The online ordering website Grubhub has asked a federal court to send a proposed class action alleging the popular digital service collects undeserved commissions to arbitration.
Grubhub filed a motion to compel arbitration with the U.S. District Court for the Eastern District of Pennsylvania on Wednesday. The filing in Tiffin EPS v. Grubhub argued that Tiffin Indian Cuisine restaurants, which filed the proposed class action late last year, agreed to arbitrate disputes on a non-class basis before the American Arbitration Association when it agreed to the terms and conditions on Grubhub’s website.
The 27-page motion, filed by Jones Day attorney Rebekah Kcehowski, said not only that the terms of service were clearly outlined on the company’s website but also that Tiffin was not an unsophisticated user, and the restaurant chain, which regularly used the online ordering service, included similar terms and conditions notifications on its own website.
“Tiffin—just like Grubhub—also imposes a limitation of liability provision on all of its users through these terms and conditions,” Grubhub said in the filing. “But, notably, the Tiffin ‘[r]elease’ can be found and reviewed only after the customer reads half-way through the terms and conditions and past the heading, ‘You’re Going To Need Some Food To Get Through The Rest Of The Jargon. Go Ahead And Order… We’ll Wait,’ which encourages customers to participate in and use the sites before reading the terms in full.”
Tiffin Indian Cuisine restaurants filed a proposed class action lawsuit in the Eastern District in December, contending that Grubhub was withholding millions from restaurants across the country because it charged commissions on “sham” phone calls that did not result in takeout orders. The complaint alleged that Grubhub’s practices had deprived “tens of millions” of dollars in revenue from more than 80,000 restaurants.
According to the complaint, the online ordering company charged commissions on phone calls, regardless of whether they resulted in an order being placed for takeout. The complaint said the company did this by issuing new phone numbers for restaurants that appear on Grubhub’s sites, and, when dialed, the company redirected the call to the intended restaurant and recorded the calls.
The complaint alleges that the company failed to disclose these practices, misrepresented how it charges commissions, and failed to undertake, or disclose, any of the methods by which it analyzes the calls to determine which result in orders. Grubhub is a Chicago company, so Tiffin also alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, which allows for treble damages.
“Grubhub’s actions, and failure to act when required, have caused plaintiffs and tens of thousands of other restaurants across the country to suffer harm, including but not limited to lost profits in the tens of millions of dollars over the past seven years,” Tiffin said in the complaint.
Grubhub in January asked the court to dismiss the lawsuit, arguing, among other things, that it had disclosed the commission to Tiffin in monthly statements, online ledgers, public disclosures and in its contract with one of the restaurants.
In its most recent motion, Grubhub contended that, on several occasions, it provided notice to its users about its terms and conditions, with banners on its web page announcing updates and “timed pop-up” notifications forcing users to acknowledge updates. Notice of the terms, the company argued, was “unavoidable.”
Kcehowski did not return a call for comment, and Dilworth Paxson attorney Catherine Pratsinakis declined to comment.