The three food delivery giants' suit, initially filed Sept. 9, claims the city's "unconstitutional" legislation, which went into effect Jan. 24, will permanently cap commissions they can charge restaurants.
DoorDash, Grubhub and Uber Eats allege that the city lawmakers' measure capping delivery fees at 15% and nondelivery fees on services such as marketing at 5% is in violation of the U.S. Constitution's contract, due process, equal protection, takings and dormant commerce clauses, and corresponding provisions of the state constitution.
In their Jan. 24 amended complaint, the apps maintain that the city's price-control measure is unnecessary because restaurants need not partner with third-party platforms, as they have other options for advertising, receiving orders and providing deliveries, including doing it themselves.
The trio said that they have been instrumental in keeping restaurants afloat and food industry workers employed since the start of the COVID-19 pandemic and that with restaurants now able to operate at full capacity, the permanent price controls will harm not only the plaintiffs but also the revitalization of local restaurants the city claims to promote.
Responding to those allegations Monday, the city also argued that the delivery services cannot make the ordinance into an illegal taking, assailing "plaintiffs' threadbare claims of reduced profits" and contending that the companies can always recoup any reduced profits "by increasing consumer fees and/or reducing the scope of services." In a footnote, the city also pushed back on assertions that hiking consumer fees would drive away consumers, calling those arguments "speculative" and without support.
"Notwithstanding, even if plaintiffs had endeavored to support this claim, plaintiffs still cannot demonstrate that the commission caps deprive them of the ability to make any economically viable use of their contracts," the city said.
The city also argued that the ordinance is well within its state and federal purview, asserting that it is "vested with broad police power to protect the public welfare, which necessarily includes the city's authority to enact local laws to protect the city's jobs, economy, and residents."
In addition, the city argued that there's nothing discriminatory about fee caps primarily affecting companies based outside New York that don't touch other firms serving restaurants such as "raw ingredient suppliers, equipment suppliers, point-of-sale system vendors, online reservation platforms, or other advertising providers."
The city's law department said in an email Tuesday that the lawsuit's allegations are "baseless."
"The restaurant industry is vital to the city's economy and way of life. The city was well within its legal authority to curb the predatory practices of these app-based delivery companies by imposing this fee cap," spokesperson Nick Paolucci said.
A DoorDash spokesperson said in a statement that the company continues to believe the price caps "are unconstitutional, unnecessary, arbitrary and ultimately harmful to the very restaurants they are intended to help."
A Grubhub spokesperson similarly contended that the ordinance "is not only unconstitutional but will also hurt local restaurants, delivery workers and diners across New York City."
A representative for Uber did not immediately respond Tuesday to a press inquiry.
This is one of several legal actions lodged by food delivery platforms to overturn restaurant aid measures enacted during the pandemic. Grubhub and DoorDash sued San Francisco in July over that city's law permanently capping fees they can charge local restaurants at 15%.
Meanwhile, both platforms were hit with lawsuits from the city of Chicago for allegedly using deceptive practices that cause customers to pay higher delivery fees. The companies have denied the allegations and called that suit "baseless," while Chicago filed an amended complaint on Dec. 27 that upped the city's claims against Grubhub.
And Massachusetts Attorney General Maura Healey sued Grubhub in July, accusing it of charging Bay State restaurants excessive fees outside the cap enacted during the pandemic.
Conversely, the delivery companies have faced accusations that they've failed to abide by New York City's caps, although earlier this month they managed to force a lawsuit making those allegations into arbitration.
DoorDash, Grubhub and Uber Eats are represented by Anne Champion, Joshua S. Lipshutz, Esther Lifshitz and Andrew C. Bernstein of Gibson Dunn & Crutcher LLP.
The city is represented by Darren Trotter and Kevin Collins of the New York City Law Department.
The case is DoorDash Inc. et al. v. City of New York, case number 1:21-cv-07564, in the U.S. District Court for the Southern District of New York.
--Additional reporting by Joyce Hanson and Khorri Atkinson. Editing by Rich Mills.