(Bloomberg) — GrubHub Inc., Postmates Inc. and Uber Technologies Inc. must face a lawsuit alleging their food delivery fees result in higher restaurant prices even for New York diners not using those apps.
A federal judge on Wednesday denied the companies’ motion to dismiss the suit, which was filed in April 2020 just after the Covid-19 pandemic forced eateries throughout the U.S. to close their doors and rely on delivery services for business.
The suit claims the companies’ “exorbitant fees” prevent restaurants operating on tight margins from offering discounts to customers who order from them directly. The delivery companies argued that the plaintiffs hadn’t shown that ordering directly from a restaurant, even online, is a substitute for ordering the same meal via their apps.
But U.S. District Judge Lewis A. Kaplan in Manhattan disagreed, saying the suit “alleges plausibly that restaurants cannot feasibly avoid doing business” and “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.”
GrubHub is “disappointed in the decision and we will continue to defend our business and the services we offer restaurants and diners,” a company spokesperson said in a statement. Uber, which purchased Postmates in 2020, didn’t respond to a request for comment.
The case is Davitashvili v GrubHub Inc., 20-cv-3000, U.S. District Court, Southern District of New York (Manhattan).
(Updates with GrubHub comment.)
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