Preview
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Exhibit 5
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To Be Argued By:
Aaron Warshaw
Time Requested: 15 Minutes
New York Supreme Court
APPELLATE DIVISION — SECOND DEPARTMENT
>>>> Docket No.
PEDRO MEMBRIVES and MICHELE SPERO, individually 2018-09117
and on behalf of others similarly situated,
Plaintiffs-Respondents,
against
HHC TRS FP PORTFOLIO LLC; REMINGTON LODGING & HOSPITALITY, LLC,
REMINGTON HOLDINGS LLC; REMINGTON LONG ISLAND EMPLOYERS, LLC;
MARK A. SHARKEY; ARCHIE BENNETT JR.; MONTY J. BENNETT; CHRISTOPHER
PECKHAM; and any other related entities,
Defendants-Appellants.
BRIEF FOR DEFENDANTS-APPELLANTS
OGLETREE, DEAKINS, NASH, SMOAK
& STEWART, P.C.
Attorneys for Defendants-Appellants
599 Lexington Avenue, Suite 1700
New York, New York 10022
212-492-2500
aaron.warshaw@ogletree.com
jamie.haar@ogletree.com
Of Counsel:
Aaron Warshaw
Jamie Haar
Nassau County Clerk’s Index No. 607828/15
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TABLE OF CONTENTS
I. PRELIMINARY STATEMENT .....................................................................1
II. QUESTIONS PRESENTED ...........................................................................5
III. STATEMENT OF FACTS ..............................................................................6
A. Plaintiffs’ Allegations............................................................................6
B. The Catered Event Process Includes Numerous Disclaimers ...............7
C. Staffing Service Agreements ...............................................................14
D. Membrives’ Purported Employment With the Hyatt ..........................18
E. Spero’s Purported Work at Catered Events at the Hyatt .....................19
F. The Decision and Order ......................................................................20
IV. ARGUMENT .................................................................................................20
A. The Trial Court Erred in Granting Plaintiffs’ Summary Judgment
Motion and Denying Defendants’ Summary Judgment Motion .........20
1. Summary Judgment Standard ...................................................20
2. Applicable Law to Gratuities and Administrative Fees,
Including the Dispositive Ahmed and Villasin Decisions .........21
3. The Undisputed Facts Show That Remington Long Island
Utilized Adequate Disclaimers .................................................25
4. Justice Bucaria’s Reversible Errors of Fact and Law ...............26
B. The Trial Court Erred in Failing to Decertify the Class Due to
Plaintiffs’ Failure to Sustain Their Burden Under
C.P.L.R. §§ 901 and 902 .....................................................................30
1. Requirements Under C.P.L.R. §§ 901 and 902 ........................31
2. Plaintiffs Have Not Established That the Class Is So
Numerous as to Make Joinder Impracticable ...........................33
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3. The Questions of Law and Fact Affecting Individual
Class Members Predominate Over Those
Common to the Class ................................................................35
a. Membrives ...........................................................................37
b. Spero....................................................................................43
4. The Named Plaintiffs’ Claims Are Not Typical of
the Claims of the Class .............................................................45
5. The Named Plaintiffs Are Not Adequate
Representatives of the Class .....................................................45
6. A Class Action Is Not the Superior Method for
Adjudication of This Controversy ............................................48
7. Plaintiffs Do Not Satisfy the C.P.L.R. § 902 Factors ...............49
8. The Named Plaintiffs Lack Standing to
Bring Class Claims ...................................................................50
V. CONCLUSION..............................................................................................52
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TABLE OF AUTHORITIES
Page(s)
Cases
Ahmed v. Morgans Hotel Grp. Mgmt., LLC,
54 Misc. 3d 1220(A), 55 N.Y.S.3d 691 (Sup. Ct. N.Y. Cnty. 2017),
aff’d sub nom. Ahmed v. Morgan’s Hotel Grp. Mgmt., LLC, 160
A.D.3d 555, 74 N.Y.S.3d 546 (1st Dep’t 2018), leave to appeal
denied, 32 N.Y.3d 901, 109 N.E.3d 1154 (2018) ........................................passim
Alix v. Wal-Mart Stores, Inc.,
16 Misc. 3d 844, 838 N.Y.S.2d 885 (Sup. Ct., Albany Cnty. 2007),
aff’d, 57 A.D.3d 1044, 868 N.Y.S.2d 372 (3d Dep’t 2008) ........................passim
Amorim v. Metropolitan Club,
Index No. 650008/16, 2018 NY Slip. Op. 33270 (Sup. Ct. N.Y.
Cnty. Dec. 11, 2018) ........................................................................................... 24
Brill v. City of New York,
2 N.Y.3d 648, 781 N.Y.S.2d 261 (2004) ............................................................20
Bynog v. Cipriani Grp.,
1 N.Y.3d 193, 770 N.Y.S.2d 692 (2003) .....................................................passim
Cardona v. Maramont Corp.,
43 Misc. 3d 1230(A), 993 N.Y.S.2d 643 (Sup. Ct., N.Y. Cnty.
2014) ...................................................................................................................32
Carni v. Cont’l Home Loans, Inc.,
44 Misc. 3d 788, 989 N.Y.S.2d 798 (Sup. Ct., Nassau Cnty. 2014) ............31, 32
Chaine v. Paris Limousine Servs., Corp.,
32 Misc. 3d 1227(A), 934 N.Y.S.2d 32 (Sup. Ct., N.Y. Cnty.
2011). C...............................................................................................................49
City of New York v. Maul,
14 N.Y.3d 499 (2010) .........................................................................................32
Evans v. City of Johnstown,
97 A.D.2d 1, 470 N.Y.S.2d 451 (3rd Dep’t 1983) .............................................35
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Felice v. St. Agnes Hosp.,
65 A.D.2d 388, 411 N.Y.S.2d 901 (2d Dep’t 1978)........................................... 42
Fernandez v. Masterpiece Caterers Corp.,
2016 WL 6639047 [Sup Ct New York County 2016] ........................................24
Genesis Healthcare Corp. v. Symczyk,
133 S. Ct. 1523 (2013) ........................................................................................51
Gilman v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
93 Misc. 2d 941, 404 N.Y.S.2d 258 (Sup. Ct., N.Y. Cnty. 1978) ......................49
Jara v. Strong Steel Door, Inc.,
20 Misc. 3d 1135(A) 18, 872 N.Y.S.2d 691 (Sup. Ct., Kings Cnty.
2008) ...................................................................................................................45
Marchant v. Mead-Morrison Mfg. Co.,
252 N.Y. 284, 169 N.E. 386 (1929) (Cardozo, C.J.) ..........................................22
Maywalt v. Parker & Parsley Petroleum Co.,
67 F.3d 1072 (2d Cir. 1995) ............................................................................... 46
Murray v. Empire Ins. Co.,
175 A.D.2d 693, 572 N.Y.S.2d 909 (1st Dep’t 1991) ........................................50
Picard v. Bigsbee Enterprises, Inc.,
44 Misc. 3d 1214(A), 997 N.Y.S.2d 669 (Sup. Ct., Albany Cnty.
2014) ...................................................................................................................48
Pruitt v. Rockefeller Center Properties, Inc.,
167 A.D.2d 14 (1st Dep’t 1991) .........................................................................46
Rallis v. City of New York,
3 A.D.3d 525 (2d Dept. 2004) ............................................................................32
Raske v. Next Mgm’t, LLC,
40 Misc.3d 1240(A), 977 N.Y.S.2d 699 (Sup. Ct., N.Y. Cnty.
2013) ...................................................................................................................50
Rosabella v. Metro. Transp. Auth.,
23 A.D.3d 365, 804 N.Y.S.2d 771 (2d Dep’t 2005)........................................... 20
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Samiento v. World Yacht Inc.,
10 N.Y.3d 70, 854 N.Y.S.2d 83, 883 N.E.2d 990 [2008] ......................22, 24, 28
Simon v. Eastern Ky. Welfare Rights Organization,
426 U.S. 26 (1976).............................................................................................. 50
Matter of Ted Is Back Corp.,
64 N.Y.2d 725, 485 N.Y.S.2d 742 (1984) .......................................................... 41
Tegnazian v. Con. Edison, Inc.,
189 Misc.2d 152, 730 N.Y.S.2d 183 (Sup. Ct., N.Y. Cnty. 2000) ...............50, 51
Villasin v. The Sleepy Hollow Country Club,
No. 611534/2017 (Sup. Ct. Nassau Cnty. May 11, 2018) ...........................passim
In re Wachovia Equity Sec. Litig.,
753 F. Supp. 2d 326 (S.D.N.Y. 2011) ................................................................ 51
Wojciechowski v. Republic Steel, Corp.,
67 A.D.2d 830, 413 N.Y.S.2d 70 (4th Dep’t 1979)............................................ 35
Zheng v. Liberty Apparel Co.,
355 F.3d 61 (2d Cir. 2003) .................................................................................42
Zuckerman v. New York,
49 N.Y.2d 557 (1980) .........................................................................................21
Statutes and Other Authorities
12 N.Y.C.R.R. § 146-2.18 ...................................................................................6, 21
12 N.Y.C.R.R. § 146-2.19 .............................................................................6, 23, 24
C.P.L.R. § 901 ...................................................................................................passim
C.P.L.R. § 902 ...................................................................................................passim
N.Y. Labor Law § 196-d ................................................................................3, 22, 24
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Defendants-Appellants HHC TRS FP Portfolio LLC (“HHC”), Remington
Lodging & Hospitality, LLC, Remington Holdings LLC, Remington Long Island
Employers, LLC (“Remington Long Island”), Mark A. Sharkey, Archie Bennett
Jr., Monty J. Bennett, and Christopher Peckham (collectively, “Defendants”)
respectfully submit this brief in support of their appeal from the decision and order
of the Honorable Stephen A. Bucaria, J.S.C., of the Supreme Court of New York,
Nassau County, Commercial Division, dated July 24, 2018 (the “Decision &
Order”). The Decision & Order denied Defendants’ summary judgment and class
certification motion, and granted Plaintiffs-Appellees’ summary judgment motion.
Defendants respectfully request that the Court reverse and remand the
decision below by granting Defendants’ summary judgment and class certification
motion. In the alternative, Defendants respectfully request that the Court reverse
and remand the lower court’s grant of Plaintiffs-Appellees’ summary judgment
motion, and direct the case to a trier of fact for disposition on the merits.
I. PRELIMINARY STATEMENT
Plaintiffs-Appellees Pedro Membrives (“Membrives”) and Michelle Spero
(“Spero”) (collectively, “Plaintiffs”) commenced this case as a putative class action
under the New Yok Labor Law (“NYLL”). Plaintiffs’ case is based on the flawed
premise that Defendants unlawfully retained gratuities owed to Plaintiffs and other
similarly situated persons who purportedly worked at the Hyatt Regency Long
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Island (the “Hyatt”). Plaintiffs assert that Defendants failed to disclose that
administrative fees were not gratuities for staff. Plaintiffs further allege that
reasonable patrons would have understood the administrative fee to be gratuities,
and that Defendants’ sales and event staff represented or allowed patrons to believe
that the administrative fees were a gratuity. At the close of discovery, both
Plaintiffs and Defendants moved for summary judgement. In the alternative to their
motion for summary judgment, Defendants moved to decertify the class, which –
despite Defendants’ objections – was conditionally certified at the beginning of
discovery.
In the Decision & Order, the trial court erroneously held that Plaintiffs met
their burden as a matter of fact and law that patrons who booked events at the
Hyatt believed that administrative fees for catered events were intended as
gratuities for Plaintiffs. In doing so, the trial court wholly ignored that disclaimers
on Event Orders, Catering Agreements, and menus were sufficient as a matter of
law. The trial court further ignored the evidentiary record that sales managers
repeatedly engaged in discussions with clients regarding administrative fees kept
by the hotel and gratuities provided to banquet staff. The trial court also ignored
the evidentiary record showing that final bank checks specifically contained lines
for “Administrative Fee” and “Tip,” again notifying customers that the
administrative fee is not a tip or gratuity. Neither the trial court nor Plaintiffs
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identified – nor can they identify – any specific instance where a customer was not
made aware of the clear disclaimers at some point during the process of booking,
holding, or paying for their catered events.
The trial court also erroneously asserted that Plaintiffs entered into
employment contracts with Defendants. That conclusion alone – which Plaintiffs
did not even assert – mandates reversal. In fact, the only such agreements in the
evidentiary record are staffing contracts between banquet staff and a third-party
staffing agency that is completely unaffiliated with Defendants.
Moreover, the trial court erred in misstating and attempting to distinguish
the First Department’s decision in Ahmed v. Morgans Hotel Grp. Mgmt., LLC, 54
Misc. 3d 1220(A), 55 N.Y.S.3d 691 (Sup. Ct. N.Y. Cnty. 2017), aff'd sub
nom. Ahmed v. Morgan's Hotel Grp. Mgmt., LLC, 160 A.D.3d 555, 74 N.Y.S.3d
546 (1st Dep’t 2018), leave to appeal denied, 32 N.Y.3d 901, 109 N.E.3d 1154
(2018). Ahmed held that an employer satisfies its defense under NYLL
§ 196-d as a matter of law by notifying customers that an administrative or service
charge: (i) is for the administration of the banquet, special function, or package
deal; (ii) is not purported to be a gratuity; and (ii) will not be distributed as
gratuities to the employees who provide service to the guests. Id. The First
Department further held that, merely because other documents generated in
connection with an event do not include the explanatory language, a document
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with explanatory language is not rendered ineffective. Id. at 556. Ahmed thus held
that every document that a customer receives need not contain a disclaimer for an
employer to rebut the presumption that any service or administrative charge is
purported to be a gratuity. Id. The Court of Appeals recently denied the Ahmed
plaintiffs (represented by the same counsel as Plaintiffs herein) leave to appeal this
holding, which is highly persuasive authority that the Second Department should
expressly adopt. Ahmed mandates that summary judgment be granted in favor of
Defendants, not to Plaintiffs, because there is clear evidence that Defendants used
disclaimer language to notify patrons that administrative fees were not intended as
gratuities.
Even if Plaintiffs’ substantive claims are viable, which they are not, the trial
court further erred in misstating the evidentiary record and its cursory denial of
Defendants’ motion to decertify the class. The trial court erroneously held that
Defendants entered into employment contracts with Plaintiffs and class members.
In fact, the only such agreements in the evidentiary record are between banquet
workers and a third-party staffing agency – a fact left completely unaddressed by
the Decision & Order. The trial court also did not address or even consider
Plaintiffs’ failure to elicit or produce a single document relating to Membrives’
alleged employment with the Hyatt. Moreover, Spero admitted in deposition
testimony that she was never scheduled to work as a banquet server, and she
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possessed no information or belief as to any details of purported work at the Hyatt.
Aside from a self-serving affidavit, Spero did not provide any evidence that she
worked any banquet events at the Hyatt. These dispositive facts also went
unaddressed by the trial court. The trial court nonetheless held that, although there
is no credible evidence whatsoever to prove that either Membrives or Spero
worked at a single banquet event at the Hyatt, they have supposedly established
their claims as a matter of fact and law. The trial court further held that Membrives
or Spero can adequately represent a purported class (of unknown size) of banquet
staff from 2009 through the present. This too is plain reversible error.
For each of these reasons, and the reasons below, the Decision & Order
should be reversed and Defendants’ summary judgment motion should be granted.
Alternatively, this Court should reverse the lower court’s denial of class
decertification and, at a bare minimum, reverse the grant of Plaintiffs’ summary
judgment motion and allow the parties to proceed to trial.
II. QUESTIONS PRESENTED
1. Whether the trial court erred in denying Defendants’ summary
judgment motion, and granting Plaintiffs’ summary judgment motion, by ignoring
controlling case law and misstating the evidentiary record, which demonstrated
that Defendants utilized disclaimers to notify patrons that administrative fees were
not intended to be gratuities?
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2. Whether the trial court erred in denying Defendants’ motion to
decertify the class by ignoring controlling case law and failing to address the
evidentiary record demonstrating that Membrives and Spero had in no way met
their burden under C.P.L.R. §§ 901(a) and 902?
III. STATEMENT OF FACTS
A. Plaintiffs’ Allegations
On December 4, 2015, Membrives filed a purported class action Complaint
on behalf of himself and members of the putative class alleging that Defendants
violated the NYLL and the Hospitality Wage Order (“Wage Order”), 12
N.Y.C.R.R. §§ 146, et seq., by unlawfully retaining employees’ gratuities at all of
Defendants’ hotel and catering venues located in New York. On August 30, 2016,
Membrives filed an Amended Complaint, adding Spero as a named plaintiff. (R.
17-28.)
Plaintiffs allege that Defendants included a service charge on the contracts it
used for catered events, and provided customers with documents such as menus,
bills, and invoices that conveyed a “service charge” or other mandatory charges for
administration of catered events. (R. 24, ¶ 39.) Plaintiffs allege that Defendants
failed to disclose that the service charge was not a gratuity for the staff, and that
reasonable patrons would have understood the alleged service charge to be in the
nature of a gratuity. (R. 24, ¶¶ 41-42.) Plaintiffs further allege that Defendants’
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sales staff and event staff represented or allowed Defendants’ patrons to believe
that the alleged service charge was a gratuity, and that Plaintiffs and those
similarly situated were not paid tips to which they were entitled. (R. 24, ¶ 43.) As
to their class allegations, Plaintiffs allege that, beginning in or around December
2009, Defendants employed class members (consisting of at least 40 similarly
situated individuals) at the Hyatt to perform food and service related tasks for
catering events. (R. 22-23, ¶¶ 24-32.)
B. The Catered Event Process Includes Numerous Disclaimers
The evidentiary record regarding the catered event process at the Hyatt,
which was flatly ignored by the trial court, mandates reversal.
Remington Long Island1 frequently contracts with clients to host events at
the Hyatt. Some of these clients are new clients, and some are repeat clients. (R.
48, 164:5-6; R. 65, 76:23-24.) When a prospective client first expresses interest in
holding an event at the Hyatt, a sales manager speaks to the client to discuss their
needs and interests, including what type of event they are looking to hold, the
number of people, and whether room and banquet services are needed. (R. 30-31,
22:24-23:7; (R. 53-55, 35:23-37:7.) After an initial conversation, the sales manager
may meet with the prospective client at the Hyatt for a site visit. (R. 53-54, 35:23-
1
Remington Long Island, the only proper Defendant at issue in this case, became the
manager of the Hyatt in December 2011. (R. 333, ¶ 3.) Prior to December 2011, the Hyatt was
managed by Hyatt Hotels Corporation (“Hyatt Hotels”), which is not a party to this case. HHC
and Remington Long Island are not affiliated companies with Hyatt Hotels. (Id.) The Hyatt is the
only property at issue in this case. (Id., ¶ 4.)
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36:9; R. 60-61, 48:15-49:13.) If the prospective client is interested in a catered
event, the sales manager usually sends a menu after the initial conversation, which
sets forth various food and beverage options, as well as prices that include
mandatory charges for administration of catered events and tax. (R. 64, 61:13-18;
R. 86-116.) The menus (at least since 2017) clearly state that “[a]ll prices are
subject to a 24% Administrative Fee (which is not a gratuity for wait staff, service
bartenders, or service employees) and 8.625 % State Sales Tax.” (R. 89 at D
2
106562.) Specifically, the menus state:
(R. 87.)
After the prospective client provides more details regarding their event, the
sales manager creates a proposal, which typically includes price quotes,
minimums, number of attendees, and rooming information. (R. 31, 23:4-7; R. 55-
58, 37:8-40:22.) The proposal also includes language stating that the prices on the
proposal are exclusive of the administrative fee and tax. (R. 59, 41:4-9; R. 72-73,
95:7-96:6.) At that time, if she has not already, the sales manager informs the client
that the administrative fee does not include gratuity. (R. 68-70, 91:19-93:5.) A
2
From in or around December 2011 to in or around October 2012, the administrative fee
was 22%. (R. 333, ¶ 5.) In or around November 2012, the administrative fee increased to 23%.
(Id., ¶ 6.) In or around April 2017, the administrative fee increased to 24%. (Id., ¶ 7.) In or
around March 2018, the administrative fee increased to 26%. (Id., ¶ 8.) When administrative fees
are increased, the transition to the new amount is not immediate, but rather a gradual process.
(Id., ¶ 9.)
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contract is then prepared and sent to the client for execution. (R. 31, 23:8-9.) The
contract defines food and beverage minimums, deadlines, rooming information,
cancellation policy, and how the charges are structured, including the
administrative fee and sales tax. (R. 34, 32:4-7; R. 37, 43:9-17; (R. 62-63, 55:23-
56:16.) The contracts include another disclaimer that the administrative fee does
not include a gratuity: “All banquet charges are subject to a 23% Administrative
Fee.” (R. 119-121) (emphasis in original). Specifically, the contracts state:
(R. 120.)
After the contract is signed, the event continues to be detailed, either by the
sales manager or the director of catering. (R. 31, 23:10-13; R. 52, 19:15-20.) If the
event is turned over to the director of catering, she will reach out to the client to
introduce herself, go over the contract, obtain additional details pertaining to the
event, and explain next steps moving forward. (R. 32-33, 30:21-31:15; R. 37, 43:8-
9.) If the client has not yet seen a menu, the director of catering will send the menu
at that time, and offer to meet at the Hyatt to further discuss the event. (R. 36-37,
42:20-43:12.)
After the client has made their menu choices and determined all other details
regarding the event, either the sales manager or director of catering creates a
banquet event order (“BEO”), which is sent to the client for review and signature,
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along with a cost estimate, if the client has not yet received one. (R. 38, 44:2-7; R.
39, 50:3-12.) The BEOs further state that the fees imposed on the customer for bars
and culinary stations are not a tip, gratuity, or service charge for wait staff, service
bartenders, or service employees. (R. 117-118.) Specifically, the BEOs state:
(R. 118.)
Throughout the sales and detailing process, the sales manager and/or director
of catering conduct multiple discussions with the client regarding their options and
the various costs associated with the event, including the administrative fee and
gratuities. (R. 67-81, 90:13-104:21; R. 82, 110:21-25; R. 32-34, 30:21-32:20; R.
37-38, 43:6-44:12; R. 40-42, 87:25-89:18; R. 43-46, 95:24-98:24; R. 47, 102:2-8.)
To be clear, the contracts, BEOs, and menus contain disclaimers that the
administrative fee charged to the customers does not represent a tip, gratuity, or
service charge for wait staff, service bartenders, or service employees, and that the
administrative fee was retained by the Hyatt. (R. 86-121.) The trial court ignored
the evidence that customers are provided with numerous disclaimers that
administrative fees are not intended as gratuities to be shared with employees:
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Document Type Charges for Administration Disclaimer Dates
of Catered Events
Menu “All prices are subject to a Yes At least by 2017
24% Administrative Fee to present
(which is not a gratuity for
wait staff, service
bartenders, or service
employees)”
Banquet Event “[An] additional charge[] Yes 2011 to present
Order will be added to your final
bill: a 23% Administrative
Fee, which does not
represent a tip, gratuity or
service charge for wait
staff, service bartender or
service employee and is
retained by the hotel”
Contract “All banquet charges are Yes 2011 to present
subject to a 23%
Administrative Fee.”
(R. 86-121) (emphasis in originals).
After the details of the event are finalized, the sales manager or director of
catering turns the BEO over to the banquet department. (R. 35, 41:8-11.) After
reviewing the BEO, the banquet manager determines how many staff are needed
for each event. He then informs the staffing agency, currently Rob Mir (“Mr. Mir”)
from Finesse Hosting Corporation (“Finesse”), how many workers the Hyatt needs
for each event over the next week. (R. 124-125, 30:2-31:12.)
Mr. Mir attends larger events to oversee his staff. (R. 126-127, 32:24-33:4.)
Although the Hyatt requires the temporary employees to wear an all-black uniform
(not supplied by Defendants) like the Hyatt employees, Finesse provides them with
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nametags. (R. 128, 34:2-10.) The banquet manager does not request certain
individuals from Finesse and does not have the ability to hire any workers supplied
by Finesse. (R. 129-130, 40:16-41:18.) While Hyatt employees clock in and out for
each event, the service workers supplied by Finesse sign a sign-in and sign-out
sheet provided by Finesse. (R. 131, 44:3-13.) After an event, the Hyatt invoices
Finesse for staff provided for that event. (R. 142-145.) Critically, there is no
evidence in the record that Defendants maintained any day-to-day control,
including the ability to hire or fire, over any banquet staff – yet another fact
ignored by the trial court.
On the day of the event, the director of catering introduces the client to the
banquet manager. (R. 35, 41:12-22.) Depending on the type of event, the sales
manager may attend for part of the event as well. (R. 66, 89:18-25.) At the end of
the event, the banquet manager provides the client with the banquet check. The
check sets forth the final price of the event, administrative fee and tax, and also
provides a line for the client to leave a gratuity should they choose to do so:
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(R. 146; R. 135, 58:8-15.) If clients have any questions regarding the
administrative fee at the time they are presented with the check, which is not often,
the banquet manager will explain what the administrative fee is and that it does not
include a gratuity. (R. 136-137, 67:2-68:16.) The client then signs the check. (R.
134, 57:9-23.) Although there is no express tipping policy at the Hyatt, clients may
elect to tip in various ways. They can either leave a tip when they sign the banquet
check, or they can distribute cash tips to the staff. (R. 138-140, 70:17-72:15.)
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At the Hyatt, ten individuals are employed in the Banquet Department – a
banquet manager, a banquet captain, two servers, a bartender, and approximately
four convention set-up housemen. (R. 123, 29:12-23.) Third parties such as Finesse
– not Defendants – were the entities that staffed and assigned Membrives and those
similarly situated to him to perform services at the Hyatt. (R. 125-126, 31:8-
32:17.) Moreover, the Banquet department is entirely separate from the Restaurant
department, which is not involved in catered events. (R. 132, 47:15-22.)
Remington Long Island employees who work in the Restaurant department – such
as Spero – do not work catered events, and vice versa. (R. 132-133, 47:15-48:14.)
Moreover, the employees in the Banquet department are managed by the banquet
manager and banquet captains, who can receive gratuities, while employees in the
Restaurant department are managed by restaurant managers, who cannot receive
gratuities from catered events. (R. 141, 78:5-23.)
Despite this overwhelming evidence, the trial court erroneously granted
summary judgment in Plaintiffs’ favor and held, as a matter of fact and law, that
customers are confused whether administrative fees are intended as gratuities.
C. Staffing Service Agreements
The trial court also erred when it concluded – without any evidence in
support – that Defendants entered into employment agreements with Plaintiffs and
other class members. (R. 9) (“Defendants required many of the plaintiff class
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members to sign ‘temporary service contracts.’”). In fact, and as noted above,
Remington Long Island exclusively relies upon third-party companies to provide
staffing services at its banquet events, and there is no evidence whatsoever that any
Defendant ever entered into a contract with any Plaintiff. (R. 147-179.)
On or about October 9, 2008, defendant HHC entered into a nationwide
Staffing Service Agreement with Hospitality Staffing Solutions, LLC (“HSS”) (the
“2008 HSS Agreement”), through which HSS supplied individuals to work events
held at the Hyatt.3 (R. 180-190.) The 2008 Agreement set forth the various means
by which HSS would maintain control over its staff that were assigned at the Hyatt.
In particular, the 2008 Agreement provided that HSS “shall be responsible for all
aspects of [staff] work performance, including but not limited to, recruiting, hiring,
scheduling, promoting, disciplining, wage determination, training,” and that HSS
“expressly agrees that it shall pay its employees in accordance with all federal,
state and local wage and hour laws.” (R. 180-181.) On August 21, 2012, HSS and
HHC entered into a similar two-year Contractual Agreement for Temporary Labor
of Services (the “2012 HSS Agreement”) “specifically for the purpose of [HSS]
assigning its employees to perform services for and at [the Hyatt],” (R. 191)
(emphasis added). The 2012 HSS Agreement stated that HSS maintained control
over its employees, including that HSS “will recruit, interview, select, hire and
3
Defendant HHC is the lessee of the Hyatt. In or around December 2011, defendant
Remington Long Island began managing the Hyatt. (R. 333, ¶ 3.)
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assign employees,” and that “[a]s the employer, [HSS] will . . . maintain all
necessary personnel and payroll records for its employees . . . withhold from its
employees’ compensation any taxes, charges or other payroll deductions required
by law,” and that “employees assigned to [HHC] under this Agreement shall
remain employees of [HSS].” (R. 192.)
On October 9, 2013, HHC entered into an Agreement for Temporary Labor
Services with Finesse (the “2013 Finesse Agreement”) “specifically for the
purpose of [Finesse] assigning its employees to perform services for and at [the
Hyatt].” (R. 147) (emphasis added). The 2013 Finesse Agreement contained
similar language to the HSS Agreements clearly stating that the individuals
assigned to the Hyatt were not to be treated as employees of the Hyatt. (Id.). The
2013 Finesse Agreement provided that Finesse – not Defendants – would maintain
any necessary employment records, withhold required wage and tax deductions,
and provide liability and workers’ compensation insurance coverage. (Id.)
Individuals hired by Finesse entered into Temporary Service Contracts with
Finesse (not with Defendants as the trial court erroneously held), by which they
were clearly classified and treated as independent contractors. (R. 200.)
On May 23, 2014, HHC entered into a similar Agreement for Temporary
Labor Services with Rainbow Maintenance & Cleaning Corp. (“Rainbow
Maintenance”), which included language identical to that in the Finesse
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Agreements. (R. 171.) On February 12, 2016 and February 13, 2017, HHC
renewed its contract with Finesse. (R. 153-170.) Remington Long Island currently
contracts with Finesse to provide temporary staffing for banquet events at the
Hyatt with individuals supplied by Finesse.
During discovery, Plaintiffs subpoenaed employment records from Finesse.
In response, Finesse produced 97 Temporary Service Contracts with individuals
who apparently provided banquet services at the Hyatt. (R. 200-296.) Notably,
Finesse treated each of these individuals as independent contractors, not as
employees. (Id.) Further, these agreements are the only evidence that Plaintiffs
produced relating to purported class members who are similarly situated to
Membrives – who failed to produce a single document showing that he worked at
any banquet event at the Hyatt. Moreover, Plaintiffs did not produce any shred of
evidence showing that Finesse’s contracted individuals worked at any events at the
Hyatt and, if so, the details of those shifts. In fact, Plaintiffs never elicited any
discovery whatsoever to provide any details regarding the purported class members
other than the 97 Temporary Service Contracts, which merely reflect a contracting
relationship with Finesse and the individuals but does not indicate that the
individuals would be assigned to work at the Hyatt nor any details about such
purported work.
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D. Membrives’ Purported Employment With the Hyatt
Membrives claims that he worked as a bartender at the Hyatt from
approximately 2012 or 2013 until approximately November 2016. Yet, the trial
court ignored that Plaintiff utterly failed to elicit or produce a single document
demonstrating that Membrives worked a catered event at the Hyatt. It bears
repeating – there is no evidence in the record that plaintiff Membrives ever worked
a single catered event at the Hyatt. Indeed, Membrives lacks any information that
would substantiate his purported work at the Hyatt. For example, he does not recall
if he was assigned to the Hyatt by a staffing agency, but recalls that someone
named “Rob” (presumably Mr. Mir) asked him to work events at the Hyatt. (R.
301, 19:4-18; R. 309, 50:8-23.) Membrives does not know who employed him
during the time period that he provided services at the Hyatt. (R. 301, 17:18-
20:21.) Membrives did not recall the full names of the people who allegedly
managed him as a bartender at the Hyatt – only that they were called “Glenn,”
“Greg,” and “Sandra.” (R. 302, 21:19-25.) He has no recollection whatsoever who
was the payer listed on his paychecks, and he purports
Preview
FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 Exhibit 5 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 To Be Argued By: Aaron Warshaw Time Requested: 15 Minutes New York Supreme Court APPELLATE DIVISION — SECOND DEPARTMENT >>>> Docket No. PEDRO MEMBRIVES and MICHELE SPERO, individually 2018-09117 and on behalf of others similarly situated, Plaintiffs-Respondents, against HHC TRS FP PORTFOLIO LLC; REMINGTON LODGING & HOSPITALITY, LLC, REMINGTON HOLDINGS LLC; REMINGTON LONG ISLAND EMPLOYERS, LLC; MARK A. SHARKEY; ARCHIE BENNETT JR.; MONTY J. BENNETT; CHRISTOPHER PECKHAM; and any other related entities, Defendants-Appellants. BRIEF FOR DEFENDANTS-APPELLANTS OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. Attorneys for Defendants-Appellants 599 Lexington Avenue, Suite 1700 New York, New York 10022 212-492-2500 aaron.warshaw@ogletree.com jamie.haar@ogletree.com Of Counsel: Aaron Warshaw Jamie Haar Nassau County Clerk’s Index No. 607828/15 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 TABLE OF CONTENTS I. PRELIMINARY STATEMENT .....................................................................1 II. QUESTIONS PRESENTED ...........................................................................5 III. STATEMENT OF FACTS ..............................................................................6 A. Plaintiffs’ Allegations............................................................................6 B. The Catered Event Process Includes Numerous Disclaimers ...............7 C. Staffing Service Agreements ...............................................................14 D. Membrives’ Purported Employment With the Hyatt ..........................18 E. Spero’s Purported Work at Catered Events at the Hyatt .....................19 F. The Decision and Order ......................................................................20 IV. ARGUMENT .................................................................................................20 A. The Trial Court Erred in Granting Plaintiffs’ Summary Judgment Motion and Denying Defendants’ Summary Judgment Motion .........20 1. Summary Judgment Standard ...................................................20 2. Applicable Law to Gratuities and Administrative Fees, Including the Dispositive Ahmed and Villasin Decisions .........21 3. The Undisputed Facts Show That Remington Long Island Utilized Adequate Disclaimers .................................................25 4. Justice Bucaria’s Reversible Errors of Fact and Law ...............26 B. The Trial Court Erred in Failing to Decertify the Class Due to Plaintiffs’ Failure to Sustain Their Burden Under C.P.L.R. §§ 901 and 902 .....................................................................30 1. Requirements Under C.P.L.R. §§ 901 and 902 ........................31 2. Plaintiffs Have Not Established That the Class Is So Numerous as to Make Joinder Impracticable ...........................33 i FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 3. The Questions of Law and Fact Affecting Individual Class Members Predominate Over Those Common to the Class ................................................................35 a. Membrives ...........................................................................37 b. Spero....................................................................................43 4. The Named Plaintiffs’ Claims Are Not Typical of the Claims of the Class .............................................................45 5. The Named Plaintiffs Are Not Adequate Representatives of the Class .....................................................45 6. A Class Action Is Not the Superior Method for Adjudication of This Controversy ............................................48 7. Plaintiffs Do Not Satisfy the C.P.L.R. § 902 Factors ...............49 8. The Named Plaintiffs Lack Standing to Bring Class Claims ...................................................................50 V. CONCLUSION..............................................................................................52 ii FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 TABLE OF AUTHORITIES Page(s) Cases Ahmed v. Morgans Hotel Grp. Mgmt., LLC, 54 Misc. 3d 1220(A), 55 N.Y.S.3d 691 (Sup. Ct. N.Y. Cnty. 2017), aff’d sub nom. Ahmed v. Morgan’s Hotel Grp. Mgmt., LLC, 160 A.D.3d 555, 74 N.Y.S.3d 546 (1st Dep’t 2018), leave to appeal denied, 32 N.Y.3d 901, 109 N.E.3d 1154 (2018) ........................................passim Alix v. Wal-Mart Stores, Inc., 16 Misc. 3d 844, 838 N.Y.S.2d 885 (Sup. Ct., Albany Cnty. 2007), aff’d, 57 A.D.3d 1044, 868 N.Y.S.2d 372 (3d Dep’t 2008) ........................passim Amorim v. Metropolitan Club, Index No. 650008/16, 2018 NY Slip. Op. 33270 (Sup. Ct. N.Y. Cnty. Dec. 11, 2018) ........................................................................................... 24 Brill v. City of New York, 2 N.Y.3d 648, 781 N.Y.S.2d 261 (2004) ............................................................20 Bynog v. Cipriani Grp., 1 N.Y.3d 193, 770 N.Y.S.2d 692 (2003) .....................................................passim Cardona v. Maramont Corp., 43 Misc. 3d 1230(A), 993 N.Y.S.2d 643 (Sup. Ct., N.Y. Cnty. 2014) ...................................................................................................................32 Carni v. Cont’l Home Loans, Inc., 44 Misc. 3d 788, 989 N.Y.S.2d 798 (Sup. Ct., Nassau Cnty. 2014) ............31, 32 Chaine v. Paris Limousine Servs., Corp., 32 Misc. 3d 1227(A), 934 N.Y.S.2d 32 (Sup. Ct., N.Y. Cnty. 2011). C...............................................................................................................49 City of New York v. Maul, 14 N.Y.3d 499 (2010) .........................................................................................32 Evans v. City of Johnstown, 97 A.D.2d 1, 470 N.Y.S.2d 451 (3rd Dep’t 1983) .............................................35 iii FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 Felice v. St. Agnes Hosp., 65 A.D.2d 388, 411 N.Y.S.2d 901 (2d Dep’t 1978)........................................... 42 Fernandez v. Masterpiece Caterers Corp., 2016 WL 6639047 [Sup Ct New York County 2016] ........................................24 Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013) ........................................................................................51 Gilman v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 93 Misc. 2d 941, 404 N.Y.S.2d 258 (Sup. Ct., N.Y. Cnty. 1978) ......................49 Jara v. Strong Steel Door, Inc., 20 Misc. 3d 1135(A) 18, 872 N.Y.S.2d 691 (Sup. Ct., Kings Cnty. 2008) ...................................................................................................................45 Marchant v. Mead-Morrison Mfg. Co., 252 N.Y. 284, 169 N.E. 386 (1929) (Cardozo, C.J.) ..........................................22 Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d 1072 (2d Cir. 1995) ............................................................................... 46 Murray v. Empire Ins. Co., 175 A.D.2d 693, 572 N.Y.S.2d 909 (1st Dep’t 1991) ........................................50 Picard v. Bigsbee Enterprises, Inc., 44 Misc. 3d 1214(A), 997 N.Y.S.2d 669 (Sup. Ct., Albany Cnty. 2014) ...................................................................................................................48 Pruitt v. Rockefeller Center Properties, Inc., 167 A.D.2d 14 (1st Dep’t 1991) .........................................................................46 Rallis v. City of New York, 3 A.D.3d 525 (2d Dept. 2004) ............................................................................32 Raske v. Next Mgm’t, LLC, 40 Misc.3d 1240(A), 977 N.Y.S.2d 699 (Sup. Ct., N.Y. Cnty. 2013) ...................................................................................................................50 Rosabella v. Metro. Transp. Auth., 23 A.D.3d 365, 804 N.Y.S.2d 771 (2d Dep’t 2005)........................................... 20 iv FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 Samiento v. World Yacht Inc., 10 N.Y.3d 70, 854 N.Y.S.2d 83, 883 N.E.2d 990 [2008] ......................22, 24, 28 Simon v. Eastern Ky. Welfare Rights Organization, 426 U.S. 26 (1976).............................................................................................. 50 Matter of Ted Is Back Corp., 64 N.Y.2d 725, 485 N.Y.S.2d 742 (1984) .......................................................... 41 Tegnazian v. Con. Edison, Inc., 189 Misc.2d 152, 730 N.Y.S.2d 183 (Sup. Ct., N.Y. Cnty. 2000) ...............50, 51 Villasin v. The Sleepy Hollow Country Club, No. 611534/2017 (Sup. Ct. Nassau Cnty. May 11, 2018) ...........................passim In re Wachovia Equity Sec. Litig., 753 F. Supp. 2d 326 (S.D.N.Y. 2011) ................................................................ 51 Wojciechowski v. Republic Steel, Corp., 67 A.D.2d 830, 413 N.Y.S.2d 70 (4th Dep’t 1979)............................................ 35 Zheng v. Liberty Apparel Co., 355 F.3d 61 (2d Cir. 2003) .................................................................................42 Zuckerman v. New York, 49 N.Y.2d 557 (1980) .........................................................................................21 Statutes and Other Authorities 12 N.Y.C.R.R. § 146-2.18 ...................................................................................6, 21 12 N.Y.C.R.R. § 146-2.19 .............................................................................6, 23, 24 C.P.L.R. § 901 ...................................................................................................passim C.P.L.R. § 902 ...................................................................................................passim N.Y. Labor Law § 196-d ................................................................................3, 22, 24 v FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 Defendants-Appellants HHC TRS FP Portfolio LLC (“HHC”), Remington Lodging & Hospitality, LLC, Remington Holdings LLC, Remington Long Island Employers, LLC (“Remington Long Island”), Mark A. Sharkey, Archie Bennett Jr., Monty J. Bennett, and Christopher Peckham (collectively, “Defendants”) respectfully submit this brief in support of their appeal from the decision and order of the Honorable Stephen A. Bucaria, J.S.C., of the Supreme Court of New York, Nassau County, Commercial Division, dated July 24, 2018 (the “Decision & Order”). The Decision & Order denied Defendants’ summary judgment and class certification motion, and granted Plaintiffs-Appellees’ summary judgment motion. Defendants respectfully request that the Court reverse and remand the decision below by granting Defendants’ summary judgment and class certification motion. In the alternative, Defendants respectfully request that the Court reverse and remand the lower court’s grant of Plaintiffs-Appellees’ summary judgment motion, and direct the case to a trier of fact for disposition on the merits. I. PRELIMINARY STATEMENT Plaintiffs-Appellees Pedro Membrives (“Membrives”) and Michelle Spero (“Spero”) (collectively, “Plaintiffs”) commenced this case as a putative class action under the New Yok Labor Law (“NYLL”). Plaintiffs’ case is based on the flawed premise that Defendants unlawfully retained gratuities owed to Plaintiffs and other similarly situated persons who purportedly worked at the Hyatt Regency Long FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 Island (the “Hyatt”). Plaintiffs assert that Defendants failed to disclose that administrative fees were not gratuities for staff. Plaintiffs further allege that reasonable patrons would have understood the administrative fee to be gratuities, and that Defendants’ sales and event staff represented or allowed patrons to believe that the administrative fees were a gratuity. At the close of discovery, both Plaintiffs and Defendants moved for summary judgement. In the alternative to their motion for summary judgment, Defendants moved to decertify the class, which – despite Defendants’ objections – was conditionally certified at the beginning of discovery. In the Decision & Order, the trial court erroneously held that Plaintiffs met their burden as a matter of fact and law that patrons who booked events at the Hyatt believed that administrative fees for catered events were intended as gratuities for Plaintiffs. In doing so, the trial court wholly ignored that disclaimers on Event Orders, Catering Agreements, and menus were sufficient as a matter of law. The trial court further ignored the evidentiary record that sales managers repeatedly engaged in discussions with clients regarding administrative fees kept by the hotel and gratuities provided to banquet staff. The trial court also ignored the evidentiary record showing that final bank checks specifically contained lines for “Administrative Fee” and “Tip,” again notifying customers that the administrative fee is not a tip or gratuity. Neither the trial court nor Plaintiffs 2 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 identified – nor can they identify – any specific instance where a customer was not made aware of the clear disclaimers at some point during the process of booking, holding, or paying for their catered events. The trial court also erroneously asserted that Plaintiffs entered into employment contracts with Defendants. That conclusion alone – which Plaintiffs did not even assert – mandates reversal. In fact, the only such agreements in the evidentiary record are staffing contracts between banquet staff and a third-party staffing agency that is completely unaffiliated with Defendants. Moreover, the trial court erred in misstating and attempting to distinguish the First Department’s decision in Ahmed v. Morgans Hotel Grp. Mgmt., LLC, 54 Misc. 3d 1220(A), 55 N.Y.S.3d 691 (Sup. Ct. N.Y. Cnty. 2017), aff'd sub nom. Ahmed v. Morgan's Hotel Grp. Mgmt., LLC, 160 A.D.3d 555, 74 N.Y.S.3d 546 (1st Dep’t 2018), leave to appeal denied, 32 N.Y.3d 901, 109 N.E.3d 1154 (2018). Ahmed held that an employer satisfies its defense under NYLL § 196-d as a matter of law by notifying customers that an administrative or service charge: (i) is for the administration of the banquet, special function, or package deal; (ii) is not purported to be a gratuity; and (ii) will not be distributed as gratuities to the employees who provide service to the guests. Id. The First Department further held that, merely because other documents generated in connection with an event do not include the explanatory language, a document 3 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 with explanatory language is not rendered ineffective. Id. at 556. Ahmed thus held that every document that a customer receives need not contain a disclaimer for an employer to rebut the presumption that any service or administrative charge is purported to be a gratuity. Id. The Court of Appeals recently denied the Ahmed plaintiffs (represented by the same counsel as Plaintiffs herein) leave to appeal this holding, which is highly persuasive authority that the Second Department should expressly adopt. Ahmed mandates that summary judgment be granted in favor of Defendants, not to Plaintiffs, because there is clear evidence that Defendants used disclaimer language to notify patrons that administrative fees were not intended as gratuities. Even if Plaintiffs’ substantive claims are viable, which they are not, the trial court further erred in misstating the evidentiary record and its cursory denial of Defendants’ motion to decertify the class. The trial court erroneously held that Defendants entered into employment contracts with Plaintiffs and class members. In fact, the only such agreements in the evidentiary record are between banquet workers and a third-party staffing agency – a fact left completely unaddressed by the Decision & Order. The trial court also did not address or even consider Plaintiffs’ failure to elicit or produce a single document relating to Membrives’ alleged employment with the Hyatt. Moreover, Spero admitted in deposition testimony that she was never scheduled to work as a banquet server, and she 4 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 possessed no information or belief as to any details of purported work at the Hyatt. Aside from a self-serving affidavit, Spero did not provide any evidence that she worked any banquet events at the Hyatt. These dispositive facts also went unaddressed by the trial court. The trial court nonetheless held that, although there is no credible evidence whatsoever to prove that either Membrives or Spero worked at a single banquet event at the Hyatt, they have supposedly established their claims as a matter of fact and law. The trial court further held that Membrives or Spero can adequately represent a purported class (of unknown size) of banquet staff from 2009 through the present. This too is plain reversible error. For each of these reasons, and the reasons below, the Decision & Order should be reversed and Defendants’ summary judgment motion should be granted. Alternatively, this Court should reverse the lower court’s denial of class decertification and, at a bare minimum, reverse the grant of Plaintiffs’ summary judgment motion and allow the parties to proceed to trial. II. QUESTIONS PRESENTED 1. Whether the trial court erred in denying Defendants’ summary judgment motion, and granting Plaintiffs’ summary judgment motion, by ignoring controlling case law and misstating the evidentiary record, which demonstrated that Defendants utilized disclaimers to notify patrons that administrative fees were not intended to be gratuities? 5 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 2. Whether the trial court erred in denying Defendants’ motion to decertify the class by ignoring controlling case law and failing to address the evidentiary record demonstrating that Membrives and Spero had in no way met their burden under C.P.L.R. §§ 901(a) and 902? III. STATEMENT OF FACTS A. Plaintiffs’ Allegations On December 4, 2015, Membrives filed a purported class action Complaint on behalf of himself and members of the putative class alleging that Defendants violated the NYLL and the Hospitality Wage Order (“Wage Order”), 12 N.Y.C.R.R. §§ 146, et seq., by unlawfully retaining employees’ gratuities at all of Defendants’ hotel and catering venues located in New York. On August 30, 2016, Membrives filed an Amended Complaint, adding Spero as a named plaintiff. (R. 17-28.) Plaintiffs allege that Defendants included a service charge on the contracts it used for catered events, and provided customers with documents such as menus, bills, and invoices that conveyed a “service charge” or other mandatory charges for administration of catered events. (R. 24, ¶ 39.) Plaintiffs allege that Defendants failed to disclose that the service charge was not a gratuity for the staff, and that reasonable patrons would have understood the alleged service charge to be in the nature of a gratuity. (R. 24, ¶¶ 41-42.) Plaintiffs further allege that Defendants’ 6 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 sales staff and event staff represented or allowed Defendants’ patrons to believe that the alleged service charge was a gratuity, and that Plaintiffs and those similarly situated were not paid tips to which they were entitled. (R. 24, ¶ 43.) As to their class allegations, Plaintiffs allege that, beginning in or around December 2009, Defendants employed class members (consisting of at least 40 similarly situated individuals) at the Hyatt to perform food and service related tasks for catering events. (R. 22-23, ¶¶ 24-32.) B. The Catered Event Process Includes Numerous Disclaimers The evidentiary record regarding the catered event process at the Hyatt, which was flatly ignored by the trial court, mandates reversal. Remington Long Island1 frequently contracts with clients to host events at the Hyatt. Some of these clients are new clients, and some are repeat clients. (R. 48, 164:5-6; R. 65, 76:23-24.) When a prospective client first expresses interest in holding an event at the Hyatt, a sales manager speaks to the client to discuss their needs and interests, including what type of event they are looking to hold, the number of people, and whether room and banquet services are needed. (R. 30-31, 22:24-23:7; (R. 53-55, 35:23-37:7.) After an initial conversation, the sales manager may meet with the prospective client at the Hyatt for a site visit. (R. 53-54, 35:23- 1 Remington Long Island, the only proper Defendant at issue in this case, became the manager of the Hyatt in December 2011. (R. 333, ¶ 3.) Prior to December 2011, the Hyatt was managed by Hyatt Hotels Corporation (“Hyatt Hotels”), which is not a party to this case. HHC and Remington Long Island are not affiliated companies with Hyatt Hotels. (Id.) The Hyatt is the only property at issue in this case. (Id., ¶ 4.) 7 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 36:9; R. 60-61, 48:15-49:13.) If the prospective client is interested in a catered event, the sales manager usually sends a menu after the initial conversation, which sets forth various food and beverage options, as well as prices that include mandatory charges for administration of catered events and tax. (R. 64, 61:13-18; R. 86-116.) The menus (at least since 2017) clearly state that “[a]ll prices are subject to a 24% Administrative Fee (which is not a gratuity for wait staff, service bartenders, or service employees) and 8.625 % State Sales Tax.” (R. 89 at D 2 106562.) Specifically, the menus state: (R. 87.) After the prospective client provides more details regarding their event, the sales manager creates a proposal, which typically includes price quotes, minimums, number of attendees, and rooming information. (R. 31, 23:4-7; R. 55- 58, 37:8-40:22.) The proposal also includes language stating that the prices on the proposal are exclusive of the administrative fee and tax. (R. 59, 41:4-9; R. 72-73, 95:7-96:6.) At that time, if she has not already, the sales manager informs the client that the administrative fee does not include gratuity. (R. 68-70, 91:19-93:5.) A 2 From in or around December 2011 to in or around October 2012, the administrative fee was 22%. (R. 333, ¶ 5.) In or around November 2012, the administrative fee increased to 23%. (Id., ¶ 6.) In or around April 2017, the administrative fee increased to 24%. (Id., ¶ 7.) In or around March 2018, the administrative fee increased to 26%. (Id., ¶ 8.) When administrative fees are increased, the transition to the new amount is not immediate, but rather a gradual process. (Id., ¶ 9.) 8 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 contract is then prepared and sent to the client for execution. (R. 31, 23:8-9.) The contract defines food and beverage minimums, deadlines, rooming information, cancellation policy, and how the charges are structured, including the administrative fee and sales tax. (R. 34, 32:4-7; R. 37, 43:9-17; (R. 62-63, 55:23- 56:16.) The contracts include another disclaimer that the administrative fee does not include a gratuity: “All banquet charges are subject to a 23% Administrative Fee.” (R. 119-121) (emphasis in original). Specifically, the contracts state: (R. 120.) After the contract is signed, the event continues to be detailed, either by the sales manager or the director of catering. (R. 31, 23:10-13; R. 52, 19:15-20.) If the event is turned over to the director of catering, she will reach out to the client to introduce herself, go over the contract, obtain additional details pertaining to the event, and explain next steps moving forward. (R. 32-33, 30:21-31:15; R. 37, 43:8- 9.) If the client has not yet seen a menu, the director of catering will send the menu at that time, and offer to meet at the Hyatt to further discuss the event. (R. 36-37, 42:20-43:12.) After the client has made their menu choices and determined all other details regarding the event, either the sales manager or director of catering creates a banquet event order (“BEO”), which is sent to the client for review and signature, 9 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 along with a cost estimate, if the client has not yet received one. (R. 38, 44:2-7; R. 39, 50:3-12.) The BEOs further state that the fees imposed on the customer for bars and culinary stations are not a tip, gratuity, or service charge for wait staff, service bartenders, or service employees. (R. 117-118.) Specifically, the BEOs state: (R. 118.) Throughout the sales and detailing process, the sales manager and/or director of catering conduct multiple discussions with the client regarding their options and the various costs associated with the event, including the administrative fee and gratuities. (R. 67-81, 90:13-104:21; R. 82, 110:21-25; R. 32-34, 30:21-32:20; R. 37-38, 43:6-44:12; R. 40-42, 87:25-89:18; R. 43-46, 95:24-98:24; R. 47, 102:2-8.) To be clear, the contracts, BEOs, and menus contain disclaimers that the administrative fee charged to the customers does not represent a tip, gratuity, or service charge for wait staff, service bartenders, or service employees, and that the administrative fee was retained by the Hyatt. (R. 86-121.) The trial court ignored the evidence that customers are provided with numerous disclaimers that administrative fees are not intended as gratuities to be shared with employees: 10 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 Document Type Charges for Administration Disclaimer Dates of Catered Events Menu “All prices are subject to a Yes At least by 2017 24% Administrative Fee to present (which is not a gratuity for wait staff, service bartenders, or service employees)” Banquet Event “[An] additional charge[] Yes 2011 to present Order will be added to your final bill: a 23% Administrative Fee, which does not represent a tip, gratuity or service charge for wait staff, service bartender or service employee and is retained by the hotel” Contract “All banquet charges are Yes 2011 to present subject to a 23% Administrative Fee.” (R. 86-121) (emphasis in originals). After the details of the event are finalized, the sales manager or director of catering turns the BEO over to the banquet department. (R. 35, 41:8-11.) After reviewing the BEO, the banquet manager determines how many staff are needed for each event. He then informs the staffing agency, currently Rob Mir (“Mr. Mir”) from Finesse Hosting Corporation (“Finesse”), how many workers the Hyatt needs for each event over the next week. (R. 124-125, 30:2-31:12.) Mr. Mir attends larger events to oversee his staff. (R. 126-127, 32:24-33:4.) Although the Hyatt requires the temporary employees to wear an all-black uniform (not supplied by Defendants) like the Hyatt employees, Finesse provides them with 11 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 nametags. (R. 128, 34:2-10.) The banquet manager does not request certain individuals from Finesse and does not have the ability to hire any workers supplied by Finesse. (R. 129-130, 40:16-41:18.) While Hyatt employees clock in and out for each event, the service workers supplied by Finesse sign a sign-in and sign-out sheet provided by Finesse. (R. 131, 44:3-13.) After an event, the Hyatt invoices Finesse for staff provided for that event. (R. 142-145.) Critically, there is no evidence in the record that Defendants maintained any day-to-day control, including the ability to hire or fire, over any banquet staff – yet another fact ignored by the trial court. On the day of the event, the director of catering introduces the client to the banquet manager. (R. 35, 41:12-22.) Depending on the type of event, the sales manager may attend for part of the event as well. (R. 66, 89:18-25.) At the end of the event, the banquet manager provides the client with the banquet check. The check sets forth the final price of the event, administrative fee and tax, and also provides a line for the client to leave a gratuity should they choose to do so: 12 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 (R. 146; R. 135, 58:8-15.) If clients have any questions regarding the administrative fee at the time they are presented with the check, which is not often, the banquet manager will explain what the administrative fee is and that it does not include a gratuity. (R. 136-137, 67:2-68:16.) The client then signs the check. (R. 134, 57:9-23.) Although there is no express tipping policy at the Hyatt, clients may elect to tip in various ways. They can either leave a tip when they sign the banquet check, or they can distribute cash tips to the staff. (R. 138-140, 70:17-72:15.) 13 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 At the Hyatt, ten individuals are employed in the Banquet Department – a banquet manager, a banquet captain, two servers, a bartender, and approximately four convention set-up housemen. (R. 123, 29:12-23.) Third parties such as Finesse – not Defendants – were the entities that staffed and assigned Membrives and those similarly situated to him to perform services at the Hyatt. (R. 125-126, 31:8- 32:17.) Moreover, the Banquet department is entirely separate from the Restaurant department, which is not involved in catered events. (R. 132, 47:15-22.) Remington Long Island employees who work in the Restaurant department – such as Spero – do not work catered events, and vice versa. (R. 132-133, 47:15-48:14.) Moreover, the employees in the Banquet department are managed by the banquet manager and banquet captains, who can receive gratuities, while employees in the Restaurant department are managed by restaurant managers, who cannot receive gratuities from catered events. (R. 141, 78:5-23.) Despite this overwhelming evidence, the trial court erroneously granted summary judgment in Plaintiffs’ favor and held, as a matter of fact and law, that customers are confused whether administrative fees are intended as gratuities. C. Staffing Service Agreements The trial court also erred when it concluded – without any evidence in support – that Defendants entered into employment agreements with Plaintiffs and other class members. (R. 9) (“Defendants required many of the plaintiff class 14 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 members to sign ‘temporary service contracts.’”). In fact, and as noted above, Remington Long Island exclusively relies upon third-party companies to provide staffing services at its banquet events, and there is no evidence whatsoever that any Defendant ever entered into a contract with any Plaintiff. (R. 147-179.) On or about October 9, 2008, defendant HHC entered into a nationwide Staffing Service Agreement with Hospitality Staffing Solutions, LLC (“HSS”) (the “2008 HSS Agreement”), through which HSS supplied individuals to work events held at the Hyatt.3 (R. 180-190.) The 2008 Agreement set forth the various means by which HSS would maintain control over its staff that were assigned at the Hyatt. In particular, the 2008 Agreement provided that HSS “shall be responsible for all aspects of [staff] work performance, including but not limited to, recruiting, hiring, scheduling, promoting, disciplining, wage determination, training,” and that HSS “expressly agrees that it shall pay its employees in accordance with all federal, state and local wage and hour laws.” (R. 180-181.) On August 21, 2012, HSS and HHC entered into a similar two-year Contractual Agreement for Temporary Labor of Services (the “2012 HSS Agreement”) “specifically for the purpose of [HSS] assigning its employees to perform services for and at [the Hyatt],” (R. 191) (emphasis added). The 2012 HSS Agreement stated that HSS maintained control over its employees, including that HSS “will recruit, interview, select, hire and 3 Defendant HHC is the lessee of the Hyatt. In or around December 2011, defendant Remington Long Island began managing the Hyatt. (R. 333, ¶ 3.) 15 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 assign employees,” and that “[a]s the employer, [HSS] will . . . maintain all necessary personnel and payroll records for its employees . . . withhold from its employees’ compensation any taxes, charges or other payroll deductions required by law,” and that “employees assigned to [HHC] under this Agreement shall remain employees of [HSS].” (R. 192.) On October 9, 2013, HHC entered into an Agreement for Temporary Labor Services with Finesse (the “2013 Finesse Agreement”) “specifically for the purpose of [Finesse] assigning its employees to perform services for and at [the Hyatt].” (R. 147) (emphasis added). The 2013 Finesse Agreement contained similar language to the HSS Agreements clearly stating that the individuals assigned to the Hyatt were not to be treated as employees of the Hyatt. (Id.). The 2013 Finesse Agreement provided that Finesse – not Defendants – would maintain any necessary employment records, withhold required wage and tax deductions, and provide liability and workers’ compensation insurance coverage. (Id.) Individuals hired by Finesse entered into Temporary Service Contracts with Finesse (not with Defendants as the trial court erroneously held), by which they were clearly classified and treated as independent contractors. (R. 200.) On May 23, 2014, HHC entered into a similar Agreement for Temporary Labor Services with Rainbow Maintenance & Cleaning Corp. (“Rainbow Maintenance”), which included language identical to that in the Finesse 16 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 Agreements. (R. 171.) On February 12, 2016 and February 13, 2017, HHC renewed its contract with Finesse. (R. 153-170.) Remington Long Island currently contracts with Finesse to provide temporary staffing for banquet events at the Hyatt with individuals supplied by Finesse. During discovery, Plaintiffs subpoenaed employment records from Finesse. In response, Finesse produced 97 Temporary Service Contracts with individuals who apparently provided banquet services at the Hyatt. (R. 200-296.) Notably, Finesse treated each of these individuals as independent contractors, not as employees. (Id.) Further, these agreements are the only evidence that Plaintiffs produced relating to purported class members who are similarly situated to Membrives – who failed to produce a single document showing that he worked at any banquet event at the Hyatt. Moreover, Plaintiffs did not produce any shred of evidence showing that Finesse’s contracted individuals worked at any events at the Hyatt and, if so, the details of those shifts. In fact, Plaintiffs never elicited any discovery whatsoever to provide any details regarding the purported class members other than the 97 Temporary Service Contracts, which merely reflect a contracting relationship with Finesse and the individuals but does not indicate that the individuals would be assigned to work at the Hyatt nor any details about such purported work. 17 FILED: KINGS COUNTY CLERK 06/01/2023 07:50 PM INDEX NO. 512248/2022 NYSCEF DOC. NO. 36 RECEIVED NYSCEF: 06/01/2023 D. Membrives’ Purported Employment With the Hyatt Membrives claims that he worked as a bartender at the Hyatt from approximately 2012 or 2013 until approximately November 2016. Yet, the trial court ignored that Plaintiff utterly failed to elicit or produce a single document demonstrating that Membrives worked a catered event at the Hyatt. It bears repeating – there is no evidence in the record that plaintiff Membrives ever worked a single catered event at the Hyatt. Indeed, Membrives lacks any information that would substantiate his purported work at the Hyatt. For example, he does not recall if he was assigned to the Hyatt by a staffing agency, but recalls that someone named “Rob” (presumably Mr. Mir) asked him to work events at the Hyatt. (R. 301, 19:4-18; R. 309, 50:8-23.) Membrives does not know who employed him during the time period that he provided services at the Hyatt. (R. 301, 17:18- 20:21.) Membrives did not recall the full names of the people who allegedly managed him as a bartender at the Hyatt – only that they were called “Glenn,” “Greg,” and “Sandra.” (R. 302, 21:19-25.) He has no recollection whatsoever who was the payer listed on his paychecks, and he purports