11th Circuit confirms class action dismissal

Michael P. Tremoglie Apr. 11, 2012, 8:00am

ATLANTA (Legal Newsline) -- A federal three-judge panel has affirmed a district court's dismissal of a complaint by employees of a food service company about a service fee.

The specific issue was the collection from patrons, by the defendants -- Levy Premium Foodservice d.b.a. Atlanta Sports Catering and Compass Group North America d.b.a. Levy Restaurants -- of a 20 percent service fee. The defendants have an exclusive contract to provide concessions and food service in luxury suites at the Georgia Dome, Philips Arena and Atlanta Motor Speedway.

The plaintiffs were employees who were suite attendants. They provided the food and beverages to the patrons for which Levy added a 20 percent fee to the bill, according to the case heard by the U.S. District Court of Appeals for the Eleventh Circuit in Atlanta.

The menus stated that this fee was "a convenience to our guests." It was included because the company wanted to "clarify any confusion regarding the service charge and tipping policy." The defendants explained that the additional fee was "shared in the form of higher wages ... It helps our company attract a high quality employee ..." Then the menu says that patrons can "feel free to extend a personal gratuity."

Levy retained the service fee and did not pay it to the plaintiffs. The plaintiffs sued. The class alleged a breach of contract, breach of contract as a third-party beneficiary, unjust enrichment and conversion. The company moved to dismiss the complaint in the federal district court. The district granted the motion. The plaintiffs appealed.

Both the district court and the Appeals Court said that there could not be a breach of contract because the contract was between the patrons and Levy. It was not between Levy and the employees.

Both courts said there was not a third-party breach of contract because the contract was never intended for the third party's benefit -- which means the employees. Levy's policy, the district court said and the Appeals Court concurred, was never stated to benefit the employees. Levy clearly states if the patrons want to tip the servers they could.

This was a policy that was intended to purportedly benefit the patrons. It permits Levy to attract superior servers. These servers will benefit the patrons.

Regarding the claim of being unjustly enriched, both courts said that the plaintiffs did receive compensation for their services which is all they were entitled. The retention of the service fee did not prove that the employees were not justly compensated.

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