NEW YORK (Legal Newsline) - A New York City law that requires food delivery companies like DoorDash and Uber Eats to supply restaurants with customers' personal information is unconstitutional.
Federal judge Analisa Torres on Sept. 24 made that decision, granting summary judgment to the companies' First Amendment challenge to NYC's Customer Data Law, which has been stayed pending resolution of the case.
Uber Eats, DoorDash and Grubhub teamed for a challenge in 2021. The law would have required them to provide to restaurants customers' full names, email addresses, phone numbers, delivery addresses and order contents.
The only way customers could block this from happening was to opt out, but the CDL presumes a diner consents to the disclosure of the information. Delivery services says this arrangement violates the First Amendment because it requires them to furnish data it would not otherwise provide.
"The City may prefer that restaurants have access to customer data, but a mere preference for one industry over another is not a substantial state interest," Torres wrote.
"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."
The bill passed in July 2021, two years after the New York City Hospitality Alliance told a city council committee to explore who owns customer data and whether a restaurant transacting a large amount of business on a food delivery platform will lose customers if it leaves the platform.
A proposed bill aimed to protect restaurants by requiring more information sharing with delivery companies. Restaurants could supposedly use the info for marketing purposes.
Restaurants complained about the leverage delivery companies have over restaurants by withholding customers' info. The NYCHA claimed the law would "even the playing field."
But Torres wrote there are less restrictive alternatives to achieve this goal than what became law. The delivery companies could have been required to offer opt-in programs for customers to send their data to restaurants, as well as financial incentives encouraging delivery services to provide the data, she wrote.
"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," Torres added.
A proposed judgment against the law is due by Oct. 7.