DoorDash, Grubhub, Uber Eats can sue NYC over fee caps

investing.com:

By Jonathan Stempel

NEW YORK (Reuters) -A federal judge on Tuesday said DoorDash, Grubhub and Uber (NYSE:UBER) Eats can sue New York City over a law capping how much they can charge restaurants for delivering meals.

U.S. District Judge Gregory Woods in Manhattan said the plaintiffs adequately alleged that the law violates the U.S. Constitution and New York state constitution by depriving them of their right to contract with restaurants, and forcing them to operate in the city at a loss.

He also said the companies plausibly alleged that the city's «not-so-veiled» purpose in capping commissions at 15% for food orders and 5% for advertising and other services was «economic protectionism for local 'mom and pop' stores and antagonism toward out-of-state, wealthy third-party platforms.»

The city had said the law's main purpose was to prevent «social and economic devastation» that could result if excessive commissions forced restaurant owners to slash employment.

Nicholas Paolucci, a spokesman for New York City's law department, said: «The city looks forward to making its case in court.»

Lawyers for the plaintiffs, which also include Caviar, Seamless and Postmates, did not immediately respond to requests for comment.

Grubhub welcomed the decision, and called on the City Council to give restaurant owners more flexibility to choose which services they want and how much to pay.

«Based on the strength of the industry’s case, we continue to urge the City Council to act now and resolve this issue,» a Grubhub spokesperson said in a mail.

«Good news from New York City,» CEO of Grubhub's parent company Just Eat Takeaway, Jitse Groen, wrote on X, formerly known as Twitter.

Shares in Just Eat Takeaway were up over 7% in Amsterdam at 1123