Grubhub to pay $3.6M to settle pandemic overcharging allegations

Grubhub settlement overview:

• Who: Grubhub has agreed to pay $3.6 million to settle a lawsuit filed by the Massachusetts attorney general’s office.
• Why: Grubhub allegedly overcharged restaurants for delivery services during the state’s COVID-19 state of emergency.
• Where: The Grubhub overcharging lawsuit was filed in Suffolk County Superior Court.

Grubhub agreed to a settlement of more than $3.6 million to resolve allegations the food delivery company engaged in overcharging Massachusetts restaurants during the COVID-19 pandemic, Law360 reports.

Massachusetts Attorney General Andrea Joy Campbell announced the Grubhub settlement Jan.12. Most of the settlement payment will go to the restaurants that were allegedly overcharged for delivery services, while $125,000 will go to the commonwealth, according to Campbell’s office.

Massachusetts passed legislation during the COVID-19 pandemic that capped third-party food delivery fees to 15% of the menu price. This service delivery fee cap reportedly remained in place from Jan. 14, 2021, through June 15 of that year, when the governor lifted the state of emergency in Massachusetts.

However, Grubhub allegedly violated the service delivery fee cap by charging more than 18%, which inflated restaurants’ operational costs during a time when they were already struggling.

Judge found Grubhub overcharges violated statutory cap and consumer protection laws

A Suffolk County Superior Court judge granted summary judgment in favor of Massachusetts, finding that Grubhub violated the statutory cap and Chapter 93A, a Massachusetts consumer protection law.

Grubhub denies any wrongdoing but agreed to settle the lawsuit to avoid ongoing litigation.

“Grubhub unlawfully overcharged and took advantage of restaurants during a public health emergency that devastated much of this industry,” Campbell said in a statement. “I am proud of my office’s dedicated work in securing meaningful financial relief for impacted businesses and we will continue to protect both consumers and businesses from such unfair and illegal practices.”

Restaurant community members celebrated the Grubhub overcharging settlement outcome and the fact that it will provide funds to the restaurants that worked throughout the COVID-19 emergency to serve customers.

The attorney general’s office says it will contact affected restaurants and set up a hotline for affected restaurants to get more information about the Grubhub settlement.

Grubhub, along with other delivery apps UberEats, Postmates and DoorDash, has also faced allegations that the delivery services operate an unlawful monopoly that inflates prices for consumers. In April 2023, the companies appealed a New York federal judge’s ruling that they failed to show that the plaintiffs had agreed to arbitrate any claims.

What do you think about the Grubhub settlement? Let us know in the comments.

Massachusetts is represented by Michael Sugar of the Office of the Attorney General.

The Massachusetts Grubhub lawsuit is Commonwealth of Massachusetts v. Grubhub Holdings Inc., et al., Case No. 2184CV01719, in Suffolk County Superior Court.

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