Business
L.A. County accuses Grubhub of 'bait-and-switch' with last-minute fees
The price of the turkey on rye half-sandwich from Langer’s Delicatessen-Restaurant in Los Angeles, purchased through the delivery app Grubhub, starts around $17.
But at checkout, the costs mount. With additional fees and sales tax, the cost of a sandwich delivery can hit over $26.00. Plus tip.
L.A. County says it amounts to an illegal “bait-and-switch.”
In a lawsuit filed Wednesday against Grubhub, county lawyers argue the food delivery company has repeatedly flouted a state law barring false advertising by promoting meals at a cheaper price than what customers see at the checkout page.
“Grubhub has built this vast marketplace through practices that mislead consumers and restaurants and put the squeeze on the company’s delivery drivers,” the lawsuit says. “Multiple aspects of Grubhub’s business — and every transaction for food delivery — are suffused with deception.”
A Grubhub spokesperson said in a statement the company plans to “aggressively defend” itself in court.
“We’ve sought to engage in a constructive dialogue with the Los Angeles County Counsel’s office to explain our business and identify any areas for improvement,” a company spokesperson wrote. “We are disappointed they have moved forward with this lawsuit because our practices have always complied with applicable law, and in any event, many of the allegations are incorrect or have been discontinued.”
The lawsuit refers to a Grubhub webpage with a banner that says customers can “order online for free” at Los Angeles restaurants near them. In reality, the lawsuit says, they cannot.
Grubhub said it is working on removing the language “from all existing materials.”
“This lawsuit sends a clear message: Los Angeles County will not tolerate businesses that deceive consumers, take advantage of restaurants, and exploit the drivers who work hard to provide a valued service,” said Supervisor Lindsey Horvath, the board chair, in a statement.
It’s the latest government action aimed at preventing companies from hitting consumers with surprise charges. A new state law goes into effect this summer prohibiting last-minute “junk fees” across a long list of businesses, including delivery apps. Atty. Gen. Rob Bonta, who co-sponsored the measure, has promised “the price Californians see will be the price they pay.”
The attorney general’s office has said that once the law goes into effect, delivery apps cannot tack on miscellaneous fees at the end of the transaction.
The county’s lawsuit argues the status quo hurts not only Grubhub’s customers, but also the drivers and restaurants who serve them.
According to the lawsuit, restaurants signing up for Grubhub were not properly warned that they would have to refund money to dissatisfied customers even if the restaurants didn’t believe they had made a mistake with the order. Restaurants are also at a disadvantage if they don’t pay the company extra marketing fees, the county alleged.
Grubhub gives more search prominence to restaurants that pay more in marketing fees, though most customers likely don’t realize this, the suit alleges. Instead, customers may believe the restaurants they’re seeing higher in the search ranking are the closest or the most popular.
“These practices inflict financial harm on L.A. County’s residents, restaurants and workers and are unacceptable while so many of them struggle to make ends meet,” Rafael Carbajal, director of the county’s Department of Consumer and Business Affairs, said in a statement.
Grubhub came under fire from its California delivery drivers in 2020 after the company rolled out a new charge — called the driver benefits fee — to help cover the costs that came under Proposition 22, a voter-approved ballot measure that guaranteed delivery drivers who clock a certain number of hours a healthcare stipend, among other benefits.
As part of the rollout, the company defaulted to no tip. Drivers said their earnings were slashed as a result.
The lawsuit alleges the way Grubhub explains the driver benefits fee continues to deter customers from tipping.
Grubhub explains the fee to consumers as helping guarantee “minimum wage and healthcare benefits for our drivers so they don’t have to depend on tips,” the lawsuit says. In reality, many drivers don’t qualify for the stipend and are fully dependent on tips, the county alleges.
Grubhub said the company has worked to make it easier for restaurants to dispute refunds and plans to clarify the benefits drivers receive as a result of Proposition 22. It also said marketing fees only affect the searches customers see in “certain, limited circumstances.”
In 2022, Grubhub settled a similar suit with Washington, D.C., for $3.5 million after the district’s attorney general accused the company of manipulating customers with “hidden fees.” Under the settlement, Washington received $800,000, and $2.7 million went back into the accounts of Grubhub customers.
Business
Read Nick Bilton’s Letter to Scott Pelley
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
Business
Aspiration co-founder sentenced to 14 years for fraud
The co-founder of Aspiration, Joseph Sanberg, was sentenced to 14 years in prison on Monday after defrauding investors and lenders of over $248 million.
The startup, an eco-friendly digital banking company boasting fossil fuel-free investments, carbon offsets for gas purchases, and a debit card with cash-back benefits for shopping at clean companies, was founded by Sanberg and Andrei Cherny. Cherny left the company in 2022 and has not been charged.
Sanberg, an Orange County native, pleaded guilty to wire fraud in October after being arrested in March last year. Aspiration subsequently filed for bankruptcy and liquidated all of its assets by July.
Sanberg and venture capitalist Ibrahim AlHusseini, who also faces charges, together forged a series of bank statements in order to obtain loans. From 2020 to 2021, the pair forged AlHusseini’s bank statements to show millions of dollars in assets in order to obtain millions of dollars from lenders.
Additionally, they forged a letter from their audit committee stating that $250 million in funds were available, when in reality Aspiration had less than $1 million. The amount of loans defrauded exceeded $248 million.
In 2021, Sanberg artificially inflated Aspiration’s 2021 revenue by $44 million by recruiting 27 fake customers to sign letters of intent pledging tens of thousands of dollars per month for tree planting services. Sanberg himself funded the contracts and used the inflated revenue numbers to obtain more loans.
The charges sparked an NBA investigation into salary cap allegations due to Aspiration’s connections with Clippers owner Steve Ballmer.
Ballmer personally invested $60 million in Aspiration, all of which was lost. He is now the target of a civil lawsuit alleging his participation in the scheme. Ballmer denies the allegations.
The team announced a $300-million sponsorship deal with Aspiration, and Clippers player Kawhi Leonard signed a four-year, $28-million marketing contract with the company, which reportedly performed no duties. The issue has raised concerns about how players are circumventing the NBA’s salary cap.
The team lost the $300-million sponsorship deal and an additional $20 million paid for carbon offset purchases.
Business
Monterey Park takes landmark vote on banning data centers
Residents in the city of Monterey Park will be the first in the nation to vote on a permanent ban on data centers Tuesday.
If approved, Measure NDC would prohibit data centers within the city limits and could only be overturned by another vote.
Yard signs saying “No Data Center” in English and Chinese with images of dragons line sidewalks in the San Gabriel Valley city.
As a wave of data center opposition sweeps the country, numerous towns and counties across the U.S. have instituted temporary moratoria and other restrictions on the facilities. But only a handful have instituted indefinite bans, and just four other towns have sent related matters to the ballot.
Supporters are hoping the vote will set a precedent for the rest of the region, where residents are fighting proposals in Vernon and City of Industry.
“This is about as permanent a ban as we can get,” said Steven Kung, co-founder of the group No Data Center Monterey Park. “Winning Measure NDC would send a huge message to the rest of the San Gabriel Valley about how residents don’t want data centers.”
The ballot measure emerged from the fight against a 247,000-square-foot center proposed in 2024 by the Australian-owned investment firm HMC StratCap for a residential area in Monterey Park.
The facility would have sat less than 500 feet away from the nearest home and used three times the electricity of the 60,000-person, predominantly Asian American city.
While the developer touted the potential for jobs and tax revenue, residents expressed concerns about noise and air pollution, rising electricity rates and a potential to lower property values.
The company pulled its plans in late March following public outcry and a March 4 city council vote to extend a temporary data center moratorium and place a ban on Tuesday’s ballot.
In a letter to the city council, HMC StratCap said it would pursue a different use for the land and would not engage in a ballot measure fight.
The city council later banned data centers indefinitely, the first in California to do so, said Mayor Elizabeth Yang. But she’s still been out campaigning for the measure with all four other council members.
“If a council puts in an ordinance, a future council can reverse it too,” said Yang. “With the ballot measure, unbanning it is a lot harder because you need the entire city to vote on it.”
The measure proposes the ban “to protect air quality, drinking water resources, and public health” and “prevent impacts to electricity and water rates.”
While California places third in the country for existing data centers with about 300 facilities, it hasn’t been a hot spot in the recent AI-driven data center boom. High electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in Virginia, Texas, Georgia, Illinois or Arizona.
“Most of California’s data centers are small by today’s standards,” said Shaolei Ren, an engineering professor at UC Riverside who studies how to reduce the environmental impacts of data centers. “Ten years ago, they would be medium-sized, but the power demand for new AI data centers has increased a lot.”
The average operating data center demands 45 megawatts, according to the Washington Post, while the average planned one would draw 430 MW. The one proposed for Monterey Park would have required about 50 MW at peak demand.
As proposals crop up in SoCal, they’re met with fierce opposition. Montebello, El Monte and Baldwin Park have all enacted temporary moratoria, and Alhambra recently banned data centers as part of a zoning code update. City of Industry, Vernon, City of Commerce and Santa Fe Springs are moving in the other direction, trying to court developers and streamline data center approvals. Community groups are fighting that.
Outside the San Gabriel Valley, residents of Coachella and Imperial County are showing up in droves to protest local proposals.
Matthew Shaw, a volunteer with the Coalition for Responsible Data Center Development, who recently published a report on opposition to AI data centers, said a vote to ban them in Monterey Park “would lead to copycats, partially because so many groups are just opposed to any data center development at all.”
While there is no formal opposition to Measure NDC, some building trades like Ironworker Local 433 supported the Monterey Park data center when it was still live before city council. Those in the data center industry are lamenting the state of public opinion.
“These are multi-billion-dollar assets that are built by multi-trillion-dollar companies. These things will get done,” said Mehdi Paryavi, chairman of the International Data Center Authority. “My biggest problem is that our industry does not invest enough in community engagement.”
Paryavi said towns that seek to limit data centers are missing out on thousands of jobs generated by data center construction, operations and customers, as well as faster artificial intelligence speeds and better performance.
Kung said local community organizers are “looking at the empirical evidence” and seeing a ban as a win.
“We’ve never seen a city that embraces a data center and is like, ‘Look how our quality of life has increased, look how all the revenue has gone into citywide improvements,’” he said. “That just doesn’t exist.”
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