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DoorDash Faces Class Claims Over Deceptive Sales Tax Fees

Elizabeth DiNardo, Esq. | Associate Counsel

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On April 5, 2019, proposed class claims were filed in Delaware federal court against popular on-demand food delivery service DoorDash Inc. A group of plaintiffs alleged that the company unlawfully collected sales tax from customers in states that do not permit the collection of sales taxes, including New Hampshire, Delaware and Montana.

In the complaint, named plaintiffs Ashley Moore and Greg Safian, allege that the defendant food delivery company’s practice of charging customers sales tax in sales tax free states is unlawful, unfair and deceptive. DoorDash is ranked as the second most popular food delivery service in America behind GrubHub, processing over 100 million food orders between 2013 and 2018. The defendant company generates a profit by charging users the actual cost of the food order plus a service fee, delivery fee, optional driver tip and sales tax. Plaintiffs argue that the “sales tax” DoorDash charges customers living in sales tax-free states, is essentially a fee that goes directly to DoorDash as profit and is deceptively labeled as a lawful tax. Customers who pay the unlawful sales tax reasonably believe that they are paying a legally required fee. It is alleged that DoorDash has unlawfully collected millions of dollars in revenue in tax-free states.

The suit brings causes of action for violation of Delaware Consumer Protection Act, violation of Delaware Deceptive Trade Practices Act, violation of New Hampshire Consumer Protection Act, violation of Montana Unfair Trade Practices and Consumer Protection Act and breach of contract and implied covenant of good faith and fair dealing.

 

The suit is: Moore et al. v. DoorDash Inc., Case No.: 1:19-cv-00636, in the U.S. District Court for the District of Delaware.

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