Crime & Law

DoorDash Agrees to Pay $18M to Settle Chicago Lawsuit Alleging Firms Hurt Restaurants During COVID-19 Pandemic

DoorDash agreed to pay $18 million to resolve a lawsuit filed by the city of Chicago in 2021 that alleged the delivery firm harmed restaurants and misled diners during the COVID-19 pandemic that decimated Chicago’s restaurant industry, Chicago officials announced Friday.

The city’s lawsuit accused DoorDash of advertising delivery services from restaurants without their consent, damaging the restaurants’ reputations and forcing them to scramble to resolve complaints.

“This settlement demonstrates Chicago’s commitment to standing up for workers and small businesses while maintaining a fair and honest marketplace,” Mayor Brandon Johnson said in a statement.

The lawsuit was brought by former Mayor Lori Lightfoot. The city also sued Grubhub, another third-party delivery service, and that lawsuit is scheduled for trial on Dec. 10.

A spokesperson for DoorDash said in a statement that the “firm was pleased to have settled a years-old lawsuit.” 

“To be clear, this settlement isn’t an admission of wrongdoing and the allegations in this lawsuit focus on business practices that no longer exist,” the statement said. “We’re glad to put this behind us.”

The city’s lawsuit against DoorDash claimed the firms “lured consumers into a bait-and-switch with deceptively small delivery fees upfront, only to charge misleading fees at the end of the transaction.” That inflated the final bill by as much as six times higher than the advertised amount, city officials said.

The firms also hid that their prices were “significantly higher than the prices available if ordering directly from the restaurant,” according to the lawsuit.

The lawsuit also accused Grubhub of violating a city ordinance requiring them to cap their fees at 15% until Dec. 8, 2021, or 180 days after the last of the city’s COVID-19 restrictions were lifted.

According to a statement from the mayor’s office, Grubhub launched “deceptive, promotional campaigns to ‘save restaurants’ during the pandemic, while forcing participating restaurants to extend their contracts, cover the cost of the promotions, and pay Grubhub its full commission on all orders.”

The lawsuit accuses DoorDash of “misleading consumers to believe they were tipping drivers directly” but using that money to subsidize the firm’s payment to its drivers.

In addition, DoorDash, imposed a “misleading ‘Chicago Fee’ of $1.50 on every order in the city, deceptively implying the fee was required by, or paid to, Chicago — when in fact DoorDash was the sole beneficiary,” according to the mayor’s office.

DoorDash agreed to pay $3.25 million to restaurants that had been listed on DoorDash’s platform without consent and are not currently on the platform, according to the city’s statement.

An additional $5.8 million in delivery commission and marketing credits will be paid to restaurants currently on the DoorDash platform, with a lion’s share going to those that were initially listed by DoorDash without consent, but have since joined the platform, according to the city’s statement.

DoorDash users will get $4 million in credits, which can be applied to food delivery orders, starting Jan. 26, according to the city’s statement.

An additional $500,000 will go to drivers who were delivering food orders in Chicago as of September 2019, the last month that DoorDash’s practice of using tips to subsidize driver pay was in effect, according to the city’s statement.

DoorDash will also pay $4.5 million to the city to cover the cost of the lawsuit, according to the city’s statement.

Contact Heather Cherone: @HeatherCherone | (773) 569-1863 | [email protected]

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