Hawaiian Gardens Municipal Code Ch. 9.54 Prohibition of Price Gouging by Third Party Food Delivery Services

While the pricing of delivery services is generally best left to the market under ordinary conditions, when a declared state of emergency results in market failure and predatory pricing, the public interest requires regulation to prohibit excessive and unjustified increases in the prices of essential consumer goods and services such as food delivery. It is the intent of the City Council to protect the residents and restaurants of Hawaiian Gardens from such price gouging in the market food delivery services, which is vital to the public health, safety, and welfare.

The findings and determinations reflected in the adoption of this chapter are true and correct, and are incorporated by this reference herein as the cause and foundation for the action taken by and through this chapter. The City Council hereby finds that this chapter is necessary for the current and immediate protection of the public health, safety and welfare of the City and its residents.

(Ord. No. 2021-596U, § 2, 1-26-2021)

For purposes of this chapter, unless a word's context clearly requires otherwise, the following definitions apply:

City means the City of Hawaiian Gardens

Delivery fee means a fee charged by a third-party food delivery service for providing a retail food establishment with a service that delivers food and beverages from such establishment to customers. The term does not include fees or costs that may be charged by a third-party food delivery service to a retail food establishment for services that are not associated with individual food or beverage delivery to specific customers for online orders, such as fees for listing or advertising the retail food establishment on the third-party food delivery service platform, or for fees related to processing the online order incurred by the third-party food delivery service from other vendors, including, but not limited to, credit card processing fees.

Online order means an order placed by a customer through or with the assistance of a platform provided by a third-party food delivery service, including but not limited to through a website, a mobile application, other internet service, or a telephone order, for delivery or pick-up within the City.

Purchase price means the price, as listed by the third-party food delivery service, for the items contained in an online order, minus any applicable coupon or promotional discount provided to the customer by the retail food establishment through the third-party food delivery service. This definition does not include taxes, gratuities, and any other fees or costs that may make up the total amount charged to the customer that must be clearly listed to the customer.

Retail food establishment means a restaurant, delicatessen bakery, coffee shop, or other eat-in or carry-out service of processed or prepared raw and ready-to-eat food or beverages.

Third-party food delivery service means any website, mobile application or other internet service that offers or arranges for the sale of consumer food items for same-day delivery or same-day pickup from a restaurant or similar food facility located within the City.

(Ord. No. 2021-596U, § 2, 1-26-2021)

A. It shall be unlawful for a third-party food delivery service to charge a retail food establishment a delivery fee the retail food establishment's use of the third-party food delivery service for any individual food or beverage delivery to specific customers that totals more than 15 percent of the purchase price of each online order.

B. It shall be unlawful for a third-party food delivery service to chare a retail food establishments any other fee, commission or other costs that are not delivery fees for the retail food establishment's use of the third-party food delivery service for any individual food or beverage delivery to specific customers that totals more than five percent of the purchase price of each online order.

C. It shall be unlawful for a third-party food delivery service to charge a retail food establishment any amount designated as a delivery fee for an online order that does not involve the delivery of food or beverages.

D. It shall be unlawful for a third-party food delivery service to charge a customer any purchase price for a food or beverage item that is higher than the listed price clearly stated by the third-party food delivery service or, if no price is set on the third-party food delivery service, the price listed on the retail food establishment's own menu. A third-party food delivery service may charge a delivery fee or other fees to the customer provided any such fee or charge is clearly listed prior to the customer completing the order.

E. It shall be unlawful for a third-party food delivery service to retain any portion of amounts designated as a tip or gratuity. Any tip or gratuity shall be paid by the third-party delivery service, in its entirety, to the person delivering the food or beverages.

F. As an example, if a customer orders a meal that is advertised for $10.00 on the third-party food delivery service's app, the third-party food delivery service cannot charge the customer more than $10.00 for the meal. Nor can the third-party food delivery service charge the restaurant more than $1.50 for the delivery fee. Nor can the third-party food delivery service charge the restaurant more than $0.50 for other fees, commissions, or costs for the retail food establishment's use of the third-party food delivery service (e.g., fee or commission for the restaurant's placement on the third-party food delivery service's app, or where the customer orders through the third-party food delivery service's app for pick-up (and not delivery) of the meal on his/her/their own). If the same meal is advertised for $10.00 plus a $2.00 delivery fee to the customer to use the third-party food delivery service app, the third-party food delivery service cannot charge the customer more than $12.00 for the meal. Nor can the third-party food delivery service charge the restaurant more than $1.50 for the delivery fee or $0.50 for any other fees, commissions, or costs for the retail food establishment's use of the third-party food delivery service. Finally, if the customer determines to provide the delivery person a $2.00 tip, that tip must go to the delivery person; not the third-party food delivery service company.

G. The third-party food delivery service shall disclose to the customer an accurate, clearly identified, and itemized cost breakdown of each transaction, including, but not limited to the following:

1. The purchase price of the food and beverages at the cost listed on the retail food establishment's menu;

2. The delivery fee and each fee, commission, or cost charged to the retail food establishment;

3. Each fee, commission, or cost charged to the customer by the third-party food delivery service; and

4. Any tip or gratuity that will be paid to the person delivering the food or beverages.

(Ord. No. 2021-596U, § 2, 1-26-2021)

A violation of this chapter shall subject the violator to the following:

A. A civil action in the Superior Court of the State of California to recover all actual damages resulting from a violation of this chapter.

B. Reasonable attorneys' fees and costs awarded by a court to a plaintiff that prevails in an action against a third-party food delivery service. If plaintiff fails to prevail against a third-party food delivery service, a court may award reasonable attorneys' fees and costs to the third-party food delivery service upon a determination by the court that the plaintiffs action was frivolous.

C. A civil action alleging a violation of any provision of this ordinance shall commence only after the following requirements have been met:

1. Written notice is provided to the third-party food delivery service of the provisions of the chapter alleged to have been violated and the facts to support the alleged violation; and

2. The third-party food delivery service is provided 15 days from the date of the written notice to cure any alleged violation.

(Ord. No. 2021-596U, § 2, 1-26-2021)

This chapter shall automatically sunset on the date that is 90 days following the end of the locally declared COVID-19 emergency, unless extended by the City Council.

(Ord. No. 2021-596U, § 2, 1-26-2021)