The Law Blog of DiPasquale Law Group

Monday, April 14, 2014

Celebrity Restaurant Lawsuit Illustrates the Complexities of Partnership Agreements

Celebrity Chef Gordon Ramsay Faces a Lawsuit by a Longtime Partner

Opening a bar or restaurant, or any business for that matter, in New York City has the potential to be expensive and risky, which can sometimes act as a deterrent for individuals who want to start a company of this kind on their own. Instead, partners and investors may be brought in to pool resources and talent. Restaurant partnership agreements vary greatly depending on each individual business, and disputes, misunderstandings and even potential cases of fraud can arise over such contracts. A recently filed lawsuit by an investor against celebrity chef Gordon Ramsay serves as a case in point.

Several years ago, Ramsay opened a Los Angeles restaurant called The Fat Cow with financial backing by Rowen Seibel, who had already worked with Ramsay on the opening of several other restaurants, including Gordon Ramsay Steak, Gordon Ramsay Pub & Grill and BurGR, all in Nevada. Seibel likely had little cause to anticipate a conflict, but quickly realized he wanted to pursue legal action.

According to the 34-page complaint, Ramsay chose the name The Fat Cow because he knew that the name was already in use by a Florida restaurant. Also according to the complaint, the ensuing trademark dispute quickly derailed the project, allowing Ramsay to complete his plan of closing The Fat Cow and creating a company that opened another restaurant in the same lease space.

Seibel seems to attribute the breach and falling out to Ramsay’s famously volatile and authoritarian personality. "Gordon Ramsay attempted to run the business and make decisions on behalf of [the parties involved] similar to his Hell's Kitchen on television - as a dictatorship," Seibel claimed. This alleged dictatorial behavior extended to a “dramatic money grab” that involved the shuttering of The Fat Cow and opening of restaurant without Seibel.

Seibel is seeking $10 million in damages.

As this case illustrates, partnerships between even long-established partners such as Seibel and Ramsay can be vulnerable to costly lawsuits. For this reason, it makes sense to work with a law firm dedicated to protecting the rights of restaurant, nightclub and bar owners. James DiPasquale of New York City's DiPasquale Law Group routinely represents restaurateurs in all aspects of their business and can provide qualified legal help. To contact our firm, call 646-383-4607.

Monday, March 31, 2014

How New York City's New Sick Leave Law Impacts Restaurant and Bar Owners

As of April 1, New York City restaurant workers have a financial safety net if they have to miss work because they're sick or have to care for a sick family member.

This is great for the employees receiving this type of compensation for the first time, but, how will the new sick leave law affect NYC restaurant owners?

Shiv Puri, owner of Manhattan's Bombay Sandwich Company, was concerned about the cost when he first heard about the law. However, after calculating costs and receiving more information, he is now confident about this new measure ,The New York Times reported. Puri said his eight employees were excited about this news, he said "It’s the law and it’s the right thing to do. It won’t bust the bank. It won’t put us (the business) in jeopardy.”

Puri pays his workers $10 an hour, which is $2 more than the state minimum wage rate, and considers himself a progressive employer, but as we stated, he was worried that the newly enacted regulation would negatively affect his business.

Some important things to note about NYC sick leave law:

  • An employee is only eligible for sick days after three months on the job; workers accrue leave based on their hours worked.
  • Current employees can start taking time in July, three months after the effective date of April 1
  • Companies with five or more employees are legally required to provide up to five paid days off to workers if they, or their close relatives, fall ill.
  • Approximately 1.2 million workers will have paid sick leave for the first time, according to Nancy Rankin, vice president for policy research at the Community Service Society of New York, a group that works on behalf of low-income New Yorkers.

After crunching the numbers, Puri was happy to learn he could absorb the potential costs, and that he could extend these benefits to his employees as required by law and continue to enjoy the success of his business.

Employees are please as well. A cook at Puri's restaurant said she ended up losing $325 when she missed an entire week in March due to an illness. Since the law went into effect, Blair Phoenix feels as if she has some protection if she's in that situation again. “It’s a relief, it gives you room to breathe," the NYT quoted.

The work sectors experiencing the most growth in today's market are creating countless low-wage jobs- the job creation is great, but the pay allows workers to barely scrape by in some cases. This law will give low-wage workers, some of whom are restaurant employees, a sense of security they have not enjoyed previously.

The creation of this law makes New York City the largest in the nation to enact this sort of legal measure on businesses who employ certain categories of workers, guaranteeing job security to a vast majority of workers who might have otherwise lost their jobs or a portion of their paychecks if they became ill or had to care for a sick family member.

If you're a New York City restaurant or bar owner and have questions or concerns about the new sick leave law or any other matter related to restaurant law, contact DiPasquale Law Group of NYC at 646-383-4607.

Tuesday, March 18, 2014

"Bottomless Brunches" Are Legal in NYC After All

Many media outlets jumped on a (false) report that brunch deals which include unlimited drinks within a certain time period are illegal in New York City. This news shocked New York's die-hard brunch fans, but the panic quickly ceased when the media noted shortly thereafter that the deals aren't actually illegal. So, New York City brunch-goers are free to have their fill of weekend afternoon mimosas after all. More importantly, the city's restaurants aren't in violation of state law when they host brunch specials that include alcoholic beverages.

What caused this so-called panic? The New York Hospitality Alliance posted a reminder on its website recently that simply read: “NYC restaurant and nightlife operators should familiarize themselves with the law," in reference to N.Y. 117-A, which prohibits “selling, serving, delivering or offering to patrons an unlimited number of drinks during any set period of time for a fixed price.”

This law was created more than five years ago in response to complaints that restaurants and bars were over-serving patrons, leading to extreme intoxication, Business Insider reports. 

The publication contacted the New York State Liquor Association (SLA), and the organization responded by email, telling Business Insider that the law (NY 117-A) does not apply to bottomless brunches, which are considered “events.”

According to the SLA:

"Serving unlimited drinks to a patron is prohibited under the Alcoholic Beverage Control law, and instances of over serving by our licensees will be investigated and prosecuted. However, there is a limited exception in the statute when the service of alcohol is incidental to the event, such as in the case of certain brunch specials. Even under these limited exceptions, licensees still have a legal obligation not to over serve patrons. The SLA will continue to take a balanced regulatory approach by allowing licensees to conduct specials where alcohol is an accompaniment, while simultaneously cracking down on specials that promote excessive drinking."

Though the law surrounding bottomless brunches has been clarified, restaurants and bars should always exercise responsibility when serving alcoholic beverages to patrons. And, no restaurant is immune from an investigation by the SLA. Just a note for those who are interested, restaurants/bars can receive a punishment to the tune of $10,000 for violations involving the promotion of excessive drinking.

Friday, March 07, 2014

Are You Playing Music in Your Bar or Restaurant Without a Music Distribution License? A Recent Crackdown in NYC Could Cost You Thousands in Fines

If you play music in your restaurant (even as background music through your iPod) without the appropriate music distribution license, you may be fined up to $30,000 for each song played.  Even playing songs that you legally purchased is considered to be against the law because there is a difference between purchasing music for “personal use” versus “commercial use.” In recent weeks, a few of our clients have received letters from ASCAP (the American Society of Composers, Authors, and Publishers) – a Performing Rights Organization that represents thousands of artists. The other well-known Performing Rights Organizations include SESAC (the Society of European Stage Authors and Composers) and BMI (Broadcast Music, Inc.).

ASCAP’s letter notified these clients that they are in violation of Copyright Law due to their “unauthorized performances of copyrighted musical works.” ASCAP’s letter further explained that the courts may award damages that range from $750 to $30,000 for each song played plus the costs of the lawsuit. As an alternative to a costly lawsuit, owners could purchase an ASCAP license which allows the restaurant or bar to play all songs by members of ASCAP for a monthly or yearly fee.

Many restaurants and bars that play music do not have the appropriate licenses, but is it worth the risk? The internet has made it even easier for Performing Rights Organizations to identify which venues are playing music. If you do get caught, your chances of success are not good. One of the largest Performing Rights Organizations, BMI, has not lost a single lawsuit filed against copyright infringers in over 51 years. Obtaining a license does not have to be costly – for smaller venues, the license may be as little as $300 per year.

As an alternative to obtaining a license with ASCAP, SESAC, or BMI, more options are becoming available to restaurant owners. The popular music website is currently offering a business subscription for $24.95/month.

Thursday, February 27, 2014

NYC Restaurants May Be Required to Install Carbon Monoxide Detectors

A New York City lawmaker is sponsoring a bill that will require all New York City bars and restaurants to install carbon monoxide detectors. Coincidentally, City Councilman James Vacca co-sponsored this legislation several weeks ago, but he is now seeking to expedite it after it was reported that a leak at a New York restaurant last week resulted in the death of the manager and sickened more than two dozen other people.

Vacca is hoping to prioritize the bill, aiming for the council committee to pass it as soon as possible. The councilman said this potential law should never have been omitted, as restaurants and bars present the same dangers in terms of carbon monoxide poisoning as private homes. New York State fire codes only require carbon monoxide detectors in places where people sleep.

Police evacuated the Legal Sea Foods restaurant located in the Walt Whitman Shops on Long Island after they received reports that a woman had collapsed in the basement of the establishment. A spokesman for the Town of Huntington, where the restaurant is located, said investigators found a leak in the flue pipe of the water heater.

The town official who inspected the restaurant last March didn't find any issues. Legal Sea Foods was due for another inspection in March, as it is subject to them annually. Although authorities said the carbon monoxide appeared to be limited to the basement of the restaurant, the entire restaurant and surrounding businesses were evacuated Saturday.

Local plumbing and heating experts say that they are unsure why it wasn't previously mandated that carbon monoxide detectors be installed anywhere people gather. It may be New York State law to have one in private residences, but it won't be a requirement by law for restaurants and bars until the passing of this bill.

Legal Sea Foods and nearby Panera Bread can't reopen until the town's plumbing inspector confirms there are no leaks and gives the restaurants proper certification.

Wednesday, February 12, 2014

Little Known New York City Restaurant Law Repealed

Did you know that a majority of New York City restaurants break the law every time a patron walks through their doors?

Well, neither did many city restaurateurs.

Until now, it was illegal for restaurant staff to automatically serve customers water.

Since at least as far back at 1991, eateries in the city of New York have been legally required to ask every one of their customers if they would like water before a glass is poured for them. This regulation was enacted when the city was facing a drought emergency in the early nineties, but has barely been enforced since then.

More than 10 years after the legislation was enacted, in 2002, the city experienced another drought emergency and the Department of Environmental Protection issued warnings to 14 restaurants.  

Mayor Michael Bloomberg's administration repealed the regulation during his final days in office. As of 30 days from Jan. 23, when the final rule was published in the city record, it will be perfectly legal for restaurant staff to serve water to patrons whether or not they ask for it. However, this repeal does not mean that restaurants are legally obligated to pour water for every patron.

Numerous New York City restaurant owners were quoted as saying  they weren't even aware of the longtime law. Some noted they usually ask customers if they would prefer tap water (at no charge) or mineral water. Despite all of the chatter surrounding the little known recently repealed law, restaurateurs have always had a financial incentive to sell soda and alcoholic drinks rather than water.

The installation of more accurate water metering in the last decade allows the city to keep a closer eye on water consumption. Energy and conservation efforts, such as more efficient toilets and timers on spray showers in parks have led to a significant decrease in the number of gallons of water New York City consumes each day. In the mid-1970s the city's consumption reached its peak at 1.5 billion gallons per day, and currently the city barely consumes 1 billion gallons. The city's consumption hasn't been this low since the 1960s, when the it was experiencing a drought and the population was substantially smaller.

If you have questions about your restaurant’s compliance with these recent changes, contact the New York City office of the DiPasquale Law Group for a free consultation at 646-383-4607.

Thursday, January 09, 2014

Health Department Violations “Nearly Impossible” to Overturn: True or False?

The New York Post recently reported that Health Department violations issued against restaurants were upheld 97% of the time in administrative hearings. While this statistic is certainly outrageous, it may not come as a surprise to anyone in the restaurant industry. One likely explanation for this has to do with the Department of Health’s “settlement offers” which allow restaurant owners to accept a lower fine rather than attempt to fight the violations. City Council Speaker Christine Quinn has already implemented changes that will lower fines for restaurant owners, and Mayor-elect Bill de Blasio has expressed the need for change in the existing inspection system. Hopefully, a true overhaul is underway.

In the meantime, what should you do if your restaurant receives a violation from the Department of Health? Should you just concede and pay the fines after learning about this dismal statistic? The answer is: it depends. With the current system in place, it sometimes makes sense to pay when it is a non-letter grade inspection. However, when the violations affect your letter grade, much more is at stake; if you have a credible argument, an appearance at the hearing by you or an attorney may be worth it. Each Department of Health inspection report is different, and each restaurant owner has different things to consider.

If you have had a recent visit from the Department of Health and want us to review your inspection report, contact DiPasquale Law Group for a free consultation. Our attorneys can explain your options and allow you to choose what is best for you and your restaurant.


Thursday, January 09, 2014

City Council to Vote on NYC Styrofoam Ban

A ban on foam food containers will likely pass during today’s City Council vote. This ban will be considered a victory for Mayor Bloomberg during his final days in office, but could cost restaurant owners who will be forced to switch to more expensive materials like paper or plastic for to-go packaging.

Mayor Bloomberg has long argued that food foam containers, which are made out of expanded polystyrene, are extremely difficult to recycle and are filling up the city’s landfills. Not surprisingly, the makers of foam products disagree and argue that it is possible to recycle these products in a cost-effective way.

In response to the foam companies’ arguments, Bloomberg’s original proposal was amended to give Styrofoam makers a chance. Dart Container Corporation, one of the largest producers of foam products, has been given until January 1, 2015 to prove that the containers can be recycled efficiently. However, if Dart Container fails to demonstrate this, the ban will take effect shortly thereafter on July 1, 2015.

The bill does allow businesses that gross less than $500,000 per year and non-profit organizations to apply for a waiver from the law. Additionally, those who violate this law within the first year will only be subjected to warnings; fines will be implemented the following year.

Thursday, January 09, 2014

Tax Credits for Restaurant Owners Set to Expire at End of Year

The Work Opportunity Tax Credit (“WOTC”) can save employers thousands of dollars per eligible employee, but it is one of the many tax credits set to expire at the end of 2013. If you are planning to hire new employees, you can still take advantage of this tax credit if hiring occurs prior to December 31, 2013. If you will not meet this deadline, do not fret: there are rumors that Congress will be extending the credit for another year.

The Work Opportunity Tax Credit provides tax credits to employers who hire members of 9 specific target groups: (1) recipients of Temporary Assistance to Needy Families; (2) veterans; (3) ex-felons hired within one year of conviction or release; (4) designated community residents ages 18 through 39;  (5) vocational rehabilitation referrals; (6) designated community resident youths ages 16 through 17; (7) Supplemental Nutrition Assistance Program recipients ages 18 through 39; (8) Supplemental Social Security recipients; and (9) Long-Term Family Assistance recipients.

Prior to receiving the credit, an employer must complete a Pre-Screening Notice and Certification Request from the IRS and submit an Individual Characteristic Form to the Labor Department. If the employee meets all eligibility requirements, the WOTC Unit will issue a certification and the employer savings will begin.

If you have questions about your eligibility, or if you need assistance applying for the WOTC, contact DiPasquale Law Group for a free consultation.

Thursday, January 09, 2014

Restaurant Owners Will Pay Additional “Spread of Hours” Pay as Minimum Wage Increases

Have you heard of “Spread of Hours” pay? It is a law unique to New York and greatly affects the restaurant industry, but it is not well-known. Recently, employees of the chain restaurant Planet Wings sued their employer for failing to comply with the spread of hours mandate imposed by New York law. You, too, could be liable to certain employees who meet hour requirements.

“Spread of hours” pay is an extra hour of pay that must be paid to employees when an employee’s workday is “spread” over 10 hours. For example, if a waiter works a morning shift from 10am – 3pm and then returns later in the day to work an evening shift from 6pm – 10pm, he has worked a total of 9 hours “spread” over a 12 hour period and would be entitled to an additional hour of pay at the minimum wage. This additional hour of pay is not for work performed.

Courts have found that the spread of hours requirement does not apply to employees in certain industries whose total weekly compensation is above the minimum wage.  However, in the hospitality industry spread of hours pay must be paid to employees who meet the requirements regardless of how much money the employee makes.

In any event, the upcoming increase in the state’s minimum wage will affect all employers responsible for spread of hours pay. In the hospitality industry, the additional hour of pay will increase with the minimum wage, and in other eligible industries, more employees will now be eligible to receive spread of hours pay.

If you have questions or concerns about the “spread of hours” requirement, contact DiPasquale Law Group for a free consultation.

Thursday, January 09, 2014

Restaurant Owners Now Permitted to Charge Customers More for Credit Transactions vs. Cash

Restaurant owners will now be able to charge customers different rates depending on their method of payment. After years of legal battles, American Express, Visa, and MasterCard must now allow business owners to implement a “two-tier pricing system.” This two-tier system permits business owners to charge customers who pay with credit cards more than those who pay with cash or debit cards.

In August 2012, a group of business owners won a settlement from MasterCard and Visa after filing a class-action lawsuit against the two major credit card companies. In the settlement agreement, MasterCard and Visa agreed to pay $5.7 million in damages to business owners, lower “swipe fees”, and allow business owners to implement surcharges on credit transactions.

In his decision supporting the MasterCard and Visa settlement, Judge John Gleeson explained, “For the first time, merchants will be empowered to expose hidden bank fees to their customers, educate them about those fees and use that information to influence their customers’ choices of payment methods.”

Now, a recent American Express surcharge settlement will allow business owners to implement this same two-tier pricing system for American Express users.

These decisions present new challenges to business owners as some may be hesitant to begin implementing these surcharges for fear of customer backlash. However, in an area that previously had no room for negotiation, having the option should come as good news.

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The DiPasquale Law Group is a full service law firm that assists Restaurant and Nightclub Owners in all legal aspects of their business. Serving Manhattan, Brooklyn, Queens, and the Bronx in New York City. Attorney James DiPasquale, Principal.

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