Second Circuit blocks NYC food delivery app data-sharing law

The city initially hoped the law requiring apps like DoorDash to share customer data would help the restaurant industry, but the appeals court found the law violated the First Amendment.MANHATTAN (CN) — New York City’s controversial Covid-era law requiring third-party food delivery apps to turn over private customer data to restaurants is a breach of the First Amendment, a Second Circuit panel ruled Wednesday.The 2021 law, aimed at helping restaurants recover from the pandemic by better connecting them with customers, was already enjoined — U.S. District Judge Analisa Torres, a Barack Obama appointee, found in 2024 that it was unconstitutional and could violate customers’ privacy.The three-judge appeals panel upheld Torres’ findings, writing in a 28-page decision that the law failed to give consumers a suitable option to opt out of sharing their data.“The law requires customers who want to opt out of data sharing to do so on an order-by-order basis,” U.S. Circuit Judge Richard Wesley, a George W. Bush appointee, wrote for the panel. “The result is a marketing list that no customer asked to join and that none can be confident they have permanently left. The city has offered no evidence that this design serves its interests better than obvious, substantially less burdensome alternatives would.”The underlying lawsuit comes from DoorDash, GrubHub and Uber Eats, who teamed up to sue the city and stop it from implementing the law in 2021.The city hoped the required disclosure, which included customer names, delivery addresses and even what was ordered, would help local restaurants “generate more effective marketing.” But the companies argued it could actually help the businesses poach away their delivery customers.In the panel’s ruling, the appellate judges scrutinized the scope of the data New York City sought to require the apps to share.“The disclosure here — customers’ personal identification — is not information ‘about’ [the] marketplace,” Wesley wrote. “The Customer Data Law, by contrast, compels the disclosure of each customer’s name, number, email address, delivery address, and order contents. Those are facts about third parties who use [the] marketplace, not about [the] marketplace itself.”Joining Wesley on the appellate panel was U.S. Circuit Judge Susan Carney, a Barack Obama appointee, and U.S. Circuit Judge Michael Park, a Donald Trump appointee. All three were in agreement, but Park penned his own accompanying opinion “to note a deeper problem” with the regulation.“The law compels speech for nothing more than economic favoritism,” he wrote. “The city’s stated goal is to ‘support the restaurant industry’ by requiring delivery platforms to disclose valuable data to restaurants … A vague desire to support an industry comprised of tens of thousands of stores is not the type of interest that can justify abridging the freedom of speech of disfavored competitors.”When reached for comment, the New York City Law Department said it is reviewing the appellate court’s decision. Representatives for DoorDash, GrubHub and Uber Eats didn’t immediately respond to requests for comment.In its initial 2021 lawsuit, the companies called the city’s law a “shocking and invasive intrusion of consumers’ privacy.”Then-Democratic Councilman Keith Powers, who sponsored the scrutinized law, touted it as one that could give restaurants a cut of the record-breaking business done by the delivery apps during the pandemic.“After such a devastating year for our city’s restaurant industry, this precedent-setting law gives much needed relief to eateries to have better access to customer data and provides strong privacy protections,” he said at the time.Restaurant groups have defended the law. The New York City Hospitality Alliance has said that as it stands, delivery platforms have a monopoly on customer data that requires local restaurants to stay on the apps or risk losing access to their diners.And as noted by the judges in their Wednesday ruling, the New York State Restaurant Association had argued that the apps kept restaurants “at arm’s length from their customers, even repeat customers, even their regulars,” and viewed the bill as a means to “stop the gate keeping by third party platforms.”Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads