Class-Action Lawsuit Claims Top Los Angeles Restaurants Are Fixing Prices

Someone is finally fed up with the marginal 3% healthcare surcharge that some LA restaurants are adding to checks. A class-action lawsuit filed yesterday accuses several places, including Melisse, Lucques, Trois Mec, Animal, Son of a Gun, AOC, and Rustic Canyon, of raising their prices together and thereby violating antitrust laws. According to CBS News, Melisse's Josiah Citrin sent an email saying, "We decided it would be a good thing to do it as a group ... usually when lots of people do things it's easier to make change," with regards to the 3% surchage.

It seems unreasonable that a few establishments, even notable ones, would be able to affect the market as a whole based on their position (update: Section 1 of the Sherman Antitrust Act does in fact note that price fixing can occur regardless of market share as a "per se" violation, but it's rarely argued since it's much easier to argue based on Section 2, which bases it on market share). It's arguable that it wouldn't amount to a classic price fix because the players don't have the ability to charge prices across the board. Even though the defendant restaurants are some of the most successful places in town (as regular fixtures of the Essential 38), their overall market share would be a tiny fraction of the entire LA restaurant industry.

Many patrons don't seem to mind the surcharge, which is clearly laid out on menus and listed as a separate line item on checks. The lawsuit argues Animal and Son of a Gun are complicit in the collusion despite not charging an actual 3% surcharge, simply because they "encourage other restaurants to raise their prices." That's a bit of an oddball accusation.

Republique, Bestia, Esters, Milo & Olive, and Cassia are among other restaurants in Los Angeles that add the 3% surcharge, which affords healthcare to all of their employees.