Class Action

Suit: NYC restaurants illegally adding tips

Posted on

Action targeting high-traffic midtown restaurants

Anyone familiar with the restaurant scene in New York City knows that the chain restaurants dotting the most heavily-trafficked areas of midtown — Olive Garden, Red Lobster, Applebees, and the like — aren’t just subpar cuisine options; they’re also shockingly overpriced. The foot traffic provided by tourists staying in nearby hotels, along with the hordes of theatergoers on Broadway, ensures that these restaurants can charge obscene prices without anyone batting an eye.

A recently-filed lawsuit adds insult to injury, alleging that some of these restaurants are also automatically adding a secret gratuity without telling the diner in advance.

The suit, filed by tennis star Ted Dimond, says that at least five midtown eateries are in violation of city laws prohibiting restaurants from adding a built-in tip or other surcharge, except for groups of 8 or more diners. Even when that requirement is met, restaurants can only add tips of up to 15 percent. The complaint singles out the Applebee’s on W. 50th Street, the Ruby Tuesday on Seventh Avenue, the Marriott Marquis Hotel on Broadway, and the Red Lobster and Olive Garden located in Times Square.

More restaurants may be named

Dimond’s lawyer, Evan Spencer, told the  that unwitting consumers, unaware of the built-in tip, have been leaving additional gratuities of up to 40 percent.

The News quoted a statement by Spencer calling the named defendants “the tip of the iceberg,” suggesting that there may be more restaurants padding customer’s already sky-high bills.

Indeed, court papers say that up to 1,000 other restaurants may be in violation of the law. Those restaurants could be identified as the litigation progresses.

“This is a significant consumer rights and antitrust case,” Spencer’s statement said. “These restaurants have jointly conspired to raise prices in a deceptive manner … and the named defendants are only the tip of the iceberg.”

(originally published at )

Related Posts

What You Need to Know About the Corporate Transparency Act

Common Sources of Employment Disputes in Startups and How to Avoid Them

Top Compliance Failures of Startups and How to Avoid Them