This excerpt taken from the MRT 10-Q filed Oct 31, 2007.
Since August 2002, a number of the Companys current and former employees in New York, Massachusetts and Florida have initiated arbitrations with the American Arbitration Association in their respective states alleging that the Company has violated state (Massachusetts arbitration), state and federal (New York arbitrations) and federal (Florida arbitrations) wage and hour laws regarding the sharing of tips with other employees. The Florida case is proceeding as a collective action with approximately 20 claimants. There are 14 additional claimants from the Boca Raton and North Miami restaurants who will either join the original action or proceed in a separate arbitration. There are two group arbitrations pending in New York. In the first, the arbitrator has permitted the approximately 88 claimants to consolidate their arbitrations into one action and proceed as a collective action. The arbitrator has rendered a decision that the wage and hour laws have been willfully violated, but there has been no determination as to damages. The arbitrator has made an interim award of attorneys fee and costs of approximately $0.8 million. The Company has moved to vacate the liability decision and is moving to vacate the interim attorney award. At this time, it is not possible to predict the outcome of the motion to vacate. The claimants in New York are seeking an aggregate of approximately $1.7 million in damages, exclusive of liquidated damages and interest, and $1.0 million in attorneys fees. The second New York arbitration was filed in October 2006 and contains similar allegations. There are four named claimants in this arbitration proceeding. The claimants seek to represent a class of current and former employees from the Mortons steakhouses in New York, Midtown Manhattan and Great Neck, for a six year time period. In Massachusetts, the arbitrator has ruled that the claimants may proceed as a class, but to date, there are only three people in the class and the arbitrator has ruled that there would be no automatic certification. The parties submitted legal briefs on the issue of class certification but no class action has been certified by the arbitrator. In general, the claimants are seeking restitution of tips, the difference between the tip credit wage and the minimum wage, liquidated damages and attorneys fees and costs. The Company is contesting these matters vigorously. The claimants in Florida and Massachusetts have not stated the amount of damages sought and, at this stage of the proceedings, it is not possible to state the estimated damages sought by the claimants.
In November 2004, current and former employees of the Sacramento, California Mortons steakhouse commenced a state lawsuit in the Superior Court of the State of California, County of Sacramento, asserting individual, representative and class claims against the Sacramento Mortons steakhouse and several other Mortons steakhouses. The plaintiffs asserted claims based on the Companys alleged failure to provide them with meal and rest periods, and for unlawful tip sharing and unfair competition. The plaintiffs seek restitution of tips, meal period compensation and attorneys fees. Dismissals with prejudice for all defendants, except the Sacramento Mortons steakhouse, were granted. The claims against the Sacramento Mortons steakhouse were moved to arbitration and have been resolved pending approval by the arbitrator.
In May 2005, a former employee of the Boston, Massachusetts Mortons steakhouse filed a nationwide class action complaint in federal court in the United States District Court, District of Massachusetts, alleging that the sharing of tips with other restaurant employees violates the Fair Labor Standards Act. The Company moved to dismiss the complaint and compel arbitration. While the motion was pending, the plaintiff filed a nationwide collective action demand for arbitration with the American Arbitration Association. The demand for arbitration alleges the same facts as the lawsuit filed in federal court. The Companys motion to dismiss was granted and the matter is moving forward as an arbitration. On January 13, 2006, the original claimant sought to add a second claimant, a former employee of the Portland and Phoenix restaurants. The arbitrator has ruled that a nationwide class, except for New York, Minnesota, Kentucky, California and Florida, could be certified and an additional class representative could be added. The Company has moved to vacate this decision. The plaintiff has not stated the amount of damages sought and, at this stage of the proceedings, it is not possible to state the estimated damages sought by the plaintiff.
In March 2006, a former employee of the Burbank, California Mortons steakhouse filed a class and collective action in Superior Court in Los Angeles, California alleging that the sharing of tips with other restaurant employees violates federal and state laws. The case was brought on behalf of all current and former California servers for a four-year period. The Company moved to dismiss the action and its motion was granted. The plaintiff has appealed. The plaintiff has not stated the amount of damages sought and, at this stage of the proceedings, it is not possible to estimate the damages sought by the plaintiff, or what the ultimate outcome of the appeal will be.
The Company is involved in various other claims and legal actions arising in the ordinary course of business. The Company does not believe that the ultimate resolution of these actions will have a material adverse effect on the Companys financial condition. However, an adverse judgment by a court or arbitrator or a settlement could adversely impact the Companys results of operations in any given period.
There are no material changes to the risk factors disclosed in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2006.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.