| Ramirez v Mansions Catering, Inc. |
| 2010 NY Slip Op 04857 [74 AD3d 490] |
| June 8, 2010 |
| Appellate Division, First Department |
| Luis Ramirez et al., Respondents, v Mansions Catering,Inc., et al., Appellants. |
—[*1] Law Office of William Coudert Rand, New York (William Coudert Rand of counsel), forrespondents.
Order, Supreme Court, New York County (Jane S. Solomon, J.), entered July 28, 2009,which, to the extent appealed from, certified as plaintiffs a class of all wait staff employeesemployed by defendants Mansions Catering and/or Sam Milliken, from August 14, 2002 throughthe present, who have not been paid gratuities or similar payments received by defendants fromcustomers, to which the class is allegedly entitled, unanimously affirmed, with costs.
Section 196-d of the Labor Law provides, in pertinent part, that no "employer or his agent. . . shall demand or accept, directly or indirectly, any part of the gratuities,received by an employee, or retain any part of a gratuity or of any charge purported to be agratuity for an employee." In Samientov World Yacht Inc. (10 NY3d 70 [2008]), the Court of Appeals held that the "gratuity"provisions of section 196-d "can include mandatory charges when it is shown that employersrepresented or allowed their customers to believe that the charges were in fact gratuities for theiremployees" (World Yacht, 10 NY3d at 81).
Defendants' principal argument on this appeal is that the Court of Appeals' holding inWorld Yacht should not be applied retroactively to plaintiffs' class or individual claims.Defendants contend that, because they assertedly changed their policies to comply withWorld Yacht within months of that ruling, prospective-only application of the WorldYacht holding would eliminate the bulk of plaintiffs' claims, most of which predateWorld Yacht, and compel the decertification of plaintiffs' class action. Defendants'arguments lack merit.
Although cases are generally decided in accordance with the law as it exists at the time theyare decided, a new rule of state law need not automatically be applied retroactively (People vFavor, 82 NY2d 254, 262 [1993]). A judicial decision announces a "new rule" where it"overrul[es] established precedent" or constitutes "such a sharp break in the continuity of law" or"a dramatic shift away from customary and established procedure" that its "impact will wreakmore havoc in society than society's interest in stability will tolerate" (Favor, 82 NY2d at263 [citations and internal quotation marks omitted]).
The Court of Appeals' holding in World Yacht is "[a] judicial decision construing thewords of a statute," and, as such, "does not constitute the creation of a new legal principle"(Gurnee v Aetna Life & Cas. Co., 55 NY2d 184, 192 [1982], cert denied 459 US837 [1982]). [*2]Moreover, the only pre-World Yachtappellate decision construing Section 196-d's "gratuity" provisions was our decision inBynog v Cipriani Group (298 AD2d 164 [2002], affd as mod 1 NY3d 193[2003]), where we held that a "contractual 22% 'service charge' " was not a "voluntary gratuity"within the meaning of section 196-d (Bynog, 298 AD2d at 165). In modifying our orderon other grounds, however, the Court of Appeals expressly "reserve[d] judgment as to whetherthose waiters would be entitled to a share of Cipriani's service charge under Labor Law section196-d if they were employees" (Bynog, 1 NY3d at 199 n 4). Hence, prior to the Court ofAppeals' decision in World Yacht, the issue of whether mandatory service charges couldconstitute "gratuities" under section 196-d had not been authoritatively resolved. Because therewas no existing body of established precedent on the issue, World Yacht was not adeparture from existing law and thus not a "new rule" subject to retroactivity analysis. To thecontrary, the Court of Appeals' construction of section 196-d was "foreshadowed" by the plainmeaning of the term "gratuity," as used in the statute (Gurnee, 55 NY2d at 192).
Since no "new rule" was pronounced in World Yacht, there is no basis here fordisturbing the presumption that its holding be accorded retroactive effect (see Favor, 82NY2d at 262-263). Concur—Mazzarelli, J.P., Saxe, Nardelli, DeGrasse andManzanet-Daniels, JJ.