Uber and GrubHub defeat New York data sharing law in fight for free speech

DoorDash Inc., GrubHub Inc.And Uber Technologies Inc. Uber Eats convinced a federal judge to declare unconstitutional a New York City law that requires food delivery apps to share customer data with restaurants.

The Customer Privacy Act violates the First Amendment because it regulates commercial speech and does not address unlawful or deceptive activities, Judge Analisa Torres said in an order issued Tuesday by the U.S. District Court for the Southern District of New York.

The law arose out of concerns about the influence of delivery companies on restaurants, which were bolstered by pandemic-related closures, and aimed to allow restaurants to bypass the platforms and target their customers directly. Delivery platforms argued that the law violated the First Amendment by requiring them to provide restaurants with data they would not otherwise provide.

The New York City defense cited three alleged exploitative practices by delivery companies: limiting restaurants' ability to store their own customers' data, using restaurant customer data to promote competing restaurants, and listing false information about restaurants. However, the city has “provided no evidence that the Customer Data Act will actually impact these offensive practices,” Torres wrote.

“We are carefully reviewing the court’s decision,” the New York Department of Law press office said in an email to Bloomberg Law.

• The only impact the law would have on delivery companies' business practices would be “to make it more attractive for restaurants, which now have data they can use to target customers, to leave plaintiffs' platforms,” ​​the statement said.
• Torres outlined alternatives, including requiring delivery companies to offer customers an opt-in program to provide their data to restaurants.
• DoorDash filed the lawsuit one month after the law went into effect in August 2021.

Cahill Gordon & Reindel LLP is representing Grubhub. Uber's delivery division, known as Porter LLC, is represented by attorneys at Kaplan Hecker & Fink LLP. Gibson, Dunn & Crutcher LLP is representing DoorDash.

The case is Grubhub Inc. v. City of New York, SDNY, No. 21-cv-10602, 9/24/24.