LOS ANGELES (CN) – Owners of top restaurants in Los Angeles conspired to raise prices by 3 percent, call it a “health care surcharge,” and blame it on Obamacare, a disgruntled diner claims in an antitrust class action.
Lead plaintiff Margaret Imhoff sued 13 named defendants and 100 John and Jane Does on Tuesday in Superior Court, claiming: “Los Angelenos are the victims of an illegal price-fixing conspiracy among some of the most prominent restaurateurs in the city.”
Imhoff claims an “influential restaurant owner” in mid 2014 “circulated a secret agreement” among restaurateurs who serve similar clientele, suggesting they all raise their prices by 3 percent in unison, leaving fine diners with nowhere to turn.
The owners of the Animal, AOC, Hungry Cat, Lucques, Melisse, Rustic Canyon, Son of a Gun and Trois Mec are among those who claim the Affordable Care Act forced them to raise prices by 3 percent and call it a “health care surcharge” for employee health insurance, Imhoff says.
“The intended and actual effect of the conspiracy is to artificially increase the price of defendants’ restaurant services and reduce competition in the market,” Imhoff says.
The LA Times reported on Oct. 6, 2014 that the first Los Angeles restaurant to add the 3 percent “health care surcharge” did so in late 2013, and that more than a dozen followed suit. Among them, the Times reported, were Rustic Canyon, Milo & Olive (owned by Rustic Canyon Food and Wine), Hungry Cat, Son of a Gun, and other defendants in the new lawsuit.
Rustic Canyon owner Josh Loeb told the Times: “We want our staff to have health care. It’s not because we support Obama or don’t support Obama, or are Democrats or are not Democrats.”
Josiah Citrin, owner-chef of Melisse in Santa Monica added: “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.”
Imhoff claims that a newsletter released by Rustic Canyon Food and Wine shows that its owners met with other restaurateurs, who agreed to implement the 3 percent surcharge starting Sept. 1, 2014.
She claims the surcharge causes diners to reduce their tips, so that employees “are largely paying” for their health care benefits. The actual and intended effect is to inflate prices and reduce competition, Imhoff says.
Though Imhoff says the surcharge actually harms workers, Milo & Olive server Sarah Huxhold told the Times otherwise. “I’m really excited about having insurance again,” Huxhold told the newspaper. “There is no way I can pay for those things out of pocket.”
Imhoff says she has paid the 3 percent surcharge at one of the defendants’ restaurants, and that it violates California’s Cartwright (antitrust) Act and unfair competition law.
She seeks certification of a class of all customers who paid the surcharge at any of the defendants’ restaurants since Sept. 1, 2014. She estimates there are tens of thousands of class members.
She also seeks treble damages, disgorgement of unjust profits and attorney’s fees.
The defendant restaurant owners are Suzanne Goin, Carolyn Stein, David Lentz, Jon Shook, Vinny Dotolo, Josiah Citrin, Josh Loeb and Zoe Nathan.
Defendant restaurants and other businesses include Lucques Catering, Dirty Chicken, O&A Hospitality, 1104 Wilshire and Rustic Canyon Food and Wine.
Imhoff is represented by Daniel Sterrett, who was not immediately available for comment Wednesday, nor were the defendant restaurant owners.
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