Grubhub Inc., Postmates Inc. and Uber Technologies Inc. can’t move to arbitration a lawsuit alleging their food delivery fees raised restaurant prices, a judge ruled.
(Bloomberg) — Grubhub Inc., Postmates Inc. and Uber Technologies Inc. can’t move to arbitration a lawsuit alleging their food delivery fees raised restaurant prices, a judge ruled.
US District Judge Lewis Kaplan on Thursday denied the companies’ request to move the price-fixing suit to a third-party arbitrator. He found that the defendants’ arbitration clauses don’t apply to the claims in the lawsuit, insofar as the plaintiffs didn’t make their allegations “in their capacities as a current or former user” of the companies’ platforms.
The plaintiffs are New York state residents and consumers who bought dine-in and direct meals from restaurants with which the delivery app companies had contracted. In their suit, filed in April 2020 in federal court in Manhattan, they claimed the companies unlawfully fixed prices for meals — even for New York diners not using the apps — by entering into restrictive agreements with restaurants, forbidding them to charge lower prices than those listed on the delivery apps.
The delivery companies and their lawyers didn’t immediately respond to a request for comment on the court’s opinion.
Read More: GrubHub, Uber Fail to Get Price-Fixing Lawsuit Dismissed
The suit was filed at the height of the Covid-19 pandemic, when the restaurant business was severely limited and relied heavily on delivery apps.
The companies had already been dealt a setback in the litigation. Last March the court denied their request to dismiss the case altogether. They had claimed it wasn’t clear that ordering from a restaurant in person or on the restaurant’s website substitutes for ordering the meal on their apps.
Kaplan in that opinion said the suit plausibly alleged that “restaurants — being foreclosed from lowering prices in the direct markets to attract sales — have had no choice but to raise prices in both the platform and direct markets.”
The case is Davitashvili v. Grubhub Inc., 20-cv-3000, US District Court, Southern District of New York (Manhattan).
–With assistance from Chris Dolmetsch.
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