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A permanent cap on third-party delivery fees that San Francisco imposed is being challenged.
DoorDash and Grubhub are taking the city to court over the first-in-the-nation cap, according to the San Francisco Chronicle.
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The suit goes after the cap as an "irrational law, driven by naked animosity and ill-conceived economic protectionism."
San Francisco’s Board of Supervisors voted unanimously in June to permanently cap the fee at 15% per order.
The intent of the cap was to protect independent restaurants from predatory practices by third-party delivery apps.
DoorDash and Grubhub are arguing that the city’s ordinance is unlawful and could actually hurt restaurants.
The companies are seeking monetary damages and warn in the lawsuit that the limit might force them to cut down — or eliminate completely — their operations in San Francisco.
"Costs to facilitate food delivery that are not covered by restaurants will likely shift to consumers — irrespective of whether those restaurants would prefer to bear those costs to increase their own sales — thereby reducing order volume, lowering restaurant revenues, and decreasing earning opportunities for couriers," the lawsuit reads.
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Plaintiffs DoorDash, based in San Francisco, and Grubhub, in Chicago, filed the lawsuit in the U.S. District Court for the Northern District of California early Friday evening.
John Cote, communications director for the city attorney’s office, said they "will review the lawsuit once we’ve been served with it, and we will address it in court."
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