DoorDash, Inc. v. City Of New York

Background

The opinion addresses three consolidated lawsuits brought by DoorDash, Inc., Portier, LLC, doing business as Uber Eats, and Grubhub Inc. against the City of New York. The plaintiffs provide online food-delivery marketplace services connecting diners, restaurants, and delivery workers.

New York City’s Customer Data Law requires a delivery service, when a restaurant requests the information, to provide five categories of customer data: the customer’s name, telephone number, email address, delivery address, and order contents. The information must be provided in a machine-readable format, separated by customer, at least monthly. The law presumes that diners consent to disclosure unless they opt out. It also prevents delivery services from limiting restaurants’ ability to download, retain, or use the information for marketing, while imposing restrictions on restaurants’ later sale or disclosure of the data.

Before the law, restaurants generally received only a diner’s first name, the first initial of the surname, and order contents for marketplace orders. The plaintiffs’ privacy policies described how they collected, used, and disclosed customer information. The plaintiffs argued that the law violated the First Amendment, the Fifth Amendment’s Takings Clause, the federal Contract Clause, and New York’s constitutional limits on the City’s police powers. The parties filed cross-motions for summary judgment, which asks whether the undisputed record entitles a party to judgment as a matter of law.

First Amendment analysis

The court held that the Customer Data Law regulated speech protected by the First Amendment. Customer data was information in the plaintiffs’ possession, and the law restricted how the plaintiffs could use and disclose it by requiring them to send specified information to restaurants. The court rejected the City’s argument that the plaintiffs were merely passive intermediaries. It found that the plaintiffs exercised discretion over whether, to whom, and how to disclose customer information under their privacy policies, making them more like brokers than entities performing a purely ministerial transmission.

The court characterized the compelled disclosures as commercial speech because they occurred in commercial transactions and involved information economically valuable to the plaintiffs and restaurants. It rejected the City’s argument for rational-basis review under Zauderer, which can apply to certain required factual disclosures in commercial advertising. The court found that the required disclosures were made to restaurants that had competitive aspects in their relationship with the delivery services and did not merely explain the terms of the plaintiffs’ own services.

The court did not decide whether strict scrutiny or intermediate scrutiny applied because the Customer Data Law failed even intermediate scrutiny. Under the intermediate-scrutiny test for commercial speech, the government must show a substantial interest, that the law directly advances that interest, and that the law is not more extensive than necessary.

The City identified interests in protecting restaurants from allegedly exploitative practices, including limits on restaurants’ access to customer data, the use of data to promote competing restaurants, and allegedly false listings that could direct customers toward higher-paying restaurants. The court found that the City had not shown that the Customer Data Law would materially address the latter two practices. The law did not prevent the plaintiffs from using customer data to promote competitors and did not target allegedly false or misleading statements. Any benefit from making it easier for restaurants to leave the platforms was too remote, the court concluded.

The court also found the City’s evidence concerning restaurants’ lack of customer data too speculative to establish the required substantial interest. The plaintiffs already offered restaurants marketing tools, advertising, data analytics, and other products that could help restaurants reach customers or retain their own data. The court further concluded that the law was not sufficiently tailored because less restrictive approaches were available, including opt-in data-sharing programs, financial incentives, or more targeted regulation. The City had not shown that those alternatives would be ineffective.

Disposition

The court held that the Customer Data Law violated the First Amendment. Plaintiffs’ motion for summary judgment on the First Amendment claim was granted, and the City’s cross-motion for summary judgment on that claim was denied. Judge Torres stated that this ruling prohibited the City from enforcing the law against the plaintiffs and provided the relief they sought.

On the remaining claims—the Takings Clause, Contract Clause, and New York constitutional claim—the plaintiffs’ motion and the City’s cross-motion were denied as moot. The court expressly declined to decide those claims. The parties were directed to file a proposed judgment by October 7, 2024.