Here’s why Haidilao’s ¥20 Million “Pee Gate” Claim Didn’t Hold Up in Court: A Legal Explanation

September 14th – A Shanghai court has reached a verdict in the case involving Haidilao International Holding Ltd. (6862.HK), and two minors, Tang and Wu, over an incident at one of its restaurants. The Huangpu District People’s Court ruled on the lawsuit filed by Sichuan XXX Catering Management Group Co., Ltd. and Shanghai XXX Catering Management Co., Ltd.

The court ordered Tang and Wu, through their parents, to issue formal apologies to Haidilao in designated publications, while protecting the minors’ identities. The parents of Tang and Wu were also ordered to pay a collective sum of RMB 2.2 million (approximately $300,000 USD) to cover the cost of damaged cutlery, cleaning and disinfection fees, operational losses, reputational damage, and legal expenses incurred by Haidilao.

The incident occurred in February when Tang and Wu, both 17 years old, were recorded urinating into a hot pot in a private room at a Haidilao location. The video subsequently circulated online, sparking public outrage.

Haidilao responded swiftly in March, issuing a public apology and taking immediate steps to mitigate the damage. All cutlery at the affected restaurant was destroyed and replaced. The entire establishment underwent thorough disinfection. Furthermore, the company offered full refunds and a 10x compensation payout to the 4,109 customers who had dined at the restaurant between the time of the incident and the completion of the disinfection process. This generous compensation package aimed to reassure customers and rebuildtrust in the brand.

However, only two days following their apology, Haidilao escalated the matter by filing a lawsuit against Tang, Wu, and their respective parents, seeking a public apology and a staggering RMB 23.26 million (approximately $3.2 million USD) in damages.

The court ultimately rejected Haidilao’s claim for the full amount. The court explained that the 10x compensation offered to customers, while generous, did not establish a direct legal link as required for damages. It was recognized to be a business decision made by Haidilao and therefore not claimable in the lawsuit.

This case highlights the legal and financial responsibilities of parents and guardians. It serves as a cautionary tale about the potential consequences of inadequate supervision and the significant financial and reputational damage that can arise from the actions of minors. The ruling reinforces the principle that parental responsibility extends beyond basic care and encompasses the moral and social development of their children.