Grubhub Fraudulent Restaurant Listing Lawsuit

On May 7, 2021, Gibbs Law Group filed an opposition to a proposed settlement set forth by Grubhub.
The proposed settlement would effectively legalize Grubhub’s practice of listing approximately 150,000 restaurants on its platform without consent, and it wouldn’t give any notice to affected restaurants or allow them to opt out of the settlement.

This means restaurants would be forced to abide by this sweetheart settlement and would lose the right to pursue legal action against Grubhub in the future. The proposed settlement would also force restaurants listed without permission to claim their own Grubhub profile listing before being allowed to request removal or to fix errors in menus or hours of operation. Finally, the proposed settlement provides zero payout to restaurants listed without consent; instead, Grubhub would only pay one plaintiff restaurant, Freshcraft, and its attorneys.

In our opposition to this predatory settlement, Gibbs Law Group has gathered declarations from over 20 restaurant owners who describe in detail their stories of how Grubhub damaged their business and reputations by listing their restaurant without consent, and how the proposed settlement would hurt restaurant owners across the country at a time when the industry is already particularly vulnerable:

If this settlement goes through, it will allow Grubhub to legally use our name to build up their business, all without our permission. The settlement would allow Grubhub to continue engaging in this predatory behavior unhindered.

—S. Walden, owner of The First Seat

I have never signed up and have never asked to have my restaurant listed in the first place. The burden should not be placed on restaurants to request to be removed.

— K. Lawson, owner of La Mesa Modern Mexican

 

“Under the Lanham Act, you’re not allowed to misrepresent to consumers that you have a business relationship with another business when you don’t. There’s a negative experience for the customer and sometimes the restaurant only learns of it when they read a Yelp review.”

— Steven Tindall, attorney representing restaurants harmed by Grubhub

“All the money Grubhub made by including restaurants on its platform without consent rightfully belongs to restaurants, whose strong local reputations were responsible for quickly reversing Grubhub’s flagging fortunes.”

— Geoffrey Munroe, attorney representing restaurants harmed by Grubhub

• Eater: Restaurant owners should be able to affirmatively decide whether to affiliate with Grubhub to offer delivery and takeout services.
• CBS News: Grubhub added “non-partnered restaurants” because company officials felt pressure from shareholders to boost revenue.
• Fox Business: 150,000 non-partner restaurants have been added to GrubHub since 2019.

Restaurants across the country report being listed on Grubhub without their permission, even after they call and request being taken down. One restaurant owner in reddit reports:

Despite calling and emailing for a year to remove us from their site, they are still calling pretending to be regular pickup orders. This is company practice to call non participating restaurants and pretend to be a regular pick up order. Some of the times they call from their Colorado call center and we can tell it’s them. Grubhub is NOT a restaurants HERO. Quite the opposite. They are CROOKS.

As many restaurants pivot to take-out and delivery to survive the COVID-19 pandemic, an increasing number of restaurant delivery sales are being made on apps like Grubhub. As a result, many restaurants may feel forced to accept these Grubhub orders, despite high fees and unfavorable terms. One restaurant owner quoted in LA Magazine says:

We used to be with them before, with our permission, but early last year, we told them to take us off. Then about a month ago, Grubhub drivers started showing up with orders… We refused the early orders. But then decided [to] take them… The profit margin was nominal for the headaches.

Unfortunately, these unauthorized listings can damage restaurants’ hard-earned reputation. One restaurant owner tells Evansville Courier & Press she only found out about the unauthorized listing after a customer ordered something that wasn’t even on the menu:

We had a customer come in angry at us. When they called, we told them we’re not on it (Grubhub) and they screenshotted to show us… of course, I got on the app and found it. It’s infuriating; it’s absolutely infuriating. And the fact that they are knowingly doing this to us. They wouldn’t do this to a big franchise because they have corporate attorneys at their beck and call. They do this to these little mom and pop and shops.

After Grubhub stock fell by 43% in October 2019, the company openly told shareholders it would start listing restaurants without their permission, in order to stay competitive with rivals like DoorDash, Uber Eats, and Postmates:

Right now, our existing and new potential diners find more restaurants on other platforms – we need to eliminate this difference and speed is paramount… For restaurant inventory, we will rapidly expand our recent pilots of putting non-partnered restaurants on the platform.

In the same letter, they admit this leads to a bad experience for restaurants and customers:

It is expensive for everyone, a suboptimal diner experience and rife with operational challenges. With that said, it is extremely efficient and cheap to add non-partnered inventory to our platform.

As a report in Eater says, “it’s the price delivery companies seem to be willing to pay at everyone else’s expense.”

Grubhub’s phone number for restaurant owners: (877) 799-0790

Unfortunately, many restaurant owners have reported having to call and email Grubhub multiple times to remove their listing, only to find themselves receiving Grubhub orders again a few weeks or months after removal. If this happens to you, one of our attorneys may be able to help. Contact us to learn more about your options.

We’re combatting harmful and unfair business practices to help restaurants make it through these difficult times. If your restaurant was denied insurance coverage after shutting down for COVID-19 safety, we can help with that too. Visit our page: Business Interruption Insurance Lawsuits

“The COVID-19 closures are having a profound impact on the restaurant industry. It’s a pretty substantial social issue.”

— Andre Mura, attorney on our COVID-19 Business Interruption Insurance Coverage Task Force

Steven Tindall

Steven Tindall has specialized in employment and class action litigation for eighteen years. He has been lead or co-lead counsel on several cases that resulted in settlements worth over $1 million.

Dylan Hughes

Dylan Hughes concentrates his practice on investigating and prosecuting fraud matters on behalf of whistleblowers, consumers and employees harmed by corporate misconduct.

Elizabeth Fegan

Elizabeth Fegan, co-founder and managing partner of FeganScott LLC, is an acclaimed class action attorney representing victims of sexual abuse, discrimination, consumer fraud, antitrust violations and other offenses. In 25 years practicing law, Beth has recovered more than $1 billion for her clients.