A new lawsuit against top New York City restaurateurs like Union Square Cafe’s Danny Meyer, Momofuku’s David Chang, and Craft’s Tom Colicchio is alleging that the current movement toward including tipping in the price of a meal is one full of backroom deals, secret handshakes, and collective greed.
The lawsuit, first reported by Law360 and filed in both NYC and San Francisco, alleges that these “restaurant owners are engaged in a sophisticated unlawful conspiracy to put that money into their own pockets” and that their faithful leader is Meyer, who “spearheaded” it all.
Indeed, Meyer was one of the first major players in the hospitality to industry to publicly and loudly announce in 2015 that his Union Square Hospitality Group restaurants — Union Square Cafe, Gramercy Tavern, Untitled, and more — would move to a gratuity-included business model in 2016.
The suit alleges that in August 2015, Meyer “gathered together fifteen of New York’s top restauranteurs [sic], representing about eighty establishments, to tell them that USHG was planning to end tipping and raise prices. The apparent purpose of the meeting was to solicit participation by the attendees and, upon information and belief, other participants did indicate they may follow USHG’s lead.”
This is the crux of what makes the practice illegal, argues the suit, which claims that Meyer and a group of top NYC and SF restaurateurs colluded to steal tips that would otherwise go directly to the servers. The suit alleges that the restaurateurs instead used those tips as profit — a move that the suit claims goes against anti-trust laws. The complaint states:
The ongoing conspiracy unlawfully transfers millions of dollars from customers and servers to restaurant owners in violation of federal and state antitrust laws. Participating restaurants and a compliant media have portrayed the no-tipping/higher prices movement as intended to promote social justice and equality, while the real aim and effect is greater profit at the expense of workers and consumers.
In a statement, USHG tells Eater:
We undertook the challenging and lonely journey of introducing Hospitality Included to create clear and transparent growth paths for our people, while beginning to address the decades-long growth of inequality among restaurant professionals. We believe hospitality can and should be a viable career with competitive wages, and we are more committed than ever to Hospitality Included getting us there.
Other restaurateurs named in the suit are Eleven Madison Park’s Daniel Humm and Will Guidara, Marlow’s Andrew Tarlow, Bar Sardine’s Gabriel Stulman, Huertas’ Nate Adler and Jonah Miller, and restaurant lobby NYC Hospitality Alliance’s executive director Andrew Rigie, as well as several in San Francisco.
The no-tipping movement has been part of national conversation in recent years, spurred on by rising minimum wage, the disparity in pay between front-of-house and back-of-house employees, and the struggle to find and retain kitchen talent.
While the practice been adopted by the restaurateurs named here — even as recently as last month — it has not been without its setbacks. Restaurants like Fedora and Nishi in NYC and Bar Agricole in SF backpedaled on the practice when they couldn’t make it work. Meanwhile, Meyer’s the Modern had its most profitable month ever after switching to no-tipping, though data is not available on months since then. NYC restaurants like Little Tong and Pasquale Jones continue with the practice.
Now this lawsuit, brought by diner Timothy Brown, claims that “Whether the participants understand their conduct is unlawful is also irrelevant,” and asks for “threefold their actual damages” plus attorney fees, as well as demanding everyone “withdraw from the conspiracy.”
Eater has reached out to the lawyers who filed the suit and has not immediately heard back. David Chang, Will Guidara, Daniel Humm, Andrew Tarlow, Nate Adler, and Gabriel Stulman declined to comment. Andrew Rigie tells Eater, “We believe the lawsuit is baseless on the merit, and flawed on a number of legal and substantive grounds. We intend to vigorously defend the matter in court.”