The city of Chicago has filed separate lawsuits against Grubhub and DoorDash alleging the third-party delivery companies “engaged in deceptive practices to prey on its affiliated restaurants.”
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August 2021's Converge Newsletter
Chicago Sues Grubhub and DoorDash for Allegedly Scamming Basically Everyone: Restaurants, Drivers, and Customers
Home delivery and contactless payment during coronavirus pandemic
June 28, 2021 via Conn Maciel Carey
The city of Chicago has filed separate lawsuits against Grubhub and DoorDash alleging the third-party delivery companies "engaged in deceptive practices to prey on its affiliated restaurants." The lawsuits, filed today, August 27, in Cook County circuit court, contain a multitude of allegations, including that the companies use bait-and-switch tactics to fool customers into thinking they’ll be paying lower fees compared to what they’re ultimately charged.

The DoorDash lawsuit also alleges that the company "used consumer tips to pay itself rather than its drivers." There’s also the question of the Chicago Fee, the charge DoorDash added to compensate for the city’s pandemic-era fee cap. The city says DoorDash tried to make it seem like the Chicago Fee was being administered by the city, and even included a customer’s tweet from January in the lawsuit: "one thing about Chicago, they gon tax your ass LMAO."

A DoorDash spokesperson says drivers get 100 percent of tips but had no comment on the Chicago Fee. Tipping was also the subject of a $2.5 million settlement after the Washington, D.C. attorney general investigated DoorDash in November 2020. At one point, DoorDash was using tips to subsidized wages for drivers, meaning employees wouldn’t earn more than their locked-in wages. DoorDash has since ended this practice.

Attorneys for the city listed many issues relevant to restaurant owners in the lawsuits, including adding restaurants to the platform without the owner’s knowledge or consent, using telephone routing numbers to charge commission on phone calls that didn’t result in orders, and even creating fake restaurant websites to redirect customers to the delivery platform. Many owners have raised concerns that the city hasn’t done enough to help them, although the city did institute a 15 percent fee cap on third parties first enacted in November 2020. DoorDash and Grubhub are suing San Francisco over its decision to implement a permanent fee cap on third-party delivery companies; New York is now looking to enact the same policy.
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Pros and Cons of Arbitration
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Arbitration is a way to resolve lawsuits without going to court. The parties argue their case to an arbitrator in a private, informal setting. Arbitration appeals to some because it is quicker, private and often cheaper.

Arbitration is undesirable to others for several reasons. Typically, an arbitrator’s decision cannot be appealed. Instead, the parties get one hearing and the decision is final. The arbitrator, who could be a lawyer or an industry professional, is not bound to follow the law. The exchange of information between the parties prior to the hearing is limited. Also, the devil often lurks in the details of many an arbitration clause.
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