Joan's on Third vs. Joan's on Third in Bizarre Legal Food Fight

Joan's on Third Bizarre Lawsuit - H 2015

Mac and cheese mishaps! Improper omelets! The owner of Hollywood's favorite lunch spot fights investors over a new Santa Monica outpost with allegedly "rancid" food.

This story first appeared in the Dec. 4 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

Pass the Pepto-Bismol. Joan's on Third, the comfort-food cafe whose locations in L.A. and Studio City are lunchtime staples of the entertainment industry, has found itself embroiled in an odd licensing-agreement lawsuit involving its newest outpost in Santa Monica. The dispute reveals how expansion plans can lead to serious indigestion.

On Nov. 6, a note was posted on the Facebook page for the two-decade-old restaurant brand stating that the coastal location, which opened this summer, "is no longer a licensed Joan's on Third," going on to explain that the only places "to get Joan's real recipes, prepared the way [founder] Joan [McNamara] believes they should be," is at the other two locations. News of an "imposter Joan's" lit up L.A. social media.

McNamara (Photo credit: Jo Stougaard)

Turns out, the salvo was timed to the filing of a cross complaint in quiet litigation between McNamara and her majority-holding business partners at the Santa Monica outpost — led by managing partner Walter Perkowetz, a restaurant-industry veteran with chains such as Ruth's Chris Steak House. The investors sued McNamara on Aug. 13 for breach of contract and other claims. Neither side is talking, but the legal papers tell a delicious story.

The investors' attorneys portray McNamara as unreasonably difficult and disorganized, too upset that, for instance, a "community table" was "three inches wider than the one in Studio City," and negligent by not ensuring that her team provided "sandwich diagrams," "look books" (pamphlets with pictures showing how completed dishes should appear) and "retail pack­aging specifications" in advance of the debut of the $2.5 million Ocean Avenue restaurant. McNamara's legal team, meanwhile, alleges that Joan's had encountered problems during a walk-through inspection in the weeks before the Santa Monica opening, including unapproved retail products for sale and incorrect labeling. The situation allegedly turned worse for the detail-oriented McNamara once operations commenced: She claims her representatives found spoiled and rancid dishes (tarragon chicken salad), improperly prepared menu items ("chocolate cupcake with unapproved milk frosting") and a variety of products she never signed off on (think: gummy peach rings).

What's more, McNamara asserts Perkowetz ignored her concerns, even when she personally had begun fielding quality complaints from longtime customers. (Katy Perry, Will Ferrell, David Lynch and the writing staffs of such shows as Modern Family and Family Guy are among her loyal patrons.) For his part, Perkowetz's attorneys complain that McNamara's representatives would appear at the Santa Monica location without warning, "measuring tables while customers were sitting at them."

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McNamara’s Nov. 6 cross complaint alleges Joan’s in Santa Monica served mac and cheese at an
“incorrect depth and portion size” compared with the original at the Third Street location. (Photo credit: Courtesy of Cross Complaint)

Exhibit A of McNamara's filing is a disapproving photographic comparison of mac and cheese offerings, which the cross complaint terms her "signature dish" and notes "was served at an incorrect depth and portion size" in Santa Monica. In another instance, the new location's manager, Michael Miranda, is lambasted for "knowingly permitting" staff to stray from the established Joan's omelet technique of utilizing low heat to create "a light, fluffy, French-style" dish, instead "leaving the eggs in the pan unstirred to be finished under a broiler, resulting in a tougher, heavier" effect.

"While we may laugh about a dispute about the fluffiness of an omelet, it really could ruin a Los Angeles dining institution if its reputation is built on the quality of its food," says Jesse Saivar, a litigator at Greenberg Glusker who has worked on restaurant licensing dis­putes. But he says the case isn't so clear: "You've also got to give credence to what the licensee is alleging: 'How can you tell us the omelet isn't fluffy enough when you won't tell us how to make the omelet?' "

Joan's on Third Santa Monica Complaint

Joan's Management Cross Complaint