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University of Southern California Is in Trouble for Allegedly Defrauding Restaurants

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Rance’s Chicago Pizza and local cafe BBCM say the university mislead them on several key issues at its USC Village development

Onlookers point at a map at USC Village.
USC Village
USC Village

A new lawsuit filed last week could spell trouble for the University of Southern California. The already-embattled private university — beaten down by separate admissions and sexual abuse scandals — is now facing charges from multiple restaurant tenants that it has “deceived and defrauded” them at its newer USC Village development just north of campus. Rance’s Chicago Pizza and local cafe BBCM are seeking $5 million in damages.

The lawsuit, filed in the state court in Los Angeles, alleges that USC’s Real Estate and Asset Management team “induced” restaurants into signing “above market rate” leases by offering a variety of promises that never came true. The suit claims that USC “falsely represented” the following:

  • Restaurant operators “would be able to accept USC meal cards” as payment from students
  • The development would contain “a reasonable mix of restaurants and retail” instead of what actually ended up opening there: primarily restaurants
  • The college “fraudulently concealed the fact that there would be an 8,000 square foot dining hall at the USC Village”

The lawsuit, filed by Russ, August, & Kabat law firm in Los Angeles, claims instead that “USC never intended to and never permitted the tenants to accept” USC meal cards, called USCards. Students use the cards widely elsewhere on campus to implement their meal plans.

Meanwhile, USC also constructed a massive dining hall in the middle of the Village that did accept USCards. According to the lawsuit, the planned construction of this dining hall was known to USC at the time that the tenants signed leases, but they say this highly material information was deliberately withheld from them. USC also nearly doubled the number of restaurants in the Village, and failed to market the Village to non-USC customers within the surrounding local community.

A rendering for the brick buildings of USC Village.
An early rendering of USC Village
Harley Ellis Devereaux

The University said that they developed the gigantic, multi-million-dollar USC Village years ago as an anchor not just for students but also for the greater University Park neighborhood. Yet when it opened in 2018, some local non-students felt that the place — stocked with fast casual restaurants, chains like Starbucks, Cava, and Trejo’s Tacos, and a Trader Joe’s — did not cater to them at all. Now the restaurants on property, including all-day cafe BBCM and Rance’s Chicago Pizza, say that the university didn’t care about them, either.

In response, USC representatives gave the following statement to Eater:

USC Village is a pioneering mixed-use student residential center that offers a wide variety of dining and retail options that support the vibrant residential life experience at USC and are open to the community.

The university believes the allegations that Rance’s and BBCM have made in their lawsuit are inaccurate, and we will vigorously defend against them in court.

The university recently filed a separate action in court because Rance’s is several months behind in paying its rent. We remain hopeful, however, that we will be able to work together and reach a workable solution with our tenants.

Other local restaurants like Honeybird and Kobunga continue to operate inside the Village property, which opened to the public last year. Move in for USC students began last week, with classes starting yesterday.

Here’s the full complaint in PDF:

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