Dive Brief:
- Grubhub filed a lawsuit against New York City on Dec. 10, in the U.S. District Court for the Southern District of New York. The suit seeks a permanent injunction to keep the city from enforcing two ordinances (NYC Int. 2311-A and NYC Int. 1897-A2) that require third-party delivery companies to share customers' personal information with restaurants monthly if a restaurant requests this data.
- Grubhub's suit is the second legal action filed by a major delivery company against New York City's restaurant delivery data laws. DoorDash filed a similar suit in September.
- The suits against New York City are part of an ongoing struggle between municipal governments and regulators and major restaurant delivery apps over how best to structure and regulate the industry.
Dive Insight:
New York City agreed to stop enforcing one of its laws, 2311-A, in October as part of an agreement with DoorDash, which withdrew an injunction against the law. The city was careful to ensure the agreement with Doordash did not stipulate that 2311-A was unconstitutional. Grubhub's suit is broader, targeting the ordinance DoorDash sued the city over, as well as 1897-A, which established a licensing scheme for delivery operators — requiring them to follow a number of recently passed laws.
Grubhub alleges that New York City's new laws violated the First Amendment of the U.S. Constitution, framing data disclosures as a form of compelled speech. The company also said the city's laws would endanger customer information by providing identifying information to restaurants that might not have the security infrastructure to protect customer data.
"This law would instantly jeopardize the privacy of millions of New Yorkers if it were allowed to stand. That's wrong — and Grubhub works hard to protect the privacy of those who entrust us with their data," Grubhub shared in an emailed statement. "This lawsuit reflects numerous ways this law is deeply unconstitutional and fundamentally fails to recognize the importance of data privacy and personal data rights."
The suit is the latest legal battle between a major city and large delivery firm. The COVID-19 pandemic sparked a dramatic uptick in delivery orders, and gave added political urgency to the efforts of municipal governments seeking to regulate the delivery space. In addition to data-sharing laws, which are intended to give restaurants a greater ability to connect directly with customers, New York City has also expanded labor protections for gig workers and established a 15% cap on the fees delivery companies can charge their restaurant partners.
"The Ordinances state that customers are presumed to have consented to this dangerous flow of their information unless they specifically opt out for each and every order they place, contrary to the common view that opt-out requests should be valid for at least several months," Grubhub's complaint stated.
