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No-Tipping Restaurants Duck Price-Fixing Conspiracy Lawsuit

By William Vogeler, Esq. on January 18, 2019 | Last updated on March 21, 2019

Tip-free restaurants may sound like a great idea for customers, but not so much for waiters, waitresses, and unhappy plaintiffs.

In federal court, plaintiff Timothy Brown alleged that tip-free restaurants in the San Francisco Bay Area and New York City conspired to fix prices. Potential plaintiffs everywhere may have agreed.

But a judge dismissed the proposed class action. It's hard to bake make a price-fixing case against just a handful of restaurants, he suggested.

Tip-Free

The California defendants -- owners of the Shake Shack, Union Square Cafe, Gramercy Tavern, Camino, and Comal -- allegedly went tip-free and raised their prices in concert. In New York, Happy Cooking Hospitality was also in hot water.

"In the fall of 2014, a handful of Bay Area restaurants agreed 'as a group' to eliminate tipping and increase prices by twenty percent," the complaint said.

The plaintiff called it an "ongoing conspiracy" to transfer "millions of dollars" from customers and servers to restaurant owners. The lawsuit alleged violations of federal and state antitrust laws.

Judge Jeffrey White dismissed the case, saying there was no personal jurisdiction against the defendants. Brown may file an amended complaint, but the judge was skeptical.

No Jurisdiction

"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," White said.

Gwyneth Borden, executive director of the Golden Gate Restaurant Association, said the lawsuit was a "fishing expedition." She said restaurateurs are just trying to find better ways to serve.

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