DoorDash, Grubhub, and Uber Eats have filed lawsuits against New York City for making pandemic-era fee caps permanent. The companies claim that the limitations are an example of government overreach that would eventually hurt consumers.
As a measure to assist restaurants dealing with pandemic limitations, New York City began limiting what third-party companies may charge for delivery services last year.
According to the rules, the platforms can charge restaurants 15% of a particular order for delivery, plus an extra 5% for costs other than credit-card fees, such as marketing, which are also piled on. In late August, the municipal council agreed to make the limitations permanent.
The complaint was filed in federal court in the Southern District of New York on Thursday by DoorDash, which owns Caviar, Grubhub, which owns Seamless, and Portier LLC, the Uber company that operates Uber Eats and Postmates.
In addition to monetary damages, they are requesting an injunction to prohibit the city from implementing the ordinance. The complaint claims that “the Ordinance is unlawful because, among other things, it interferes with freely negotiated contracts between platforms and restaurants by altering and mandating the economic parameters on which a dynamic sector operates.”
A permanent cap will almost certainly necessitate renegotiation or termination of contracts with restaurants, as well as a reduction in the scope of some services, according to the plaintiffs in the lawsuit. It would also very certainly mean rising delivery prices, they said in the complaint.
Proponents of keeping the charge limitations permanent argue that they are vital to the survival of the city’s eateries, which have been badly impacted by the pandemic.
“By restricting the fees charged to restaurants by third-party food delivery services without expiry, we are guaranteeing that mom-and-pop stores have a real opportunity to recover and thrive,” said NYC Council Member Francisco Moya in an August statement.
