Wage Hour Class Actions SDNY

Employment Law Daily
May 10, 2011

WAGE HOUR CLASS ACTIONS SDNY: Tipped employees at eight Batali restaurants granted conditional class certification; portion of wine sales deducted from tips

Tipped employees at eight New York area restaurants owned by celebrity chef Mario Batali and Joseph Bastianich were granted conditional class certification of their wage claims alleging that the employers paid them less than the minimum wage and deducted a portion of the night’s wine sales from the tips they were supposed to receive, in violation of the FLSA (Capsolas v Pasta Resources Inc, May 10, 2011, Holwell, R). A federal district court in New York allowed the plaintiffs to send opt-in notice to similarly situated employees who worked as backwaiters, servers, and bartenders at the restaurants.

Each of the eight restaurants operates as a separately incorporated entity, with Batali and Bastianich having an ownership stake in each, though the exact percentage varies from restaurant to restaurant. Both employers oversee the operations of each restaurant and visit each restaurant regularly. Pasta Resources is a separate company that provides administrative support to the restaurants, including payroll and marketing.

Although the defendants did not contest conditional certification with respect to employees of five of the eight restaurants, they argued that the plaintiffs have not adequately shown that employees of the other three restaurants (Esca, Lupa, and Del Posto) were subject to a common policy of withholding tips. They contended that each restaurant functions as a separate entity and sets its own policies, including tip policy. As evidence, they noted that the amount deducted varied from 4-4.5 percent of total wine sales and that the method for distributing tips among tipped employees varied from restaurant to restaurant. However, when the employees sought an explanation for the tip deduction, they were mostly told the same story: the money was supporting wine research. Furthermore, many employees provided preprinted tip worksheets with a space for the deduction, indicating that the policy was entrenched and not the actions of particular managers. All of these facts, the court found, supported a reasonable inference that there was a uniform policy across the eight restaurants, all of which share common ownership, are supervised by the same individuals, and are administered by the same company. It is highly unlikely that each restaurant would reach this same policy independently, the court concluded.

While the defendants also argued that the court should divide potential opt-in plaintiffs into subclasses, one for each restaurant, the court indicated that it may ultimately decide to divide plaintiffs in such a way, but such an action was premature at this stage in the litigation. As of yet, the court did not have sufficient information to make an informed decision regarding the form that potential subclasses should take because there has been no discovery. In the second stage, after discovery had been conducted, the defendants will have an opportunity to argue that the court should decertify the class or, alternatively, divide it into subclasses.

Mail notice will suffice. Although the court was also troubled by employees’ reports of possible retaliation by supervisors, it was not persuaded that the proper response was to post a duplicative notice of the collective action in the defendants’ restaurants. Here, the court found it was premature to conclude that mailed notice will prove ineffective. Further, if the plaintiffs experience retaliation, the proper procedural remedy is to amend their complaint to include allegations of retaliation.

Charles Edward Joseph (Joseph, Herzfeld, Hester, & Kirschenbaum), Justin Mitchell Swartz (Outten & Golden, LLP) for Plaintiffs. A Michael Weber (Littler Mendelson, PC) for Defendants.