Tuesday, October 11, 2016

Court deems Uber's safety claims to be puffery

XYZ Two Way Radio Service v. Uber Technologies, Inc., No. 15-cv-3015 (E.D.N.Y. Sept. 30, 2016)

Two black-car companies sued Uber for false advertising, false association, and tortious interference with contractual relations between them and their drivers. The court rejected all the claims.

The court found that the challenged statements were generally puffery, such as:

Wherever you are around the world, Uber is committed to connecting you to the safest ride on the road. This means setting the strictest safety standards possible, then working hard to improve them every day. The specifics vary depending on what local governments allow, but with each city we operate, we aim to go above and beyond local requirements to ensure your comfort and security—and what we’re doing in the US is an example of our standards around the world.

… Unlike the taxi industry, our background checking process and standards are consistent across the United States and often more rigorous than what is required to become a taxi driver. . . . We’ll continue innovating, refining, and working diligently to ensure we’re doing everything we can to make Uber the safest experience on the road.

Although “these statements are intended to convey the impression that Uber takes the safety of its passengers seriously,” they did so in ways that were clearly puffery:

The overall tone is boastful and self-congratulatory. Many of the statements are couched in aspirational terms—“committed to,” “aim to,” “believe deeply”—that cannot be proven true or false. Others are vague and hyperbolic; if Uber literally set the “strictest safety standards possible” at the outset, it could not “improve them every day.” In sum, the Court concludes that the challenged statements cannot reasonably be understood as specific representations of objective facts.

Query whether taxi companies, like Domino's Pizza, can exploit this ruling to their own advantage.

Plaintiffs focused on the background check, which they alleged was not “more rigorous than what is required to become a taxi driver,” because it does not require fingerprints, a medical clearance or a drug test, all of which NYC requires.  But the court found Uber’s background check claims to be not false.  First, they were qualified with “often,” and Uber’s website acknowledged that “[t]he specifics vary depending on what local governments allow,”  and that, “[i]n New York City, DMV and criminal background checks are conducted by the Taxi and Limousine Commission (TLC) according to their licensing standards.” Though drivers for UberX don’t need a commercial driver’s license in Connecticut or New Jersey, the website is clear that “[i]n order to drive with Uber in New York City, you need a TLC (Taxi and Limousine Commission) License,” and that Connecticut and New Jersey Drivers “CANNOT pick up anywhere in New York State.”

Plaintiffs also challenged Uber’s statements about its drivers as “partners,” some of which were clearly directed at potential drivers, not customers.  Plaintiffs alleged that “partners” was false because Uber considers its drivers independent contractors and expressly disclaims liability for their actions. But there was no reason to think that customers took “partners” as a legal term of art.  The term, “as used on Uber’s website, reads like euphemistic adspeak devoid of any inherent meaning.”  Thus it wasn’t actionable.

False association: some of plaintiffs’ drivers signed up as Uber “partners,” and used plaintiffs’ cars bearing plaintiffs’ service marks for Uber pickups. However, the court ruled, “[w]hen a driver employed by one of the plaintiffs decides to make an Uber pickup in a car bearing one of the plaintiffs’ services marks, it is the driver—not Uber—who is ‘using’ the mark.”  Interesting ruling—wonder how contributory infringement might go.

Tortious interference: nope.  Although drivers’ contracts were at-will, that didn’t make tortious interference with prospective contract impossible.  But tortious interference with business relations “requires a showing of malice or wrongful conduct,” which means something rising to the level of fraud, threats, or breach of fiduciary duty: “as a general rule, the defendant’s conduct must amount to a crime or an independent tort.” Plaintiffs didn’t allege those things.

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