SALEM, Ore. (Legal Newsline) – The Supreme Court of the state of Oregon has the remanded a case filed by Starbucks employees who sued the company for allegedly improperly calculating tax withholdings.
According to the court, which ruled on the issue Nov. 8, the parties’ disagreements are better resolved through proceedings where those arguments can be fully developed rather than through the limited jurisdiction afforded in a mandamus proceeding.
Mandamus is appropriate only if there is no “plain, speedy and adequate remedy in the ordinary course of the law,” the Supreme Court added.
As a result, the court dismissed Starbucks' alternative writ of mandamus and remanded the case for further development of the record.
“The alternative writ of mandamus is dismissed as improvidently allowed,” the opinion stated. “The order allowing the petition for alternative writ of mandamus is withdrawn, and the petition for a writ of mandamus is denied.”
According to the opinion, former Starbucks baristas said the company mismanaged state and federal tax withholdings, resulting in improperly deducted withholdings from plaintiffs’ paychecks.
The employees claimed they were not paid the full wages they had earned, violating state wage and hour laws, the opinion stated.
“Plaintiffs alleged that, because of those improper deductions, Starbucks failed to pay them the full wages that they had earned, violating state wage and hour laws,” the opinion stated. “As it related to those violations, plaintiffs’ complaint sought injunctive relief, declaratory relief, and damages.”
The Supreme Court said the plaintiffs then abandoned any claim for damages in the form of a refund or return of withheld wages.
“Plaintiffs explained that the money damages that they had sought were only those provided by state statutory law governing payment of wages,” the opinion stated.
Based on the plaintiffs’ concession that they were not seeking a return of the withheld wages, the trial court dismissed any claim that plaintiffs had for a refund or return of the withheld wages, but permitted plaintiffs’ claims for statutory damages to proceed, the Supreme Court said.
The trial court held that neither the federal Anti-Injunction Act nor statutory immunity barred plaintiffs’ claims for statutory damages and non-anticipatory declaratory relief, the opinion stated.
The trial court also concluded that Starbucks’ withholding of taxes based on unreported tip income was not required by either state or federal tax law, the Supreme Court added.
Starbucks petitioned the Oregon Supreme Court for an alternative writ of mandamus, raising questions of whether plaintiffs’ claims were prohibited by the federal Anti-Injunction Act and whether they were prohibited by the statutory immunity provisions, the opinion stated.
The Supreme Court said it issued an alternative writ of mandamus, but the trial court declined to vacate its order and the case returned to the higher court.
To determine whether direct appeal gives Starbucks an adequate remedy, the Supreme Court said it would have had to resolve numerous complex issues of both state and federal law, not all of which had been briefed adequately.
“Although the mandamus petition directly raises questions about the AIA and the statutory immunity provisions, the parties have intertwined arguments about federal preemption and the merits of plaintiffs’ claims,” the opinion stated.