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DoorDash Sales Tax Charges in No-Sales-Tax States Class Action

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Doordash, Inc. picks food up from restaurants and delivers it to customers. The complaint for this class action alleges that the company charges customers sales taxes even in states where there is no sales tax, thereby taking more money for itself. 

The class for this action is all persons in a tax-free state who paid sales tax to DoorDash on a food delivery order. Delaware, New Hampshire, and Montana subclasses have also been proposed.

Customers can order from restaurants using DoorDash’s website or app. The company’s “dashers,” or drivers, then pick up the food from whichever restaurant the customer has chosen and deliver it to the customer. For this, the customer pays (1) the cost of the food, plus (2) a service fee, (3) a delivery fee, (4) an optional tip for the driver, and (5) sales tax.

Different states have different rates of sales taxes. But Delaware, New Hampshire, and Montana have no sales taxes. New Hampshire levies a 9% tax for food consumed on the premises of a restaurant, but DoorDash customers are not eating at the restaurants. The other two states have no taxes on prepared food, no matter where it’s consumed. The complaint thus says that no sales taxes should be charged to customers in these states. 

Oregon and Alaska also have no sales taxes, and DoorDash does not charge sales taxes in those states. 

The complaint gives three examples from the two plaintiffs in this case of orders placed in Delaware. For all three orders, DoorDash charged sales tax, at rates of from 8.71% to 8.75%. The complaint says that the plaintiffs confirmed that DoorDash orders to addresses in New Hampshire and Montana also resulted in sales tax charges. 

Since no such taxes are due to these states, the complaint suggests that DoorDash simply keeps the extra money. It alleges that the extra charges for sales taxes obtained in the three states is more than $5 million.

While DoorDash’s Terms of Use (TOU) require binding individual arbitration of disputes, the complaint rejects this, saying, “DoorDash customers are not required to review the TOU at any time, including at the creation of their account or upon the placement of an order.” They are “not required to check a box, sign, initial, or otherwise affirmatively consent to the TOU or the arbitration and class waiver provisions.” Therefore, it says, users “did not assent to the TOU or the arbitration and class waiver provisions therein.”

The complaint claims violations of state consumer protection and deceptive or unfair trade practices laws as well as violations of the implied covenant of good faith and fair dealing.

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