DoorDash, Uber Sue New York City Over Cap on Delivery Fees
(Bloomberg) -- DoorDash Inc., Grubhub Inc. and Uber Technologies Inc.’s Uber Eats sued New York City over its newly entrenched cap on the amount meal-delivery services can collect from restaurants.
In a complaint filed Thursday in Manhattan federal court, the companies say the 15% cap interferes with their right to freely negotiate contracts and will likely result in higher prices for consumers and lower earnings for restaurants and delivery drivers.
The city’s ordinance is “nothing more than unconstitutional, harmful, and unnecessary government overreach that should be struck down,” the companies said.
The New York City Council originally instituted the fee limit in May 2020 on a temporary basis. Councilors said it was necessary to protect restaurants struggling during the Covid pandemic from high commissions charged by the delivery apps. The council made the cap permanent in August.
Jitse Groen, chief executive officer of Just Eat Takeaway, which owns Grubhub, said in a Friday morning tweet that the company has worked hard during the pandemic to support restaurants in New York and across the country. He called the cap “unprecedented and unconstitutional.”
“Price controls increase delivery fees for consumers, and therefore lead to a reduction of orders for both restaurants and couriers,” Groen said. “While Grubhub remains willing to engage with the City Council, we unfortunately are left with no choice but to take legal action.”
The initiative is legally sound and New York will defend it in court, the city’s Law Department said in a statement.
Shares of DoorDash rose as much as 1.8 percent on Friday morning following the news, while Uber’s stock increased as much as 1.2 percent. Just Eat Takeaway’s American depositary receipts fell 0.4 percent while earlier gaining as much as 0.8 percent.
The suit is DoorDash, Inc. et al v. City Of New York, 1:21-cv-07564, U.S. District Court, Southern District of New York (Manhattan).
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