Maine Supreme Judicial Court to decide if banquet wait staff must share ‘service charge’

Posted May 09, 2012, at 6:09 p.m.

PORTLAND, Maine — The Maine Supreme Judicial Court will decide if banquet wait staff are entitled to keep all of a service charge added to the cost of food and beverage or if a portion of it can be shared with other employees, such as banquet and other managers as well as set-up and kitchen staff, who do not usually receive tips.

Justices heard oral arguments Wednesday in the appeal of the class action lawsuit from York County Superior Court.

The Cliff House added a 19 percent service charge to the bill for banquet food and beverage, according to court documents. Wait staff received 13 percent of the service charge and the rest was given to management and other workers.

State law allows waitstaff who receive tips to be paid less than minimum wage if they would be making minimum wage or more when the tips are added to their hourly rate. Most often, banquet servers are not paid minimum wage but managers, set-up staff and others, who do not generally receive tips, must be paid minimum wage.

Allison Hayden-Tidd of York sued Cliff House & Motels Inc. and owner Kathryn M. Weare nearly two years ago alleging that management had been distributing tips illegally. Her attorney, Hillary Schwab of Boston, argued that the service charge was a tip or gratuity disguised under another name.

In September 2011, Superior Court Justice William S. Brodrick granted summary judgment to the Cliff House and Weare. He found that a tip and a service charge were not the same thing, and quoted state law in his decision.

‘“A sum presented by a customer in recognition of services … ’ strongly suggests [a] particular service to a particular customer,” Brodrick, who is an active retired judge, wrote in his decision. “That is what is important. Banquet servers do not render particular service. Nor are they recognized in particular by the customers. Absent a statutory command, banquet servers are not entitled to 100 [percent] of the banquet service charge.”

Brodrick also cited a law passed by the Legislature in 2011 that allowed banquet facilities to distribute a service charge to wait staff and other banquet workers if the facility discloses that information to customers so they have the option of tipping waitstaff.

Several justices Wednesday questioned whether the new law could be applied retroactively to the Cliff House situation, which occurred before the law was changed.

Schwab argued in oral arguments in her brief that Brodrick wrongly interpreted Maine law. The law ensures that service employees receive the payments customers expect them to receive. She also said that the words “service charge,” “tip” and “gratuity” are used interchangeably in the food and beverage industry.

Robert Kline, the Portland attorney for the Cliff House and Weare, argued that Brodrick’s decision was sound.

“[I]n light of the fundamental difference between a restaurant meal, facilitated and served by a single waiter or waitress and a catered banquet event delivered by a cooperative and highly coordinated team, the superior court’s adoption of the federal definition of ‘tip’ as a gratuity paid for personalized service, was entirely appropriate,” Kline wrote in his brief.

If the justices rule in favor of Hayden-Tidd, the case would be returned to York County Superior Court so damages could be determined, Schwab said Wednesday in a phone interview after oral arguments. She estimated there were between 50 and 75 people in the class who might be affected by a favorable decision.

A similar lawsuit brought against the Union Bluff Hotel in York in December 2008 was settled for $28,000, which included more than $9,000 in legal fees, in October 2009, according to a previously published report. About two dozen people qualified to share in the distribution of more than $18,000.

Schwab declined to estimate Wednesday how much money might be owed to waitstaff at the Cliff House were her side to prevail in the lawsuit.

There is no timetable under which the justices must announce a decision.

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