GrubHub Defeats NYC Data-Sharing Law in Speech Fight (Correct)

DoorDash Inc., GrubHub Inc., and Uber Technologies Inc.‘s Uber Eats convinced a federal judge to hold unconstitutional a New York City law requiring food delivery apps to share customer data with restaurants.

The Customer Data Law violates the First Amendment because it regulates commercial speech and doesn’t concern unlawful or misleading activity, Judge Analisa Torres said in an order issued Tuesday in the US District Court for the Southern District of New York.

The law stemmed from concerns about delivery companies’ leverage over restaurants fueled by pandemic-forced closures, and aimed to enable restaurants to sidestep the platforms and directly market to their customers. The delivery platforms argued the law infringes the First Amendment by requiring them to provide data to restaurants that they otherwise wouldn’t.

New York City’s defense outlined three allegedly exploitative practices by the delivery companies: limiting restaurants’ ability to retain data on their own customers; using restaurants’ customer data to promote competing restaurants; and listing false information about restaurants. But the city didn’t provide “evidence that the Customer Data Law will in fact affect the objectionable practices,” Torres wrote.

“We are carefully reviewing the court’s ruling,” the NYC Law Department’s press office said in an email to Bloomberg Law.

• The law’s only effect on delivery companies’ practices would be “to make it more desirable for restaurants, now equipped with data that they could use to target customers, to leave Plaintiffs’ platforms,” according to the opinion.
• Torres outlined alternatives, including a requirement that delivery companies offer an opt-in program for customers to send their data to restaurants.
• DoorDash filed the lawsuit a month after the law was enacted in August 2021.

Cahill Gordon & Reindel LLP represents Grubhub. Uber’s delivery division, known as Portier LLC, is represented by lawyers from Hecker & Fink LLP. Gibson, Dunn & Crutcher LLP represents DoorDash.

The case is Grubhub Inc. v. City of New York, S.D.N.Y., No. 21-cv-10602, 9/24/24.