The court ruled that supervisors "essentially perform the same job as baristas" so they should get their fair share of collective tip jars.
The appeals court ruling stems from a class-action lawsuit brought on behalf of more than 100,000 current and former baristas in California in 2004.
A Superior Court judge ruled in their favor last year, awarding them $86 million in restitution plus about $20 million in interest. But the appeals court has reversed that.
Attorneys for the baristas say they plan to appeal to the state Supreme Court.