The parties involved in a lawsuit against a big Denver restaurant group have agreed to allow the case to be dismissed and to enter into arbitration, both sides said this week, ending a legal battle related to added fees on customer bills.
Culinary Creative Group, which operates more than a dozen bars and restaurants in Denver, was sued last year by a server who first alleged the restaurant she worked at, Kumoya, had stolen tips, reduced her wages and refused her regular breaks, according to documents filed in Denver County District Court.
Plaintiff Marianna White later amended those allegations, and the case instead began to revolve around the semantics of a “service charge” and what constitutes a tip.
White’s attorney, Adam Harrison, said the two sides came to a compromise and sought a legal definition from district court Judge Sarah Block Wallace over the wording and how to explain it to customers who might confuse a service charge with an automatic gratuity.
The unopposed motion seeking a determination of law, which White’s attorneys filed in January, asked Wallace to specify that service charges couldn’t go toward a state credit that lowers the minimum wage for servers who earn tips. That credit was related only to tips, according to the motion.
But Wallace, Harrison said, “didn’t want to enter that order without more information about why we weren’t in arbitration, and how it could possibly be that she could rule on an issue where we weren’t disagreeing.”
Earlier this month following a case conference, it “became apparent” to Wallace that the language of service charges may not be in her purview, and ordered the parties to show why the court had jurisdiction over the subject, according to her order.
White entered a request for joint dismissal without prejudice earlier this week. Wallace granted the order on Wednesday.
Culinary Creative Group CEO Richard Flaherty confirmed the suit’s dismissal and shift toward a private resolution and settlement. “We are pleased that the lawsuit has been dismissed, and are tying up loose ends in arbitration,” he said.
Flaherty took over as CEO last month after company co-founder Juan Padro stepped down. The group’s restaurants include Kumoya, Tap & Burger, Bar Dough, Mister Oso, Magna Kainan, Ash’Kara and A5 Steakhouse.
A new Colorado law aimed at price transparency, signed by the governor last year, states that businesses selling food and drink must tell customers what all mandatory service fees are used for.
Harrison, who has worked on previous cases involving restaurant fees and service charges, is still seeking more state regulation over the issue.
Earlier this month, he sent a letter to the director of the Colorado Department of Labor and Employment, asking the state to issue an opinion on the language about service charges that had been submitted during White’s lawsuit. Her motion seeking determination of law listed four elements of a service charge: that they be mandatory to all customers, that there be transparent communication about the fee with both customers and employees, and that it not fund the tip credit.
“It’s still unwritten in Colorado law,” Harrison said. “I’m just doing my best to create some transparency, find some clarity for the employees and customers, and then the businesses they are working for or patronizing.”
