DoorDash Charged NYC Restaurant Almost $14K in Unlawful Fees, Lawsuit Alleges

Harlem Shake, a popular restaurant in Manhattan, is taking DoorDash to court for charging “unlawful and excessive” service fees, alleging the delivery service ran off with $13,932 of the restaurant’s money and only offered to refund half. 

The lawsuit comes after New York implemented a cap on delivery fees during the Covid-19 pandemic, stopping delivery services from putting an unfair squeeze on restaurants during a difficult time. Harlem Shake alleges DoorDash has broken the city’s law ever since it was implemented with its “unlawful, unfair, and/or fraudulent actions.”

A recipe for dispute

Harlem Shake filed a proposed class action lawsuit against DoorDash in California federal court alleging DoorDash’s behavior is “widespread and pervasive.” The restaurant entered an agreement with the delivery service in 2019 and in mid-2023 Harlem Shake staff noticed DoorDash had been charging fees that exceeded the city’s cap. 

When the restaurant asked DoorDash about the fees, a rep from the delivery service said it had “improperly taken $13,932.01 in commissions” and insisted Harlem Shake execute a release and settlement of the claims for $7,259.19. 

 “To date, DoorDash has failed to provide any full accounting, but has admitted that it charged fees in excess of the fee cap,” the lawsuit says.

New York City restaurants need delivery

Restaurants are part of the lifeblood of New York City, and during the pandemic delivery services became essential for their survival. As more restaurants joined delivery services and New Yorkers' appetites increased for food delivered to their door steps, so too did the industry's appetite for profits — backed by venture capital, the lawsuit argues. 

“The major food delivery platforms doubled their combined revenue during the pandemic, making a profit of $5.5 billion in April to September 2020, compared to $2.5 billion during the same months the previous year,” the lawsuit claims. 

Grubhub CEO Matt Maloney told MarketWatch that the pandemic caused the platform to receive “10 to 15 times our usual new restaurant leads.”

In response to “exorbitant delivery fees” that were being charged by third-party delivery services like DoorDash and Grubhub, New York City passed a law capping fees at 20 percent. 

“DoorDash has violated these limits since they were first instituted by New York,” Harlem Shake claims in the lawsuit.

Delivery services push back

In September last year, a federal judge in Manhattan gave DoorDash, Grubhub, and Uber Eats the OK to sue New York City over the law capping delivery fees, which they argue forces them to operate at a loss, Reuters reported. The delivery services argue that the law unlawfully deprived them of their ability to collect higher commissions under their contracts with restaurants, costing hundreds of millions of dollars in revenue, which the judge said they had adequately alleged.

Meanwhile, Uber Eats and other delivery services were shut down by a New York state appeals court in their efforts to overturn a minimum wage law recently enacted by the city for delivery drivers, Reuters reported. The law will require companies to pay delivery workers $17.96 an hour, which will rise to nearly $20 in April 2025.

Consumers take action, too

Some restaurants have found themselves on the receiving end of unfair delivery fee lawsuits. Bakery and cafe chain Panera agreed to pay $2 million to settle a class action lawsuit in which customers said Panera marked up prices for delivery orders by five to seven percent. 

Meanwhile, Chick-fil-A agreed to settle a class action lawsuit where customers accused it of raising food prices by as much as 30 percent for delivery, Fortune reported. The $4.4 million settlement resulted in members of the class receiving either a $29.25 cash payment or a gift card. Panda Express has also recently settled a similar lawsuit.

Consumers have also sued delivery services Grubhub, Uber Eats and Postmates, accusing them of conspiring to drive up prices for restaurant meals during the pandemic, Reuters reported.

Harlem Shake wants to represent restaurants across New York City’s five boroughs in the proposed class action lawsuit and is suing for violations of the Administrative Code of City of New York, and other local laws. The restaurant wants damages, restitution, and declaratory and injunctive relief.

The plaintiffs are represented by Jenelle Welling of Rossi Domingue LLP; Charles Barrett and Daniella Bhadare-Valente of Neal & Harwell PLC; and David McMullan of Barrett Law Group P.A.

The DoorDash excessive fees class action lawsuit is Omnity Consulting LLC d/b/a Harlem Shake v. DoorDash Inc., Case No. 4:24-cv-00959, in the U.S. District Court for the Northern District of California.