Courts Confirm Class Action Status of Price-Fixing Lawsuit Against LA Restaurants

A judge from the Los Angeles County Superior Court has officially granted class action status to an antitrust lawsuit against a host of LA’s most renowned restaurants. The issue stems from the use of a healthcare surcharge put on the final bill by a range of restaurateurs, and whether those owner/operators collectively pursued the joint action as a way to, in essence, fix a portion of their prices.

Restaurant Hospitality broke the news of the court’s decision this week, and its potentially wide-ranging effects on the restaurant industry locally and beyond. The case is seen by many as a test of the court system on issues relating to things like service charges, which are an increasingly popular way for restaurants to pool and redistribute money for both front and back of house staff equitably. As of now those service charges remain largely unregulated by the state of California, though they are seen by some customers as mandatory additional payment.

The affected restaurants include: AOC, Lucques, The Hungry Cat, Rustic Canyon, Milo & Olive, Huckleberry, Melisse, Animal, Son of a Gun, Trois Mec, and others.

The lawsuit was first brought by one Margaret Imhoff in 2015 after a meal at Rustic Canyon, where she noticed the 3% healthcare surcharge and believed it to be a mandatory additional cost on top of her meal. The issue of possible restaurateur collusion stems from an email amongst many of the highest-performing restaurant owners around town in 2014, allegedly discussing the inclusion of the 3% healthcare charge across each of their restaurants.

Some restaurants have since done so, others have not, and yet more have chosen to tackle the issue in slightly different ways, with different percentages or new service charge models. Others, like Atwater Village’s newer Journeymen have been working to avoid the issue of service charge, taxes, and tipping altogether by bundling everything into the final price shown on the menu, with no additional gratuity allowed.

As for the class action side of the lawsuit, any customer who can produce a receipt (with a shown healthcare surcharge) from one of the listed restaurants between September 1, 2014 and this past Tuesday, January 9, 2018, is eligible to apply to join the case. The final day to apply is February 20.

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