Given your hypothetical, in which you the proprietor had a standing policy, noted for the customers to see, that you demanded a mandatory gratuity for your waiters and waitresses, you wouldn't be in the wrong to cite the non-payers for infringement of contract. However, on basic principles, you WOULD be in the wrong if you went to the cops to enforce it. Calling on the state, which is fueled by majority-sanctioned theft to enforce such a dispute, would be -- in a 'prime' setting -- improper. That being said, one should note that we are thrust into a police-state already, so your supposition would be mildly tolerable in my eyes, given the existing paradigm. I'd prefer to have private, market-based policing of voluntary rules, agreed to by the participants, using reputation and private ajudication to handle such disputes. BUT, we don't have that kind of a situation, so I suppose one could hedge and say you would be okay to call the cops to get people who didn't abide by the standing rules of your restaurant. Personally, I'd avoid it. The thing about this story is that it's not a restaurant policy being enforced, it's a municipal law, so the entire thing is clearly unjustified.

I don't like the idea myself Gard, but I couldn't figure out exactly whats wrong with it.  The hypothetical I proposed suggested that the unreasonable gratuity could be enforced by the police.  The fact its a municipal law is insane and makes the hypothetical void.  

Besides, anyone know if the restaurant was still paid their tip after they were arrested?

If I may derail to my experiences I had with the police in my life, I see no reason to call them if something gets stolen (unless insurance wants a police report).  When I was a kid, a robber had broken into our house and stole my mother's and sister's jewelry.  Called the police, and nothing.  We got absolutely nothing out of calling the police except a report.  Same thing happened when I was in Hawaii.  Someone pulled the stem valves out of my 2 left tires and cut my brake line(which some places is attempted murder).  On a military post.  Contacted CID (Criminal Investigation) and nothing.  They didn't even call me back.  I really hate these guys.

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