Grubhub, DoorDash, Uber Eats File Suit Against NYC Over Fee Cap Law

The three largest food delivery platforms filed a lawsuit against New York City seeking an injunction that would stop the city from enforcing commission caps, the Wall Street Journal and others reported on Friday (Sept. 10).

NYC instituted a temporary cap in May 2020 to help the restaurant industry, struggling to stay afloat during the pandemic lockdowns and indoor dining restrictions.  Last month, the NYC Council voted to make the legislation permanent.

See also: NYC OKs Delivery Fee Caps

The legislation limits food delivery commissions at 15 percent for delivery services, 5 percent for add-ons such as marketing and 3 percent for transaction fees. Commission fees had been as high as 30 percent.

The new law also requires that third-party food delivery services obtain a license from the Department of Consumer and Worker Protection every two years and comply with a previously passed law mandating the sharing of customer data with the restaurants fulfilling the orders, according to the NYC Council.

The lawsuit, filed in the U.S. District Court, Southern District of New York, Manhattan, alleges that the cap on commissions is government overreach and sets a dangerous precedent. The three delivery giants also said in the suit that a permanent cap will result in higher fees for consumers. The lawsuit asks for unstated monetary damages and a trial by jury.

See: NYC Commission Cap Hurts Food Delivery Firms

Delivery fee caps were also temporarily instituted in Los Angeles, Chicago, Seattle, Las Vegas, Washington, D.C., and Portland, Oregon to help the restaurant industry during the pandemic. San Francisco made its cap permanent and was hit with a lawsuit by DoorDash and Grubhub.

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“This permanent price control is flagrantly unconstitutional and will hurt local restaurants, delivery workers and diners across NYC,” Grubhub said last month. “We will vigorously fight this illegal action.”