On May 11, 2020, class claims were filed against food delivery service Grubhub in Colorado federal court, alleging that the company knowingly promoted a false advertising campaign with the intent to steer users to its partnered restaurants by incorrectly listing on the app that non-partnered restaurants are either closed or not accepting online orders.
In the complaint, named plaintiff Freshcraft alleges that due to the stay-at-home orders issued across the country prohibiting restaurant dining, the National Restaurant Association estimated that the restaurant industry will lose around $2.5 trillion in sales in 2020. As such, take-out orders are more important than ever to restaurants, and partnering with services like Grubhub has become crucial to a restaurant’s survival.
At the onslaught of the shutdown, Grubhub promoted a message of unity and pledged to show menus and deals from all restaurants in a given area, even those who were not in partnership with Grubhub. However, the plaintiff argued, while Grubhub listed non-partnered restaurants on the app, once a prospective customer clicked on the restaurant’s name, they were directed to a landing page which indicated that the restaurant was not taking online orders and then prompted to try other Grubhub-partnered restaurants.
Plaintiff claimed that while its restaurant was open for business, Grubhub listed the establishment as closed without attempting to contact the restaurant to determine if it was open for business. Plaintiff argued that Grubhub is benefiting economically from this willful and false advertising campaign.
Plaintiff is seeking to represent a class made up of all restaurants in the United States or its territories for which Grubhub created landing pages falsely advertising the restaurant as being closed or not accepting online orders, when the restaurant was in fact, open and accepting online orders. The suit brings causes of action for false advertising under Lanham Act and is seeking actual damages and equitable monetary relief, including restitution.
The case is: CO Craft LLC dba Freshcraft v. Grubhub Inc., Case No.: 1:20-cv-01327, in the U.S. District Court for the District of Colorado.
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