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Two restaurant owners have filed a proposed class action lawsuit against Grubhub, saying their eateries are among more than 150,000 the food-ordering and delivery service has listed on its website without permission.
The complaint filed Monday in federal court in Chicago lists plaintiffs Lynn Scott LLC, which owns Antonia’s, an Italian restaurant in Hillsborough, North Carolina; and The Farmer’s Wife LLC, which owns an eponymous restaurant serving locally sourced dishes in Sebastopol, California.
According to the class action lawsuit, Grubhub listed the two restaurants on its website in a manner that made it appear the businesses had an official partnership with the delivery service when they did not.
In fact, Grubhub reportedly approached Lynn Scott about entering into a partnership that would authorize the service to list Antonia’s on its platform, but the company declined. Grubhub listed the restaurant anyway, according to the class action lawsuit.
Despite Lynn Scott asking the company to stop listing Antonia’s on its platform and stop redirecting clicks on Antonia’s Google profile to Grubhub’s business, Grubhub has not complied, according to the Grubhub partnership class action lawsuit. Similar requests by The Farmer’s Wife have also not been respected, the suit states.
The false partnerships practice is allegedly part of an aggressive strategy by Grubhub to increase the number of eateries on its website in order to compete with similar services, such as DoorDash and Uber Eats. Grubhub began employing the strategy about a year ago after it was forced to slash earnings projections and its stock value dropped 40%, according to the class action lawsuit.
By claiming it partners with a rapidly growing list of restaurants, the company can reassure shareholders and quickly return to “the rapid growth and astronomical market valuations it had previously enjoyed,” the class action lawsuit contends.
The plaintiffs argue the practice makes for a poor experience for restaurant patrons because Grubhub isn’t actually coordinating with the restaurant, leading to the use of outdated menus on the service, cancelled orders and delayed deliveries.
“The end result for restaurants is significant damage to their hard-earned reputations, loss of control over their customers’ dining experiences, loss of control over their online presence, and reduced consumer demand for their services,” the Grubhub partnership class action lawsuit states.
Indeed, the company’s own representatives have acknowledged the false partnerships practice is harmful to restaurants, admitting it creates a “suboptimal diner experience rife with operational challenges,” the class action lawsuit states.
The company’s endgame, plaintiffs contend, is to force restaurants like The Farmer’s Wife to give in and become actual partners with the delivery service.
According to the class action lawsuit, Grubhub’s CEO told investors, “it’s our job over time to make those restaurants — turn those restaurants into partnered restaurants.”
“In other words, Grubhub is intentionally harming restaurants’ local reputations and then offering them a partnership to make the harm stop — a partnership where Grubhub will keep 30% or more from each order,” the Grubhub partnership class action lawsuit argues.
The practice is common among third-party delivery services, Eater reported.
In 2015, burger chain In-N-Out sued DoorDash for delivering food without permission, and Postmates has also added restaurants without their permission, according to Eater.
Plaintiffs are seeking a declaration that Grubhub has violated the Lanham Act by using restaurant names and logos without authorization and in a manner likely to confuse consumers. They also want Grubhub to end the allegedly unlawful conduct, turn over its “ill-gotten gains” and pay damages to the restaurants it has harmed, according to the complaint.
The GrubHub partnership class action lawsuit seeks to represent a Class of restaurants throughout the country, led by Antonia’s and The Farmer’s Wife, that were listed on the service’s website without their permission.
A Grubhub representative said the company doesn’t comment on pending litigation, Axios reported.
Have you ordered through Grubhub? Have you experienced any problems? Tell us about it in the comments.
The plaintiffs are represented by Elizabeth A. Fegan of Fegan Scott LLC; Steven M. Tindall, Geoffrey A. Munroe and Alex J. Bukac of Gibbs Law Group LLP.
The GrubHub Unauthorized Restaurant Partnership Class Action Lawsuit is Lynn Scott LLC, et al. v. Grubhub Inc., Case No. 1:20-cv-06334, in the U.S. District Court for the Northern District of Illinois Eastern Division.
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12 thoughts onGrubhub Class Action Lawsuit Claims Service Lists Restaurants Without Permission
Please add I have proof that would bring great benefits to all the families and business owners that GrubHub is stealing money from our hard working families and business owners. For sure working with employees to make commissions, without business owners knowing.
They’re doing the same to my business. I work from my home I’m not even a restaurant! I make primarily custom cakes and fill my schedule 6/7 weeks in advance. Yet their drivers are calling me and knocking on my door wanting to pick up orders I never even knew about. I’ve called, emailed, even messaged on Facebook. And still my info is on their website looking like I work with them. It’s so very frustrating!