The talk of Mott Street this week is the long-sought victory in federal court by a team of three Skadden, Arps, Slate, Meagher & Flom lawyers on behalf of 11 waiters and busboys at a Chinatown restaurant who were cheated out of tips by their employers.

The workers are to receive nearly $700,000 in compensatory damages, according to the judge's award at trial - plus a similar amount from confidential settlement of a companion lawsuit.

"Justice has been served," said Wing Lam, director of the Chinese Staff and Workers Association, a community advocacy group that worked with Skadden attorneys and counsel for the Urban Justice Center over the four years of litigation. "And now, finally, the servers have been given justice."

In a bench trial before Southern District Court Judge Gerard E. Lynch, the owners of 88 Palace restaurant were found guilty of violating the U.S. Fair Labor Standards Act and several sections of the New York state Labor Law.

Additionally, in the matter of Chan v. Sung Yue Tung Corp., 03 Civ. 6048, defendant owners were cited by Judge Lynch for "systematic destruction" of relevant business records as well as "extensive" and "pervasive" under-reporting of revenues in tax filings. During the 2002 tax period, for instance, Judge Lynch found that gross revenues at 88 Palace "should have been $2.78 million [but] defendants reported only $1.547 million."

The central issue, however, was the distinction between "tips," all of which must lawfully go to serving staff, and "service charges," which restaurants typically apply to large parties of diners. Under certain circumstances, restaurant owners may share in the proceeds of service charges.

But what 88 Palace said were service charges - of which the owners kept a 25 percent share - was what Judge Lynch declared were tips, in fact, based on plaintiff testimony he found "credible and impressive in its cumulative effect" versus "false testimony" on the other side.

In his 58-page opinion of Feb. 1, Judge Lynch said defense testimony was particularly egregious in the case of one co-owner who "frequently [gave] the impression that he was embarrassed by his own claims."

Mark S. Cheffo, a Skadden partner who headed the firm's pro bono team, said Judge Lynch had rendered a "ground-breaking decision that clarified many areas left murky" by state and federal labor rules governing the administration of pooled gratuities, overtime wages and the so-called "tip credit," whereby restaurant employers may pay workers less than minimum wage if a substantial part of their incomes are derived from customer tips.

Daniel A. Hochheiser, managing partner of Hochheiser & Hochheiser, represented the restaurant. He said he had not decided on whether to appeal the ruling, but that he was negotiating with Mr. Cheffo on attorney's fees Judge Lynch ordered the restaurant to pay Skadden. Mr. Cheffo said his firm had invested "thousands of hours" in the pro bono case.

Mr. Hochheiser said Judge Lynch made "several astute points" in his opinion, noting one that cast a somewhat favorable light on his client.

"At all relevant times," wrote Judge Lynch, "the total compensation received by all plaintiffs exceeded the amount they would have received if paid a flat hourly wage equal to the legally-required New York State minimum wage, including all overtime requirements."

Mr. Hochheiser offered calculations at trial showing that such total compensation computed to an hourly pay rate of $9 to $20. But Judge Lynch said tips were an "anomalous method of compensation" by customers rather than employers, who are given dispensation by labor law to pay workers less than minimum wage in return for the opportunity of customer gratuities.

The companion suit against previous owners of 88 Palace was settled days before Judge Lynch ordered current owners to reimburse workers for expropriated tips. Of the settlement's reimbursement figure, Mr. Cheffo said, "I'm allowed to say it's a significant amount, on top of the significant amount" won at trial in the related case.

Pro Bono Team

Lead litigator for Skadden was Rachel B. Passaretti, a sixth-year associate. Mara Cusker Gonzalez, a second-year associate, handled trial preparation. As a former summer associate, Ms. Cusker Gonzalez first entered the case while in her final year at Columbia Law School.

The 11 plaintiffs, nine of whom were men, ranged in age from 30 to 70. They spoke three separate Chinese dialects - Cantonese, Mandarin and Fuzhou. Mr. Lam, who is fluent in Mandarin and Cantonese, provided translation assistance to plaintiffs as well as Skadden lawyers.

"I commend their bravery in coming forward, for risking their livelihoods," Ms. Passaretti said of the plaintiffs. "They thought they were right, and that victory was important for them and others."

"They stuck with this case through four years, through all the depositions - and still, they worked at the restaurant, facing the defendants on a day-to-day basis," Ms. Cusker Gonzalez added.

There were some "retaliatory" firings during the four years, said Ms. Passaretti, who went before the National Labor Relations Board and won reinstatements.

Ray Brescia, associate director of the Urban Justice Center who originally joined the agency under a public interest fellowship sponsored by Skadden, said he sought pro bono help because the case was "too big for us to handle."

Judge Lynch's ruling, said Mr. Brescia, should help in another Chinese restaurant matter likewise initiated by the center and also involving expropriated wages.

Skadden's case was "masterfully litigated on very complex issues," said Mr. Brescia. Referring to Mr. Cheffo, he added, "Mark was the steady hand, and the associates worked like dogs. Together, they wrestled that bear to the ground and pinned it."

Last Saturday, the Skadden wrestlers held a news conference in Chinatown, dutifully attended by the community's four principal Chinese language newspapers - the China Press, Ming Pao Daily News, the World Journal and Sing Tao Daily, all of which published lengthy stories on Judge Lynch's decision.

As a result, Wing Lam said he had spoken with waiters all over Chinatown this week, many of whom confronted restaurant owners who persisted in expropriating their tips with the question, "Don't you read the newspapers?"