By Charles Passy 

A company behind a Manhattan bakery has filed a proposed class-action lawsuit against major third-party ordering and delivery platforms, including Grubhub Inc., DoorDash Inc. and Uber Eats, saying they have billed it and other food businesses more than allowed by New York City law.

In the lawsuit, Micheli & Shel, the company that operates the Michaeli Bakery on the Lower East Side, says the platforms have routinely levied fees beyond the city-imposed caps that were put into place last year as a way to help restaurants and similar establishments during the Covid-19 pandemic. The caps limit the charges to 15% for delivery and 5% for other fees, based on a customer's order.

It is "a blatant violation of the law," said Lee N. Jacobs, an attorney who represents Micheli & Shel. He said other businesses plan to join the suit if it becomes a class action. The case was filed earlier this week in federal court in Manhattan.

Grubhub said, "We look forward to responding to these baseless allegations." DoorDash said it "has always supported restaurants, and claims to the contrary are simply wrong."

Uber Eats, which is Uber Technologies Inc.'s food-delivery division, declined to comment.

Andrew Rigie, executive director of the New York City Hospitality Alliance, a nonprofit association that represents restaurants and nightlife establishments, said he believed the lawsuit was the first of its kind in terms of alleging violations regarding the local cap.

Mr. Jacobs said the point of the case was to end what he called a habitual pattern of the platforms overcharging restaurants and other food businesses, particularly through what he described as billing statements that often hide charges or make them unclear.

Under New York City law, the ordering and delivery platforms can charge a credit-card processing fee in addition to the combined 20% cap but only as a "pass through" fee equivalent to what the processing companies impose. The lawsuit also alleges the platforms routinely inflated the processing fees.

Even before the pandemic, the platforms had become a popular way for New Yorkers and others across the country to order food. But during the Covid-19 crisis, particularly when restaurants in the city were closed for indoor dining, the platforms took on added importance since delivery became critical to the bottom line of food establishments.

New York City Councilman Mark Gjonaj, a Democrat who represents parts of the Bronx and helped push for the platform-fee cap, said he planned to closely monitor the lawsuit. Mr. Gjonaj said he wouldn't comment on the specific claims, but he said that it "is unimaginable that any company would intentionally seek to break the law just to squeeze more profits from an industry that is already teetering on the edge."

Write to Charles Passy at cpassy@wsj.com

 

(END) Dow Jones Newswires

June 08, 2021 18:03 ET (22:03 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.
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