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Court Dismisses $5.5 Billion Suit Over Automatic Tips

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Tennis pro Ted Dimond's $5.5 billion class action lawsuit against a number of New York restaurants for "illegally adding an automatic 18 percent tip to diners' bills," has been dismissed. The suit, which Dimond filed last year, was aimed mainly at the the Darden group (the parent company of Red Lobster and Olive Garden), but also included Masa and Per Se. It claimed that the added gratuity was a surcharge that's considered illegal under New York State law.

U.S. District judge Katherine Polk Failla in Manhattan dismissed the lawsuit, saying that Darden "conspicuously" notes the tip on the menu, "and that diners were free to leave if they disapproved." While New York City's laws prohibit "businesses from engaging in unfair trade practices" and restaurants from "adding a surcharge to listed prices," private individuals don't have the right to sue on the basis of those laws. But, for the most part, the suit was thrown out because of "technical issues that might have been avoided had the complaint been drafted better," says Mondaq. The ruling doesn't impact whether or not state/local agencies like the Department of Consumer affairs can sue employers who break these laws.
· Darden Wins Dismissal of New York Lawsuit Over Automatic Tips [Reuters]
· Federal Court Dismisses Lawsuit Against New York City Restaurant That Imposed Auto-Gratuities . . . But Don't Start Putting Them Back Just Yet [Mondaq]

Per Se

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