Food delivery service Grubhub will pay more than $3.5 million to Massachusetts restaurants and a $125,000 fine to the commonwealth for illegally charging its regular fee during the pandemic — when it was legally barred in this state from doing so.
“Grubhub unlawfully overcharged and took advantage of restaurants during a public health emergency that devastated much of this industry,” Attorney General Andrea Campbell said in a statement Friday. “I am proud of my office’s dedicated work in securing meaningful financial relief for impacted businesses and we will continue to protect both consumers and businesses from such unfair and illegal practices.”
In 2020, Massachusetts enacted a state of emergency in response to COVID-19 and with it a slate of rules of order that included legislation that limited fees delivery services like Grubhub could charge partner restaurants to no more than 15% of the purchase price of an online order, according to the lawsuit filed in July 2021 under now-Gov. Maura Healey’s term as AG. The state of emergency and such rules lapsed on June 15, 2021.
The lawsuit alleged that Grubhub “repeatedly violated this fee limit and charged covered establishments fees in excess of 15%,” which it stated “damaged restaurants financially during the declared COVID-19 emergency, often raining restaurant costs by thousands of dollars.”
The lawsuit demanded the company pay the state restitution equal to all fees in excess of the statutory cap and a civil penalty of $5,000 per order.
The parties battled it out in Suffolk Superior Court, but in March 2023, a judge issued a summary judgment against Grubhub.
A Grubhub spokesperson provided the Associated Press with a statement that said serving restaurants is “at the heart of everything Grubhub does.”
“Our success depends on these valuable merchant partners. While we have always complied with Massachusetts’ temporary price control, we’re ready to move forward from this situation and continue providing Massachusetts restaurants with the best possible service,” the written statement continued.
The AG’s office said it would reach out to restaurants impacted by the settlement but that any businesses with questions should contact the department’s Insurance and Financial Services hotline at 1-888-830-6277.
The president and CEO of the Massachusetts Restaurant Association said he is “grateful that both parties have come to a settlement, and that funds will go back to the restaurants that were working so hard to survive and serve customers during the pandemic.”
“While the dark days of the pandemic are behind us, the impacts are still being felt across the restaurant industry. Delivery, especially third-party delivery, is not going away,” Stephen Clark said.
Nancy Lane/Boston Herald
AG Andrea Campbell listens during a Governor’s Council confirmation hearing for Elizabeth “Bessie” Dewar at the State House last month. (Nancy Lane/Boston Herald)
