Archive for the ‘Restaurant Liability’ Category

GeoTag Patent Infringement Lawsuit Tests Limits of 474 Patent for Store Locator Website Function

Wednesday, February 9th, 2011

GeoTag’s patent infringement lawsuit in the U.S. District Court for the Eastern District of Texas against 150 retailers and restaurants over a much-used store-locator website function will ultimately test the limits of the 474 patent for systems and methods that associate online information with geographic areas.  The lawsuit also presents a broader question: Are search engine functions patentable?

Indeed, the court’s ruling on this issue could affect nearly every retailer and restaurant in the United States with an online presence.  This lawsuit, like the Allen v. Google case pending in the United States District Court for the Western District of Washington could have pernicious effects on commerce and economic growth, as some patentees with dubiously valid claims essentially seek to privatize the “virtual world.”  

Stay tuned.  The progress and results of this lawsuit and related litigation matters will be interesting and could have a fundamental effect on the way businesses market themselves on the Internet.

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Tip Pooling: Are You Following the Law?

Monday, October 18th, 2010

Many states allow employers to require tip pooling.  In a tip pooling arrangement, all employees subject to the pool have to chip in a portion of their tips, which are then divided among a group of employees.  But be careful, and look before you leap!

The following is a brief survey of the applicable federal law and relevant state laws in New England regarding tip pooling.

Fair Labor Standards Act (FLSA)

The FLSA expressly permits employees to pool their tips.  Employer can even require employees to pool their tips.  Employers can also determine tip-pooling arrangement among employees in the tip pool.

There are, however, two exceptions: (1) A tip pooling arrangement is invalid if an employee must relinquish more than a “customary and reasonable” amount of tips to the pool, (but the law does not place any ceiling on the amount of tips contributed to a pool); (2) Only employees who customarily and regularly receive tips can participate in a tip pool (e.g., waiter, bellhop, busboy, counter personnel, and service bartender); by contrast, employees who do not customarily and regularly receive tips cannot participate in a tip pool (e.g., janitor, dishwasher, chef, cook and laundry room attendant).

As a general rule of thumb: whether an employee can participate in a tip pool depends on whether the employee’s occupation entails regular interactions with customers.  If yes, the employee can participate in a tip pool.  Courts have held that hosts and hostesses, and maîtres d’ hôtel can participate in a tip pool, but salad mixers and kitchen helpers cannot.

Employers, however, cannot participate in a tip pool.  An “employer” is “any person acting directly or indirectly in the interest of an employer in relation to an employee.”  Courts use the “economic reality test” to determine whether someone is an employer.  That test looks at whether the individual in question: (1) has the power to hire and fire employees, (2) supervises and controls employee work schedules or conditions of employment, (3) determines the rate and method of employees’ pay, and (4) maintains employment records. 

The greater number of these factors are present, the more likely an individual will be deemed to be an employer or agent of the employer and, thus, ineligible to participate in a tip pool (e.g., shareholders or board members of restaurant, general manager).

Massachusetts

Massachusetts does not outlaw tip pooling altogether.  It merely specifies who may participate lawfully in a tip pool.  An employer cannot require or permit a service employee to participate in a tip pool with non-service employees.  It does not prohibit, however, a tip pooling arrangement between service employees. 

However, a “service employee,” in part, means one who does not have “managerial responsibility.”  “Managerial responsibility” is not defined.  The better view on what constitutes “managerial responsibility” argues against making shift supervisors, who may themselves be non-exempt hourly workers, into people with “managerial responsibility” because such an approach would stretch that term beyond its intended meaning and possibly be unfair.

New Hampshire

New Hampshire is very straightforward.  A valid tip pool is one that (1) the employee “voluntarily and without coercion” agrees to participate in and (2) the employer does not require or control in any manner.  If the employee agrees to participate, the employer can administer the tip pool but cannot exercise any control over the manner in which tips are pooled other than for accounting and bookkeeping purposes.  In addition, anyone can participate. 

Connecticut

Connecticut is even simpler.  There is no Connecticut law on tip pooling.  Thus, employers should use the FLSA (see above) as guidance.

Tip Pooling is often a forgotten area of the law, but it is not that difficult to follow, and it will obviously protect you from liability.

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Silent ICE Raids Coming to a Restaurant Near You.

Thursday, September 30th, 2010

Since President Obama took office, the Administration has changed the way the federal government polices and investigates illegal immigrants on the job. Rather than hunting for illegal workers, the Immigration Customs Enforcement (or ICE) targets employers, i.e., restaurants, construction companies, agriculture businesses and other “usual suspects” where illegal immigrants might find employment. The Administration argues that this practice serves to deprive illegals looking for work in the United States a market for their services.

So, rather than raiding workplaces and arresting workers, ICE conducts “silent raids, ” i.e., audits conducted by ICE agents who review computer files and study I-9 employment eligibility forms. When agents discover issues, they notify the employer. The employer then must discharge workers with false identification.

Sometimes ICE does more than merely “notify,” however, as its enforcement activity has increased substantially, as has its collections of fines. In 2010, ICE has commenced over 2,600 investigations of employers, triple the number from before the Obama Administration. ICE has arrested 170 employers this year and issued more than $5 million in fines related to I-9 inspections.

ICE claims it targets “egregious employers” who make it a business practice to hire undocumented workers. But one person’s percieved “business practice” may be another’s innocent bad luck. Those fines from ICE come from employers who may be crippled by this new enforcement strategy. That said, the threat of raids should serve to provide substantial warning to those who may rather turn a blind eye to potential immigration issues in their work place.

Be sure to follow I9 requirements while also not practicing unlawful “document” discrimination against lawful foreign workers. The employer should not take discriminatory short cuts to avoid ICE audits, but it also should not simply “see no evil” when applicants provide suspicious documentation. Compliance with the I9 procedure is key, and the websites at ICE and the DOL, as well as counsel, can provide critical guidance on how to navigate the Scylla and Caribdis of ICE and Title VII.

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Happy Meal Lawsuit Threatened Against McDonald’s: Is the Happy Meal Really Like “Joe Camel,” and Does It Really Violate Consumer Protection Laws?

Friday, June 25th, 2010

Chris Vrountas offers the following post:

The Center for Science in the Public Interest has threatened to file consumer protection lawsuits in a number of jurisdictions against McDonald’s unless the fast food chain stops its practice of offering toys to children who order the Happy Meal, which typically includes a cheeseburger and “fries.” The Group claims that McDonald’s marketing “unfairly and deceptively” targets children by enticing them with toys to “nag” their parents to have them buy allegedly unhealthy or high fat meals. “McDonald’s “couldn’t disagree more” and asserts that the chain offers a great variety of foods that include low fat and healthier options.”

While McDonald’s may have its own legal defenses, there is another perhaps larger potential defect in the group’s theory against the chain. “Ultimately, it is one of causation.” Or in other words, as some skeptics have argued, it’s called “parenting,” and perhaps those concerned with what their children eat should “just do it.”  It is one thing if the concern” was about children old enough, to have their own purchasing power and about advertising that in fact deceives them “into purchasing a harmful product.” Think, for example, of Joe Camel, a marketing program allegedly targeted to children who were not legally permitted to use the product but who nevertheless could purchase it with their own money. “Here, however, the customers are parents who presumably can read labels and the nutrition content offered by the chain to anyone who asks.” While toys may entice children to ask their parents for something that is not good for them, parents with access to full information make the final call. In that context, the defense argument goes, how can the real customer genuinely argue that the chain has been “deceptive” in its marketing?

The Group, however, insists that the targeting of children, who are “really the ultimate customers, is calculated to mislead them so that they may press their parents into purchasing allegedly unhealthy products for them.” And, if the chain’s marketing is not actually “deceptive,” then perhaps it is “unfair” to market in such a fashion as to mislead children into becoming “an unpaid army drone army of work-of- mouth marketers, causing them to nag their parents to bring them to McDonald’s.”

The Group is not the only critic of the Happy Meal practice. “Santa Clara County in California this year” enacted a ban in restaurants on toy give-aways associated with high calorie meals aimed at children. “There are a number of ways a restaurant could arguably comply with this ban while nevertheless continuing to offer loss leader toys to children.” For example, one could offer an alternative series of meal packages, including both “healthy” and “high calorie” options, that would all include the toy give-away. “There” really is no reason why kiddie toys should only be associated with the “lunch box of death.”

The Group has served its demand letter upon McDonald’s, giving the chain 30 days to respond with a reasonable offer of settlement. “What McDonald’s may do remains to be seen.” “While it is a free country, hopefully McDonald’s and the nutrition activists can bring freedom of choice and health to a workable compromise and settle this alleged consumer protection claim, as there is no reason why a Happy Meal cannot also be a healthy meal.

Posted in Health & Safety, Industry News, Menu Labeling, Restaurant Liability | No Comments »

Muslim woman denied job at Detroit McDonald’s files complaint

Wednesday, April 21st, 2010

A Muslim woman filed a discrimination complaint against the McDonald???s claiming that she was denied a job at a one of their Detroit restaurants because of her religion and ethnicity. The woman wears an Islamic head scarf known as a hijab as part of her religious customs. According to the Complainant, the McDonald???s manager with whom she interviewed asked her about her nationality and whether she had to wear the hijab, and proceeded to tell her that she would not be able to wear the hijab while she was working. Ultimately, McDonald???s hired someone else. This is not the first time that a Michigan McDonald???s has been under fire for discriminating against Muslim individuals. In July 2008, two Muslim women complained after a manager at a McDonald’s restaurant in Dearborn said they could not wear Islamic headscarves at work. Their attorney filed suit and he said today that the case may go to trial in a couple of months. McDonald???s director of operations responded that the restaurant strictly prohibits any form of discrimination. A McDonald???s representative said that the Company never intends to offend anyone and it requires its employees to comply with all applicable anti-discrimination laws.

For more information, see Nation’s Restaurant News.

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NK+M named the “Preferred Provider” of legal services for The New Hampshire Lodging and Restaurant Association

Sunday, February 28th, 2010

The New Hampshire Lodging and Restaurant Association (the NHLRA) has recently named Nelson, Kinder, Mosseau & Saturly, P.C. (NKMS) as the “preferred provider” of legal services to the NHLRA’s members. We are excited at this opportunity to serve the industry from such a prominent position.

NKMS has long served the hospitality industry. It established its Food and Hospitality Practice Group three years ago to coordinate its several practice groups in various areas such as employment, construction, environmental, bankruptcy and credit collection, energy and utility, professional liability, intellectual property and commercial litigation to better serve the business needs of restaurants, hotels and those who support them. As lawyers, we are proud to represent an industry which offers advancement and opportunity to people regardless of background more than probably any other sector of the economy.

NKMS has also regularly exhibited at the New England Food Show (NEFS) the last several years. This year, the NEFS exhibition will run in Boston from March 14 to March 16. Come visit us at our booth and find out more how NKMS can assist your hospitality enterprise in meeting its business and legal goals. We truly look forward to meeting you.

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Big Win For NK+M and the Restaurant Industry

Monday, February 22nd, 2010

No Rights if not ???qualified??? under the ADA.

A restaurant manager who claimed her employer fired her expressly because she was disabled, without trying to find an accommodation for her, saw her claim dismissed because she could not prove she was a ???qualified person with a disability??? and because she could not provide the court with any ???reasonable accommodation??? that would have been effective, says the First Circuit Court of Appeals. The fired manager argued that although she could not use her right arm for anything beyond holding a menu, she could still do her job by assigning physical tasks to other workers who were primarily responsible for those tasks. The Court disagreed, however, as the undisputed record showed that an ???essential function??? of the manager???s job involved ???filling in??? where needed in all aspects of restaurant work, including cooking, cleaning and serving, and that the manager who could not fill in for those tasks when needed was not a ???qualified person with a disability.??? While the manager argued that her ???primary??? duty was ???managing,??? the Court rejected that theory because the ADA does not concern itself with ???primary??? duties but ???essential??? duties.

NKMS has a particularly close perspective on this case as this firm represented the defendant, Friendly Ice Cream Corporation, and won at summary judgment at the U.S. District Court level and later again on appeal at the First Circuit Court of Appeals. The members of the firm have long ties to the hospitality industry, which is the primary reason why the firm developed its Food and Hospitality Practice Group to work closely with its Employment Counseling and Litigation Practice Group. This win required knowledge of both the relevant employment law and the practicalities of the restaurant business.

For example, the plaintiff wanted to convince the Court that managers simply ???manage??? rather than perform physical labor, but the District Court and the First Circuit listened to the reason and experience in Friendly???s argument, as well as the undisputed facts, which showed how a restaurant manager cannot manage just from the sidelines, and how ???filling in??? on the spot at the grill or as the dishwasher cannot be delegated any more than infielders in baseball can delegate catching one or two ground balls that might shoot at them in any two and half hour game. Managing involves more than just wearing the uniform. It requires performance just in time. At the end of the day, the First Circuit Court of Appeals understood that and ruled in favor of Friendly???s.

This was an important win for Friendly???s and indeed for the restaurant industry. Restaurants like Friendly???s are challenging, but rewarding, places to work. They offer opportunities to advance, more than other industries, for all motivated people regardless of race, sex, education, religion or class. With nothing more than wit, honesty and willingness to work hard, anyone can advance and succeed in this business without the need for contacts, pedigrees or other barriers to market entry. A bad court decision that could have rewarded excuses and gamesmanship over teamwork and performance would have been a difficult millstone for the restaurant and the industry. In the end, managers can work as hard if not harder than those they manage and cannot expect their staff to do what they say but not as they do. The Court???s ruling, while important to employment law and to the restaurant industry, should not be a surprise as, according to one observer, it ???makes perfect sense.???

The lawyers on the NKMS defense team for this case included Allison Ayer, Stephen Coppolo and Chris Vrountas. Congratulations to them and to Friendly???s for a well deserved win.

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Foxwoods Union Vote Approved

Sunday, February 14th, 2010

Recently, a Foxwoods union vote resulted in 75% of workers favoring unionization of the workplace.?? For those who think unions cannot take hold in the hospitality industry, think again.?? The Foxwoods Resort now must deal with the UAW.?? Why do workers vote to unionize??? Click here to find out.?? Read the worker testimonials about why a Foxwoods-union partnership is now a reality.?? Hardly any testimonial??mentions pay.?? Instead, they discuss, for the most part, having “a voice,” ensuring “fairness,” and what they viewed as the arbitrary and unfair manner in which management appeared to run the establishment.

The lesson??? In the end, we get what we pay for.?? Employers who do not invest in their employees will more likely find that a union will do it for them.?? As manufacturing jobs continue to leave this country, unions will follow the workers to whereever they relocate.?? The restaurant and hospitality industry is not immune.?? If you want to avoid the Foxwoods-union route, invest in your employees.

Chris Vrountas, Chair of the Employment Counseling and Litigation Group, contributed this posting.

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First Circuit Rules Massachusetts Law Limiting Direct Wine Shipments to Consumers is Unconstitutional

Friday, February 5th, 2010

Stephen Coppolo, a member of the firm???s Employment Counseling and Litigation Practice Group, reports the following:

In January, the Boston-based First Circuit Court of Appeals ruled unconstitutional a Massachusetts statute severely limiting the ability of what the law defines as ???large??? wine producers, all of whom were outside of Massachusetts, to ship wine directly to state consumers. The First Circuit decision is a victory for winemakers across the country, as the Massachusetts??? law was the first in a wave of state laws passed in reaction to the Supreme Court???s 2005 Granholm v. Heald decision, which held unconstitutional New York and Michigan schemes that permitted in-state wineries to ship directly to consumers, while prohibiting out-of-state wineries from doing the same.

The Massachusetts statute, Mass. Gen. Laws ch. 138, ?? 19F (2006), defines ???small??? wineries are as those that produce less than 30,000 gallons of grape wine per year, while ???large??? wineries are those that produce more than 30,000 gallons of grape wine per year. Under ?? 19F, ???small??? wineries may sell wine both through traditional beverage distributors and through direct to consumer shipments. ???Large??? wineries must choose to either their sell products through distributors or through direct shipments to consumers. Key to the First Circuit???s ruling was the fact that all wineries in Massachusetts qualified as small wineries, entitled to the competitive advantage against large wineries, each of which was based out-of-state.

Specifically, the First Circuit held ?? 19F violated the Commerce Clause because it had both the purpose and effect of favoring in-state wine producers and the Commonwealth had not demonstrated ?? 19F achieved a legitimate local purpose that cannot be furthered by a non-discriminatory alternative.

The court found that the effect of ?? 19F was discriminatory against out-of-state wine producers since ???large??? winemakers are not offered the ability to benefit from the synergy provided with dual-marketing through direct-to-consumer shipments and through traditional beverage distributors who procure placement of wines in retail outlets. The court also rejected the Commonwealth???s argument that small wineries both inside and outside of Massachusetts benefited, noting that 27 of Massachusetts??? 31 wineries have obtained small winery licenses (allowing them to enjoy the benefits of the law), while only 26 of the 2,933 out-of-state ???small??? wineries have done so.

The court also found ?? 19F???s discriminatory purpose was clear from the statements of the bill???s sponsor that ???[w]ith the limitations that we are suggesting ??? we are really still giving an inherent advantage indirectly to the local wineries.??? Further, a state senator whose district included Massachusetts??? then largest winery, which was planning to expand above the 30,000 gallon limitation, voiced concern about the legislation???s effect on that winery. Soon after, language was added to the bill exempting non-grape wine from the calculation, allowing the winery in question to safely avoid the 30,000 gallon cap. Lastly, the court found no correlation between the 30,000 gallon number chosen and any other state or federal system of classifying wine producers: the only correlation found was with the Massachusetts wine industry.

The Court further rejected Massachusetts??? argument that no non-discriminatory method was available to meet the purported purposed behind ?? 19F, noting that the National Conference of State Legislatures adopted a Model Direct Shipment Bill in 1997, which does not regulate winery access to direct shipments based on winery size. Lastly, the Court rejected an unrelated argument that the 21st Amendment to the United States Constitution, which repealed Prohibition, overrides the Commerce Clause in this area and gives states the power to enact laws that discriminate against out-of-state producers.

Massachusetts could seek Supreme Court rule of the First Circuit decision, although the soundness of the First Circuit???s reasoning leaves Massachusetts with a steep hill to climb in successfully having the decision overturned. More likely, the First Circuit decision will serve as a model for other federal trial and appeals courts to rule on the constitutionality of similar laws enacted in other states.

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Trouble Brewing At Starbucks

Sunday, January 24th, 2010

Regardless of who you believe, it is a sordid story that may lead to a tremendous liability for Starbucks, not to mention embarrassment for everybody involved. A teenaged “barista” has alleged that her 24 year old manager sexually harassed her on a regular basis and used his position to obtain sexual favors from her. The company claims that the two concealed a consensual relationship. The manager claimed he never know the employee was only 16 and pleaded guilty to statutory rape charges and served 4 months in jail. The teenagers parents seek to impose responsibility for these events upon the company.

Whether Starbucks has a valid legal defense or not, this should not have happened. Bottom line: an employer should not only have a policy against harassment, it should also have and enforce a non-fraternization policy between managers and line-workers. And rules are not enough. An employer should conduct training as part of the hiring and promotion process, and that training should be refreshed on a regular basis. A professional human resources department can also serve as a trouble shooter, helping operations work in a way that can avoid liability and working towards ensuring that employees feel comfortable in their environments by being visible and available. At the end of the day, a strong work culture based on respect and team work will do more than policies printed on forgotten paper.

The demographics in this case also demonstrate an important point. Here, a teenager has brought a complaint concerning her 24 year old manager. Frequently, sexual harassment claims, especially in the restaurant context, arise when young and inexperienced people with authority fail to manage their authority in a responsible manner. In other words, they’re not yet grown ups and they act like kids, and they’re surprised at the consequences. Yes, rules and their enforcement are important, but training, training, training, will actually better serve an employer and its employees. Having a strong corporate purpose, a strong corporate culture, and a solid corporate infrastructure capable of delivering training, mentoring and troubleshooting can help employers avoid the sordid stories on prime time and keep your employees looking at the bottom line.

Chris Vrountas, Chair of the Employment Counseling and Litigation Practice Group, contributed this posting.

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