Food Delivery Services Sue New York City Over Unconstitutional Cap Fees

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A food delivery courier puts an insulated food bag in his UberEats, operated by Uber Technologies Inc., branded box on his motor scooter in London, U.K., on Thursday, Dec. 22, 2016. The food delivery business model has proven attractive to venture capitalists, who last year poured $5.5 billion into food-delivery companies globally, according to research firm CB Insights. Photographer: Simon Dawson/Bloomberg

New York City has come undone under Democratic leadership and in Bill de Blasio’s final year as mayor. Between police cuts and scrapping advanced classes for gifted children, residents are less safe and more inconvenienced. COVID-19 has been one of the major excuses for the failures of the administration and it has been the thing to blame for poor management skills and bad decisions.

And now, food delivery apps are suing New York City and arguing that the pandemic-era fee caps on charging restaurants is government overreach that only harms businesses. DoorDash, Grubhub, and Uber Eats are seeking monetary damages from the orders that were made permanent in August of this year. The capping rule states that the apps cannot charge more than 23% per order, which breaks it down to 15% for delivery, 5% for listing the restaurant on the platform, and 3% for fees associated with the credit card processing.

A Grubhub spokesperson shared that their service has worked hard to support restaurants in New York City and across the country, adding that a fee cap would only lead to a reduction of orders for both restaurants and couriers.

San Francisco enacted a similar cap on the food delivery apps but decided not to sign it into law after Grubhub and Doordash sued over it. Mayor London Breed pulled back on the law, adding that it only limits the business models of third-party organizations and oversteps what is “necessary for the public good.”

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In the filing against New York City, the caps were deemed “unconstitutional.” The filing explained how the caps were set to expire 90 days after the declared public health emergency prohibiting on-premise dining due to the COVID-19 pandemic and were only intended as a “lifeline” for restaurants. The City Council then moved that goalpost three times after that.

“This now-indefinite legislation bears no relationship to any public-health emergency, and qualifies as nothing more than unconstitutional, harmful, and unnecessary government overreach that should be struck down,” lawyers for the third-party delivery apps argued.

The lawsuit describes the City Council’s fee caps as “arbitrary” and “not supported by economic impact studies.” The lawsuit explains how Grubhub, Door,Dash, Uber Eats, and other third-party delivery apps have spent millions of dollars to cultivate the customer base for restaurants and that the City Council should not be able to regulate the fees.

Grubhub executive Katie Norris notes that while they were willing to work with the City Council, they were left with no choice but to take legal action. These harsh regulations are harming the already-affected nonessential businesses, with former Gov. Andrew Cuomo warning that residents are fleeing the city to work elsewhere. The city has continued to struggle economically and has had a devastating impact on the commercial market.

A Newsmark report indicates the New York office spaces are experiencing record high vacancy rates and that they reached 21.1% in June. Bigger companies, such as Goldman Sachs, have even considered new headquarters outside of New York City. They are now operating at 78% pre-recession capacity. They are far below the national average of 92% and aren’t anywhere near getting life back to normal for New Yorkers.

New York Democrats keep forcing to charge customers more while reduce earnings for drivers. COVID-19 has been the main excuse for administrations to do whatever they want and businesses have had enough.