Micheli & Shel, LLC v. Grubhub Inc.

Background

Micheli & Shel, LLC, identified in the opinion as a New York City bakery, brought a proposed class action concerning New York City Local Law Nos. 52 and 88. Those laws, enacted during the COVID-19 pandemic, limited the fees that food-delivery services could charge restaurants. The laws were later repealed and replaced.

The opinion states that Micheli sued Postmates LLC, although the caption identifies Grubhub Inc. as the first defendant. Postmates moved for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure. The issue was whether the 2020 city laws created an implied private right of action—that is, a right for a private party to sue in court even though the statute does not expressly grant that right.

The opinion also notes that Micheli had named three other food-delivery companies. In an earlier round of this case, the court granted those defendants’ motions to compel arbitration and stayed the proceedings against them.

Private Right of Action

Micheli conceded that the city laws did not expressly create a private right of action. Under New York law, an implied private remedy exists only if legislative intent can fairly be inferred from the statutory text and legislative history. Courts consider whether the plaintiff belongs to the class the law benefits, whether a private lawsuit would promote the law’s purpose, and whether such a lawsuit is consistent with the law’s enforcement structure. All three factors must be satisfied, and the consistency of a private lawsuit with the legislature’s chosen enforcement mechanisms is the most important factor.

The court held that this factor defeated Micheli’s claims. The laws authorized civil actions by the City’s Corporation Counsel and administrative proceedings for civil penalties. By specifying those enforcement methods, the City Council chose particular mechanisms to the exclusion of others. The legislative history likewise referred only to those two methods and did not suggest that private parties could sue in court.

The court also relied on the City Council’s later enactment of a replacement law that expressly authorized any person alleging a violation to bring a civil action. The court viewed that change as showing that the City Council knew how to create a private right of action and deliberately had not done so in the earlier laws.

Unjust Enrichment

Micheli argued in its opposition brief that the complaint also alleged unjust enrichment. The court rejected that argument because the complaint did not mention unjust enrichment or allege facts concerning the equitable circumstances Micheli described in its brief. A complaint cannot be amended through arguments in a motion brief.

The court further stated that, even if an unjust-enrichment claim could fairly be read into the complaint, it would fail as a matter of law. A plaintiff cannot use unjust enrichment to avoid the legislature’s decision not to permit private lawsuits under a statute when the plaintiff alleges no independent wrongful conduct. The court also stated that unjust enrichment is a quasi-contract claim unavailable when a valid and enforceable contract governs the parties’ relationship.

Disposition

The court granted Postmates’s motion for judgment on the pleadings and dismissed Micheli’s claims against Postmates. It declined Micheli’s request for leave to amend because the defects were substantive and could not be cured by amendment.

Under Rule 54(b), the court found no just reason to delay final judgment in Postmates’s favor until the arbitration proceedings against the other defendants ended. The Clerk was directed to enter judgment for Postmates, terminate the motion, and terminate Postmates as a party. The case was administratively closed without prejudice to a party seeking to reopen it by letter motion within thirty days after the arbitration proceedings concluded.