Grubhub Not Buying Phila. Restaurant's Proposed Class Action Lawsuit
Tiffin Indian Cuisine restaurants filed a proposed class action, contending that Grubhub was withholding millions from restaurants across the country because it charged commissions on "sham" phone calls that did not result in takeout orders.
January 29, 2019 at 03:19 PM
3 minute read
Online ordering service Grubhub is pushing back on a proposed nationwide class action spearheaded by a Philadelphia restaurant chain that claims the popular digital service is collecting undeserved commissions.
Last month, Tiffin Indian Cuisine restaurants filed a proposed class action lawsuit in the U.S. District Court for the Eastern District of Pennsylvania, contending that Grubhub was withholding millions from restaurants across the country because it charged commissions on “sham” phone calls that did not result in takeout orders. The online ordering company, however, shot back in court papers recently, saying Tiffin's lawsuit failed to raise a claim.
“The face of the complaint makes this much clear. … There has been no 'deception' on Grubhub's part in this matter,” Pittsburgh-based Jones Day attorney Rebekah Byers Kcehowski said as part of a motion to dismiss. “Grubhub has performed in accordance with the contracts at all times.”
Dilworth Paxson attorney Catherine Pratsinakis, acting on behalf of the two Tiffin restaurants that are lead plaintiffs in the case, filed the proposed class action in late December. The complaint alleged that Grubhub's practices had deprived “tens of millions” of dollars in revenue from more than 80,000 restaurants.
According to the complaint, the online ordering company has been charging commissions on phone calls, regardless of whether they resulted in an order being placed for takeout. The complaint said the company does this by issuing new phone numbers for restaurants that appear on Grubhub's sites, and, when dialed, the company redirects the call to the intended restaurant and records the calls.
The complaint alleges that the company failed to disclose these practices, misrepresented how it charges commissions, and failed to undertake, or disclose, any of the methods by which it analyses the calls to determine which result in orders. Grubhub is a Chicago company, so Tiffin also alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, which allows for treble damages.
“Grubhub's actions, and failure to act when required, have caused plaintiffs and tens of thousands of other restaurants across the country to suffer harm, including but not limited to lost profits in the tens of millions of dollars over the past seven years,” Tiffin said in the complaint.
In its response filed late last week, Grubhub asked the court to dismiss the lawsuit, arguing, among other things, that it had disclosed the commission to Tiffin in monthly states, online ledgers, public disclosures, and in its contract with one of the restaurants.
Grubhub also noted that roughly 15 percent of Tiffin's business comes through Grubhub, so the online platform allowed the restaurants to grow its customer and revenue base.
Regarding the treble damages, Grubhub further contended that Illinois' consumer fraud law did not apply to non-Illinois plaintiffs.
“And even if plaintiffs could overcome these threshold issues, their claim would still fail on the merits under the Act and Rule 9(b)'s heightened pleadings standard, as the complaint is devoid of particularized allegations of 'deceptive' practices or of any intent that plaintiffs rely on such alleged practices,” Grubhub said.
Neither Kcehowski nor Pratsinakis returned a call seeking comment.
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