Wednesday, July 22, 2015

Uber's safety claims not all puffery

L.A. Taxi Cooperative, Inc. v. Uber Technologies, Inc., --- F. Supp. 3d ----, 2015 WL 4397706, No. 15-cv-01257 (N.D. Cal. Jul. 17, 2015)
Uber makes various safety-related claims, such as its website’s claims to offer the “SAFEST RIDES ON THE ROAD” and that Uber is “GOING THE DISTANCE TO PUT PEOPLE FIRST.”  It continues: “Wherever you are around the world, Uber is committed to connecting you to the safest ride on the road. That means setting the strictest safety standards possible, then working hard to improve them every day.” It promises “SAFE PICKUPS” with “No more waiting alone on a dark street hoping you can hail a taxi.”  Uber’s blog contains similar statements, such as one issued after an Uber driver struck and killed a six-year old girl: “We are committed to improving the already best in class safety and accountability of the Uber platform, for both riders and drivers.”
After Uber customers complete a ride, they get an email with a bill and fare breakdown, including a $1.00 “Safe Rides Fee.” Customers who click on a question mark next to those words get a page that says “From the beginning, we’ve always been committed to connecting you with the safest rides on the road. The Safe Rides fee is a fee added to uberX fares on behalf of drivers (who may pay this fee to Uber) in cities with uberX ridesharing. This Safe Rides Fee supports continued efforts to ensure the safest possible platform for Uber riders and drivers.... For complete pricing transparency, you’ll see this as a separate line item on every uberX receipt.”
Uber’s advertising emphasizes the rigor of its background checks for drivers. The website promises “BACKGROUND CHECKS YOU CAN TRUST,” and says that “Every ridesharing and livery driver is thoroughly screened through a rigorous process we’ve developed using constantly improving standards....”  which used to be “industry-leading standards.” The blog elaborates on this procedure, claiming that it’s more rigorous than taxi background checks.
Uber has also made statements to the media about Uber’s superior safety, such as that quoted in a news report: “We’re confident that every ride on the Uber platform is safer than a taxi.”
Plaintiffs alleged that Uber’s representations were false and misleading because their taxi services were safer than Uber’s.  First, plaintiffs’ drivers used Live Scan, which is “considered the gold standard of background checks.” “Live Scan uses fingerprint identification; analyzes information in Department of Justice and Federal Bureau of Investigation systems that have no time-based or jurisdictional limitations; and continuously refreshes the results of a person’s background check. By contrast, Uber’s background checks, which are run by a private third-party company, do not involve fingerprinting; have jurisdictional and time-based limits; and are not automatically updated to reflect new information.”

Second, Plaintiffs’ drivers, unlike Uber drivers, were allegedly required to take a driver safety course and/or other safety training and to pass a written examination before transporting passengers. Third, Plaintiffs’ vehicle safety inspections and maintenance standards were allegedly more stringent than those required by Uber. Fourth, unlike Uber drivers, plaintiffs’ drivers weren’t allowed to drive for more than one company, so they were less likely to be distracted by managing multiple platforms for ride requests, often using multiple cellphones.
Plaintiffs sued for violation of the Lanham Act, the California FAL, and the California UCL.
Uber argued that all the challenged statements were puffery; the court only agreed in part.
The claim that Uber is “GOING THE DISTANCE TO PUT PEOPLE FIRST” was clearly unmeasurable puffery, as was “BACKGROUND CHECKS YOU CAN TRUST.” But other alleged statements were more specific, such as that Uber was “setting the strictest safety standards possible,” that its safety was “already best in class,” and that its “three-step screening” background check procedure, which includes “county, federal and multi-state checks,” adhered to a “comprehensive and new industry standard.” Uber’s statements were also explicitly comparative, e.g., “often more rigorous than what is required to become a taxi driver.” References to the “strictest safety standards” and explicit comparisons with competitor taxi services reinforced the impression that Uber’s statements were grounded in fact.
Uber argued that certain statements were only “aspirational” and thus puffery, e.g., “We are committed to improving the already best in class safety and accountability of the Uber platform, for both riders and drivers.”  Aspirational statements aren’t categorically immune for liability—the simple addition of phrases such as “Uber is committed to ...,” “Uber works hard to ...,” or “We’re doing everything we can to ...” to an advertising statement is not a liability shield. The challenged statements didn’t just say that Uber prioritizes safety, but rather included assertions that a reasonable consumer might rely on as based in fact, such as “already best in class safety and accountability.”
Uber argued that some of the challenged statements weren’t commercial advertising or promotion, and the court agreed. The court used the classic Gordon & Breach test; any changes mandated by Lexmark aren’t important here, where the parties directly compete. Statements to the media went beyond proposing a commercial transaction: “Statements made to the media and published in a journalist’s news article concerning a matter of public importance are not commercial speech, and are protected under the First Amendment.” The articles cited in the complaint discussed whether Uber was safe and included responses from Uber representatives; they were “inextricably intertwined” with the reporters’ coverage of a matter of public concern and thus not actionable under the Lanham Act.  (The parties agreed that the California claims stood or fell with the Lanham Act claims, which is a concession that plaintiffs in particular should be more hesitant to make, especially given the “sufficiently disseminated” constraint on the Lanham Act’s coverage of “advertising or promotion.”)
Plaintiffs’ citation to Kasky v. Nike, 27 Cal.4th 939 (2002), and SKEDCO, Inc. v. ARC Prods., LLC, No. 13–cv–00696–HA, 2014 WL 2465577 (D. Or. June 2, 2014), proved insufficient. Kasky “involved statements written by the defendant and distributed as press releases and letters to the editor, rather than statements made in response to journalists’ inquiries and published in independent news articles.”  SKEDCO involved a published interview with a company executive in a specialized magazine targeted toward the business’s primary customer and placed in close proximity to a paid advertisement. By contrast, the challenged statements here were “one part of longer, independent articles that are largely critical of Uber.”
However, the court found that statements made about Uber’s “Safe Rides Fee” on users’ emailed receipts were commercial speech. Uber argued that, because they came after completed rides, the statements related to completed transactions, rather than proposing a transaction or influencing consumers to purchase Uber’s services in the future.  However, it was plausible that passengers who read the information about the “Safe Rides Fee” were influenced to use the service again. The explanation of the “Safe Rides Fee” promised “continued efforts to ensure the safest possible platform,” and explained that “you’ll see this as a separate line item on every uberX receipt,” demonstrating Uber’s expectation that customers would ride again. After all, “[t]he business press has frequently observed that all communications between a successful firm and its customers, including post-sale communications, should encourage consumer loyalty and repeat business.”
The court then found that plaintiffs lacked standing under the UCL, since their claims were fraud-based and only the person who relied on the fraudulent statement has UCL standing, according to the majority of cases.  Moreover, plaintiffs lacked valid restitution claims because they had no direct or vested ownership interest in money transferred to Uber. Plaintiffs failed to allege a “confirmed” contractual relationship with any of Uber’s customers; nonrestitutionary disgorgement was not available under the label “restitution.”

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