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Law360 (June 30, 2020, 6:35 PM EDT) -- Instacart and a food retailer trade group sued Seattle on Monday in Washington state court to block a new ordinance requiring coronavirus hazard pay for gig delivery workers, arguing it violates a state law that aims to keep the cost of food low by prohibiting charges for the transportation of groceries.
The organizations argue that Council Bill 119979 — which was signed into law Friday by Mayor Jenny Anne Durkan and is believed to be the first law of its kind in the country — violates the state's Keep Groceries Affordable Act of 2018, as well as the U.S. Constitution and the Washington State Constitution.
The act was approved by state voters through a measure and "prohibits 'local government entities' from imposing any 'charge, or exaction of any kind on' the 'transfer' or 'transportation' of groceries,'" Instacart and the Washington Food Industry Association said in the complaint. "This lawsuit arises from just such a prohibited 'charge' or 'exaction' passed by the city on food and grocery delivery services in Seattle."
Durkan signed CB-119979 following a unanimous approval vote by the Seattle City Council, with the extra pay for drivers meant to reflect the added risk the essential workers are taking during the pandemic.
The ordinance requires grocery delivery companies like Instacart, Shipt, TaskRabbit and Amazon Fresh and restaurant delivery companies like DoorDash, UberEats, Postmates, Caviar and GrubHub to add a charge to reflect the added risk the essential workers are taking during the pandemic.
Under the new ordinance, the companies must tack an additional $2.50 for delivery workers for their first work-related stop on each online order and $1.25 for each additional work-related stop on the same online order, according to the lawsuit.
The local law "constitutes a new 'charge' or 'exaction of any kind' on the transfer and transportation of groceries explicitly proscribed by I-1634," Instacart and the WFIA said. "In addition to this premium pay, the ordinance makes unprecedented intrusions into a business's most fundamental management decision."
The intrusions include the rewriting of Instacart's and other companies' independent contracts and an undermining of "their ability to profitably provide essential grocery-delivery services to consumers," according to the lawsuit.
The WFIA is a nonprofit advocacy organization whose members include independent grocery stores, supermarkets, convenience stores and suppliers. Maplebear Inc., which does business as Instacart, offers home delivery of groceries and other goods.
According to the lawsuit, the new Seattle ordinance also violates Instacart's rights under the Fifth and 14th Amendments of the U.S. Constitution under the takings and equal protection clauses and is unconstitutional by violating Article I, Section 16 of the Washington State Constitution, which prohibits the taking of property without just compensation.
The WFIA and Instacart are seeking among other things declaratory relief that 119799 is illegal, unspecified damages and injunctive relief prohibiting Seattle from enforcing 119799.
"We're disappointed that the Seattle City Council and Mayor Durkan chose to disregard the needs of Seattleites in the midst of a global health crisis and widespread economic hardship," Instacart said in a statement Tuesday. "This legislation is a blatant overreach of power, violating state and federal constitutional law and requiring food delivery network companies to unsustainably subsidize service in Seattle for years to come."
The city of Seattle did not immediately respond to requests for comment.
The WFIA and Instacart are represented by Robert M. McKenna, Daniel J. Dunne and Christine Hanley of Orrick Herrington & Sutcliffe LLP.
Counsel information for Seattle was not immediately available.
The case is the Washington Food Industry Association et al. v. City of Seattle, case number unavailable, in the Superior Court of the State of Washington for King County.
--Editing by Orlando Lorenzo.
Update: This story has been updated with comment from Instacart.
For a reprint of this article, please contact reprints@law360.com.
