NEW YORK (Legal Newsline) - A federal judge is refusing to send a proposed class action lawsuit against Grubhub, Uber and Postmates to arbitration.
New York judge Lewis Kaplan denied those defendants' motion to compel arbitration on March 16, allowing the case to proceed in open court. Kaplan had already denied the companies' motion to dismiss the case.
Litigation started in 2020, alleging the defendants have used their positions in the food-delivery industry to fix prices. They do so with agreements with restaurants that prevent those restaurants from selling food at lower prices either directly to consumers or through a competing delivery company.
The case is brought under the Sherman Act and seeks certification of three nationwide classes.
The defendants instead claimed the dispute was subject to arbitration clauses in their terms of use. Grubhub's says "any" dispute is to be sent to arbitration, plus a class action waiver.
Second Circuit law says an arbitration clause is broad if it simply stipulates "any claim or controversy arising out of or relating to the agreement."
"(T)he Grubhub checkout page - where the... Plaintiffs allegedly manifested assent - does not require users to check a box or take any affirmative action indicating that they have assented to, let alone read, the Grubhub terms of use," Kaplan wrote.
"Rather, Grubb alleges that the... Plaintiffs manifested assent by placing their orders on a page that states, in fine print, '(b)y placing your order you agree to Grubhub's terms of use.'"
Screenshots showing where notice of the terms of use are on the app and website were meaningless, Kaplan ruled. He said the company failed to show what its app and web page looked like at the time the named plaintiffs made their orders.
The clauses are referred to as "infinite arbitration clauses" as they seek to govern "any" dispute, Kaplan noted.
"Plaintiffs' claims are completely unrelated to their use of defendants' platforms," he wrote. "To the contrary, their claims specifically exclude any purchases made through defendants' platforms and are based solely on purchases made directly from restaurants or from non-defendant meal-delivery platforms.
"The fact that the... Plaintiffs a some time used some of the defendants' platforms is purely coincidental..."