Settecas v. Gotham Hall, LLC

• Decision Date: 13 April 2022
• Docket Number: 2022-31227,Index 152791/2018
• Parties: VINCENT SETTECAS1, PAMELA GRAHAM, COREE SPENCER, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, Plaintiff, v. GOTHAM HALL, LLC, GOTHAM HALL OPERATING ENTITY, LLC, CORE ZIEGFELD, LLC D/B/AZIEGFELD BALROOM, SIMON AUERBACHER, BRUCE KURTZ Defendant.
• Court: New York Supreme Court

VINCENT SETTECAS1, PAMELA GRAHAM, COREE SPENCER, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, Plaintiff,
v.
GOTHAM HALL, LLC, GOTHAM HALL OPERATING ENTITY, LLC, CORE ZIEGFELD, LLC D/B/AZIEGFELD BALROOM, SIMON AUERBACHER, BRUCE KURTZ Defendant.

No. 2022-31227

Index No. 152791/2018

Supreme Court, New York County

April 13, 2022

Unpublished Opinion

PRESENT: HON. WILLIAM PERRY Justice

DECISION + ORDER ON MOTION

William Perry Judge

The following e-filed documents, listed by NYSCEF document number (Motion 001) 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81 were read on this motion to/for ORDER MAINTAIN CLASS ACTION.

Plaintiffs Vincent Settecasi (Settecasi), Pamela Graham (Graham) and Coree Spencer (Spencer) (collectively, plaintiffs) bring this putative class action to recover damages for alleged wage and overtime violations under Labor Law articles 6 and 9. Plaintiffs move, pursuant to CPLR article 9, for class certification and for an order appointing Leeds Brown Law, P.C. as class counsel, approving a proposed Notice of Wage & Hour Class Action Lawsuit and approving a proposed publication order. Defendants Gotham Hall, LLC (Gotham LLC), Gotham Hall Operating Entity, LLC (Gotham Operating) (together, Gotham), Core Ziegfeld, LLC d/b/a Ziegfeld Ballroom (Ziegfeld), Simon Auerbacher (Auerbacher) and Bruce A. Kurtz (Kurtz) (collectively, defendants) oppose the motion and cross-move, pursuant to CPLR 3212, for partial summary judgment dismissing the first cause of action alleging they unlawfully withheld gratuities under Labor Law § 196-d and the Department of Labor's Hospitality Wage Order (12 NYCRR) §§ 146-2.18 and 146-2.19.

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BACKGROUND

Gotham and Ziegfeld operate two event spaces in Manhattan known as Gotham Hall and Ziegfeld Ballroom (together, the Venues) (NYSCEF Doc No. 58, Ilan Weiser [Weiser] affirmation, Ex D, ¶¶ 3 and 27). Auerbacher is a partner and Kurtz is a director in Gotham LLC and Ziegfeld (id, ¶¶ 15-16). Defendants facilitate the production of private events their clients hold at the Venues by coordinating with outside vendors, such as caterers and service staff (NYSCEF Doc No. 45, Kurtz aff, ¶ 7). Thomas Preti Caterers Inc. d/b/a Thomas Preti Events to Savor (TPC) and Neuman's Kitchen, Inc. (Neuman's) were two of the caterers the Venues recommended to clients, and Hospitality Staffing, LLC and Top Shelf Staffing, LLC (Top Shelf) provided bartenders and cleaners for events (id., ¶¶ 26 and 35).

Plaintiffs allege they and members of the putative class worked for defendants in food and service capacities, such as wait staff, waiters, servers, captains, bussers, bartenders, food runners, maitre d's, bridal attendants and other related, customarily tipped positions at events held at the Venues from 2012 to the present (NYSCEF Doc No. 57, Weiser affirmation, Ex C, ¶¶ 9-11 and 18). Plaintiffs allege defendants charged clients a mandatory 23% service charge for the administration of catered events at the Venues (id, ¶¶31-32). The service charge appeared on contracts, menus, bills and invoices for catered events, but the documents failed to disclose that the charge was not a gratuity for staff (id., ¶¶ 32-34). It is alleged that a reasonable patron would have construed the service charge as a gratuity and that defendants' sales or event staff represented or allowed clients to believe the charge was a gratuity (id, ¶¶ 35-36). Defendants allegedly failed to distribute the service charge to the putative class and retained it for themselves (id, ¶¶41-42). The putative class members also worked more than 40 hours each week, but defendants willfully or purposefully failed to pay them overtime compensation (id, ¶ 43).

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Plaintiffs, on behalf of themselves and the putative class, commenced this action in March 2018. The first amended class action complaint (the FAC) alleges as a first cause of action violations of Labor Law § 196-d and 12 NYCRR 146-2.18 and 146-2.19 predicated on the unlawful withholding of gratuities. As alternatives to the first cause of action, the FAC alleges breach of contract and unjust enrichment as second and third causes of action. As a fourth cause of action, the FAC alleges violations of Labor Law §§ 650 and 663 and 12 NYCRR 146-1.4 based on a failure to pay overtime compensation. As a fifth cause of action, the FAC alleges violations of Labor Law §§ 191, 193 and 198 for unlawful deductions from plaintiffs' pay. Defendants have interposed an answer.

In moving for class certification, plaintiffs rely on sample event contracts and invoices and the deposition transcripts for plaintiffs and Kurtz. Defendants oppose and cross-move for summary judgment dismissing the first cause of action. The cross motion is supported by an affidavit from Kurtz; an affidavit from Michael Bonizio (Bonizio), TPC's president, owner and co-founder; sample event contracts and invoices from 2012 to the present; plaintiffs' responses to requests for admissions and interrogatory responses; and documentary discovery from Spencer and Graham. Defendants also rely on the deposition transcripts submitted by plaintiffs on the motion for class certification.

DISCUSSION

I. The Cross Motion for Summary Judgment

A party moving for summary judgment under CPLR 3212 "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986]). The "facts must be viewed in the light most favorable to the non-moving party"

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(Vega v Restani Constr. Corp., 18 N.Y.3d 499, 203 [2012] [internal quotation marks and citation omitted]). Once the moving party has met this prima facie burden, the burden shifts to the non-moving party to furnish evidence in admissible form sufficient to raise a material issue of fact (Alvarez, 68 N.Y.2d at 324). The moving party's "[f]ailure to make such prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers" (id.).

Labor Law § 196-d provides, in relevant part:

"No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee ...."

The statute is meant to "end the 'unfair and deceptive practice' of an employer retaining money paid by a patron 'under the impression that he is giving it to the employee, not to the employer'" (Samiento v World Yacht, Inc., 10 N.Y.3d 70, 79 n 4 [2008] [citation omitted]). To that end, the Department of Labor adopted the Hospitality Wage Order to "clarify what constitutes a gratuity and details notice requirements that employers must follow when informing customers about gratuities" (Lyell Party House, Inc. v New York State Dept. of Labor, Commr., 190 A.D.3d 1046, 1046 [3d Dept 2021]). Relevant herein are 12 NYCRR 146-2.18 and 146-2.19. 12 NYCRR § 146-2.18 (Charge purported to be a gratuity or tip) partially states:

"(a) A charge purported to be a gratuity must be distributed in full as gratuities to the service employees or food service workers who provided the service.

(b) There shall be a rebuttable presumption that any charge in addition to charges for food, beverage, lodging, and other specified materials or services, including but not limited to any charge for 'service' or 'food service,' is a charge purported to be a gratuity."

12 NYCRR 146-2.19 (Administrative charge not purported to be a gratuity or tip), reads, in part:

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"(a) A charge for the administration of a banquet, special function, or package deal shall be clearly identified as such and customers shall be notified that the charge is not a gratuity or tip.

(b) The employer has the burden of demonstrating, by clear and convincing evidence, that the notification was sufficient to ensure that a reasonable customer would understand that such charge was not purported to be a gratuity.

(c)Adequate notification shall include a statement in the contract or agreement with the customer, and on any menu and bill listing prices, that the administrative charge is for administration of the banquet, special function, or package deal, is not purported to be a gratuity, and will not be distributed as gratuities to the employees who provided service to the guests. The statements shall use ordinary language readily understood and shall appear in a font size similar to surrounding text, but no smaller than a 12-point font."

A. The Mandatory or Administrative Service Charge

Defendants contend that no reasonable customer would have understood the service charge was a gratuity because each client contract contained plain, clear language stating that the charge was not a gratuity. The Venues' form contract consists of two sections (NYSCEF Doc No. 45, ¶¶ 11-12). The first contains information on pricing and the number of attendees (the Offer Letter) and the second contains the terms and conditions (the Terms and Conditions) (together, the Contract) (id, ¶ 12). Kurtz avers the Venues typically charge a mandatory additional charge labeled a "service charge" or "administrative charge" (id., ¶ 14)...