Portier, LLC v. City of New York

Background

The opinion addresses three consolidated cases brought by DoorDash, Inc., Portier, LLC (identified in the opinion as Uber Eats), and Grubhub Inc. against the City of New York. The plaintiffs operate online food-delivery platforms. The City’s Customer Data Law, Local Law No. 2021/090, requires a delivery service, when a restaurant requests the information, to provide customer data in a machine-readable format at least monthly. The covered data includes the customer’s name, telephone number, email address, delivery address, and order contents.

The law includes an opt-out provision, but it presumes that a diner consents to disclosure unless the diner specifically says otherwise. It also prevents delivery services from limiting restaurants’ ability to download and retain the data or use it for marketing, subject to restrictions on restaurants’ later sale or disclosure of the data.

The plaintiffs said that, for marketplace orders, restaurants generally received only a diner’s first name, first surname initial, and order contents, with additional information sometimes provided for self-delivery or under certain agreements. The plaintiffs argued that the law violated the First Amendment, the Fifth Amendment’s Takings Clause, the Contract Clause, and the New York Constitution’s limits on the City’s police powers. The parties filed cross-motions for summary judgment, meaning each asked the court to decide the claims without a trial because it believed the undisputed record entitled it to judgment as a matter of law.

First Amendment analysis

The court held that the Customer Data Law regulates speech protected by the First Amendment. Relying on the principle that creating and disseminating information can constitute speech, the court reasoned that the law controls information in the plaintiffs’ possession and requires them to send that information to restaurants. The court rejected the City’s argument that the plaintiffs were merely passive transmitters. It found that the plaintiffs’ privacy policies gave them discretion over whether and how to disclose customer data, making them more like brokers than entities performing a purely ministerial transmission.

The court characterized the required disclosures as commercial speech because the information is exchanged in the context of commercial transactions and has economic value to both the delivery services and restaurants. The court declined to apply the more lenient review used for certain factual disclosures under Zauderer because the law requires disclosure to restaurants that have competitive aspects to their relationship with the delivery services, rather than providing information to the public about the terms of the plaintiffs’ own services.

The court stated that it did not need to decide whether strict scrutiny or intermediate scrutiny applied because the law failed even intermediate scrutiny. Under the commercial-speech test known as Central Hudson, the City had to show a substantial governmental interest, that the law directly advanced that interest, and that the law was not more extensive than necessary.

The court accepted that supporting the restaurant industry and promoting fair competition could be substantial governmental interests. But it found that the City had not shown that requiring disclosure of customer data would address two practices the City criticized: promoting competing restaurants that pay higher fees and listing false information about restaurants to redirect business. The law did not restrict those practices, and any effect from making it easier for restaurants to leave the platforms was too remote.

The court also found the City’s evidence insufficient to show that withholding customer data harmed the restaurant industry in the way the City claimed. The plaintiffs already offered restaurants advertising, marketing, and data-analytics tools, and some products allowed restaurants to build their own websites and retain customer data. The court further concluded that the law was not adequately tailored because the City had not shown that less restrictive options—such as customer opt-in programs, financial incentives, or more targeted regulations—would be ineffective.

Disposition

The court held that the Customer Data Law violates the First Amendment. It granted the plaintiffs’ motion for summary judgment on the First Amendment claim and denied the City’s cross-motion for summary judgment on that claim. The decision prohibits the City from enforcing the law against the plaintiffs.

The court did not decide the plaintiffs’ Takings Clause, Contract Clause, or New York Constitution police-powers claims. It denied both the plaintiffs’ motion and the City’s cross-motion on those remaining claims as moot. The parties were directed to file a proposed judgment by October 7, 2024.