Francis Mailman Soumilas, P.C. Wins Reversal in Federal Appeals Court Over Automatic Tipping Charges at Ritz-Carlton Restaurants
The U.S. Court of Appeals for the Eleventh Circuit recently ruled that the Ritz-Carlton hotel chain will need to face a class action lawsuit under accusations of deceptively adding gratuities to customers’ dining bills at its 49 restaurants in Florida. The lawsuit was originally dismissed by a federal trial court.
At the heart of the lawsuit is a claim by the plaintiff, Michael Fox, represented by the firm lawyers Jim Francis and David Searles, that Ritz-Carlton violated the Florida Deceptive and Unfair Trade Practices Act and Florida’s tax regulations by automatically adding tips to customers’ bills at its restaurants without properly disclosing that it would do so or the mandatory nature of those charges. The lawsuit was filed after the firm discovered that our client and thousands of other Ritz patrons were paying the unlawful automatic charges.
Our client brought the lawsuit against Ritz-Carlton on behalf of himself and others who paid those gratuities at any of Ritz-Carlton’s 49 Florida restaurants in the past four years from the date he filed the lawsuit.
In its decision, the Eleventh Circuit held that the lower federal trial court incorrectly ruled that our client could only bring claims on behalf of other people who ate at the same restaurants, on the same days, that he did. The appeals court held that our client could bring the lawsuit on behalf of people who ate at any Ritz-Carlton restaurant in Florida over the past four years because they all suffered the same alleged legal harm: paying automatic gratuity fees that were not properly disclosed.
The Eleventh Circuit also held that the trial court was wrong when it ruled that the amount of potential damages in the case was lower than the $5 million threshold required for a class action to be filed in federal court. The trial court based its decision about this issue on how the damages Ritz-Carlton would have to pay in the lawsuit would be calculated. The appeals court questioned the trial court’s method for calculating damages. But more importantly, the appeals court held that with hundreds of thousands of Ritz-Carlton customers paying these automatic gratuity charges at its 49 Florida restaurants over four years, there was little doubt that these charges, and thus the damages in the case, would together be greater than $5 million.
Based on its ruling in favor of our client, the Eleventh Circuit sent the case back to the trial court for the case to continue.
“When restaurants are permitted to do so under local laws, their automatic gratuity charges can help their employees earn living wages so that they can support their families if they are paid to the servers as tips,” said Jim Francis. “However, those charges must be lawfully disclosed to restaurant patrons so customers do not knowingly double tip, and the charges must actually be paid to the servers, not retained by the hotel or restaurant. We look forward to recovering these overpayments for the class members and holding Ritz-Carlton accountable.”
The Eleventh Circuit’s decision was covered by the Daily Business Review and Law360.
If you were charged an automatic gratuity fee by a business that did not properly disclose that fee to you, you may have a legal claim against that business. Click here to schedule a free case review with a representative of Francis Mailman Soumilas, P.C. or call 215-735-8600 or visit us online at www.consumerlawfirm.com. The firm has offices in Philadelphia, New York, Chicago, and San Francisco.