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LA restaurateurs face charges of price fixing

LA restaurateurs face charges of price fixing

Lawsuit cites collusion in decision to add 3-percent healthcare surcharge

A group of Los Angeles restaurant operators that have instituted a 3-percent healthcare surcharge were targeted by a lawsuit Tuesday alleging a price-fixing conspiracy.

The lawsuit was filed on behalf of plaintiff Margaret Imhoff in Los Angeles County Superior Court, but the attorney is seeking class-action status. Named defendants include the owners of some of Los Angeles’ hottest restaurants, including Animal, AOC, The Hungry Cat, Lucques, Melisse, Rustic Canyon, Son of a Gun and Trois Mec, along with potentially others.

The complaint contends that the restaurants violated state anti-trust laws when in mid 2014 Josh Loeb, an owner of Rustic Canyon, emailed a group of restaurant operators to plan a course of action for implementing a 3-percent surcharge.

Melisse and Rustic Canyon, through a press spokesman, declined to comment on the case. The spokesman for the group that owns Lucques, AOC and Hungry Cat also declined comment. The group that includes Son of a Gun and Trois Mec did not respond to requests for comment at press time.

The complaint cites the restaurant’s newsletter, posted on its website, which explains the surcharge to consumers as a means to help cover the cost of providing healthcare coverage.

“We’ve recently sat down with other like-minded local chefs and restaurant owners like Suzanne Goin, Carolyn Stein and David Lentz, Jon Shook and Vinny Dotolo, and Josiah Citrin to come up with a plan to offer coverage and have decided to implement a 3 percent employee benefit surcharge added to all of our checks beginning Sept. 1 to pay the October 1 premium,” the newsletter said.

The filing argues that Melisse owner Josiah Citrin and others “acknowledged the conspiracy.” Citrin is quoted as commenting on the surcharge, 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.”

The filing states restaurateurs publicly described the 3-percent “mark up” as a surcharge to address the employee healthcare mandate of the Affordable Care Act.

The complaint also contends that employees are hurt by the surcharge because patrons reduce their tips, though it offers no evidence.

Daniel Sterrett, attorney for Imhoff, said it was the collective agreement between the restaurateurs that indicates a conspiracy.

“If one restaurant, by itself, decides to raise rates, that’s perfectly legal,” he said. “There are restaurants that we know about that have done that, but we don’t have evidence they were involved in the collective agreement.”

Imhoff, who Sterrett said was a patron of Rustic Canyon, became concerned after reading press reports and information on the restaurant website about the surcharge.

“We were alarmed because they were very clear about what they were doing, why they met and what the result was,” Sterrett said.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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