Mario Batali Pays $5.25 Million in Employee Wage and Tip Lawsuit – Regulations Inside

Some Facebook friends led by such pains in the asses as Henry Alexander Dumas and Susan Anton regularly prod me to write about various wrongdoings by evil doers. The reported settlement by restauranteur Mario Batali and his partners over a wage/tip dispute is their latest peeve for Steve to explore. It seems that workers at Mario’s restaurants have been forced to share their tips with sommeliers – and that isn’t allowed. Other infractions, like choosing not to pay employees a required extra hour of pay after the 10th hour of labor, were also cited. Mr. Batali is reportedly settling for $5.25 million.That’s a whole lot of jars of Mario Batali Marinara Pasta Sauce. This settlement is a wake-up call to the industry. The bad practices of this crew regarding employers encroaching on employee tip pools is merely the tip of the industry iceberg. This huge precedent has law firms salivating on the next group of former or current disgruntled employees to step up and cry foul. I believe that a great deal of the business is not in compliance with current law. I’m not going to name names as I am friends with most, but I will list the most common "misunderstandings" and the corresponding New York State Labor Department regulation.

Who shares in the tip pool, the core of the Batali suit, is an industry mess waiting for the right lawyer to meet the right pissed-off employee. Many establishments find creative ways to supplement managers’ pay, door staff pay, and even line their own pockets off the tips of the waitrons. In bottle service establishments, these employees often score big. It is not unusual for a waitron in a high-profile establishment to take in more than a thousand dollars on a good night. That doesn’t mean they are not entitled to $1,001 or more if the rules are followed. I have heard instances where a whale (a hugely-spending customer) has bought hundreds of thousands of dollars worth of bottles but the staff received an unusually smaller percentage of the gargantuan tip. Many places give back to promoters and door hosts and door people and celebrity wranglers who are not entitled to a cut. I must note that the really buttoned-up places are very careful to do things right. It’s usually the second-level places that cheat. I have seen an extra line put into the physical receipt that specifies an optional charge or tip for otherwise ineligible staff. The regulation seems clear that a direct interaction between the customer and the employee must occur and the customer must know that that employee is participating in the tip pool or that that employee could reasonably be assumed to be part of it.
 
Here’s the regulation:
 
                 146-2.14. Tip sharing and tip pooling.
   (a) Tip sharing is the practice by which a directly tipped employee gives a portion of his or her tips to another service employee or food service worker who    participated in providing service to customers and keeps the balance.
   (b) Tip pooling is the practice by which the tip earnings of directly tipped employees are intermingled in a common pool and then redistributed among directly and indirectly tipped employees.
   (c) Directly tipped employees are those who receive tips from patrons or customers without any intermediary between the patron or customer and the employee.
   (d) Indirectly tipped employees are those employees who, without receiving direct tips, are eligible to receive shared tips or to receive distributions from a tip pool.
   (e) Eligibility of employees to receive shared tips, or to receive distributions from a tip pool, shall be based upon duties and not titles. Eligible employees must perform, or assist in performing, personal service to patrons at a level that is a principal and regular part of their duties and is not merely occasional or incidental. Examples of eligible occupations include:
(1) wait staff; (2) counter personnel who serve food or beverages to customers; (3) bus persons; (4) bartenders; (5) service bartenders; (6) barbacks; (7) food runners; (8) captains who provide direct food service to customers; and (9) hosts who greet and seat guest
Some establishments takes the credit card company’s service charge out of the tip pool. They cannot do this. They can take a proportion of the charge out as defined below. Many places take the whole 5 percent when only 1 is allowed.
146-2.20. Tips charged on credit cards. When tips are charged on credit cards, an employer is not required to pay the employee’s pro-rated share of the service charge taken by the credit card company for the processing of the tip. The employer must return to the employee the full amount of the tip charged on the credit    card, minus the pro-rated portion of the tip taken by the credit card company.
Example: The bill totals $100.00 exactly. The customer leaves, on their credit card, the $100.00 payment of the bill, as well as a $20.00 tip. Both the tip and the bill must be processed through a credit card company which charges a 5% fee on all transactions. The total charge levied by the credit card company on the $120.00 charge is $6.00. Of that $6.00, $5.00 is for the bill (5% of $100) and $1.00 is for the tip (5% of $20). The employer must provide the employee $19, which represents the $20 tip minus $1.00 pro- rated employee’s portion of the surcharge).
Some establishments charge a waitron if the customer skips out on the bill. The rules say that can’t be done. Some joints stiff an employee of wages or tips if they quit or flip off a customer.
 
             146-2.7. Deductions and expenses.
       (a) Employers may not make any deductions from wages, except for credits authorized in this Part and deductions authorized or required by law, such as for social security and income taxes. Some examples of prohibited deductions are:
      (1) deductions for spoilage or breakage; (2) deductions because of non-payment by a customer; (3) deductions for cash shortages or losses; and (4) fines or  penalties for lateness, misconduct, or quitting by an employee without notice.      
 
Most places don’t pay new employees while they are trailing or training. The mantra goes "everybody starts this way."
 
            146-2.11. Learner, trainee, or apprentice rates. Any employees whom an            
            employer designates learners, trainees, or apprentices must
            nonetheless be paid at least the minimum rates prescribed in this Part.
      
Some places think by using the words service charge that they can get around this issue.
146-2.18. Charge purported to be a gratuity or tip.
Section 196-d of the New York State Labor Law prohibits employers from demanding, accepting, or retaining, directly or indirectly, any part of an employee’s gratuity or any charge purported to be a gratuity.
         (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.
These regulations were written with a restaurant mentality and are often a little less reasonable in places where food isn’t served. Still they exist and the Batali lawsuit settlement must have vengeful minds thinking of getting back at places that fired them. Clubs must review their practices or face debilitating legal action. Even then, it may be too late to prevent fines for past indiscretions. The rules and penalties for ignoring them or bending them seem to be enforceable going back as much as six years. With many places including restaurant components as part of their marketing, regulation will be more scrutinized and enforced. Wages and regulations often vary for hotel employees. Here, too, a gray area may exist for the distribution of the green. 

Suit over Derek and Daniel Koch’s MPD Rages, Statement and Scoop From the Brothers Inside

In an industry with so many moving parts, lawsuits are not that common. Most serious players have someone who handles the minor stuff that could easily turn more major, like a trip and fall on a wet floor or a promise that was less than kept. With literally thousands of people getting wasted every night or week, actual litigation is rare. On the business deal side of things court room drama is also not the norm. Despite the enormous investments, convoluted partnerships, and massive egos, most disputes are settled around a dinner table rather than in court. Publicity of such actions and subsequent exposure of well-kept secrets keep it simple. Nightlife is a great deal of smoke and mirrors and most of the players are like the Great and Powerful Wizard of Oz…not all that much when they come out from behind the self-created curtain. That curtain hides the trysts, the binges, the unusual predilections, shady business, and sometimes bad habits of the creatures of the night. A lawsuit can shatter the image and the brand that a player has spent years establishing.

I was shocked and awed by an email I received from the Dual Groupe that had my pals Derek and Daniel Koch announcing a lawsuit over MPD, their restaurant that I enjoyed so much. I guess the word "their" in the last sentence is at the heart of the matter. Here is the email, followed by a little Q & A with Derek Koch. I must put in my very biased two cents: I have found Derek and Daniel to be men of their words, something I hold in high regard. It is inconceivable to me that anyone could find fault in their actions. I went to MPD sometimes and was involved in an event there, but only because they were the people I was dealing with. What is Rick’s Cafè Amèricain in Casablanca without Rick, The Electric Room without Nur, Avenue without Noah, The Darby without Scott and Richie. Clubs , restaurants, and bars are usually ex-warehouses, garages, or even slaughterhouses. It is the personalities of the operators that animates these spaces into fabulousness. MPD, for
 me, was Derek and Daniel Koch. They were the reason to be cheerful there.
 
The email:
To Our Beloved MPD Family and Clients:
It is with great sorrow that we announce that on February 6th, 2012, we found it necessary to file two (2) New York Supreme Court Lawsuits, (Supreme Court of the City of New York, New York County: Index Number 150169/12 and 150170/12) and on February 9, 2012, a United States District Court Lawsuit (for the Southern District of New York: Index Number 12 Civ 1031), for past monies due and owing, and to prevent the wrongful parties from continuing to use the “MPD” name and likeness, a Trademark that is owned by Dual Groupe, LLC (“Dual”).
 
We have worked diligently and with great pride in developing and building the name and brand “MPD” for more than 2 years, and were very successful.  The wrongful parties, Gans-Mex, LLC (“Gans”), and Ginza Project, LLC (“Ginza”), have refused to comply with our “cease and desist” letter dated February 3, 2012, in which we asked them to stop using our Trademarked name “MPD”, and they have unilaterally caused Dual Groupe and the “MPD” name and brand to be irrevocably harmed. We tried to resolve these most serious issues without going to court, but Gans and Ginza have refused and neglected to have any meaningful conversations.
 
Dual worked hard at developing MPD into an enormous success, and subsequently was awarded a recommendation from Michelin, the oldest and best-known European hotel and restaurant guide. Ginza Project, the current leaseholders of 73 Gansevoort, has illegally and unlawfully operated the restaurant under the Trademark MPD, which we created, developed, and built over the past 2 years. We have sought the court’s assistance to right this terrible wrong that was thrust upon us by Gans and Ginza, but it is unlikely that they will comply with the terms and conditions of our contract and our federally filed and registered Trademark.
 
Building the MPD name, brand, and Trademark has been a labor of love for us and we will fight diligently to retain same.  While we have enjoyed our time at 73 Gansevoort, Gans-Mex, LLC and Ginza Project, LLC have made it impossible for us to operate our restaurant, MPD, at that location at this time.  We will announce in the near future a new venue, where we hope to continue the laughs and make new memories together with our family, you.
To be the very first to hear about MPD at its new location, write us at: info@dualgroupe.com
 
Ciao for now and we are certain to see you soon!
The MPD Family and Dual Groupe
Q & A with Derek Koch
 
I know you are in the middle of a suit over MPD and can only say so much. Tell my readers what you can.
We sent the defendants a cease-and-desist letter to prevent them from using our legally trademarked name “MPD." MPD is a brand and concept that Dual Groupe conceived and developed without any input or support from the defendants, and the defendants are now trying to capitalize and “steal” our brand and trademark. We filed suit in New York federal court to stop the defendants from illegally using our trademarked name. We estimate our damages to be in excess of $1,000,000. Additionally, we have commenced actions to recover the monies we invested in opening the venue, as well as the monies they owe us under our management agreement.
 
What are you working on ? How is Day and Night doing?
We are currently working to open a new restaurant, garden, and wine bar concept in Chelsea. This will be a repositioning of an iconic property. We are excited about the location and will officially announce it this week or next. D&N is stronger than ever.  The brunch is presently held every Saturday afternoon at the former Buddha Bar spot. We are fortunate to have solid partners involved. We are looking forward to celebrating our 30th birthdays there on March 31st – should be a good one!
 
Most promoters/owners would love to expand their brands but tell me they can’t without cloning themselves. You have a twin (Daniel) and therefore should be ahead of the pack. What are the advantages and disadvantages of working with your twin?
The biggest advantage is trust. We look after each other’s best interest. There is usually no tit-for-tat. We both pick up the slack wherever and whenever it’s needed.   The disadvantage are our brotherly office disagreements… they can be a little disruptive – hehe. One of the smarter things we did is partner with a non-family member. He not only serves as a partner, mentor, and dear friend, but his involvement truly helps to balance out our sibling rivalry by serving to be a great tie-breaker.
 
Is your crowd immune to swings in the economy?
I believe our clients are no different than many in America who are affected by swings in the economy. Sometimes it is a true economic change in our client’s financial situation and sometimes it is their sensitivity to being compassionate to those that have less, and in that capacity they choose to not flaunt their wealth. We know firsthand that they always feel the ups and down one way or another.
 
A couple of years ago I declared that you and Daniel were "the next big things," even though I thought that was old news at the time. What have you done to prove me right and who do you see as the next big thing?
We appreciate the compliment; thank you, Steve. We continue to strive and work toward keeping your prophecy true. One thing we hope we have shown you is staying power in brand creation. Day & Night is in its fourth year of business… outlasting many a skeptic and is stronger than ever. In this business, we both would agree it is a marathon, not a sprint, and therefore we work hard every day, hone our skills, and make the client experience the best it can be. We were fortunate to have partnered with someone who believes in us completely. Day & Night was a spring board toward changing the way people perceived brunch and, together with a few others, revolutionized the day club business. We were fortunate to have started out with a bang and have kept the momentum going ever since. We have to keep up the energy with new trends and concepts to keep it fresh and exciting for our current and future clients and partners. We also have an amazing team at the
office to whom we are eternally grateful who also help generate the excitement around our brands.
 
Who do you see as the next big thing?
Cristina Civetta (Events), David Berrie (DJ), Oli Evans (Promoter), Romain Pavee (Nightclub Host), Pavan Pardasani (Marketing), Adam Alpert (Talent Agent), Micha Jesse (TV Host), Jon Neidich (Restaurant Owner), Philippe Bondon (Maitre ‘D), Eric Marx (Operator), The Chainsmokers (DJ’s), Nima Yamini (Artist Management), Mick Boogie (DJ), Jonny Lennon (Entertainer), Tim Sheldon (Door), Roberto Buchelli (Operator).

Assorted Kooks Claim ‘Avatar’ Plagiarized Their Work

Successful films often have a way of churning up lawsuits, and one of the most commonplace is for copyright infringement. Some joker (or less often, actual victim of theft) comes out of the woodwork alleging intellectual plagiarism and wanting his fair share. That this should happen to Avatar isn’t a surprise. What’s shocking rather, is that it’s only happened twice so far.

The first suit came from Beijing-based novelist Zhou Shaomou who claimed that his 1997 book, The Legend of the Blue Crow, shared approximately 80% of Avatar’s material. Not being the greedy type, he sought only 8% of the film’s profits, but the case was summarily dismissed by a Chinese Court.

Now another plaintiff has come forward, this time in the form of Vancouver restauranteur, Emil Malak, who claims that Avatar is suspiciously similar to his 1998 screenplay Terra Incognita. THR has it that in the script, “a tree is a focal point of a community of indigenous people and contains their collective memories. His characters are odd-looking creatures, some with braided hair and others with tails. They are protecting their home planet from militaristic human intruders who want to mine precious minerals.”

Malak says that he sent the script and appurtenant design elements to some twenty studios in 2002, including Cameron’s own Lightstorm Entertainment, but never got a response. Now he’s suing Cameron and Twentieth Century Fox in a B.C. Supreme Court, but odds are he wont fare any better than Shaomou. Fox has already issued the following statement: “James Cameron wrote the story for Avatar two years before Mr. Malak claims he wrote his work, and therefore Avatar cannot be based on Terra Incognita. We are confident that the lawsuit will be decided in our favor.”

If nothing else, you can expect the next crackpot lawsuit to stem from material written well before the mid 90’s so as to not make Fox and Cameron’s defense so easy.