Preview
FILED: NEW YORK COUNTY CLERK 01/15/2016 04:47 PM INDEX NO. 160993/2014
NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 01/15/2016
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
xxxxxxxx xxxx AND STAR RIVERA, on Index No.: 160993/2014
behalf of themselves and others similarly situated,
Plaintiffs,
-against-
HORNBLOWER NEW YORK, LLC;
HORNBLOWER CRUISES AND EVENTS; TERRY
MACRAE; and any other related entities,
Defendants.
MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS’
MOTION FOR CLASS CERTIFICATION
VIRGINIA & AMBINDER LLP LEEDS BROWN LAW, P.C.
Lloyd Ambinder, Esq. Jeff Brown, Esq.
Suzanne Leeds Klein, Esq. Michael Tompkins, Esq.
40 Broad Street, 7th Floor Brett Cohen, Esq.
New York, New York 10004 One Old Country Road, Suite 347
Telephone: (212) 943-9080 Carle Place, NY 11514
Fax: (212) 943-9082 Telephone: (516) 873-9550
Fax: (516) 747-5024
Attorneys for Plaintiffs and Putative Class
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES…………………………………………………………………….iii
PRELIMINARY STATEMENT………………………………………………………………….1
STATEMENT OF FACTS………………………………………………………………………..3
PROCEDURAL HISTORY………………………………………………………………………8
ARGUMENT…………………………………………………………………………………….10
I. CLASS CERTIFICATION IS PROPER BECAUSE PLAINTIFFS HAVE MET ALL
ELEMENTS OF CPLR §§ 901 AND 902……………………………………….………10
A. Class Certification is Routinely Granted in
Actions for Unpaid Gratuities.……………………….………………………10
B. This Action Satisfies All the Prerequisites of Section 901…………………...13
(1) The Class Is So Numerous That Joinder Of All
Members is Impracticable……………………………………………13
(2) The Questions Of Law And Fact Common To The
Class Predominate Over Questions Affecting Only
Individual Class Members………………..………..………...….……14
(i) Predominance is Satisfied Even Though Damages Will
Differ………………………………………………….….18
(3) The Named Plaintiffs’ Claims Are Typical
Of The Claims Of The Putative Class……………..…....…………....19
(4) The Named Plaintiffs Will Fairly And
Adequately Protect The Interests Of The Class………………….…..21
(5) A Class Action is Superior to Other Available Methods…………….23
C. Consideration of § 902 Factors Supports a Determination of Class
Certification……………………………………………………………...24
CONCLUSION…………………………………………………………………………………..25
ii
TABLE OF AUTHORITIES
Cases Page
Bittner v. Metropolitan Life Ins. Co.,
NYLJ, Dec. 19, 1994, p. 27, col. 6 (Sup.Ct. N.Y.Co.)…………………………………………..20
Borden v. 400 E. 55th St. Assoc., L.P.,
2014 N.Y. LEXIS 3346 (Nov. 24, 2014)…………………………………………………….11, 19
Brandon v. Chefetz,
106 A.D.2d 162, 485 N.Y.S.2d 55 (1st Dept. 1985)……….…....………………………...9, 11, 13
Brandy v. Canea Mare Contracting,
34 A.D.3d 512 (2d Dept. 2006)……..…………..…….…………………………………………23
Broder v MBNA Corp.,
281 AD2d 369, 722 N.Y.S.2d 524 (1st Dept, 2001)………………..……………………………18
Canavan v Chase Manhattan Bank,
234 A.D.2d 493 (2d Dept. 1996)……………..…….……………………………………………10
Cardona v. Maramount Corp.,
2009 N.Y. Misc. LEXIS 5010 (N.Y. Sup. Ct. Nov. 12, 2009) (Edmead, J.)………………..passim
Carlin v. Singh Hospitality Group, Inc.,
2012/14702 (Sup. Ct. Nassau Cty. Dec. 20, 2013)……………………………………………2, 12
Cataldo v. Morrell Caterers,
12-CV-1690 (JFB)(ARL) (E.D.N.Y. June 25, 2013)…………………………………………3, 13
Cherry v Resource America, Inc.,
15 A.D.3d 1013 (4th Dept. 2005)…………………….…..……………………………………...14
Cox v. Nap Construction, Inc.,
Index No. 11179/03 (Sup. Ct. N.Y. Co. 2004), aff’d, 10 N.Y.3d 592, 891 N.E.2d 271, 861
N.Y.S.2d 238 (2008)……..………………………………………………………………………23
Dabrowski v. Abax Incorporated,
84 A.D.3d 633 (1st Dept. 2011)……………………….....................................................12, 23, n5
Englade v. Harper Collins Publs., Inc.,
289 A.D.2d 159 (1st Dept. 2001)…………...….………………………………………………...11
Friar v. Vanguard Holding Corp.,
78 A.D.2d 83 434 N.Y.S.2d 698 (2nd Dept. 1980)…............................................................passim
iii
Galdamez v. Biordi Construction Corp.,
2006 WL 2969651 (Sup. Ct. N.Y. Co. 2006), aff’d 855 N.Y.S.2d 104 (1st Dept. 2008)…..passim
Geiger v. Amer. Tobacco Co.,
181 Misc.2d 875 (Sup. Ct. Queens Co. 1999)……………….…………………………………..14
Gilman v. Merrill Lynch, Pierce Fenner & Smith, Inc.,
404 N.Y.S.2d 258 (Sup.Ct. N.Y.Co. 1978)……………………………………………...20, 22, 25
Globe Surgical Supply v. GEICO Ins. Co.,
2008 NY Slip Op 10583 (2d Dep't 2008)………..........................................................................18
Godwin Realty Assoc. v. CATV Enterprises, Inc.,
275 A.D.2d 269 (1st Dept. 2000)…………………………………………………………………18
In re “Agent Orange” Product Liability Litigation,
506 F.Supp. 762 (E.D.N.Y. 1980)……………………………………………………………….24
Kehn v. Plainview Hospitality, LLC,
Index No. 2012/9866 (Sup. Ct. Nassau Cty. Feb. 25, 2014)………………………………….2, 12
Kudinov v Kel-Tech Construction Inc.,
65 A.D.3d 481 (1st Dept. 2009)……………………………………………………………….9, 16
Krebs v. The Canyon Club,
880 N.Y.S.2d 873 (Sup. Ct. NY, Westchester Cty. Jan. 2, 2009)…………………………. passim
Lopez v. Bethpage Associates LLC,
Index No. 2012/3465 (Sup. Ct. N.Y. Cty. Aug. 13, 2013)……………………………………2, 12
Macaluso v. Woodbury International, Inc.,
Index No. 2012/3216 (Sup. Ct. Nassau Cty. Sept. 9, 2013)………………………………3, 10, 12
Martin v. Restaurant Assoc. Events Corp.,
35 Misc.3d 215 (Sup.Ct. Comm. Part. Westchester.Co. January 12, 2012)………………2, 12, 16
Nawrocki v. Proto Const.,
82 A.D.3d 534 (1st Dept. March 15, 2011)……………..…….........................................12, 18, 23
Ortiz v. J.P. Jack Corp.,
286 A.D.2d 671 (2d Dept. 2001)………………………………….……………………………..12
Pajaczek v. Cema Const. Corp.,
859 N.Y.S.2d 897 (Sup. Ct. N.Y. Co. 2008)………..…........................................................passim
iv
Pesantez v. Boyle Envtl. Svs.,
Index No. 128988/93 (Sup. Ct. N.Y. Co. 1998) (Cahn, J.), aff’d 251 A.D.2d 11
(1st Dept. 1998)……………………………………………………………………………..passim
Pruitt v. Rockefeller Center Properties, Inc.,
167 A.D.2d 14 (1st Dept. 1991)……………………………………………………………..passim
Ramirez v. Mansions Catering Inc.,
2009 N.Y. Misc. LEXIS 5661 (Sup. Ct. NY April 27, 2009)……………………………..3, 12, 23
Samiento v. World Yacht Inc.,
10 NY3d 70 (2008)…………………………………………….……………………………passim
Smellie v. Mount Sinai Hospital,
2004 WL 2725124 (S.D.N.Y. Nov. 29, 2004)……..…………………………………………….23
Spicer v. Pier Sixty LLC,
269 F.R.D. 321, 337 (S.D.N.Y. 2010)………………………………………………………...3, 18
Super Glue v. Avis Rent-A-Car System, Inc.,
132 A.D.2d 604 (2d Dept. 1987) aff’d as mod., on other grounds, 159 A.D.2d 68 (2d Dept.
1990)………….……………………………………………………………………………...20, 22
Statutes
New York Labor Law § 196-d………………………………………………………………passim
C.P.L.R. § 901………………………………………………………………………………passim
C.P.L.R. § 902…………………………………………………………………………………...24
Other Authorities
2 Weinstein, Korn & Miller, N.Y. Civ. Practice, §901.09…………………………..…………...20
3 Weinstein-Korn-Miller, N.Y. Civil Practice § 901.11……………………….………….……..14
v
PRELIMINARY STATEMENT
Named Plaintiffs xxxxxxxx xxxx and Star Rivera commenced this action on behalf of
themselves and a putative class of individuals (collectively “Plaintiffs”) who worked in various
food-service capacities for Defendants Hornblower New York, LLC, Hornblower Cruises &
Events, Terry Macrae, and any other related entities (collectively referred to as “Defendants” or
“Hornblower”) since April 2012.1
Plaintiffs’ central allegation is that Defendants violated New York Labor Law Article 6 §
196-d by charging customers – on their standard contracts, invoices, and other event related
documents – a service charge or administrative charge (“Service Charges”) without disclaiming
such charges, and without distributing such charges to the putative class. This practice resulted in
the customers reasonably believing that such charges were gratuities for the staff. [See Exhibit A,
Plaintiffs’ First Amended Complaint, ¶¶ 4-6, 23-41].2 According to Section 196-d of the Labor
Law, “[n]o 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.” 3 The
Court of Appeals’ landmark decision in Samiento v. World Yacht Inc., 10 N.Y.3d 70 (2008) held
that “the standard under which a mandatory charge or fee is purported to be a gratuity should be
weighed against the expectation of the reasonable customer… our holding [is] that a banquet
charge, like any charge can ‘purport[] to be a gratuity’ and that the reasonable patron standard
1
Although the class period typically dates back six years from the filing of the complaint (NYLL § 198(3)), according
to Defendants’ representations, Hornblower only began conducting business in New York in April 2012.
2
All Exhibits referenced herein are annexed to the Affirmation of Suzanne Leeds Klein (“Klein Aff.”).
3
This definition encompasses charges purporting to be gratuities as defined under 12 N.Y.C.R.R. § 146-2.18(b): “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.” See also 12 NYCRR §
146-2.19.
should govern when determining whether a banquet patron would understand a service charge was
being collected in lieu of a gratuity.” Id. at 79. As articulated by the First Department, Appellate
Division, “[A]n employer cannot withhold from its employees any portion of a mandatory service
charge that is added to a customer’s bill unless the employer makes it clear to the customer that it
is retaining some of all of the charge.” Tamburnio v. Madison Sq. Garden, L.P., 115 A.D. 217,
FN1 (1st Dept. 2014).
The instant motion seeks an Order pursuant to Article 9 of the New York Civil Practice
Law and Rules (“CPLR”) certifying the following class:
All individuals who performed work as servers, bussers, bartenders, barbacks, hosts
and food runners, for or on behalf of Hornblower New York, LLC, Hornblower
Cruises & Events, and Terry Macrae (“Hornblower”) in New York. The putative
class does not include maintenance workers, corporate officers, salespersons,
cooks, food preparers, chefs, dishwashers, directors, clerical, office workers or any
other person employed whose trade, classification or profession does not
customarily receive gratuities (the “Class” or “Putative Class”).
As courts in New York have repeatedly recognized, class actions brought on behalf of
service employees to recover unpaid gratuities – as service charges or administrative charges –
under § 196-d are routinely certified, as “[t]here are no individual questions presented that are
unique to any particular special event waitstaff member.” Krebs v. The Canyon Club, 880 N.Y.S.2d
873 (Sup. Ct. Westchester Cty. Jan. 2, 2009). See e.g., Kehn v. Plainview Hospitality, LLC, Index
No. 2012/9866 (Sup. Ct. Nassau Cty. Feb. 25, 2014) [Exhibit S] (class of service employees
certified where mandatory 20% service charge imposed without disclaimer); Carlin v. Singh
Hospitality Group, Inc., 2012/14702 (Sup. Ct. Nassau Cty. Dec. 20, 2013) [Exhibit T] (certifying
a class of service workers at numerous catering and restaurant locations for the use of service
charges); Lopez v. Bethpage Associates LLC, Index No. 2012/3465 (Sup. Ct. N.Y. Cty. Aug. 13,
2013) [Exhibit U]; Martin v. Restaurant Associates Events Corp., Index No. 2011/53700 (Sup. Ct.
2
Westchester Cty. Oct. 26, 2012) [Exhibit V]; Macaluso v. Woodbury International, Inc., Index No.
2012/3216 (Sup. Ct. Nassau Cty. Sept. 9, 2013) [Exhibit W]; Cataldo v. Morrell Caterers, 12-CV-
1690 (JFB)(ARL) (E.D.N.Y. June 25, 2013) (granting a Rule 23 class of service employees at
three catering locations); Ramirez v. Mansions Catering, Inc., 2009 NY Slip Op 31100U (Sup. Ct.
N.Y. Cty. Apr. 27, 2009), aff’d 74 A.D.3d 490 (1st Dept. 2010); Spicer v. Pier Sixty LLC, 269
F.R.D. 321, 337 (S.D.N.Y. 2010). The claims of the Named Plaintiffs and all other members of
the putative class arise from the same conduct by Defendants, whereby the Named Plaintiffs and
the class suffered from the same wrongs. As Plaintiffs’ claims satisfy all elements of Article 9 of
the CPLR, the instant motion for class certification should be granted.
STATEMENT OF FACTS
As touted by its own promotional materials, Hornblower Cruises offers “Unforgettable
Private Events” and “remains the nation’s largest private passenger vessel company, boasting over
170 vessels with capacities from 20 to 2,200.”4 Hornblower’s New York fleet consists of six
different yachts, with capacities for private events ranging from 100 up to 1,200 guests. [Exhibit
B, Deposition of Cameron Clark (“Clark Dep.”), pg. 20:12- 22:22]. Hornblower hosts various
catered events on its yachts, such as weddings, corporate events, confirmations, bar mitzvahs and
birthday parties. [Id. pg. 24: 3-19]. Hornblower is so busy during its peak season, that all vessels
typically host catered events at the same time. [Id. pg. 90: 23- 91:11].
Hornblower has employed hundreds of service employees who perform work as servers,
bussers, bartenders, barbacks, hosts and food runners performing work at multiple catered events
on behalf of Hornblower. [Ex. B, Clark Dep., pg. 37: 4-9 (Hornblower employs at least 100 to 150
service employees at any one time); see also Affidavit of xxxxxxxx xxxx (“xxxx Aff.”), annexed
4
See https://hornblowernewyork.com.
3
as Exhibit C; Affidavit of Sakima Rodriguez (“Rodriguez Aff.”), annexed as Exhibit D; Affidavit
of Lillian Vazquez (“Vazquez Aff.”), annexed as Exhibit E; Deposition Transcript of Star Rivera
(“Rivera Dep.”), excerpts annexed as Exhibit F; Deposition Transcript of xxxxxxxx xxxx (“xxxx
Dep.”), excerpts annexed as Exhibit G].
The putative class of Hornblower service employees includes both long-term and
temporary employees who have collectively worked at hundreds of catered events on
Hornblower’s vessels since 2012. [Id.] Plaintiffs allege that they and their co-workers were subject
to Hornblower’s unlawful policy of failing to remit gratuities to Plaintiffs as required under NYLL
§ 196-d at those events where a Service Charge was assessed to the customer. [Ex. C, xxxx Aff.
¶¶ 9-12; Ex. D, Rodriguez Aff., ¶¶ 9-12; Ex. E, Vazquez Aff.,, ¶¶ 7-10; Ex. F, Rivera Dep., pg.
66: 9-16].
More specifically, Plaintiffs allege that Hornblower contracted with customers to provide
catering services at hundreds of events held on Hornblower’s fleet of yachts, and often included a
Service Charge in its invoices, contracts, and other catered event related documents. [See e.g. Ex.
C, xxxx Aff., ¶ 10 (“Hornblower required its customers to pay a mandatory service charge. I know
this because I saw forms and contracts that listed a service charge. I was also told by colleagues
that Hornblower charged a service charge.”); Ex. D, Rodriguez Aff., ¶ 10; Ex. E, Vazquez Aff., ¶
8; Ex. F, Rivera Dep., pg. 42: 16-21 (“the way it’s written, it’s misleading…it’s on a separate piece
of paper when they’re signing it.”); see also pg. 66: 9-16 (“it is illegal to…keep [the service charge]
as an owner or manager, and then not pay the staff that charge and give the illusion to the client
that they are being paid that charge and then tell the staff to not ask the client directly for
gratuity.”)]. Further, Defendants’ documents explicitly convey that a service or administrative
charge will apply. [See e.g. Ex. L, event invoice]. These documents used by Hornblower did not
4
adequately disclaim that the service or administrative charge was not a gratuity, which creates a
rebuttable presumption requiring an explicit disclaimer on all documents including contracts,
invoices, menus, and promotional materials that explain pricing. See 12 NYCRR § 146-2.19.
Although the invoices and other catering-related documents contained the use of service
and/or administrative charges that a reasonable customer would have presumed to be gratuities,
these amounts were not distributed to the workers. [Ex. C, xxxx Aff., ¶ 11 (“At no time did I
receive any gratuity from my time working events for Hornblower.”); Ex. D, Rodriguez Aff., ¶ 11;
Ex. E, Vazquez Aff., ¶ 9]. These service workers were only paid an hourly rate. [Ex. C, xxxx Aff.,
¶ 9; Ex. D, Rodriguez Aff., ¶ 9; Ex. E, Vazquez, ¶ 7].
Consistent with the holding in World Yacht, its progeny, and the Hospitality Industry Wage
Order, Plaintiffs allege that Defendants’ failure to explain the service or administrative charge
caused the reasonable customer to believe that the charge was a gratuity that would be paid to the
putative class members who worked those events. See also, Tamburino, 115 A.D.2d at n1. The
New York State Department of Labor adopted a presumption, based on the Court of Appeals’
decision in World Yacht, that the use of the term “service charge,” without any further explanation,
is a charge purported to be a gratuity. [See New York State Department of Labor (NYSDOL)
Regulation, “Hospitality Industry Wage Order”, 146-2.18(b), annexed as Exhibit H]. In pertinent
part, the Wage Order explicitly states:
Section 196-d of the New York State Labor Law prohibits
employers from demanding, accepting, or retaining, directly or
indirectly, any party 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.
5
(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.
[See Ex. H, 12 NYCRR § 146-2.18 (emphasis added)]. With respect to the term “administrative
charge”, the NYSDOL regulations mandate that:
(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 the
administration of the banquet, special function, or package deal, is
not purported to be a gratuity, and will not be distributed as
gratuities as 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.
[See Ex. H, 12 NYCRR § 146-2.19 (emphasis supplied)]. Absent conspicuous contract language
to the contrary, a reasonable customer who paid the Service Charge would have understood the
term “service charge” or “administrative charge” to be a gratuity that was to be distributed to the
service employees. [Id.]. As such Defendants “allowed their customers to believe that the charges
were in fact gratuities for their employees” and thus cannot “be allowed to retain these monies.”
World Yacht, 10 N.Y. 3d at 81.
At this class certification stage, it is well-settled that the inquiry is limited to “whether there
appears to be a cause of action that is neither spurious nor a sham.” Cardona v. Maramount Corp.,
2009 N.Y. Misc. LEXIS 5010, *8 (N.Y. Sup. Ct. Nov. 12, 2009) (Edmead, J.) (citing Simon, 75
6
A.D.2d at 288). Although Plaintiffs are not required to prove liability at this juncture (e.g. that
customers were misled by Hornblower’s standard form contracts and invoices, and thus gratuities
were wrongfully withheld), the documentary evidence more than substantiates that their claims are
not a sham. [See e.g. Exhibits A through W]. Plaintiffs’ submissions support that Defendants
uniformly (1) charged Service Charges for catered events, and (2) failed to disclaim it in
accordance with the law. As demonstrated by the documentary evidence, the explanatory language
required by the NYSDOL was not properly displayed on Hornblower’s invoices, receipts,
contracts, promotional pamphlets, menus, banquet event order forms, or similar catering-related
documents. By way of example, Defendants’ wedding pamphlets explicitly reference an additional
“service charge” without any explanation or disclaimer. [Ex. I, New York Weddings promotional
pamphlet; see also 2013 wedding promotional websites containing reference to “administrative
fees” without any disclaimer at Exhibits I-1, I-2, I-3]. Likewise, wedding menus reference
“Administrative Fees” without providing any disclaimer regarding gratuities. [Ex. J, Wedding
package menu]. Other promotional materials explicitly reference a 25% service charge without
any disclaimer or clarification. [Ex. K, promotional website for New York weddings]. Although
Defendants’ invoices to patrons contained service or administrative charges, those documents fail
to provide any clarification regarding the nature of the charge. [See e.g. Ex. L, Billing Details with
Administrative Fees of $918.75 and $5,160.00; Ex. M, wedding invoice with Administration Fee
of $5,160.00].
Additionally, if an individual purchases a ticket to a catered event through the Hornblower
website, the website similarly fails to disclaim that the administrative charge is not a gratuity. [See
e.g. Ex. N, 2014 “Sights & Sips” event with 25% Administrative Fee applied without proper
7
disclaimer; see also Ex. O, 2015 New Year’s Eve Dinner Cruise with 25% Administrative Fee
applied without proper disclaimer].
Tellingly, Defendants’ website fails to disclaim the nature of the service or administrative
charge in its “Frequently Asked Questions” section representing that a gratuity will be assessed at
time of reservation in the form of a service charge:
IS GRATUITY INCLUDED?
A service charge is collected at the time of reservation, related to the cruise and the
service included in the ticket.
[See 2014 “Frequently asked Questions” at Exhibit P]. It should be noted that this section of the
website was obtained in 2014- prior to the lawsuit’s inception. In 2015, after Defendants became
aware of this lawsuit, the same section was amended to contain a disclaimer. [See Exhibit P,
compare to 2015 “Frequently Asked Questions” at Exhibit Q].
Hornblower cannot dispute that its invoices and other standardized catering documents
used the terms “service charge” or “administrative charge” without any explanation or disclaimer
regarding the nature of those charges. Plaintiffs will prove, at an appropriate stage of the litigation,
that the wording of Hornblower’s invoices and promotional materials caused reasonable customers
to believe that the service charge was a gratuity that would be paid to service employees – such as
Plaintiffs. At issue on this motion, however, is whether the Plaintiffs have common claims that
can be adjudicated on a class-wide basis. As set forth below, Plaintiffs’ submissions show that
Plaintiffs and other putative class members were required to perform the same duties, were subject
to identical policies, worked at events that were subject to standardized catering forms, and did not
receive any gratuities. As such, Plaintiffs satisfy the prerequisites to class certification under
Article 9 of the CPLR.
8
PROCEDURAL HISTORY
Plaintiffs commenced this action on November 5, 2014 to recover unpaid gratuities.
Shortly thereafter, Defendants submitted a motion to dismiss the action in its entirety, pursuant to
CPLR 3211(a)(1) and (7). This Court’s May 6, 2015 Order denied Defendants’ motion to dismiss,
reasoning that the documentary evidence submitted did not defeat Plaintiffs’ allegations that
documents provided to customers (such as menus, bills and invoices) contained a mandatory
service charge without a disclaimer, and thus could have misled a reasonable patron. [See May 6,
2015 Order at Exhibit R, pg. 16].
Thereafter, the parties engaged in pre-class certification discovery.5 Plaintiffs now seek
certification of a class of service workers who performed work at catered events on behalf of
Hornblower, and were allegedly deprived of unlawfully retained gratuities. Although a factual
determination on the merits is not appropriate at this stage of the litigation, Plaintiffs’ submissions
are more than sufficient to meet their burden for class certification. It is well established that courts
do not inquire into the merits of a case for class certification purposes. Brandon v. Chefetz, 106
A.D.2d 162, 168 (1st Dept. 1985) (“inquiry on a motion for class action certification vis-à-vis the
merits is limited to a determination as to whether on the surface there appears to be a cause of
action which is not a sham”) (citing Simon v. Cunard Line, 75 A.D.2d 283 (1st Dept. 1980));
5
Throughout the discovery process Defendants repeatedly refused to produce relevant and responsive documents.
Defendants improperly objected to producing information concerning the putative class, limiting the production to
information pertaining to only the Named Plaintiffs and the events they worked at. It is well-established that Plaintiffs
are entitled to discovery identifying information regarding potential class members and establish the necessary facts
to satisfy the prerequisites for class certification. See e.g. Dabrowski v ABAX Incorporated, 2009 N.Y. Misc. LEXIS
5640 (N.Y. Sup. Ct. Apr. 16, 2009); Casey v. Prudential Securities, Inc., 702 N.Y.S.2d 670 (3d Dept. 2000); Scott v.
Prudential Ins. Co. of Amer., 492 N.Y.S.2d 201 (4th Dept. 1985). In light of Defendants’ failure to comply with basic
discovery obligations, Plaintiffs have only received a small sampling of contracts and invoices. Nevertheless, Plaintiffs
have amply satisfied the prerequisites to class certification.
9
Macaluso, Index No. 2012/3216, Ex. N (“[T]he Court’s function on the plaintiffs’ motion is not to
weigh facts or render a summary judgment-type conclusion with respect to the substance of the
plaintiffs’ claims”).
This Court has held that “any inquiry into the merits of plaintiffs’ claim is limited to
whether there appears to be a cause of action that is neither spurious nor a sham.” Cardona v.
Maramount Corp., 2009 N.Y. Misc. LEXIS 5010, *8 (N.Y. Sup. Ct. Nov. 12, 2009) (Edmead, J.)
(citing Simon, 75 A.D.2d at 288). Plaintiffs’ submissions sufficiently demonstrate that their claims
are certainly not a sham. Hornblower’s allegedly unlawful policy of withholding gratuities that a
reasonable customer would have assumed were meant for service employees is a class-wide issue
that uniformly impacts each putative class member. Moreover, Hornblower utilized standardized
forms and contracts to effectuate this allegedly unlawful scheme, thereby raising uniform questions
of law and fact, rendering this factual scenario ideal for class certification. As such and for the
reasons set forth below, Plaintiffs’ motion for class certification should be granted.
ARGUMENT
I. CLASS CERTIFICATION IS PROPER BECAUSE PLAINTIFFS HAVE MET ALL
ELEMENTS OF CPLR §§ 901 AND 902
A. Class Certification Is Routinely Granted In Actions For Unpaid Gratuities
In order to obtain class certification, Plaintiffs must satisfy each of the five statutory
requirements of CPLR § 901 and the factors in CPLR § 902. See e.g. Canavan v. Chase Manhattan
Bank, 234 A.D.2d 493, 494 (2d Dept. 1996).
CPLR § 901(a) provides that one or more members of a class may sue as representative
parties on behalf of a class if:
1. the class is so numerous that joinder of all members whether otherwise
required or permitted is impracticable [“numerosity”];
10
2. there are questions of law or fact common to the class which predominate
over any questions affecting only individual members [“predominance”];
3. the claims or defenses of the representative parties are typical of the
claims or defenses of the class [“typicality”];
4. the representative parties will fairly and adequately protect the interests of
the class [“adequacy”]; and
5. a class action is superior to other available methods for the fair and efficient
adjudication of the controversy [“superiority”].
It is well established that, in deciding whether to certify a class, “a court must be mindful
of [the Appellate Division’s] holding that the class certification statute should be liberally
construed.” Kudinov v. Kel-Tech Construction Inc., 65 A.D.3d 481, 481 (1st Dept. 2009) (citing
Englade v. Harper Collins Publs., Inc., 289 A.D.2d 159, 159 (1st Dept. 2001)); see also Borden v.
400 E. 55th St. Assoc., L.P., 2014 N.Y. LEXIS 3346, *19 (Nov. 24, 2014); Pruitt v. Rockefeller
Center Properties, Inc., 167 A.D.2d 14, 21 (1st Dept. 1991) (“[a]ppellate courts in this state have
repeatedly held that the class action statute should be liberally construed… any error, if there is to
be one, should be ... in favor of allowing the class action”); Friar v. Vanguard Holding Corp., 78
A.D.2d 83, 90-92, (2d Dept. 1980); Galdamez v. Biordi Construction Corp., 2006 WL 2969651
(Sup. Ct. N.Y. Cty. 2006), aff’d 855 N.Y.S.2d 104 (1st Dept. 2008); Pajaczek v. Cema Const.
Corp., 859 N.Y.S.2d 897 (Sup. Ct. N.Y. Ctr. 2008) (citing Brandon v. Chefetz, 106 A.D.2d 162).
The flexible scheme of Article 9 was enacted to replace the previously rigid and undesirable
restrictions that existed under former law. This legislative intent was acknowledged by the
Appellate Division in Brandon v. Chefetz:
In his scholarly and persuasive opinion in Friar v. Vanguard Holding, cited above
[78 A.D.2d 83, 434 N.Y.S.2d 698 (2nd Dept. 1980)], Justice Lazer stated that the
criteria for class certification should be broadly construed not only because of the
general command for liberal construction of all CPLR sections (see CPLR 104),
11
but also because it is apparent that the Legislature intended article 9 to be a liberal
substitute for the narrow class action legislation which preceded it.
106 A.D.2d 168. See also Stecko v. RLI Insurance Company, 2014 N.Y. App. Div. LEXIS 7065,
*2 (1st Dept., Oct. 21, 2014).
Class certification is routinely granted in wage and hour actions in the State of New York.
See generally Stecko v. RLI Insurance Company, 2014 N.Y. App. Div. LEXIS 7065; Dabrowski
v. Abax Incorporated, 84 A.D.3d 633, 635 (1st Dept. 2011) (class action “is superior to the
prosecution of individualized claims” in action to recover unpaid wages); Nawrocki v. Proto
Construction and Development Corp., 82 A.D.3d 534, 536 (1st Dept. 2011) (“class action is the
superior vehicle for resolving this wage dispute”); Ortiz v. J.P. Jack Corp., 286 A.D.2d 671 (2d
Dept. 2001); Pesantez v. Boyle Environmental Services, Inc., 251 A.D.2d 11, 12 (1st Dept. 1998)
(class action is the “best method of adjudicating” wage and hour disputes).
More specifically, class certification is routinely granted in Labor Law § 196-d actions
such as this where the plaintiffs are seeking payment of unpaid gratuities. See e.g. Kehn v.
Plainview Hospitality, LLC [annexed as Exhibit S] (class of service employees certified where
mandatory 20% service charge imposed without disclaimer); Carlin v. Singh Hospitality Group,
Inc., Index No. 2012/14702 [annexed as Exhibit T] (certifying class of service employees at
defendants’ catering facilities where plaintiffs alleged defendants imposed a service charge which
to the reasonable customer purported to be a gratuity); Lopez v. Bethpage Associates LLC, Index
No. 2012/3465 [annexed as Exhibit U]; Martin v. Restaurant Associates Events Corp., Index No.
2012/53700 (certifying class of service employees performing work at various events and locations
where plaintiffs alleged service charges were assessed) [annexed as Exhibit V]; Macaluso v.
Woodbury International, Inc., Index No. 2012/3216 [annexed as Exhibit W]; Ramirez v. Mansions
12
Catering, Inc., 2009 NY Slip Op 31100U, aff’d 74 A.D.3d 490 (certifying class of employees who
work at defendants’ restaurant and catering facilities who allege defendants imposed a 20% service
charge which to the reasonable customer purported to be a gratuity); Krebs, 880 N.Y.S.2d 873
(certifying class of service employees at defendants’ catering facilities where plaintiffs alleged
defendants imposed a service charge which to the reasonable customer purported to be a gratuity).
See also Cataldo v. Morrell Caterers, 12-CV-1690 (JFB)(ARL) (granting a Rule 23 class of
service employees at three permanent catering locations and those working off-premise). In these
§ 196-d cases, courts have found that all requisites of class certification have been met by service
employees seeking payment of gratuities – as service charges or administrative charges – that were
improperly withheld by their employers. As the facts of this case are almost identical to those
previously mentioned, certification of the class is proper.
While, as demonstrated below, the instant action clearly meets the requirements for class
certification, any doubts must be resolved in favor of class certification. Pruitt, 167 A.D.2d at 21
(“any error, if there is to be one, should be . . . in favor of allowing the class action”); Friar, 78
A.D.2d at 90-92; Brandon, 106 A.D.2d at 168; Pesantez, Index No. 1993/128988 (Sup. Ct. N.Y.
Cty. 1998) (Cahn, J.), aff’d 251 A.D.2d 11.
B. This Action Satisfies All the Prerequisites of Section 901
(1) The Class Is So Numerous That Joinder Of All Members Is Impracticable
Section 901(a)(1) requires that the class be so numerous that joinder of all class members
is impracticable. Courts have held the general threshold for impracticability of joinder to be around
40, although numerosity has been satisfied with less than 40 class members. See e.g., Pesantez,
251 A.D.2d 11 (1st Dept. 1998).
Here, Defendants’ own witness testified that Hornblower employs at least 100 to 150
13
service employees at any one time. [Ex. B, Clark Dep., 37: 4-9]. Under these circumstances,
joinder is both impracticable and undesirable. The “numerosity” requirement has thus clearly been
satisfied.
(2) The Questions Of Law And Fact Common To The Class Predominate
Over Questions Affecting Only Individual Class Members
The second requirement of § 901 is that common questions of law or fact predominate over
any questions affecting individual members. This standard requires “predominance, not identity
or unanimity, among class members” and has been satisfied in other Labor Law § 196-d cases
where defendants use a common scheme to affect the wages of its employees and the legality of
that scheme is called into question. Krebs, 880 N.Y.S. 2d 873 (quoting Friar v Vanguard Holding
Corp.,
Preview
FILED: NEW YORK COUNTY CLERK 01/15/2016 04:47 PM INDEX NO. 160993/2014 NYSCEF DOC. NO. 30 RECEIVED NYSCEF: 01/15/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK xxxxxxxx xxxx AND STAR RIVERA, on Index No.: 160993/2014 behalf of themselves and others similarly situated, Plaintiffs, -against- HORNBLOWER NEW YORK, LLC; HORNBLOWER CRUISES AND EVENTS; TERRY MACRAE; and any other related entities, Defendants. MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION VIRGINIA & AMBINDER LLP LEEDS BROWN LAW, P.C. Lloyd Ambinder, Esq. Jeff Brown, Esq. Suzanne Leeds Klein, Esq. Michael Tompkins, Esq. 40 Broad Street, 7th Floor Brett Cohen, Esq. New York, New York 10004 One Old Country Road, Suite 347 Telephone: (212) 943-9080 Carle Place, NY 11514 Fax: (212) 943-9082 Telephone: (516) 873-9550 Fax: (516) 747-5024 Attorneys for Plaintiffs and Putative Class TABLE OF CONTENTS Page TABLE OF AUTHORITIES…………………………………………………………………….iii PRELIMINARY STATEMENT………………………………………………………………….1 STATEMENT OF FACTS………………………………………………………………………..3 PROCEDURAL HISTORY………………………………………………………………………8 ARGUMENT…………………………………………………………………………………….10 I. CLASS CERTIFICATION IS PROPER BECAUSE PLAINTIFFS HAVE MET ALL ELEMENTS OF CPLR §§ 901 AND 902……………………………………….………10 A. Class Certification is Routinely Granted in Actions for Unpaid Gratuities.……………………….………………………10 B. This Action Satisfies All the Prerequisites of Section 901…………………...13 (1) The Class Is So Numerous That Joinder Of All Members is Impracticable……………………………………………13 (2) The Questions Of Law And Fact Common To The Class Predominate Over Questions Affecting Only Individual Class Members………………..………..………...….……14 (i) Predominance is Satisfied Even Though Damages Will Differ………………………………………………….….18 (3) The Named Plaintiffs’ Claims Are Typical Of The Claims Of The Putative Class……………..…....…………....19 (4) The Named Plaintiffs Will Fairly And Adequately Protect The Interests Of The Class………………….…..21 (5) A Class Action is Superior to Other Available Methods…………….23 C. Consideration of § 902 Factors Supports a Determination of Class Certification……………………………………………………………...24 CONCLUSION…………………………………………………………………………………..25 ii TABLE OF AUTHORITIES Cases Page Bittner v. Metropolitan Life Ins. Co., NYLJ, Dec. 19, 1994, p. 27, col. 6 (Sup.Ct. N.Y.Co.)…………………………………………..20 Borden v. 400 E. 55th St. Assoc., L.P., 2014 N.Y. LEXIS 3346 (Nov. 24, 2014)…………………………………………………….11, 19 Brandon v. Chefetz, 106 A.D.2d 162, 485 N.Y.S.2d 55 (1st Dept. 1985)……….…....………………………...9, 11, 13 Brandy v. Canea Mare Contracting, 34 A.D.3d 512 (2d Dept. 2006)……..…………..…….…………………………………………23 Broder v MBNA Corp., 281 AD2d 369, 722 N.Y.S.2d 524 (1st Dept, 2001)………………..……………………………18 Canavan v Chase Manhattan Bank, 234 A.D.2d 493 (2d Dept. 1996)……………..…….……………………………………………10 Cardona v. Maramount Corp., 2009 N.Y. Misc. LEXIS 5010 (N.Y. Sup. Ct. Nov. 12, 2009) (Edmead, J.)………………..passim Carlin v. Singh Hospitality Group, Inc., 2012/14702 (Sup. Ct. Nassau Cty. Dec. 20, 2013)……………………………………………2, 12 Cataldo v. Morrell Caterers, 12-CV-1690 (JFB)(ARL) (E.D.N.Y. June 25, 2013)…………………………………………3, 13 Cherry v Resource America, Inc., 15 A.D.3d 1013 (4th Dept. 2005)…………………….…..……………………………………...14 Cox v. Nap Construction, Inc., Index No. 11179/03 (Sup. Ct. N.Y. Co. 2004), aff’d, 10 N.Y.3d 592, 891 N.E.2d 271, 861 N.Y.S.2d 238 (2008)……..………………………………………………………………………23 Dabrowski v. Abax Incorporated, 84 A.D.3d 633 (1st Dept. 2011)……………………….....................................................12, 23, n5 Englade v. Harper Collins Publs., Inc., 289 A.D.2d 159 (1st Dept. 2001)…………...….………………………………………………...11 Friar v. Vanguard Holding Corp., 78 A.D.2d 83 434 N.Y.S.2d 698 (2nd Dept. 1980)…............................................................passim iii Galdamez v. Biordi Construction Corp., 2006 WL 2969651 (Sup. Ct. N.Y. Co. 2006), aff’d 855 N.Y.S.2d 104 (1st Dept. 2008)…..passim Geiger v. Amer. Tobacco Co., 181 Misc.2d 875 (Sup. Ct. Queens Co. 1999)……………….…………………………………..14 Gilman v. Merrill Lynch, Pierce Fenner & Smith, Inc., 404 N.Y.S.2d 258 (Sup.Ct. N.Y.Co. 1978)……………………………………………...20, 22, 25 Globe Surgical Supply v. GEICO Ins. Co., 2008 NY Slip Op 10583 (2d Dep't 2008)………..........................................................................18 Godwin Realty Assoc. v. CATV Enterprises, Inc., 275 A.D.2d 269 (1st Dept. 2000)…………………………………………………………………18 In re “Agent Orange” Product Liability Litigation, 506 F.Supp. 762 (E.D.N.Y. 1980)……………………………………………………………….24 Kehn v. Plainview Hospitality, LLC, Index No. 2012/9866 (Sup. Ct. Nassau Cty. Feb. 25, 2014)………………………………….2, 12 Kudinov v Kel-Tech Construction Inc., 65 A.D.3d 481 (1st Dept. 2009)……………………………………………………………….9, 16 Krebs v. The Canyon Club, 880 N.Y.S.2d 873 (Sup. Ct. NY, Westchester Cty. Jan. 2, 2009)…………………………. passim Lopez v. Bethpage Associates LLC, Index No. 2012/3465 (Sup. Ct. N.Y. Cty. Aug. 13, 2013)……………………………………2, 12 Macaluso v. Woodbury International, Inc., Index No. 2012/3216 (Sup. Ct. Nassau Cty. Sept. 9, 2013)………………………………3, 10, 12 Martin v. Restaurant Assoc. Events Corp., 35 Misc.3d 215 (Sup.Ct. Comm. Part. Westchester.Co. January 12, 2012)………………2, 12, 16 Nawrocki v. Proto Const., 82 A.D.3d 534 (1st Dept. March 15, 2011)……………..…….........................................12, 18, 23 Ortiz v. J.P. Jack Corp., 286 A.D.2d 671 (2d Dept. 2001)………………………………….……………………………..12 Pajaczek v. Cema Const. Corp., 859 N.Y.S.2d 897 (Sup. Ct. N.Y. Co. 2008)………..…........................................................passim iv Pesantez v. Boyle Envtl. Svs., Index No. 128988/93 (Sup. Ct. N.Y. Co. 1998) (Cahn, J.), aff’d 251 A.D.2d 11 (1st Dept. 1998)……………………………………………………………………………..passim Pruitt v. Rockefeller Center Properties, Inc., 167 A.D.2d 14 (1st Dept. 1991)……………………………………………………………..passim Ramirez v. Mansions Catering Inc., 2009 N.Y. Misc. LEXIS 5661 (Sup. Ct. NY April 27, 2009)……………………………..3, 12, 23 Samiento v. World Yacht Inc., 10 NY3d 70 (2008)…………………………………………….……………………………passim Smellie v. Mount Sinai Hospital, 2004 WL 2725124 (S.D.N.Y. Nov. 29, 2004)……..…………………………………………….23 Spicer v. Pier Sixty LLC, 269 F.R.D. 321, 337 (S.D.N.Y. 2010)………………………………………………………...3, 18 Super Glue v. Avis Rent-A-Car System, Inc., 132 A.D.2d 604 (2d Dept. 1987) aff’d as mod., on other grounds, 159 A.D.2d 68 (2d Dept. 1990)………….……………………………………………………………………………...20, 22 Statutes New York Labor Law § 196-d………………………………………………………………passim C.P.L.R. § 901………………………………………………………………………………passim C.P.L.R. § 902…………………………………………………………………………………...24 Other Authorities 2 Weinstein, Korn & Miller, N.Y. Civ. Practice, §901.09…………………………..…………...20 3 Weinstein-Korn-Miller, N.Y. Civil Practice § 901.11……………………….………….……..14 v PRELIMINARY STATEMENT Named Plaintiffs xxxxxxxx xxxx and Star Rivera commenced this action on behalf of themselves and a putative class of individuals (collectively “Plaintiffs”) who worked in various food-service capacities for Defendants Hornblower New York, LLC, Hornblower Cruises & Events, Terry Macrae, and any other related entities (collectively referred to as “Defendants” or “Hornblower”) since April 2012.1 Plaintiffs’ central allegation is that Defendants violated New York Labor Law Article 6 § 196-d by charging customers – on their standard contracts, invoices, and other event related documents – a service charge or administrative charge (“Service Charges”) without disclaiming such charges, and without distributing such charges to the putative class. This practice resulted in the customers reasonably believing that such charges were gratuities for the staff. [See Exhibit A, Plaintiffs’ First Amended Complaint, ¶¶ 4-6, 23-41].2 According to Section 196-d of the Labor Law, “[n]o 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.” 3 The Court of Appeals’ landmark decision in Samiento v. World Yacht Inc., 10 N.Y.3d 70 (2008) held that “the standard under which a mandatory charge or fee is purported to be a gratuity should be weighed against the expectation of the reasonable customer… our holding [is] that a banquet charge, like any charge can ‘purport[] to be a gratuity’ and that the reasonable patron standard 1 Although the class period typically dates back six years from the filing of the complaint (NYLL § 198(3)), according to Defendants’ representations, Hornblower only began conducting business in New York in April 2012. 2 All Exhibits referenced herein are annexed to the Affirmation of Suzanne Leeds Klein (“Klein Aff.”). 3 This definition encompasses charges purporting to be gratuities as defined under 12 N.Y.C.R.R. § 146-2.18(b): “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.” See also 12 NYCRR § 146-2.19. should govern when determining whether a banquet patron would understand a service charge was being collected in lieu of a gratuity.” Id. at 79. As articulated by the First Department, Appellate Division, “[A]n employer cannot withhold from its employees any portion of a mandatory service charge that is added to a customer’s bill unless the employer makes it clear to the customer that it is retaining some of all of the charge.” Tamburnio v. Madison Sq. Garden, L.P., 115 A.D. 217, FN1 (1st Dept. 2014). The instant motion seeks an Order pursuant to Article 9 of the New York Civil Practice Law and Rules (“CPLR”) certifying the following class: All individuals who performed work as servers, bussers, bartenders, barbacks, hosts and food runners, for or on behalf of Hornblower New York, LLC, Hornblower Cruises & Events, and Terry Macrae (“Hornblower”) in New York. The putative class does not include maintenance workers, corporate officers, salespersons, cooks, food preparers, chefs, dishwashers, directors, clerical, office workers or any other person employed whose trade, classification or profession does not customarily receive gratuities (the “Class” or “Putative Class”). As courts in New York have repeatedly recognized, class actions brought on behalf of service employees to recover unpaid gratuities – as service charges or administrative charges – under § 196-d are routinely certified, as “[t]here are no individual questions presented that are unique to any particular special event waitstaff member.” Krebs v. The Canyon Club, 880 N.Y.S.2d 873 (Sup. Ct. Westchester Cty. Jan. 2, 2009). See e.g., Kehn v. Plainview Hospitality, LLC, Index No. 2012/9866 (Sup. Ct. Nassau Cty. Feb. 25, 2014) [Exhibit S] (class of service employees certified where mandatory 20% service charge imposed without disclaimer); Carlin v. Singh Hospitality Group, Inc., 2012/14702 (Sup. Ct. Nassau Cty. Dec. 20, 2013) [Exhibit T] (certifying a class of service workers at numerous catering and restaurant locations for the use of service charges); Lopez v. Bethpage Associates LLC, Index No. 2012/3465 (Sup. Ct. N.Y. Cty. Aug. 13, 2013) [Exhibit U]; Martin v. Restaurant Associates Events Corp., Index No. 2011/53700 (Sup. Ct. 2 Westchester Cty. Oct. 26, 2012) [Exhibit V]; Macaluso v. Woodbury International, Inc., Index No. 2012/3216 (Sup. Ct. Nassau Cty. Sept. 9, 2013) [Exhibit W]; Cataldo v. Morrell Caterers, 12-CV- 1690 (JFB)(ARL) (E.D.N.Y. June 25, 2013) (granting a Rule 23 class of service employees at three catering locations); Ramirez v. Mansions Catering, Inc., 2009 NY Slip Op 31100U (Sup. Ct. N.Y. Cty. Apr. 27, 2009), aff’d 74 A.D.3d 490 (1st Dept. 2010); Spicer v. Pier Sixty LLC, 269 F.R.D. 321, 337 (S.D.N.Y. 2010). The claims of the Named Plaintiffs and all other members of the putative class arise from the same conduct by Defendants, whereby the Named Plaintiffs and the class suffered from the same wrongs. As Plaintiffs’ claims satisfy all elements of Article 9 of the CPLR, the instant motion for class certification should be granted. STATEMENT OF FACTS As touted by its own promotional materials, Hornblower Cruises offers “Unforgettable Private Events” and “remains the nation’s largest private passenger vessel company, boasting over 170 vessels with capacities from 20 to 2,200.”4 Hornblower’s New York fleet consists of six different yachts, with capacities for private events ranging from 100 up to 1,200 guests. [Exhibit B, Deposition of Cameron Clark (“Clark Dep.”), pg. 20:12- 22:22]. Hornblower hosts various catered events on its yachts, such as weddings, corporate events, confirmations, bar mitzvahs and birthday parties. [Id. pg. 24: 3-19]. Hornblower is so busy during its peak season, that all vessels typically host catered events at the same time. [Id. pg. 90: 23- 91:11]. Hornblower has employed hundreds of service employees who perform work as servers, bussers, bartenders, barbacks, hosts and food runners performing work at multiple catered events on behalf of Hornblower. [Ex. B, Clark Dep., pg. 37: 4-9 (Hornblower employs at least 100 to 150 service employees at any one time); see also Affidavit of xxxxxxxx xxxx (“xxxx Aff.”), annexed 4 See https://hornblowernewyork.com. 3 as Exhibit C; Affidavit of Sakima Rodriguez (“Rodriguez Aff.”), annexed as Exhibit D; Affidavit of Lillian Vazquez (“Vazquez Aff.”), annexed as Exhibit E; Deposition Transcript of Star Rivera (“Rivera Dep.”), excerpts annexed as Exhibit F; Deposition Transcript of xxxxxxxx xxxx (“xxxx Dep.”), excerpts annexed as Exhibit G]. The putative class of Hornblower service employees includes both long-term and temporary employees who have collectively worked at hundreds of catered events on Hornblower’s vessels since 2012. [Id.] Plaintiffs allege that they and their co-workers were subject to Hornblower’s unlawful policy of failing to remit gratuities to Plaintiffs as required under NYLL § 196-d at those events where a Service Charge was assessed to the customer. [Ex. C, xxxx Aff. ¶¶ 9-12; Ex. D, Rodriguez Aff., ¶¶ 9-12; Ex. E, Vazquez Aff.,, ¶¶ 7-10; Ex. F, Rivera Dep., pg. 66: 9-16]. More specifically, Plaintiffs allege that Hornblower contracted with customers to provide catering services at hundreds of events held on Hornblower’s fleet of yachts, and often included a Service Charge in its invoices, contracts, and other catered event related documents. [See e.g. Ex. C, xxxx Aff., ¶ 10 (“Hornblower required its customers to pay a mandatory service charge. I know this because I saw forms and contracts that listed a service charge. I was also told by colleagues that Hornblower charged a service charge.”); Ex. D, Rodriguez Aff., ¶ 10; Ex. E, Vazquez Aff., ¶ 8; Ex. F, Rivera Dep., pg. 42: 16-21 (“the way it’s written, it’s misleading…it’s on a separate piece of paper when they’re signing it.”); see also pg. 66: 9-16 (“it is illegal to…keep [the service charge] as an owner or manager, and then not pay the staff that charge and give the illusion to the client that they are being paid that charge and then tell the staff to not ask the client directly for gratuity.”)]. Further, Defendants’ documents explicitly convey that a service or administrative charge will apply. [See e.g. Ex. L, event invoice]. These documents used by Hornblower did not 4 adequately disclaim that the service or administrative charge was not a gratuity, which creates a rebuttable presumption requiring an explicit disclaimer on all documents including contracts, invoices, menus, and promotional materials that explain pricing. See 12 NYCRR § 146-2.19. Although the invoices and other catering-related documents contained the use of service and/or administrative charges that a reasonable customer would have presumed to be gratuities, these amounts were not distributed to the workers. [Ex. C, xxxx Aff., ¶ 11 (“At no time did I receive any gratuity from my time working events for Hornblower.”); Ex. D, Rodriguez Aff., ¶ 11; Ex. E, Vazquez Aff., ¶ 9]. These service workers were only paid an hourly rate. [Ex. C, xxxx Aff., ¶ 9; Ex. D, Rodriguez Aff., ¶ 9; Ex. E, Vazquez, ¶ 7]. Consistent with the holding in World Yacht, its progeny, and the Hospitality Industry Wage Order, Plaintiffs allege that Defendants’ failure to explain the service or administrative charge caused the reasonable customer to believe that the charge was a gratuity that would be paid to the putative class members who worked those events. See also, Tamburino, 115 A.D.2d at n1. The New York State Department of Labor adopted a presumption, based on the Court of Appeals’ decision in World Yacht, that the use of the term “service charge,” without any further explanation, is a charge purported to be a gratuity. [See New York State Department of Labor (NYSDOL) Regulation, “Hospitality Industry Wage Order”, 146-2.18(b), annexed as Exhibit H]. In pertinent part, the Wage Order explicitly states: Section 196-d of the New York State Labor Law prohibits employers from demanding, accepting, or retaining, directly or indirectly, any party 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. 5 (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. [See Ex. H, 12 NYCRR § 146-2.18 (emphasis added)]. With respect to the term “administrative charge”, the NYSDOL regulations mandate that: (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 the administration of the banquet, special function, or package deal, is not purported to be a gratuity, and will not be distributed as gratuities as 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. [See Ex. H, 12 NYCRR § 146-2.19 (emphasis supplied)]. Absent conspicuous contract language to the contrary, a reasonable customer who paid the Service Charge would have understood the term “service charge” or “administrative charge” to be a gratuity that was to be distributed to the service employees. [Id.]. As such Defendants “allowed their customers to believe that the charges were in fact gratuities for their employees” and thus cannot “be allowed to retain these monies.” World Yacht, 10 N.Y. 3d at 81. At this class certification stage, it is well-settled that the inquiry is limited to “whether there appears to be a cause of action that is neither spurious nor a sham.” Cardona v. Maramount Corp., 2009 N.Y. Misc. LEXIS 5010, *8 (N.Y. Sup. Ct. Nov. 12, 2009) (Edmead, J.) (citing Simon, 75 6 A.D.2d at 288). Although Plaintiffs are not required to prove liability at this juncture (e.g. that customers were misled by Hornblower’s standard form contracts and invoices, and thus gratuities were wrongfully withheld), the documentary evidence more than substantiates that their claims are not a sham. [See e.g. Exhibits A through W]. Plaintiffs’ submissions support that Defendants uniformly (1) charged Service Charges for catered events, and (2) failed to disclaim it in accordance with the law. As demonstrated by the documentary evidence, the explanatory language required by the NYSDOL was not properly displayed on Hornblower’s invoices, receipts, contracts, promotional pamphlets, menus, banquet event order forms, or similar catering-related documents. By way of example, Defendants’ wedding pamphlets explicitly reference an additional “service charge” without any explanation or disclaimer. [Ex. I, New York Weddings promotional pamphlet; see also 2013 wedding promotional websites containing reference to “administrative fees” without any disclaimer at Exhibits I-1, I-2, I-3]. Likewise, wedding menus reference “Administrative Fees” without providing any disclaimer regarding gratuities. [Ex. J, Wedding package menu]. Other promotional materials explicitly reference a 25% service charge without any disclaimer or clarification. [Ex. K, promotional website for New York weddings]. Although Defendants’ invoices to patrons contained service or administrative charges, those documents fail to provide any clarification regarding the nature of the charge. [See e.g. Ex. L, Billing Details with Administrative Fees of $918.75 and $5,160.00; Ex. M, wedding invoice with Administration Fee of $5,160.00]. Additionally, if an individual purchases a ticket to a catered event through the Hornblower website, the website similarly fails to disclaim that the administrative charge is not a gratuity. [See e.g. Ex. N, 2014 “Sights & Sips” event with 25% Administrative Fee applied without proper 7 disclaimer; see also Ex. O, 2015 New Year’s Eve Dinner Cruise with 25% Administrative Fee applied without proper disclaimer]. Tellingly, Defendants’ website fails to disclaim the nature of the service or administrative charge in its “Frequently Asked Questions” section representing that a gratuity will be assessed at time of reservation in the form of a service charge: IS GRATUITY INCLUDED? A service charge is collected at the time of reservation, related to the cruise and the service included in the ticket. [See 2014 “Frequently asked Questions” at Exhibit P]. It should be noted that this section of the website was obtained in 2014- prior to the lawsuit’s inception. In 2015, after Defendants became aware of this lawsuit, the same section was amended to contain a disclaimer. [See Exhibit P, compare to 2015 “Frequently Asked Questions” at Exhibit Q]. Hornblower cannot dispute that its invoices and other standardized catering documents used the terms “service charge” or “administrative charge” without any explanation or disclaimer regarding the nature of those charges. Plaintiffs will prove, at an appropriate stage of the litigation, that the wording of Hornblower’s invoices and promotional materials caused reasonable customers to believe that the service charge was a gratuity that would be paid to service employees – such as Plaintiffs. At issue on this motion, however, is whether the Plaintiffs have common claims that can be adjudicated on a class-wide basis. As set forth below, Plaintiffs’ submissions show that Plaintiffs and other putative class members were required to perform the same duties, were subject to identical policies, worked at events that were subject to standardized catering forms, and did not receive any gratuities. As such, Plaintiffs satisfy the prerequisites to class certification under Article 9 of the CPLR. 8 PROCEDURAL HISTORY Plaintiffs commenced this action on November 5, 2014 to recover unpaid gratuities. Shortly thereafter, Defendants submitted a motion to dismiss the action in its entirety, pursuant to CPLR 3211(a)(1) and (7). This Court’s May 6, 2015 Order denied Defendants’ motion to dismiss, reasoning that the documentary evidence submitted did not defeat Plaintiffs’ allegations that documents provided to customers (such as menus, bills and invoices) contained a mandatory service charge without a disclaimer, and thus could have misled a reasonable patron. [See May 6, 2015 Order at Exhibit R, pg. 16]. Thereafter, the parties engaged in pre-class certification discovery.5 Plaintiffs now seek certification of a class of service workers who performed work at catered events on behalf of Hornblower, and were allegedly deprived of unlawfully retained gratuities. Although a factual determination on the merits is not appropriate at this stage of the litigation, Plaintiffs’ submissions are more than sufficient to meet their burden for class certification. It is well established that courts do not inquire into the merits of a case for class certification purposes. Brandon v. Chefetz, 106 A.D.2d 162, 168 (1st Dept. 1985) (“inquiry on a motion for class action certification vis-à-vis the merits is limited to a determination as to whether on the surface there appears to be a cause of action which is not a sham”) (citing Simon v. Cunard Line, 75 A.D.2d 283 (1st Dept. 1980)); 5 Throughout the discovery process Defendants repeatedly refused to produce relevant and responsive documents. Defendants improperly objected to producing information concerning the putative class, limiting the production to information pertaining to only the Named Plaintiffs and the events they worked at. It is well-established that Plaintiffs are entitled to discovery identifying information regarding potential class members and establish the necessary facts to satisfy the prerequisites for class certification. See e.g. Dabrowski v ABAX Incorporated, 2009 N.Y. Misc. LEXIS 5640 (N.Y. Sup. Ct. Apr. 16, 2009); Casey v. Prudential Securities, Inc., 702 N.Y.S.2d 670 (3d Dept. 2000); Scott v. Prudential Ins. Co. of Amer., 492 N.Y.S.2d 201 (4th Dept. 1985). In light of Defendants’ failure to comply with basic discovery obligations, Plaintiffs have only received a small sampling of contracts and invoices. Nevertheless, Plaintiffs have amply satisfied the prerequisites to class certification. 9 Macaluso, Index No. 2012/3216, Ex. N (“[T]he Court’s function on the plaintiffs’ motion is not to weigh facts or render a summary judgment-type conclusion with respect to the substance of the plaintiffs’ claims”). This Court has held that “any inquiry into the merits of plaintiffs’ claim is limited to whether there appears to be a cause of action that is neither spurious nor a sham.” Cardona v. Maramount Corp., 2009 N.Y. Misc. LEXIS 5010, *8 (N.Y. Sup. Ct. Nov. 12, 2009) (Edmead, J.) (citing Simon, 75 A.D.2d at 288). Plaintiffs’ submissions sufficiently demonstrate that their claims are certainly not a sham. Hornblower’s allegedly unlawful policy of withholding gratuities that a reasonable customer would have assumed were meant for service employees is a class-wide issue that uniformly impacts each putative class member. Moreover, Hornblower utilized standardized forms and contracts to effectuate this allegedly unlawful scheme, thereby raising uniform questions of law and fact, rendering this factual scenario ideal for class certification. As such and for the reasons set forth below, Plaintiffs’ motion for class certification should be granted. ARGUMENT I. CLASS CERTIFICATION IS PROPER BECAUSE PLAINTIFFS HAVE MET ALL ELEMENTS OF CPLR §§ 901 AND 902 A. Class Certification Is Routinely Granted In Actions For Unpaid Gratuities In order to obtain class certification, Plaintiffs must satisfy each of the five statutory requirements of CPLR § 901 and the factors in CPLR § 902. See e.g. Canavan v. Chase Manhattan Bank, 234 A.D.2d 493, 494 (2d Dept. 1996). CPLR § 901(a) provides that one or more members of a class may sue as representative parties on behalf of a class if: 1. the class is so numerous that joinder of all members whether otherwise required or permitted is impracticable [“numerosity”]; 10 2. there are questions of law or fact common to the class which predominate over any questions affecting only individual members [“predominance”]; 3. the claims or defenses of the representative parties are typical of the claims or defenses of the class [“typicality”]; 4. the representative parties will fairly and adequately protect the interests of the class [“adequacy”]; and 5. a class action is superior to other available methods for the fair and efficient adjudication of the controversy [“superiority”]. It is well established that, in deciding whether to certify a class, “a court must be mindful of [the Appellate Division’s] holding that the class certification statute should be liberally construed.” Kudinov v. Kel-Tech Construction Inc., 65 A.D.3d 481, 481 (1st Dept. 2009) (citing Englade v. Harper Collins Publs., Inc., 289 A.D.2d 159, 159 (1st Dept. 2001)); see also Borden v. 400 E. 55th St. Assoc., L.P., 2014 N.Y. LEXIS 3346, *19 (Nov. 24, 2014); Pruitt v. Rockefeller Center Properties, Inc., 167 A.D.2d 14, 21 (1st Dept. 1991) (“[a]ppellate courts in this state have repeatedly held that the class action statute should be liberally construed… any error, if there is to be one, should be ... in favor of allowing the class action”); Friar v. Vanguard Holding Corp., 78 A.D.2d 83, 90-92, (2d Dept. 1980); Galdamez v. Biordi Construction Corp., 2006 WL 2969651 (Sup. Ct. N.Y. Cty. 2006), aff’d 855 N.Y.S.2d 104 (1st Dept. 2008); Pajaczek v. Cema Const. Corp., 859 N.Y.S.2d 897 (Sup. Ct. N.Y. Ctr. 2008) (citing Brandon v. Chefetz, 106 A.D.2d 162). The flexible scheme of Article 9 was enacted to replace the previously rigid and undesirable restrictions that existed under former law. This legislative intent was acknowledged by the Appellate Division in Brandon v. Chefetz: In his scholarly and persuasive opinion in Friar v. Vanguard Holding, cited above [78 A.D.2d 83, 434 N.Y.S.2d 698 (2nd Dept. 1980)], Justice Lazer stated that the criteria for class certification should be broadly construed not only because of the general command for liberal construction of all CPLR sections (see CPLR 104), 11 but also because it is apparent that the Legislature intended article 9 to be a liberal substitute for the narrow class action legislation which preceded it. 106 A.D.2d 168. See also Stecko v. RLI Insurance Company, 2014 N.Y. App. Div. LEXIS 7065, *2 (1st Dept., Oct. 21, 2014). Class certification is routinely granted in wage and hour actions in the State of New York. See generally Stecko v. RLI Insurance Company, 2014 N.Y. App. Div. LEXIS 7065; Dabrowski v. Abax Incorporated, 84 A.D.3d 633, 635 (1st Dept. 2011) (class action “is superior to the prosecution of individualized claims” in action to recover unpaid wages); Nawrocki v. Proto Construction and Development Corp., 82 A.D.3d 534, 536 (1st Dept. 2011) (“class action is the superior vehicle for resolving this wage dispute”); Ortiz v. J.P. Jack Corp., 286 A.D.2d 671 (2d Dept. 2001); Pesantez v. Boyle Environmental Services, Inc., 251 A.D.2d 11, 12 (1st Dept. 1998) (class action is the “best method of adjudicating” wage and hour disputes). More specifically, class certification is routinely granted in Labor Law § 196-d actions such as this where the plaintiffs are seeking payment of unpaid gratuities. See e.g. Kehn v. Plainview Hospitality, LLC [annexed as Exhibit S] (class of service employees certified where mandatory 20% service charge imposed without disclaimer); Carlin v. Singh Hospitality Group, Inc., Index No. 2012/14702 [annexed as Exhibit T] (certifying class of service employees at defendants’ catering facilities where plaintiffs alleged defendants imposed a service charge which to the reasonable customer purported to be a gratuity); Lopez v. Bethpage Associates LLC, Index No. 2012/3465 [annexed as Exhibit U]; Martin v. Restaurant Associates Events Corp., Index No. 2012/53700 (certifying class of service employees performing work at various events and locations where plaintiffs alleged service charges were assessed) [annexed as Exhibit V]; Macaluso v. Woodbury International, Inc., Index No. 2012/3216 [annexed as Exhibit W]; Ramirez v. Mansions 12 Catering, Inc., 2009 NY Slip Op 31100U, aff’d 74 A.D.3d 490 (certifying class of employees who work at defendants’ restaurant and catering facilities who allege defendants imposed a 20% service charge which to the reasonable customer purported to be a gratuity); Krebs, 880 N.Y.S.2d 873 (certifying class of service employees at defendants’ catering facilities where plaintiffs alleged defendants imposed a service charge which to the reasonable customer purported to be a gratuity). See also Cataldo v. Morrell Caterers, 12-CV-1690 (JFB)(ARL) (granting a Rule 23 class of service employees at three permanent catering locations and those working off-premise). In these § 196-d cases, courts have found that all requisites of class certification have been met by service employees seeking payment of gratuities – as service charges or administrative charges – that were improperly withheld by their employers. As the facts of this case are almost identical to those previously mentioned, certification of the class is proper. While, as demonstrated below, the instant action clearly meets the requirements for class certification, any doubts must be resolved in favor of class certification. Pruitt, 167 A.D.2d at 21 (“any error, if there is to be one, should be . . . in favor of allowing the class action”); Friar, 78 A.D.2d at 90-92; Brandon, 106 A.D.2d at 168; Pesantez, Index No. 1993/128988 (Sup. Ct. N.Y. Cty. 1998) (Cahn, J.), aff’d 251 A.D.2d 11. B. This Action Satisfies All the Prerequisites of Section 901 (1) The Class Is So Numerous That Joinder Of All Members Is Impracticable Section 901(a)(1) requires that the class be so numerous that joinder of all class members is impracticable. Courts have held the general threshold for impracticability of joinder to be around 40, although numerosity has been satisfied with less than 40 class members. See e.g., Pesantez, 251 A.D.2d 11 (1st Dept. 1998). Here, Defendants’ own witness testified that Hornblower employs at least 100 to 150 13 service employees at any one time. [Ex. B, Clark Dep., 37: 4-9]. Under these circumstances, joinder is both impracticable and undesirable. The “numerosity” requirement has thus clearly been satisfied. (2) The Questions Of Law And Fact Common To The Class Predominate Over Questions Affecting Only Individual Class Members The second requirement of § 901 is that common questions of law or fact predominate over any questions affecting individual members. This standard requires “predominance, not identity or unanimity, among class members” and has been satisfied in other Labor Law § 196-d cases where defendants use a common scheme to affect the wages of its employees and the legality of that scheme is called into question. Krebs, 880 N.Y.S. 2d 873 (quoting Friar v Vanguard Holding Corp.,