Legal Ramifications of Grocers and Third-Party Applications in light of COVID-19

Juliette Hernandez- Beginning March 13, 40% of Americans who ordered grocery deliveries for the week tried online grocery deliveries for the first time. COVID-19 has transformed the patterns of the everyday grocery store consumer. Grocery chains have adopted new methods or expanded existing methods both outside and inside of the store. Outside of the store, grocers have seen a surge in delivery applications and an expansion of the buy online and pickup in-store option. Inside the store they have adopted contactless payment methods, limited the number of in demand products, altered the layout of store, and are reducing the stocking level of shelves. This demand for grocery delivery has led to a rise in innovation coupled with legal implications related to grocers and the third-party platforms frequenting the grocers.

Innovation and Creativity

The online food delivery app, Instacart, saw an order volume saw a 150% increase from March to April. Moreover, the application download multiplied sevenfold. As such, Instacart alone set out to hire 300,000 employees. As a result of COVID-19, Instacart added a new feature to its application—no-contact delivery—where shoppers can elect to have their groceries left at their door and not interact with the shopper. Instacart’s increased online presence has led to another innovation—digital marketing campaigns. It is currently accepting retail partnerships that will be targeted to promote their online marketplace and participating storefronts.

However, this shift in consumer practices poses legal risks to the companies that are being used now more than ever. For example, Instacart workers went on strike to seek better working conditions. The workers request protective supplies such as masks and disinfectant, along with obligatory higher tips, and ultimately, hazard pay.

Moreover, the grocery store themselves can be exposed to legal liability as a result of third-party providers utilizing their store—whether it be through an in-store pickup, curbside pickup, or in-person shopping capacity on behalf of a customer.  Consider what would happen if a driver becomes involved in an automobile accident, if a driver were to contaminate the food and causes the customer to become ill, or if the driver harms the customer? If the store were to officially partner with the third-party platform, then the store could potentially be exposing itself to liability for the wrongful conduct of the person in the third-party platform.

For that reason, grocers should consider whether partnering with a third-party platform is appropriate, and if so, to place a formal agreement that evaluates the following factors: food safety compliance courses or training; due diligence on all employees and companies involved; insurance coverage for the employees; strong indemnification terms; and requiring third-party delivery services to actively disclaim an agency relationship.

Nonetheless, even if grocery stores do not partner with a third-party delivery service, they may still be exposed to legal liability in the form of an apparent agency relationship. This form of liability is unlikely, however, still remains a possibility. Grocery stores should consider taking affirmative steps to ensure there is no association between the grocery store and the third-party delivery service, other than, of course, the consumer.

Warehouse and Distribution

To meet the demand of hoarding and panic-buying that was once the sentiment in March, conglomerate companies such as Amazon and Walmart have vertically expanded, alone hiring 250,000 employees to service warehouses, deliveries, stores, and distribution centers.

On August 27, 2020 Amazon launched its first Amazon Fresh grocery store in California. This grocery store is designed to offer the same products as a traditional grocery store—produce, meat, seafood, and freshly prepared food—and offer in-store, online, and free same-day delivery for Prime members.

 

The expansion of Amazon into this field has a potential legal ramification. Thus far, Amazon has been able to resist unionizing efforts. Labor unions have long recognized the traditional unionization efforts of holding meetings and gauging interest have been fruitless. However, hiring more employees in different industries and Amazon’s procedures in light of COVID-19 may tip the unionization efforts in the employees’ favor. During COVID-19, labor organizations began shifting their focus from traditional unionization efforts to online petitions, contacting the media, and leveraging public platforms to place pressure on Amazon for change. Ultimately, Amazon expanding and disrupting the grocery industry may be the turning point that leads to unionization in the company.

In conclusion, the change from in-person grocery shopping to online delivery services has sparked innovation that has legal ramifications that grocery stores, applications, and consumers should all consider.

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