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NEW YORK (Reuters) – A federal judge on Tuesday said several food delivery services including DoorDash, Grubhub and Uber (NYSE:UBER) Eats can sue New York City over a law capping how much they can charge restaurants for delivering meals, forcing them to operate at a loss.
U.S. District Judge Gregory Woods in Manhattan said the plaintiffs adequately alleged that the law violates the U.S. Constitution and New York state constitution.
New York City caps the commissions that delivery services can charge restaurants at 15% for food orders, and 5% for advertising and other services.
The caps had been adopted in response to the COVID-19 pandemic, to shore up a restaurant industry beset by thousands of closures, and were made permanent in 2021.
In a 43-page decision, Woods said the plaintiffs adequately alleged that the law unconstitutionally deprived them of their ability to collect higher commissions under their contracts with restaurants, costing hundreds of millions of dollars in revenue.
He also said the plaintiffs could pursue claims that the law violated due process, and unconstitutionally punished them because they were based out of state.
A spokesperson for New York City’s law department did not immediately respond to requests for comment. Lawyers for the plaintiffs did not immediately respond to similar requests.
The plaintiffs also include Caviar, Seamless and Postmates.
The case is DoorDash Inc et al v City of New York, U.S. District Court, District of New York, No 21-07564.
