SF Proposes Raising Food Delivery Platform Fee Cap Amidst Court Fight

Doordash Inc., Grubhub Inc., and the city of San Francisco updated the federal judge overseeing their dispute on Tuesday, explaining that a proposed legislative amendment raising the fee percentage that food delivery platforms may charge restaurants for their services will be heard by the city’s Public Safety and Neighborhood Services Committee in January. Meanwhile, the motion to dismiss hearing before Judge Edward M. Chen is scheduled for today, December 16, via videoconference.

By way of background, the online ordering and food delivery platforms filed suit in July, arguing that the restaurant industry protection ordinance violates both the California and the United States Constitution by impermissibly restraining private commerce. San Francisco sought dismissal on grounds that the platforms’ constitutional causes of action fail to state claims upon which relief can be granted. In addition, the city said the ordinance does not overstep the prescriptive mark because it governs a regulated industry and was foreseeable.

The delivery platforms refuted those arguments, in part pointing to conflict between the city’s Board of Supervisors who made the measure permanent and Mayor London Breed who said the rule limiting the total chargeable fees to 15% was an overreach.

The city alerted the court to the possibility that it might amend the cap to 20% by permitting platforms to charge up to 15% for delivery services and an additional 5% for non-delivery services in its reply in support of its motion to dismiss. The late October filing explained that one city Supervisor proposed the amendment.

This week’s joint update said that the Public Safety and Neighborhood Services Committee’s hearing must occur before the proposal can return to the Board of Supervisors for first and second readings. Because the Board of Supervisors is in December recess, the committee will not hear the proposed amendment until January.

DoorDash and Grubhub are represented by Gibson Dunn & Crutcher LLP.