The $3,000 Tip: Is the Employer Stuck? | Constangy, Brooks, Smith & Prophete, LLP

But you non-geeks are welcome to join too!

The following is a true story.

A man walked into a pizza restaurant in Scranton, Pennsylvania and ordered a little over $13 worth of Stromboli.

He made his waitress’ day. He left her a $3,000 credit card tip.

After clearing the credit card charge of $3,013, the restaurant (as is typical based on my own many years of waitressing experience) paid the waitress the full $3,000 in cash. Yippieeeee!!!!!

The plot thickens

Meanwhile, the customer began to think about his act of kindness and decided that maybe he was getting carried away. When he received the credit card bill, he disputed the charge, and the credit card company notified the restaurant. As a result, the restaurant did not recover the $3,000 it paid the waitress the day the customer visited.

The restaurant has now sued the customer in a small claims court. Good. And good for them they don’t make the waitress return the tip.

“Tips for Jesus”

It turns out the tip was part of the “Tips for Jesus” social media trend. (Which apparently has nothing to do with Jesus or even Christianity.) People go out to eat, tip outrageously in relation to the price of the meal, take pictures of their bills and post the pictures on social media.

Most of the “Tips for Jesus” people are just trying to do a good deed. They don’t try to take back their tips.

But this Scranton “Restaurant Reneger” (hat tip to the New York Post for that) got the best of both worlds: first nice publicity, and then the restaurant gets stuck with the bill.

Because that’s exactly what Jesus would have done.

My feelings exactly.

Put on your thinking caps!

Here’s the law school problem: In court, does the “restaurant reneger” win, or does the restaurant win?

I should note here that the restaurant could probably reclaim the tip from the waitress instead of the customer as an overpayment of wages. If an employer makes a mistake and overpays an employee, most state hourly wage laws allow the employer to reclaim the amount of overpayment from the employee. In this case the “fault” was not the fault of the waitress nor the fault of the restaurant. Since the waitress might not have made much money anyway, the restaurant could work out a payment plan where they deduct small amounts from her paycheck until the $3,000 is repaid. If they’re feeling charitable, they might even choose to give her a decent but more mundane meal tip of $13 — say $5, which is more than 20 percent of $13. That would bring her debt down to $2,995.

Apparently this restaurant didn’t mean to do that to the waitress, which I think says a lot for her. Either that, or they didn’t want to wait until 2086* to get paid back in full.

*Take this with a grain of salt. I didn’t count.

So now we have a competition between the restaurant and the stiffer.

I still think the restaurant should beat the customer in court. Here is my rationale:

The implicit agreement to pay $13 in exchange for a Stromboli is a contract, so he’s definitely obligated to pay for it. But a tip isn’t called a “gratuity” for nothing. It’s free. So, unless there’s some quirky legal rule that applies to credit card charges, I’d say there was no “contract” here.

However . . .

There is a concept in the law known as “Promissory Estoppel”. If you make a promise to someone and they reasonably rely on your promise “to their detriment”, you may have to pay even if there is no contract.

Let’s say my kid is thinking about buying a new car but can’t afford the one they want. I tell him, “Oh, buy the car, honey. I’ll put down a $20,000 deposit, and then if you take out a five-year loan, you can afford the payments.” My kid does the math and thinks I’m right. With my $20,000 down payment, he can actually afford the car. So he goes to the car dealership and buys the car. But when he asks me to refund him the deposit, I’m like, “Oh, you thought I was serious? Haha, I was just kidding! Boy are you stupid!”

My kid and I didn’t have a contract because my promise to pay the $20,000 down payment was gratuitous. In other words, I didn’t get anything of value for that promise that a contract would require. But my kid could still sue me, claiming that I promised to pay the $20,000, he reasonably relied on my promise (after all, I’m his mother, albeit a lousy one), and as a result of his trust, he did suffered damage (he is now obliged to pay for a car he cannot afford). This is debenture. I’m “stopped” (legally barred) from claiming that I didn’t have to pay him $20,000 because we didn’t have a contract.

I think this concept could apply to the restaurant.

Alfredo’s Pizza Cafe from Scranton, Pa. read this post before your court date!

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