Applebees, Red Lobster, etc. Hit With Major Lawsuit for Automatic Gratuities

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Several New York City restaurants, including popular chains such as Red Lobster and Olive Garden, are being accused in a lawsuit of adding automatic gratuity to all bills – regardless of the size of the parties, CBS This Morning reports.

Normally, restaurants add automatic gratuity to parties of, say, 10 or more. Restaurants are also required by law to post their gratuity policies where they are clearly visible to customers.

But in a lawsuit totaling $5.5 billion, restaurants in New York City, including Applebee’s, Red Lobster, and Olive Garden, are being accused of adding automatic gratuities to all bills.

New York law allows restaurants to apply automatic gratuities to parties of eight or more.

CBS News aired images this week of an Olive Garden check that included a line for an automatic gratuity of 18 percent and a line for an additional tip – but party size wasn’t taken into account. Same for an Applebee’s check with a line for a 17 percent automatic gratuity that also read “payable at guest’s discretion”:

“They want to squeeze that extra little dollar that they can out of everybody,” said Evan Spencer, the lawyer who brought the $5.5 billion class action lawsuit, adding, a “tip and a gratuity are exactly the same thing,”

Darden Restaurants, the parent company that owns Olive Garden and Red Lobster, said in a statement: “The automatic gratuity is a convenience for our guests. Our guests always have the option of adding to, reducing or completely deducting the automatic gratuity before paying their check.”

Applebees, Red Lobster, etc. Hit With Major Lawsuit for Automatic Gratuities

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Spencer’s billion dollar lawsuit, according to Yahoo! News, could “impact some 2,000 restaurants in New York City.”

“Ted Dimond, a tennis pro who brought the suit,” the Yahoo! Report continues, “[said] he wants to see diners get back $50 plus $1,000 for ‘willful violations,’ where restaurants trick diners into adding a second tip when one is already included.”

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