Projected Class Action Alleges Restaurant Groups’ Plan to End Tipping Is Conspiracy

Danny Meyer, David Chang, Jonah Miller, Tom Colicchio and other restaurateurs have been named as defendants in a putative class action that alleges a business strategy to eliminate tipping and replace it with a service charge of at least 20 percent is price-fixing and a conspiratorial restraint of trade that violates the federal Racketeer Influenced and Corrupt Organizations Act and Sherman Act. Brown v. 140 NM LLC, No. 17-5782 (N.D. Cal., filed October 5, 2017). The complaint alleges that the restaurateurs’ agreement constitutes price-fixing because the restaurants involved conspired to raise their prices simultaneously.

Meyer, CEO of Union Square Hospitality Group, is alleged to have spearheaded the “conspiracy.” The complaint cites dozens of newspaper articles, television and radio interview transcripts, trade group meetings and tweets in which Meyer and other defendants discussed the reasons for implementing the change and explaining the competitive advantages of acting as a group. According to the complaint, Thaddeus Vogler, owner of Trou Normand and Bar Agricole in California, told NPR that he tried a no-tipping system but retracted it, noting, “We were losing staff. Servers mostly . . . We were continuing to hire young new people, train them, and then they would get the set of skills necessary, and they would generally give notice and move to other restaurants in our community who were still on a traditional tip economy.”