LL schreef op 13 augustus 2022 13:03:
1/2 Federal judge blocks nationwide settlement with Grubhub, orders further negotiations
By MICHAEL KARLIK email@example.com
Aug 12, 2022 Updated 5 hrs ago
A federal judge has blocked a proposed nationwide settlement between food delivery service Grubhub and restaurants frustrated about their inclusion on Grubhub's platform without their consent.
Although Grubhub reached an agreement last year with attorneys for Denver-based Freshcraft that would give restaurants greater control over whether and how they are listed on Grubhub, U.S. District Court Judge Regina M. Rodriguez ordered the parties last month to keep talking.
On July 28, Rodriguez issued an order allowing two other restaurants — who are also suing Grubhub in federal court in Illinois — to intervene in the Colorado lawsuit. Although she noted Freshcraft's case came first, the proposed settlement expands the number of restaurants that would be included beyond Freshcraft's original lawsuit to now encompass the plaintiffs in the Illinois case. Although the claims in the two lawsuits are largely similar, the Freshcraft settlement would not force Grubhub to distribute its profits to injured restaurants — something the Illinois lawsuit is seeking.
"Therefore, the proposed settlement agreement does not warrant preliminary approval until the parties have addressed this issue," Rodriguez wrote.
Freshcraft and Grubhub accused the intervening restaurants of misunderstanding the settlement, and of seeking to disrupt the case by waiting until the last minute to get involved. Meanwhile, the plaintiffs in the Illinois lawsuit — Lynn Scott, LLC of Durham, N.C. and The Farmer's Wife restaurant in Sebastopol, Calif. — claimed Freshcraft's negotiations did not go far enough for the now-hundreds of thousands of restaurants covered under the potential settlement.
"Here, most restaurants would receive nothing under the settlement: no money, no notice, no ability to exclude themselves from the settlement, and no right to ever sue to stop Grubhub’s ongoing use of their trademark," the intervening restaurants wrote to the court.
The common thread between both sets of litigation is the desire of restaurant owners to maintain control over their image and their customer experience, something they surrender when Grubhub unilaterally lists businesses on its delivery platform. The lawsuits also allege Grubhub provides deceptive information to customers about menus and whether restaurants are even taking orders.
Beyond that, the objectives begin to diverge.
Freshcraft filed a proposed class action lawsuit in May 2020, accusing Grubhub of using the COVID-19 pandemic to capitalize on an increase in food delivery orders while creating "landing pages" for restaurants that never consented to having Grubhub carry out their deliveries. In particular, Freshcraft was concerned that its landing page on Grubhub said the restaurant was "closed" or "not taking online orders," which was untrue.
Freshcraft sued for false advertising under the federal Lanham Act on behalf of all restaurants whose landing pages on Grubhub contained false information. The restaurant argued Grubhub's deceptive advertising made it less likely customers would order from restaurants wrongly identified as being closed.
Five months later, Lynn Scott, LLC and The Farmer's Wife filed suit in the Northern District of Illinois, where Grubhub is headquartered. They also alleged a violation of the Lanham Act, but under the provision governing trademark infringement. Restaurants have many legitimate reasons for avoiding delivery orders placed through Grubhub, the plaintiffs argued, including the desire to disassociate themselves from any problems Grubhub itself causes.
Customers "continue to believe Grubhub is working cooperatively with the restaurants on its platform to provide accurate, reliable, and timely service," the lawsuit alleged. But the "poor service that Grubhub provides while using restaurants’ names and logos hurts the restaurants’ reputations."
In contrast with Freshcraft, the Illinois plaintiffs sought to bar Grubhub from including restaurants on its delivery platform unless there was an agreement, and for Grubhub to "disgorge all profits" it earned through the unauthorized use of restaurant names and logos