Square’s Caviar agrees to pay $2.2 million to settle class-action lawsuit over gratuity

Square, the payments company led by Jack Dorsey, has agreed to pay $2.2 million to settle a class-action lawsuit involving its on-demand food delivery service, Caviar. Today, customers who ordered food from Caviar between January 20, 2012 and August 31, 2015 received a notice of the proposed class-action settlement.

As part of the settlement, which TechCrunch has reviewed, plaintiff Spencer Janssen’s counsel is expected to seek up to $755,000 in fees and costs. Janssen himself is seeking up to $10,000, which means the remaining $1.44 million will be divvied up among other class members, who can use the money to put toward another Caviar order. The parties agreed there were 93,914 class members, so that comes out to about $15.28 per person. The court will make its decision to approve or deny the settlement on September 21, 2018.

The lawsuit claimed Square collected gratuities from customers but didn’t pass on that money to the delivery drivers. Square disputes those claims, and also points to the fact 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,” Square’s attorney wrote in a court filing.

“We have always properly compensated delivery couriers, and discontinued this practice long ago to provide better transparency around costs,” a Square spokesperson told TechCrunch. “We have chosen to settle this matter to avoid the cost and distraction of litigation and provide direct benefit to our valued customers.”

In the agreed-upon settlement, it’s reiterated that Square denies all the allegations “and took the position that 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.”

Here’s the original complaint:

Spencer Janssen v Square by Megan Dickey on Scribd