In a new complaint yesterday, plaintiffs that operate the food delivery platforms DoorDash, Caviar, Grubhub, Seamless, Postmates, and Uber Eats sued the City of New York to challenge caps on fees that these platforms can charge restaurants to use their services. The caps – at 15% of an online order for delivery services, and 5% for all other services (such as marketing) – were originally enacted as a temporary measure at the beginning of the COVID-19 pandemic when restaurants were forced to close for in-person dining.
The suit takes issue with the City’s decision to extend these caps indefinitely:
This now-indefinite legislation bears no relationship to any public-health emergency, and qualifies as nothing more than unconstitutional, harmful, and unnecessary government overreach that should be struck down. The Ordinance is unconstitutional because, among other things, it interferes with freely negotiated contracts between platforms and restaurants by changing and dictating the economic terms on which a dynamic industry operates.
The United States and New York Constitutions prohibit such government overreach by safeguarding the terms of freely negotiated contracts, protecting property rights and the right to pursue legitimate business enterprises, and providing for due process and equal protection under the law. Left unchecked, the Ordinance sets a dangerous precedent. Indeed, in refusing to sign a price control measure into law, Mayor London Breed of San Francisco described permanent price controls as “unnecessarily prescriptive in limiting the business models of the third-party organizations, and oversteps what is necessary for the public good.” The same is true here.
The complaint includes claims for declaratory relief, injunctive relief, and damages.
A judge has not yet been assigned.