In a costly rebuke for overstepping during a crisis, Grubhub has been slapped with a hefty $3.5 million tab to compensate Massachusetts restaurants it overcharged while they were struggling to survive the COVID-19 public health emergency. Attorney General Andrea Joy Campbell announced the settlement, which aims to resolve allegations from a 2021 lawsuit that Grubhub flouted the state's emergency fee cap by gouging eateries with exorbitant fees, a statement on the Massachusetts government website reported.
In what marked a win for the hard-hit restaurant industry, Suffolk Superior Court agreed with the Commonwealth's argument that Grubhub had been taking an oversized bite out of restaurant revenues, charging them 18 percent or more per order, well above the 15 percent legal limit. Restaurants reeling from the pandemic found themselves forking over thousands in additional operational costs — a situation AG Campbell did not take lightly. "Grubhub unlawfully overcharged and took advantage of restaurants during a public health emergency that devastated much of this industry," Campbell stated.
Under the shadow of the Commonwealth's legislative efforts to shield restaurants during a time when foot traffic had dwindled to near extinction, the lawsuit contended that Grubhub's practices were not only financially injurious but also a violation of consumer protection statutes. Alongside the payment to restaurants, Grubhub will be serving up $125,000 to the Commonwealth, the AG's office declared.
Grubhub, as a dominant player in the online food delivery space, contracts with partners to facilitate digital orders and deliveries. Their typical cut comes from fees pegged to a percentage of an order's restaurant menu price. Nonetheless, during the restricted period from January 14, 2021, through June 15, 2021, these fees were supposed to be capped, a measure intended to give restaurants a fighting chance to stay afloat. "We thank the Attorney General for her efforts in bringing this to a resolution," remarked Stephen Clark, President and CEO of the Massachusetts Restaurant Association, in response to the settlement.
Hard-hit by the unprecedented circumstances of the pandemic, local restaurants like El Jefe's Taqueria view the settlement as a significant relief and acknowledgment of the financial strains they endured. Owner John Schall expressed his gratitude for the AG's office's pursuit of justice, saying, "The $3.5 million that is coming from this settlement will provide real relief to El Jefe's and to restaurants across the Commonwealth who were overcharged by Grubhub during the Delivery Fee Cap period." With checks soon to be in the mail for the impacted restaurants, this legal entrée serves as a stark reminder of the need for corporate accountability, even in uncharted times.
