Should Restaurants Be Allowed to Add Gratuity?

A New York U.S. District judge has dismissed a class-action lawsuit filed against Darden Restaurants (and several other high-end NYC restaurants) alleging that adding automatic gratuities to customers' checks violated consumer protection laws. The suit, filed by plaintiff Ted Diamond in 2013, claimed that the restaurant group's practice of automatically adding an 18% gratuity violated a state law prohibiting restaurants from "adding a surcharge to listed prices." According to Diamond, the act of leaving a tip should be a voluntary or discretionary one, and the chains' practice of automatically charging customers amounted to "price fixing," making the restaurants guilty of "engaging in deceptive acts or practices."

But a NYC judge dismissed the claim "on technical grounds," according to a legal debrief published on Mondaq. District Judge Katherine Polk Failla reasoned that because the auto-gratuity policy was written on the menu, Diamond and others could not claim they were misled: "It was clear from the face of the complaint that Darden had specifically informed Mr. Diamond (and presumably other customers) about the automatic gratuity." The judge also dismissed a claim that Darden engaged in "deceptive acts" by not listing the price of beverages on its menu, with the judge reasoning that customers concerned about beverage pricing could have simply asked their server for clarification.

But the lawsuit does add more ammunition to the ongoing debate on the practice of automatically adding gratuity. In early 2014, the Darden restaurant group — which includes chains like Red Lobster and Olive Garden — phased out automatic gratuities entirely, although the decision was unrelated to the case (and had more to do with an Internal Revenue Service policy change). But litigious diners aren't the only ones keeping an eye on auto-tipping: In October 2013, a New York City lawmaker proposed imposing fines on restaurants that automatically add gratuity without informing the diner.

· Court Dismisses $5.5 Billion Suit Over Automatic Tips [Mondaq]
· All Tipping Coverage on Eater [-E-]