DoorDash, Grubhub and other delivery apps sue New York City over fee caps

Several popular food delivery app makers are suing New York City over price controls put in place during the COVID-19 pandemic that restricted the commission that these companies can charge restaurants. 

In a lawsuit filed Thursday in New York, the companies allege that the “now-indefinite legislation bears no relationship to any public-health emergency” and that the price controls are unconstitutional because they interfere with “freely negotiated contracts” between the apps and restaurants. The suit, which was reported earlier by The Washington Post, was filed by the parent companies of DoorDash, Caviar, Grubhub, Seamless, Postmates and Uber Eats.

“New York City Council passed harmful, unnecessary, and unconstitutional price controls which leave us no choice but to resolve this matter in court,” said a DoorDash spokeswoman in an emailed statement on Friday. “Imposing permanent price controls is an unprecedented and dangerous overreach by the government and will limit the options small businesses rely on to compete in an increasingly competitive market.”

In May 2020, the New York City Council passed a law that restricted fees charged by third-party food delivery services during states of emergency. During these periods, the services could charge only up to 15% per order for providing delivery services, and no more than a 5% fee per order for other types of charges, like credit card processing and marketing. The law has been extended repeatedly amid the ongoing coronavirus pandemic. 

Last year, San Francisco, Seattle and Washington DC also passed emergency orders requiring delivery apps to cap restaurant fees at 15% to 20%.

The office for New York City Mayor Bill de Blasio didn’t immediately respond to a request for comment.