Massachusetts Legal professional Basic Sues Grubhub for Allegedly Charging Eating places Illegally Excessive Charges Through the Pandemic

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On July 29, Massachusetts Attorney General Maura Healy sued grocery supplier Grubhub for allegedly collecting high delivery charges from restaurants around the state during the COVID-19 pandemic. According to the Economic Development Act passed by Massachusetts legislature in January to help companies struggling with COVID, third-party delivery apps like DoorDash, Grubhub and Uber Eats restaurants were not allowed to charge more than 15 percent fee per delivery for as long the state of emergency existed.

Healy’s lawsuit, filed in the Suffolk Superior Court, seeks refunds for restaurants allegedly affected by Grubhub’s alleged illegal tactics, alleging that Grubhub violated a provision of the state’s Business Development Act regarding the 15 percent fee cap.

“We claim that Grubhub has knowingly and repeatedly breached the fee cap, increased costs by thousands of dollars and harmed restaurants that are already in financial distress and trying to survive,” AG Healey said in a press release. “We are suing to get money back to these facilities and to hold Grubhub accountable for its illegal behavior. Our restaurants have been badly hit by this pandemic and we will do everything in our power to give them the relief they need to recover. “

Grubhub “vehemently agrees with the allegations in this lawsuit,” a spokesman told Eater. “While we don’t believe the temporary price control was legal or appropriate, we have followed it during its period and for one month after it expired, effectively sending millions of dollars to local restaurants across Massachusetts. We look forward to responding to these unfounded allegations. “

Restaurant operators struggled for months to get city and state lawmakers to put fee caps on third-party delivery apps. Boston City Council debated it at least once, but eventually turned the money over to the state legislature, which did not act until nearly a year after the pandemic broke out, costing local restaurants countless sums of money in the process.

Now that the state of emergency no longer applies – Governor Charlie Baker lifted it on June 15 – third-party delivery apps can charge what they want for free per delivery. Some restaurants have reported delivery charges of up to 30 percent. Steep fees cut deep into a restaurant’s already razor-thin margins and have led cities across the country to introduce temporary fee caps during the pandemic. San Francisco went a step further and last month put a permanent cap on third-party delivery fees. (The delivery apps weren’t happy about that.)

It remains to be seen whether San Francisco will be the exception or the rule – and it might depend on how much time Grubhub and its delivery cohorts plan to spend in court.

Update, 3:20 p.m .: This article has been updated to include a statement from a Grubhub spokesperson.

• Massachusetts lawmakers are introducing fee caps for third-party apps like Grubhub and DoorDash [EBOS]
• Beacon Hill must limit grocery delivery fees charged by DoorDash, UberEats, GrubHub [BG]
• Will the permanent fee cap actually limit delivery apps? [E]