A federal judge has clamped down on DoorDash’s attempt to learn details about the relationship between Chicago officials and a law firm as the food delivery service defends itself in a lawsuit over its fee structure, despite the company's desire to ensure the legal action, potentially worth many millions of dollars, isn't being driven by the law firm that could stand to take up to half of whatever the city may nominally receive from any judgment or settlement in the case.
U.S. Magistrate Judge Jeffery Gilbert issued an opinion May 25 on DoorDash’s Jan. 16 motion to compel discovery, which it said was necessary following an October 2022 ruling from Gilbert and U.S. District Judge Robert Gettleman striking the majority of its affirmative defenses to the city’s lawsuit.
According to DoorDash, it cooperated with the city’s Department of Business Affairs and Consumer Protection in 2020 “about certain consumer- and restaurant-facing business practices.” But in March 2021, the city signed a deal with Cohen, Milstein, Sellers & Toll “that broadly outsourced the city’s investigatory and prosecutorial authority with respect to third-party platforms.”
DoorDash said the city in June 2021 sent a letter threatening enforcement actions if it didn’t, among other conduct, pay legal fees associated with the municipal investigation, then filed the lawsuit in late August. The city sued DoorDash competitor GrubHub at the same time, similarly accusing both food delivery app operators of concealing restaurant’s true prices for menu items and advertising low delivery fees before charging users greater amounts.
One of DoorDash’s affirmative defenses was its contention the city couldn’t be acting primarily in the public interest if it had a contingency fee agreement with Cohen Milstein as outside counsel.
“Typically, the revenue obtained in a public enforcement action would go to the city treasury or affected consumers,” DoorDash wrote in a motion filed in January. “Not so here. Instead, Cohen Milstein could retain anywhere from 20-50% of any proceeds the city aims here to recover.”
Gilbert rejected the contention the financial agreement is improper on its face, writing “courts in this jurisdiction have allowed such contingency fee arrangements.” Although the city acknowledged some discovery regarding the specific affirmative defense is appropriate, it pushed back by arguing “the only relevant factual question … is whether the city controls this litigation.”
Although Gilbert sided with DoorDash on the relevancy of certain components of its request, he ultimately determined the company didn’t “meet its burden to show the relevance” of all the information it sought. This was especially true of those communications DoorDash requested in order to yield evidence of personal relationships. Gilbert said the company’s justification is speculative and a deposition might be more appropriate.
“Although all discovery is, to some extent, a fishing expedition,” Gilbert wrote, “DoorDash casts its line too far from the figurative pier with these broad discovery requests supported mostly by speculation and conjecture.”
However, Gilbert did say DoorDash was entitled to more information on city officials’ communication with the Illinois Attorney General and state and federal agencies, largely to determine “when the city was first aware of” the business practices at the core of the city’s allegation, which DoorDash has alleged could possibly date to 2014.
While Gilbert said at this stage discovery need not predate 2019, he acknowledged ongoing discovery might lead to a reevaluation. He also agreed Chicago should produce information about communications with federal and other state agencies. Those requests point toward DoorDash’s affirmative defense arguing “this lawsuit is beyond the city’s home rule powers or authority because it addresses matters of state or national concern,” Gilbert wrote, while noting Judge Gettleman earlier refused to dismiss this defense.
“Discovery about whether the alleged problem the city is seeking to redress in this lawsuit is a national, rather than a local, problem is relevant to DoorDash’s home rule defense,” Gilbert wrote. “Judge Gettleman’s decision to deny the city’s motion to strike also leads to the conclusion, at least as of now, that there is a basis to challenge the city’s home rule authority over national problems.”
DoorDash is represented in the case by attorneys Elizabeth K. McCloskey, Michael K. Forde and Patricia Brown Holmes, and other attorneys with the firms of Gibson Dunn & Crutcher, of Washington, D.C.; Forde & O'Meara, of Chicago; and Riley Safer Holmes & Cancila, of Chicago.
The city is represented by attorneys Betsy A. Miller, Brian E. Bowcut and Peter Ketcham-Colwill, of the firm of Cohen & Milstein, of Washington, D.C.