See what's being clicked on FoxBusiness.com
Grubhub is paying $3.5 million to settle a lawsuit accusing the Massachusetts attorney general of illegally overcharging restaurants using its online food delivery platform during the COVID-19 pandemic. Agreed to pay more than $.
Massachusetts Attorney General Andrea Joy Campbell said Friday's settlement will end a lawsuit filed in 2021 alleging the company charged restaurants more than the caps imposed by the state during the public health emergency. He said it was resolved.
Figures show the COVID-19 pandemic has led to a significant increase in meals being ordered online through food delivery apps and websites. (Beata Saursel/NurPhoto via Getty Images/Getty Images)
Grubhub, a subsidiary of Just Eat Takeaway.com, will pay more than $3.5 million to affected restaurants and more than $125,000 to the state, Campbell's office said.
A Grubhub spokesperson said in a statement that while the company believes it is in compliance with price caps, “we are prepared to move forward from this situation and continue to provide the best possible service to Massachusetts restaurants.” Ta.
Ukraine adds sandwich franchise Subway to list of 'international war sponsors'
Like other states, then-Governor Charlie Baker issued a series of emergency orders aimed at curbing the spread of the coronavirus early in the pandemic in March 2020, banning large gatherings. , requiring non-essential businesses to close.
Restaurants and bars were prohibited from serving dine-in food, but were allowed to open and offer take-out services. Baker later relaxed those orders, allowing outdoor dining and limited indoor dining.
Grubhub logo on a smartphone in Brooklyn, New York City, USA, Friday, July 8, 2022. (Gabby Jones/Bloomberg via Getty Images/Getty Images)
As restaurants struggle financially, the state enacted a law in January 2021 that limits the fees Grubhub and other third-party ordering platforms can charge restaurants to 15% of an order's purchase price.
Similar price caps have been enacted in Washington state and several major cities, including: new yorkSan Francisco, Cincinnati, Seattle, some but not all of them became permanent.
Atlanta restaurant under fire for charging health insurance premiums to bills: “Why are you killing small businesses?''
Massachusetts' fee cap only applied from January 14, 2021, when Baker State lifted its state of emergency, to June 15, 2021.
The lawsuit, brought by Campbell's predecessor as attorney general and current governor, Maura Healey, alleges that Grubhub violated fee caps by regularly charging fees of more than 18%.
A deliveryman rides a bicycle in New York City on July 7, 2023. ((Photo Credit: Leonardo Munoz/VIEWpress) / Getty Images)
Grubhub's lawyers, led by Joshua Lipshutz of Gibson, Dunn & Crutcher, say Grubhub is complying with the law by lowering its fees to 15%, but that it will not charge a separate approximately 3% processing fee for credit card transactions. argued that it was not covered by the law.
However, Suffolk Superior Court Judge Robert Gordon ruled in March that the law broadly covers all fees. He said a ruling in Grubhub's favor would require “concluding (incredibly) that order processing fees are somehow not fees at all.”
CLICK HERE TO GET FOX BUSINESS ON THE GO
As a result, the judge found Grubhub liable. The state and the company, which had been seeking refunds to the restaurant, then entered into settlement negotiations with the possibility of a trial at issue.
The case is State of Massachusetts v. Grubhub Holdings, et al., Suffolk Superior Court, No. 2184CV01719.
