AG's Office Sued Company
in 2021 for Violating
Fee Cap
for Delivery Platforms During Public Health Emergency
Attorney General
Andrea Joy Campbell
has announced a settlement with
Grubhub Holdings Inc.
and
Grubhub, Inc.
, ("Grubhub"), a major online food delivery service platform. The settlement resolves a 2021 lawsuit brought by the AG's Office alleging that
Grubhub
illegally overcharged fees to
Massachusetts
restaurants in violation of the statutory fee cap in place during the COVID-19 public health emergency.
Under the settlement terms,
Grubhub
will pay a combined total of over
$3.5 million
to impacted restaurants.
Grubhub
will also pay
$125,000
to the Commonwealth.
"
Grubhub
unlawfully overcharged and took advantage of restaurants during a public health emergency that devastated much of this industry," said AG Campbell. "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."
Grubhub
is a major delivery service platform that contracts with restaurants to provide online customer ordering and delivery services.
Grubhub
charges fees to contracted restaurants per customer order; the fees are generally charged as a certain percentage of the restaurant menu price of each order.
As a result of the Commonwealth's declared public health state of emergency during the COVID-19 pandemic, which significantly impacted customer traffic to restaurants, the Commonwealth enacted legislation that prohibited
Grubhub
and other third-party delivery service platforms from charging fees to restaurants exceeding 15 percent of an order's restaurant menu price. The fee cap remained in place between
January 14, 2021
and
June 15, 2021
, when former
Governor Baker
lifted the state of emergency in
Massachusetts
.
The AG's lawsuit, filed in
July 2021
, alleged that
Grubhub
repeatedly violated the 15 percent fee cap by regularly charging fees of 18 percent or more, leading to significant financial harm to restaurants by often raising their operational costs by thousands of dollars. In
March 2023
, the
Suffolk Superior Court
ruled in favor of the Commonwealth, granting summary judgement on liability. The ruling indicated that
Grubhub's
conduct had violated both the 15 percent statutory fee cap and the state's primary consumer protection statute, Chapter 93A .
Impacted restaurants will be contacted regarding the settlement. Restaurants with questions may contact the Attorney General's Insurance and Financial Services hotline at 888-830-6277.
This matter was handled by Assistant Attorney General
Michael Sugar
of the
AG's Insurance
and
Financial Services Division
.
Statements of Support :
Stephen Clark
, President and CEO,
Massachusetts Restaurant Association
:
"We are grateful that both parties have come to a settlement, and that funds will go back to the restaurants that were working so hard to survive and serve customers during the pandemic. While the dark days of the pandemic are behind us, the impacts are still being felt across the restaurant industry. Delivery, especially third-party delivery, is not going away. Restaurants and third-party delivery companies will need to continue to work collaboratively to survive and grow. We thank the Attorney General for her efforts in bringing this to a resolution."
John Schall
, Owner, El Jefe's Taqueria:
"A heartfelt thank you to the
Attorney General's Office
for holding
Grubhub
accountable for intentionally violating the Delivery
Fee Cap
during the pandemic. The
$3.5 million
that is coming from this settlement will provide real relief to El Jefe's and to restaurants across the Commonwealth who were overcharged by
Grubhub
during the Delivery
Fee Cap
period."
