On Friday in the District of Columbia Superior Court, defendant Maplebear Inc. d/b/a Instacart filed a motion to dismiss count 1, violations of the Consumer Protection Procedures Act (CPPA), brought against it by the District of Columbia in its August complaint for allegedly deceiving consumers about its service fees, which consumers purportedly believed were tips for delivery workers, when in actuality this allegedly covered some of Instacart’s operational expenses.
D.C. Attorney General Karl A. Racine sued the company for allegedly charging consumers for a deceptive service fee and, subsequently, for failing to pay sales tax in the District. The Attorney General claimed that from September 2016 to April 2018, Instacart did not clearly disclose that it added an optional 10 percent service fee to their bills in addition to the delivery fee, and allegedly led consumers to believe that this was a tip for the delivery worker. The purportedly optional allegedly replaced the former tip option, which could also be adjusted, but was set at 10 percent. AG Racine stated that a reasonable consumer would assume this was a tip. However, according to the Attorney General, there was no tip option available at checkout; these fees were allegedly an additional source of revenue for Instacart to cover its operational expenses and it did not increase workers’ pay.
However, in its motion to dismiss, Instacart alleged that D.C. “does not cite to a single complaint from any D.C. consumers regarding this service fee.” Instacart argued that The Office of the Attorney General (OAG) for the District of Columbia failed to state a claim that Instacart “is” or “intends to violate” the CPPA; therefore, Instacart alleged that the OAG cannot file the suit in the Superior Court because it does not meet this requirement. Specifically, Instacart claimed that the Attorney General “has not pled the foundational facts necessary to bring a claim.” Moreover, Instacart noted that AG Racine noted that “Instacart voluntarily ceased the alleged practice in April 2018”; Instacart also stated that it is not alleged that it intends to bring this practice back.
Furthermore, according to Instacart, the OAG failed to “state a plausible claim that Instacart previously violated the CCPA.” Instacart stated that the “OAG’s allegations of deception are conclusory, and they are contradicted by more specific facts found elsewhere in the Complaint or contained in documents referred to in the Complaint.” Specifically, Instacart claimed that it “clearly disclosed” that a consumer could waive the service fee and that “the service fee was not a tip”; therefore, Instacart asserted that it did not mislead consumers as the OAG alleged. Instacart averred that it used the service fee for the “stated purpose,” for example, “to pay all shoppers more consistently for each and every delivery, not just the last shopper to touch the order.” Moreover, Instacart claimed that “a change in tipping practices is equally consistent with consumer knowledge that the service fees were different than tips,” because these allegedly helped to provide competitive pay to all of Instacart’s shoppers. Additionally, Instacart stated that the allegedly promoted “free delivery” “did not deceive consumers into paying the service fee.” While the OAG claimed that “Instacart deceptively utilized ‘free delivery promotions’ …because it did not set the default service fee to zero for the orders subject to the promotion.” However, Instacart claimed that the OAG did not allege any supporting facts for this allegation. Instacart reiterated that it did not represent that the service fee “was either a delivery fee or a direct payment to full-service shoppers,” it disclosed that this was waivable, and it disclosed the amount of the charge before the order was placed. Therefore, Instacart claimed that it did not deceive consumers with free delivery promotions.
Instacart has sought for the court to grant its motion to dismiss count 1 from the complaint.
Instacart is represented by Orrick, Herrington & Sutcliffe LLP.
