Smith & Wollensky Labor Dispute Still Cooking

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A group of Park Avenue restaurant waiters recently succeeded in persuading the Second Circuit to reject Smith & Wollensky Restaurant Group, Inc.’s appeal of a District Court ruling in the waiters’ favor, allowing them to return to the District Court to prosecute their unfair employment practices claims against the restaurant. Read the Circuit Court’s ruling here.

The waiters allege that Smith & Wollensky, which owns Park Avenue restaurant, failed to pay minimum wage and overtime and illegally deducted gratuities, among other things, which are violations of the New York Minimum Wage Act, several sections of the New York Labor Law (NYLL) and the federal Fair Labor Standards Act (FLSA). You can read more about New York State wage and hour laws here and the FLSA here.

The plaintiffs in this case hoped to represent themselves and all other similarly-situated Smith & Wollensky waiters in an “opt-out” class action alleging violations of their state law claims and also an “opt-in” collective action alleging violations of the FLSA.

A minority of federal courts have found opt-out and opt-in actions to be fundamentally incompatible with each other and have refused to permit state court opt-out class actions to proceed alongside federal FLSA opt-in collective actions in the same proceedings.

However, the District Court sided with the majority of courts in this instance finding no reason the waiters’ state and FLSA claims could not proceed side by side.

Smith & Wollensky appealed the grant of class certification arguing that Congress’s intent in requiring that employees affirmatively opt-in to FLSA collective actions is undermined when employees bring a lawsuit alleging both a FLSA collective action and an opt-out class action alleging state labor law claims. Smith & Wollensky asserted that there was an inherent conflict between the two types of actions stemming from the fact that the number of employees in the opt-out class would likely be much larger than the number in the opt-in collective action.

The Second Circuit correctly disagreed.

The District Court’s finding was supported because the waiters’ federal and state law claims derived from “a common nucleus of operative fact” and none of the factors that might have otherwise granted the District Court discretion to decline supplemental jurisdiction existed.

If you believe your employer has failed to pay you overtime or minimum wage, or has wrongfully withheld gratuities from you, please tell us your story.

Abbey Spanier, LLP, located in New York City, is a well-recognized national class action and complex litigation law firm.