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HomeMy Public PortalAboutUrgency Ord. 1740ORDINANCE NO. 1740 AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LYNWOOD, CALIFORNIA, TEMPORARILY ADDING SECTION XXX TO CHAPTER XXX OF THE LYNWOOD MUNICIPAL CODE TO ESTABLISH A TEMPORARY LIMIT ON THE CHARGES IMPOSED BY THIRD -PARTY DELIVERY SERVICES DURING THE STATE'S DECLARED STATE OF EMERGENCY RESULTING FROM THE COVID-19 PANDEMIC; AND FINDING THE URGENCY ORDINANCE EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT WHEREAS, on March 4, 2020, Governor Gavin Newsom proclaimed a State of Emergency in California based on the threat to public health posed by the novel coronavirus COVID-19; and WHEREAS, as Penal Code section 396 prohibits price gauging during a declared State of Emergency; and WHEREAS, also on March 16, 2020 the City Council of the City of Lynwood proclaimed the existence of a local emergency in response to the global pandemic caused by "COVID-19"; and WHEREAS, continuity of operations among the City's restaurants is critical for the delivery of essential food services to the residents of the City of Lynwood and to sustain these sources of employment and neighborhood vitality within the City; and WHEREAS, many consumers use third -party applications and websites, such as but not limited to GrubHub and Postmates, to place orders with restaurants for delivery and takeout, and these third -party platforms charge restaurants fees; service agreements between some restaurants and third -party platforms provide that the platform charges the restaurant 10% of the purchase price per order, while some agreements provide for higher per -order fees; and WHEREAS, restaurants, and particularly restaurants that are small businesses, have limited bargaining power to negotiate lower fees with third -party platforms given the market saturation of third -party platforms and the financial straits restaurants are facing during this period of emergency; and WHEREAS, capping delivery service per -order fees at no more than 15% will achieve the public purpose of ensuring the continued operation of local restaurants and third -party platforms during the period of emergency; the 15% cap is based on, amongst other things, the findings and experience of other California cities that have already adopted 15% fee ceilings as reasonable emergency regulations; and WHEREAS, the City Council has carefully reviewed and considered all of the evidence presented in connection with the hearing on this proposed Urgency Ordinance, including, but not limited to, the staff report, and all written and oral testimony presented; and 1 WHEREAS, the City Council finds that approval of this Urgency Ordinance would accomplish the following: 1. Make the use of third -party delivery services more affordable, thereby enabling an increase in their use by consumers, and thereby reducing the potential for spread of COVID-19 from in -person dining. 2. Reduce the economic impacts to retail food establishments and food consumers. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF LYNWOOD DOES ORDAIN AS FOLLOWS: Section 1. INCORPORATION OF RECITALS. The foregoing recitals are true, correct, and integral part of this Urgency Ordinance, and are therefore incorporated by reference as if set forth in full herein. Section 2. ADDITION OF SECTION XXX. Section XXX is hereby added to Chapter XXX of the Lynwood Municipal Code to read as follows: SECTION XXX Prohibition of Price Gouging By Third Party Food Delivery Services Section XXX Purpose and Incorporation of Recitals Section XXX Definitions Section XXX Third Party Food Delivery Services Price Gouging 2 Section XXX Penalties and Enforcement Section XXX Sunset Section XXX Purpose and Incorporation of Recitals 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 the City of Lynwood 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 Urgency Ordinance are true and correct, and are incorporated by this reference herein as the cause and foundation for the action taken by and through this Urgency Ordinance. The City Council hereby finds that this Urgency Ordinance is necessary for the current and immediate protection of the public health, safety and welfare of the City and its residents. Section XXX Definitions For purposes of this Section, unless a word's context clearly requires otherwise, the following definitions apply: A. "City" means the City of Lynwood B. "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. C. "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. D. "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 3 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. E. "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. F. "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. Section XXX Third -Party Food Delivery Services Price Gouging Prohibited 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 fifteen percent (15%) of the Purchase Price of each Online Order. B. It shall be unlawful for a Third -Party Food Delivery Service to charge 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 (5%) 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 ten dollars ($10.00) on the Third -Party Food Delivery Service's app, the Third -Party Food Delivery Service cannot charge the customer more than ten dollars ($10.00) for the meal. Nor can the Third -Party Food Delivery Service charge the restaurant more than one dollar and fifty cents ($1.50) for the Delivery Fee. Nor can the Third -Party Food 4 Delivery Service charge the restaurant more than fifty cents ($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 ten dollars ($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 twelve dollars ($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 fifty cents ($0.50) for any other1fees, 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 two dollar ($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; 4. Each fee, commission, or cost charged to the customer by the Third - Party Food Delivery Service; and 5. Any tip or gratuity that will be paid to the person delivering the food or beverages. Section XXX Penalties and Enforcement A violation of this Section 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 ordinance. 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: 5 1. Written notice is provided to the Third -Party Food Delivery Service of the provisions of the ordinance 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. Section XXX Sunset This ordinance shall automatically sunset on the date that is 90 days following the end of the State of California's declared COVID-19 State of Emergency, unless extended by the City Council. Section 3. CEQA COMPLIANCE. The Council finds that the adoption and implementation of this Urgency Ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA) under CEQA Guidelines section 15061(b)(3) because it can be seen with certainty that there is no possibility that the Ordinance may have a significant effect on the environment, under CEQA Guidelines section 15064(e), which exempts purely economic regulations, and under Public Resources Code Section 21080(b)(4) regarding actions to mitigate or prevent an emergency. Section 4. URGENCY FINDINGS. The City Council finds and declares that the adoption of this Urgency Ordinance is necessary for the immediate preservation of the public peace, health, and safety. Recent history shows that the risk of price gouging increases with a sustained state of emergency, and news outlets have already reported incidents of unjustified increases in fees for food delivery services threatening the continued viability of local restaurants. As state anti -gouging laws do not provide any protections in the market for food delivery series, this Urgency Ordinance is necessary the continuity of essential food services for its residents and to protect against predatory activity during the period of emergency. This Urgency Ordinance is thus necessary to enable the City to effectively enforce state protections against predatory activity. Section 5. SEVERABILITY. If any section, subsection, sentence, clause, or phrase of this Urgency Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of any competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Urgency Ordinance. The City Council hereby declares that it would have passed this Urgency Ordinance, and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the Urgency Ordinance would be subsequently declared invalid or unconstitutional. Section 6. EFFECTIVE DATE. This Urgency Ordinance shall become effective immediately upon adoption, if adopted by at a least four -fifths (4/5) vote of the City Council. 6 Section 7. CERTIFICATION. The City Clerk shall certify to the adoption of this Ordinance and shall cause the same to be published or posted as prescribed by law. This Ordinance shall take effect immediately upon its adoption and shall go into effect immediately. PASSED, APPROVED AND ADOPTED this 20th day of April 2021. ATTEST: aria Quinonez, City Clerk APPROVED AS TO FORM NA iT Noel Tapia, City Attorney APPROVED AS TO CONTENT Ernie H City M 7 STATE OF CALIFORNIA COUNTY OF LOS ANGELES ) ) ) I, the undersigned, City Clerk of the City of Lynwood, do hereby certify that the foregoing Urgency Ordinance was passed and adopted by the City Council of the City of Lynwood at a regular meeting held on the 20th day of April 2021, and passed by the following votes: AYES: COUNCIL MEMBERS FLORES, SOLACHE, SOTO AND MAYOR SANTANA NOES: MAYOR PRO TEM CASANOVA ABSTAIN: NONE ABSENT: NONE STATE OF CALIFORNIA COUNTY OF LOS ANGELES ) ) ) Maria Quinonez, City Clerk 1% I, the undersigned, City Clerk of the City of Lynwood, and the Clerk of the City Council of said City, do hereby certify that the above foregoing is a full, true and correct copy of Urgency Ordinance No. 1740 on file in my office and that said Urgency Ordinance was adopted on the date and by the vote therein stated. Dated this 20th day of April 2021. aria Quinonez, City Clerk 8