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Lawsuit targets Grubhub's 'deceptive trade practices'

GrubHub Russian Robots
Posted at 2:16 PM, Apr 05, 2022

Companies like Grubhub are driving more business to restaurants during the pandemic.

The companies are also taking a bite out of restaurant bottom lines.

Now, several lawsuits are in motion that could lead to improved transparency for food delivery apps.

In the most recent case, filed in March, D.C. Attorney General Karl Racine accused Grubhub of luring "customers into the ordering process with an artificially low" delivery fee before charging several more fees at checkout.

The lawsuit also claimed Grubhub listed restaurants without permission.

"The menu items, prices, and hours for Non-Partner restaurants listed on Grubhub may be out-of-date or incorrect," wrote the plaintiffs in the lawsuit. "Also, because Non-Partner Restaurants were not necessarily working cooperatively with Grubhub ... there is a much greater likelihood that orders would take longer to fill, would be filled incorrectly, would be delivered cold, or would eventually be cancelled altogether."

"Attorney General Racine has been pretty active in pursuing lawsuits when he feels that consumers are being duped," said Chip Magid, the head of the D.C. office of Dorsey & Whitney. "As alleged, it fits the pattern of the kind of case that he would pursue, where companies are allegedly deceiving the public."

In its response, a Grubhub spokesperson said the company is "disappointed" about the lawsuit.

"We work hard to support D.C. restaurants and diners," the spokesperson said, "and we continually review and enhance our operations to better serve them."

The company said it's already corrected many of the issues listed in the complaint.

Grubhub stopped listing non-partner restaurants in D.C., and claimed to list its fees more clearly.

Magid said the D.C. attorney general may be trying to set a blueprint for other states to follow.

"If the attorney general's office prevails," Magid said, "then I think it's going to set in motion a lot of copycat cases against others in the intermediary industry, like Grubhub, as well as those in the travel and leisure industry, and others who could be accused of doing something similar."

These lawsuits are working their way through the court system slowly.

In the meantime, Grubhub and its rivals are still listing non-partner restaurants in cities where the practice has not been banned.