Case 1:21-cv-07564-GHW Document 1 Filed 09/09/21 Page 1 of 59
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`-------------------------------------------------------------x
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`No.
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`21-cv-7564
`COMPLAINT
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`JURY TRIAL DEMANDED
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`::::::::::
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`DOORDASH, INC., GRUBHUB INC., and
`PORTIER, LLC,
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`Plaintiffs,
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`-against-
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`CITY OF NEW YORK,
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`
`Defendant.
`-------------------------------------------------------------x
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`Plaintiffs DOORDASH, INC., GRUBHUB INC., and PORTIER, LLC (collectively,
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`“Plaintiffs”) by and through their attorneys, Gibson, Dunn & Crutcher LLP, allege for their
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`complaint against Defendant CITY OF NEW YORK, as follows:
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`NATURE OF THE ACTION
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`1.
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`Plaintiffs operate the popular food ordering and delivery platforms DoorDash,
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`Caviar, Grubhub, Seamless, Postmates, and Uber Eats, which connect restaurants, consumers, and
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`independent delivery couriers. Throughout the COVID-19 pandemic, third-party platforms like
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`Plaintiffs have been instrumental in keeping restaurants afloat and food industry workers
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`employed, including by investing millions of dollars in COVID-relief efforts specifically for local
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`restaurants. See infra ¶¶ 39–42. And today, now that restaurants may operate at full capacity,
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`Plaintiffs remain committed to maintaining and restoring the vibrancy of New York City’s local
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`restaurants. Yet, the City of New York (the “City”) has taken the extraordinary measure of
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`imposing permanent price controls on a private and highly competitive industry—the facilitation
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`of food ordering and delivery through third-party platforms. Those permanent price controls will
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`harm not only Plaintiffs, but also the revitalization of the very local restaurants that the City claims
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`to serve.
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`1
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`Case 1:21-cv-07564-GHW Document 1 Filed 09/09/21 Page 2 of 59
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`2.
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`In May 2020, purportedly in response to the COVID-19 pandemic, the City enacted
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`unconstitutional—though ostensibly temporary—price controls that impaired existing agreements
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`and prevented restaurants and third-party platforms from freely negotiating the prices that
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`platforms may charge restaurants for their services within the City, primarily by capping the rate
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`that third-party platforms could charge restaurants at 15% of an online order for delivery services
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`and 5% for all other services, including marketing. That law originally was scheduled to expire
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`90 days after a declared public-health emergency that prohibits any on-premises dining due to the
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`COVID-19 pandemic. The City Council then moved the goalposts three times: first it amended
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`the sunset date to be 90 days after a declared emergency that prohibits restaurants from operating
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`at maximum indoor occupancy; then it extended the applicability of the price controls until the
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`arbitrary date of February 17, 2022 (the “Current Ordinance”);1 and most recently, it removed the
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`law’s sunset date altogether, thus making it permanent (the “Pending Amendment”).2
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`3.
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`This now-indefinite legislation bears no relationship to any public-health
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`emergency, and qualifies as nothing more than unconstitutional, harmful, and unnecessary
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`government overreach that should be struck down. The Ordinance is unconstitutional because,
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`among other things, it interferes with freely negotiated contracts between platforms and restaurants
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`by changing and dictating the economic terms on which a dynamic industry operates.
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`4.
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`The United States and New York Constitutions prohibit such government overreach
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`by safeguarding the terms of freely negotiated contracts, protecting property rights and the right to
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`pursue legitimate business enterprises, and providing for due process and equal protection under
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`1
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`As relevant here, NYC Int. No. 2359-A, Local Law 2021/094 (amending Section 20-846 of the New York
`City Administrative Code). Ex. A.
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`2
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`As relevant here, NYC Int. No. 2390. Ex. B. Mayor de Blasio has until September 25, 2021 to sign or veto
`Int. No. 2390 (or take no action). The Current Ordinance and the Pending Amendment (which also includes
`Int. No. 1897-A, discussed infra) are collectively referred to as the “Ordinance,” unless otherwise noted.
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`2
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`the law. Left unchecked, the Ordinance sets a dangerous precedent. Indeed, in refusing to sign a
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`price control measure into law, Mayor London Breed of San Francisco described permanent price
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`controls as “unnecessarily prescriptive in limiting the business models of the third-party
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`organizations, and oversteps what is necessary for the public good.”3 The same is true here.
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`5.
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`The Ordinance is also harmful. The cost of facilitating food delivery and
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`marketing will likely shift to consumers, thereby reducing order amounts or volume, lowering
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`restaurant revenues, decreasing earning opportunities for delivery couriers, and resulting in less
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`tax revenue in the City’s coffers. There is no evidence that the City Council solicited or reviewed
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`any data to understand the impact of this extended price-fixing regime, including the relationship
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`between third-party platform commissions and restaurant profitability, or the negative externalities
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`the Ordinance will impose on New York City restaurants, couriers, and consumers. Indeed, the
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`City appears to have ignored the negative externalities various advocacy organizations and trade
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`associations pointedly raised at multiple committee hearings (see infra ¶ 72), and those that many
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`couriers described in their submitted testimony (see infra ¶¶ 74, 91). Hundreds of delivery couriers
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`who use Plaintiffs’ platforms to earn livings—single parents, primary caretakers, and single-
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`income families—objected to the Ordinance as detrimental to their earning opportunities and
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`harmful to the restaurant industry. For example, as one courier explained:
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`I’m worried that this bill will have negative effects on people like myself who work
`on these platforms. A permanent price control would directly hurt delivery
`workers’ ability to make money. Restaurants pay app-based delivery companies
`for a variety of services through commissions, one of these being delivery services.
`Capping these commissions means less earnings for people like me. A commission
`cap could also mean delivery services get more expensive for the customers I
`deliver to, which ultimately means less orders for me.
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`
`
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`3
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`Letter from Mayor London Breed to Shamann Walton re File 210492 (July 9, 2021). Ex. C.
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`3
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`And, as another courier told the City Council, “I’m writing to tell you that I hope you will listen
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`to people like me who are scared that [the Ordinance] will actually reduce work opportunities for
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`people like me.” But the City did not listen. Instead, as part of its “legislate first, study second”
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`approach, the City postponed analyzing the impact of permanent price controls until 2023, at which
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`point a report will be authorized examining the Ordinance’s impact.
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`6.
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`The Ordinance is also unnecessary. Restaurants need not partner with third-party
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`platforms. Restaurants have an array of options for receiving orders and providing delivery,
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`including providing delivery services themselves, as well as third-party options well below the
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`price control established by the City (including delivery options where restaurants pay no fees or
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`little more than credit card processing fees, see infra ¶ 14). Likewise, restaurants have access to
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`many marketing options (within and apart from third-party platforms) to attract customers and
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`promote their businesses, including online advertising channels—such as building their own
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`websites and using sites like Google and Yelp, among many others—and offline advertising
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`mediums, such as printing flyers or using billboards.
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`7.
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`Furthermore, if the City’s goal is to improve the profitability of local restaurants,
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`then the City—which projected a budget surplus for Fiscal Year 2021 of $3.4 billion4—has other,
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`lawful means to aid restaurants, such as tax breaks or grants.5 But rather than exercise one of those
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`lawful options, the City chose instead to adopt an irrational law, driven by naked animosity towards
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`4
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`DeNapoli: Some Bright Spots for NYC Finances in FY21, but Long-Term Challenges Looming, OFFICE OF
`THE N.Y. STATE COMPTROLLER (Feb. 23, 2021), https://bit.ly/3mlcWCe (last visited Sept. 8, 2021).
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`5
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`Indeed, earlier this year, the National Restaurant Association issued an 11-point blueprint for state and local
`policymakers for restaurant recovery. This blueprint included policies like tax breaks and grants but did not
`state or even suggest that commission caps were necessary for restaurant recovery. See Letter from Nat’l
`Rest. Ass’n to Governor Andrew Cuomo (Feb. 18, 2021), https://bit.ly/3jXEIls (last visited Sept. 8, 2021).
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`4
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`third-party platforms and unlawful economic protectionism, in violation of the United States and
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`New York Constitutions and beyond the scope of New York City’s limited police power.
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`8.
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`That the Ordinance was driven by such is evident from lawmakers’ many public
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`statements. For example, prior to the announcement of any public state of emergency, one of the
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`Ordinance’s sponsors, Council Member Francisco Moya, introduced a 10% commission cap bill,
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`and later tweeted, “NYC local restaurants needed a 10% cap on delivery fees from third party
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`services like GrubHub long before #COVID19 hit us. They damn sure need it now.”6
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`9.
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`The Current Ordinance’s text itself clearly targets certain large, out-of-state third-
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`party platforms. Notably, the Ordinance does not regulate the prices of other businesses with
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`which restaurants regularly contract, such as wholesale food and supply companies, point-of-sale
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`vendors, online reservation platforms, credit card processing companies, or other marketing
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`companies. Indeed, the Ordinance irrationally limits third-party platforms like Plaintiffs to
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`charging 15% per order for delivery services and 5% per order for marketing services, which
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`services other companies may provide to the very same restaurants at an unregulated price.
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`10.
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`Yet the City has not offered any explanation for why it randomly selected a 15%
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`cap for delivery services nor why it randomly selected a 5% cap for all non-delivery services
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`performed on behalf of restaurants, including marketing services. Nothing in the Ordinance,
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`legislative history, or public record explains why the City chose these arbitrary figures, much less
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`how they are reasonably related (which they are not) to the public-health emergency that
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`purportedly prompted their imposition in the first place. Nor is there any justification for imposing
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`such a restrictive cap (or any cap at all) on marketing services offered by food-delivery companies,
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`in particular, when other marketing and advertising providers, such as Google, Facebook, or
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`6
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`Francisco Moya (@FranciscoMoyaNY), TWITTER (Apr. 14, 2020), https://bit.ly/3CBqsaA (last visited Sept.
`8, 2021).
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`5
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`Twitter, remain unrestricted. The City made no effort to study the economic impact and
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`sustainability of the cap on third-party platforms, including whether they can even provide the
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`same services and operate profitably at that level; instead, it expressly opted to not undertake any
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`analysis until 2023.
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`11.
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`The City’s unconstitutional and irrational motivations are made all the more
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`obvious by the slew of other laws, alongside the Ordinance, that the City recently passed that target
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`third-party platforms. These include, among others: (1) Int. No. 1897-A (also part of the Pending
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`Amendment), requiring third-party platforms to obtain licenses from the Department of Consumer
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`and Worker Protection (“DCWP”) every two years in order to conduct business in New York City,
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`and which licenses the DCWP could deny or revoke upon the occurrence of just two technical
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`violations of a whole host of various City regulations over the course of a period of two years; and
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`(2) Int. No. 2311, requiring that third-party platforms share their customers’ personally identifying
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`and sensitive data with a requesting restaurant. Each of these laws places undue burdens on third-
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`party platforms without consideration of the many impracticalities, including significant privacy
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`challenges, they pose.
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`12.
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`For at least the last century, courts in New York and elsewhere have consistently
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`held that federal and state constitutions prohibit local governments from engaging in economic
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`protectionism and fixing prices to benefit only a segment of the public—such as one industry or
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`group of businesses. See People v. Cohen, 272 N.Y. 319, 322 (1936) (holding that an ordinance
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`banning certain Broadway markets from selling food from their windows to protect the real estate
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`value of nearby properties bore “no relation to the welfare of the public but [was] designed for the
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`convenience and interest of a special class”); see also State Bd. of Dry Cleaners v. Thrift-D-Lux
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`Cleaners, Inc., 40 Cal. 2d 436, 447 (1953) (holding that a minimum dry cleaning price-setting
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`6
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`ordinance was unconstitutional because it “protect[s] the industry” which is “only a small segment
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`of the general public”); In re Kazas, 22 Cal. App. 2d 161, 171 (1937) (holding that a municipality
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`could not legislate minimum barbershop prices to protect barbers). In the years since these cases
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`unequivocally held that price-fixing laws seeking to protect favored industries are unconstitutional,
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`no legislature has enacted price-fixing legislation comparable to the Ordinance.
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`13.
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`The only types of price controls that typically survive constitutional scrutiny are
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`those applicable to public utilities of civic necessities (e.g., electricity, gas, and water). Unlike
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`these public utilities—which are often granted geographic monopolies in exchange for regulated
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`prices—Plaintiffs compete vigorously with each other and with other platforms for delivery-
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`related services and marketing services, as well as with many advertising platforms not subject to
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`an arbitrary 5% price cap, such as Google, Facebook, Twitter, Yelp, Yellow Pages, radio,
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`billboards, and more. Merchants (and consumers) can choose which platforms to use, or can
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`arrange for marketing, order taking, and delivery through various other channels. This choice and
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`the competition it drives is the hallmark of our economic system. There was no reason to regulate
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`third-party platforms like public utilities even during the state of emergency, let alone now in the
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`absence of such a declared emergency and accompanying restrictions.
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`14.
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`In light of this significant competition, Plaintiffs have always strived for fair
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`contracts that properly value the services that their platforms offer to restaurants. Pursuant to those
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`contracts, which are generally terminable at will, Plaintiffs commonly charge restaurants a
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`commission that is an agreed-upon percentage of a consumer’s order—such that Plaintiffs do not
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`earn these commissions unless the restaurant also earns revenues. Many restaurants find this to be
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`an advantage compared to offering their own delivery services, the costs of which restaurants will
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`have to bear regardless of whether their order volumes justify the expenses. Plaintiffs spend
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`7
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`hundreds of millions of dollars annually in marketing their platforms, which enables restaurants
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`on their platforms to reach new and existing consumers for incremental orders, because when
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`restaurants survive and succeed, so do Plaintiffs. As a result, restaurants have had meaningful
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`choice in whether and how they use delivery, order facilitation, and marketing services from
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`Plaintiffs to grow their businesses. For example, restaurants can:
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`a. Choose whether to offer delivery at all;
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`b. Choose to directly receive and process orders and/or facilitate delivery
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`themselves without using any third-party companies, such as by having
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`customers call the restaurants directly to place an order to be filled by the
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`restaurants’ own delivery staff, and/or operating their own website;
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`c. Choose which, if any, third-party platform to use;
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`d. Choose a third-party delivery option that charges nothing more than credit card
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`fees;
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`e. Choose a third-party delivery option that charges a flat fee per delivery instead
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`of a commission; or
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`f. Choose from a range of commission-based third-party delivery and marketing
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`packages at different price points, depending on the products and services that
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`are best suited to their needs.
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`15.
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`And due to the intense competition in this market, third-party delivery services are
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`likely to continue to provide new services and package options in the future. But this innovation
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`will be hampered by the City’s latest overreach. New York City’s permanent price control puts
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`restaurants’ choices in jeopardy because consumers will likely have to bear increased costs, which
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`will drive down orders and limit what services Plaintiffs will be able to offer going forward.
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`8
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`Case 1:21-cv-07564-GHW Document 1 Filed 09/09/21 Page 9 of 59
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`Accordingly, through this Complaint, Plaintiffs seek declaratory relief, injunctive relief, and
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`damages on the grounds that the Ordinance violates:
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`a. The Contract Clause of the United States Constitution;
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`b. The Takings Clauses of the Fifth Amendment to the United States Constitution
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`(incorporated by the Fourteenth Amendment) and Article I, Section 7 of the
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`New York Constitution;
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`c. Article IX, Section 2(c) of the New York Constitution and related statutes
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`(Police Power);
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`d. The Fourteenth Amendment to the United States Constitution and Article I,
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`Section 6 of the New York Constitution (Due Process);
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`e. The Fourteenth Amendment to the United States Constitution and Article I,
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`Section 11 of the New York Constitution (Equal Protection); and
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`f. The Dormant Commerce Clause of the United States Constitution.
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`16.
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`In pursuing this action, Plaintiffs seek to vindicate the deprivation of their federal
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`constitutional rights under color of state statute, ordinance, regulation, custom, and/or usage. Thus,
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`Plaintiffs seek damages and other relief under 42 U.S.C. § 1983. Plaintiffs are also entitled to
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`attorneys’ fees and expert fees if they prevail on any of their Section 1983 claims. See 42 U.S.C.
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`§ 1988.
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`PARTIES
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`17.
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`Plaintiff DoorDash, Inc. (“DoorDash”) is a Delaware corporation founded in 2013
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`and headquartered in San Francisco, California. Since day one, DoorDash’s mission has been to
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`empower local businesses by providing access to e-commerce. Its platforms (including the
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`DoorDash and Caviar platforms) connect consumers, a broad array of restaurants, and in some
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`cases, delivery couriers, each of whom is affected by the Ordinance. DoorDash offers several
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`9
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`options to restaurants, including Marketplace (DoorDash’s web- and app-based platform that
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`facilitates food pickup and delivery), Storefront (an application that enables restaurants to create a
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`branded online store to facilitate pickup and delivery from their own website, in exchange for
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`payment of credit card processing fees of 2.9%, plus $0.30 per order), and Drive (a platform that
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`facilitates delivery of orders originating outside the Marketplace in exchange for a flat fee). As
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`such, DoorDash has a beneficial interest in the relief sought herein.
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`18.
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`Plaintiff Grubhub Inc. (“Grubhub”) is a Delaware corporation founded in 2004 and
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`headquartered in Chicago, Illinois. Grubhub’s long-standing priority has been to serve restaurants.
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`Grubhub’s online food ordering and delivery marketplace (operating under the Grubhub and
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`Seamless brands) connects consumers with a broad array of local takeout and delivery restaurants,
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`and in a minority of cases, independent-contractor couriers. Grubhub elevates food ordering
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`through innovative restaurant technology, easy-to-use platforms, and an improved delivery
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`experience, which includes the Grubhub Guarantee7 to facilitate diner satisfaction and protect
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`restaurants’ reputations. Grubhub drives orders to restaurants through its Marketplace, while also
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`offering restaurants tools to grow their own digital businesses. These tools include Grubhub
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`Direct, which gives restaurants customized ordering websites along with loyalty and customer data
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`tools, enabling them to market directly to their consumers without paying any marketing
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`commissions. Grubhub has a beneficial interest in the relief sought herein.
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`19.
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`Plaintiff Portier, LLC (“Uber Eats”) is a Delaware company founded in 2014 and
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`headquartered in San Francisco, California. Uber Eats is a wholly owned subsidiary of Uber
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`Technologies, Inc. It contracts with merchants in New York City to grant them access to the Uber
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`7
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`The Grubhub Guarantee ensures that consumers receive the best price for their order. More specifically,
`consumers who find a better price through one of Grubhub’s competitors are eligible to receive the difference
`in price plus $5 off their next order. What Is the Grubhub Guarantee?, GRUBHUB, https://bit.ly/3AIxybS
`(last visited Sept. 8, 2021).
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`Eats online platform. Postmates, which was acquired by Uber Technologies, Inc., assigned its
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`rights in merchant agreements to Uber Eats. Uber Eats’s online marketplace platforms (operating
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`under the Uber Eats and Postmates brands) connect restaurants and other merchants to consumers
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`and a network of independent delivery people in their communities. Consumers can access the
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`Uber Eats platforms via websites or mobile applications on a smartphone. Restaurants can access
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`the Uber Eats platforms through pricing packages that vary based on their individual needs, with
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`some restaurants opting for services priced below the Ordinance’s commission caps, and some for
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`services priced above. Uber Eats facilitates these services between merchants and consumers that
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`are affected by the Ordinance. As such, Uber Eats has a beneficial interest in the relief sought
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`herein.
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`20.
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`Defendant City of New York (the “City” or “New York City”) is a municipal
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`corporation organized and existing under and by virtue of the laws of the State of New York.
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`JURISDICTION AND VENUE
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`21.
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`This Court has jurisdiction pursuant to 28 U.S.C. § 1331 and 42 U.S.C. § 1983 over
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`Plaintiffs’ federal constitutional claims, and has supplemental jurisdiction pursuant to 28 U.S.C.
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`§ 1367 over the remaining claims. This Court also has jurisdiction over the claims and relief
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`sought pursuant to 28 U.S.C. §§ 1332, 1343(a), 2201, and 2202.
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`22.
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`Plaintiffs bring this action as both a facial challenge and “as-applied” challenges to
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`the Ordinance, and are excused from exhausting any administrative remedy before the City.
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`Plaintiffs allege that the Ordinance is invalid: (1) on its face, (2) as applied to Plaintiffs, and (3) as
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`applied to certain of Plaintiffs’ contracts with New York City restaurants.
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`23.
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`Venue is proper in this Court because the Ordinance was enacted by the New York
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`City Council, and the violations of Plaintiffs’ rights occurred in this judicial district.
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`FACTUAL ALLEGATIONS
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`A.
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`The Role of Commissions Charged by Third-Party Platforms
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`24.
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`Plaintiffs operate third-party platforms in New York City and elsewhere that
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`connect restaurants with couriers and consumers who wish to purchase food and have it delivered
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`to them or be ready for pickup. Consumers can access the platforms via Plaintiffs’ websites or
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`applications on a smartphone.
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`25.
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`Other third-party platforms operating in New York City and elsewhere in the
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`United States include Delivery.com, Relay, and Slice, among others. Because restaurants do not
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`need to use Plaintiffs’ platforms at all, and because Plaintiffs compete with many other companies,
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`they have powerful market-based incentives to offer the best overall value proposition to
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`restaurants.
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`26.
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`The services offered by third-party platforms are good for restaurants. The
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`emergence of third-party platforms has resulted in the expansion of restaurants’ consumer bases.
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`Consumers who otherwise would not have patronized a restaurant in person or would not have
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`discovered a restaurant but for Plaintiffs’ platforms use the platforms to purchase food from that
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`restaurant to be delivered or picked up. Furthermore, restaurants that used Plaintiffs’ platforms
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`were more likely to stay in business throughout the pandemic. For example, the odds of staying
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`in business during the pandemic were eight times better for restaurants on DoorDash compared to
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`all U.S. restaurants. The pandemic also did not affect the basic economics of restaurants’ use of
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`Plaintiffs’ delivery platforms. Before the pandemic, restaurants grew their revenue through
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`Plaintiffs’ platforms; if they had not, they would have stopped using the platforms—as they are
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`able to do at any time without any cost or penalty.
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`27.
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`Plaintiffs generate revenue to cover their costs through commissions charged to
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`restaurants. These commissions represent a substantial part of Plaintiffs’ revenue streams.
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`12
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`Case 1:21-cv-07564-GHW Document 1 Filed 09/09/21 Page 13 of 59
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`28.
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`The operational costs that Plaintiffs incur to drive demand to and facilitate delivery
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`on behalf of restaurants include (but are not limited to):
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`a. Marketing local restaurants to consumers, including promotions and advertising
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`to drive demand;
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`b. Platform development, maintenance, and operation;
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`c. Procurement and development of
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`technology,
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`including for payment
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`processing, order management, and dispatching;
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`d. Procurement and development of restaurant-dedicated products to manage
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`promotions, order volume, and menus;
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`e. Onboarding delivery couriers, including background checks for every courier
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`on Plaintiffs’ platforms;
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`f. Compensating delivery couriers for their work;
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`g. Safety of delivery couriers, including auto insurance costs and personal
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`protective equipment; and
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`h. Dedicated customer service specialists to provide support to restaurants,
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`couriers, and consumers for orders placed through Plaintiffs’ platforms.
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`29.
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`A typical contract between Plaintiffs and a restaurant includes a commission where
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`the restaurant agrees to pay Plaintiff a fixed percentage of the price of the consumer’s order in
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`exchange for certain services. Plaintiffs have used this type of percentage commission structure
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`with thousands of New York City restaurants for many years.
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`30.
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`Restaurants are generally free to leave Plaintiffs’ platforms at any time for any
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`reason. Even though DoorDash’s and Grubhub’s contracts with restaurants are terminable at will,
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`and most of Uber Eats’s contracts with restaurants are likewise terminable at will, restaurants
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`13
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`Case 1:21-cv-07564-GHW Document 1 Filed 09/09/21 Page 14 of 59
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`choose to maintain these contracts—including the percentage commission structures contained
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`therein—typically for several years because restaurants recognize the value that Plaintiffs provide.
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`Almost all restaurants voluntarily enter into contracts with Plaintiffs with commissions greater
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`than what the Ordinance allows so as to gain access to a broader suite of services, including, for
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`example, increased delivery radius or access to customer subscription services.
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`31.
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`Restaurant commissions are not one-size-fits-all. If restaurants choose to partner
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`with Plaintiffs, they have significant flexibility in how they do so, including which of Plaintiffs’
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`services they use. Restaurants can partner with DoorDash to facilitate delivery via Marketplace,
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`Storefront, and Drive. A restaurant that selects Marketplace as the means to facilitate delivery can
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`opt in to one of three Partnership Plans at different price points depending on the products and
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`services that are best suited to its needs, including a Basic Partnership Plan where DoorDash
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`facilitates the delivery of online orders for a commission rate of 15%. However, restaurants can
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`also choose enhanced services by opting into the Plus or Premium Packages in exchange for higher
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`commission rates. The vast majority of restaurants that have opted into a Partnership Plan in New
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`York City have chosen a plan that includes a commission greater than 15%. Alternatively,
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`restaurants can select Storefront, a commission-free option that enables restaurants to create
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`branded online stores to facilitate pickup and delivery from their own websites, in exchange for
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`payment of credit card processing fees of 2.9%, plus $0.30 per order.
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`32.
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`Restaurants that use products like Grubhub’s Direct Order Toolkit or Grubhub
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`Direct do not pay any marketing commissions. Restaurants that opt to use the Grubhub
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`Marketplace to generate orders from the Grubhub network of more than 30 million consumers
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`select a negotiable marketing package. For example, restaurants can choose marketing rates as
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`low as 5% and add other marketing and/or delivery services that best suit their businesses for an
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`Case 1:21-cv-07564-GHW Document 1 Filed 09/09/21 Page 15 of 59
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`additional commission. For contracts between Grubhub and restaurants that include both delivery
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`facilitation and marketing, the total commission rate is generally greater than 15% (where the
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`delivery commission is largely a pass-through charge to cover Grubhub’s delivery costs).
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`33.
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`For the Uber Eats platforms, Uber Eats has used contracts with a fixed-percentage
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`commission structure with many restaurants for many years. Pricing packages agreed to by Uber
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`Eats’s restaurant partners vary based on their individual businesses’ needs—from well below to
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`above the current caps set by the City—and can include marketing and advertising services,
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`payment and order processing, customer support services, data and insights to inform their
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`operations, as well as the fulfillment of delivery services. Restaurants that choose to use their own
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`couriers, but rely on Uber Eats’s apps to reach customers, as well as for order and payment
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`processing, benefit from reduced pricing on a per-order basis. In addition, in 2020, Uber Eats
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`introduced the option for restaurants to partner with Uber to add online ordering directly to their
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`own websites to facilitate pickup and delivery orders—this option is currently available to
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`restaurants for only the cost of payment processing. Uber Eats’s offerings also include commission
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`percentages that exceed the amounts permitted by the Ordinance. Because of the Ordinance, Uber
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`Eats cannot charge what the competitive market would allow. But for the Ordinance, Uber Eats
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`likewise would in the future enter into agreements with restaurants for various packages of service
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`levels, at per-order percentages in excess of those allowed by the Ordinance. As such, Uber Eats
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`is inhibited from innovating new combinations of services and benefits for restaurants that have
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`per-order value over and above the limits set by the Ordinance.
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`34.
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`New York City lawmakers who support commission caps have not viewed such
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`measures as limited to COVID-19 emergency relief. Council Member Moya, who first introduced
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`a permanent 10% commission cap before any COVID-19 state of emergency was declared, stated
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`that permanent caps are necessary to protect “small businesses.”8 And Council Member Gjonaj
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`claimed that his “mandate” is to step in to “level [the] playi