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INDEX NO. 155947/2023
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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:
In the Matter of the Application of, :
: Index No. __________/2023
DOORDASH, INC., and GRUBHUB INC., :
:
Petitioners, : Oral Argument Requested
:
For Judgment Pursuant to CPLR Article 78 :
: VERIFIED ARTICLE 78
– against – : PETITION AND APPLICATION
NEW YORK CITY DEPARTMENT OF : FOR A TEMPORARY
CONSUMER AND WORKER PROTECTION, : RESTRAINING ORDER AND
: PRELIMINARY INJUNCTION
and VILDA VERA MAYUGA, in her official :
capacity as Commissioner of the New York City :
Department of Consumer and Worker Protection, :
:
Respondents. :
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Table of Contents
NATURE OF THE PROCEEDING ............................................................................................... 1
THE PARTIES................................................................................................................................ 6
I. Petitioners ........................................................................................................................... 6
II. Respondents ........................................................................................................................ 6
JURISDICTION AND VENUE ..................................................................................................... 7
FACTUAL BACKGROUND ......................................................................................................... 7
I. Petitioners Provide Delivery Workers with Flexible Work Opportunities, Available
on Their Preferred Schedule. .............................................................................................. 7
II. The City Passes Local Laws Affecting Third-Party Food Delivery Service
Industry. ............................................................................................................................ 12
III. DCWP Studies Working Conditions for Delivery Workers, but Improperly
Excludes Grocery Delivery Services from the Scope of its Study. .................................. 15
IV. DCWP Issues a First Proposed Rule and Accompanying Report, and Receives
Significant Criticism. ........................................................................................................ 18
A. The First Proposed Rule and November 2022 Report. ................................................18
B. Commenters Raise Numerous Concerns with the First Proposed Rule. ......................21
V. DCWP Issues a Second Proposed Rule that Does Not Resolve the Many Concerns
Raised by Stakeholders. .................................................................................................... 24
A. The Second Proposed Rule. .........................................................................................24
B. Commenters Again Raise Significant Concerns with DCWP’s Proposal. ..................26
VI. DCWP Issues the Rule, Which is Set to Take Effect on July 12, 2023. ........................... 28
STANDARD OF REVIEW .......................................................................................................... 29
ARGUMENT ................................................................................................................................ 31
I. The Rule Contravenes DCWP’s Statutory Authority, Is Affected by Errors of Law,
and Is Arbitrary and Capricious. ....................................................................................... 31
A. DCWP Violated Its Statutory Mandate by Excluding Grocery Delivery
Companies from Both Its Study of Delivery Worker Pay and the Scope of Its
Resulting Rule. .............................................................................................................33
B. The Rule Must Be Annulled Because DCWP Irrationally Based Its Rule-
Making on the Results of Irredeemably Flawed Surveys ............................................40
C. The Rule’s Treatment Of “On-Call” Time Is Arbitrary And Capricious. ...................45
D. The Rule’s Inclusion Of A Workers’ Compensation Component Is Arbitrary
And Capricious. ...........................................................................................................52
E. The Rule Was Premised On An Unsupported Assumption That Restaurants
Earn 0% Margin On Delivery Orders. .........................................................................56
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II. The Court Should Enjoin Enforcement Of The Challenged Rule Pending
Adjudication Of The Petition. ........................................................................................... 58
A. Petitioners Are Likely To Succeed On The Merits. .....................................................58
B. Petitioners Will Suffer Irreparable Harm Absent Injunctive Relief. ...........................59
C. The Balance Of Equities Weighs Overwhelmingly In Petitioners’ Favor. ..................72
III. This Court Should Issue A Temporary Restraining Order While It Adjudicates
Petitioners’ Request For A Preliminary Injunction. ......................................................... 75
FIRST CAUSE OF ACTION ....................................................................................................... 75
NO PRIOR APPLICATIONS....................................................................................................... 77
TRIAL DEMAND ........................................................................................................................ 77
PRAYER FOR RELIEF ............................................................................................................... 77
VERIFICATION........................................................................................................................... 79
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Petitioners DoorDash, Inc. and Grubhub Inc. (“Petitioners”), by their undersigned
attorneys, Gibson, Dunn & Crutcher LLP, for their Verified Petition, allege as follows:
NATURE OF THE PROCEEDING
1. This Petition, pursuant to CPLR Article 78, challenges an unlawful, arbitrary and
capricious new rule (the “Rule”) promulgated by the New York City Department of Consumer and
Worker Protection (“DCWP”), and seeks a temporary restraining order and preliminary injunction
preventing DCWP from implementing or enforcing the Rule—which is set to take effect on July
12, 2023—during the pendency of these proceedings.1
2. Ignoring mountains of hard data and analysis, and over emphatic objections from a
range of constituents, DCWP enacted the Rule, which threatens to single out and punish Petitioners
and other third-party food delivery services2 like them unless they meet DCWP’s newly-contrived
minimum-pay requirements for delivery workers who independently contract with Petitioners.
Under the Rule, Petitioners must pay delivery workers either (1) nearly $20 per hour for any time
delivery workers spend logged into one of the third-party food delivery services that Petitioners
maintain, regardless of whether workers are running personal errands while passively receiving
(and not even reviewing) delivery offers on Petitioners’ platforms, waiting for offers of delivery
jobs, working with another third-party delivery service while logged into multiple platforms
simultaneously, or making deliveries; or, in the alternative, (2) $33 per hour for the time all
workers spend making deliveries—an increased rate that is double the City’s minimum wage and
1
Petitioners join in the arguments asserted by Uber Technologies, Inc. and Relay Delivery, Inc. in their concurrently
filed petitions.
2
Petitioners are not “food delivery services.” They are technology platforms that connect consumers, merchants, and
(sometimes) delivery workers. The New York City law, however, refers to Petitioners as “third-party food delivery
services.” For simplicity, this Petition uses the same terminology.
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that DCWP admits was designed to compensate delivery workers indirectly for all time spent
logged into Petitioners’ platforms, regardless of what they are doing during such periods.
3. Although Petitioners are not opposed to a well-constructed minimum-pay standard
for delivery workers (and, indeed, have supported such standards in other jurisdictions), the
implementation of this ill-conceived Rule will have drastic—and immediate—consequences for
all concerned parties if it is permitted to take effect on July 12, as scheduled. For New York City
consumers, it will mean—according to DCWP’s own analyses—a $5.18-per-order average
increase in charges across the industry, representing a 15% increase on current costs. For New
York City restaurants and other merchants, it will mean losing access to valuable delivery services
that merchants—particularly small and independent merchants—cannot replace on their own. For
delivery workers who work with DoorDash or Grubhub, it will mean the loss of a flexible
opportunity that they value, as well as decreased demand for their services. And for Petitioners, it
will mean damage to their business relationships, reputations, and goodwill, as well as significant
monetary damages that are difficult to quantify and unrecoverable even if the Court eventually
holds—as it should—that the Rule must be annulled.
4. Perhaps unsurprisingly, then, the rule-making record in this case demonstrates that
DCWP’s adoption of the Rule violated bedrock administrative-law principles and was irrational,
arbitrary, and capricious in multiple respects, any one of which is sufficient to compel the Rule’s
annulment.
5. First, both the Rule and the study upon which it is based ran afoul of DCWP’s
statutory mandate to study and regulate delivery-worker pay for all third-party food delivery
services. More specifically, the City Council directed DCWP to study and promulgate a rule
establishing a method for determining minimum payments “by a third-party food delivery service”
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to “a food delivery worker.” Affirmation of Gabriel Herrmann (“Herrmann Aff.”) Ex. 2 (“Local
Law 115”). By its plain language, that law encompasses all third-party delivery services—
including those that do business with not only restaurants, but also other individual-portion food
purveyors, such as grocery stores. Yet DCWP erroneously asserted in a single unexplained
sentence that third-party delivery services predominantly doing business with grocery stores
supposedly fell outside the scope of its statutory authority—and thus unlawfully excluded them
from its study and resulting rule. DCWP’s process thus foundered at the start, and the Rule is
arbitrary and capricious and irredeemably affected by an error of law.
6. Second, DCWP based the Rule in large part on two fatally flawed surveys of food-
delivery workers that were biased and unreliable on their face, including because they disclosed at
the outset that DCWP was conducting the surveys in order to “raise pay for app delivery workers.”
DCWP’s surveys were further tainted because they incorporated improper leading questions,
suggestive close-ended responses, and other improper survey techniques, reflecting the fact that
DCWP had pre-judged the outcome of its rulemaking process all along and had set out to ensure
increases in delivery-worker pay, as opposed to studying objectively what an appropriate
“minimum” payment standard for the industry would be. DCWP’s reliance on such inherently
biased and unreliable survey data renders the adoption of the Rule arbitrary and capricious as a
matter of law.
7. Third, DCWP artificially inflated its pay standards by centering them on a
requirement that Petitioners pay delivery workers for time they spend not working. When delivery
workers log onto DoorDash or Grubhub’s system, they are free to accept delivery offers, reject
delivery offers and wait for other offers, or do nothing. They can even be logged on while running
personal errands or sitting in a movie theater. The flexibility and control delivery workers hold
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over their schedules and work practices are core features of the “gig economy” opportunity that
Petitioners like DoorDash and Grubhub offer to the market, and delivery workers value it. But the
Rule unfairly makes Petitioners pay for all of the time that delivery workers spend logged on to
Petitioners’ platform—even if the workers are attending to personal matters and even if they reject,
or simply ignore, every offer they receive. Such a requirement will result in decreased demand
and delivery volumes on Petitioners’ platforms and therefore will result in fewer opportunities for
delivery workers. The Rule irrationally treats this key feature of the industry as a bug, and its
implementation will end up harming all industry participants rather than protecting delivery
workers.
8. Fourth, DCWP artificially inflated its payment standards in yet another way,
charging Petitioners for purported “workers’ compensation” benefits that are the opposite of
workers’ compensation. Instead of calling for an entire group to make incremental payments into
an insurance pool to cover the medical expenses of an unfortunate few who suffer work-related
injuries, the Rule requires Petitioners to pay every delivery worker a $1.68-per-hour upcharge that
DCWP admits workers will not use to procure comparable private insurance benefits. It
undercompensates injured workers but overcompensates uninjured workers—thus providing
nothing more than an arbitrary windfall for uninjured workers that serves none of the purposes of,
and does not supply a meaningful substitute for, workers’ compensation benefits. Indeed, it serves
only as an irrational economic disincentive for delivery services to supply voluntary accident-
insurance benefits for delivery workers that approximate workers compensation—which some
currently do—potentially resulting in less insurance coverage for workers. That is the height of
arbitrary rule-making.
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9. Fifth, DCWP’s analysis was premised on the conclusion that restaurants make a
0% margin on orders placed through third-party food delivery services. But that assumption is not
supported by record evidence and is not rational on its face because if it were, there would not be
so many restaurants on Petitioners’ platform. DCWP purported to substantiate its assumption by
citing a single internet article that does not say restaurants make 0% margin and by referencing
undisclosed conversations with restaurant stakeholders that the interested public never had a
chance to learn about or evaluate. Principled agency decision-making demands more.
10. The Rule did not have to turn out this way. Petitioners, scores of delivery workers,
and a range of community groups expressed their concerns through two rounds of comment letters
and proposed sensible alternative approaches that could have benefited, rather than harmed,
workers, businesses, and consumers across New York City. But DCWP either ignored them or
rejected them on grounds that do not withstand scrutiny. Its actions are disappointing, but perhaps
not surprising. This is hardly the first time that City officials have aggressively sought to single
out and regulate food delivery services like Petitioners in irrational and unlawful ways. For
example, they have imposed unlawful permanent caps on the fees third-party food delivery
services may charge to food service establishments. They have unlawfully attempted to require
third-party food delivery services to share their valuable customer data with merchants, without
providing for adequate privacy protections. And DCWP now seeks to unlawfully reconfigure the
nature of this industry, and squelch innovation and flexibility, by imposing onerous minimum-pay
requirements in the name of worker protection—likely harming the very workers they purport to
protect. Unfortunately, this latest Rule is as irrational and wrong-headed as the measures that have
come before it.
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11. Left with no other choice, Petitioners bring this Article 78 Petition to vacate and
annul DCWP’s arbitrary and capricious Rule. Petitioners further request that this Court enter a
preliminary injunction and a temporary restraining order preventing DCWP from enforcing the
Rule before the rule takes effect on July 12. DCWP may be entitled to promulgate sensible rules
establishing, on a proper record, a “method for determining the minimum payments that must be
made” to delivery workers across this entire industry. But the Rule is no such regulation, and its
implementation and enforcement must immediately and permanently be enjoined.
THE PARTIES
I. Petitioners
12. Petitioner DoorDash, Inc. (“DoorDash”) is a technology company founded in 2013
and headquartered in San Francisco, California. DoorDash operates a third-party platform in New
York City (and elsewhere in the United States) that facilitates the order and delivery of food and
other goods by connecting consumers to a broad array of merchants, and in some cases delivery
workers.
13. Petitioner Grubhub Inc. (“Grubhub”) is a technology company founded in 2004 and
headquartered in Chicago, Illinois. Grubhub’s online food ordering and delivery marketplace
(operating under the Grubhub and Seamless brands) connects consumers with a broad array of
local takeout and delivery merchants, and in some cases, independent-contractor delivery workers.
14. Each of the Petitioners, as entities directly regulated by Respondents and by the
challenged Rule, independently has standing to bring this Article 78 proceeding.
II. Respondents
15. Respondent Department of Consumer and Worker Protection (“DCWP”) is an
administrative agency of the City of New York that was created as the Department of Consumer
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Affairs on April 29, 1969 by the New York City Consumer Protection Law of 1969. Among other
responsibilities, DCWP regulates delivery service in New York City.
16. Respondent Vilda Vera Mayuga is the Commissioner of DCWP. She is named as
a respondent here in her official capacity only.
JURISDICTION AND VENUE
17. This Court has jurisdiction over this proceeding against Respondents pursuant to
CPLR 3001 and 7801, 7802, 7803, 7804, 7806.
18. This proceeding is timely because it is commenced within four months after
issuance of the Rule.
19. Venue is also appropriate in the County of New York pursuant to CPLR 506 and
7804(b) because DCWP determined to promulgate the Rule in the County of New York and the
principal office of DCWP is within the Judicial District that includes the County of New York.
FACTUAL BACKGROUND
I. Petitioners Provide Delivery Workers with Flexible Work Opportunities, Available
on Their Preferred Schedule.
20. For years, DoorDash and Grubhub have provided online platforms for New York
City residents to order food from local restaurants, grocery stores, and convenience stores.
Affidavit of Abhishek Poykayil (“Poykayil Aff.”) ¶¶ 3–4; Affidavit of Dan Schechner (“Schechner
Aff.”) ¶ 12. Petitioners have since become a cornerstone of the local restaurant industry,
responsible for facilitating hundreds of thousands of deliveries and proving significant value to the
thousands of New Yorkers who use their platforms each year. Poykayil Aff. ¶ 12; Schechner Aff.
¶ 5.
21. Consumers using DoorDash enjoy the ability to order from thousands of
restaurants, convenience stores, pet stores, grocery stores, and other businesses that DoorDash
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makes available at their fingertips. Schechner Aff. ¶ 5. DoorDash has built a strong reputation
based on the vast array of merchants it partners with from a wide range of industries, and its ability
to provide those merchants with many valuable services including marketing, facilitating food
delivery and pickup, order processing, customer support, and technology and product
development. Consumers, merchants, and delivery workers each play an important role in
DoorDash’s business. Id. ¶¶ 4–5.
22. Grubhub provides an online and mobile takeout marketplace that arranges retail
pick-up and delivery orders by connecting consumers with a broad array of local takeout and
delivery merchants (including florists, grocery, and convenience stores). Poykayil Aff. ¶ 4.
Consumers can place orders directly online on websites or mobile applications operated by
Grubhub. Id. Grubhub facilitates food ordering through innovative technology, easy-to-use
platforms, and improved delivery experience. Id. ¶ 5. At the heart of Grubhub’s success are its
relationships with merchants, delivery workers, and consumers, and the strong reputation it has
carefully built in nearly twenty years of operation as a reliable and beneficial partner to them. Id.¶ .
23. Both DoorDash and Grubhub operate in an extremely competitive delivery
industry—against each other and other companies. For example, each of the following companies
facilitates deliveries from food service establishments in New York City: Portier, LLC (“Uber
Eats”); Instacart Inc. (“Instacart”); Relay Delivery, Inc. (“Relay”); Chowbus Inc. (“Chowbus”);
Club Feast Inc. (“Club Feast”); Just Order Enterprises Corp. (“Fantuan”); HungryPanda US Inc.
(“HungryPanda”); Patio Delivery, Inc. (“Patio”); and GoHive Inc (“GoHive”). See Herrmann Aff.
Ex. 4 (“DCWP Report”) at 2.
24. Many of these platforms, including DoorDash, Grubhub, Uber Eats, and Relay,
facilitate food deliveries from restaurants to consumers. Others, such as Instacart, primarily
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facilitate delivery of food from grocery stores, convenience stores, and other non-restaurant
merchants. DoorDash, Grubhub, Uber Eats, and others also facilitate food delivery from grocery
and convenience stores, albeit on a more limited scale relative to restaurant deliveries. DoorDash
and Grubhub compete amongst these companies for relationships with merchants, delivery
workers, and consumers.
25. Petitioners provide flexible, reliable work opportunities for thousands of delivery
workers in New York City. Schechner Aff. ¶ 7; Poykayil Aff. ¶ 8. This flexibility arises from an
approach unique to the third-party delivery industry. Poykayil Aff. ¶ 36. Delivery workers who
partner with Petitioners and many of their competitors access work opportunities by logging onto
these companies’ platforms. Id.; Schechner Aff. ¶ 35. Delivery workers receive offers to make
deliveries and are free to choose whether to accept, reject, or simply ignore them. Schechner Aff.
¶¶ 8, 36; Poykayil Aff. ¶ 10. If they accept, they are expected to perform the delivery. If they
reject the offer, they will continue to see available offers until they log off the platform. If they
ignore the offer, the offer will lapse after a period of seconds, and they will continue to see
available offers until they log off the platform. Petitioners have not historically required delivery
workers to accept any minimum number of offers to remain on their platforms, so a delivery
worker is free to log onto a platform for hours without accepting a single delivery. Schechner Aff.
¶ 36; Poykayil Aff. ¶¶ 10, 39.
26. The independent contractors who partner with DoorDash and Grubhub control their
delivery work. Schechner Aff. ¶ 8; Poykayil Aff. ¶ 10. They can choose when and for how long
to log on to a platform. Schechner Aff. ¶ 8; Poykayil Aff. ¶ 10. They can choose which delivery
offers they want to accept, and which to reject or ignore. Schechner Aff. ¶ 8; Poykayil Aff. ¶ 10.
In a practice called “multi-apping,” they can—and often do—log into multiple platforms at once
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and interchangeably complete deliveries through multiple delivery providers within the same
working session. Schechner Aff. ¶ 8; Poykayil Aff. ¶¶ 11, 39.
27. This flexibility is a key reason why delivery workers choose to provide deliveries
with Petitioners. Although delivery workers are welcome to log onto the platforms for longer
periods of time or accept more deliveries, most nevertheless choose to work with third-party food
delivery services part-time as a source of supplemental—rather than primary—income. Schechner
Aff. ¶ 8; Poykayil ¶ 39.
28. For example, DoorDash commented to DCWP that in the third quarter of 2022,
delivery workers who use its platform (called “Dashers”) delivered 3.18 hours per week on
average. Herrmann Aff. Ex. 6 (“Public Comments on First Proposed Rule”) at 1423.
29. DoorDash pays Dashers a “base pay” for each delivery they perform. Schechner
Aff. ¶ 9. This base pay is determined based on a variety of factors, including delivery time,
distance, and desirability. Id. DoorDash also offers Dashers promotions to incentivize the
acceptance of certain delivery offers, and Dashers keep 100% of all tips they receive from
consumers. ¶ Id.
30. Similarly, Grubhub pays delivery workers a “base amount” for each delivery they
perform. Poykayil Aff. ¶ 9. This base amount is determined for each delivery based on mileage,
delivery type, the time spent on the delivery, and the local market. Id. Grubhub also offers delivery
workers promotional pay for performing certain deliveries, and its delivery workers keep 100% of
all tips they earn from consumers for their deliveries. Id.
31. Because the vast majority of delivery workers use Petitioners’ platforms part-time
and on flexible schedules, both DoorDash and Grubhub allow delivery workers to choose to
receive compensation on an expedited basis. For example, Petitioners each offer a same-day
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payout feature, whereby delivery workers can be paid for their work within 24 hours of completion.
Public Comments on First Proposed Rule at 1536.3 It is difficult to imagine another type of work
where workers have total control over the amount of time they work and the ability to collect their
wages at will.
32. Petitioners understand this unparalleled flexibility to be a key reason why tens of
thousands of people have signed up to deliver with their platforms—and thus why they can offer
such comprehensive delivery services throughout the City.
33. For example, in a recent survey, DoorDash found that 88% of Dashers identified
work flexibility as the key reason they choose delivery work. Schechner Aff. ¶ 35. Recognizing
this, Petitioners have sought to avoid implementing changes that would curtail delivery workers’
flexibility.
34. Other third-party food delivery services employ a different business model for their
delivery worker partners. For example, Relay employs what it refers to as a “fundamental[ly]
differen[t]” approach, in which it pays delivery workers on a per-hour basis rather than a per-
delivery basis. Herrmann Aff. Ex. 8 (“Public Comments on Second Proposed Rule”) at 364–66.
Relay supports this payment structure through a “different operations model” which “maximize[s]
the efficiency of its delivery system” by “maximiz[ing] the number of trips a courier does per
hour.” Id. at 365. According to their website, Relay also “discourage[s]” delivery workers from
“multi-apping” while “working” on the Relay app, because doing so may “interfere
with . . . assigned deliver[ies] and routes.”4
3
See also https://help.doordash.com/dashers/s/article/What-is-Fastpay?language=en_US
4
https://www.relay.delivery/couriers.
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II. The City Passes Local Laws Affecting Third-Party Food Delivery Service Industry.
35. On October 24, 2021, New York City passed a suite of municipal laws affecting
the third-party delivery service industry. Among them, the City passed Local Law 114/2021
(Local Law 114) and Local Law 115/2021 (Local Law 115).
36. Local Law 114 established several general provisions regulating the third-party
delivery service industry. In doing so, it defined several key terms:
“The term ‘food delivery worker’ means any natural person or any organization
composed of no more than one natural person, whether or not incorporated or
employing a trade name, who is hired, retained, or engaged as an independent
contractor by a third-party food delivery service required to be licensed pursuant to
section 20-563.1 or a third-party courier service to deliver food, beverage, or other
goods from a business to a consumer in exchange for compensation.”
“The term ‘food service establishment’ means a business establishment located
within the city where food is provided for individual portion service directly to the
consumer whether such food is provided free of charge or sold, and whether
consumption occurs on or off the premises or is provided from a pushcart, stand or
vehicle.”
“The term ‘third-party courier service’ means a service that (i) facilitates the
same-day delivery or same-day pickup of food, beverages, or other goods from a
food service establishment on behalf of a third-party food delivery service and (ii)
that is owned and operated by a person other than the person who owns such food
service establishment.”5
“The term ‘third-party food delivery service’ means any website, mobile
application, or other internet service that: (i) offers or arranges for the sale of food
and beverages prepared by, and the same-day delivery or same-day pickup of food
and beverages from, a food service establishment; and (ii) that is owned and
operated by a person other than the person who owns such food service
5
In 2023, this definition was amended by Local Law 2023/017, and now reads: “The term ‘third-party courier service’
means a service that (i) facilitates the same-day delivery or same-day pickup of food, beverages, or other goods from
a food service establishment on behalf of such food service establishment or a third-party food delivery service; (ii)
that is owned and operated by a person other than the person who owns such food service establishment; and (iii) and
is not a third-party food delivery service.” N.Y.C. Admin. Code § 20-1501 (emphasis added to reflect changes).
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establishment.”
Herrmann Aff. Ex. 1 (“Local Law 114”) at 2.
37. In addition, the NYC Council committee report for Local Law 114 explained that
a “food service establishment . . . could include restaurants, food trucks, grocery stores or any other
establishment meeting the definition.” Herrmann Aff. Ex. 3 (“City Counsel Briefing Paper”) at
23.
38. Local Law 115 ordered DCWP to “study the working conditions for food delivery
workers,” including, “at minimum, consideration of the pay food delivery workers receive and the
methods by which such pay is determined, the total income food delivery workers earn, the
expenses of such workers, the equipment required to perform their work, the hours of such
workers, the average mileage of a trip, the mode of travel used by such workers, the safety
conditions of such workers, and such other topics as the department deems appropriate.” Local
Law 115 at 1–2.
39. In addition, the ordinance gave DCWP the power to issue subpoenas to third-party
delivery services requesting a wide variety of data, including “worker identifiers, information
about the times that such workers are available to work for such third-party food delivery service
or third-party courier service, the mode of transportation such workers use, how trips are offered
or assigned to food delivery workers, the data such service maintains relating to the trips of such
workers, the compensation such workers receive from such third-party food delivery service or
third-party courier service, any gratuities such workers receive, information relating to both
completed and cancelled trips, agreements with or policies covering such workers, contact
information of such workers, information relating to the setting of fees paid by food service
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establishments and consumers, and any other information deemed relevant by the department.”
Id. at 2.
40. Local Law 115 further directed DCWP to “by rule establish a method for
determining the minimum payments that must be made to a food delivery worker by a third-party
food delivery service.” Id.
41. Local Law 115 also mandates that in promulgating this rule, DCWP consider a
number of specific factors, including, “at a minimum . . . the duration and distance of trips, the
expenses of operation associated with the typical modes of transportation such workers use, the
types of trips, including the number of deliveries made during a trip, the on-call and work hours
of food delivery workers, the adequacy of food delivery worker income considered in relation to
trip-related expenses, and any other relevant factors, as determined by the department.” Id. at 2–
3.
42. Around the same time, the New York City Council passed other ordinances seeking
to impose entirely separate limitations upon the third-party delivery industry that Petitioners and
other third party food delivery services are currently challenging in court.
43. First, Local Law 103/2021 (“Local Law 103”) prohibits third-party delivery
services from charging more than 15% of an order total as a “delivery fee,” and limits other fees,
too. Petitioners are currently challenging Local Law 103 in the U.S. District Court for the Southern
District of New York. See Doordash, Inc. v. City of New York, Index No. 21-cv-7564 (S.D.N.Y.).
44. Second, Local Law 90/2021 (“Local Law 90”) purported to require third-party food
delivery services to disclose troves of their customers’ personal data to the food service
establishments they order from. That is, if a food service establishment requested the personal
data of customers who ordered through a third-party delivery service, that service would have to
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provide the establishment “all applicable customer data” in a “machine readable format,
disaggregated by customer, on an at least monthly basis.”
45. Local Law 90 would prohibit third-party food delivery services from “limit[ing] the
ability” of the recipients to “download and retain such data, nor limit their use of such data for
marketing or other purposes.” It also states that customers would be “presumed to have consented
to the sharing of such customer data” unless the customer makes a request to opt out of sharing
their data in relation to each “specific online order.” Petitioners are currently challenging Local
Law 90 in the U.S District Court for the Southern District of New York. See DoorDash, Inc. v.
City of New York, No. 21-cv-7695 (S.D.N.Y.); Grubhub Inc. v. City of New York, No. 21-cv-10602
(S.D.N.Y.). Enforcement of Local Law 90 is stayed pending resolution of the lawsuit.
III. DCWP Studies Working Conditions for Delivery Workers, but Improperly Excludes
Grocery Delivery Services from the Scope of its Study.
46. Pursuant to Local Law 115, DCWP commenced its study of the “working
conditions for delivery workers.” Local Law 115 at 1.
47. DCWP intentionally studied only “[r]estaurant delivery,” on the basis that
restaurant delivery “is a requirement for an app to be covered” by Local Law 115. DCWP Report
at 5. DCWP accordingly did not study grocery delivery services. See id.
48. DCWP issued subpoenas to Petitioners, as well as Uber Technologies, Inc (Uber
Eats) and Relay, Inc., requesting a vast array of data. Id. at 2. Petitioners fully complied with
these subpoenas and provided the requested data.
49. DCWP also issued similar subpoenas to Chowbus, Club Feast Inc., Just Order
Enterprises Corp., HungryPanda, Patio Delivery, Inc., and GoHive Inc. Id. The agency refused
to issue similar subpoenas to third-party food delivery services that provide online ordering and
delivery primarily to grocery stories, convenience stores, and other non-restaurant businesses.
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There is no evidence DCWP ever subpoenaed, requested, or received data from Instacart or similar
companies in connection with its study.
50. In addition, DCWP conducted three surveys, two of which were directed toward
delivery workers: The “NYC Delivery Worker Survey” and the “Columbia-Sam Schwartz-
Deliveristas Survey” (the “Deliveristas Survey”). The third survey was administered to restaurants
(the “NYC Restaurant Delivery Survey”). Id. at 2–3.
Preview
INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x : In the Matter of the Application of, : : Index No. __________/2023 DOORDASH, INC., and GRUBHUB INC., : : Petitioners, : Oral Argument Requested : For Judgment Pursuant to CPLR Article 78 : : VERIFIED ARTICLE 78 – against – : PETITION AND APPLICATION NEW YORK CITY DEPARTMENT OF : FOR A TEMPORARY CONSUMER AND WORKER PROTECTION, : RESTRAINING ORDER AND : PRELIMINARY INJUNCTION and VILDA VERA MAYUGA, in her official : capacity as Commissioner of the New York City : Department of Consumer and Worker Protection, : : Respondents. : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -: x 1 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 Table of Contents NATURE OF THE PROCEEDING ............................................................................................... 1 THE PARTIES................................................................................................................................ 6 I. Petitioners ........................................................................................................................... 6 II. Respondents ........................................................................................................................ 6 JURISDICTION AND VENUE ..................................................................................................... 7 FACTUAL BACKGROUND ......................................................................................................... 7 I. Petitioners Provide Delivery Workers with Flexible Work Opportunities, Available on Their Preferred Schedule. .............................................................................................. 7 II. The City Passes Local Laws Affecting Third-Party Food Delivery Service Industry. ............................................................................................................................ 12 III. DCWP Studies Working Conditions for Delivery Workers, but Improperly Excludes Grocery Delivery Services from the Scope of its Study. .................................. 15 IV. DCWP Issues a First Proposed Rule and Accompanying Report, and Receives Significant Criticism. ........................................................................................................ 18 A. The First Proposed Rule and November 2022 Report. ................................................18 B. Commenters Raise Numerous Concerns with the First Proposed Rule. ......................21 V. DCWP Issues a Second Proposed Rule that Does Not Resolve the Many Concerns Raised by Stakeholders. .................................................................................................... 24 A. The Second Proposed Rule. .........................................................................................24 B. Commenters Again Raise Significant Concerns with DCWP’s Proposal. ..................26 VI. DCWP Issues the Rule, Which is Set to Take Effect on July 12, 2023. ........................... 28 STANDARD OF REVIEW .......................................................................................................... 29 ARGUMENT ................................................................................................................................ 31 I. The Rule Contravenes DCWP’s Statutory Authority, Is Affected by Errors of Law, and Is Arbitrary and Capricious. ....................................................................................... 31 A. DCWP Violated Its Statutory Mandate by Excluding Grocery Delivery Companies from Both Its Study of Delivery Worker Pay and the Scope of Its Resulting Rule. .............................................................................................................33 B. The Rule Must Be Annulled Because DCWP Irrationally Based Its Rule- Making on the Results of Irredeemably Flawed Surveys ............................................40 C. The Rule’s Treatment Of “On-Call” Time Is Arbitrary And Capricious. ...................45 D. The Rule’s Inclusion Of A Workers’ Compensation Component Is Arbitrary And Capricious. ...........................................................................................................52 E. The Rule Was Premised On An Unsupported Assumption That Restaurants Earn 0% Margin On Delivery Orders. .........................................................................56 2 2 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 II. The Court Should Enjoin Enforcement Of The Challenged Rule Pending Adjudication Of The Petition. ........................................................................................... 58 A. Petitioners Are Likely To Succeed On The Merits. .....................................................58 B. Petitioners Will Suffer Irreparable Harm Absent Injunctive Relief. ...........................59 C. The Balance Of Equities Weighs Overwhelmingly In Petitioners’ Favor. ..................72 III. This Court Should Issue A Temporary Restraining Order While It Adjudicates Petitioners’ Request For A Preliminary Injunction. ......................................................... 75 FIRST CAUSE OF ACTION ....................................................................................................... 75 NO PRIOR APPLICATIONS....................................................................................................... 77 TRIAL DEMAND ........................................................................................................................ 77 PRAYER FOR RELIEF ............................................................................................................... 77 VERIFICATION........................................................................................................................... 79 3 3 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 Petitioners DoorDash, Inc. and Grubhub Inc. (“Petitioners”), by their undersigned attorneys, Gibson, Dunn & Crutcher LLP, for their Verified Petition, allege as follows: NATURE OF THE PROCEEDING 1. This Petition, pursuant to CPLR Article 78, challenges an unlawful, arbitrary and capricious new rule (the “Rule”) promulgated by the New York City Department of Consumer and Worker Protection (“DCWP”), and seeks a temporary restraining order and preliminary injunction preventing DCWP from implementing or enforcing the Rule—which is set to take effect on July 12, 2023—during the pendency of these proceedings.1 2. Ignoring mountains of hard data and analysis, and over emphatic objections from a range of constituents, DCWP enacted the Rule, which threatens to single out and punish Petitioners and other third-party food delivery services2 like them unless they meet DCWP’s newly-contrived minimum-pay requirements for delivery workers who independently contract with Petitioners. Under the Rule, Petitioners must pay delivery workers either (1) nearly $20 per hour for any time delivery workers spend logged into one of the third-party food delivery services that Petitioners maintain, regardless of whether workers are running personal errands while passively receiving (and not even reviewing) delivery offers on Petitioners’ platforms, waiting for offers of delivery jobs, working with another third-party delivery service while logged into multiple platforms simultaneously, or making deliveries; or, in the alternative, (2) $33 per hour for the time all workers spend making deliveries—an increased rate that is double the City’s minimum wage and 1 Petitioners join in the arguments asserted by Uber Technologies, Inc. and Relay Delivery, Inc. in their concurrently filed petitions. 2 Petitioners are not “food delivery services.” They are technology platforms that connect consumers, merchants, and (sometimes) delivery workers. The New York City law, however, refers to Petitioners as “third-party food delivery services.” For simplicity, this Petition uses the same terminology. 1 4 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 that DCWP admits was designed to compensate delivery workers indirectly for all time spent logged into Petitioners’ platforms, regardless of what they are doing during such periods. 3. Although Petitioners are not opposed to a well-constructed minimum-pay standard for delivery workers (and, indeed, have supported such standards in other jurisdictions), the implementation of this ill-conceived Rule will have drastic—and immediate—consequences for all concerned parties if it is permitted to take effect on July 12, as scheduled. For New York City consumers, it will mean—according to DCWP’s own analyses—a $5.18-per-order average increase in charges across the industry, representing a 15% increase on current costs. For New York City restaurants and other merchants, it will mean losing access to valuable delivery services that merchants—particularly small and independent merchants—cannot replace on their own. For delivery workers who work with DoorDash or Grubhub, it will mean the loss of a flexible opportunity that they value, as well as decreased demand for their services. And for Petitioners, it will mean damage to their business relationships, reputations, and goodwill, as well as significant monetary damages that are difficult to quantify and unrecoverable even if the Court eventually holds—as it should—that the Rule must be annulled. 4. Perhaps unsurprisingly, then, the rule-making record in this case demonstrates that DCWP’s adoption of the Rule violated bedrock administrative-law principles and was irrational, arbitrary, and capricious in multiple respects, any one of which is sufficient to compel the Rule’s annulment. 5. First, both the Rule and the study upon which it is based ran afoul of DCWP’s statutory mandate to study and regulate delivery-worker pay for all third-party food delivery services. More specifically, the City Council directed DCWP to study and promulgate a rule establishing a method for determining minimum payments “by a third-party food delivery service” 2 5 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 to “a food delivery worker.” Affirmation of Gabriel Herrmann (“Herrmann Aff.”) Ex. 2 (“Local Law 115”). By its plain language, that law encompasses all third-party delivery services— including those that do business with not only restaurants, but also other individual-portion food purveyors, such as grocery stores. Yet DCWP erroneously asserted in a single unexplained sentence that third-party delivery services predominantly doing business with grocery stores supposedly fell outside the scope of its statutory authority—and thus unlawfully excluded them from its study and resulting rule. DCWP’s process thus foundered at the start, and the Rule is arbitrary and capricious and irredeemably affected by an error of law. 6. Second, DCWP based the Rule in large part on two fatally flawed surveys of food- delivery workers that were biased and unreliable on their face, including because they disclosed at the outset that DCWP was conducting the surveys in order to “raise pay for app delivery workers.” DCWP’s surveys were further tainted because they incorporated improper leading questions, suggestive close-ended responses, and other improper survey techniques, reflecting the fact that DCWP had pre-judged the outcome of its rulemaking process all along and had set out to ensure increases in delivery-worker pay, as opposed to studying objectively what an appropriate “minimum” payment standard for the industry would be. DCWP’s reliance on such inherently biased and unreliable survey data renders the adoption of the Rule arbitrary and capricious as a matter of law. 7. Third, DCWP artificially inflated its pay standards by centering them on a requirement that Petitioners pay delivery workers for time they spend not working. When delivery workers log onto DoorDash or Grubhub’s system, they are free to accept delivery offers, reject delivery offers and wait for other offers, or do nothing. They can even be logged on while running personal errands or sitting in a movie theater. The flexibility and control delivery workers hold 3 6 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 over their schedules and work practices are core features of the “gig economy” opportunity that Petitioners like DoorDash and Grubhub offer to the market, and delivery workers value it. But the Rule unfairly makes Petitioners pay for all of the time that delivery workers spend logged on to Petitioners’ platform—even if the workers are attending to personal matters and even if they reject, or simply ignore, every offer they receive. Such a requirement will result in decreased demand and delivery volumes on Petitioners’ platforms and therefore will result in fewer opportunities for delivery workers. The Rule irrationally treats this key feature of the industry as a bug, and its implementation will end up harming all industry participants rather than protecting delivery workers. 8. Fourth, DCWP artificially inflated its payment standards in yet another way, charging Petitioners for purported “workers’ compensation” benefits that are the opposite of workers’ compensation. Instead of calling for an entire group to make incremental payments into an insurance pool to cover the medical expenses of an unfortunate few who suffer work-related injuries, the Rule requires Petitioners to pay every delivery worker a $1.68-per-hour upcharge that DCWP admits workers will not use to procure comparable private insurance benefits. It undercompensates injured workers but overcompensates uninjured workers—thus providing nothing more than an arbitrary windfall for uninjured workers that serves none of the purposes of, and does not supply a meaningful substitute for, workers’ compensation benefits. Indeed, it serves only as an irrational economic disincentive for delivery services to supply voluntary accident- insurance benefits for delivery workers that approximate workers compensation—which some currently do—potentially resulting in less insurance coverage for workers. That is the height of arbitrary rule-making. 4 7 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 9. Fifth, DCWP’s analysis was premised on the conclusion that restaurants make a 0% margin on orders placed through third-party food delivery services. But that assumption is not supported by record evidence and is not rational on its face because if it were, there would not be so many restaurants on Petitioners’ platform. DCWP purported to substantiate its assumption by citing a single internet article that does not say restaurants make 0% margin and by referencing undisclosed conversations with restaurant stakeholders that the interested public never had a chance to learn about or evaluate. Principled agency decision-making demands more. 10. The Rule did not have to turn out this way. Petitioners, scores of delivery workers, and a range of community groups expressed their concerns through two rounds of comment letters and proposed sensible alternative approaches that could have benefited, rather than harmed, workers, businesses, and consumers across New York City. But DCWP either ignored them or rejected them on grounds that do not withstand scrutiny. Its actions are disappointing, but perhaps not surprising. This is hardly the first time that City officials have aggressively sought to single out and regulate food delivery services like Petitioners in irrational and unlawful ways. For example, they have imposed unlawful permanent caps on the fees third-party food delivery services may charge to food service establishments. They have unlawfully attempted to require third-party food delivery services to share their valuable customer data with merchants, without providing for adequate privacy protections. And DCWP now seeks to unlawfully reconfigure the nature of this industry, and squelch innovation and flexibility, by imposing onerous minimum-pay requirements in the name of worker protection—likely harming the very workers they purport to protect. Unfortunately, this latest Rule is as irrational and wrong-headed as the measures that have come before it. 5 8 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 11. Left with no other choice, Petitioners bring this Article 78 Petition to vacate and annul DCWP’s arbitrary and capricious Rule. Petitioners further request that this Court enter a preliminary injunction and a temporary restraining order preventing DCWP from enforcing the Rule before the rule takes effect on July 12. DCWP may be entitled to promulgate sensible rules establishing, on a proper record, a “method for determining the minimum payments that must be made” to delivery workers across this entire industry. But the Rule is no such regulation, and its implementation and enforcement must immediately and permanently be enjoined. THE PARTIES I. Petitioners 12. Petitioner DoorDash, Inc. (“DoorDash”) is a technology company founded in 2013 and headquartered in San Francisco, California. DoorDash operates a third-party platform in New York City (and elsewhere in the United States) that facilitates the order and delivery of food and other goods by connecting consumers to a broad array of merchants, and in some cases delivery workers. 13. Petitioner Grubhub Inc. (“Grubhub”) is a technology company founded in 2004 and headquartered in Chicago, Illinois. Grubhub’s online food ordering and delivery marketplace (operating under the Grubhub and Seamless brands) connects consumers with a broad array of local takeout and delivery merchants, and in some cases, independent-contractor delivery workers. 14. Each of the Petitioners, as entities directly regulated by Respondents and by the challenged Rule, independently has standing to bring this Article 78 proceeding. II. Respondents 15. Respondent Department of Consumer and Worker Protection (“DCWP”) is an administrative agency of the City of New York that was created as the Department of Consumer 6 9 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 Affairs on April 29, 1969 by the New York City Consumer Protection Law of 1969. Among other responsibilities, DCWP regulates delivery service in New York City. 16. Respondent Vilda Vera Mayuga is the Commissioner of DCWP. She is named as a respondent here in her official capacity only. JURISDICTION AND VENUE 17. This Court has jurisdiction over this proceeding against Respondents pursuant to CPLR 3001 and 7801, 7802, 7803, 7804, 7806. 18. This proceeding is timely because it is commenced within four months after issuance of the Rule. 19. Venue is also appropriate in the County of New York pursuant to CPLR 506 and 7804(b) because DCWP determined to promulgate the Rule in the County of New York and the principal office of DCWP is within the Judicial District that includes the County of New York. FACTUAL BACKGROUND I. Petitioners Provide Delivery Workers with Flexible Work Opportunities, Available on Their Preferred Schedule. 20. For years, DoorDash and Grubhub have provided online platforms for New York City residents to order food from local restaurants, grocery stores, and convenience stores. Affidavit of Abhishek Poykayil (“Poykayil Aff.”) ¶¶ 3–4; Affidavit of Dan Schechner (“Schechner Aff.”) ¶ 12. Petitioners have since become a cornerstone of the local restaurant industry, responsible for facilitating hundreds of thousands of deliveries and proving significant value to the thousands of New Yorkers who use their platforms each year. Poykayil Aff. ¶ 12; Schechner Aff. ¶ 5. 21. Consumers using DoorDash enjoy the ability to order from thousands of restaurants, convenience stores, pet stores, grocery stores, and other businesses that DoorDash 7 10 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 makes available at their fingertips. Schechner Aff. ¶ 5. DoorDash has built a strong reputation based on the vast array of merchants it partners with from a wide range of industries, and its ability to provide those merchants with many valuable services including marketing, facilitating food delivery and pickup, order processing, customer support, and technology and product development. Consumers, merchants, and delivery workers each play an important role in DoorDash’s business. Id. ¶¶ 4–5. 22. Grubhub provides an online and mobile takeout marketplace that arranges retail pick-up and delivery orders by connecting consumers with a broad array of local takeout and delivery merchants (including florists, grocery, and convenience stores). Poykayil Aff. ¶ 4. Consumers can place orders directly online on websites or mobile applications operated by Grubhub. Id. Grubhub facilitates food ordering through innovative technology, easy-to-use platforms, and improved delivery experience. Id. ¶ 5. At the heart of Grubhub’s success are its relationships with merchants, delivery workers, and consumers, and the strong reputation it has carefully built in nearly twenty years of operation as a reliable and beneficial partner to them. Id.¶ . 23. Both DoorDash and Grubhub operate in an extremely competitive delivery industry—against each other and other companies. For example, each of the following companies facilitates deliveries from food service establishments in New York City: Portier, LLC (“Uber Eats”); Instacart Inc. (“Instacart”); Relay Delivery, Inc. (“Relay”); Chowbus Inc. (“Chowbus”); Club Feast Inc. (“Club Feast”); Just Order Enterprises Corp. (“Fantuan”); HungryPanda US Inc. (“HungryPanda”); Patio Delivery, Inc. (“Patio”); and GoHive Inc (“GoHive”). See Herrmann Aff. Ex. 4 (“DCWP Report”) at 2. 24. Many of these platforms, including DoorDash, Grubhub, Uber Eats, and Relay, facilitate food deliveries from restaurants to consumers. Others, such as Instacart, primarily 8 11 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 facilitate delivery of food from grocery stores, convenience stores, and other non-restaurant merchants. DoorDash, Grubhub, Uber Eats, and others also facilitate food delivery from grocery and convenience stores, albeit on a more limited scale relative to restaurant deliveries. DoorDash and Grubhub compete amongst these companies for relationships with merchants, delivery workers, and consumers. 25. Petitioners provide flexible, reliable work opportunities for thousands of delivery workers in New York City. Schechner Aff. ¶ 7; Poykayil Aff. ¶ 8. This flexibility arises from an approach unique to the third-party delivery industry. Poykayil Aff. ¶ 36. Delivery workers who partner with Petitioners and many of their competitors access work opportunities by logging onto these companies’ platforms. Id.; Schechner Aff. ¶ 35. Delivery workers receive offers to make deliveries and are free to choose whether to accept, reject, or simply ignore them. Schechner Aff. ¶¶ 8, 36; Poykayil Aff. ¶ 10. If they accept, they are expected to perform the delivery. If they reject the offer, they will continue to see available offers until they log off the platform. If they ignore the offer, the offer will lapse after a period of seconds, and they will continue to see available offers until they log off the platform. Petitioners have not historically required delivery workers to accept any minimum number of offers to remain on their platforms, so a delivery worker is free to log onto a platform for hours without accepting a single delivery. Schechner Aff. ¶ 36; Poykayil Aff. ¶¶ 10, 39. 26. The independent contractors who partner with DoorDash and Grubhub control their delivery work. Schechner Aff. ¶ 8; Poykayil Aff. ¶ 10. They can choose when and for how long to log on to a platform. Schechner Aff. ¶ 8; Poykayil Aff. ¶ 10. They can choose which delivery offers they want to accept, and which to reject or ignore. Schechner Aff. ¶ 8; Poykayil Aff. ¶ 10. In a practice called “multi-apping,” they can—and often do—log into multiple platforms at once 9 12 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 and interchangeably complete deliveries through multiple delivery providers within the same working session. Schechner Aff. ¶ 8; Poykayil Aff. ¶¶ 11, 39. 27. This flexibility is a key reason why delivery workers choose to provide deliveries with Petitioners. Although delivery workers are welcome to log onto the platforms for longer periods of time or accept more deliveries, most nevertheless choose to work with third-party food delivery services part-time as a source of supplemental—rather than primary—income. Schechner Aff. ¶ 8; Poykayil ¶ 39. 28. For example, DoorDash commented to DCWP that in the third quarter of 2022, delivery workers who use its platform (called “Dashers”) delivered 3.18 hours per week on average. Herrmann Aff. Ex. 6 (“Public Comments on First Proposed Rule”) at 1423. 29. DoorDash pays Dashers a “base pay” for each delivery they perform. Schechner Aff. ¶ 9. This base pay is determined based on a variety of factors, including delivery time, distance, and desirability. Id. DoorDash also offers Dashers promotions to incentivize the acceptance of certain delivery offers, and Dashers keep 100% of all tips they receive from consumers. ¶ Id. 30. Similarly, Grubhub pays delivery workers a “base amount” for each delivery they perform. Poykayil Aff. ¶ 9. This base amount is determined for each delivery based on mileage, delivery type, the time spent on the delivery, and the local market. Id. Grubhub also offers delivery workers promotional pay for performing certain deliveries, and its delivery workers keep 100% of all tips they earn from consumers for their deliveries. Id. 31. Because the vast majority of delivery workers use Petitioners’ platforms part-time and on flexible schedules, both DoorDash and Grubhub allow delivery workers to choose to receive compensation on an expedited basis. For example, Petitioners each offer a same-day 10 13 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 payout feature, whereby delivery workers can be paid for their work within 24 hours of completion. Public Comments on First Proposed Rule at 1536.3 It is difficult to imagine another type of work where workers have total control over the amount of time they work and the ability to collect their wages at will. 32. Petitioners understand this unparalleled flexibility to be a key reason why tens of thousands of people have signed up to deliver with their platforms—and thus why they can offer such comprehensive delivery services throughout the City. 33. For example, in a recent survey, DoorDash found that 88% of Dashers identified work flexibility as the key reason they choose delivery work. Schechner Aff. ¶ 35. Recognizing this, Petitioners have sought to avoid implementing changes that would curtail delivery workers’ flexibility. 34. Other third-party food delivery services employ a different business model for their delivery worker partners. For example, Relay employs what it refers to as a “fundamental[ly] differen[t]” approach, in which it pays delivery workers on a per-hour basis rather than a per- delivery basis. Herrmann Aff. Ex. 8 (“Public Comments on Second Proposed Rule”) at 364–66. Relay supports this payment structure through a “different operations model” which “maximize[s] the efficiency of its delivery system” by “maximiz[ing] the number of trips a courier does per hour.” Id. at 365. According to their website, Relay also “discourage[s]” delivery workers from “multi-apping” while “working” on the Relay app, because doing so may “interfere with . . . assigned deliver[ies] and routes.”4 3 See also https://help.doordash.com/dashers/s/article/What-is-Fastpay?language=en_US 4 https://www.relay.delivery/couriers. 11 14 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 II. The City Passes Local Laws Affecting Third-Party Food Delivery Service Industry. 35. On October 24, 2021, New York City passed a suite of municipal laws affecting the third-party delivery service industry. Among them, the City passed Local Law 114/2021 (Local Law 114) and Local Law 115/2021 (Local Law 115). 36. Local Law 114 established several general provisions regulating the third-party delivery service industry. In doing so, it defined several key terms: “The term ‘food delivery worker’ means any natural person or any organization composed of no more than one natural person, whether or not incorporated or employing a trade name, who is hired, retained, or engaged as an independent contractor by a third-party food delivery service required to be licensed pursuant to section 20-563.1 or a third-party courier service to deliver food, beverage, or other goods from a business to a consumer in exchange for compensation.” “The term ‘food service establishment’ means a business establishment located within the city where food is provided for individual portion service directly to the consumer whether such food is provided free of charge or sold, and whether consumption occurs on or off the premises or is provided from a pushcart, stand or vehicle.” “The term ‘third-party courier service’ means a service that (i) facilitates the same-day delivery or same-day pickup of food, beverages, or other goods from a food service establishment on behalf of a third-party food delivery service and (ii) that is owned and operated by a person other than the person who owns such food service establishment.”5 “The term ‘third-party food delivery service’ means any website, mobile application, or other internet service that: (i) offers or arranges for the sale of food and beverages prepared by, and the same-day delivery or same-day pickup of food and beverages from, a food service establishment; and (ii) that is owned and operated by a person other than the person who owns such food service 5 In 2023, this definition was amended by Local Law 2023/017, and now reads: “The term ‘third-party courier service’ means a service that (i) facilitates the same-day delivery or same-day pickup of food, beverages, or other goods from a food service establishment on behalf of such food service establishment or a third-party food delivery service; (ii) that is owned and operated by a person other than the person who owns such food service establishment; and (iii) and is not a third-party food delivery service.” N.Y.C. Admin. Code § 20-1501 (emphasis added to reflect changes). 12 15 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 establishment.” Herrmann Aff. Ex. 1 (“Local Law 114”) at 2. 37. In addition, the NYC Council committee report for Local Law 114 explained that a “food service establishment . . . could include restaurants, food trucks, grocery stores or any other establishment meeting the definition.” Herrmann Aff. Ex. 3 (“City Counsel Briefing Paper”) at 23. 38. Local Law 115 ordered DCWP to “study the working conditions for food delivery workers,” including, “at minimum, consideration of the pay food delivery workers receive and the methods by which such pay is determined, the total income food delivery workers earn, the expenses of such workers, the equipment required to perform their work, the hours of such workers, the average mileage of a trip, the mode of travel used by such workers, the safety conditions of such workers, and such other topics as the department deems appropriate.” Local Law 115 at 1–2. 39. In addition, the ordinance gave DCWP the power to issue subpoenas to third-party delivery services requesting a wide variety of data, including “worker identifiers, information about the times that such workers are available to work for such third-party food delivery service or third-party courier service, the mode of transportation such workers use, how trips are offered or assigned to food delivery workers, the data such service maintains relating to the trips of such workers, the compensation such workers receive from such third-party food delivery service or third-party courier service, any gratuities such workers receive, information relating to both completed and cancelled trips, agreements with or policies covering such workers, contact information of such workers, information relating to the setting of fees paid by food service 13 16 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 establishments and consumers, and any other information deemed relevant by the department.” Id. at 2. 40. Local Law 115 further directed DCWP to “by rule establish a method for determining the minimum payments that must be made to a food delivery worker by a third-party food delivery service.” Id. 41. Local Law 115 also mandates that in promulgating this rule, DCWP consider a number of specific factors, including, “at a minimum . . . the duration and distance of trips, the expenses of operation associated with the typical modes of transportation such workers use, the types of trips, including the number of deliveries made during a trip, the on-call and work hours of food delivery workers, the adequacy of food delivery worker income considered in relation to trip-related expenses, and any other relevant factors, as determined by the department.” Id. at 2– 3. 42. Around the same time, the New York City Council passed other ordinances seeking to impose entirely separate limitations upon the third-party delivery industry that Petitioners and other third party food delivery services are currently challenging in court. 43. First, Local Law 103/2021 (“Local Law 103”) prohibits third-party delivery services from charging more than 15% of an order total as a “delivery fee,” and limits other fees, too. Petitioners are currently challenging Local Law 103 in the U.S. District Court for the Southern District of New York. See Doordash, Inc. v. City of New York, Index No. 21-cv-7564 (S.D.N.Y.). 44. Second, Local Law 90/2021 (“Local Law 90”) purported to require third-party food delivery services to disclose troves of their customers’ personal data to the food service establishments they order from. That is, if a food service establishment requested the personal data of customers who ordered through a third-party delivery service, that service would have to 14 17 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 provide the establishment “all applicable customer data” in a “machine readable format, disaggregated by customer, on an at least monthly basis.” 45. Local Law 90 would prohibit third-party food delivery services from “limit[ing] the ability” of the recipients to “download and retain such data, nor limit their use of such data for marketing or other purposes.” It also states that customers would be “presumed to have consented to the sharing of such customer data” unless the customer makes a request to opt out of sharing their data in relation to each “specific online order.” Petitioners are currently challenging Local Law 90 in the U.S District Court for the Southern District of New York. See DoorDash, Inc. v. City of New York, No. 21-cv-7695 (S.D.N.Y.); Grubhub Inc. v. City of New York, No. 21-cv-10602 (S.D.N.Y.). Enforcement of Local Law 90 is stayed pending resolution of the lawsuit. III. DCWP Studies Working Conditions for Delivery Workers, but Improperly Excludes Grocery Delivery Services from the Scope of its Study. 46. Pursuant to Local Law 115, DCWP commenced its study of the “working conditions for delivery workers.” Local Law 115 at 1. 47. DCWP intentionally studied only “[r]estaurant delivery,” on the basis that restaurant delivery “is a requirement for an app to be covered” by Local Law 115. DCWP Report at 5. DCWP accordingly did not study grocery delivery services. See id. 48. DCWP issued subpoenas to Petitioners, as well as Uber Technologies, Inc (Uber Eats) and Relay, Inc., requesting a vast array of data. Id. at 2. Petitioners fully complied with these subpoenas and provided the requested data. 49. DCWP also issued similar subpoenas to Chowbus, Club Feast Inc., Just Order Enterprises Corp., HungryPanda, Patio Delivery, Inc., and GoHive Inc. Id. The agency refused to issue similar subpoenas to third-party food delivery services that provide online ordering and delivery primarily to grocery stories, convenience stores, and other non-restaurant businesses. 15 18 of 84 INDEX NO. 155947/2023 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 07/06/2023 There is no evidence DCWP ever subpoenaed, requested, or received data from Instacart or similar companies in connection with its study. 50. In addition, DCWP conducted three surveys, two of which were directed toward delivery workers: The “NYC Delivery Worker Survey” and the “Columbia-Sam Schwartz- Deliveristas Survey” (the “Deliveristas Survey”). The third survey was administered to restaurants (the “NYC Restaurant Delivery Survey”). Id. at 2–3.