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New York Attorney General Eliot L. Spitzer has stepped into a $10 million lawsuit between the Cipriani restaurant family and banquet waiters who claim they have been cheated out of tips. Spitzer’s office filed papers in New York’s Appellate Division, 1st Department, last week, asking the court to accept an amicus curiae brief on behalf of the waiters, who are appealing a ruling by Manhattan Supreme Court Justice Ira Gammerman that dismissed their proposed class action suit. The office contends in its brief that Gammerman’s ruling should be overturned because it “ignored” New York’s labor laws in determining that the waiters were not employees of the Cipriani family. The waiters, who served meals at the Cipriani-run Rainbow Room in Rockefeller Center and Cipriani 42nd Street since 1997, claimed they were entitled to the 22 percent service charge collected from banquet customers. But Gammerman found in March that the waiters worked for staffing agency M.J. Alexander & Co. and were not entitled to the service charge. The waiters were paid by the agency and did not expect tips because they earned $20 an hour, more than the average restaurant waiter, the judge said in Bynog v. Cipriani Group Inc., 602586/01. If upheld, the attorney general’s office contends, Gammerman’s ruling could undermine labor laws at a time when more businesses are relying on complex employment agreements and outsourcing. “We are seeing an explosion of alternative employment relationships,” said M. Patricia Smith, chief of the labor bureau at the attorney general’s office. “In many ways it is a throwback to the ’30s.” The office argues that both the staffing agency and the Cipriani family should be considered employers under the “economic reality test” established by labor law precedent. “It’s not as if the staffing agency has any other function than to provide people to these businesses,” Smith said. The office is also concerned that Gammerman’s ruling could weaken Labor Law � 196-d, which governs tips. Even if the Ciprianis were not the waiters’ employers, the attorney general’s office contends, they cannot keep money earmarked as a gratuity because � 196-d “says expressly that neither the employer nor ‘any other person’ shall retain the charges.” The office has not expressed an opinion about whether the banquet service charges were indeed tips, an issue Gammerman left unresolved. The Ciprianis have claimed no one was told the service charge was a tip, and that it is “industry practice” for banquet facilities to keep the entire charge. The waiters have argued that at least some customers, including investment bank Goldman Sachs, believed the charge was intended for waiters. They also note the Ciprianis did not collect taxes on the charges, which they say suggests the money was for tips. INTERVENTION QUESTIONED Lawyers for the Ciprianis questioned the attorney general’s role in the case. “We don’t think the facts of this case merit intervention by the attorney general,” said Marshall E. Bernstein of New York’s Robinson Brog Leinwand Greene Genovese & Gluck. “We are surprised that the attorney general saw fit to get involved.” Christy L. Reuter of Robinson Brog added: “We don’t believe this is a public policy issue. And we also think the attorney general may be trying to legislate in this case.” Smith said Justice Gammerman’s ruling misconstrued statutory language and presented a clear public policy concern. “We’re asking the court to interpret the statute as it is on the books,” she said. Since Gammerman’s ruling, the office has had to back off on a few labor investigations that would be weakened if the decision were sustained, Smith said. She said she could not comment on the nature of those investigations. The waiters’ attorney, Robert K. Erlanger, of counsel at Dwyer & Brennan, said his clients were “ecstatic.” “The fact that the attorney general has joined us indicates the broad impact of [Gammerman's] ruling,” he said. In its brief, the attorney general’s office cited numerous cases to bolster its claim that the waiters were Cipriani employees and that they had a statutory right to gratuities, even if they were not employees. “Because � 196-d does not protect only workers, but also those who expect the gratuities they pay to go to workers, even a truly free and knowing employee waiver would ‘contravene the legislative purpose … and, as such, [be] invalid,” the office wrote, citing the 1st Department’s 1997 ruling in Scotto v. Giuliani, 243 A.D.2d 388, a case against New York City by police officers who were asked to waive labor rights in order to become detectives. Any waiver of labor law rights, the office argues, “can be effective only ‘so long as the legislative purpose is not undermined,’” citing American Broadcasting Companies v. Roberts, 61 N.Y.2d 244 (Court of Appeals, 1984). For the banquet waiters, the office says, “forfeiture of gratuities or of such charges would be deceptive, and is prohibited by the statute even if agreed to by employees.” The 1st Department will hear arguments in the fall.

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