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Judge Allows TGI Friday's Workers To Add Claims In Wage Suit

Law360—Joyce Hanson

A New York federal judge on Tuesday largely permitted TGI Friday's workers in a wage-and-hour collective action to expand their suit, allowing additional allegations related to their claims under federal, New York and New Jersey law as well as under the wage laws of eight other states.

U.S. District Judge Analisa Torres’ wide-ranging ruling gave the workers permission to file a third amended complaint in the suit that alleges, among other claims, that the national restaurant chain violated the Fair Labor Standards Act by requiring tipped workers to perform underpaid side work.

Judge Torres, citing a Second Circuit decision in Block v. First Blood Assocs. and an Eastern District of New York decision in Fernandez v. Kinray, said TGI Friday’s argument that it would be “substantially prejudiced” if new allegations were allowed didn’t hold water. She reasoned that to determine prejudice, a court must consider whether the assertion of a new claim would require the opponent to spend significant resources to conduct discovery and significantly delay the dispute’s resolution.

“According to defendants, adding plaintiffs’ proposed state-law claims, and allegations in further support of their federal claims, will require significant additional discovery and delay the case’s resolution,” the judge wrote. “Generally, however, allegations of prejudice because of time, effort or money expended in a case alone are insufficient to defeat a motion to amend.”

The workers’ legal counsel, Justin M. Swartz of Outten & Golden LLP, said in an email Wednesday that the judgment favoring the workers was hard-won.

“We are glad that the court gave us almost all of the relief we sought but it really shouldn’t have been a fight,” Swartz said. “Defendants who reflexively oppose simple requests even where there are no real grounds to do so don’t help either party or the court.”

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TGI Friday’s in February urged Judge Torres to stop the workers from expanding their suit, arguing that it’s too late and that the new complaint would go too far. The restaurant chain said changes proposed by the workers would go beyond the classes conditionally certified by the court in January 2015 and that the workers were also looking to add significant new legal arguments to their case.

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The suit, filed in April 2014 against TGI Friday's and former parent company Carlson Restaurants Inc., brought nationwide collective action FLSA claims and New York labor law class claims on behalf of thousands of employees.

It alleged tipped workers were required to perform non-tip-producing work, such as cleaning, food preparation and stocking, for which they are owed minimum wage and overtime pay. In January 2015, the court granted the workers conditional collective action certification, a move the workers' counsel said allowed them to send notice of the suit to more than 40,000 workers.

After the sides said they had hammered out a tentative agreement to pay nine former workers about $225,000, or average payments of $25,000 each, the settlement was shot down by Judge Torres. The judge took issue with the "sweeping" confidentiality provisions contained in the agreements, as well as a clause stating that a damages award would be given to TGI Friday’s should the plaintiff be found in breach of the confidentiality agreement.

The workers are represented by Justin M. Swartz, Sally J. Abrahamson of Outten & Golden LLP and Joseph A. Fitapelli, Brian S. Schaffer and Frank J. Mazzaferro of Fitapelli & Schaffer LLP.

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The case is Flood et al. v. Carlson Restaurants Inc. et al., case number 1:14-cv-02740, in the U.S. District Court for the Southern District of New York.