Online Food Delivery Platforms Move to Compel Arbitration in NYC Restaurant’s Overcharge Class Action

A trio of reply briefs filed on Friday in the Southern District of New York urged Judge Jesse M. Furman to send the case lodged by a Manhattan eatery to arbitration. Defendants Grubhub and its subsidiary Seamless, Uber and its subsidiaries Uber Eats and Postmates, and DoorDash contend that the plaintiff signed enforceable arbitration agreements and that the dispute is within the scope of those agreements. 

The case arose in June when the restaurant accused the defendants, the city’s four major third-party online ordering and delivery platforms, of charging delivery fees in excess of the legal cap. In response to the COVID-19 pandemic and perceived high charges to restaurants struggling without in-person dining, the city limited all fees charged to restaurants to 20% of the order total.

According to the complaint, the defendants appeared to comply with this rule but in fact, circumvented it in various ways. The plaintiff seeks to certify a class composed of all the city’s restaurants that contracted with the defendants for delivery services and were overcharged.

In early August, the defendants moved to compel arbitration. In last week’s replies, the defendants argue against contentions made in the plaintiff’s opposition brief. For its part, DoorDash asserts that the Federal Arbitration Act (FAA) governs the parties’ agreement.

The filing notes that despite the restaurant’s acknowledgement that the FAA “promotes a strong presumption in favor of arbitration,” it insists that a local law passed by the New York City Council may override the FAA. DoorDash claims that this novel theory is unsupported by any authority.

In addition, the defendant argues that the agreement is not unconscionable. Allegedly, New York law requires a dual finding of procedural and substantive unconscionability before a contract may be deemed unenforceable, neither of which the plaintiff has demonstrated.

DoorDash claims that its agreement’s opt-out provision renders it viable. As to substantive unconscionability, the defendant argues that plaintiff comes nowhere close to showing that the agreement shocks the conscious, or otherwise holds it to wholly unreasonable requirements. The defendant also asserts that its agreement’s class-action waiver is valid and enforceable, mandating that the restaurant be compelled to arbitrate its claim on an individual basis.

The plaintiff is represented by Helbraun & Levey LLP, Doordash by Gibson Dunn & Crutcher LLP, Grubhub and Seamless by Cozen O’Connor, and UberEats and Postmates by Covington & Burling LLP.