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HomeMy WebLinkAboutItem a - Third Party Delivery FeesORDINANCE NO. 2377 AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA ESTABLISHING A TEMPORARY LIMIT ON THE COMMISSION FEES CHARGED BY THIRD -PARTY FOOD DELIVERY APPLICATIONS ON BUSINESSES IN ARCADIA WHEREAS, On March 4, 2020, the Health Officer of Los Angeles County determined that there is an imminent and proximate threat to the public health from the introduction of COVID-19 in Los Angeles County and declared a Local Health Emergency and the Los Angeles County Board of Supervisors concurrently proclaimed the existence of a local emergency for the County of Los Angeles; and WHEREAS, on March 4, 2020, California Governor Gavin Newsom declared a State of Emergency due to the spread and effects of COVID-19; and WHEREAS, On March 17, 2020, the City Council of the City of Arcadia ("City Council') adopted Resolution 7300, ratifying the City Manager's proclamation of a local emergency and declaring a local emergency; and WHEREAS, these and subsequent actions by the State of California and the County of Los Angeles Department of Public Health in response to the COVID-19 pandemic have prohibited or limited indoor and on-site dining at retail food establishments in the City of Arcadia, which has led to a substantial increase in the use of third -party food delivery applications; and WHEREAS, the County of Los Angeles has established a temporary limitation on the commission fees charged by third -party food delivery applications on businesses, as have numerous individual cities in the County of Los Angeles, until such time that the COVID-19 emergency has subsided and restaurants are permitted to resume on-site dining without restrictions; and WHEREAS, at their March 16, 2021 regular meeting, the Arcadia City Council carefully reviewed and considered potential adoption of a limitation on the commission fees charged by third -party food delivery applications, and directed City Staff to prepare an ordinance limiting commission fees charged to restaurants for immediate adoption; and WHEREAS, pursuant to Government Code section 8634 and Arcadia Municipal Code section 2213.3.1, the City Council may make and issue rules and regulations on matters reasonably related to the protection of life and property as affected by such disaster; and WHEREAS, pursuant to sections 415 and 419(d) of the City Charter, the City Council may introduce and adopt an ordinance at a single special meeting, and which shall take immediate effect, if at least four affirmative votes find the ordinance to be necessary as an emergency measure for preserving the public peace, health, or safety; and WHEREAS, there is an urgent need to enact this Ordinance to preserve the public peace, health, or safety in order to immediately ease the financial burden on struggling restaurants during this public health emergency through adoption of a limit on third -party commission fees charged to Arcadia restaurants similar to fee limitations that have been enacted in many surrounding jurisdictions. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES ORDAIN AS FOLLOWS: SECTION 1. The recitals set forth above are true and correct and are hereby adopted as findings in support of this Ordinance as if fully set forth herein. 2 SECTION 2. TEMPORARY LIMIT ON THE COMMISSION FEES CHARGED BY THIRD -PARTY FOOD DELIVERY APPLICATIONS ON BUSINESSES IN ARCADIA. 1. Definitions. For purposes of this Ordinance, the following definitions apply* a. "City" means the City of Arcadia. b. "Customer" means any person, firm, or association who makes use of a third -party food delivery applications for the purpose of obtaining food from a restaurant. c. "Delivery fee" means a fee charged by a third -party food delivery service for providing a food service establishment with a service that delivers food from such establishment to customers. The term does not include any other fee that may be charged by a third -party food delivery service to a food service establishment, such as fees for listing or advertising the food service establishment on the third -party food delivery service platform or fees related to processing the online order, including but not limited to, service fees, fees for facilitating customer pick-up, and credit card processing fees. d. "Food" means all articles and substances used for food and drink, confectionary or condiment whether simple or compound, and all ingredients and components used in the preparation thereof. e. "Online Order" means any order placed by a customer through or with the assistance of a platform provided by a third -party food delivery service, including a telephone order, for delivery or pick-up within the City. f. "Purchase price" means the total price of the items contained in an online order that are listed on the menu of the food service establishment where 3 such order is placed. Such term does not include taxes, gratuities and any other fees that may make up the total cost to the customer of an online order. g. "Restaurant" means and includes any restaurant, as that term is used in Section 9109.01.060 of the City of Arcadia's Development Code. h. "Third -party food delivery service" means any website, mobile application or other internet service that offers or arranges for the sale of food and beverages prepared by, and the same-day delivery or same-day pickup of food and beverages from, no fewer than 20 food service establishments located in the city that are owned and operated by different persons. i. "Worker" means any person working for a third -party food delivery service. 2. Fee Limits. It shall be unlawful for a third -party food delivery service to charge a restaurant: a. Any combination of fees, commissions, or costs, inclusive of delivery fees, that total more than 20 percent of the purchase price of each online order. b. Any individual delivery fee that totals more than 15 percent of the purchase price of an online order; c. Any fee, commission, or cost other than as permitted in subdivisions (a) and (b), above are prohibited. 3. Reporting of Fees. 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: 4 a. The purchase price of the food and beverages at the cost listed on the restaurant's menu; b. Each and every fee, commission, or cost charged to the restaurant, including any delivery fee. c. Each and every fee, commission, or cost charged to the customer by the third -party food delivery service; and d. Any tip or gratuity that will be paid to the person delivering the food or beverages. e. None of the fees, commissions, or costs in subdivisions (a) through (d) above, may be combined together. 4. Protection of Gratuities. It shall be unlawful for a third -party food delivery service to reduce the compensation, including any tip or gratuity, paid to any workers as a result of the prohibitions in this Ordinance. Any tip or gratuity shall be paid by the third -party food delivery service, in its entirety, to the person delivering the food or beverages. 5. Grace Period. A third -party food delivery service shall not be found in violation of this Ordinance for the first seven days after its effective date, if it imposes a fee in excess of the fee limit in Section 2, provided it refunds the excess fee to the restaurant no later than 14 days. 6. Restaurant Opt -Out. Restaurants shall have the option to opt -out of the enacted limitations on third -party food delivery commission fees and engage with third -party food delivery service providers according to their own preferences. For purposes of enforcement, upon City request, written confirmation that a restaurant has 10 chosen to opt -out of the adopted requirements shall be provided to the City by said restaurant and/or third -party food delivery service within 14 days. 7. Penalties and Enforcement. a. In addition to any other legal remedies, if a third -party food delivery service charges a restaurant fees that violate this Ordinance, the restaurant shall provide written notice to the third -party food delivery service requesting a refund within seven days. If the third -party food delivery service does not provide the refund requested after seven days or the third -party food delivery service continues to charge fees in violation of this Ordinance after the 4 initial notice and seven-day cure period, a restaurant may enforce this Ordinance by means of a civil action seeking damages and injunctive relief. The prevailing party in any such action shall be entitled to an award of reasonable attorney fees. b. Violations under this Ordinance shall accrue on a daily basis for each day and for each restaurant charged a fee in violation of this Ordinance. 8. Term. This Ordinance shall become effective immediately, and shall terminate 90 days after the County of Los Angeles Public Health Officer allows restaurants to offer dine -in services, without limitation, or upon the termination of the COVID-19 local emergency, whichever comes first. SECTION 3. Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Ordinance, or any part thereof is for any reason held to be unconstitutional or otherwise legally ineffective, such decision shall not affect the validity of the remaining portion of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsection, subdivision, paragraph, sentence, clause or phrase be declared unconstitutional or otherwise legally ineffective. To the extent that this action fails as an urgency ordinance, whether by lack of sufficient votes in favor or otherwise, the action shall take effect as a resolution issuing an emergency rule or regulation pursuant to Government Code section 8634 and Arcadia Municipal Code section 2213.3.1 if approved by a majority of the City Council. If for any reason any portion of this Ordinance is found to be invalid by a court of competent jurisdiction, the balance of this ordinance shall not be affected. SECTION 4. Effective Date; Urgency Declaration. The City Council finds and declares that this ordinance is required for the immediate easing of the financial burden on struggling restaurants during this emergency. The Council, therefore, adopts this ordinance to become effective immediately upon adoption pursuant to Arcadia City Charter Section 415 and Government Code Section 36937. SECTION 5. CEQA. The City Council finds that this Ordinance is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. SECTION 6. The City Clerk shall certify to the adoption of this Ordinance and shall cause a copy of same to be published at least once in the official newspaper of the 7 City within fifteen (15) days after its adoption. Passed, approved and adopted this 22nd day of March, 2021. ATTEST - City Clerk APPROVED AS TO FORM: Stephen P. Deitsch City Attorney l:3 Mayor of the City of Arcadia ORDINANCE NO. 2378 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA ESTABLISHING A TEMPORARY LIMIT ON THE COMMISSION FEES CHARGED BY THIRD -PARTY FOOD DELIVERY APPLICATIONS ON BUSINESSES IN ARCADIA WHEREAS, On March 4, 2020, the Health Officer of Los Angeles County determined that there is an imminent and proximate threat to the public health from the introduction of COVID-19 in Los Angeles County and declared a Local Health Emergency and the Los Angeles County Board of Supervisors concurrently proclaimed the existence of a local emergency for the County of Los Angeles; and WHEREAS, on March 4, 2020, California Governor Gavin Newsom declared a State of Emergency due to the spread and effects of COVID-19; and WHEREAS, On March 17, 2020, the City Council of the City of Arcadia ("City Council") adopted Resolution 7300, ratifying the City Manager's proclamation of a local emergency and declaring a local emergency; and WHEREAS, these and subsequent actions by the State of California and the County of Los Angeles Department of Public Health in response to the COVID-19 pandemic have prohibited or limited indoor and on-site dining at retail food establishments in the City of Arcadia, which has led to a substantial increase in the use of third -party food delivery applications; and WHEREAS, the County of Los Angeles has established a temporary limitation on the commission fees charged by third -party food delivery applications on businesses, as have numerous individual cities in the County of Los Angeles, until such time that the COVID-19 emergency has subsided and restaurants are permitted to resume on-site dining without restrictions; and WHEREAS, at their March 16, 2021, regular meeting, the Arcadia City Council carefully reviewed and considered potential adoption of a limitation on the commission fees charged by third -party food delivery applications, and directed City Staff to prepare an ordinance limiting commission fees charged to restaurants for immediate adoption; and WHEREAS, pursuant to Government Code Section 8634 and Arcadia Municipal Code Section 2213.3.1, the City Council may make and issue rules and regulations on matters reasonably related to the protection of life and property as affected by such disaster. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, DOES ORDAIN AS FOLLOWS: SECTION 1. The recitals set forth above are true and correct and are hereby adopted as findings in support of this Ordinance as if fully set forth herein. SECTION 2. TEMPORARY LIMIT ON THE COMMISSION FEES CHARGED BY THIRD -PARTY FOOD DELIVERY APPLICATIONS ON BUSINESSES IN ARCADIA. 1. Definitions. For purposes of this Ordinance, the following definitions apply: a. "City" means the City of Arcadia. b. "Customer" means any person, firm, or association who makes use of a third -party food delivery applications for the purpose of obtaining food from a restaurant. c. "Delivery fee" means a fee charged by a third -party food delivery service for providing a food service establishment with a service that delivers food from such establishment to customers. The term does not include any other fee 2 that may be charged by a third -party food delivery service to a food service establishment, such as fees for listing or advertising the food service establishment on the third -party food delivery service platform or fees related to processing the online order, including but not limited to, service fees, fees for facilitating customer pick-up, and credit card processing fees. d. "Food" means all articles and substances used for food and drink, confectionary or condiment whether simple or compound, and all ingredients and components used in the preparation thereof. e. "Online Order" means any order placed by a customer through or with the assistance of a platform provided by a third -party food delivery service, including a telephone order, for delivery or pick-up within the City. f. "Purchase price" means the total price of the items contained in an online order that are listed on the menu of the food service establishment where such order is placed. Such term does not include taxes, gratuities and any other fees that may make up the total cost to the customer of an online order. g. "Restaurant" means and includes any restaurant, as that term is used in Section 9109.01.060 of the City of Arcadia's Development Code. h. "Third -party food delivery service" means any website, mobile application or other internet service that offers or arranges for the sale of food and beverages prepared by, and the same-day delivery or same-day pickup of food and beverages from, no fewer than 20 food service establishments located in the city that are owned and operated by different persons. 3 i. "Worker' means any person working for a third -party food delivery service. 2. Fee Limits. It shall be unlawful for a third -party food delivery service to charge a restaurant: a. Any combination of fees, commissions, or costs, inclusive of delivery fees, that total more than 20 percent of the purchase price of each online order. b. Any individual delivery fee that totals more than 15 percent of the purchase price of an online order; c. Any fee, commission, or cost other than as permitted in subdivisions (a) and (b), above are prohibited. 3. Reporting of Fees. 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: a. The purchase price of the food and beverages at the cost listed on the restaurant's menu; b. Each and every fee, commission, or cost charged to the restaurant, including any delivery fee. c. Each and every fee, commission, or cost charged to the customer by the third -party food delivery service; and d. Any tip or gratuity that will be paid to the person delivering the food or beverages. e. None of the fees, commissions, or costs in subdivisions (a) through (d) above, may be combined together. 0 4. Protection of Gratuities. It shall be unlawful for a third -party food delivery service to reduce the compensation, including any tip or gratuity, paid to any workers as a result of the prohibitions in this Ordinance. Any tip or gratuity shall be paid by the third -party food delivery service, in its entirety, to the person delivering the food or beverages. 5. Grace Period. A third -party food delivery service shall not be found in violation of this Ordinance for the first seven days after its effective date, if it imposes a fee in excess of the fee limit in Section 2, provided it refunds the excess fee to the restaurant no later than 14 days. 6. Restaurant Opt -Out. Restaurants shall have the option to opt -out of the enacted limitations on third -party food delivery commission fees and engage with third -party food delivery service providers according to their own preferences. For purposes of enforcement, upon City request, written confirmation that a restaurant has chosen to opt -out of the adopted requirements shall be provided to the City by said restaurant and/or third -party food delivery service within 14 days. 7. Penalties and Enforcement. a. In addition to any other legal remedies, if a third -party food delivery service charges a restaurant fees that violate this Ordinance, the restaurant shall provide written notice to the third -party food delivery service requesting a refund within seven days. If the third -party food delivery service does not provide the refund requested after seven days or the third -party food delivery service continues to charge fees in violation of this Ordinance after the 4 initial notice and seven-day cure period, a restaurant may enforce this .j Ordinance by means of a civil action seeking damages and injunctive relief. The prevailing party in any such action shall be entitled to an award of reasonable attorney fees. b. Violations under this Ordinance shall accrue on a daily basis for each day and for each restaurant charged a fee in violation of this Ordinance. 8. Term. This Ordinance shall become effective immediately, and shall terminate 90 days after the County of Los Angeles Public Health Officer allows restaurants to offer dine -in services, without limitation, or upon the termination of the COVID-19 local emergency, whichever comes first. SECTION 3. Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Ordinance, or any part thereof is for any reason held to be unconstitutional or otherwise legally ineffective, such decision shall not affect the validity of the remaining portion of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsection, subdivision, paragraph, sentence, clause or phrase be declared unconstitutional or otherwise legally ineffective. If for any reason any portion of this Ordinance is found to be invalid by a court of competent jurisdiction, the balance of this ordinance shall not be affected. SECTION 4. CEQA. The City Council finds that this Ordinance is not subject to the California Environmental Quality Act ("CEQA") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. SECTION 5. The City Clerk shall certify to the adoption of this Ordinance and shall cause a copy of same to be published in the official newspaper of said City within fifteen (15) days after its adoption. This Ordinance shall take effect on the thirty-first (31St) day after its adoption. Passed, approved and adopted this day of ATTEST - City Clerk APPROVED AS TO FORM: Stephen P. Deitsch City Attorney 7 .2021. Mayor of the City of Arcadia