Restaurant Sues DoorDash For Falsely Advertising Partnership, Redirecting Users

Restaurant Lona’s Lil Eats, LLC filed a class-action complaint on Thursday in the Northern District of California against DoorDash for deceptively representing that the parties had a partnership when they did not. The complaint alleged that the restaurant was visible on DoorDash, but always listed as closed or otherwise unavailable; users would purportedly then be redirected to restaurants that DoorDash does have a partnership with. The class includes all restaurants and related entities or individuals in the United States who do not do business with DoorDash, but still have a page on DoorDash’s website or mobile app.

DoorDash delivers food from restaurants that it has partnered with via its website and mobile app. After a customer places an order from a restaurant through DoorDash, a DoorDash delivery worker (a Dasher) will pick up the order and deliver it to the customer. According to the plaintiff, DoorDash collects the payment and DoorDash retains some of the funds for commission and service fees. Lona’s stated that “DoorDash has developed significant market power,” especially in light of the COVID-19 pandemic, to offer restaurant meals when restaurants were unable to offer dine-in services. However, Lona’s proffered that DoorDash’s market power has put restaurants in a tough spot: “they can become Partner Restaurants and pay exorbitant fees and commissions to Defendant, or they decline to do so and risk losing out on sales.” Lona’s added that “(t)his already difficult choice is made far more difficult, however, because DoorDash publishes false and misleading information about restaurants that are not Partner Restaurants.”

Specifically, Lona’s Lil Eats claimed that DoorDash “has engaged in a pattern of behavior whereby customers are deceptively steered away from restaurants with whom DoorDash does not have a relationship by DoorDash’s practice of affirmatively representing to consumers that those restaurants are closed, cannot deliver to them, or are not accepting orders at the time.” Thus, according to the plaintiff, DoorDash has engaged in “unfair, deceptive, and anticompetitive practice(s).”

Lona’s claimed that it is not a Partner Restaurant of DoorDash. However, “if a consumer were to search for ‘Lona’s Lil Eats delivery’ – as a result of DoorDash’s market power and internet marketing strategies – then one of the first results that comes up is a link for Plaintiff’s restaurant on DoorDash’s website…Clicking through the link will bring a consumer to a page with DoorDash branding and the complete menu, as if it were possible to place an order through the site.” Furthermore, DoorDash’s site allows a consumer to place an order with the ability to customize an order, “adding credibility to the idea that Lona’s has partnered with DoorDash and that placing an order is possible in the abstract.” According to the complaint, “(t)he order, however, cannot be completed, because no matter what the user’s proximity to Lona’s may be, the site will say that it is ‘unavailable’ on account of being ‘out of the delivery area’ and ‘too far.’” The plaintiff used a sample address in the complaint that was 200 feet away, but the DoorDash site claimed that it was unavailable because it was too far away. Lona’s averred that the issue is that “Lona’s has not agreed to pay DoorDash’s exorbitant fees,” not that a location is too far away.

Additionally, Lona’s alleged that DoorDash has also represented that the restaurant is “closed,” and that the defendant “takes advantage of the existing market demand for Lona’s and other restaurants to drive traffic to its site, at which time it will redirect customers to other Partner Restaurants by suggesting that Lona’s is not an option. However, Lona’s claimed that it is open for curb-side service and, therefore, is an option. Lona’s alleged that DoorDash “is publishing false and deceptive information about the ability to get food from Lona’s as a means of punishing it for not partnering with it, and/or pressuring it to partner with it, and to redirect would-be Lona’s business to its Partner Restaurants.” Moreover, Lona’s alleged that this conduct has become particularly dangerous and harmful during the COVID-19 pandemic, when restaurants “are struggling to stay open and have been forced to radically change their business model to survive, DoorDash is engaged in predatory, deceptive, and anticompetitive behavior that takes unfair advantage of their market position.”

In sum, the counts against DoorDash are false advertising, violation of California False Advertising Law, and violation of California Unfair Competition Law.

In a somewhat similar suit filed in February, DoorDash was sued for using the menus and logos of restaurants that it did not have a business relationship with. Moreover, in July, consumers sued various platforms for supracompetitive pricing.

Lona’s Lil Eats has sought an order certifying the putative class and to appoint the plaintiff and its counsel to represent the class; declaratory relief; equitable relief, an award for restitution, disgorgement, and damages; an award for penalties; and other relief.

Lona’s Lil Eats is represented by the Law Office of Francis J. Flynn, Jr.; Carey, Danis & Lowe; and Chimicles Schwartz Kriner & Donaldson-Smith LLP.