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IN THE SUPERIOR COURT OF THE DISTRICT OF COLUMBIA
`
`Civil Division
`
`Filed
`
`D.C. Superior Court
`08/27/2020 1!:092M
`Clerk of the Court
`
`Case N03
`
`2020 CA 003777 B
`
`DISTRICT OF COLUMBIA
`
`a municipal corporation
`400 6th Street, NW.
`Washington, DC. 20001,
`
`Plaintiff,
`
`V.
`
`MAPLEBEAR, INC. D/B/A
`INSTACART
`
`50 Beale St, Suite 600
`
`San Francisco, CA 94105
`
`Serve on:
`
`COGENCY GLOBAL, INC.
`
`Registered Agent
`1025 Vermont Ave. NW.
`
`Suite 1130
`
`Washington, DC. 20005
`
`Defendant.
`
`
`
`COMPLAINT FOR VIOLATIONS OF THE CONSUMER PROTECTION
`
`PROCEDURES ACT AND SALES TAX LAW
`
`Plaintiff the District of Columbia (“District”), through the Office of the Attorney General,
`
`brings this consumer protection and sale tax enforcement action against Defendant Maplebear, Inc.
`
`d/b/a Instacart (“Instacart” or the “Company”) for Violations of the District’s Consumer Protection
`
`Procedures Act (“CPPA”), DC. Code § 28-3901, et seq, and Sales Tax Law, DC. Code §47-
`
`2001, et seq. In support of its claims, the District states as follows:
`
`INTRODUCTION
`
`1.
`
`Instacart is an online platform that allows consumers to place orders for groceries
`
`with shoppers who select and deliver groceries to the consumer. To use Instacart’s services,
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`

`

`consumers must place delivery orders through Instacart’s mobile application or website. After the
`
`consumer places their order, he or she enters a check-out screenflow, where the consumer receives
`
`an order subtotal for the cost of selected groceries, as well as a number of fees imposed by Instacart
`
`in connection with delivery. In some versions of the check-out screenflow, consumers can also tip
`
`the shopper who completes their order.
`
`2.
`
`Instacart’ s violations of District consumer and sales taX laws arise out of the various
`
`fees it has charged District consumers. From September 2016 until at least April 2018, Instacart
`
`charged its District consumers a default ten percent “service” fee in connection with the sale of its
`
`grocery delivery services. To a reasonable consumer, this service fee looked like a tip: the amount
`
`was set as a default percentage of the order total, and consumers had the option to increase or
`
`decrease the percentage or waive the amount entirely. But unlike a tip, the service fee went to
`
`Instacart and did not change the wages or commissions that the Company paid its shoppers. District
`
`consumers’ confusion about the true nature of the service fee was compounded by Instacart’s
`
`ambiguous, confusing, and shifting explanations of the service fee.
`
`3.
`
`Around November 2017, only after settling a lawsuit brought by Instacart shoppers,
`
`the Company made obscure changes to its website related to the service fee. Still, Instacart
`
`continued to apply a default service fee to consumers’ orders. And it did not disclose to consumers
`
`on the main check-out screen that this fee was entirely optional, banking on the prospect that many
`
`consumers would not discover that the service fee could be waived or would continue to confuse
`
`the purpose of this fee and a tip.
`
`4.
`
`On April 23, 2018, following reporting on this unfair and deceptive practice by
`
`multiple media outlets and after being contacted by the District, Instacart changed its practices by
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`

`

`implementing a mandatory service fee. Even after this change was made, Instacart refused to
`
`refund consumers who had been misled by Instacart’s prior deceptive practices.
`
`5.
`
`Additionally, Instacart has failed to collect District sales taX on the revenue it
`
`received from its service and delivery fees. Instacart has failed to collect sales taX on either of these
`
`fees during the entire time it has transacted business in the District.
`
`6.
`
`The District brings this case to stop Instacart from engaging in unfair and deceptive
`
`trade practices in violation of the CPPA, obtain appropriate restitution and other relief from the
`
`Company, and secure payment of all sales taxes owed on Instacart’s business in the District.
`
`JURISDICTION
`
`7.
`
`This Court has jurisdiction over the subject matter of this case pursuant to DC.
`
`Code §§ 11-921, 28-3909, and 47-4301.
`
`8.
`
`This Court has personal jurisdiction over Defendant Instacart pursuant to DC. Code
`
`§ 13-423(a) based on Defendant’s sales of groceries and grocery delivery services in the District
`
`of Columbia.
`
`PARTIES
`
`9.
`
`Plaintiff the District of Columbia, a municipal corporation empowered to sue and
`
`be sued, is the local government for the territory constituting the seat of the government for the
`
`United States. The District brings this action through its chief legal officer, the Attorney General
`
`for the District of Columbia. The Attorney General has general charge and conduct of all legal
`
`business of the District and all suits initiated by and against the District and is responsible for
`
`upholding the public interest. DC. Code § 1-301.81(a)(1). The District has authority to commence
`
`a proceeding in court for the collection of taX, without assessment, when a taxpayer has failed to
`
`file a required return or when the taxpayer omits from the return an amount of taX properly
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`

`

`includible on the return that exceeds 25% of the amount of the taX reported on the return. DC.
`
`Code §§ 47-4301(d)(1) and (3). In addition, the Attorney General is specifically authorized to
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`enforce the District’s consumer protection laws, including the CPPA.
`
`10.
`
`Defendant Maplebear, Inc. is a Delaware corporation with its headquarters and
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`principal place of business at 50 Beale Street, Suite 600, San Francisco, CA 94105. Defendant
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`operates in the District of Columbia under the trade name “Instacart” and provides grocery delivery
`
`through the Instacart mobile application (the “Instacart App”) and through the website
`
`
`
`A.
`
`Instacart’s Business
`
`FACTS
`
`11.
`
`Instacart is a grocery delivery company that sells groceries and grocery delivery
`
`services in the District of Columbia. Instacart offers consumers the ability to purchase groceries
`
`from specified stores on a mobile phone application or website and have them delivered by
`
`personal shoppers within hours.
`
`12.
`
`In order to use Instacart’s services, a consumer first registers for an Instacart
`
`account through the Instacart App or website, providing the Company with their email address, a
`
`unique password, and their zip code. Once their account is created, a consumer can use the Instacart
`
`App or website to place delivery orders from various grocery stores in the District of Columbia
`
`and surrounding areas. To confirm their orders, consumers provide Instacart with payment
`
`information (i.e., credit or debit card number), a preferred delivery time, and the delivery address.
`
`13.
`
`Instacart employs “full-service shoppers” who both shop for and deliver groceries
`
`to consumers. Instacart also employs “in-store shoppers” who shop and stage orders at one store
`
`but do not deliver groceries (collectively with full-service shoppers, “shoppers”). Full-service
`
`

`

`shoppers are classified by Instacart as independent contractors, whereas in-store shoppers are
`
`classified as part-time employees.
`
`14.
`
`Instacart has operated the District of Columbia since at least 2014. The Company
`
`currently maintains a consumer and shopper base operating in the District of Columbia that
`
`numbers well
`
`into the tens of thousands. On a weekly basis, Instacart receives and fulfills
`
`thousands of delivery orders in the District of Columbia.
`
`B.
`
`Instacart’s Service Fee
`
`15.
`
`Prior to September 2016, an Instacart consumer would have seen at least four
`
`separate line items on their bill for an online grocery order: (1) the total cost of the items ordered
`
`(subtotal), (2) a delivery fee, (3) applicable “taxes and fees,” and (4) an optional tip that went
`
`directly to the shopper who delivered the consumer’s order. This shopper tip was set by default to
`
`ten percent of the subtotal of the consumer’s order. The tip could be increased or decreased at the
`
`consumer’s discretion, including a decrease to zero.
`
`16.
`
`Around September 2016, Instacart replaced the shopper tip with a new line item:
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`an optional and variable “service” fee (“service fee”). Like the shopper tip,
`
`the service fee
`
`defaulted to ten percent of the subtotal of the consumer’s order. And, like the shopper tip, the
`
`service fee could be increased or decreased at the consumer’s discretion, including a decrease to
`
`zero.
`
`17.
`
`At the time, Instacart assured consumers that shoppers would receive higher
`
`delivery commissions and that “100% of the variable service amount is used to pay all shoppers
`
`more consistently for each and every delivery, not just the last shopper to touch the order.” In fact,
`
`Instacart never earmarked or set aside the amounts collected as service fees to pay its shoppers.
`
`

`

`18.
`
`Approximately one month later, in response to an outcry from workers, Instacart
`
`reintroduced the ability to tip shoppers—but it omitted this option from consumers’ main check-
`
`out screen. In addition to obscuring the ability to tip, Instacart set the default shopper tip to zero.
`
`19.
`
`Instacart again told the public that the service fee “will be used to guarantee a high
`
`commission for all shoppers to help smooth out variations in pay. Shoppers will no longer have to
`
`count on unpredictable tips for the majority of their compensation.” However, this service fee was
`
`not specifically earmarked or tracked for shopper pay.
`
`20.
`
`An Instacart order placed after September 2016 therefore would have shown a
`
`default ten percent “service” amount and a separate delivery fee. As illustrated below, the main
`
`check-out screen did not display an option to tip the shopper.
`
`
`
`21.
`
`These various changes tended to mislead District consumers to believe—
`
`incorrectly— that the service fee was a tip (or tip equivalent, such as a tipping pool) to be paid to
`
`the shopper(s) who fulfilled a consumer’s order. In reality, the service fee was a voluntary
`
`contribution unsuspectingly made by consumers to Instacart’s coffers.
`
`22.
`
`Instacart compounded its deceptive
`
`conduct by making misleading and
`
`contradictory statements throughout the Instacart App and website that the service fee would be
`
`used to pay shoppers. But this was not true. The service fee was used like any other revenue to
`
`6
`
`

`

`cover a broad range of Instacart’s operating expenses, including customer support, background
`
`checks, and insurance.
`
`23.
`
`The amount consumers were contributing for “service” did not directly increase
`
`shopper pay, rather, the service fee was simply another revenue source that Instacart used to cover
`
`its costs and generate profit.
`
`C.
`
`Instacart’s Misrepresentations and Omissions Regarding lts Service Fee
`
`24.
`
`During all or part of the period of September 2016 through April 2018 (the
`
`“relevant time period”), Instacart made numerous misrepresentations, ambiguities, and omissions
`
`regarding its service fee that tended to mislead consumers about the fee’ s true nature and purpose.
`
`1.
`
`Instacart Presented the Service Fee in a Deceptive Manner.
`
`25.
`
`Instacart presented the service fee in a manner that tended to mislead consumers
`
`into believing that this amount represented a gratuity to the shopper(s) who fulfilled a consumer’s
`
`order.
`
`26.
`
`Specifically, by including on consumers’ online bills a separate “service” amount
`
`that is based on a variable percentage of the subtotal of the consumer’s order, Instacart took
`
`advantage of consumers’ expectations that they would be able to leave a tip for the shopper(s) who
`
`performed the grocery delivery service.
`
`27.
`
`A consumer viewing the main check-out screen would have understood the optional
`
`and variable 10% “service” amount to represent a tip (or tip equivalent, such as a tipping pool).
`
`28.
`
`There are several reasons why consumers would have been misled by this
`
`presentation. First, consumers are accustomed to leaving an optional gratuity calculated as a
`
`variable percentage of their bill to a person who has provided a service. Because they had the
`
`

`

`option to change the “service” fee, a consumer would have assumed the “service” fee represented
`
`a tip.
`
`29.
`
`Second, by separating the service fee from the delivery fee, Instacart gave
`
`consumers the misimpression that the “delivery fee” would go to Instacart as the basic price of
`
`Instacart’s grocery delivery services, and the optional and variable service fee would go to the
`
`shoppers who fulfilled the order as a gratuity. In fact, both the “service” and “delivery” fees simply
`
`paid for Instacart’s grocery delivery services.
`
`30.
`
`Critically, although Instacart’s main check-out screen allowed consumers to
`
`“Change” the service fee, it did not clearly and conspicuously state that the service fee was not a
`
`tip. Only consumers who clicked through to a separate pop-up window would encounter a
`
`disclosure making this distinction.
`
`31.
`
`Instacart further reinforced consumers’ misimpression by removing the option to
`
`tip from the main check-out screen around September 2016.
`
`32.
`
`Tellingly, Instacart temporarily eliminated the tipping option altogether when it
`
`first began to collect a service fee. And even when the option to tip was reintroduced, nothing on
`
`the main check-out screen referred to tipping until November 2017, as illustrated below:
`
`

`

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`
`33.
`
`The option to tip one’s shopper at check-out was only Visible to consumers who
`
`first clicked an obscure link to change the service fee, which then yielded a pop-up window or a
`
`separate screen in which the option to tip was presented:
`
`
`
`

`

`34.
`
`Instacart’s decision to bury the option to tip behind an unrelated link—rather than
`
`to display this option on the main check-out screen—concealed from the consumer that the service
`
`fee and the shopper tip were distinct. In this respect, Instacart’s checkout design compounded
`
`consumers’ tendency to confuse the service fee with a shopper tip.
`
`35.
`
`Similarly, Instacart ensured that consumers would not see the tip on their bill by
`
`setting the default tip to zero. Again, this default setting tended to lead consumers to confuse the
`
`service fee for a tip by obscuring the fact that the service fee and tip would appear as separate line
`
`items on the consumer’s bill.
`
`36.
`
`Instacart’s division of the service fee from the delivery fee also facilitated
`
`misleading “free delivery” promotions that reinforced the notion that the service fee was a tip.
`
`37. While denominated differently, the delivery fee and service fee were each an
`
`amount collected by Instacart for providing grocery delivery services. Yet (as illustrated by the
`
`screenshots in paragraphs 20 and 32 above), when Instacart offered consumers “free delivery,” the
`
`Company only waived the delivery fee.
`
`38.
`
`Consumers who are promised “free delivery” by a grocery delivery service
`
`reasonably expected that such an offer means that the company will waive all charges applied to a
`
`purchase to cover the added costs associated with having groceries delivered. In Instacart’s case,
`
`this included both the delivery fee and the service fee.
`
`39.
`
`Furthermore, by applying a 10% service fee to “free delivery” orders, Instacart
`
`misleadingly caused its consumers to believe that the service fee was not a fee paid to Instacart for
`
`grocery delivery services, but rather a gratuity paid to shoppers. Instacart was able to pocket the
`
`service fees paid by unsuspecting consumers on “free delivery” orders as a result of this deceptive
`
`practice.
`
`10
`
`

`

`40.
`
`The tendency of Instacart’s misrepresentations and omissions to mislead consumers
`
`is confirmed by the Company’s own admissions. In April 2018, Instacart redesigned its main
`
`check-out page in connection with imposing a mandatory 5% service fee. As part of this redesign,
`
`Instacart acknowledged that consumers “may still” confuse the service fee with a tip:
`
`
`
`2.
`
`Instacart Described the Purpose of the Service Fee in a Deceptive Manner.
`
`41.
`
`Instacart’s disclosures about the purpose of the service fee also deceptively
`
`suggested that shopper compensation would be impacted by a consumer’s decision to pay the
`
`service fee.
`
`42.
`
`For example, as alleged above, when announcing the service fee, Instacart told
`
`consumers that “100% of the variable service amount is used to pay all shoppers more consistently
`
`for each and every delivery, not just the last shopper to touch the order.”
`
`43.
`
`Consumers who attempted to change the service fee were also advised that the
`
`service fee “allow[ed]” the Company “to provide competitive pay to all shoppers” and “to pay all
`
`shoppers (including those, for example, that also pick out ordered items in the store).”
`
`44.
`
`These disclosures were misleading because Instacart did not explain that it also
`
`used the service fee to pay other operating expenses and that an individual consumer’s decision to
`
`pay the service fee would not increase any shopper’s pay.
`
`11
`
`

`

`45.
`
`Even these confusing disclosures were only made to consumers who tried to alter
`
`the default 10% service fee. Instacart failed to clearly and conspicuously provide on the main
`
`check-out screen that the service fee was not a tip.
`
`46.
`
`The Company’s FAQ/Help Center pages addressing the service fee similarly
`
`misrepresented the fee, deceptively characterizing this amount as a contribution to shopper
`
`compensation.
`
`47.
`
`As an initial matter, these FAQ/Help Center statements were located on webpages
`
`that consumers would be unlikely to see, entirely separate from the main check-out screen that
`
`consumers used to place their orders. It was thus not clear and conspicuous that the service fee was
`
`not a tip, especially considering a reasonable consumer’s expectations that an optional and variable
`
`service fee would operate as a tip to the shopper and not a donation to the Company.
`
`48.
`
`In at least one FAQ/Help page, the Company implied that the service fee reflected
`
`shopper performance, explaining that the service fee was not reduced when the cost of a
`
`consumer’s order went down because “the same amount of time and care is taken by your shopper,
`
`even if a few items may be replaced, added, or refunded[.]”
`
`49.
`
`Other pages emphasized that Instacart used the service fee “to provide high
`
`guaranteed commissions to the shoppers on the platform,” and that the Company collected a
`
`service fee because “multiple shoppers may have been involved in a single order” and the “service
`
`amount is used to pay this entire set of shoppers” (emphasis added). The Company further stated
`
`that because the service amount would be used to pay shoppers a commission, an “additional tip”
`
`was “not necessary.”
`
`50.
`
`These statements misrepresented the service fee as compensation for the set of
`
`shoppers who assisted the consumer in obtaining her order. This would be familiar to consumers
`
`12
`
`

`

`in that it would be similar to the tip pooling mechanism used by restaurants to distribute tips earned
`
`by wait staff to the kitchen and/or host staff.
`
`51.
`
`Instacart’s characterization of the service fee was confusing and misleading
`
`because the explanation omitted that the shopper(s) who fulfill a consumer’s order made the same
`
`pay whether or not a consumer paid the recommended service fee. Customers who understood this
`
`fee could be waived were thus misled that paying and/or increasing the service fee would benefit
`
`shoppers in the form of higher compensation, when that was not the case.
`
`52.
`
`Furthermore, Instacart mischaracterized the service fee as funds that would be used
`
`specifically to pay shoppers. In fact, Instacart never tracked how service fee payments were
`
`expended or earmarked these funds to pay shopper commissions. Only in November 2017, after
`
`settling a lawsuit brought by shoppers, did Instacart revise its description of the service fee to
`
`remove misleading references to shoppers and more accurately disclose the purpose of the service
`
`fee, explaining that the charge simply “helps us operate Instacart and provide you with the best
`
`service possible.”
`
`53.
`
`Instacart also relied on cues in its disclosures to conflate the service fee with a
`
`shopper tip. For example, certain versions of the window that consumers opened to “Change” the
`
`service fee described the tip option as an “additional tip.” This language tended to mislead
`
`consumers to conclude that the service fee is effectively a tip.
`
`13
`
`

`

`
`
`
`
`54.
`
`By explicitly conflating the service fee with the option to tip, Instacart confused
`
`and misled consumers into believing the service fee would go directly to shoppers and any further
`
`tip would only be in addition to that payment.
`
`3.
`
`Instacart Concealed and Failed to Clearly State the Fact the Customers Could
`Chose Not to Pay the ”Service Amount. ”
`
`55.
`
`Finally, Instacart failed to adequately and clearly tell consumers that the service fee
`
`could be waived in full. These omissions and failures to clearly state material facts tended to
`
`mislead consumers regarding the fully optional nature of this payment.
`
`56.
`
`Certain versions of the Instacart check-out screen did not even include a “Change”
`
`link to edit the default service fee.
`
`14
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`

`

`
`
`57.
`
`Critically, even those versions of Instacart’ s main check-out screen that did provide
`
`consumers a “Change” link to edit the default service fee did not make clear to consumers that
`
`they could elect not to pay it at all. Only consumers who clicked through to a separate pop-up
`
`window would uncover this option.
`
`58.
`
`Further, for at least some of the relevant time period, even this obscure link did not
`
`take consumers directly to a disclosure that the default service fee could be waived. Only by
`
`navigating through the drop-down menu available on this screen would a consumer learn that the
`
`service fee could be waived in its entirety.
`
`15
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`

`

`59.
`
`By contrast, for at least some of the relevant time period, the tipping option that
`
`consumers saw when they sought to change the service fee is clearly marked as “optional.” This
`
`juxtaposition created in consumers the false impression that the service fee was not optional.
`
`
`
`
`
`60.
`
`In addition, Instacart’s free delivery promotions were deceptive in that free delivery
`
`orders included a default service fee amount that was paid directly to Instacart for delivery services.
`
`61.
`
`On information and belief, Instacart used free delivery promotions to attract
`
`customers. However, it did not set the default service fee to zero for these orders.
`
`62.
`
`Because Instacart did not clearly disclose that the service fee was optional, some
`
`consumers who were promised free delivery by Instacart, and spent time preparing an Instacart
`
`order, paid the default service fee out of a mistaken belief that they had no alternative. Consumers
`
`who were asked to pay and paid a “service” fee for a delivery service did not receive the “free
`
`delivery” promised by the Company.
`
`16
`
`

`

`D.
`
`Changes in Tipping Patterns Demonstrate that Consumers Were Misled.
`
`63.
`
`Changes in consumers’ tipping practices confirm that consumers were misled
`
`regarding the purpose of the service fee and believed that the service fee operated as a tip.
`
`64.
`
`In the three months prior to introduction of the service fee in September 2016,
`
`Instacart consumers in the District of Columbia tipped on almost all orders (approximately 90%).
`
`From October 2016 to November 2017, after the misleading service fee was introduced, the tip
`
`rate dropped precipitously, with District consumers tipping on only approximately one-third of
`
`orders overall during this time period.
`
`65.
`
`Furthermore, total shopper tips were equal to approximately 10% of the total
`
`revenue on orders placed in the months prior to September 2016, consistent with the default tip
`
`amount. After the service fee was introduced, from October 2016 to November 2017, total shopper
`
`tips fell to only approximately 3.5% of the total revenue on orders.
`
`66.
`
`These numbers demonstrate that the service fee operated to allow Instacart to
`
`capture money for
`
`itself that consumers previously paid in tips, based on consumers’
`
`misunderstanding of the nature and purpose of the service fee. This cost-shifting was significant.
`
`Over the course of the relevant time period Instacart had this policy in place, District consumers
`
`paid millions of dollars in service fees.
`
`67.
`
`Had Instacart adequately disclosed to consumers that the service fee was not a tip,
`
`that the service fee could be waived in full, and that electing to pay or increase the service fee had
`
`no impact on shoppers’ pay, this understanding would have significantly affected consumers’
`
`decisions.
`
`17
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`

`

`E.
`
`Instacart’s Sales Tax Violations
`
`68.
`
`Instacart also has failed to collect sales taxes owed to the District in connection
`
`with the Company’s provision of services in this jurisdiction. Under District law, Instacart is and
`
`was responsible for collecting sales tax on the Company’s delivery services as well as certain
`
`grocery sales. Instacart violated and continues to violate District law by failing to collect sales
`
`taxes for its services, including all sales taxes owed on all service fees and delivery fees it has
`
`charged its District consumers.
`
`69. When providing delivery services in the District to website consumers, Instacart is
`
`required to collect District sales taxes “for the privilege of selling .
`
`.
`
`. services” that are included
`
`within the statutory definition of “retail sale” and “sale at retail.” DC. Code § 47-2002(a) and §
`
`47-2001(n)(1). This statutory definition includes “[t]he sale of or charge for any delivery in the
`
`District for which a separate charge is made. .
`
`.
`
`.” DC. Code § 47-2001(n)(1)(Q).
`
`70.
`
`Because Instacart rendered taxable services to consumers in the District, Instacart
`
`is a vendor under the District Sales Tax Code and is responsible for collecting and remitting all
`
`applicable sales taxes to the District. DC. Code § 47-2001(w), DC. Code § 47-2003(a).
`
`71.
`
`District law imposes sales taxes totaling 5.75% on “gross receipts” from a vendor’s
`
`“retail sale” or “sale at retail” before October 1, 2013. After that date, District law imposes a 6%
`
`sales tax on a vendor’s “gross receipts” from a vendor’s “retail sale” or “sale at retail.” DC. Code
`
`§ 47-2002(a).
`
`72.
`
`Under the District Sales Tax Code, “gross receipts” of the vendor’s retail sale are
`
`the total price paid for goods or services “without any deduction” for, among other things, labor
`
`or service cost or “any other expenses .
`
`.
`
`. [or] services that are part of the sale .
`
`.
`
`.
`
`.” DC. Code
`
`Ann. §§ 47-2001(g-3), (p)(1), 47-2002(a) (emphasis added).
`
`18
`
`

`

`73.
`
`Amounts paid by Instacart’s customers in delivery fees and service fees are
`
`consideration for the retail sale of Instacart’s delivery services and, as such, they are included in
`
`the “sales price” and “gross receipts” for the “retail sale” of Instacart’s delivery service.
`
`Accordingly, both amounts are taxable.
`
`74.
`
`Instacart has not reported or paid taX on any of these sales.
`
`75.
`
`Further, Instacart is a marketplace facilitator since it provides an electronic platform
`
`where a retail sale occurs, and it collects payments from customers. DC. Code §§ 47-2001(g-4)
`
`and (g-S).
`
`76.
`
`As of April 1, 2019, marketplace facilitators are required to collect and remit sales
`
`taX on all sales the marketplace facilitator makes on its own behalf and all sales the marketplace
`
`facilitator facilitates on behalf of marketplace sellers to consumers in the District of Columbia.
`
`DC. Code § 47—200mm.
`
`77.
`
`As a marketplace facilitator, Instacart was required to collect and remit sales taX on
`
`the total amounts paid by Instacart’s customers as delivery fees and service fees. Again, Instacart
`
`has not made any payments to the District to cover these sales taxes.
`
`In addition, under this law,
`
`Instacart continues to be responsible for collecting sales taX on certain grocery sales.
`
`78.
`
`At a minimum, Instacart owes the District hundreds of thousands of dollars, plus
`
`penalty and interest, for unpaid sales taxes since 2014.
`
`Count I: Violations of the Consumer Protection Procedures Act
`
`79.
`
`The District incorporates the allegations of paragraphs 1 through 78 into this Count.
`
`80.
`
`The CPPA is a remedial statute that is to be broadly construed. It establishes an
`
`enforceable right to truthful information from merchants about consumer goods and services that
`
`are or would be purchased, leased, or received in the District of Columbia.
`
`19
`
`

`

`81.
`
`The services that Instacart provides consumers are for personal, household, or
`
`family purposes and, therefore, are consumer goods and services.
`
`82.
`
`Instacart, in the ordinary course of business, supplies consumer goods and services
`
`and, therefore, is a merchant under the CPPA.
`
`83.
`
`Instacart users receive consumer goods and services in the form of groceries and
`
`grocery delivery services from Instacart and are therefore consumers under the CPPA.
`
`84.
`
`The CPPA prohibits unfair and deceptive trade practices in connection with the
`
`offer, sale, and supply of consumer goods and services.
`
`85.
`
`During the relevant time period, Instacart’s misrepresentations and omissions
`
`regarding its service fee constituted deceptive and unfair trade practices that violated DC. Code §
`
`28-3904.
`
`86.
`
`Instacart’s failure to clearly and adequately disclose to consumers that its variable
`
`service fee was not a tip to the consumer’s shopper(s) was a failure to state material facts that had
`
`the tendency to mislead and was an unfair and deceptive trade practice in violation of DC. Code
`
`§ 28-39046).
`
`87.
`
`Instacart’s failure to adequately eXplain to consumers that the consumer’s decision
`
`to pay the service fee did not change shopper pay was a failure to state material facts and/or
`
`ambiguity that had the tendency to mislead and was an unfair and deceptive trade practice in
`
`violation of DC. Code §§ 28-3904(f)-(f-1).
`
`88.
`
`During the relevant time period, Instacart made affirmative misrepresentations to
`
`consumers that the Company was offering “free delivery” while listing a service fee on consumers’
`
`bills, this misrepresentation had the tendency to mislead and was an unfair and deceptive trade
`
`practices in violation of DC. Code § 28-3904(e).
`
`20
`
`

`

`89.
`
`During the relevant time period, Instacart made affirmative misrepresentations to
`
`consumers that the Company used the service fee “to provide high guaranteed commissions to the
`
`shoppers on the platform” and “to guarantee a high commission for all shoppers to help smooth out
`
`variations in pay,” that “100% of the variable service amount is used to pay all shoppers more
`
`consistently for each and every delivery, not just the last shopper to touch the order,” that the
`
`Company collected a service fee because “multiple shoppers may have been involved in a single
`
`order” and the “service amount is used to pay this entire set of shoppers,” and that the service fee
`
`“allow[ed] [the Company] to pay all shoppers (including those, for example, that also pick out
`
`ordered items in the store)” and “to provide competitive pay to all
`
`shoppers.” These
`
`misrepresentations had the tendency to mislead and were unfair and deceptive trade practices in
`
`violation of DC. Code § 28-3904(e).
`
`90.
`
`Instacart’s failure to clearly and adequately disclose to consumers that its variable
`
`service fee was used to pay the Company’s general operating expenses was a failure to state
`
`material facts that had the tendency to mislead and was an unfair and deceptive trade practice in
`
`violation of DC. Code § 28-39046).
`
`91.
`
`During the relevant time period, Instacart’s representations, both express and
`
`implied,
`
`that a consumer’s payment of the service fee would impact shopper pay were
`
`misrepresentations concerning material facts that had a tendency to mislead and were unfair and
`
`deceptive trade practices in violation of § 28-3904(e).
`
`92.
`
`Instacart’s failure to disclose to consumers, on the main check-out screen, that the
`
`default service fee amount was optional and/or could be fully waived was a failure to state a
`
`material facts that had the tendency to mislead and was an unfair and deceptive trade practice in
`
`violation of DC. Code § 28-3904(f)-(f-1).
`
`21
`
`

`

`Count 11: Failure to Pay Sales Taxes Due
`
`93.
`
`The District repeats and realleges Paragraphs 1 through 92 as if set forth fully in
`
`this paragraph.
`
`94.
`
`Instacart has failed to collect sales taxes due, in Violation of DC. Code § 47-2016.
`
`Count 111: Tax Penalties
`
`95.
`
`The District repeats and reall

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