City Attorneys: Fast-growing online food delivery companies ‘taking advantage’ of regulatory requirements

Restaurants are turning to the courts to weigh in on how apps like GrubHub & Seamless deliver food in New York City. City lawyers sent a letter to the U.S. Appellate Court Tuesday opposing “restaurant …

Restaurants are turning to the courts to weigh in on how apps like GrubHub & Seamless deliver food in New York City.

City lawyers sent a letter to the U.S. Appellate Court Tuesday opposing “restaurant ambush lawsuits,” telling the court that fast-growing online food delivery companies have taken advantage of their legal advantage to “dominate” New York City’s fast-growing food delivery sector.

The letters from both sides were filed with the court Wednesday. The court would ultimately decide whether city regulations aimed at curbing delivery drivers’ access to addresses are illegal, not the city’s lawyers.

The fast-growing, technology-based businesses frequently file suit in lower courts against the city, which regulates delivery byways and strict delivery locations.

In the letter from the city, lawyers say the firms are taking advantage of existing rules “to hold New York City’s innovation economy hostage,” and they aim to shift delivery hours and locations of restaurants and require restaurants to pay delivery fees on deliveries in violation of city regulations.

The restaurants, meanwhile, accuse the city of trying to fix the market in their favor and are asking the court to “preserve consumer freedom.”

Both sides are asking for a hearing on the issue before an appellate court, but a court date hasn’t been set.

As of June, one-third of restaurants in the New York City area had a delivery option, the letter to the appellate court states.

Restaurants sued the city in state and federal courts last year after the city passed restrictions limiting how fast that business could grow.

The restrictions included slowing delivery hours, requiring restaurants to be at a fixed location during the delivery time and having small deliveries of less than 25 pounds deliver only at night.

Deliveries got so common in 2015, the New York Times reported in September, that a driver had to fill out an entire order just to order food for the delivery driver.

The order included a lunch menu, a pizza, entrees from restaurants and a bag of chips, which the driver handed to his or her location in return for a credit card.

The delivery fee was $15, the Times reported, and the restaurant was required to return the next day with a gift card so the driver could purchase the food.

Since the new rules have been enacted, GrubHub & Seamless have filed 11 lawsuits around the country, accusing cities of shutting them out of markets they should be able to enter, including Boston, which rejected the threat of such a lawsuit by GrubHub & Seamless in March 2018.

A GrubHub & Seamless spokesman declined to comment.

The Associated Press contributed to this report.

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