Lawsuit Alleging Price-fixing Conspiracy at No-Tipping Restaurants Dismissed in California Court

A California District Court judge has dismissed a proposed class-action lawsuit alleging restaurateur and Shake Shack founder Danny Meyer and his Union Square Hospitality Group (Union Square Cafe, Gramercy Tavern) led restaurants in New York and the Bay Area in a price-fixing conspiracy based on their tip-free model. The suit named tip-free restaurants and their owners in New York and the Bay Area as defendants, alleging that they illegally raised their prices in concert. It originally sought three-fold damages for diners at the tip-free restaurants.

In his ruling, US District Court Judge Jeffrey White granted the New York defendants’ motion to dismiss the case based on a lack of personal jurisdiction, and dismissed the California defendants in a joint motion. The California defendants are Trou Normand and Bar Agricole, along with their owner Thad Vogler, the recently-closed Oakland restaurant Camino and its owners Russel Moore and Allison Hopelain, and Berkeley’s Comal and its owners. The New York defendants included Momofuku and David Chang, Gabriel Stulman and his Happy Cooking Hospitality, Inc., and celebrity chef Thomas Colicchio.

Plaintiff Timothy Brown — an unhappy diner at some of the restaurants in question — hadn’t proven the connection between New York restaurants and those in California, the judge ruled. Now, Brown has the the opportunity file a second, amended complaint against only the California defendants — but he’s not exactly being encouraged to do so.

“It is not clear to the Court how Brown will be able to allege a plausible price fixing conspiracy that consists of just four restaurants, given the number of restaurants in the Bay Area,” the judge writes.

“We are delighted that the Court dismissed this no-merit class action, and did so by adopting our arguments in such a thorough opinion,” said Jonathan Shapiro, a lawyer representing Union Square Hospitality Group and its executives Danny Meyer and Sabato Sagaria.

The Golden Gate Restaurant Association, a local restaurant group, was originally named in the lawsuit but was dismissed from the case after being deposed last spring. “It seemed like a fishing expedition,” says GGRA executive director Gwyneth Borden, who worries it was also “an attempt to stifle a meaningful conversation around alternatives to tipping.”

“For many restaurateurs in the Bay Area, people are trying to navigate the issues of rising cost, tip sharing, retaining employees, and creating more sustainable income, so here, it wasn’t necessary a philosophical question for many — though it is for some — it was just a question of how can we do this better.”

That project is ongoing: Restaurants like Bar Agricole and Trou Normand have returned to a tipping model — partly in response to less formal complaints about automatically higher prices.

• Lawsuit Alleges Restaurants Engaged in ‘Price-Fixing Conspiracy’ with Tip-Free Model [ESF]
• Why the Price Fixing Lawsuit Against Danny Meyer Is So Ridiculous [ENY]