Panel Allows Class Action Against MSG to Proceed

, New York Law Journal

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A class action lawsuit accusing Madison Square Garden of illegally withholding gratuities from service employees can go forward, a unanimous Appellate Division, First Department, panel ruled on Tuesday.

Justice Dianne Renwick wrote the opinion, joined by Justices David Friedman, Rolando Acosta, Sallie Manzanet-Daniels and Judith Gische. It affirmed an August 2011 order by Manhattan Supreme Court Justice Milton Tingling denying MSG's motion to dismiss.

The employees, who worked at MSG during the last decade, allege that the sports and entertainment center charged customers a 20 percent gratuity for food and beverage service, but did not distribute all of that gratuity to the service employees, as required by New York's Labor Law §196-d.

MSG moved to dismiss on several grounds, but Tingling and the First Department rejected them all.

The panel ruled that the suit was not precluded by MSG's collective bargaining agreement with the employees' union, Unite Here Local 100, because it contained "no clear, unmistakable waiver."

It said that the suit was not preempted by the federal Labor Management Relations Act, which governs disputes between unions and management, because the employees' complaint arises under state law, not the bargaining agreement.

Similarly, the panel ruled that an arbitration clause in the agreement does not apply because the dispute does not arise from it either.

The plaintiffs are represented by Arthur Schwartz and Tracey Kiernan of Advocates for Justice Chartered Attorneys.

Madison Square Garden is represented by Kenneth Margolis of Kauff McGuire & Margolis.

The case is Tamburino v. Madison Square Garden, 111432/10.

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