Grubhub Settles Lawsuit Over Excessive Fees Charged to Massachusetts Restaurants

Massachusetts Attorney General Andrea Campbell announced a $3.5 million settlement with Grubhub for overcharging restaurants during the COVID-19 pandemic, violating the states fee cap. Grubhub will pay over $3.5 million to impacted restaurants and $125,000 to the state.

In a significant victory for Massachusetts restaurants, Attorney General Andrea Campbell announced a $3.5 million settlement with the online food delivery platform Grubhub. The settlement resolves a 2021 lawsuit filed by Campbell, alleging that Grubhub illegally overcharged fees to restaurants in violation of a state fee cap imposed during the COVID-19 public health emergency.

Settlement Details

Under the terms of the settlement, Grubhub will provide financial relief to impacted restaurants and the state. Here are the key details of the settlement:

• Grubhub will pay a combined total of over $3.5 million to affected restaurants.
• Grubhub will also pay $125,000 to the state.

Grubhub's Response

In response to the settlement, a Grubhub spokesperson emphasized the company's commitment to serving restaurants and acknowledged the importance of their partnership. The spokesperson stated that Grubhub has always complied with Massachusetts' temporary price control measures and is ready to move forward from this situation.

Background of the Lawsuit

During the height of the COVID-19 pandemic, Massachusetts declared a public health emergency. As dine-in traffic plummeted and restaurants relied heavily on delivery services, lawmakers implemented legislation to protect restaurants from excessive delivery fees. The legislation capped delivery fees charged by Grubhub and other third-party platforms at 15% of an order's restaurant menu price.

However, the lawsuit alleged that Grubhub repeatedly violated the 15% fee cap by charging fees of 18% or more. This resulted in significant financial harm to restaurants, often increasing their operational costs by thousands of dollars.

Court Ruling and Impact

In March 2023, Suffolk Superior Court ruled in favor of the state, finding that Grubhub's conduct violated both the 15% statutory fee cap and the state's primary consumer protection statute. This ruling paved the way for the settlement.

The settlement provides much-needed relief to restaurants that struggled during the pandemic. Stephen Clark, president and CEO of the Massachusetts Restaurant Association, expressed gratitude for the settlement and highlighted the importance of collaboration between restaurants and third-party delivery companies.

The Grubhub settlement serves as a reminder of the challenges faced by restaurants during the pandemic and the importance of consumer protection measures. As the restaurant industry continues to recover, it is crucial for delivery platforms and restaurants to work together to ensure fair practices and sustainable growth.