Delivery

Square’s Caviar Settles Gratuity Lawsuit With $2.2M Payout

Square, Jack Dorsey’s digital payments company, has agreed to settle a class-action lawsuit lodged at Caviar, its on-demand food delivery service, reported TechCrunch.

According to the report, Square is paying $2.2 million, with Caviar customers from Jan. 20 of 2012 through Aug. 31 of 2015 receiving notices of the proposed settlement. The lawsuit alleged Square received gratuities from customers but didn’t give the money to the delivery drivers. Square denies the allegations, saying in a court filing according to TechCrunch that “each driver knew in advance the amount he or she would be paid under his or her contract for each order before accepting and making that delivery.”

A company spokesperson told TechCrunch that Square has always properly compensated its drivers and discontinued the practice “long ago” to increase transparency, and added, “We have chosen to settle this matter to avoid the cost and distraction of litigation and provide direct benefit to our valued customers.”

Under the settlment, Spencer Janssen’s lawyers expect to receive $755,000 in fees and expenses, with Janssen looking for $10,000 in compensation and the remaining $1.44 million being divided among the members of the lawsuit. The money can be used for another order through the Caviar service, reported TechCrunch. Given there were 93,915 members of the class action lawsuit it amounts to $15.28 per person.

A ruling on whether to approve or deny the settlement agreement is slated for September 21, noted TechCrunch. The company said “the use of the term ‘gratuity’ was neither misleading to reasonable consumers nor unlawful. Defendant contended that the amounts collected as gratuities from Plaintiff were paid to his independent contractor couriers.”

Earlier this year, Square made moves to boost its Caviar service, announcing the acquisition 3of the 2-year-old Entrees On-Trays. Caviar Product Lead Gokul Rajaram told TechCrunch in January that the goal of the purchase was twofold: to speed Caviar’s growth in the Dallas-Fort Worth area and to profit from the partnerships Entrees On-Trays had established with local Texas restaurants. The two firms are similar, Rajaram said. “They have great relationships with restaurants, and they offer amazing service for diners.”

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