Aug 27 (Reuters) – Online food delivery platform Grubhub has agreed to pay $7.1 million to settle a class action that accused the company of falsely advertising that it was partnered with thousands of restaurants.
The restaurants filed a preliminary settlement, opens new tab, which requires a judge’s approval, on Tuesday in the federal court in Chicago.
Jumpstart your morning with the latest legal news delivered straight to your inbox from The Daily Docket newsletter. Sign up here.
The settlement class includes about 387,000 businesses that Grubhub advertised without their consent as participating in the company’s delivery services, the plaintiffs’ lawyers said in a court filing.
Grubhub did not have contracts with those restaurants, which alleged Grubhub harmed their reputations by including them on the company’s website and affiliated online platforms. The restaurants said their inclusion caused consumer confusion and resulted in loss of sales.
Last year the company agreed to pay $25 million to settle a lawsuit brought by the Federal Trade Commission and Illinois’ attorney general accusing the company of adding restaurants to the platform without their consent, misleading customers about order fees and duping drivers about pay.
Grubhub denied any wrongdoing in settling both cases.
In a statement, Grubhub said the false advertising settlement will allow the company to focus on its business operations. It said the claims in the lawsuit “have not been part of our business model for some time.”
The plaintiffs’ lawyers said in a filing the settlement is “poised to deliver meaningful relief without further risk, delay and expense.” They said they will ask a judge to award them up to about $2.4 million in legal fees from the settlement fund.
Eligible class members are entitled to an initial payment of $50 and an additional payment that will be determined based on the length of time the business was listed on Grubhub and affiliated sites.
The settlement covers a period from early 2019 to April 2024.