Preview
FILED: NEW YORK COUNTY CLERK 07/26/2022 03:45 PM INDEX NO. 152791/2018
NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 07/26/2022
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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VINCENT SETTECASI, PAMELA GRAHAM, and Index No. 152791/2018
COREE SPENCER, individually and on behalf of others
similarly situated,
Hon. William Perry (Part 23)
Plaintiffs,
-against-
GOTHAM HALL, LLC, GOTHAM HALL
OPERATING ENTITY, LLC, CORE ZIEGFELD, LLC
d/b/a ZIEGFELD BALLROOM, SIMON
AUERBACHER, BRUCE A. KURTZ, and any other
related entities,
Defendants.
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DEFENDANTS’ MEMORANDUM OF LAW IN SUPPORT
OF MOTION TO AMEND THE CLASS ACTION
CERTIFICATION ORDER PURSUANT TO CPLR § 902
Ilan Weiser
Amanda M. Fugazy
Paul P. Rooney
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas, 11th Floor
New York, NY 10105
(212) 370-1300
Counsel to Defendants
Dated: July 26, 2022
New York, New York
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TABLE OF CONTENTS
TABLE OF AUTHORITIES .......................................................................................................... i
PRELIMINARY STATEMENT .................................................................................................... 1
SUMMARY OF FACTS ................................................................................................................ 2
THE CLASS ACTION CERTIFICATION ORDER ..................................................................... 3
DEFENDANTS’ EVIDENCE OF COMPLIANCE SINCE OCTOBER 4, 2018 .......................... 4
ARGUMENT .................................................................................................................................. 4
POINT I: THE COURT MAY AMEND THE CLASS CERTIFICATION ORDER .................... 4
POINT II: THE COURT SHOULD AMEND ITS ORDER TO SHORTEN THE CLASS
PERIOD TO COMPLY WITH CPLR § 901 AND TO FURTHER JUDICIAL ECONOMY ...... 5
A. Plaintiffs’ Claims Based on Work Performed After October 4, 2018 Lack Merit. ............ 6
B. Plaintiffs’ Claims Fail to Satisfy CPLR § 901(a)(2) or (3). ................................................ 7
CONCLUSION ............................................................................................................................. 10
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TABLE OF AUTHORITIES
Cases
Colt Industries Shareholder Lit.,
77 N.Y.2d 185, 565 N.Y.S.2d 755, 566 N.E.2d 1160, 1166 (1990) ........................................... 5
Cornell Univ. v. Dickerson,
100 Misc.2d 198 (Sup. Ct. Tompkins Co. 1979) ........................................................................ 8
Corsello v. Verizon N.Y. Inc.,
25 Misc. 3d 1221(A), 901 N.Y.S.2d 905 (Table), 2009 WL 3682595 (Sup. Ct. 2009) ............. 9
Hoerger v. Bd. of Educ. of Great Neck Union Free Sch. Dist.,
98 A.D.2d 274, 471 N.Y.S.2d 139, (1983) ................................................................................. 9
Reis v Club Med,
81 A.D.2d 793 (1st Dep’t 1981) ................................................................................................. 8
Seligman v Guardian Life Ins. Co.,
59 A.D.2d 859 (1st Dept. 1977) .................................................................................................. 8
Yollin v. Holland America Cruises, Inc.,
97 A.D.2d 720 (1st Dept. 1983).................................................................................................. 8
Statutes
12 NYCRR § 146-2.19 .......................................................................................................... passim
12 NYCRR § 146-2.19(c) ........................................................................................................... 1, 6
CPLR § 901............................................................................................................................. 22, 24
CPLR § 901(a)(2) or (3) ............................................................................................................. 7, 8
CPLR § 902............................................................................................................................ passim
Secondary Sources
Twentieth Ann. Report of N Y Judicial Conference, 1975, p. 208................................................. 8
Vincent C. Alexander, Prac. Commentaries CPLR § 902, C902:1 (2022) .................................... 5
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Defendants Gotham Hall, LLC, Gotham Hall Operating Entity, LLC (“Gotham Hall”),
Core Ziegfeld LLC, (“Zeigfeld Ballroom”),1 Simon Auerbacher, and Bruce A. Kurtz
(collectively, “Defendants”), by and through their attorneys Ellenoff Grossman & Schole LLP,
submit this Memorandum of Law, in support of Defendants’ motion pursuant to CPLR § 902 to
amend the class certification order the Court entered upon the motion of Plaintiffs Vincent
Settecasi, Pamela Graham, and Coree Spencer (collectively, “Plaintiffs”).
PRELIMINARY STATEMENT
The Court has granted class certification with respect to Plaintiffs’ claims that Defendants
failed to adequately inform their clients that the administrative charge Defendants assessed in
connection with events held at Gotham Hall and Zeigfeld Ballroom was not a gratuity. See Dkt.
No. 82. The Court’s April 13, 2022 Decision and Order provided that “the certified class shall
consist of ‘[a]ll individuals who performed work as servers, bartenders, or in related service
positions at Gotham Hall and/or Zeigfeld Ballroom between March 2012 and the present.’” Id. at
20. The Court should amend its class certification order so that only those individuals who
performed such work between March 2012 and October 4, 2018 will be class members.
The Court based its class certification order upon a determination that, while Gotham
Hall’s and Zeigfeld Ballroom’s contracts contained an adequate disclaimer that satisfied the
requirements of 12 NYCRR § 146-2.19(c), their invoices did not. Id. at 6. Evidence now
demonstrates, however, that as of October 4, 2018, Defendants’ invoices contained precisely the
same disclaimer language as their contracts, which the Court deemed compliant: “The
administrative charge is not a gratuity; it is not paid to any supervisory or event staff. Any
gratuities shall be at Client’s sole discretion.” Dkt 82 at 6.
1
Defendant Core Ziegfeld LLC is a real estate entity. The entity that operates the event space located at 141 West
54th Street, New York, New York 10019 is Core Z Operations, LLC (“Ziegfeld”).
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Thus, with respect to work performed after October 4, 2018, no meritorious class action
based upon 12 NYCRR § 146-2.19 exists, because Defendants have satisfied their burden to
demonstrate, by clear and convincing evidence, that such disclaimers were sufficient to ensure
that a reasonable client would understand that such charge was not a gratuity. Moreover, even if,
hypothetically, some invoices did not comply with the law after October 4, 2018, Plaintiffs’
claims based on work after that date would lack the typicality required of a class action, and
questions of fact and law common to the proposed class would not predominate over questions
affecting only individual class members. Therefore, the Court should amend its certification
order to limit the class membership to those who performed work before October 4, 2018.
SUMMARY OF FACTS
Plaintiffs bring this class action to recover damages for alleged wage violations under
Labor Law articles 6 and 9. Defendants deny liability. The relevant facts recited in the Court’s
Decision and Order granting Plaintiffs’ class certification motion, and which Defendants accept
as true for purposes of this motion, are stated below.
Gotham Hall and Ziegfeld Ballroom (together, “the Venues”) are two event spaces in
Manhattan. Defendants facilitate the production of private events their clients hold at the Venues
by coordinating with outside vendors, such as caterers and staffing companies, who provide
service staff to work at the Venues during events.
Plaintiffs allege they and members of the class worked for Defendants in customarily
tipped food service positions at events held at the Venues from 2012 to the present. Plaintiffs
allege Defendants charged clients a mandatory 23% charge for the administration of catered
events at the Venues. Plaintiffs further allege the mandatory charge appeared on contracts and/or
invoices for catered events, but the documents failed to sufficiently disclose to the clients that the
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mandatory charge was not a gratuity for service staff. It is alleged that a reasonable patron would
have construed the mandatory charge as a gratuity, and that Defendants’ sales or event staff
represented or allowed clients to believe the mandatory charge was a gratuity which Defendants
allegedly failed to distribute to the class members and retained for themselves. Dkt No. 82 at 2.
Defendants have submitted as evidence on this motion, 58 separate examples of contracts
and invoices collectively (one for each month, for each consecutive month, for the entire current
class period, for each Venue) that each contain adequate notification to their clients that any
mandatory charge assessed was explicitly not a gratuity.2 See, e.g., Affidavit of Bruce A. Kurtz
(“Kurtz Aff.”) ¶¶ 1-6, Exh. “A” at pp. 7, 14, 19, 24, 30 and “B” at pp. 6, 11, 17, 22, 27, 34, 39.
THE CLASS ACTION CERTIFICATION ORDER
Plaintiffs moved for class certification of their New York Labor Law claims premised
upon allegedly unlawful taking of purported gratuities on June 30, 2020 pursuant to CPLR
Article 9. Briefing of that motion and related cross-motions was closed on October 26, 2020.
The Court granted Plaintiffs’ class certification motion on April 13, 2022. Dkt. No. 82.
In granting class certification, the Court ruled that “[u]nder 12 NYCRR 146-2.19(c), a disclaimer
explaining that an administrative charge is not a gratuity must appear as ‘a statement in the
contract or agreement with the customer, and on any menu and bill listing prices.’ The
documentary evidence submitted on Defendants’ cross motion for summary judgment establishes
that the disclaimer appears in the Terms and Conditions section in the Venues’ standard
Contract, and, contrary to Plaintiffs’ contention, the Terms and Conditions form part of the
Contract.” Dkt. No. 82 at p.6-7. Specifically, paragraph 7 of all contracts the Venues provided to
2
Defendants note that no events were held at Gotham Hall from April 2020 to May 2021, and no events
were held at Ziegfeld Ballroom from April 2020 – April 2021, as a result of COVID-19-related
government restrictions on large gatherings, and therefore no contracts or invoices exist for such period.
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clients said the following: “The administrative charge is not a gratuity; it is not paid to any
supervisory or event staff. Any gratuities shall be at Client's sole discretion.” Id. at 6.
The Court further ruled, however, that “defendants have not shown they have satisfied 12
NYCRR 146-2.19(c)” because “Gotham Hall's invoices state only that ‘Special Gratuities for
Supervisory Staff at Host’s Discretion’” and “Ziegfeld Ballroom's invoices omit this language in
its entirety.” Dkt. No. 82 at 7.
DEFENDANTS’ EVIDENCE OF COMPLIANCE SINCE OCTOBER 4, 2018
Evidence gathered since the Plaintiffs moved for class certification in June 2020, shows
that the invoices for both Venues, as of October 4, 2018, do in fact contain the adequate
notification sufficient to ensure that the Venues’ clients would not understand such mandatory
charge to be a gratuity. For example, both Gotham Hall’s and Ziegfeld Ballroom’s invoices, as
of October 4, 2018, state: “[T]he Administrative charge is not a gratuity, it is not paid to
supervisory or event staff. Any gratuities shall be at Client’s sole discretion.” Kurtz Aff., Ex.
“A” and “B.” This language is identical to the disclaimer in the Venues’ form contract that the
Court found compliant with the law. See Dkt. No. 82 at 6-7.
Defendants are providing, in support of this motion, an example of each Venue’s invoice
and contract for a particular event, from every consecutive month from October 2018 to April
2022 in months when events were held. They each have the same language quoted above. See,
e.g., Kurtz Aff., Exhs. “A” and “B.”
ARGUMENT
POINT I:
THE COURT MAY AMEND THE CLASS CERTIFICATION ORDER
The Court has the discretion to amend the class certification order. Section 902 of the
CPLR, governing certification of class actions, provides, in pertinent part, “An order under this
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section may be conditional, and may be altered or amended before the decision on the merits on
the court’s own motion or on motion of the parties.”
Section 902 grants the Court broad discretion to amend class certification orders. “An
order of certification, once issued, is not impervious to change … The need to protect the due
process rights of the absent class members as well as considerations of judicial economy
necessitate judicial vigilance throughout the course of the litigation. An order of certification, in
other words, is necessarily tentative by nature.” Vincent C. Alexander, Prac. Commentaries
CPLR § 902, C902:1 (2022) (citing N.Y. Jud. Conf., Twenty-first Ann.Rep., Leg.Doc.No.90,
p.252 (1976)). In fact, “[t]he courts have repeatedly noted that flexibility is the hallmark of
CPLR Article 9 and this point was also stressed by the Judicial Conference in its proposal for
adoption of CPLR 902: ‘A wide range of discretion would enable the court to vary the order at
any time before reaching a decision on the merits.’” Vincent C. Alexander, supra (citing In re
Colt Industries Shareholder Lit., 77 N.Y.2d 185, 196, 565 N.Y.S.2d 755, 761, 566 N.E.2d 1160,
1166 (1990) and N.Y. Jud. Conf., supra, at p.252).
Thus, the Court has broad discretion under CPLR § 902 to amend class action
certification orders to efficiently manage class action litigation.
POINT II:
THE COURT SHOULD AMEND ITS ORDER TO SHORTEN THE CLASS PERIOD TO
COMPLY WITH CPLR § 901 AND TO FURTHER JUDICIAL ECONOMY
The Court should use its broad discretion to amend its order so that the class includes
only individuals who performed work as service staff at the Venues prior to October 4, 2018, and
so that the class members’ claims are based upon work performed at the Venues prior to October
4, 2018. After that date, Plaintiffs’ claims: a) lack merit because Defendants’ invoices have a
compliant disclaimer; and b) fail to satisfy the requirements of commonality and typicality.
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A. Plaintiffs’ Claims Based on Work Performed After October 4, 2018 Lack Merit.
“[U]nder 12 NYCRR 146-2.19(c), a disclaimer explaining that an administrative charge
is not a gratuity must appear as ‘a statement in the contract or agreement with the customer, and
on any menu and bill listing prices.’” Dkt. No. 82 at 6 (quoting 12 NYCRR § 146-2.19(c)). The
Court ruled in itsclass certification decision that, notwithstanding the presence of a compliant
disclaimer in the Venues’ contract, Plaintiffs’ claims survived because the disclaimer was absent
from the Venues’ invoices. Dkt. No. 82 at 6-7.
As of October 4, 2018, however, the Venues’ invoices contained the exact same
disclaimer as in the contracts. The invoices as of that date state, “The administrative charge is
not a gratuity, it is not paid to any supervisory or event staff. Any gratuities shall be at Client's
sole discretion.” Kurtz Aff., Exh. “A” at p. 7. In granting class certification, the Court ruled that
precisely the same disclaimer language made the Venues’ contracts compliant with 12 NYCRR §
146-2.19(c). The Court determined, “[t]he documentary evidence establishes that the disclaimer
appears in the Terms and Conditions section in the Venues’ standard Contract, and, contrary to
plaintiffs’ contention, the Terms and Conditions form part of the Contract.” Dkt. No. 82 at p.6-7.
Accordingly, Plaintiffs’ claims are meritless in those instances where both the Venues’
contracts and invoices contain a disclaimer stating that, “[t]he administrative charge is not a
gratuity; it is not paid to any supervisory or event staff. Any gratuities shall be at Client's sole
discretion,” i.e.,all contracts and invoices issued to the Venues’ clients as of October 4, 2018,
and thereafter. Defendants have submitted with this motion 58 examples where this is case (one
invoice and one contract, for an event held at each of the Venues, from every consecutive month
of the current class period when events were held) with respect to work performed since October
4, 2018.
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B. Plaintiffs’ Claim Fails to Satisfy CPLR § 901(a)(2) or (3).
In light of the fact that Plaintiffs’ claims lack merit with respect to work performed after
October 4, 2018, Plaintiffs’ claims based on work performed after October 4, 2018 do not satisfy
CPLR § 901(a)(2) or (3). Specifically, the claims do not involve questions of law or fact
common to the class which predominate over any questions affecting only individual members,
and also lack typicality.
Section 901(a) of the CPLR states, “[o]ne or more members of a class may sue or be sued
as representative parties on behalf of all if: . . . “2. there are questions of law or fact common to
the class which predominate over any questions affecting only individual members;” and “3. the
claims or defenses of the representative parties are typical of the claims or defenses of the class.”
Where evidence demonstrates a lack of merit to claims brought by plaintiffs, New York
courts have reversed class action certifications or denied them on the grounds that the claims
lack merit. Such courts have reasoned that, in addition to lack of merit being a factor weighing
against class certification, claims’ lack of merit also prevents satisfaction of other prerequisites to
class treatment, such as the claims’ typicality and commonality.
In that regard, the First Department has “observed that in determining whether an action
should proceed as a class action, the courts may consider, in addition to the factors enumerated in
CPLR 902, the merits of the action, with a view toward eliminating spurious and sham suits as
early as possible.” Yollin v. Holland America Cruises, Inc., 97 A.D.2d 720, 721 (1st Dept. 1983)
(citing Seligman v Guardian Life Ins. Co., 59 A.D.2d 859, 860 (1st Dept. 1977) and Twentieth
Ann Report of N Y Judicial Conference, 1975, p. 208 (“The list[of relevant factors in CPLR
902] is non-exhaustive. For example, the apparent merits of the claims asserted may have a
bearing on the court's determination.”).
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In Yollin, supra, the court applied that principle to affirm denial of certification of a class
of cruise passengers based on claims that they had been denied shopping opportunities at various
ports of call when the ship deviated from its itinerary. 97 A.D.2d at 721. The First Department
found that granting class certification on such “flimsy allegations” would be a “dubious result.”
Id. It added that “[w]hen the factors listed in CPLR 9023 are evaluated together with the
apparent lack of merit of the claims asserted, the inappropriateness of the action for class action
certification seems to us quite clear.” Yollin, 97 A.D.2d at 721. Specifically, the court found a
“likelihood that the proposed class action would ultimately break down into many minitrials
requiring the personal appearance and testimony of each class member to determine the relative
importance of the alleged lost shopping opportunities and the damages flowing to each member
of the class” and wrote that “we are therefore not persuaded that ‘there are questions of law or
fact common to the class which predominate over any questions affecting only individual
members.’” Id. (quoting CPLR 901(a)(2) and citing Reis v Club Med, 81 A.D.2d 793 (1st Dep’t
1981); and Cornell Univ. v. Dickerson, 100 Misc.2d 198, 203 (Sup. Ct. Tompkins Co. 1979)).
Similarly, the Second Department reversed an order granting class certification on the
grounds that the class members’ claims were meritless because none of the class members had
filed a notice of claim against the defendant school district. See Hoerger v. Bd. of Educ. of Great
Neck Union Free Sch. Dist., 98 A.D.2d 274, 279–80, 471 N.Y.S.2d 139, 142–43 (1983). The
3
CPLR Section 902 provides, in pertinent part as follows: “The action may be maintained as a class
action only if the court finds that the prerequisites under section 901 have been satisfied. Among the
matters which the court shall consider in determining whether the action may proceed as a class action
are: 1. The interest of members of the class in individually controlling the prosecution or defense of
separate actions; 2. The impracticability or inefficiency of prosecuting or defending separate actions; 3.
The extent and nature of any litigation concerning the controversy already commenced by or against
members of the class; 4. The desirability or undesirability of concentrating the litigation of the claim in
the particular forum; 5. The difficulties likely to be encountered in the management of a class action.”
N.Y. C.P.L.R. 902 (McKinney)
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Second Department disagreed with the trial court’s determination that “as notice was alleged in
the complaint, the ‘adequacy of such notice is not an issue properly raised upon plaintiffs' motion
for class certification.’” Id. at 280. The Second Department wrote, “[i]t is not the ‘adequacy’ of
the notice that defendant Board challenges, but whether the required notices were filed at all. If
they were not, those plaintiffs would not be able to recover on a cause of action for damages, and
their claims would be subject to dismissal. Judicial economy would be best served by making
this determination as early as possible, and it is clear that on this record a determination must be
made adverse to plaintiffs.” Id. (citations omitted). On that basis, the Second Department
reversed the trial court’s order granting class certification.
Applying Hoerger, the Kings County Supreme Court denied class certification on the
grounds that “[t]he evidence presented by [defendant] Verizon in opposition to the motion to
certify the class presents serious questions as to plaintiffs’ standing to maintain this action as an
aggrieved member of the proposed class. Plaintiffs thus fail the test of typicality.” Corsello v.
Verizon N.Y. Inc., 25 Misc. 3d 1221(A), 901 N.Y.S.2d 905 (Table), 2009 WL 3682595, at *13
(Sup. Ct. 2009), aff’d in part, appeal dismissed in part, 76 A.D.3d 941, 907 N.Y.S.2d 431
(2010), aff’d, 18 N.Y.3d 777, 967 N.E.2d 1177 (2012) The court explained that typicality is
determined by whether “plaintiff's claim derives from the same practice or course of conduct that
gave rise to the remaining claims of other class members and is based on the same legal theory”
and, in light of the doubt as to whether the plaintiff had standing, typicality was lacking.
Corsello, 25 Misc. 3d 1221(A), 901 N.Y.S.2d 905 (Table), 2009 WL 3682595, at *13.
In the case at bar, the evidence shows a complete lack of merit to claims for purported
gratuities after October 4, 2018, the date when the Venues added the adequate notification to
their invoices explicitly informing their clients that the mandatory charge was not a gratuity.
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Insofar as some stray invoices may lack the disclaimer language after October 4, 2018, such
unusual instances cannot justify class treatment.
In light of the case law cited above, no class certification should apply to Plaintiffs’
claims based on work performed after October 4, 2018 due to the underlying claims’ lack of
merit and such claims’ failure to meet CPLR § 902(a)(2)’s commonality requirement and/or §
902(a)(3)’s typicality requirement. Accordingly, the Court should amend itsclass certification
order to limit the class period to October 4, 2018.
CONCLUSION
For the foregoing reasons, the Court should grant Defendants’ motion to amend the
Court’s April 13, 2022 class certification order to limit the class membership to persons who
performed work in the period of March 2012 through October 4, 2018 and grant such other relief
as the Court deems proper.
Dated: July 26, 2022
New York, New York
Ilan Weiser
Amanda M. Fugazy
Paul P. Rooney
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas, 11th Floor
New York, NY 10105
(212) 370-1300
iweiser@egsllp.com
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CERTIFICATE OF SERVICE
I hereby certify that, on July 26, 2022, a copy of the foregoing DEFENDANTS’
MEMORANDUM OF LAW IN SUPPORT OF MOTION TO AMEND THE CLASS ACTION
CERTIFICATION ORDER PURSUANT TO CPLR § 902 was filed electronically and served by
mail on anyone unable to accept electronic filing. Notice of this filing will be sent by e-mail to
all parties by operation of the court’s electronic filing system or by mail to anyone unable to
accept electronic filing as indicated on the Notice of Electronic Filing. Parties may access this
filing through the Court’s NYSCEF system.
Ilan Weiser
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