Restaurant Law Blog

Tuesday, December 16, 2014

NYC Automatic Gratuity Lawsuit Dismissed

If you have ever been to a restaurant with a large group of people, you are probably familiar with the concept of automatic gratuity.  Automatic gratuity is added to the bill so that the customer tips the staff a predetermined amount as opposed to at his or her own discretion.  When a restaurant is going to assess this charge, they usually inform customers in advance by noting the policy on the menu or in another conspicuous place.  This is a common practice, especially in New York City, where dining out is essential to tourism and to the daily life of residents of the five boroughs.

Recently, a class action suit was brought against the owner of Darden Restaurants as a result of the empires automatic gratuity policy.  The plaintiff brought the lawsuit in the United States District Court claiming that adding automatic gratuity to a bill was an unlawful and deceptive business practice under the laws of New York City.  He also alleged that the restaurants failure to disclose drink prices on the menu fell into the same category.

While New York City does regulate surcharges assessed by restaurants, these laws do not create a private legal action, even if colored as consumer fraud protection claims.  This concept was reinforced when U.S. District Court Judge Katherine Polk Failla dismissed the case against Darden Restaurants.  The judge found that because the restaurants clearly outlined the policy of the menu and customers who disagreed with the policy could choose not to eat at the establishment, there was no violation.  She also found that since most customers tipped at a higher rate and that because diners could inquire about the cost of drinks before ordering, there was no injury in this case.

While all restaurants should be careful to abide by laws relating to automatic gratuity and other surcharges, they are still allowed in New York City. If you have a legal matter relating to these policies, contact the restaurant law attorneys at the DiPasquale Law Group today by calling (646)383-4607.

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