Grubhub and DoorDash have filed a lawsuit against San Francisco after capping delivery fees to 15% last month.
On Friday, the two food suppliers filed a lawsuit in the U.S. District Court for the Northern District of California arguing that the maximum fees are in violation of both the U.S. and California constitution. Court documents show that DoorDash and Grubhub argued that the cap could potentially lead to higher prices for consumers and affect delivery couriers, among other things.
“The City of San Francisco has passed hasty, adverse and unconstitutional price controls that leave us no choice but to resolve this matter in court,” a DoorDash spokesman said in a statement shared with SFGATE. “Constant price controls are not only against the US and California constitutions, but will likely harm the restaurants the city claims to support. The introduction of permanent price controls is an unprecedented and dangerous exaggeration by the government and will limit the ways small businesses rely on to compete in an increasingly competitive marketplace. “
The delivery companies also said that the 15% fee cap could affect business as it would entail renegotiating or terminating existing contracts with local restaurants. Part of their reasoning was based on marketing and other services that DoorDash and Grubhub said were unable to cover the costs.
Supervisor Aaron Peskin, who co-sponsored the law in June, condemned both grocery companies in a tweet Friday following the complaint. He wrote that he was not surprised at the lawsuit.
“Hardly surprising of giant corporations that have just spent over $ 200 million to deprive their own workers of basic services,” wrote Peskin on Twitter. “I stand by small businesses and my legislation to stop the rampant exploitation of the San Francisco restaurant industry.”
No wonder with giant corporations that have just spent over $ 200 million to stamp out basic services for their own workers.
I stand by small businesses and my legislation to stop the rampant exploitation of the San Francisco restaurant industry. https://t.co/1j3rmGcelK
– Aaron Peskin (@AaronPeskin) July 17, 2021
Last April, Mayor London Breed announced a temporary fee cap to prevent grocery delivery apps from charging restaurants more than 15% to help local businesses stay afloat during the coronavirus pandemic. At the time, it was said that the provisional order should remain in place until the remainder of the local emergency or until restaurants can reopen for dine-in service.
Court documents argue that with the advent of vaccinations, the local emergency has been “mitigated”. San Francisco was summoned to court on Monday.