Coffee Shop Server Picking Up a Cash Tip

Sometimes the real mystery isn't which side will win a lawsuit, but on what grounds.

Failure to state a claim? Lack of personal jurisdiction? Improper venue? Failure to effect service?

Or just general stupidity?

In what should come as a surprise to no one, a would-be antitrust class action targeting restaurants that eliminated tipping got the boot by U.S. District Judge Jeffrey White in the Northern District of California on Monday.

You might recall from Lit Daily's prior coverage that plaintiff Timothy Brown sued a handful of prominent restaurants in California and New York including Reynard in Brooklyn, Gramercy Tavern in Manhattan, Comal in Berkeley and Camino in Oakland.

The reason? All opted to include the gratuity in the price of the food.

Represented by David Lavine and Guy Edward Mailly of Mailly Law and solo practitioner Steven Uhr, Brown said this alleged antitrust price-fixing conspiracy “unlawfully transfers millions of dollars from customers and servers to restaurant owners in violation of federal and state antitrust laws.”

Or not.

The restaurants lawyered up big time: Union Square Hospitality Group and restaurateur Danny Meyer tapped a team from Baker Botts led by Jonathan Shapiro; celebrity chef Thomas Colicchio and Craft Worldwide turned to Gordon Rees Scully Mansukhani; Eleven Madison Park and its owners hired Boies Schiller Flexner; 140 NM LLC  and Bar Agricole was represented by Zelle LLP; the New York City Hospitality Alliance, Inc. hired Duane Morris; Happy Cooking Hospitality, Inc. went with Hueston Hennigan LLP; Momofuku retained Bryan Cave Leighton Paisner.

Overkill? Perhaps. But you can't blame the restaurants for not wanting to let the suit—which in theory could have resulted in massive treble damages—get off the ground.

Still, the judge did give the plaintiff a little traction: “Brown alleges that he paid $5.00 more for a fried-chicken sandwich than he would have absent the alleged price fixing conspiracy. The court concludes that, at the pleading stage, Brown has alleged sufficient facts to show he has standing to seek damages,” White wrote.

But the judge added, “That does not mean these same facts will be sufficient to state a claim.”

White let the New York defendants off the hook for lack of personal jurisdiction. He also found some of the New York defendants were not properly served. (The process server claimed to have delivered one complaint to a restaurant manager with brown hair who was between 5'4” and 5'8” tall, when the actual manager had thinning red hair and stood 6'2”.)

In his 24-page opinion, White only skimmed the merits of the case, like, say, how can a restaurant in a Manhattan museum be considered part of the same market for antitrust purposes as an upscale Mexican eatery 3,000 miles away in Berkeley?

Or for that matter, what's unlawful about charging the prices listed on a menu? If you think it's too expensive, go eat somewhere else. There are about 660,000 restaurants in the United States.

The judge simply wrote that Brown failed “to allege facts from which it would be reasonable and plausible to infer that the California defendants compete with the New York defendants.”

He continued, “Brown does not include many details about the alleged price increases, but the allegations do not show the decision to do so was simultaneous or that the increases were uniform. Indeed, some of the New York defendants are alleged to have eliminated tipping four years after the California defendants eliminated tipping.”

As for the California defendants, the judge noted that because Brown alleged they “raised menu prices (by some unspecified amount) and added a 20 percent service charge to their menus, it is not clear to the court which prices he contends are fixed.”

He added, “Brown does not include any other allegations from which the court can infer that the California defendants agreed to increase menu prices, let alone agreed to a uniform increase in prices. If it is the service charge, the court concludes he has not alleged facts showing he was injured by that practice because he does not allege he would have paid less than 20 percent as a tip.”

Still, White did allow Brown to amend his complaint against the California defendants, though he added, “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.”

 

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