8.
....;-1 c J' .
::;.il !I:1 :', '. : Q i
il:l:1 ~... . : , "; ~
.1
U
II i
I1 ~ \' f
",''fl. :1:.0. .,1 ti, ~" ; ~ ~0) r.. .. ,H ""..
:lllij":l :~iu.~;
'. .. ~1i1i6 . 'C S; 8 'S
'jlil~l Gg~~ :'1' :'.:511:_' ..:t ~~i

..
Exhibit
Page 15 of 21
Exhibit 1 -46
Case 3:13-cv-00029-HU
U.S. Postal Service, '
IQ
i: ..
(Domestic Mail Only; No Insurance Coverage Provided)
LI
CERTIFIED MAIL. RECEIPT
rr
c:
$1.30 $2.95
ru
sOli6l C I A L
Document 1-1
Po .
J
i: $2.35 i: (Eiic~~ i: SO.GO ,. i: ToI Po 6 F- $ l6.60 ru i: Starbucks Cororation i: c/o Prentice-all Corporation System. Inc., Registered Agent i: ~ 285 Liberty St. NE
,. ,. i:
Ci Fe
Filed 01/08/13
(=:~
Page 47 of 70
Salem, OR 97301
m~
'fr ~~ ;: 0' 9-
- cf
Page ID#: 58
~ 0 0-C' ... I I\ r-
...
~.. ~
-.
Case 3:13-cv-00029-HU
111e112
English
Customer Service
Document 1-1
Filed 01/08/13
Page 48 of 70
Page ID#: 59
USPS.CO~ - Track & Confirm

USPS Mobile
Register I Sign In
6JUSPS.COM.
QuIck Tools
Search USPS.com or
Track Packages
Ship a Package
Send Mall
Manage Your Mall
Shop
Builness Solutions
Track & Confirm

GET EMAL UPDATES
PRINT OET~LS
YOUR lAEL NUMBER
SERVice
STATS OF YOUR ITEM
DATE&nME
LOCAnON
FEAlURES
;0087.810000110321;685
. Rrst-Oass Mlir&
. Celiered
, IIverrr 07, 2012, 11:46 am : SALe. OR 97301
. Expected Dellvery~:
IIverrr 8, 2012
certie Mlil '"

Return Receipt
A'ocessed at lJ
N:verrr 07,2012,4:56 am SALBv OR , N:errr 06, 2012, 3:33 pm ! LAKEOSO, OR
97301
Ongin Sort Faclit

Ospalched to Sort
97034
Faciit
Acceptnce
N:verrr 06, 2012, 3:18 pm LAKEOSO, OR 97034

Vlafs your label (or receipt) numbet?
Rnd
LAL
Pracy R:lby )
Terms of Use )
ONUSPS.COM
ON ABUT .USPS.COM
About liPS I-rr i
OTH~ USPS SITES
Governrrnt Servbes ) Buy Starrs & Shop)

A'int a Label w it R:slage ,
Business Custorrr Galeway )

R:stallnspectors i
Inspetor Generali
I\wsroomi
Mail Servbe Updates i
FQl )
li FEAR Act EE Data )
Custorrr Service i
S.e Index,
Form & AJblications i
R:stal Explorer,
03reers,
, ;:.p-..i i:ili(f.' -'f i!.' i (~i~~. ,. i j..!;.!: il"', :;,.'.:., '1-., (". ~
Exibit
A
1/1
https:llools.uspS.comlgofTrackConfirmAction.aclion
Page 17 of 21
Exhibit 1 -48
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 49 of 70
Page ID#: 60
Ii
~ c
1
..
.....1 ..... ,iI. - l l . ,.~ ,Ii ~:l ~ I l ..' ~ . i:i:i ,; .

:;I;~~ , l..jlq~;dl"'::II:J' ; ~:: ," k~'!I1it l . " .' ..~i:i: ~ cI ij
, :i.i.~, ~~ _. P1:~..-...I
, 11'.1 ~"ln61 . l~. Rui" ,1. l~~!l . 11 : ., .ii illl= ~iil~ ~ . .. .,l.g ~~l'l ~ l!" ri
.I~ ;!'l-', - ; ~ 1 ~; s; I i r
:i ji~i,l,lil. .. l g
fl!:~~$; . l 1-
Exhibit Page 18 of
A
21
Exhibit 1 -49
Case 3:13-cv-00029-HU
U.S. Postal Service
..
EO
ru
(Domestic Mail Only; No Insurance Coverage Provided)
CERTIFIED MAIL RECEIPT
ir
Document 1-1
ru
siLFwSailC I A L
Po s
$1.30
", c r' r'

Ci Fe
$2.95 $2.35
CJ
c: c: Rl De Fe c: (Eidai..meill Re r"
EO
(E Re
$
Re RI Fe
ru
cO I Starbucks Cororation
Filed 01/08/13
Tai Pa & i: rs
~ ~~~~~ Ave. 5., Ste. 800 _......._..__.._-_._~_.._..._..

Seale, WA 98134
Page 50 of 70
m ix ~
Page ID#: 61
fr ro ~ _.\0 ~ ... :: .~ 0 0" i ~... rCJ f\ ..
:: Ot
o ~ 10
Case 3:13-cv-00029-HU
Document 1-1
Filed 01/08/13
Page 51 of 70
Page ID#: 62
English
Customer Service
USPS Mobile
Register J Sign In
j;USPS.COMQuick Tools
Search USPS.com or
Track Packages
Ship a Package
Send Mill
Manage Your Mall
Shop
Buiin... Solutloni
Track & Confirm

GET EMIL UPDATES PRINT OET.lLS
'fUR LAEL NUMBER SERVICE

70082810000110328692
First.Oass Mail
STIUS OF 'fUR ITIM
DATE& liME : IIveri 08, 2012, 9: 11 am
LOCAnON
FEA RES
: Expected Delivery By;
Deliered
: SETTE, WA 98134
: N:errr 8,2012
, Qrt~ied Mai'"
: Rern Receipt
Processed at US
Orgin Sort Facil
Dspatched 10 Sort
N:errr 08, 2012, 2:59 am
; SEATTE, WA 98168
f'verrr 06, 2012, 3:33 pm
LAKE0S0,OR97034
LAKE 0S0, OR 97034
!
Facilit
Acceptance
N:errr 06, 2012, 3: 19 pm

Wlafs your label (or receipt) number?
Find
LEGAL
ONUSPS.COM
ON ABUT.USPS.COM
About US l-rr ,
OTHER USPS SITES
Privacy Policy)
Governrrnt services i
Buy St"lS & Shop'
Business Cuslorrr Gateway'

Postal Inspeclors i
Inspector General i
TerlT of Use ,
FOIA ,
Nesroom,
Mail service Upates i
Forms & P.blications )
Print a Label w rth R:stage )
li FER Acl ff Dela ,
Custorrr service i
Site Index i
Postal Explorer,
Gareers)
l.J'l,,,I~itii\r.; .i;i,'-' ~:.j:-~ ,\:i,"ili\. i'."~'.,ri' .(:!
Exibit Page 20 of
A
21
Exhibit 1 -51
Case 3:13-cv-00029-HU
.~~~~u~r
. Prnt yol' an ~. ti. th nJ
80 that WlCal'ro thc:an:ftoyo. i . . Ath this c: to th ba of th ma~ .
or on th
Document 1-1
1. Ai Ad to
Starucks Corporation
fr If spac pe !
2401 Utah Ave. S.. Ste. 800
MSS-LA1
. Seatle. WA 98134
a.
Filed 01/08/13
Page 52 of 70
PS Fo 3811, Feb 20 ~ Re.__. . h.i' .J! '_~5.1
2. Ai Ni .... h..h. ..' . '_h' . .. . (lfr.n li 71J IJ a 2 ailJ .JJI IJ 1 :L IJ 3 2 861:2., r'
4. Re e i Fe C Ye .."
o Ins Ma 0 C.O.D. .
C Re 0 Re Replfo ~Il
e. Ma.' C El Ma
m " X :
:: ~ ~
Page ID#: 63
Q: ~ 9-
- ...
~ S- .. ~ , ~ ~ I\

Fredrickson v. Starbucks Corporation

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Fredrickson v. Starbucks Corporation

Uploaded by

Copyright:

Available Formats

Case 3:13-cv-00029-HU

IN THE CIRCUI COURT OF THE STATE OF OREGON

FOR THE COUN OF MULTNOMA

HANNAH FREDRICKSON, ASHLEY Case No. 1212 -15734

CLAS ACTION COMPIANT

ST ARUCKS CORPORATION, a Washington corporation,

Jury Trial Requested

Filng fee of $755 per ORS21.160(1)(d)

Page 1 - CLAS ACTON COMPLAINT

240 SIX STREET

2 their counsel requested additional documents, information and legal citations to

6 from company-wide policies, as well as based on the reaonable information and

20 At all times material herein, Plaintiff were residents of

Page 2 - CLASS ACTION COMPLANT

1 Defendant STARUCKS is a Washington corpration doing business in

taes from its

11 . belief, Hannah Fredrckson's records reveal additional potential violations regarding

Workers' Benefit Fund asessments and wrongfl

18 TIp Deduction Claims-Wrongf Deducton of Oregon mcome Taxes,

19 Federal mcome Taxes and FICA Taxes

21 STARUCKS customers leave a substantial amount of cah tips every day in

10 tips to STARUCKS-indeed, STARUCKS specifically discourages its employees

13 the assumed amount of tips they received.

15 Oregon law prohibits an employer from taking any deductions out of an

Page 4 - CLASS AClION COMPLANT

240 SIXll SlR EET

TELEHCM: (503) 697-3427. FAX: (866)311.5629

1 Executive Assistant to the Commissioner of the Oregon Bureau of Labor, tetified to

employee have not voluntaly consented to those

12 deductions in wrting, so the deductions are ilegal unless STARUCKS is "reqired

13 ... by law" to make them. It is not.

15 Oregon Income Tax Deducton Claims

20 withholding purposes as "remuneration for servces penormed by an employee for an

22 definition. STARUCKS should therefore not be withholding Oregon income ta

240 SlX S11EE

1 Oregon Departent of Revenue's own Frequently Asked Withholding Questions,

18 STARUCKS hides those tip-based deductions in the employees' pay stubs, so

Page 6 - CLASS ACTION COMPLANT

240 SIX11 STREE

1 which are tip-based deductions. For example, in STARUCKS's internal records

Total Tax EE: 98.50

FED Federal W/HEE:

34.92 26.83 6.27 3.92

18 paycheck, the following are listed as her deductons:

38.84 28.45 23.82

Page 7 - CLASS AClION COMPLANT

LAKE OSEGO. OR 97034.2931

240 sixrn SlRT

7 deductions are all

jumbled up and combined with each other. These pay stubs

11 Federal Income Tax Deduction Claims

13 STARUCKS is only required to withhold federal income taes on tip amounts

17 furnished to the employer pursuant to section 6053(a)." 26 CFR 3L.3402(k)-I(a)(2).

240 SIXLL SlREET

tips received by the employee

this section)." 26 CFR 31.6053-1(b)(1). But

10 tip statements that STARUCKS claims entitled or required it to withhold federal

Page 9 - CLAS ACTION COMPLANT

240 S1X11 S1lET

TILEPHON: (503) 697-3427. FAX: (866) 311-5629

3 meanings as they do when applied to a wrtten signature on a paper tip statement."

5 tip statements either.

7 Before filing this lawsuit, Plaintiff requested 26 CFR 31.6053-1(d)(4) hard

10 reported. No such tip statements were ever provided.