DoorDash sues New York City over customer data law, second lawsuit in week

© Reuters. FILE PHOTO: Doordash logo is seen on a smartphone in front of displayed Japan flag in this illustration picture taken June 9, 2021. REUTERS/Dado Ruvic/Illustration

By Jonathan Stempel

NEW YORK (Reuters) - DoorDash Inc sued New York City on Wednesday over a new law requiring food delivery companies to share customer data with restaurants, saying it violates customer privacy and lets restaurants compete unfairly.

The lawsuit is the latest battle in a series of legal clashes between food delivery app companies and cities.

It was filed in federal court in Manhattan six days after DoorDash, Grubhub Inc and Uber (NYSE:UBER) Eats sued the United States' most populous city over a separate law capping fees that delivery companies charge restaurants.

Representatives of New York City's law department were not immediately available for comment.

Since the coronavirus pandemic began, New York has tried to help restaurants that had complained about delivery app companies charging fees as high as 30%, but became more dependent on delivery as dining rooms closed or limited capacity.

About 90,000 restaurants nationwide have closed temporarily or permanently during the pandemic, costing 1.5 million jobs, the National Restaurant Association said in June.

In Wednesday's lawsuit, San Francisco-based DoorDash said New York exhibited "naked animus" by requiring food delivery companies to provide customers' names, phone numbers, email addresses and delivery addresses to restaurants.

DoorDash said this would let restaurants "free-ride" on the data in a "shocking and invasive intrusion of consumers' privacy," saying restaurants would not demand the same information from in-person diners.

It also said "more vulnerable populations, especially undocumented customers" could be harmed if data were mishandled, and shared with immigration authorities or hate groups.

Soon after the pandemic began, New York City imposed temporary 5% and 15% fee caps on food delivery apps, which the companies hoped would end as restaurants resumed more normal operations.

That cap cost DoorDash, Grubhub and Uber Eats hundreds of millions of dollars of revenue through July, the companies said.

DoorDash and Grubhub sued San Francisco in July over fee caps there. Chicago sued those companies last month, saying their deceptive practices misled customers and hurt restaurants. DoorDash and Grubhub rejected Chicago's claims.

The case is DoorDash Inc v City of New York, U.S. District Court, Southern District of New York, No. 21-07695.