DoorDash, Uber Eats, Grubhub Settle NYC Lawsuit Over Delivery Fee Caps

DoorDash, Uber Eats, and Grubhub have reached a settlement with New York City over its controversial cap on food delivery fees. The agreement, filed in Manhattan federal court, allows the companies to charge higher commissions than currently permitted—if the City Council amends the existing law as anticipated.

The law, enacted in May 2020 during the COVID-19 pandemic, limits delivery app charges to restaurants at 15% for deliveries and 5% for marketing and other services. Initially introduced as a temporary relief measure, it became permanent in August 2021, prompting the three companies to file a lawsuit the following month.

The food delivery giants argued that the caps were unconstitutional, depriving them of their right to freely negotiate contracts and forcing them to operate at significant financial losses. They claimed hundreds of millions of dollars in lost revenue due to the city's restrictions.

In September 2023, U.S. District Judge Gregory Woods denied the city's motion to dismiss the lawsuit, allowing it to move forward. However, the new settlement—if formalized by the City Council—will lead to the dismissal of the case with prejudice, meaning it cannot be refiled.

The original law aimed to protect New York City’s struggling restaurant sector, which faced mass closures and job cuts during the pandemic. City officials argued that high delivery fees could lead to further economic fallout.

The outcome could set a precedent, as other cities like San Francisco also imposed permanent delivery commission caps. Neither the companies nor city representatives have commented publicly on the settlement.

This development highlights the ongoing tension between local regulation and gig economy platforms navigating pandemic-era policy changes and evolving business models.