NYC law on customer data sharing is unconstitutional, judge rules

A federal judge on Tuesday declared unconstitutional a New York City law requiring food delivery companies to share customer data with restaurants. U.S. District Judge Analisa Torres in Manhattan ruled in favor of DoorDash, Grubhub, and Uber Eats, saying the law violated the First Amendment by improperly regulating commercial speech. New York City adopted the law in the summer of 2021, one of multiple measures to help its thousands of restaurants recover from the COVID-19 pandemic. Delivery companies were required to provide restaurants with customers’ names, delivery addresses, email addresses, and phone numbers, as well as order contents. Though the city said the requirements protected restaurants from delivery companies’ “exploitive practices,” it agreed not to enforce the law while the companies sued. The companies argued that the law violated the privacy rights of customers and threatened their data security. They also said it harmed their own businesses because restaurants could use the data for marketing and “poach customers away.” Nicholas Paolucci, a spokesman for the city’s law department, said: “We are carefully reviewing the court’s ruling.” Torres said the city did not demonstrate it had a substantial interest in helping restaurants collect customer data from the delivery companies, and said it had less intrusive means to achieve that goal. She said these means included letting customers decide whether to share data, offering financial incentives for the companies to share data, and subsidizing online-ordering platforms for individual restaurants. DoorDash said the decision “rightly recognized how this law would have violated bedrock First Amendment rights of how we protect New Yorkers’ data,” while Grubhub said it “reinforces the privacy protections that New Yorkers deserve.” UberEats and its lawyers did not respond to requests for comment. The law had drawn support from the New York City Hospitality Alliance, a restaurant and nightlife industry trade group. Its executive director Andrew Rigie said Torres’ decision “hurts small businesses and consumers. We urge the city to appeal.” The cases in the U.S. District Court, Southern District of New York, are DoorDash Inc v. City of New York, No. 21-07695; Portier LLC v. City of New York, No. 21-10347, and Grubhub Inc v. City of New York, No. 21-10602. —Jonathan Stempel, Reuters