Monday, April 17, 2017

Uber can't get taxi false advertising case dismissed on 12(b)(6)

Delux Cab v. Uber Technologies, Inc., 2017 WL 1354791, No. 16cv3057 (S.D. Cal. Apr. 13, 2017)

Delux, a cab company in San Diego, sued Uber for false advertising about “the purported exceptional safety of Uber” and the relative unsafety of taxicab rides. Challenged claims included:  “SAFEST RIDES ON THE ROAD—Going the Distance to Put People First,” and that Uber sets “the strictest safety standards possible …. The specifics vary depending on what local governments allow, but within each city we operate, we aim to go above and beyond local requirements to ensure your comfort and security—what we’re doing in the US is an example of our standards around the world.” Uber also touted rigorous background checks that it said compared favorably to those in the taxi industry.  Uber added a separately itemized $1 “Safe Rides Fee” shown on receipts, touting the fee as supporting an “industry-leading background check process, regular motor vehicle checks, driver safety education, development of safety features in the app, and insurance.”

Uber argued that the statements were all puffery, but many of them were specific and testable: Uber claims that it is “setting the strictest safety standards possible,” that its safety is “already best in class,” and that its “three-step screening” background check procedure, which includes “county, federal and multi-state checks,” and adheres to a “comprehensive and new industry standard.” A reasonable consumer “could conclude that an Uber ride is objectively and measurably safer than a ride provided by a taxi or other competitor service, i.e., it is statistically most likely to keep riders from harm.”  Nor were the statements merely aspirational and subjective.  Thhe 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 isn’t an automatic shield from liability.  Nor did the context preclude a finding of misleadingness. Though Delux didn’t dispute that Uber screens criminal records going back seven years and conducts county, federal, and multi-state checks, the additional statements it made were also falsifiable, and the seven-year multi-jurisdictional background check was allegedly not “industry-leading.”

Uber also argued that several of its statements weren’t made in commercial advertising or promotion because they were made to journalists independent of Uber. Those challenged statements were “inextricably intertwined” with the reporters’ coverage of a matter of public concern, whether Uber is safe for riders.  Claims based on those statements weren’t actionable under the Lanham Act.

The “Safe Rides Fee,” however, was actionable even though Uber argued that it related to a transaction that had already occurred; it was aimed at getting future rides.

Uber agued that Delux didn’t adequately allege proximate cause.  Injury can be presumed in false comparative advertising cases.  The parties here were direct competitors, and it made sense that Uber’s alleged misrepresentations would decrease taxi rides.

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