DoorDash, Grubhub, and Uber are suing NYC over supply payment caps
Delivery man rides past a security sign on Bushwick Avenue. The NYPD has closed key roads to vehicle traffic in Bushwick during the day so people can practice proper social distancing while walking on the streets during the pandemic.
Erik McGregor | Getty Images
DoorDash, Grubhub and Uber Eats filed a lawsuit against New York City on Thursday over a new bill passed by the city council that would permanently set the emergency delivery fee caps installed during the pandemic.
The lawsuit, filed in federal court in New York’s southern borough, alleges that the price controls required under the new law “not only harm plaintiffs but also revitalize the local restaurants the city is supposed to serve”. Corporations consider the law unconstitutional because it “interferes with freely negotiated contracts between platforms and restaurants by changing and dictating the economic conditions of a dynamic industry.”
The companies argued that the choice of a 15% cap for delivery services and a 5% cap for non-delivery services was arbitrary. They said restaurants have many options to do their business without using the apps and are not limited to using their services if they think prices are too high.
The plaintiffs also said they are “competing vigorously” not only with each other, but also with online advertising companies such as Google and Yelp, which are not subject to the 5% limit on non-delivery fees.
In the early stages of the coronavirus pandemic, when restaurants were hardest hit by government-ordered closings, food delivery fee caps spread across cities like New York. They relied heavily on delivery to keep at least part of the revenue going.
New York City Council voted in late August to extend these fee caps indefinitely to prevent the platforms from charging restaurants what the bill’s sponsors believe are excessive fees.
The delivery platforms are demanding an injunction that would prevent the law from being enforced. They want the court to declare the bill unconstitutional and are also demanding damages from the city.
The lawsuit follows a similar lawsuit by DoorDash and Grubhub against San Francisco, which also introduced a permanent 15% delivery fee cap.
“You can’t get better from these greedy, contactless and unscrupulous billionaire companies,” said Francisco Moya, a member of the NYC council that introduced the fee cap legislation, in a statement via a spokesman. “These companies took advantage of mom and pop stores long before the pandemic and want to continue to exploit the most vulnerable during and after COVID. From the start, they had the opportunity to do the right thing and stand by small business owners like us, and they still can. We have to stand by small business owners to prevent these abuses from happening again. “
The mayor’s office did not respond immediately to a request for comment.
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