GrubHub Delivers Deal To End Eateries' False Ad Class Action

By Craig Clough
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Law360 (April 19, 2021, 8:36 PM EDT) -- GrubHub urged a Colorado federal judge Friday to approve a class action deal to end false advertising claims that it steered customers to its partner restaurants by telling them that other establishments were closed or not accepting online orders, agreeing to alter its platform's wording and not to oppose paying up to $450,000 in attorney fees.

The stipulation and settlement agreement filed by GrubHub and plaintiff CO Craft LLC, which does business as Freshcraft, would certify a settlement class of any restaurant, convenience store, market, grocery store or other food service business that did not have any type of agreement with GrubHub from May 11, 2016, until final approval of the settlement.

The deal also includes a $5,000 service award for Freshcraft, while GrubHub admits no wrongdoing.

Counsel for the parties did not immediately respond to requests for comment, but the agreement states that if "the parties are contacted by the press, media or any industry association, they will respond only that this action has been amicably resolved to the parties' mutual satisfaction."

Denver bar and restaurant Freshcraft's May lawsuit stated that GrubHub Inc. has been running a false advertising campaign telling customers that restaurants it doesn't partner with are closed during the coronavirus pandemic in order to redirect those customers to its partner restaurants.

Freshcraft alleges that, while it believes that the delivery app has been using this false advertising tactic since before the pandemic, the impact now is especially damaging to restaurants that are "struggling to stay afloat" during the crisis.

The family-owned restaurant filed suit on behalf of all restaurants in the U.S., claiming that GrubHub created landing pages for falsely advertising that restaurants were closed or not accepting online orders when they were actually accepting orders.

Because the COVID-19 outbreak led most states to issue stay-at-home orders, meal delivery services like GrubHub have seen business skyrocket, according to the suit. And GrubHub has created menu pages for most restaurants in major cities, including the ones that do not offer delivery through its platform, Freshcraft said.

The proposed settlement includes injunctive relief in which GrubHub agreed that its landing pages will not state without qualification that a restaurant is "not accepting online orders" unless otherwise indicated by the restaurants covered in the deal or their representatives.

According to the proposed settlement, the parties reached an agreement in principal in January. Two restaurants involved in litigation of similar claims against GrubHub filed a motion to intervene in the Colorado case in March. The court has not yet made a ruling on that motion.

Freshcraft is represented by Ross Ziev of the Law Offices of Ross Ziev PC and Laura L. Sheets of Liddle & Dubin PC.

GrubHub is represented by Jean Marie French, Meredith C. Slawe and Michael W. McTigue Jr. of Cozen O'Connor.

The case is CO Craft LLC dba Freshcraft v. GrubHub Inc., case number 1:20-cv-01327, in the U.S. District Court for the District of Colorado.

--Additional reporting by Lauren Berg and Joyce Hanson. Editing by Rich Mills.

For a reprint of this article, please contact reprints@law360.com.

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Case Information

Case Title

CO Craft, LLC v. Grubhub, Inc.


Case Number

1:20-cv-01327

Court

Colorado

Nature of Suit

Commerce ICC Rates, Etc.

Judge

William J. Martinez

Date Filed

May 11, 2020

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