Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 1 of 14
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`MICHELI & SHEL, LLC, individually and on behalf
`of others similarly situated,
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`Plaintiff,
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`v.
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`GRUBHUB INC., GRUBHUB INC. d/b/a
`SEAMLESS, SEAMLESS NORTH AMERICA,
`LLC, UBER TECHNOLOGIES INC., UBER EATS,
`POSTMATES LLC, and DOORDASH INC.,
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`Defendants.
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`Case No. 21-cv-04995-JMF
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`DEFENDANT POSTMATES, LLC’S MEMORANDUM OF LAW
`IN SUPPORT OF MOTION FOR JUDGMENT ON THE PLEADINGS
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`Andrew A. Ruffino
`Teena-Ann V. Sankoorikal
`COVINGTON & BURLING LLP
`The New York Times Building
`620 Eighth Avenue
`New York, New York 10018-1405
`Tel. (212) 841-1000
`aruffino@cov.com
`tsankoorikal@cov.com
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`Counsel for Defendant Postmates, LLC
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 2 of 14
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`PRELIMINARY STATEMENT .................................................................................................... 1
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`TABLE OF CONTENTS
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`I.
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`II.
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`BACKGROUND ................................................................................................................ 1
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`LEGAL STANDARD ......................................................................................................... 4
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`III.
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`ARGUMENT ...................................................................................................................... 4
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`A.
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`B.
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`C.
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`There is No Private Right of Action Under Local Law Nos. 52 and 88. ................ 4
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`The Complaint Does Not Plausibly Allege Any Unlawful Conduct. ..................... 8
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`Dismissal Should Be With Prejudice Because Amendment Would
`Be Futile. ................................................................................................................. 9
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 3 of 14
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`TABLE OF AUTHORITIES
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`Page(s)
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`Cases
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`Gayle v. Pfizer Inc.,
`452 F. Supp. 3d 78, 90 (S.D.N.Y. 2020), aff’d, 847 F. App’x 79 (2d Cir. 2021) ....................10
`
`Johnson v. JPMorgan Chase Bank, N.A.,
`488 F. Supp. 3d 144, 158 (S.D.N.Y. 2020)................................................................................8
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`Lively v. WAFRA Inv. Advisory Grp., Inc.,
`6 F.4th 293 (2d Cir. 2021) .........................................................................................................4
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`Madonna v. United States,
`878 F.2d 62 (2d Cir. 1989).........................................................................................................4
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`Mark G. v. Sabol,
`93 N.Y.2d 710 (1991) ................................................................................................................5
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`Mitsui O.S.K. Lines, Ltd. v. Archer-Daniels-Midland Co.,
`No. 17-CV-5588 (JMF), 2018 WL 3946446 (S.D.N.Y. Aug. 16, 2018) ...............................4, 9
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`New York Wheel Owner LLC v. Mammoet Holding B.V.,
`481 F. Supp. 3d 216, 238 (S.D.N.Y. 2020)................................................................................5
`
`Pincus v. Am. Traffic Sols., Inc.,
`No. 18-CV-80864, 2019 WL 9355827 (S.D. Fla. Jan. 14, 2019), aff’d, 25
`F.4th 1339 (11th Cir. 2022) .......................................................................................................9
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`Schlessinger v. Valspar Corp.,
`817 F. Supp. 2d 100 (E.D.N.Y. 2011), aff’d, 723 F.3d 396 (2d Cir. 2013) ...........................6, 7
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`Sheehy v. Big Flats Cmty. Day, Inc.,
`73 N.Y.2d 629 (1989) ................................................................................................................5
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`Uhr ex rel. Uhr v. E. Greenbush Cent. Sch. Dist.,
`94 N.Y.2d 32 (1999) ..................................................................................................................6
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`Yucyco, Ltd. v. Republic of Slovenia,
`984 F. Supp. 209 (S.D.N.Y. 1997).............................................................................................9
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`Statutes
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`N.Y., Code § 20-563 ................................................................................................................3, 4, 7
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`N.Y., Code § 20-845 ........................................................................................................................8
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`ii
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 4 of 14
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`N.Y., Code § 20-846 ................................................................................................................2, 3, 8
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`N.Y., Code § 20-848 ................................................................................................................2, 4, 5
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`iii
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 5 of 14
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`PRELIMINARY STATEMENT
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`On behalf of a proposed class of New York City restaurants, plaintiff Micheli & Shel,
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`LLC purports to assert claims against Postmates and other third-party food delivery services on
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`the theory that they allegedly charged restaurants fees in excess of caps imposed by New York
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`Local Law Nos. 52 and 88 during the COVID-19 pandemic.1 Plaintiff’s Complaint fails as a
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`matter of law because neither Local Law No. 52 nor Local Law No. 88 included a private cause
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`of action, and both have since been repealed. The plain text of those laws did not contemplate
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`private enforcement, and the legislative history confirms none was intended. In any event, the
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`Complaint is also bereft of well-pleaded factual allegations that could support any recovery.
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`Because plaintiff’s claims are deficient facially as a matter of law, and because any
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`attempt at amendment would be futile, the Court should dismiss the Complaint with prejudice
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`and enter judgment on the pleadings in favor of Postmates.
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`I.
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`BACKGROUND
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`On May 26, 2020, the New York City Council passed Local Law No. 52 as part of its
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`response to the COVID-19 pandemic. See ECF No. 1 (“Compl.”) ¶ 32.2 The law took effect on
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`June 2, 2020, “seven days after it [became] law,” and implemented a cap on “fees charged by
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`third-party food delivery services during, and for 90 days after, a declared emergency that
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`prohibits on-premises dining.” See Compl., ¶ 33.3 This emergency fee cap law made it
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`“unlawful for a third-party food delivery service to charge a food service establishment a
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`1 This action is currently stayed pending arbitration as to all defendants other than Postmates.
`See ECF No. 79.
`2 See Local Law No. 52, N.Y. CITY COUNCIL (2020), https://legistar.council.nyc.gov/
`LegislationDetail.aspx?ID=4344564&GUID=BAB73224-E999-411A-8C42-1BDF14C0DACE.
`3 See Local Law No. 52, N.Y. CITY COUNCIL (2020), https://legistar.council.nyc.gov/
`LegislationDetail.aspx?ID=4344564&GUID=BAB73224-E999-411A-8C42-1BDF14C0DACE.
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`1
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 6 of 14
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`delivery fee that total[ed] more than 15% of the purchase price of each online order” or “to
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`charge a food service establishment any fee or fees other than a delivery fee for the use of their
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`service greater than 5% of the purchase price of each online order.” See Compl., ¶ 33; New
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`York City, N.Y., Code § 20-846.
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`Local Law No. 52 contained no private cause of action. Rather, the Council intended that
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`“[v]iolations of the prohibitions in this bill would be subject to civil penalties,” and “[t]he
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`Corporation Counsel would be empowered to enforce the bill’s provisions by instituting civil
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`action against third-party delivery services in violation, and by conducting investigations
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`pursuant to such civil action.”4 Local Law No. 52 codified these enforcement mechanisms:
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`● “A proceeding to recover any civil penalty authorized pursuant to
`this subchapter may be brought in any tribunal established within
`the office of administrative trials and hearings or within any
`agency of the city designated to conduct such proceedings.”
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`● “A civil action may be brought by the corporation counsel on
`behalf of the city in any court of competent jurisdiction . . . .”
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`● “The corporation counsel may initiate any investigation to
`ascertain such facts as may be necessary for the commencement of
`a civil action pursuant to this section ….”
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`New York City, N.Y., Code § 20-848.
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`On September 14, 2020, the Council passed Local Law No. 88, which “[took] effect
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`immediately,” to amend the emergency fee cap so that it would apply “during states of
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`emergency when restaurants [were] restricted from operating at maximum indoor occupancy,
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`plus an additional 90 days thereafter.” See Compl., ¶ 36.5 It also “exempt[ed] from the 5% limit
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`4 See Local Law No. 52, N.Y. CITY COUNCIL (2020), https://legistar.council.nyc.gov/
`LegislationDetail.aspx?ID=4344564&GUID=BAB73224-E999-411A-8C42-1BDF14C0DACE.
`5 See Local Law No. 88, N.Y. CITY COUNCIL (2020), https://legistar.council.nyc.gov/
`LegislationDetail.aspx?ID=4609918&GUID=CDB3B4A7-1AD8-4E2B-B2BA-
`2EDC28F22DC8.
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`2
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 7 of 14
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`on non-delivery fees[] any fees incurred by the third-party delivery service for processing the
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`customer transaction for which the third-party service acts as a ‘pass-through’ by charging such
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`fees to the restaurant,” enabling third-party delivery platforms to charge credit card processing
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`fees to merchants.6 Local Law No. 88 did not affect the enforcement mechanisms of the
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`emergency fee cap law and did not add a private cause of action to that law.7
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`Plaintiff filed its lawsuit on June 7, 2021, based on orders placed from June 7, 2020,
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`through June 7, 2021. See Compl., ¶¶ 63, 78, 83. The Complaint asserts claims for alleged
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`violations of Local Law Nos. 52 and 88, even though neither of those laws included a private
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`cause of action. See id., ¶¶ 75-89.
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`On September 26, 2021, the Council enacted Local Law No. 100 and overhauled the fee
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`cap regime.8 The new law, which took effect on January 24, 2022—six months after plaintiff’s
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`Complaint was filed—set up a licensing mechanism for third-party food delivery services,
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`repealed the emergency fee cap law implemented by Local Law Nos. 52 and 88, and imposed
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`permanent caps in connection with the new licensing mechanism. See id.; New York City, N.Y.,
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`Code § 20-563.3 (fee cap, formerly § 20-846).9
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`6 See Local Law No. 88, N.Y. CITY COUNCIL (2020), https://legistar.council.nyc.gov/
`LegislationDetail.aspx?ID=4609918&GUID=CDB3B4A7-1AD8-4E2B-B2BA-
`2EDC28F22DC8.
`7 Id.
`8 See Local Law No. 100, N.Y. CITY COUNCIL (2021), https://legistar.council.nyc.gov/
`LegislationDetail.aspx?ID=4344527&GUID=6ABD2852-C9A4-4F4B-A996-064475CAD03E&
`Options=ID%7CText%7C&Search=1897.
`9 See Local Law No. 103, N.Y. CITY COUNCIL (2021), https://legistar.council.nyc.gov/
`LegislationDetail.aspx?ID=5116226&GUID=C266469A-2803-4C77-ACD2-ACCFA711B12D.
`The Council designed the new law to “take[] effect 120 days after it becomes law, except that the
`commissioner of consumer affairs may take such measures as are necessary for the
`implementation of this local law, including the promulgation of rules, before such date.” See id.;
`supra, footnote 8.
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 8 of 14
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`Although the new fee cap law contained the same enforcement mechanisms as its
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`predecessors (see New York City, N.Y., Code § 20-563.10 (civil penalty, formerly § 20-848);
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`id., § 20-563.11 (enforcement by Corporation Counsel, formerly § 20-848)), it departed from
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`Local Law Nos. 52 and 88 in a material respect: it expressly authorized—for the first time—a
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`private cause of action. See New York City, N.Y., Code § 20-563.12; cf. id., § 20-563.11(d)
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`(“Nothing in this section prohibits … a civil action pursuant to section 20-563.12 based on the
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`same facts as a civil action commenced by the corporation counsel pursuant to this section.”).
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`II.
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`LEGAL STANDARD
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`“The standard for granting a Rule 12(c) motion for judgment on the pleadings is identical
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`to that for granting a Rule 12(b)(6) motion for failure to state a claim.” Lively v. WAFRA Inv.
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`Advisory Grp., Inc., 6 F.4th 293, 301 (2d Cir. 2021). “To survive a Rule 12(c) motion, [the]
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`complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is
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`plausible on its face.” Id. A court considering a Rule 12(c) motion may also consider extrinsic
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`material that is incorporated by reference, integral to the complaint, or subject to judicial notice.
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`Id. at 305. The Court does not, however, need to accept as true plaintiff’s own “legal
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`conclusions [and] characterizations.” Madonna v. United States, 878 F.2d 62, 65 (2d Cir. 1989);
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`accord Mitsui O.S.K. Lines, Ltd. v. Archer-Daniels-Midland Co., No. 17-CV-5588 (JMF), 2018
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`WL 3946446, at *3 (S.D.N.Y. Aug. 16, 2018) (“A complaint that offers only ‘labels and
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`conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’”).
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`III. ARGUMENT
`A.
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`There is No Private Right of Action Under Local Law Nos. 52 and 88.
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`Plaintiff’s Complaint sets forth claims based upon alleged violations of Local Law Nos.
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`52 and 88 that occurred between June 2020 and July 2021, but neither of those laws expressly
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`included any private cause of action. See Compl., ¶¶ 63, 78, 83. And the legislative history
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`4
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 9 of 14
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`confirms that no private cause of action was intended or implied under those provisions.
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`Plaintiff, therefore, cannot state any claim upon which it could obtain relief.
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`To determine whether a private cause of action may be implied under a New York state
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`law, courts consider three factors: “(1) whether the plaintiff is one of the class for whose
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`particular benefit the statute was enacted; (2) whether recognition of a private right of action
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`would promote the legislative purpose; and (3) whether creation of such a right would be
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`consistent with the legislative scheme.” New York Wheel Owner LLC v. Mammoet Holding B.V.,
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`481 F. Supp. 3d 216, 238 (S.D.N.Y. 2020). The third factor is the “most critical.” Mark G. v.
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`Sabol, 93 N.Y.2d 710, 720 (1999). Even when the first two factors are satisfied, “a private right
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`of action should not be judicially sanctioned if it is incompatible with the enforcement
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`mechanism chosen by the Legislature or with some other aspect of the over-all statutory
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`scheme.” Sheehy v. Big Flats Cmty. Day, Inc., 73 N.Y.2d 629, 634-35 (1989).
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`Here, the City Council specifically enumerated mechanisms to enforce violations of the
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`emergency fee cap law, and a private cause of action was not one of them. This is evident from
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`the plain text of Local Law Nos. 52 and 88, as well as the legislative history.
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`First, the plain language of Local Law Nos. 52 and 88 makes clear that neither law
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`permitted a private right of action. In enacting Local Law No. 52, the Council chose to limit the
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`right to bring civil actions to the Corporation Counsel, and to restrict any attempt to recover civil
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`penalties to administrative (as opposed to judicial) proceedings. See New York City, N.Y., Code
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`§ 20-848. Specifically, Local Law No. 52 provided for proceedings to recover civil penalties
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`only “in any tribunal established within the office of administrative trials and hearings or within
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`any agency of the city designed to conduct such proceedings,” and not in state or federal courts.
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`See id. That law also provided for civil actions “in any court of competent jurisdiction” (and
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 10 of 14
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`investigations to facilitate such civil actions) only when “brought by the corporation counsel on
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`behalf of the city,” and not by private litigants. See id. Local Law No. 88 left this enforcement
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`regime completely untouched.
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`Second, a private right of action would run counter to the Council’s intent as stated in the
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`legislative history of Local Law No. 52. The Council’s description of the enacting bill did not
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`include any language permitting private litigation and instead explicitly stated to the contrary
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`that “[t]he Corporation Counsel would be empowered to enforce the bill’s provisions by
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`instituting civil action.”10
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`Courts routinely reject claims where, as here, the underlying state or local law
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`specifically delineates enforcement mechanisms and does not include a private right of action.
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`Since Local Law Nos. 52 and 88 carried their “own potent official enforcement mechanism[s],”
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`“a private right of action would not be consistent with the statutory scheme.” Uhr ex rel. Uhr v.
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`E. Greenbush Cent. Sch. Dist., 94 N.Y.2d 32, 40 (1999) (finding no implied private right of
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`action under New York law where legislature “clearly contemplated administrative
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`enforcement”); accord Schlessinger v. Valspar Corp., 817 F. Supp. 2d 100, 104 (E.D.N.Y. 2011)
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`(finding no implied private right of action under New York law where legislation “expressly set[]
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`forth an enforcement scheme through the State Attorney General, without defining a similar
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`remedy by private persons in a civil suit”), aff’d, 723 F.3d 396 (2d Cir. 2013).
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`Third, the City Council’s actions since first enacting the emergency fee cap law via Local
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`Law No. 52 confirm that the law was not intended to include any private right of action. If the
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`Council had wanted to add a private cause of action to the emergency fee cap law, it could have
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`10 See Local Law No. 52, N.Y. CITY COUNCIL (2020), https://legistar.council.nyc.gov/
`LegislationDetail.aspx?ID=4344564&GUID=BAB73224-E999-411A-8C42-1BDF14C0DACE.
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`6
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`modified the relevant enforcement provisions in 2020 or 2021, including when it enacted Local
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`Law No. 88 with immediate effect.11 But Local Law No. 88 left the enforcement scheme
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`completely untouched, confirming that the limited mechanisms set forth in Local Law No. 52
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`accurately reflected the Council’s intent.12
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`In addition, the Council’s actions with regard to Local Law No. 100 demonstrate that the
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`Council knew precisely how to authorize private rights of action, as Local Law No. 100
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`expressly authorized the private enforcement of fee caps on third-party food delivery services
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`beginning January 24, 2022, when the permanent fee cap law took effect. See New York City,
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`N.Y., Code § 20-563.12 (“Any person alleging a violation of any provision of this subchapter
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`may bring a civil action, in accordance with applicable law, in any court of competent
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`jurisdiction.”). That law (unlike Local Law Nos. 52 and 88) added an entirely new statutory
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`section expressly providing a private right of action as part of an overall licensing and regulatory
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`scheme for third-party food delivery services. See id.; cf. id. § 20-563.1. This further confirms
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`that no such enforcement mechanism was intended for the earlier laws relating to the emergency
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`fee caps. See, e.g., Schlessinger, 817 F. Supp. 2d at 105 (finding no implied private right of
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`action where New York law “was initially enacted to provide only for enforcement by the
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`Attorney General” and was subsequently amended “to add a private cause of action”).
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`Plaintiff’s claims are premised on laws that provided no private cause of action and have
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`since been repealed. See Compl., ¶¶ 75-89. The Court accordingly should enter judgment on the
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`pleadings in favor of Postmates. See also, e.g., Johnson v. JPMorgan Chase Bank, N.A., 488 F.
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`11 See Local Law No. 88, N.Y. CITY COUNCIL (2020), https://legistar.council.nyc.gov/
`LegislationDetail.aspx?ID=4609918&GUID=CDB3B4A7-1AD8-4E2B-B2BA-
`2EDC28F22DC8.
`12 Id.
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`7
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 12 of 14
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`Supp. 3d 144, 158 (S.D.N.Y. 2020) (“[P]laintiffs’ declaratory judgment claims must be
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`dismissed because plaintiffs have failed to identify an underlying substantive cause of action.”).
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`B.
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`The Complaint Does Not Plausibly Allege Any Unlawful Conduct.
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`Even if plaintiff could in theory sue under Local Law Nos. 52 and 88—and it cannot—
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`plaintiff’s claims are defective because the Complaint includes no well-pleaded factual
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`allegations that could plausibly show a violation by Postmates of either law.
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`The sparse specific allegations against Postmates appear solely in paragraph 63 of the
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`Complaint’s 20-plus pages; that paragraph states in its entirety:
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`Postmates also blatantly violated caps imposed by the Delivery
`App. Legislation by continuing to charge Plaintiff fees in some
`cases as high as twenty-seven and a half percent (27.5%) of the
`total order. These practices did not change following the
`enactment of the Amended Delivery App. Legislation as Postmates
`set up a flat twenty percent (20%) “commission” fee which again
`violated the spirit and the letter of the Delivery App. Legislation.
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`The Complaint does not specify when the orders in question were placed, how plaintiff
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`determined that it was charged “fees” totaling 27.5% “of the total order,”13 of what the alleged
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`“fees” consisted, or how (if at all) the provisions of the emergency fee cap law applied to those
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`“fees.” This is not a well-pled claim. See, e.g., Mitsui, 2018 WL 3946446, at *3 (“A complaint
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`that offers only ‘labels and conclusions’ … will not do.”).
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`Nor does the Complaint explain how or why the alleged 20% “commission” fee violated
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`either Local Law No. 52 or Local Law No. 88. In fact, by arguing that the “commission” fee
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`violated the “spirit” of the emergency fee cap law, plaintiff tacitly admits that no statutory
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`13 Local Law No. 52 defined its fee caps as percentages “of the purchase price of each online
`order,” with “purchase price” specifically defined as “the total price of the items contained in an
`online order that are listed on the menu of the food service establishment where such order is
`placed”—which is not the same as “the total cost to the customer of an online order.” See New
`York City, N.Y., Code §§ 20-845–20-846.
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`8
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 13 of 14
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`provision actually supports its claim. Cf., e.g., Pincus v. Am. Traffic Sols., Inc., No. 18-CV-
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`80864, 2019 WL 9355827, at *6 (S.D. Fla. Jan. 14, 2019) (dismissing claim because allegations
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`that “[d]efendant’s surcharge may violate the spirit of the law” did not show that it “violate[d]
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`the letter of the law”), aff’d, 25 F.4th 1339 (11th Cir. 2022). And the Complaint makes no
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`attempt to explain what the “spirit” alleged to have been violated is, or how plaintiff can have a
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`cause of action to sue for it.
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`Finally, paragraph 65 of the Complaint asserts in similarly conclusory fashion that
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`“[d]efendants also wrongfully inflated their credit card processing fees to as high at [sic] four
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`and half percent (4.5%) in order to further extort fees from Plaintiff and the Class members.”
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`Plaintiff does not explain when this happened, when (or even if) Postmates allegedly did this on
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`a specific transaction, which provisions (if any) of the emergency fee cap law applied, or how the
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`fees in question were “wrongfully inflated.” See Yucyco, Ltd. v. Republic of Slovenia, 984 F.
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`Supp. 209, 219 (S.D.N.Y. 1997) (“Rule 8(a) of the Federal Rules of Civil Procedure requires that
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`a complaint against multiple defendants ‘indicate clearly the defendants against whom relief is
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`sought and the basis upon which the relief is sought against the particular defendants.’”). The
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`lack of even minimal factual content renders these allegations insufficient as a matter of law and
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`incapable of supporting a plausible claim for relief. See Mitsui, 2018 WL 3946446, at *3.
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`C.
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`Dismissal Should Be With Prejudice Because Amendment Would Be Futile.
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`Judgment on the pleadings should be granted and a complaint should be dismissed with
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`prejudice where, as here, any attempt at amendment would be futile. See, e.g., Gayle v. Pfizer
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`Inc., 452 F. Supp. 3d 78, 90 (S.D.N.Y. 2020) (granting Rule 12(c) motion and dismissing
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`complaint with prejudice because amendment would have been futile), aff’d, 847 F. App’x 79
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`(2d Cir. 2021). No possible amendment of the Complaint could allow plaintiff to state a claim
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`for orders placed in 2020 and 2021 based on now-repealed laws that provided no private cause of
`9
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`Case 1:21-cv-04995-JMF Document 94 Filed 06/06/22 Page 14 of 14
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`action. Cf. Compl., ¶ 63 (accusing Postmates of charging unlawful fees on orders subject to
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`Local Law Nos. 52 and 88); id., ¶¶ 78, 83 (accusing defendants of violating Local Law Nos. 52
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`and 88 from June 7, 2020, through June 7, 2021).
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`Dated: New York, New York
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`June 6, 2022
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`Respectfully submitted,
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`COVINGTON & BURLING LLP
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`By: s/ Teena-Ann V. Sankoorikal
`Teena-Ann V. Sankoorikal
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`Andrew A. Ruffino
`The New York Times Building
`620 Eighth Avenue
`New York, New York 10018-1405
`(212) 841-1000
`tsankoorikal@cov.com
`aruffino@cov.com
`
`Counsel for Defendant Postmates, LLC
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