Judge Rules NYC Law on Sharing Food Delivery Customer Data Unconstitutional, Says Reuters

By Jonathan Stempel

A federal judge has ruled that a New York City law mandating food delivery companies to share customer data with restaurants is unconstitutional.

U.S. District Judge Analisa Torres, based in Manhattan, sided with major delivery platforms including DoorDash, Grubhub, and Uber Eats, asserting that the law infringed upon the First Amendment by improperly regulating commercial speech.

The law was enacted in the summer of 2021 as part of New York City’s efforts to support local restaurants in their recovery from the COVID-19 pandemic. It required delivery services to disclose customers’ names, delivery addresses, email addresses, phone numbers, and details of their orders.

While the city argued that the law was intended to protect restaurants from predatory practices by delivery companies, it paused enforcement of the law amid the ongoing litigation from the delivery firms.

The companies contended that the legislation violated customer privacy rights and posed risks to data security. Additionally, they expressed concerns that the sharing of customer data could enable restaurants to undermine their businesses by marketing directly to their customers.

Nicholas Paolucci, a representative from the city’s law department, commented that they are currently reviewing the court’s decision.

Judge Torres noted that the city failed to show a significant interest in facilitating restaurants’ access to customer data from delivery services. She argued that there were less intrusive alternatives available, such as empowering customers to choose whether to share their data, offering financial incentives for voluntary data sharing, and providing subsidies for restaurant-specific online ordering platforms.

In response to the ruling, DoorDash stated that the decision correctly acknowledged how the law would infringe upon fundamental First Amendment rights regarding the protection of New Yorkers’ data.

Reactions from Uber Eats and Grubhub were not immediately available.

The law had received backing from the New York City Hospitality Alliance, which represents the restaurant and nightlife sector. Its executive director, Andrew Rigie, stated that the ruling negatively impacts small businesses and consumers, urging the city to consider an appeal.