Third-party delivery companies win consumer data case against New York City

A U.S. district court judge has ruled in favor of DoorDash, Uber Eats, and Grubhub, and against New York City’s COVID-era rule that required the delivery apps to release consumer data to restaurant operators. Judge Analisa Torres ruled that New York City’s rule requiring delivery apps to share customer data with restaurants is unconstitutional. She said that the law improperly regulated commercial speech and was therefore in violation of the first amendment.

New York City originally passed the law in August 2021 as an attempt to help restaurants in the aftermath of COVID-19-related restaurant closures.

“Even if the court were to find that the city has a substantial interest in ensuring that restaurants obtain data about customers who order food, it has not demonstrated that the Customer Data Law is appropriately tailored to this goal,” Torres said in her ruling. “The city has not demonstrated that an incentive-based program or more fine-tuned regulation would be ineffective, and compelling delivery services to disclose customer data is incommensurate with the identified harm.”

Delivery apps consider this a major victory over New York City, which has attempted to regulate delivery apps’ operations model previously through passing delivery fee caps and new minimum wage standards for delivery drivers, both of which the third-party delivery companies have tried to fight in court.

The New York City hospitality industry, however, sees this court decision as a net loss for its operators.

 “[B]y withholding the data the [delivery services] have enormous leverage over restaurants, because restaurants can’t leave the platform because then essentially, they leave their customers, and then the [delivery services] will use that customer data to market to competitor restaurants,” Andrew Rigie, executive director of the New York City Hospitality Alliance, said during a hearing on the law.

The ruling is currently under review by the New York City law department.

Contact Joanna at [email protected]