Mass Attorney General: GrubHub Illegally Overcharged Restaurants During COVID-19 Emergency order
In full transparency, the following is a press release from the Massachusetts Attorney General’s office submitted to SOURCE media.
BOSTON – Massachusetts Attorney General Andrea Joy Campbell announced today, March 16, that her office has obtained a ruling from the Superior Court that online food delivery service platform Grubhub Holdings Inc. illegally overcharged fees to Massachusetts restaurants in violation of the statutory fee cap in place during the COVID-19 public health emergency.
The AG’s Office had originally sued Grubhub in July 2021 for violating the law and the state’s consumer protection act, seeking refunds for restaurants that were harmed by Grubhub’s alleged unlawful practices.
The court’s decision, issued by the Suffolk Superior Court, ruled that Grubhub violated the statute and that the company’s “scattershot of constitutional arguments” were unavailing.
“I am proud of the team and this thoughtful ruling which found that Grubhub illegally overcharged Massachusetts’ restaurants as they struggled to stay afloat during the pandemic,” said AG Campbell. “We look forward to continuing with our case to hold the company accountable and refund restaurants for the fees they were illegally charged.”
The AG’s lawsuit alleged that Grubhub violated a provision of the state’s economic development legislation, which prohibited Grubhub and other third-party delivery service platforms from charging fees to restaurants that exceed 15 percent of an order’s menu price.
The lawsuit specifically alleged Grubhub charged fees in excess of 18 percent of the order’s menu price.
The fee cap came into effect on January 14, 2021 and remained in place until June 15, 2021, when former Governor Baker lifted the state of emergency in Massachusetts.
Grubhub opposed the lawsuit, arguing that it had not violated the Emergency Law and, that if it had violated the law, the law was unconstitutional.
Grubhub is a delivery service platform through which customers order restaurant food for delivery or pickup. Restaurants contract with Grubhub to use its services, which include advertising the restaurant’s menu, accepting and processing orders and payments, transmitting orders to the restaurant and delivering orders to customers.
In February 2021, the AG’s Office sent letters to Grubhub and other online food delivery service platforms reminding them about the 15 percent fee cap that was in place. In May 2021, the AG’s Office sent a cease and desist letter to Grubhub, demanding that the company cease charging covered establishments fees in excess of 15 percent of the purchase price of the online order, in violation of the law. The AG Office’s lawsuit against GrubHub remains active and ongoing.
This matter is being handled by Assistant Attorney General Michael Sugar and Legal Analyst Maggie Wallace, both of AG Campbell’s Insurance and Financial Services Division.