Class Action Rejected in SDNY Labor Litigation Over Grocery Delivery Fees
Judge Lorna Schofield, of the Southern District of New York. Photo: Rick Kopstein/ALM
A potential class action that claimed fees on Stop & Shop LLC’s Peapod grocery delivering service were in fact tips owed to employees was shut down Tuesday by U.S. District Judge Lorna Schofield of the Southern District of New York.
The suit principally alleged violations of New York’s labor law by the grocery chain. The plaintiffs claimed that the delivery fees incurred by customers should be treated as tips. They claim the online ordering process fails to properly alert customers to the fact the fee is not gratuity. They pointed to the fact that the website is without the ability to include a tip and tells customers that tipping is optional.
Schofield disagreed, finding that the complaint failed to sufficiently plead that a reasonable customer understood the delivery fee to be gratuity. Most obviously, the judge noted, one is simply not a synonym for the other. The website itself “expressly distinguishes” between the two—the fee being mandatory, while tipping is noted as optional “but always appreciated.”
The plaintiffs pointed to state regulatory opinions regarding the hospitality industry, but Schofield held that the guidance related to very specific scenarios—service charges in banquet contracts and food service work—and therefore was inapplicable to grocery deliveries.
Schofield also ruled against an individual plaintiff who brought a claim under the state’s Wage Theft Prevention Act. Stop & Shop employee Anthony McAllister alleged that he believed the company was out of compliance with the law by not providing him proper pay notice, while stating he never electronically signed employment-related forms.
The court earlier in the litigation indicated its intention to convert the initial motion to dismiss claim by the defendants into one for summary judgment. In her decision Tuesday, Schofield found Stop & Shop provided “undisputed evidence” McAllister was provided proper wage notice, each of which was acknowledged through electronic signature by McAllister.
The court pointed to the fact that, under state law, an electronic signature carries the same validity and effect as a physical one. Without some alternative explanation for how the signature came to be, simply not believing he had done was insufficient to defeat summary judgment.
The plaintiffs were represented by Thomas & Solomon partner Michael Lingle. Stop & Shop and the other defendants were represented by a legal team led by Morgan, Lewis & Bockius partner Brendan Killeen. Neither sets of attorneys responded to a request for comment.
A spokeswoman for Stop & Shop likewise did not respond to a request for comment.
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