Boston Cab Dispatch, Inc. v. Uber Technologies, Inc., 2014 WL 1338148 No. 13–10769 (D. Mass. Mar. 27, 2014)
Plaintiffs sued Uber for false advertising, unfair
competition, and violation of Boston taxicab ordinances for “providing a
private car service that allows users to call taxicabs associated with Boston
Cab and other dispatch services without complying with Boston taxicab
regulations.” (There were also tortious
interference/RICO claims, though those were kicked out.)
The core of the complaint is that Uber gained an unfair
competitive advantage over traditional taxicab dispatch services and
license-holders “because it avoids the costs and burdens of complying with
extensive regulations designed to ensure that residents of Boston have access
to fairly priced and safe transportation options throughout the city and yet
reaps the benefits of others’ compliance with those regulations.” The Boston
Police Commissioner requires all taxi drivers to have a medallion, maintain a
properly equipped and functioning taxicab, refrain from cell phone use while
operating a taxicab and belong to an approved dispatch service or “radio
association.” Such associations must provide 24–hour dispatch capability,
two-way radio service and discount reimbursements for the elderly; keep
records; and use specific approved colors and markings. Plaintiffs each
contract with several hundred medallion owners to manage them.
Uber allows users to request private vehicles for hire. At the time of the motion to dismiss, Uber
offered both unmarked vehicles and “Uber Taxis,” operated by Boston taxicab
drivers. Uber-affiliated drivers can’t accept cash or non-Uber-associated
credit cards. Uber taxi drivers “have
agreed to be available for hire through Uber while they are working shifts and
subject to dispatch by their radio associations.” While their fees are
calculated based on the flat rate applicable to all Boston taxicab drivers,
Uber adds a $1 “fee” and a 20% ”gratuity” and therefore the final charge
exceeds the maximum that taxicabs are permitted to charge under the Police
Commissioner’s rule. Though Uber says
that 20% is “for the driver,” drivers only get 10% and Uber keeps the
rest. (Boo!) Unmarked vehicles don’t comply with the rules
about 1) membership in approved associations or dispatch services, 2) regular
inspections, 3) partitions between drivers and passengers, 4) panic buttons and
GPS tracking to allow customers to alert police when they are in danger, 5)
criminal background checks of drivers, 6) non-discrimination with respect to
passengers with handicaps or 7) use of mobile telephones.
Somewhat puzzlingly, the court says there’s no evidence in
the record (on this motion to dismiss) that Boston Cab suffered any harm due to
members on the clock picking up passengers through Uber rather than through its
dispatch services. But plaintiffs argued
that, by falsely portraying taxis as one choice Uber offers, “Uber diverts
fares that would go to licensed Boston taxis if Uber did not falsely claim
taxis were part of its affiliated businesses.” They contended that this
diversion decreased demand for their cabs, smaller numbers of leased cabs, and
lost revenue.
Plaintiffs alleged that Uber misrepresented that it was
affiliated with Boston Cab. The court
found that, regardless, they failed to plead harm caused by the alleged
misrepresentation—the “use” of Boston Cab colors and markings. There was no connection between the allegedly
poorer quality of the unmarked Uber cars and the use of Boston Cab
colors/markings on Uber taxis. No
reasonable inference could be drawn that a consumer would hold the unmarked
cars’ lack of safety features against plaintiffs. (In other words, mere affiliation confusion
does not plausibly harm goodwill or reputation!
Mark McKenna, take note.)
Second, the magistrate judge who recommended keeping this
claim alive reasoned that plaintiffs could be harmed because the Police
Commissioner’s rule forbids mobile phone use by drivers, but Uber drivers must
use mobile phones. Even if this use
increases accident potential, it still wasn’t plausible that plaintiffs were
harmed by that risk “as a result of consumers possibly mistaking the
relationship between plaintiffs and Uber. Even if Uber’s service resulted in an
increase in accidents involving taxis bearing the Boston Cab markings, any harm
to Boston Cab’s reputation would not be the result of customer confusion about
the relationship between Uber and Boston Cab.”
Plus, plaintiffs alleged that they were harmed by lost
revenues from the unmarked cars, but that doesn’t have anything to do with
confusion about the relationship between Uber and Boston Cab either.
Likewise, the Chapter 93A unfair competition by misrepresentation
claims were also dismissed. Uber’s
alleged misrepresentations of affiliation with medallion owners/radio
associations, and misrepresentations that Uber only collects $1 and pays the
20% gratuity to taxi drivers, lacked the requisite causal connection to
plaintiffs’ harm, as described above. As
for alleged misrepresentations that Uber’s service was lawful under the Boston
rules, and that the unmarked cars didn’t need to be licensed and regulated as taxis,
plaintiff didn’t identify a representation by Uber that said these things
either expressly or by necessary implication.
Uber’s just acting and leaving Boston to catch up, if it can.
However, plaintiffs also alleged that Uber violated Chapter
93A through unfairly competing by “operating” its service without incurring the
expense of compliance with Massachusetts law and Boston ordinances. Uber argued
that it couldn’t be violating the law because it doesn’t own any cars,
medallions, or radio associations and does not employ drivers. This was based
on an “unduly narrow conception” of the term “operating.” There was sufficient
evidence that Uber exercised control over vehicles for hire that competed with
plaintiffs. Uber’s preclusion argument
also failed; the regulations didn’t occupy the field to the exclusion of
Chapter 93A. Nor did Uber succeed in
shifting all responsibility for unlawful conduct to drivers (like Airbnb and
others of these types of services, Uber said it was the drivers’ responsibility
to follow local law and not Uber’s fault if they didn’t; Uber drivers take
note). Uber sets policy for the drivers,
such as requiring mobile phone use.
This also preserved the common-law unfair competition claim.
Posts
No comments:
Post a Comment