Postmates Asks NYC Court to Toss Restaurant’s COVID Fee Ordinance Case

Defendant Postmates moved for dismissal of a class action brought by a Manhattan bakery on Monday. The filing said that the claims against Postmates and other third party food delivery services are void because the city-wide laws have been repealed and moreover, provided no private right of action. 

By way of background, New York City enacted two local laws during the COVID-19 pandemic capping the fees nationwide delivery platforms could charge restaurants in view of their struggle to survive without regular patronage. The plaintiff sued Grubhub Inc., Doordash Inc., Uber Eats, and their corporate relatives, including Uber-owned Postmates, for their alleged failure to comply with the laws.

The delivery platforms responded with motions to compel individual arbitration. The New York City federal court granted the requests except as to Postmates, who filed the instant motion for judgment as a matter of law.

This week, Postmates explained that in September 2021, New York City enacted a law overhauling the emergency fee cap regime. It reportedly took effect in January 2022, six months after plaintiff’s complaint was filed, and set up a licensing mechanism for third-party food delivery services, imposed permanent caps in connection with that licensing mechanism, and repealed the emergency fee cap implemented by the former laws.

Importantly, Postmates said that the new law expressly authorized a private cause of action whereas the previous laws did not. The defendant alleged that the prior laws, under which the plaintiff filed suit, permitted only the “Corporation Counsel” to rectify violations of the fee cap ordinance, not restaurants themselves.

The motion also asserted that the complaint is “bereft of well-pleaded factual allegations that could support any recovery.” For example, Postmates pointed to an allegation claiming that it charged fees totaling 27.5% of a total food order, exceeding the 20% cap. Yet the defendant claimed that the complaint failed to explain what the fees consisted of or how the emergency cap applied to the surcharge.

“[B]y arguing that the ‘commission’ fee violated the ‘spirit’ of the emergency fee cap law, plaintiff tacitly admits that no statutory provision actually supports its claim,” the motion said.

The plaintiff is represented by Helbraun & Levey LLP and Postmates by Covington & Burling LLP.