Islam v. Morgans Hotel Group Management LLC
- George Daniels
- 1:18-cv-03091
- U.S. District Court · Southern District of New York
- 5
In Islam v. Morgans Hotel Group Management LLC, Judge Daniels denied dismissal, allowing Christina Falcon’s New York tip claim to continue.
Christina Falcon’s unpaid-tips claim against Morgans Hotel Group Management LLC remained pending; the ruling also affected the proposed collective and class action because Falcon was not dismissed at this stage.
What happened
Islam v. Morgans Hotel Group Management LLC is a proposed group lawsuit under federal and New York wage laws. The plaintiffs alleged that Morgans collected mandatory gratuity charges at events but kept some of the money instead of distributing it to service workers, including Christina Falcon, who worked through a staffing agency.
Morgans asked the court to remove Falcon from the case, arguing that she was employed by a staffing agency rather than Morgans and therefore had no claim against Morgans. The court concluded that Falcon’s allegations were sufficient at this stage to claim that Morgans employed her and improperly retained gratuities meant for her.
Judge George B. Daniels adopted the magistrate judge’s recommendation and denied Morgans’s motion to dismiss. Falcon’s unpaid-tips claim under New York law therefore remained in the case.
The detailed version
- Islam v. Morgans Hotel Group Management LLC · No. 1:18-cv-03091
- George Daniels
- Dec. 2, 2019
Background
Rejwanul Islam, Nasir Ahmed, Imran Hussain, and Christina Falcon brought a proposed collective and class action against Morgans Hotel Group Management LLC under the Fair Labor Standards Act (FLSA) and New York Labor Law. The plaintiffs alleged that they worked as servers at events hosted by Morgans and that Morgans represented to customers that a 16% charge for food, beverages, and room rental would be added as a gratuity and fully distributed to service staff.
Islam, Ahmed, and Hussain were allegedly employed directly by Morgans. Falcon was assigned to work for Morgans through a third-party staffing agency. The complaint alleged that Morgans did not distribute gratuities to Falcon or similarly situated workers and instead retained portions of the gratuities it collected. Falcon’s only claim in the action was for unpaid tips and gratuities.
Motion and Recommendation
Morgans moved under Federal Rules of Civil Procedure 12(b)(6) and 12(c) to dismiss Falcon from the action. It argued that Falcon’s employment by a staffing agency deprived her of a claim against Morgans.
Magistrate Judge Robert W. Lehrburger recommended denying the motion. No party objected to the recommendation. Judge Daniels therefore reviewed it for clear error and found none.
Court’s Analysis
The court held that Falcon sufficiently alleged a claim under Section 196-d of the New York Labor Law, which prohibits an employer or other covered person from demanding, accepting, or retaining gratuities or charges represented as gratuities for an employee.
The court stated that, drawing reasonable inferences in Falcon’s favor as required at the motion-to-dismiss stage, the complaint adequately alleged that Morgans employed Falcon and improperly retained gratuities intended for her. The court also rejected Morgans’s argument that a New York Court of Appeals decision gave it discretion to distribute collected gratuities only to selected employees. According to the court, that decision did not support a caterer’s retaining a mandatory gratuity charge for itself.
Disposition
Judge Daniels adopted Magistrate Judge Lehrburger’s Report and Recommendation. The court denied Morgans’s motion to dismiss, and the Clerk of Court was directed to close the motion. The ruling addressed whether Falcon had adequately pleaded a claim; it did not resolve the ultimate merits of the alleged tip-retention violation.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.