AG Healey Sues Grubhub For Allegedly Charging Restaurants Illegally High Fees During Pandemic
BOSTON (CBS) - Grubhub, the online delivery service platform that has been used frequently during the coronavirus pandemic, is now being sued by Massachusetts Attorney General Maura Healey.
Healey's office announced on Thursday that she is suing Grubhub Holdings Inc. for allegedly violating a provision in Massachusetts' economic development law that prohibited Grubhub and other third-party delivery service platforms from charging fees to restaurants that exceed 15% of an order's menu price.
The legislation was put into law January 21 and lasted until June 15, which is when Gov. Charlie Baker lifted the state of emergency within Massachusetts.
The lawsuit, which was filed Thursday in Suffolk Superior Court, says Grubhub "knowingly charged fees to restaurants that exceeded 18 percent of the order's menu price".
We are suing Grubhub.
— Maura Healey (@MassAGO) July 29, 2021
We allege that Grubhub illegally charged restaurants fees above the state's 15% cap, harming them while they struggled to survive the pandemic. Our restaurant community deserves refunds and Grubhub must be held accountable for willfully violating our laws. pic.twitter.com/YxacUIPHwh
Healey says that she sent Grubhub and other delivery platforms a reminder in February that a 15 percent fee cap was in place.
In May, Grubhub was sent a cease and desist letter, which ordered them to stop charging "covered establishment fees in excess of 15 percent of the menu price of the online order".
The lawsuit is hoping to get refunds for restaurants affected by the high fees.
"We are suing to get money back to these establishments and to hold Grubhub accountable for its unlawful conduct," said Healey in a statement. "Our restaurants have been hard hit by this pandemic and we will do everything we can to help get them the relief they need to recover."
Restaurant owners admit delivery apps provided an essential service during what was a crisis. But food prices are up, business was down and every cent mattered.
"If everything goes right after paying your mortgage and rent and taxes," said North End restaurant owner Frank DePasquale, "you're very, very, lucky if you make 20% at the end of the whole thing."
In a statement sent to WBZ-TV, Grubhub called the allegations "baseless", arguing that they complied with laws in place.
"Serving restaurants is at the heart of everything we do at Grubhub and we strongly disagree with the allegations in this lawsuit," said Grubhub. "While we do not believe the temporary price control was either legal or appropriate, we complied with it while it was in effect and for an additional month after it expired, effectively conveying millions of dollars to local restaurants across Massachusetts. We look forward to responding to these baseless allegations."