In a dramatic turn of events, Grubhub has agreed to pay a staggering $3.6 million to settle a lawsuit accusing the food delivery giant of overcharging Massachusetts restaurants during the tumultuous pandemic. This hefty settlement, announced by Massachusetts Attorney General Andrea Joy Campbell on Friday, marks a pivotal moment in the legal battle that has unfolded since 2021.
Unlawful Overcharging Allegations
The heart of the matter revolves around Grubhub’s alleged misconduct during the public health crisis. According to Campbell’s office, Grubhub unlawfully overcharged and exploited struggling restaurants when the industry was reeling from the pandemic’s devastating effects. The settlement’s lion’s share, a whopping $3.5 million, is earmarked to reimburse the affected restaurants, while an additional $125,000 will find its way into the state’s coffers.
Attorney General’s Stance
Expressing her determination to combat unfair practices, Campbell stated, “Grubhub unlawfully overcharged and took advantage of restaurants during a public health emergency that devastated much of this industry.” She applauded her office’s relentless efforts in securing substantial financial relief for impacted businesses, emphasizing the commitment to safeguarding both consumers and businesses from such unjust practices.
Violation of Fee Caps
The lawsuit, initially filed by Campbell’s predecessor, Governor Maura Healey, alleges that Grubhub repeatedly violated Massachusetts legislation. The state had imposed a temporary cap, restricting delivery fees to 15% of an order’s menu price during the first six months of 2021. Grubhub stands accused of flouting this cap by charging fees exceeding 18%, imposing a significant burden on restaurants already grappling with soaring operational costs.
Grubhub $3.6M Overcharge Settlement: Legal Battle Highlights
The legal battle reached a critical juncture in March when a Suffolk County Superior Court judge delivered a summary judgment victory, affirming that Grubhub had breached both the statutory cap and Massachusetts’ consumer protection statute, Chapter 93A.
Grubhub’s Defense and Resolution
Grubhub, while agreeing to settle, maintains its innocence, asserting that it did not violate the temporary price control and remained in compliance with the statute’s language. A company representative emphasized, “Serving restaurants is at the heart of everything Grubhub does,” expressing eagerness to move past the litigation and continue providing top-notch service to Massachusetts restaurants.
Grubhub $3.6M Overcharge Settlement: Restaurant Community’s Response
The settlement has been met with gratitude from the restaurant community. Stephen Clark, President and CEO of the Massachusetts Restaurant Association, acknowledged the relief the settlement brings to restaurants impacted during the health crisis. “Delivery, especially third-party delivery, is not going away,” Clark stated, emphasizing the need for ongoing collaboration between restaurants and third-party delivery companies.
Relief for Impacted Restaurants
Restaurant owners, such as John Schall of El Jefe’s Taqueria, see the settlement as a beacon of relief. Schall believes it will provide tangible relief to restaurants across the commonwealth that fell victim to Grubhub’s alleged overcharging practices.
Grubhub $3.6M Overcharge Settlement: Next Steps and Legal Representation
Campbell’s office assures affected restaurants that they will be contacted, and a hotline will be established to provide more information. The Commonwealth is represented by Michael Sugar of the Office of the Attorney General, while Grubhub is represented by Joshua S. Lipshutz of Gibson Dunn & Crutcher LLP.
