Deceptive Tipping Class Action Lawsuit Filed Against NYC Restaurants

By Sarah Mirando | July 30, 2013

Category: Legal News

By Anne Bucher

restaurant tip class action lawsuit A New York man has filed a class action lawsuit alleging that several Manhattan restaurants, including Ruby Tuesday, Applebee’s, Crossroads, Olive Garden and Red Lobster, have deceptively added on tips without properly warning the customer. He claims that this practice encourages customers to tip their waiters twice. He filed his class action lawsuit in the Manhattan Supreme Court.

Ted Dimond, a tennis pro, has petitioned for the opportunity to file a class action lawsuit against the offending restaurants, which are located in Times Square. Dimond claims that Times Square restaurants frequently add 18-percent gratuity for parties of all sizes. When asked about the practice, waiters suggest that it is customary in Manhattan.

According to the class action lawsuit, the city’s consumer protection laws allow restaurants to add 15-percent gratuity for parties of eight or more. Dimond alleges that several businesses are flouting this law. In some cases, customers are deceived into tipping as much as 40 percent of their bills, not realizing that the restaurant has already added gratuity.

While some patrons say that their waiters warned them about the added gratuity, some customers are unaware that a tip has already been added, even when there are fewer than eight people in a party. Because it is customary to leave a tip, most customers are not in the habit of checking their bill to see if a tip has been added, especially if they are part of a party of four or fewer.

In his class action lawsuit, Dimond says that the named restaurants have a line on the bill underneath the total, indicating the automatic 18-percent gratuity just above the total bill amount. Under the total, the customers are given the option to add an additional tip to their bill.

Dimond accuses Ruby Tuesday, Applebee’s, Crossroads, Olive Garden and Red Lobster of illegally adding gratuity to their customers’ bills. Dimond’s lawyer says that these restaurants are “just the tip of the iceberg.” He claims that as many as 2,000 additional restaurants may be added to the class action lawsuit in the future.

“CBS This Morning” has reported on this class action lawsuit. Restaurant company Darden Restaurants, which owns Red Lobster and Olive Garden, released a statement to CBS, claiming that the automatic tip is a “convenience” for the restaurant patrons.

“Our guests always have the option of adding to, reducing or completely deducting the automatic gratuity before paying their check,” Darden said.

This New York City tipping class action lawsuit is seeking as much as $5.5 billion in damages. Dimond says that he wants to see affected customers get $50 back, plus $1,000 for each “willful violation” in which restaurants deceive customers into double-tipping. He alleges that these restaurants have violated state consumer fraud protection laws. He also claims that the restaurants have conspired to deceptively increase their prices.