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DoorDash, Grubhub and Uber Eats Sue New York City Over Restaurant Fees The food-delivery apps are arguing that fee caps are government overreach that harm business.

By Emily Rella Edited by Emily Rella

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DoorDash, Grubhub and Uber Eats are suing New York City for pandemic-era caps on the fees they can charge restaurants. According to a complaint first posted by The Verge, the food-delivery apps are arguing that fee caps are government overreach that harm business. They're seeking monetary damages and a jury trial in addition to an injunction to keep the city from enforcing the fee caps, which were made permanent in August of this year.

Under the capping rule, apps can't charge more than 23% per order. Per The Verge, that breaks down to 15% for delivery, 5% for listing the restaurant on the platform and 3% for fees associated with credit card processing.

Related: DoorDash vs. Grubhub: Which Stock Is a Better Buy?

The companies vowed in August to fight the caps. In a Thursday statement to the Wall Street Journal, NYC Councilman Mark Gjonaj, who chairs the small business committee, said, "The laws simply seek to bring fairness to a system that all too often lacks it." In a statement to The Verge last week, a Grubhub spokesperson said the service had "worked hard during the pandemic to support restaurants in New York City and across the country," and a fee cap would "lead to a reduction of orders for both restaurants and couriers." Those points were also made in the filing last week.

San Francisco enacted a similar cap earlier this year, earning oppositional statements from DoorDash. That app and Grubhub sued San Francisco in July and Mayor London Breed decided not to sign the law -- which was voted on unanimously in une by the San Francisco board of supervisors -- because it was, she said, "unnecessarily prescriptive in limiting the business models of the third-party organizations, and oversteps what is necessary for the public good."

Last week's filing pointed out that when the caps were put in place in spring of 2020, they were "unconstitutional," but "ostensibly temporary: "The law originally was schedule to expire 90 days after a declared public-health emergency that prohibits any on-premisis dining due to the COVID-19 pandemic." The City Council "moved the goalposts three times" after that, per the complaint, extending the caps.

"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," argued the lawyers.

Emily Rella

Entrepreneur Staff

Senior News Writer

Emily Rella is a Senior News Writer at Entrepreneur.com. Previously, she was an editor at Verizon Media. Her coverage spans features, business, lifestyle, tech, entertainment, and lifestyle. She is a 2015 graduate of Boston College and a Ridgefield, CT native. Find her on Twitter at @EmilyKRella.

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