Manhattan Bakery Accuses Grubhub, DoorDash, Uber Eats of Illegal Fees
09 June 2021 - 08:08AM
Dow Jones News
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)
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