Grubhub, DoorDash and Uber Eats have banded together to sue New York City over the City Council passing a 15% permanent fee cap for third-party delivery companies on Aug. 26.
The third-party delivery companies filed the complaint late Thursday night with the U.S. District Court for the Southern District of New York, calling it an unconstitutional “extreme measure” that will “ultimately harm” restaurants and couriers, because fees will then be passed onto the consumer which will ostensibly cause them to order takeout less from restaurants.
This lawsuit is almost identical to the one DoorDash and Grubhub filed with the U.S. District Court for the Northern District of California in July over San Francisco making their 15% fee cap permanent.
“This now-indefinite legislation bears no relationship to any public-health emergency, and qualifies as nothing more than unconstitutional, harmful, and unnecessary government overreach that should be struck down,” the lawsuit reads. “The ordinance is unconstitutional because, among other things, it interferes with freely negotiated contracts between platforms and restaurants by changing and dictating the economic terms on which a dynamic industry operates.”
The lawsuit calls the 15% number “arbitrary” and claims it’s unfair to directly target third-party delivery services when other service companies remain unrestricted, particularly when restaurants have other options than third-party delivery and are not forced to use these apps.
The companies are seeking declaratory relief and unspecified monetary damages from the city, as well as a jury trial.
“This last-ditch lawsuit demonstrates that these billion-dollar corporations will use every weapon in their war chest to overturn widely supported legislation and continue preying on New York City restaurants,” Andrew Rigie, executive director of the New York City Hospitality Alliance said in a statement. “These big third-party delivery companies use their money and market domination to increase fees on small businesses. The court should reject their abhorrent attempts to overturn this law so they can keep delivery fees outrageously high with ploy tactics that have been recognized by the City Council and the mayor as harmful to local businesses.”
Although not a fee cap, the state of California currently requires that third-party delivery companies are required to provide fee transparency with their customers.
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