Opinion
Case No. 23-00110-CV-W-BP
2023-03-01
Leonard LAWSON, Plaintiff, v. DOORDASH, INC., Defendants.
Brandon J.B. Boulware, Jeremy M. Suhr, Boulware Law LLC, Kansas City, MO, Matthew Lawrence Venezia, Ellis George Cipollone O'Brien Annaguey LLP, Los Agneles, CA, George Laiolo, Pro Hac Vice, Ellis George Cipollone O'Brien Annaguey LLP, San Francisco, CA, for Plaintiff. Elizabeth Katharine McCloskey, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, San Francisco, CA, Michael Holecek, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, Los Angeles, CA, Robert Paul Berry, Berry Silberberg Stokes PC, St. Louis, MO, for Defendants.
Brandon J.B. Boulware, Jeremy M. Suhr, Boulware Law LLC, Kansas City, MO, Matthew Lawrence Venezia, Ellis George Cipollone O'Brien Annaguey LLP, Los Agneles, CA, George Laiolo, Pro Hac Vice, Ellis George Cipollone O'Brien Annaguey LLP, San Francisco, CA, for Plaintiff. Elizabeth Katharine McCloskey, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, San Francisco, CA, Michael Holecek, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, Los Angeles, CA, Robert Paul Berry, Berry Silberberg Stokes PC, St. Louis, MO, for Defendants. ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION BETH PHILLIPS, CHIEF JUDGE
Plaintiff filed this suit, asserting Defendant has violated three California statutes designed to prevent false advertising and otherwise protect consumers. The Second Amended Complaint also includes a claim for breach of contract. Now pending is Plaintiff's Motion for Preliminary Injunction, (Doc. 19), which is DENIED.
I. BACKGROUND
Defendant maintains a website through which individuals can (as relevant here) order food from restaurants to be delivered. The amount individuals pay is comprised of several charges, three of which are material to Plaintiff's claims. Restaurants set the prices to be charged for their menu items, and the entirety of that amount is remitted to the restaurants. (Doc. 35-1, ¶ 15.) A service charge is also imposed, with the amount based on a percentage of the subtotal. (Doc. 35-1, ¶¶ 28-29.) Finally, a separate delivery charge that varies from restaurant to restaurant may be imposed. (Doc. 35-1, ¶ 26.) At the time of the transactions at issue, a hyperlink for "Pricing and Fees" appeared on each restaurant's page; hovering over or clicking on the hyperlink led to a disclosure further detailing that (1) the merchant sets the prices for items ordered and (2) there are several separate fees that may apply (including delivery fees and service fees). (Doc. 35-1, ¶¶ 18-20.)
There are two circumstances in which the delivery charge will be zero. Some restaurants have agreements with Defendant whereby the delivery charge is zero. (Doc. 35-1, ¶ 27.) In addition, customers may opt to subscribe to Defendant's services by purchasing a "DashPass," which waives all delivery fees and sometimes reduces the service charge. (Doc. 35-1, ¶ 36.) If these circumstances do not exist, the customer will be charged both a service charge and a delivery charge; if one of these circumstances exist, the customer will be charged just the service charge. The absence of a delivery charge does not increase the service charge; to the contrary, as stated above if a customer has a DashPass the delivery charge is zero and the service charge might be reduced.
Placing an order is accomplished by first selecting a restaurant, which causes the website to display its menu. If the restaurant's agreement with Defendant calls for there to be no delivery fee, that fact is displayed as well. The customer then selects the items he wishes to order. Once the items are selected, the customer's order, with corresponding (and itemized) charges, is displayed, and the customer must confirm he wishes to complete the order.
In April 2022, Plaintiff, a citizen and resident of Missouri, used Defendant's website to order food from two different restaurants. In both instances Defendant's website reflected there was no delivery fee for the restaurants he selected; it is not clear (or important) whether this is because Plaintiff purchased a DashPass or because the restaurants' agreements with Defendant called for there to be no delivery fee, but the Court observes the Second Amended Complaint does not allege Plaintiff purchased a DashPass. In both instances, the bill displayed at the checkout screen reflected there was no delivery fee, but a service charge was imposed. In addition, subsequent investigation revealed the restaurants Plaintiff ordered from charge less for its food when it is ordered directly from the restaurant than when it is ordered through Defendant. Plaintiff initiated this lawsuit in July 2022.
By mid-January 2023, Defendant's website was redesigned; some of the changes are relevant to this lawsuit. First, each restaurant's page more prominently advises that the prices for menu items are set by the restaurant and that different prices may be charged when ordering for delivery through Defendant, ordering for pick-up through Defendant, and ordering in the restaurant. (Doc. 35-1, ¶ 22.) Second, there are more (and more prominent) "tool-tips" that a customer can access by hovering with the cursor or clicking; a pop-up screen appears to explain the charges. (Doc. 35-1, ¶ 32.)
The fee structure and policies have always been explained in the Terms and Conditions associated with signing up for an online account with Defendant. The Court's holding makes it unnecessary to discuss the parties' arguments regarding the legal relevance of the Terms and Conditions.
Plaintiff's Second Amended Complaint (filed in January 2023) alleges Defendant's representation that there is no delivery charge is misleading because the service charge and the price differential on menu items each constitute hidden delivery fees. (E.g., Doc. 37, ¶¶ 3, 5, 8, 17, 22-28.) He repeats these assertions for each of his four causes of action, alleging "DoorDash hides the true cost of delivery associated with placing delivery orders on its platform." (Doc. 37, ¶¶ 76, 83, 90; see also Doc. 37 ¶ 99 ("[A]dditional delivery fees were hidden in the prices of the individual items, as described above.").) Counts I through III allege this misrepresentation violates California's (1) Legal Remedies Act, (2) False Advertising Law, and (3) Unfair Competition Law. In Count IV, Plaintiff asserts Defendant breached the parties' contract by imposing a delivery charge.
Plaintiff has also filed a Motion for Preliminary Injunction. Initially, his motion generally requested the Court "enjoin [Defendant] from engaging in false advertising concerning its delivery fees." (Doc. 19, p. 25.) In his Reply Suggestions, Plaintiff's request is narrower; he "seeks an order prohibiting [Defendant] from displaying its '$0 delivery fee' advertisements." (Doc. 39, p. 8.) Defendant opposes Plaintiff's request. The Court resolves the parties' arguments below, and in so doing may discuss additional relevant facts.
All page numbers are those generated by the Court's CM/ECF system.
II. DISCUSSION
A. Jurisdiction
The first matter to be addressed is whether Plaintiff has standing to seek injunctive relief. Standing is "an essential and unchanging" requirement for the Court's jurisdiction, and a plaintiff "must establish standing for each type of remedy sought, including declaratory and injunctive relief." Digital Recognition Network, Inc. v. Hutchinson, 803 F.3d 952, 956 (8th Cir. 2015) (quotation omitted). For a plaintiff to have standing, he must demonstrate that when he filed the suit he had an injury that was "concrete, particularized, and actual or imminent; fairly traceable to the challenged action; and redressable by a favorable ruling." Clapper v. Amnesty Int'l USA, 568 U.S. 398, 409, 133 S.Ct. 1138, 185 L.Ed.2d 264 (2013) (quotation omitted). And, because an injunction will not remedy past or completed injuries, a plaintiff seeking one must demonstrate an injunction is necessary to redress (or prevent) an imminent injury.
Although imminence is concededly a somewhat elastic concept, it cannot be stretched beyond its purpose, which is to ensure that the alleged injury is not too speculative for Article III purposes—that the injury is certainly impending. Thus, we have repeatedly reiterated that threatened injury must be certainly impending to constitute injury in fact, and that allegations of possible future injury are not sufficient.Id. (cleaned up). In that same opinion, the Supreme Court acknowledged it had sometimes "found standing based on a 'substantial risk' that the harm will occur, which may prompt plaintiffs to reasonably incur costs to mitigate or avoid that harm" but declined to definitively state whether "substantial risk" or "certainly impending" is the proper standard. Id. at 414, 133 S.Ct. 1138. Subsequently, courts have applied both standards (or at least the seemingly lesser standard) without resolving which standard applies or is correct, likely because there has been no case where the possibility of a future injury has fallen between "substantial risk" and "certainly impending." E.g., Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158, 134 S.Ct. 2334, 189 L.Ed.2d 246 (2014); Carson v. Simon, 978 F.3d 1051, 1058 (8th Cir. 2020); In re SuperValu, Inc., 870 F.3d 763, 768-69 (8th Cir. 2017). Under either formulation, the mere possibility of injury is insufficient. E.g., City of Kennett v. Environmental Prot. Agency, 887 F.3d 424, 431 (8th Cir. 2018) (citing Clapper, 568 U.S. at 409, 133 S.Ct. 1138).
The Court agrees with Defendant that Plaintiff does not have a substantial risk of injury in the future. First, Plaintiff has not alleged any likelihood he will again utilize Defendant's services. His discussion of injury focuses on his contentions that had he known the truth he would not have utilized Defendant's services and "he suffered an economic injury in the form of the upcharge on his food, and hidden fees." (Doc. 19, p. 16.) Setting aside the fact that Plaintiff knew the truth before he incurred the charge (because it was disclosed to him before he completed the transaction), an injunction will not remedy any injuries Plaintiff has already suffered. Second, if he elects to utilize Defendant's services again, he cannot be deceived by Defendant's charging of a service fee because he now knows that (1) Defendant charges both a delivery fee and a service fee, and (2) the fact the delivery fee may be zero in certain circumstances does not mean there is no service fee. He also knows the amount restaurants charge customers may be different on Defendant's platform than it is in the restaurant. Therefore, there is no substantial risk of future injury.
Plaintiff relies on the Ninth Circuit's decision in Davidson v. Kimberly-Clark Corp. There, the plaintiff sued because Defendant advertised certain cleansing wipes were "flushable" when they were not. The Ninth Circuit held the plaintiff demonstrated a threat of future harm because
[k]nowledge that the advertisement or label was false in the past does not equate to knowledge that it will remain false in the future. In some cases, the threat of future harm may be the consumer's plausible allegations that she will be unable to rely on the product's advertising or labeling in the future, and so will not purchase the product although she would like to. In other cases, the threat of future harm may be the consumer's plausible allegations that she might purchase the product in the future, despite the fact it was once marred by false advertising or labeling, as she may reasonably, but incorrectly, assume the product was improved.889 F.3d 956, 969-70 (9th Cir. 2018). Davidson does not aid Plaintiff.
First, its rationale is expressly predicated on a further showing the plaintiff would likely purchase the product in the future but cannot because of uncertainty as to the advertising's accuracy. Indeed, the court immediately "turn[ed its] attention to whether Davidson adequately alleged that she face[d] an imminent or actual threat of future harm caused by Kimberly-Clark's allegedly false advertising" and concluded she did because she indicated she would purchase Defendant's product but had "no way of determining whether the representation 'flushable' is in fact true." Id. at 970 (quotation omitted). But, as discussed above, Plaintiff provides no indication that he is likely to use Defendant's services under any circumstances.
Second, the theory presupposes the plaintiff lacks the ability to determine whether the representation is still false, because the plaintiff cannot know whether the defendant changed the product or service to make the formerly false representation true. Davidson explains that in such a case, the consumer "may reasonably, but incorrectly, assume the product was improved." Id. However, Plaintiff does not need to "assume" anything; for instance, he knows with certainty that Defendant charges a service charge separate from a delivery charge, and he will be required to pay the service charge even if he does not have to pay a delivery charge. He also knows with certainty that some restaurants charge more for menu items purchased through Defendant than for items purchased at the restaurant. Finally, and most importantly, he knows how to readily and easily ascertain Defendant's fee structure. Under these circumstances, courts in the Ninth Circuit do not apply Davidson. E.g., Gamez v. Summit Naturals Inc., 2022 WL 17886027, at *4 (C.D. Cal. Oct. 24, 2022); Cimoli v. Alacer Corp., 546 F. Supp. 3d 897, 906-07 (N.D. Cal. 2021); Naiman v. Alle Processing Corp., — F.Supp.3d —, —, 2020 WL 6869412, at *6 (D. Ariz. Nov. 23, 2020); Jackson v. General Mills, Inc., 2020 WL 5106652, at *5 (S.D. Cal. Aug. 28, 2020); see also McNair v. Synapse Group Inc., 672 F.3d 213, 225 (3d Cir. 2012) ("[S]peaking generally, the law accords people the dignity of assuming they act rationally, in light of the information they possess.").
The Motion for Preliminary Injunction was fully briefed before the case was transferred from the Northern District of California, so the briefs understandably focus on Ninth Circuit decisions. The Court's conclusion that Davidson does not support Plaintiff makes it unnecessary to decide if the Eighth Circuit would follow its reasoning. See Davidson, 889 F.3d at 968-69 & n.5 (acknowledging some courts take a different view and hold a consumer who is already aware of a deceptive advertisement lacks standing to seek injunctive relief).
Accordingly, Plaintiff lacks standing to seek injunctive relief for two reasons. First, there is no indication he intends to utilize Defendant's services in the future. Second, even if he does utilize Defendant's services in the future, he does not face a risk of being deceived because he now knows how to ascertain Defendant's charges. This constitutes an independent basis for denying his Motion for Preliminary Injunction.
Having addressed one component of jurisdiction, the Court sees no reason to discuss Defendant's additional argument regarding mootness. The parties do not fully address the extent to which Defendant's new disclosures regarding the service charge are effective at imparting knowledge. Moreover, a defendant's voluntary cessation does not moot a case unless the defendant satisfies a "heavy burden" of demonstrating "the challenged conduct cannot reasonably be expected to" resume. Friends of the Earth, Inc. v. Laidlaw Env't Servs. (TOC), Inc., 528 U.S. 167, 189, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000). These topics are also not discussed by the parties, so the Court is reluctant to discuss mootness when the discussion of standing makes it unnecessary to do so.
B. Requirements for a Preliminary Injunction
Even if Plaintiff has standing to seek injunctive relief, the Court would not grant a preliminary injunction. The Eighth Circuit has listed four factors to be weighed when deciding whether to grant or deny preliminary injunctive relief: "(1) whether there is a substantial probability movant will succeed at trial; (2) whether the moving party will suffer irreparable injury absent the injunction; (3) the harm to other interested parties if the relief is granted; and (4) the effect on the public interest." Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 112 (8th Cir. 1981) (en banc).
Ordinarily, the Court cannot consider the merits of a claim if it lacks jurisdiction. However, the Court still has jurisdiction over Plaintiff's claims for monetary relief. Moreover, while granting a preliminary injunction requires consideration of the merits, it does not call for (or permit) resolution of the merits. For these reasons, it is not clear that the Court's conclusion regarding Plaintiff's standing forbids it from discussing whether it would exercise its discretion to grant a preliminary injunction. In an abundance of caution, the Court elects to do so.
While no single factor is determinative, since Dataphase the Eighth Circuit has consistently held that likelihood of success on the merits is the most important factor. E.g., Barrett v. Claycomb, 705 F.3d 315, 320 (8th Cir. 2013); S.J.W. ex rel. Wilson v. Lee's Summit R-7 Sch. Dist., 696 F.3d 771, 776 (8th Cir. 2012). The Eighth Circuit has also held that "[f]ailure to show irreparable harm is an independently sufficient ground upon which to deny a preliminary injunction." Watkins Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003).
1 . Likelihood of Success on the Merits
Plaintiff has not demonstrated a likelihood of success on the merits; that is, he has not demonstrated he has "a fair chance of prevailing." Planned Parenthood Minnesota, N. Dakota, S. Dakota v. Rounds, 530 F.3d 724, 731-32 (8th Cir. 2008); see also 1-800-411-Pain Referral Serv., LLC v. Otto, 744 F.3d 1045, 1054 (8th Cir. 2014). The Second Amended Complaint is predicated on the theory that the upcharge on menu items and the service charge are actually delivery charges, in violation of the representation that no delivery charge would be imposed. However, Defendant has demonstrated (and Plaintiff does not dispute) that the charge for menu items is set by the restaurants, and that all the money charged for menu items is remitted to restaurants; none of it goes to Defendant so it cannot be a delivery charge imposed by Defendant. Defendant has also demonstrated (and Plaintiff does not dispute) that all customers are charged a service charge, regardless of whether they pay a delivery charge. Moreover, the service charge is at least the same for those who pay a delivery charge as for those who do not - except for those who pay for a DashPass, who may pay a lower service charge than others. Thus, Plaintiff does not appear likely to succeed on his claim that Defendant is charging a "hidden" delivery charge.
In his Suggestions in Support, Plaintiff at times appears to argue the service charge and the potential upcharge are not clearly explained. (E.g., Doc. 19, pp. 18, 20.) However, the Second Amended Complaint does not assert a claim based on inadequate disclosure. Elsewhere, Plaintiff seems to present an argument regarding the timing of the disclosure that a service charge will be imposed, (see Doc. 39, pp. 14-15); again, no such claim appears in the Second Amended Complaint.
This discussion also explains why the Court does not rely on Plaintiff's customer survey: the survey cannot change the reality of what Defendant charges. For instance, the survey concludes 48% of respondents "indicated a belief that DoorDash had not charged a delivery fee on the order that they had reviewed," (Doc. 15-2, ¶ 50), and automatically counts those respondents as having been deceived. But as explained, the facts currently in the Record confirm the respondents were not charged a delivery fee. Similarly, the survey concludes nearly 41% of respondents believe the prices for menu items ordered through Defendant are the same prices charged when the food is ordered at the restaurant. (Doc. 15-2, ¶ 50.) However, this does not change the fact that the difference in pricing is set by the restaurants, the differential is paid to the restaurant, and the differential is not a delivery fee - and as Plaintiff concedes, he is not arguing Defendant has a duty to disclose products may be found cheaper elsewhere. (Doc. 39, pp. 14-15.) In short, Plaintiff's survey does not persuade the Court he is likely to prevail on the merits.
The Court also believes Plaintiff's reliance on California law - while understandable - may no longer be appropriate. As explained earlier (see footnote 3, supra), the case was originally filed in the Northern District of California but was transferred to this District after the Motion for Preliminary Injunction was fully briefed. The case was transferred because the parties' agreement contained a forum selection clause requiring the case to be litigated in the district where Plaintiff resides. (Doc. 43.) When "a case is transferred under 28 U.S.C. § 1404(a) based on a forum-selection clause, the court applies the choice-of-law rules of the State in which the transferee court sits." Morgantown Mach. & Hydraulics of Ohio, Inc. v. American Piping Prod., Inc., 887 F.3d 413, 415 (8th Cir. 2018). Therefore, the Court must apply Missouri's choice of law rules, and it appears Missouri's choice of law rule would call for Missouri law to be applied because the transaction and the services contemplated occurred in Missouri. See, e.g., CIT Group/Equipment Fin., Inc. v. Integrated Fin. Servs., Inc., 910 S.W.2d 722, 729 (Mo. Ct. App. 1995) (applying the "most significant relationship" test). Notably, the Missouri Merchandising Practices Act (the "MMPA") may be narrower than the California statutes forming the basis for Plaintiff's claims because the MMPA requires a plaintiff to suffer an "ascertainable loss" to bring suit. MO. REV. STAT. § 407.025. This requires consideration of "the benefit-of-the-bargain rule, which compares the actual value of the item to the value of the item if it had been as represented at the time of the transaction." Murphy v. Stonewall Kitchen, LLC, 503 S.W.3d 308, 313 (Mo. Ct. App. 2016); see also Plubell v. Merck & Co., 289 S.W.3d 707, 715 (Mo. Ct. App. 2009).
2 . Irreparable Injury
The Court also concludes a preliminary injunction is not necessary to protect Plaintiff from irreparable injury. "Irreparable harm occurs when a party has no adequate remedy at law, typically because its injuries cannot be fully compensated through an award of damages." General Motors Corp. v. Harry Brown's, LLC, 563 F.3d 312, 319 (8th Cir. 2009). Plaintiff's injuries are economic in nature, and it is readily apparent they can be remedied through an award of damages. His arguments to the contrary are not persuasive.
Plaintiff primarily argues the Court must consider the potential for non-parties to be injured because he is seeking a "public injunction." The cases he cites - which are predicated on California law - are inapposite. In McGill v. Citibank, N.A., the California Supreme Court held that California's Legal Remedies Act, False Advertising Law, and Unfair Competition Law - the statutes forming the basis for Counts I, II, and III - all permit "public injunctive relief, i.e., injunctive relief that has the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public." 2 Cal. 5th 945, 951, 216 Cal.Rptr.3d 627, 393 P.3d 85 (2017). Relying on McGill, the Ninth Circuit has held a plaintiff can seek injunctive relief even if he will not face irreparable harm. DiCarlo v. MoneyLion, Inc., 988 F.3d 1148, 1152-53 (9th Cir. 2021). However, as discussed above (see footnote 7, supra), Plaintiff likely cannot assert claims under California law. Moreover, the cases he cites do not discuss the requirements for obtaining a preliminary injunction, and no case the Court has reviewed holds the requirement of irreparable harm is completely obviated when one seeks a preliminary public injunction. More to the point: Plaintiff does not establish anyone will suffer harm that cannot be remedied with an award of monetary damages. The Court does not agree with Plaintiff's arguments that other consumers suffer irreparable harm because many will be compelled to arbitrate their claims. (See Doc. 19, p. 22.) The Court also does not agree that it should consider the possibility Defendant is gaining an unfair advantage over its competitors, (see Doc. 19, pp. 22-23); such injuries are suffered by Defendant's competitors and not by Plaintiff or other consumers.
Plaintiff also contends adequate compensation cannot be obtained based on the Fifth Circuit's decision in Mississippi Power & Light Co. v. United Gas Pipe Line Co., a case in which a natural gas supplier was overcharging a public utility and the utility passed the overcharges to consumers. The Fifth Circuit observed the consumers served by the utility were near the poverty line and held the continued passing of overcharges to those consumers while the litigation proceeded constituted irreparable harm. 760 F.2d 618, 624-25 (5th Cir. 1985). Even if this theory is viable, it is not applicable here. The Court does not agree with Plaintiff's assertion that Defendant can be compared to a utility, (Doc. 19, p. 22), even though food (like utility services) is a "basic human need." (Doc. 39, p. 18.) Unlike a utility - which often has monopoly-like power - Defendant is not the sole source of food for anyone.
3 . Harm to Others
The third requirement involves a balancing of the harm to be prevented by the preliminary injunction and the harm granting it will cause to others, including Defendant. Plaintiff's arguments depend entirely on its assertion Defendant is charging a delivery fee. As he puts it, "[s]hould the Court agree with Plaintiff on the merits, that [the] '$0 delivery fee' is false or misleading, [Defendant's] arguments fall away, because [it] can claim no interest in . . . engag[ing] in actionable false advertising." (Doc. 39, p. 20.) But, as discussed earlier, the Court does not agree with Plaintiff's assessment of the merits; nothing in the Record suggests Defendant is charging a delivery fee in circumstances when it has advertised one is not being charged. Accordingly, the balance of equities does not favor requiring Defendant to expend resources (time and money, for instance) to redesign its website.
4 . Public Interest
The Court's analysis of the public interest is similar to its analysis of the balance of harms. Further discussion is not required.
III. CONCLUSION
Plaintiff does not face a threat of imminent harm, so he lacks standing to seek injunctive relief. Moreover, he does not meet the traditional requirements for obtaining a preliminary injunction. Most critically, the evidence in the Record does not demonstrate Plaintiff is likely to succeed on the claims asserted in the Second Amended Complaint, and he has not suffered (and will not suffer) irreparable harm. For these reasons, the Motion for Preliminary Injunction, (Doc. 19), is DENIED.