Uber Technologies, Inc. v. New York City Department of Consumer

The following e-filed documents, listed by NYSCEF document number (Motion 001) 57, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 104, 105, 107, 108, 109, 110, 111, 114 were read on this motion to/for ARTICLE 78 (BODY OR OFFICER). DECISION ORDER ON MOTION INTRODUCTION: Petitioners, Uber Technologies, Inc. (Uber), DoorDash, Inc. (DoorDash) together with GrubHub, Inc. (Grubhub), and Relay Delivery, Inc. (Relay), commenced these Article 78 special proceedings to challenge the adoption of the Final Minimum Payment Rule (“Final Rule”) promulgated by the New York City Department of Consumer and Worker Protection (DCWP). Petitioners seek to vacate and annul the Minimum Pay Rule: (Subchapter H of Chapter 7 of Title 6 of the Rules of the City of New York §§7-801, 7-804, 7-805, 7-806, 7-807, and 7-810[b] and [c]). Presently before the Court are petitioners’ requests for a preliminary injunction enjoining the Minimum Pay Rule from taking effect pending the final determination of the petitions.¹ For the reasons set forth hereinbelow, the request is denied as to petitioners Uber and DoorDash, together with GrubHub, but is granted as to petitioner Relay. Legislative Background: In 2021, the New York City Council (City Council) adopted a package of laws that focused on the working conditions of food delivery workers within New York City. Included in this package was Local Law No. 115 (2021) of the City of New York, known as the “Minimum Pay Law” (see DoorDash/GrubHub’s exhibit 14). Codified as Administrative Code of the City of New York §20-1522, it directed the DCWP to study the pay and working conditions of food delivery workers and based on the results of this study, create a rule establishing a method for determining the minimum pay that third-party food delivery and third-party food courier services must pay their delivery workers. The Minimum Pay Law granted the DCWP the authority to issue subpoenas for data, documents, and other relevant information necessary for their study (see Admin. Code §20-1522[a] [2]). Starting February 1, 2024, and every February thereafter, DCWP may announce an amendment to the Minimum Payment Method or formula and may promulgate such amendments by rule if necessary (see Admin. Code §20-1522[c]). DCWP shall submit to the City Council and the mayor a report on the Minimum Payment Rule, any amendment, and the effect of such Minimum Payment Rule on food delivery workers and the food delivery industry, no later than September 30, 2024, and every two years thereafter (see Admin. Code §20-1522[d]). To fulfill its obligations under the Minimum Pay Law, DCWP conducted its study and issued a report centered on the pay and working conditions of New York City app-based food delivery workers. On November 16, 2022, DCWP concurrently published the findings of its study, entitled, A Minimum Pay Rate for App-Based Delivery Workers in NYC (Report), and its First Proposed Rule (see Uber’s exhibits 4, 12). In conducting its study, Local Law 115 required the DCWP to consider the following topics: (1) food delivery workers’ pay and the methods determining that pay; (2) total income earned; (3) workers’ expenses; (4) required equipment; (5) workers’ hours; (6) average mileage of a trip; (7) mode of travel used; and (8) safety conditions (Admin. Code §20-1522[a] [1]). In addition to the topics the City Council required it to consider, DCWP was given discretion to include in its study and report any additional factors that it deemed appropriate (Id.). As detailed in the Report, the DCWP’s study drew principally on data obtained from the apps, primarily petitioners, in response to administrative subpoenas used in combination with data from a survey that DCWP distributed to nearly all of the approximately 123,000 workers who performed app deliveries in New York City between October and December 2021 (Worker Survey) (Report at 2). DCWP’s study also drew on additional sources, including a separate in-person field survey of delivery workers (Deliveristas Survey), a survey of restaurant owners and managers in NYC (Restaurant Survey), testimony from a public hearing on delivery worker pay and working conditions, expert and stakeholder interviews, and other public information (Report at 2-4; Uber’s exhibits 6, 7). Pursuant to the New York City Charter and the City Administrative Procedure Act (CAPA), New York City agencies, when rulemaking, shall give notice by publishing the full text of the proposed rule thirty days prior to the date of the public hearing and provide the time and place of the public hearing to be held (see NY City Charter §1043[b] [1],[4]). Additionally, an agency must provide the public the opportunity to comment on the proposed rule and all written comments, along with a summary of the oral comments shall be placed in a public record (see NY City Charter §§1043[e] [i], [ii], [iii]). After a consideration of relevant comments, an agency may adopt a final rule and shall publish the text of the final rule and the statement of basis and purpose in the City Record (Id. at §1043[f] [1] [c]). As required under CAPA, the DCWP gave notice and held a public hearing for the First Proposed Rule on December 16, 2022. During the first comment period, DCWP received comments from workers, advocates, restaurants, researchers, representatives of the apps, and members of the public (see respondent’s exhibit D). The four petitioners submitted comments, objections, and proposed revisions to the First Proposed Rule. On March 7, 2023, DCWP published a Second Proposed Rule. The Statement of Basis and Purpose of the Second Proposed Rule (Second SBP) included the DCWP’s responses to comments on the First Proposed Rule and explanations for incorporated or unincorporated changes. Notice was again provided, and a second public hearing was held on April 7, 2023. Throughout the second comment period, DCWP again received comments, objections, and alternative suggestions, including submissions from the four petitioners (see respondent’s exhibit G). On June 12, 2023, the DCWP published the Final Minimum Pay Rule. The Notice of Adoption and the Statement of Basis and Purpose to the Final Rule (Final SBP) included the full text of the Final Rule. The Final SBP, which incorporated the Second SBP and Report by reference, included responses to comments, objections, and suggestions DCWP received in response to the Second Proposed Rule. The Final Rule, which was to go into effect on July 12, 2023, set a Minimum Pay Rate and included two payment methods by which third-party delivery workers could be paid: the “Standard Method” and “Alternative Method” (see generally 6 RCNY §7-810). ARTICLE 78 REVIEW AND INJUNCTIVE RELIEF: Shortly after the Notice of Adoption was published, petitioners Uber, DoorDash together with GrubHub, and Relay commenced these underlying Article 78 special proceedings to challenge the adoption of the Final Minimum Pay Rule. Each petitioner requests the interim relief of a preliminary injunction to enjoin the Final Minimum Pay Rule from taking effect. The Court conducted oral arguments, spanning three separate days, to aid in reaching its determination.² A preliminary injunction may only be granted when the proponent of such relief clearly demonstrates (1) a likelihood of success on the merits; (2) irreparable injury if the relief is not granted; and (3) a balancing of equities in their favor (Doe v. Axelrod, 73 NY2d 748, 750 [1988]). Although conclusive proof is not required, an injunction is an extraordinary preliminary remedy and therefore the threshold inquiry is “whether the proponent has tendered sufficient evidence demonstrating ultimate success in the underlying action” (1234 Broadway LLC v. W. Side SRO Law Project, 86 AD3d 18, 23 [1st Dept 2011]; Chester Civic Imp. Ass’n, Inc. v. New York Tr. Auth., 122 AD2d 715, 717 [1st Dept 1986]). The Court reviews the administrative action under the applicable standard of review for an Article 78 proceeding to determine whether DCWP, in promulgating the Final Rule, acted outside the authority statutorily delegated to it or if the regulation was so lacking in reason for its promulgation that it is essentially arbitrary (see Doe v. Axelrod, 73 NY2d 748, 750 [1988]; see also Natl. Rest. Ass’n v. New York City Dept. of Health & Mental Hygiene, 148 AD3d 169, 179 [1st Dept 2017]). In an Article 78 proceeding, judicial review is limited to whether a governmental agency’s determination was made in violation of lawful procedures, whether it was arbitrary and capricious, or whether it was affected by an error of law (CPLR §7803[3]). “Arbitrary” for the purposes of the statute is interpreted as “when it is without sound basis in reason and is taken without regard to the facts” (Matter of Pell v. Board of Educ., 34 NY2d 222 [1974]). To survive challenge, an administrative agency determination need only be reasonable and supported by the record when taken as a whole (Pell, 34 NY2d at 231; see also New York State Ass’n of Ctys. v. Axelrod, 78 NY2d 158, 166 [1991]; Purdy v. Kreisberg, 47 NY2d 354, 358 [1979]). Judicial review of an agency’s action is limited to the grounds invoked by the agency and cannot be affirmed on an alternative ground that may have been adequate if cited by the agency (Matter of Natl. Fuel Gas Distrib. Corp. v. Pub. Serv. Com’n of State, 16 NY3d 360, 368 [2011]). If the determination has a rational basis, it will be sustained, even if a different result would not have been unreasonable (Matter of Ward v. City of Long Beach, 20 NY3d 1042, 1043 [2013]). When an agency acts pursuant to its authority and within the orbit of its expertise, it is entitled to deference, even if different conclusions could be reached as a result of conflicting evidence (Partnership 92 LP & Bldg. Mgt. Co., Inc. v. State of N.Y. Div. Of Hous. & Community Renewal, 46 AD3d 425, 428-29 [1st Dept 2007] [internal citations and quotations omitted). Petitioners³ argue that they are likely to succeed on the merits for the following reasons: (1) the Final Rule is based on flawed and biased surveys; (2) the DCWP failed to include grocery and convenience delivery services in its study and Final Rule; (3) the Final Rule arbitrarily compensates workers for all on-call time; (4) the Final Rule contains a workers' compensation component that is not rationally related to the purported purpose; (5) the recordkeeping and reporting requirements are irrational and unreasonable; (6) the DCWP improperly relied on the assumption that restaurants do not benefit from delivery services; and (7) the DCWP failed to adequately consider the Final Rule's consequences (see Uber petition; DoorDash/Grubhub petition; Relay petition). Relay, in addition to the aforementioned reasons, argues that they are likely to succeed for the following additional reasons: (1) DCWP, in its study and process preceding the promulgation of the Final Rule, failed to adequately consider Relay's unique business model; (2) DCWP failed to consider the impact of the Final Rule as it relates to Relay; and (3) the Final Rule sets a compliance period that is unreasonable or impossible for Relay to meet. DCWP, in response, argues that the Final Rule is reasonable and rational, and petitioners have failed to establish entitlement to the requested relief under the highly deferential Article 78 standard. SURVEY RESULTS: Petitioners argue that, because the Final Rule is based on the results of flawed and biased surveys, it is arbitrary and capricious. While a regulatory agency is entitled to rely on all facts that exist so long as they are reliable and trustworthy, a rule must be annulled when the information on which the agency relied is proven to be outdated, erroneous, or incomplete (Schur v. New York State Div. of Hous. And Community Renewal, 169 AD2d 677, 678 [1st Dept 1991] [express reliance on a flawed inspection report was arbitrary and capricious]; Matter of NY Palm Tree, Inc. v. New York State Liq. Auth., 18 Misc 3d 1102(A) [Sup Ct 2007]). Here, petitioners assert that DCWP’s reliance on the results from the Workers Survey, Deliveristas Survey, and Restaurant Survey, was irrational. Petitioners take issue with each survey’s design, question structure, phrasing, and type, lack of controls, disclosure of who conducted the surveys, and intended use and/or purpose of the surveys. Further, petitioners argue they raised concerns about the surveys, relying on survey expert reports, which were not adequately addressed by the DCWP (see Uber’s exhibit 25 at 1500-16). According to petitioners, the methodological flaws and improper survey tactics produced biased or unreliable results, which dictated several aspects of the Minimum Pay Rate-pointing primarily to the component dealing with worker expenses.⁴ The Court finds these arguments to be unavailing primarily because they overstate the surveys’ role in formulation of the Final Rule. As DCWP argues, using surveys to inform agency determinations is neither novel nor controversial (see Brenner v. O’Connell, 308 NY 636, 642 [1955] [agency reasonably denied liquor license based on survey revealing that community had sufficient density of liquor licenses]). Additionally, informing survey respondents of the intended uses of their responses and disclosing that it was the City of New York conducting the survey is appropriate and customary (Final SBP at 24). This is in line with Federal rules regarding government surveys (see 44 U.S.C. §3506[c] [1] [B] [iii] [each information collection informs the person receiving the collection of the reasons the information is being collected and the way such information is to be used]; see also 5 C.F.R. §1320.8[b] [3] [i], [ii]). Petitioners assert that DCWP improperly relied on data from both the Restaurant and Deliveristas Surveys to inform critical aspects of the Final Rule. However, these contentions are unsubstantiated as there is no evidence in the record indicating that DCWP actually relied on data from the Restaurant or Deliveristas Survey in its calculation of the Minimum Pay Rate for the Final Rule (Final SBP at 22; Report at 3-5). Moreover, the record before the Court demonstrates that DCWP relied on the data from the Workers Survey for very limited purposes, including, if not primarily, for assessing compensation relative to workers’ reported expenses (Final SBP at 24, 25). The Court agrees that it would be unreasonable for an agency to rely exclusively upon survey results without analyzing the potential for bias, or adjusting the data based upon any bias found, when the survey respondents are made aware of the purpose of the survey (Friends of Boundary Waters Wilderness v. Bosworth, 437 F3d 815, 826 [8th Cir 2006]). There is no evidence that is the case here. Here, DCWP sufficiently detailed the methodology, analytics, and rationale behind the formation, design, and use of the Workers Survey in the Report, Second SBP, and Final SBP. Accordingly, the DCWP appropriately utilized the data supplied by this survey’s results while also taking measures to account for or compare this data with other reliable metrics.⁵ While petitioners claim that DCWP did not address their concerns about the Workers Survey, its results, or otherwise explain its uses, the record shows otherwise. The Report, Second SBP, and Final SBP explain and provide a clear outline of: the structure and sources of the survey, DCWP’s methods and use of control measures⁶, a break-down of the survey’s findings, and an overview of in what aspects of formulating the Minimum Pay Rate the results were used (Report at 2-5, 12-26; Second SBP at 9; Final SBP at 22-25).⁷ While petitioners may disagree with DCWP about what would have been the most appropriate survey methodology, DCWP’s design and reliance on the Workers Survey was not unreasonable or irrational (Matter of Ward v. City of Long Beach, 20 NY3d 1042, 1043 [2013]; Matter of NY Palm Tree, Inc. v. New York State Liq. Auth., 18 Misc 3d 1102(A) [Sup Ct 2007]; see also Friends of Boundary Waters Wilderness v. Bosworth, 437 F3d 815, 822, 825 [8th Cir 2006] [even if the agency's underlying data are flawed, substantial deference requires the ruling be reversed only if the survey design and implementation was so inadequate as to make any reliance upon the data unreasonable]). EXCLUSION OF GROCERY AND NON-RESTAURANTS: Petitioners claim that the Final Rule contradicts the plain language of Local Law 115′s statutory mandate. Petitioners cite Trump-Equit. Fifth Ave. Co. v. Gliedman (57 NY2d 588, 595 [1982]) for the proposition that “an agency may not promulgate a rule out of harmony with, or inconsistent with, the plain meaning of the statutory language”. Furthermore, petitioners claim that where the question is one of pure statutory interpretation, the Court need not accord any deference to an agency’s determination and can undertake its function of statutory construction (Matter of DeVera, 32 NY3d 423, 434 [2018]). Petitioners argue that DCWP’s failure to include third-party delivery services that do business with grocery stores or non-restaurant purveyors of food, such as Instacart, contravenes the plain language of its statutory mandate. Specifically, petitioners contend that, under the plain meaning of the statutory language, grocery and convenience stores constitute food service establishments and therefore the exclusion of a website, mobile application, or other internet service that only provides delivery from grocery stores and quick convenience stores is improper. Petitioners further argue that this exclusion from the Final Rule means that it is affected by an erroneous interpretation of the law and must be annulled (see Matter of DeVera, 32 NY3d 423, 439 [2018]). Pursuant to New York City Administrative Code §20-1501, the applicable definition of the term “food service establishment” is “a business establishment located within the city where food is provided for individual portion service directly to the consumer whether such food is provided free of charge or sold, and whether consumption occurs on or off the premises or is provided from a pushcart, stand or vehicle” (Admin. Code §20-1501; see DoorDash/GrubHub’s exhibit 13). Other statutes and agency rules have different definitions of the term “food service establishment,”⁸ some of which do, and some of which do not, include grocery stores. However, the Court need not reference these other definitions because the websites, mobile applications, or other internet services that deliver only from grocery or convenience stores are not third-party food delivery services as defined by Admin. Code §20-1501. Therefore, the Final Rule is inapplicable to them. The Minimum Pay Rule only applies to the food delivery workers engaged as independent contractors by a third-party courier service or third-party food delivery service that is required to be licensed pursuant to section 20-563.1 (Admin. Code §§20-563.1). Delivery services dealing with grocery stores are not required to be licensed and the independent contractors engaged by grocery delivery apps are therefore not “food delivery workers” as defined by the law (Id.). Further, DCWP has previously determined that grocery delivery applications, such as Instacart, are not “third-party food delivery services” or “third-party courier services” (affirmation of Elizabeth Wagoner in opp to DoorDash/GrubHub mot 42). To be considered as a “third-party food delivery service” a site or service must offer or arrange for the sale of food and beverages prepared by, and the same-day delivery or same-day pickup of food and beverages from, a food service establishment (see Admin. Code §20-1501). The plain meaning of the definition of third-party delivery services therefore supports the exclusion of websites, mobile applications, or other internet services that arrange only for the purchase and delivery of groceries and other prepackaged foods. The determination of whether food and beverages are prepared by a food service establishment for same day delivery or pickup, or whether an application constitutes a covered entity, requires an evaluation of the factual data and inferences to be drawn therefrom and is within the orbit of DCWP’s expertise (see Partnership 92 LP & Bldg. Mgt. Co., Inc. v. State of N.Y. Div. Of Hous. & Community Renewal, 46 AD3d 425, 428-29 [1st Dept 2007] [internal citations and quotations omitted). Accordingly, the Court should defer to the agency (see Claim of Gruber, 89 NY2d 225, 231 [1996]). Therefore, DCWP’s decision to exclude grocery delivery websites, mobile applications, or other internet services from the Final Rule was not an erroneous interpretation of the statute nor is it inconsistent with the plain language of the statute. The Court also finds the petitioners’ claim, that the legislative history of the Minimum Pay Law compels DCWP to treat grocery stores the same as restaurants, unavailing. Petitioners point to a (single) stray reference to groceries in the September 23, 2021, Committee Report for Local Law 115 of 2021 (DoorDash/GrubHub’s exhibit 3 at 23; DoorDash/GrubHub Pet. 120). However, that reference, which states that it could include grocery stores, does not overrule the otherwise established meaning of “food service establishment” (Id.). But, in any event, the full legislative record demonstrates City Council’s true intent. By contrast, that same Committee Report contains thirty-four references to “restaurants,” seven references to “DoorDash”, four references to “GrubHub”, three references to “Uber Eats”, and zero references to “Instacart” (see DoorDash/GrubHub’s exhibit 3). The September 23, 2021, City Council Committee hearing, involving discussion of Local Law 115, contains testimony by Council Members about the regulation of restaurants and the rights of these delivery workers (see DoorDash/GrubHub’s exhibit 15). However, this testimony fails to mention grocery stores or Instacart. By comparison, the overall legislative record for both the Licensing Law and the Minimum Pay Law contains hundreds of references to restaurants (see generally DoorDash/GrubHub’s exhibit 3, 15). Furthermore, both the City Council and the Mayor have proposed separate minimum wage legislation that would specifically encompass grocery delivery workers. Accordingly, the petitioners are unlikely to succeed on the merits of their claim that the rule is out of harmony with or inconsistent with the plain meaning of the statutory language.⁹ TREATMENT OF ON-CALL TIME: On-call time is the time that a worker is connected to the third-party service’s app in a status where the worker is available to receive or accept trip offers and assignments but excluding all trip-time (Final Rule at 26). The Final Rule includes two methods by which the third-party delivery and courier services may pay their workers. The two methods, the “Standard Method” and “Alternative Method,” both compensate for on-call time either directly or indirectly (Final SBP at 4). Under the Standard Method, third-party services must make payments that meet both the individual requirement (pay the individual no less than the sum of that worker’s trip time in a pay period multiplied by the Minimum Pay Rate) and the aggregate requirement (pay, in the aggregate, the workers who engage in trip and on-call time in a pay period no less than the sum of all workers’ trip and on-call time multiplied by the Minimum Pay Rate) (Admin. Code §7-810 [b] [1], [2]). This method directly compensates for on-call time in the aggregate payment portion. Under the Alternative Method, eligible third-party services must pay to each worker who engages in trip time in a pay period no less than the worker’s trip time multiplied by the alternative Minimum Pay Rate (standard Minimum Pay Rate divided by 0.60) (Admin. Code §7-810 [c] [2]). Prior to April 1, 2024, any third-party service may use the Alternative Method; after April 1, 2024, third-party services may use the Alternative Method for any pay period that its utilization rate (third-party service’s total trip time divided by the sum of its trip and on-call time) is greater or equal to 0.53 and in two pay periods where it is lower (Admin. Code §7-810 [c] [1]). This method indirectly compensates for on-call time by only paying for trip time but at a higher rate. Petitioners argue that the Final Rule’s treatment and inclusion of on-call time, compensating for all time spent logged into the app regardless of whether the worker is engaged in any work-like activity, is arbitrary and capricious for the following three reasons, each discussed in turn. First, petitioners argue that the Final Rule’s inclusion of compensation for all on-call time was erroneous as Local Law 115 only directed that DCWP consider the on-call time and work hours of delivery workers. Petitioners contend that DCWP, by including all on-call time, misunderstood the statutory framework which warrants annulment of the Final Rule (Woods v. N.Y. City Dep’t of Citywide Admin. Servs., 16 NY3d 505, 509 [2011]). Local Law 115 mandated that, “[i]n establishing such method, the department shall, at minimum, consider…the on-call and work hours of food delivery workers…” (Admin. Code §20-1522 [a] [3]; [emphasis added]). While petitioners disagree with DCWP’s interpretation of the word “consider”, arguing the definition means merely “to think about” (DoorDash/GrubHub petition 141), it is clear DCWP considered on-call time: engaging with how on-call time is used, the purpose it serves, hearing commentary from workers regarding on-call time, studying how that time is spent, and depicting the way on-call time benefits or works for the platforms (Report at 16, 17, 22; respondent’s exhibit L, June 2022 hearing written testimony). Following its consideration, DCWP determined that on-call time should be included in the Minimum Pay Method as the Minimum Pay Rule aims to provide a livable wage for delivery workers. Further, Local Law 115 afforded DCWP the discretion, after its consideration of the issues, to include what it deemed relevant in the Final Rule (see DoorDash/GrubHub petition 141; Admin. Code §20-1522 [a] [3]). As the Final Rule is in harmony with the authorizing statute, the Court cannot re-interpret the statutory scheme simply because the petitioners do not like or agree with the manner in which DCWP utilized its statutorily provided discretion (see Jones v. Berman, 37 NY2d 42, 53 [1975]). Second, petitioners argue that the Final Rule’s inclusion of all on-call time is irrational. Petitioners claim that DCWP failed to provide adequate reasoning for their decision to require platforms to compensate food delivery workers for all time spent logged onto the app, regardless of whether work is being performed. Petitioners maintain that compensating for all on-call time creates negative incentives and is inconsistent with the traditionally flexible nature of employment under the existing business models. Specifically, that the “gig economy” element will be fatally undermined because workers will lose the flexibility to choose their own hours and working conditions. Additionally, petitioners argue that DCWP did not adequately explain why it rejected alternative proposals or how it resolved the issues petitioners raised (Trump on Ocean, LLC v. Cortes-Vasquez, 908 NYS2d 694, 700 [2d Dept 2010]; see also Street Vendor Project v. City of New York, 811 NYS2d 555, 561 [Sup Ct 2005]). The New York City Charter does not require that an agency fully explain its rationale for adopting a rule, nor that the agency articulate its rationale at the time of promulgation, so long as the record reveals a rational basis (Lynch v. New York City Civilian Complaint Review Bd., 206 AD3d 558, 560 [1st Dept 2022], lv to appeal denied, 39 NY3d 902 [2022]; Tri-City, LLC v. New York City Taxi and Limousine Commn., 189 AD3d 652 [1st Dept 2020]). In consideration of the nature of this employment and the concerns raised by petitioners, DCWP provided adequate justification, with support in the record, for its decision to compensate for on-call time (see Metro. Taxicab Bd. of Trade v. New York City Taxi & Limousine Com’n, 18 NY3d 329, 333 [2011]). During the rulemaking process, DCWP engaged with the various elements and concerns, including flexibility and instability, that directly involve or implicate on-call time. One factor relevant to on-call time is the unique nature and benefits of app-based delivery work, where: delivery workers can connect or log-on when they wish, may pre-schedule shifts, are offered incentivizes to hit production targets, and can accept, ignore, or decline trip offers (Report at 16, 17). The record reflects that DCWP had to balance these competing factors and try to produce a compensation formula that adequately supported workers without subjecting the apps to having to pay a higher compensation without performing an adequate number of deliveries. The record also reflects that DCWP appropriately considered the unstable base pay and work hours of delivery workers, the inconsistent offer and assignment availability, and the unanticipated and uncompensated wait times for offers or order preparation which affect overall earnings and tips (Second SBP at 6, 7, 12; respondent’s exhibit L, June 2022 hearing written testimony). The record therefore demonstrates that DCWP had a rational basis for its decision to compensate for all on-call time.¹⁰ Further, the record shows that DCWP conformed with CAPA requirements by providing a reasoned explanation for its actions and responding in a reasoned manner to comments received or problems raised (St. Vendor Project v. City of New York, 10 Misc 3d 978, 986 [Sup Ct 2005], affd, 43 AD3d 345 [1st Dept 2007]). DCWP addressed the petitioners’ concerns regarding compensating for time that does not result in a trip or actual work being performed, or otherwise incentivizing workers to log on to apps but not perform any food deliveries. DCWP found that the platforms had existing practices and could implement additional methods to combat this type of fraud and misconduct (Final SBP at 14). The platforms can block workers from receiving trip offers or, offer them infrequently (a practice known as gating); can limit future earning opportunities if a shift is missed or cancelled and can condition future earning opportunities on the acceptance rates of workers (Report at 35). DCWP also reasoned that the platforms are well equipped to monitor workers’ performances and can and often do condition future work opportunities based on performance during on-call time (Second SBP at 12, 17).¹¹ In fact, it was in direct response to the petitioners’ concerns and comments that the DCWP created the Alternative Method and the adjustment for “multi-apping”, both of which benefitted the platforms (Second SBP at 10; Final SBP at 4). In response to a proposal by petitioner DoorDash, DCWP adopted a version of the proposed “safe harbor” to the low utilization floor of 0.53, allowing platforms to use the Alternative Method in two pay periods where its utilization rate is lower than 0.53 (Final SBP at 4). DCWP also explained why it would not adopt alternative proposals that requested or offered a different utilization rate or multipliers: the suggested utilization rate and multiplier resulted in inadequate income in relation to expenses and were not in compliance with Local Law 115 as they were based on the platforms’ own data and not the results of DCWP’s study (Final SBP at 5).¹² Rejecting these alternative proposals or declining to make requested modifications does not necessarily mean that DCWP failed to analyze, or disregarded, the alternative data before it (Metropolitan Taxicab Bd of Trade v. New York City TLC, 18 NY3d 329, 333 [2011]). Third, petitioners argue that the Final Rule’s inclusion of on-call time clashes with DCWP’s stated purposes: to require petitioners to assume financial responsibility for workers’ time, and to accommodate the variety of pay arrangements already present in the industry.¹³ Petitioners consider this inclusion, incentivizing logging on and undermining valued flexibility and independence, to be a grave threat to their business model and to the gig economy as a whole. The Final Rule’s methods of compensating for on-call time does not conflict with DCWP’s goal of promoting worker efficiency. Under the Alternative Method, the platforms are incentivized to increase the number of deliveries per hour of trip time (alternatively put, to cut down on workers’ trip time per delivery) which will help offset labor costs and maximize workers’ on-call time (Final SBP at 16, 17). The Final Rule does not compel petitioners to make operational changes to their existing flexible framework nor does it restrict their ability to do so. DCWP explicitly states that “[a]pps have flexibility to manage their own labor needs and costs within the Final Rule framework and may choose to self-impose restrictions on platform access if they wish” (Final SBP at 7). Petitioners offer anecdotal evidence from workers who claim the Final Rule will cause them to stop accepting delivery orders if they are forced to work a certain number of hours or during particularly designated times in a week (see Uber’s exhibit 27, 29; Hermann affirmation, exhibit 6, public comments in response to first proposed rule). While this evidence is of relevance, the petitioners have not conclusively demonstrated that DCWP’s methods of compensating for on-call time are in irreconcilable conflict with the industry goals of promoting worker flexibility and independent arrangements. Higher compensation, including for on-call time, need not be mutually exclusive with worker flexibility, and it is not irrational to pursue both goals simultaneously. Nor does the Final Rule’s methods of compensating for on-call time conflict with DCWP’s goal of accommodating existing industry arrangements. DCWP’s goal was “to accommodate the variety of pay arrangements already present in the industry, which include per-trip rates and hourly pay” (Second SBP at 11). The Final Rule’s pay methods include: (1) the Standard Method, reflective of the previous pay practices by Relay that directly compensated for on-call and trip time and (2) the Alternative Method, reflective of the previous payment practices and operating methods of Uber, GrubHub, and DoorDash, which does not directly compensate for on-call time but provides for a right to higher rate of pay for trip time (Final SBP at 4). Considering the record before the Court, the Final Rule’s compensation of on-call time does not clash with, but is rationally related to, its stated purposes (New York State Ass’n of Ctys. v. Axelrod, 78 NY2d 158, 167 [1991]).¹⁴ WORKERS’ COMPENSATION COMPONENT: Petitioners argue that the workers’ compensation component is not rationally connected to its purported purpose and DCWP did not engage with or consider reasonable alternatives (see Lynch v. N.Y. City Civilian Complaint Rev. Bd., 98 NYS3d 695, 703 [Sup Ct NY Cnty 2019]; Street Vendor Project v. City of New York, 811 NYS2d 555, 561 [Sup Ct 2005]). Petitioner DoorDash also argues that DCWP failed to account for the problem that it will be paying twice, as it already provides occupational accident insurance. The stated purpose of the workers’ compensation component is to “compensate for expected income loss and medical expenses associated with on-the-job injuries that food delivery workers experience” (Second SBP at 7, 8). Through its study into the working conditions of delivery workers, DCWP detailed the safety risks, high rate of injuries and expenses, and work-loss time that these workers face (Report at 23-26). DCWP further notes that since these workers are classified as independent contractors, not full-time employees, they lack access to traditional workers’ compensation benefits or to alternative systems like the Black Car Fund (Report at 30). In consideration of these points, DCWP’s inclusion of a workers’ compensation component was rationally related to its’ stated purpose.¹⁵ Petitioners argue that DCWP failed to engage with the reasonable alternatives raised during the comment periods. However, the Court finds that DCWP did engage with these alternatives but found them to be unreasonable (see Partnership 92 LP v. State Div. of Hous. And Community Renewal, 46 AD3d 425, 429 [1st Dept 2007], affd, Matter of Partnership 92 LP, 11 NY3d 859 [2008] [even if different conclusions could be reached as a result of conflicting evidence, a court may not substitute its judgment for that of the agency if it is supported by the record]). Given the nature of the work and the current classification of the workers, DCWP’s rejection of the proposed alternatives was rational. DCWP reasonably rejected proposals for requiring apps to provide insurance or otherwise work with New York State to create a compensation fund for delivery workers. However, DCWP left open the possibility that if workers were able “to gain a legal right to a benefit equivalent to the workers’ compensation coverage currently available to employees, the Department may choose to revisit the workers’ compensation component at that time” (Second SBP at 8). It was neither unreasonable nor irrational for DCWP to reject proposals of an exemption for platforms that provide occupational accident insurance. It should be noted that presently, only one out of the four platforms provide this type of insurance (see respondent’s exhibit J, DoorDash insurance claim letter). Contrary to the argument by DoorDash, DCWP did not fail to account for it already providing accident insurance. DCWP pointed out that DoorDash’s current policy was inadequate as it: does not provide coverage for injuries sustained on on-call time, the policy contains exclusions that make benefits difficult or impossible to access, and the coverage terms are less generous than the New York State workers’ compensation system (Second SBP at 8; see also Med. Soc’y of State v. Serio, 100 NY2d 854, 870 [2003]). DCWP reasonably included the possibility of exemptions in the future for policies that do meet minimum coverage and accessibility criteria (Second SBP at 8). Regardless of the possibility of viable alternatives, the DCWP provided a reasonable explanation for including its workers’ compensation component and afforded a further opportunity of review for this component (see Matter of Natl. Fuel Gas Distrib. Corp. v. Pub. Serv. Com’n of State, 16 NY3d 360, 368 [2011] [a court must judge the action solely on the grounds invoked by the agency]; Matter of Ward v. City of Long Beach, 20 NY3d 1042, 1043 [2013] ["[i]f the determination has a rational basis, it will be sustained, even if a different result would not be unreasonable”]). REGULATORY REQUIREMENTS: Petitioners argue that the Final Rule’s recordkeeping and reporting requirements are burdensome, have no rational connection to administering a Minimum Pay Standard, and that the requirements exceed the limited scope of authority delegated to DCWP by the City Council. The law is clear that “[a]n agency cannot create rules, through its own interstitial declaration, that were not contemplated or authorized by the Legislature” (Matter of Tze Chun Liao v. New York State Banking Dept., 74 NY2d 505, 510 [1989]; see also Matter of New York State Superfund Coalition, Inc. v. New York State Dept. of Envtl. Conservation, 18 NY3d 289, 294-5 [2011] [agency's authority must coincide with its enabling statute and regulations must have a statutory basis, or they may represent an impermissible expansion of power]). However, this is not a winning argument in this case. A plain reading of the statute supports the conclusion that DCWP was authorized to create recordkeeping and reporting requirements of this nature.¹⁶ Local Law 115 directed DCWP to study and establish a method for determining the minimum payments that must be paid to food delivery workers in consideration of certain criteria. In doing so, the City Council authorized DCWP to request and issue subpoenas to produce data and information relating to this criteria and other factors DCWP deemed relevant (Admin. Code §20-1522 [a] [1], [2], [3]). In conjunction with that task, Local Law 115 asked DCWP to announce any updates and promulgate any amendments determined to be necessary, as well as, to submit a report on the Minimum Payment Rate, any amendments to it, and its effect on the workers and the industry (Admin. Code §20-1522 [c], [d]). It is unclear how petitioner would expect the DCWP to iron out any wrinkles that should arise with the Minimum Pay Rule, or create a report on its’ impact, if they did not have the relevant data to do so. What is clear is that the City Council, by including its own reporting requirement in Local Law 115, contemplated that DCWP would need to collect such data in order to fully fulfill its mandate. The Final Rule’s reporting requirement includes providing information, in totalities, which is incidental to implementing and, if needed, tweaking the Minimum Pay Rate and petitioners have not demonstrated that these requirements are unduly burdensome (see 6 RCNY §7-805 [d]). Therefore, the regulatory requirements are rationally related to the intended or stated purposes: enabling DCWP to monitor compliance, adopt amendments, and report on the effects (see Final SBP at 15). ASSUMPTION ABOUT RESTAURANTS: Petitioners argue that the Final Rule is based on the unsupported assumption that restaurants do not profit from the orders placed on food delivery platforms and as a result, DCWP failed to adequately consider the implications of the Final Rule on restaurants. Petitioners also claim that DCWP did not provide a timely disclosure of the economic model underlying its impact analysis, which allegedly included an assumption of zero percent restaurant margins, but that it was only revealed through a Freedom of Information Law request and subsequent analysis of the data performed by Uber (see Uber’s exhibit 16, 32). However, DCWP published the impact analysis on which it relied and disclosed its methods and analysis during the rulemaking process (Report at 34, 35; Second SBP at 16, 17; Final SBP at 15, 16, 19-21). In its impact analysis, DCWP assumed that restaurants will not see a material increase in fees and restaurant profitability will mostly unaffected (Report at 34, 35). In response to concerns regarding the impact analysis modeling, in the Final SBP, DCWP included a formal statement of its impact analysis, providing the inputs it used, and possible outcome variations based on additional sensitivity analyses (Final SBP at 15, 16: Table 7, 20, 21: Table 8). The impact analysis performed by DCWP, which serves as the basis for its assumption about restaurant profitability, did not include any numerical values for restaurant margins (Id.). Accordingly, this demonstrates that the assumption about zero percent restaurant profits or margins, was not actually relied upon in the impact analysis and/or economic modeling of the Final Rule (Id.).¹⁷ Therefore, the information that Uber received in response to its FOIL request was immaterial to DCWP’s consideration of the impact on restaurants and any issues are therefore irrelevant to the Court’s consideration. DCWP developed a model to estimate and assess the potential impacts and outcomes of the Minimum Pay Rule, by relying on assumptions about how industry actors will respond to the Minimum Pay Rate (Report at 5, 34). The DCWP looked at the relationship between restaurants and the apps to inform its assumption that restaurant profitability would be mostly unaffected (Report at 10, 35). DCWP claims that its statements about restaurant margins for delivery orders is consistent with previous data, pointing to previous interviews and an article, entitled, “Ordering in: The rapid evolution of food delivery,” published by McKinsey & Company (Report at 4; Krinsky aff in opp to Uber’s mot