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Burger eatery files lawsuit against Postmates

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Yahoo Finance speaks to Christina Anastasia Karagias, Spokesperson & Officer for Lucky Boy Hamburgers Inc., and Jeff Sheldon, Attorney for Lucky Boy Hamburgers Inc., about their lawsuit against Postmates.

Video Transcript

AKIKO FUJITA: A Southern California restaurant is suing Postmates for unfair business practices. Pasadena-based Lucky Boy alleges the food delivery app used its name without the restaurant's permission and intentionally misled users about the diner and its prices. Let's bring in the spokesperson and officer for that restaurant, Lucky Boy Hamburgers. We've got Tina Karagias. We've also got an attorney for the restaurant, Jeff Sheldon, and Yahoo Finance's Alexis Keenan joining in on the conversation.

Tina, I want to put the question to you first because I think a lot of our viewers are not familiar with this particular case. Walk me through very briefly, if you can, what exactly the experience was with Postmates and what led you to file this lawsuit.

CHRISTINA ANASTASIA KARAGIAS: Lucky Boy Hamburgers Inc is a small business. And the delivery company model is not Lucky Boy Hamburgers Inc model. Lucky Boy Hamburgers Inc is a customer-driven restaurant. Our customers tell us what they want. The delivery companies in general have approached us for several years now, and I keep saying no, this doesn't work for Lucky Boy. We cook fresh, and our customers come in and pick up their food. And they dictate how they want their food. So Lucky Boy is not a good match for the delivery companies.

ALEXIS KEENAN: Hi, Tina, this is--

CHRISTINA ANASTASIA KARAGIAS: And what really happened-- what happened to cause this is several delivery companies in the past and the present and now Postmates, they marked the restaurant closed. And that-- I kept writing and saying we're not a part of your delivery program. We never signed a contract. Lucky Boy Hamburgers, Inc is not part of your platform. Please remove, please remove. Nothing. And then I had to call Jeff.

ALEXIS KEENAN: Tina, this is Alexis here. I just want to ask you about that, marking the restaurant closed when it's, in fact, open on the app. Now we have reached out to Uber and Postmates for comment. They have not responded. And you say in your own lawsuit that you, too, reached out to the company 16 times. Did you get a response? And if so, what did they say?

CHRISTINA ANASTASIA KARAGIAS: They were polite and very helpful as best they could, but they did not understand the problem.

JEFF SHELDON: And may I speak for a second? This is Jeff Sheldon, the attorney. One of the responses will say, well, go to your portal and you can adjust your opening and closing times. Well, if you're not a, quote, partner with Postmates, you can't do that. So that was a non-helpful response.

AKIKO FUJITA: Jeff, we've done a little back and forth here. But I wonder if you can clarify for us what exactly you are alleging was the unfair business practice, and also this accusation of retaliation from the platform itself.

JEFF SHELDON: Well, the facts are the facts. The facts are-- you went to Lucky Boy, you searched for it, and it would report closed when it wasn't closed. Another time, they send you to competitive restaurants. The third time, they just display the menu, which implies you can order, but you can't. And the prices are too low. They're not what they currently are.

All of those have, in effect, drive business away from Lucky Boy. Is there a motive here? That's for discovery. It, arguably, could be [INAUDIBLE] that this is just a coercive technique to get restaurants to sign up. Because if you sign up, you don't have those problems.

Maybe that's part of the business model. Maybe we're a one-off, and they just-- customer service didn't work. I tried to make a phone call. There is no number that you can try to reach Lucky. Oh, no, I'm sorry-- not Lucky Boy, Postmates. So--

ZACK GUZMAN: Yeah, that's--

JEFF SHELDON: --it's not a responsive--

ZACK GUZMAN: --an interesting take. That's an interesting take, Jeff. And Tina, I'd be curious to get your stance, too, as the business owner, right? Or part of the family that's owned this business for generations, in terms of it being maybe a pressure tactic to say, you never signed up for this, but your menu items are listed now on the thing, and it's showing you as closed. It seems like it could be a pressure tactic. But talk to me about what it means as a business owner to go through hassles like this that could be negatively impacting your business, especially when you're also dealing with the pandemic.

CHRISTINA ANASTASIA KARAGIAS: Well, small businesses, we have issues. And we are small. And I just thought I had a good relationship with the delivery companies in the sense I kept telling them no, and I was just asking them to please go away. We're not interested in doing business with them because it doesn't match our model.

It affected us because customers were calling up and saying, you're closed. And then we say no, we're open. One location is open 6:00 AM to 12:00 AM. The other location is 7:00 AM to, like, 11:00 PM. And a lot of mass confusion. It wasn't helpful that this was happening during a time of chaos.

ALEXIS KEENAN: Jeff, this is Alexis here. I want to point out that there-- you're not the first company-- Lucky Boy is not the first restaurant to experience problems with delivery companies. There are other lawsuits outstanding, alleging that this kind of behavior has occurred against a variety of delivery companies.

But I do want to point out some statistics from the National Restaurant Association. They say that since the start of the pandemic, the US food service sales are down $255 billion off from what were expected levels for this year. On top of that, they say 17% of restaurants have closed permanently or long term during the pandemic. So how do you quantify the damages in a loss like this, as you're alleging?

JEFF SHELDON: Ah, you're asking my damage theory. The lawsuits just started. We would expect from discovery, if Postmates cooperates, to find out how many people searched for Lucky Boy, which, of course, didn't order through them. And there are experts available, which will indicate false information about being closed, how that would translate into sales. It's definitely a fact. Measuring it is something we lawyers will need to do during discovery.

ZACK GUZMAN: Yeah, and just added homework, I'm sure, Lucky Boy and you did not want necessarily on their plate. But Tina Karagias, officer for Lucky Boy Hamburgers, as well as your attorney, Jeff Sheldon, appreciate you coming on here to chat, alongside Yahoo Finance's Alexis Keenan with us today.