On Monday, Judge Nicholas G. Garaufis granted DoorDash, Inc.’s motion to compel arbitration in a suit accusing the online food delivery service of deceiving its customers into believing that tips they entered via its mobile app would go to the delivery worker assigned to their order. The 2019 case alleged that in so doing, DoorDash violated New York’s deceptive advertising law and other consumer fraud laws. The putative plaintiff class sought damages from the company.
The case centered on DoorDash’s “widely criticized” policy of using app-entered tips to subsidize labor costs. The plaintiff, a Brooklyn resident, made 38 DoorDash orders from 2015 to 2019, allegedly under the mistaken belief that the DoorDash delivery workers who brought him food would receive the tips he designated. According to the order, the truth emerged when the plaintiff read a June 2019 New York Times article about the actual nature of the DoorDash’s policy. Three days later, DoorDash scrapped the policy, the court explained.
This week’s decision focused on the scope of the arbitration clause within DoorDash’s terms and conditions that customers had to agree to in order to use the service. In the court’s view, the agreement “broadly described” the scope of covered claims. In relevant part, it read, “any dispute or claim relating … to any products or services sold or distributed through the Soft-ware or the Website (including the Services), or to any other aspect of your relationship with the Company will be resolved by binding arbitration, rather than in court.”
The Eastern District of New York considered whether the arbitration clause, which included a class action waiver was “unconscionable due to the fees [the plaintiff] would be required to bear in an arbitration proceeding,” and in turn, was unenforceable. The court held that the question was not properly before it, and instead was the province of an arbitrator because the parties “clearly and unmistakably agreed to delegate issues of enforceability of the arbitration agreement to the arbitrator,” including the plaintiff’s unconscionability assertion. Thus, because all claims were arbitrable, the court granted the defendant’s motion to stay proceedings pending the resolution of the arbitration.
The plaintiff is represented by Z Law and Giskan Solotaroff & Anderson. The defendant is represented by Gibson, Dunn & Crutcher.
