At the time of the pandemic, fee caps enabled some assurance of revenue to restaurants that were hit the hardest by government-mandated closures. As a result, the NYC Council voted to extend those fee caps indefinitely in late August to prevent platforms from charging unnecessarily high fees to restaurants.
The lawsuit, filed on Thursday, September 9, 2021, in federal court in the Southern District of New York, follows similar legal action taken by DoorDash and Grubhub against San Francisco.
The lawsuit claims that not only is the law unconstitutional because “it interferes with freely negotiated contracts between platforms and restaurants by changing and dictating the economic terms on which a dynamic industry operates,” but they also claim that the 15 percent fee cap for delivery services and 5 percent cap for non-delivery services are essentially unreasonable as restaurants have the ability to forgo the use of such apps if they feel the pricing is too high.
Furthermore, delivery platforms argue that online advertising companies such as Google and Yelp are not subjected to the same five percent non-delivery fee cap.
Through the lawsuit, the delivery platforms are seeking an injunction to prevent the law from being enforced. Additionally, DoorDash, Grubhub and Uber Eats are looking for the court to declare the bill to be unconstitutional and are seeking damages from the city.
