Two local Tiffin Indian Cuisine restaurants involved in suit against Grubhub, alleging sham telephone orders

Two Tiffin Indian Cuisine restaurants, one in Mt. Airy and one in Elkins Park, are involved in a proposed class-action lawsuit filed last year in federal court against Grubhub, an online, mobile food delivery service, claiming it withheld millions of dollars in revenue from restaurants across the country.

Munish Narula, founder of the Tiffin restaurant chain, which has locations in Pennsylvania and New Jersey, stated in the lawsuit that “for at least seven years, if not longer, Grubhub has been withholding commissions for sham telephone food orders, depriving more than 80,000 restaurants of revenues and profits that rightfully belong to them.”

The lawsuit also claims Grubhub, a Chicago company, violated the Illinois Consumer Fraud and Deceptive Business Practice Act, which allows for treble damages.

According to the complaint, “unlike Grubhub’s online or mobile platforms, when a customer places an order by telephone using contact information from Grubhub’s platform,” the call is rerouted to the restaurant and the company “does not play any role in processing the telephone food orders.”

Regardless of whether the call resulted in a food order, the company charged restaurants a commission fee on all Grubhub telephone calls that lasted longer than 45 seconds.

According to the lawsuit, Narula, a Wharton graduate and former investment banker, discovered the scheme after he called the phone number of one of his restaurants listed on Grubhub’s app and had the restaurant place him on hold for two minutes before hanging up. A few minutes later, the call, which was recorded by Grubhub, was listed on Tiffin’s ledger as a food order and a fee was charged.

Later that day, a woman called the Grubhub-issued telephone number to one of the Tiffin restaurants to ask questions about food allergies. After hanging up, she placed an online order. Narula noticed that the company charged Tiffin twice – once for her call about food allergies and the other for the online order placed by the woman immediately after the call.

According to the complaint, the majority of calls made to restaurants using the phone number assigned by Grubhub to the restaurants were “to check on the status of their delivery orders to ask questions about the menu.”

“Narula estimates that 80 percent of the telephone commissions that his restaurants were charged were not linked to an actual food order,” stated the lawsuit.

The lawsuit also alleges that a Grubhub account advisor told Narula that the company’s system “is automated to charge a telephone commission on each and every call made to the restaurants, regardless of whether a food order is actually placed.”

According to the lawsuit, “That same account advisor then threatened to suspend Grubhub’s services for all of Narula restaurant locations if Narula took legal action or went to the media about Grubhub’s telephone order scheme, threatening to cut off 15 percent of Narula’s revenues.

In recent court documents, Grubhub filed a motion to compel arbitration with the U.S. District Court for the Eastern District of Pennsylvania on March 6.

An article in The Legal Intelligencer noted that the motion filed by Grubhub’s attorney, Rebekah Kcehowski, said that Tiffin Indian Cuisine restaurants “agreed to arbitrate disputes on a non-class basis before the American Arbitration Association when it agreed to the terms and conditions on Grubhub’s website.”

Tiffin’s lawyer, Catherine Pratsinakis, declined comment for this story. Grubhub’s lawyer did not return calls for comment.