Mass. AG's Office Sues Grubhub, Claims It Violated Cap On Restaurant Fees
The Office of Massachusetts Attorney General Maura Healey has filed a lawsuit against the online food delivery service Grubhub for allegedly overcharging restaurants using its platform in the pandemic.
The lawsuit, filed in Suffolk County Superior Court on Thursday, claims the company knowingly violated a law that prohibited third-party delivery platforms such as Grubhub, Uber Eats, and DoorDash from charging restaurants fees on each order that exceed 15% of the order's menu price.
On top of charging restaurants a 15% fee on each order for "marketing and delivery," the complaint alleges, Grubhub tacked on an additional 3% or more for "collecting payments, fraud monitoring, customer care," effectively charging restaurants at least 18%.
“We are suing to get money back to these establishments and to hold Grubhub accountable for its unlawful conduct," said Healy in a statement announcing the lawsuit Thursday. "Our restaurants have been hard hit by this pandemic and we will do everything we can to help get them the relief they need to recover.”
In response to WBUR’s request for comment, Grubhub issued the following statement:
"Serving restaurants is at the heart of everything we do at Grubhub and we strongly disagree with the allegations in this lawsuit. While we do not believe the temporary price control was either legal or appropriate, we complied with it while it was in effect and for an additional month after it expired, effectively conveying millions of dollars to local restaurants across Massachusetts. We look forward to responding to these baseless allegations."
The cap on fees, which went into effect on Jan. 14, was part of a larger pandemic-related economic aid package and was aimed at helping restaurants, which have struggled to stay open amid COVID lockdowns and restrictions. The rule expired on June 15 when Gov. Charlie Baker lifted the state of emergency that went into effect in March 2020.
Chef Jody Adams, a founding member of the advocacy group Massachusetts Restaurants United, said that she was “grateful” the AG is acting to hold Grubhub accountable. “This lawsuit also makes clear that Massachusetts needs new protections from delivery apps to protect the neighborhood restaurants that define our communities,” she said in a statement commenting on the suit.
In addition to refunding affected restaurants the excess fees, the AG's office is asking the court to hit Grubhub with $5,000 in civil penalties for each alleged violation.
Whatever the outcome, this litigation isn't likely to change the business landscape said Steve Clark, vice president of government affairs for the Massachusetts Restaurant Association.
"Going forward," Clark said, "restaurants and the third-party delivery companies will need each other."
This article was originally published on July 29, 2021.