Here's How Non-Black Restaurant Owners Could Sue Uber

By Hans Bader | June 11, 2020 | 4:46pm EDT
Uber CEO Dara Khosrowshahi addresses a press conference in New Delhi on October 22, 2019. (Photo credit: SAJJAD HUSSAIN/AFP via Getty Images)
Uber CEO Dara Khosrowshahi addresses a press conference in New Delhi on October 22, 2019. (Photo credit: SAJJAD HUSSAIN/AFP via Getty Images)

Uber and Postmates are waiving delivery fees for black restaurants, reports the Washington Free Beacon.

This is an obvious violation of the federal law banning racial discrimination in contracts, 42 U.S.C. 1981. Uber and Postmates are discriminating against restaurants based on the race of their owners. Restaurants that are not black-owned could easily bring a class action lawsuit against Uber under Section 1981, seeking many millions of dollars in damages.

The Supreme Court has ruled that excluding whites from a benefit based on their race violates this law, even when the exclusion is not total, but rather just gives minorities a quota, or awards them a substantial bonus for being black. For example, it ruled that racial discrimination in college admissions violated Section 1981, as well as Title VI of the Civil Rights Act and the Constitution, when it was committed by a university that automatically awarded black and Hispanic applicants a large number of bonus points for being minorities. (See Gratz v. Bollinger, 539 U.S. 244, 276 n.23 (2003)).

Yet Uber and Postmates are totally excluding restaurants owned by whites, Hispanics, and Asians from the benefit of free delivery. As the Free Beacon notes, "The programs, announced by Uber Eats and Postmates following the death of George Floyd at the hands of police, waive delivery fees for black-owned restaurants but make no such benefit available to other minority or white-owned businesses."

Section 1981 forbids discriminating against a business based on the race of its owners or staff. (See Thinket Ink v. Sun Microsystems (2004))

Uber and Postmates are violating the rights of non-black-owned restaurants by giving black-owned restaurants a competitive advantage over them by waiving the delivery fee for such restaurants based on the race of their owners. That increases the likelihood of customers ordering from black-owned restaurants than restaurants owned by other races.

Restaurants owned by whites, Hispanics, and Asians can sue over this, even if Uber would respond to a successful lawsuit by charging black restaurants' customers more, not by charging white-owned restaurants' customers less. The Supreme Court has ruled that whites and males can challenge a gender or race preference even if a successful challenge would take away a benefit for women or minorities, rather than giving the benefit to men or whites. (See Heckler v. Mathews (1984)).

Unlimited compensatory and punitive damages are available under Section 1981, as are attorneys fees, so Uber could be sued for a lot of money.

Uber could also be sued by customers of non-black owned restaurants under either Section 1981 or California's Unruh Act. Customers don't need to have any ongoing contractual relationship with Uber to sue over this. The Supreme Court allowed college applicants to bring a class-action lawsuit against a college for discrimination in admissions, even though the college rejected their applications for admission, and thus never entered into a contract with them. (See Gratz v. Bollinger, 539 U.S. 244, 276 n.23 (2003); Runyon v. McCrary (1976)).

A college student had legal standing to sue the University of Michigan for using race in admissions, just because he alleged that if it stopped using race in admissions, he would apply to it as a transfer student. (See Gratz v. Bollinger).

Uber is discriminating against restaurants, not customers, based on their race. But customers of restaurants not owned by blacks will likely be injured by its discrimination, because Uber is going to have to charge the customers of white-owned restaurants more to be able to afford to provide free delivery for black restaurants.

If a customer is buying from non-black owned restaurants and is charged a higher delivery fee because Uber is raising delivery fees to non-black-owned restaurants to have enough money to waive delivery fees for black-owned restaurants, that customer probably has legal standing to sue Uber in federal court, under Article III of the Constitution. (See, e.g., CEI v. NHTSA, 901 F.2d 107, 111-13 (D.C. Cir. 1990); Community Nutrition v. Block, 698 F.2d 1239, 1248 (D.C. Cir. 1983)).

But it is probably easier for a customer to bring a class-action lawsuit in state court in California, the state where Uber and Postmates are headquartered. California's Unruh Act bans arbitrary discrimination against a class of customers -- not just discrimination based on the race of the customer. In California state court, it is easier to show legal standing to sue than in federal court.

Uber's practices also violate the law of the District of Columbia, for an additional reason: Discriminating against customers of Asian and Hispanic-owned restaurants has a "disparate impact" against Asian and Hispanic customers, who are more likely than the average customer to consume particular ethnic cuisines. The D.C. Human Rights Act has a very broad ban on practices that have an unintentionally discriminatory "disparate impact" on a racial or ethnic group. And Uber is not providing free delivery to Asian and Hispanic-owned restaurants, only black-owned restaurants, so certain Asian and Hispanic clienteles are being adversely affected by its policy.

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. He also once worked in the Education Department.

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