Grubhub is being sued for allegedly adding tens of thousands of restaurants to its platform without permission.
The accusations come in a class-action lawsuit filed Monday in federal court by two restaurants on behalf of the 150,000 others they say have been listed on the delivery company’s app and website without consent.
It says the practice hurt restaurants by co-opting their dining experience and online presence, leading to confusion for diners, who blame the restaurant for problems with a Grubhub order. And it alleges that Grubhub violated federal trademark law by using restaurants’ names and logos without their permission.
It also alleges that Grubhub instructed drivers to pretend to be customers when picking up an order from a nonpartner restaurant to conceal the fact that the restaurant had been surreptitiously listed. A driver quoted in the suit called the process “sketchy.”
Grubhub declined to comment on the lawsuit.
Grubhub and other third-party delivery services openly admit to adding non-partner restaurants to their marketplaces. Grubhub started doing it last year, writing in a shareholder letter last October that it believed the practice was the “wrong long-term answer,” but was necessary to compete with other delivery companies that had been doing the same thing for years.
The tactic has come under increasing scrutiny recently. Last month, California outlawed the practice; starting Jan. 1, delivery companies will need restaurants’ written permission to list them. Grubhub strongly supported the measure, saying in a statement that it would “level the playing field, help restaurants better control where and how their food is delivered, bring lower fees to diners, and improve food delivery operations for everyone involved.”
The plaintiffs in the lawsuit are the owners of Antonia’s in Hillsborough, N.C., and The Farmer’s Wife in Sebastopol, Calif. It asks that Grubhub be found in violation of the Lanham Act, end its practice of adding non-partner restaurants, “turn over its ill-gotten gains” and pay damages to restaurants.
It was filed in U.S. District Court in Chicago, where Grubhub is based.
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