Monday, February 01, 2021

Uber avoids taxi suit because of causation problems

Ezeokoli v. Uber Technol., Inc., 2021 WL 247975, No. A156445 (Cal. Ct. App. Jan. 26, 2021)

Plaintiffs, a putative class of taxi drivers, lost this Lanham Act false advertising appeal because they couldn’t show that Uber’s allegedly false statements harmed them (as opposed to Uber’s nonfalse business model). Uber allegedly misrepresented the availability and proximity of rides through cartoon images of cars displayed on its consumer app; (2) misrepresented the safety of its service; (3) misrepresented the legality of its operations at certain airports; and (4) made false and misleading statements about driver gratuities.

Uber won summary judgment with “evidence that (1) the plaintiffs could not show reduced income from driving taxis during the relevant period; and (2) they could not show that any economic harm was caused by the alleged misrepresentations.” In particular, “as to the challenged statements related to safety concerns, only a very small percentage—fewer than 2.5 percent—of Uber users would have seen them.”

Plaintiffs could not succeed on appeal with deposition testimony from individual drivers that they were working more, but earning less, once Uber became a competitor. Their speculation that this was driven by Uber’s false advertising wasn’t enough. Although the Lanham Act expressly authorizes suit by a person who “who believes that he or she is likely to be damaged,” standing requires “a real possibility of … being damaged and not the mere assertion of a belief.”

Nor was an economist’s expert report that proposed a methodology for estimating their damages plus a promise of survey data regarding consumer deception. The damages estimate would have been based on the full competition from Uber; it wasn’t enough to promise to sort out the impact of false statements later.

No presumption of injury and causation applied because Uber’s advertising wasn’t directly comparative. In a footnote, the court endorsed the reasoning of Il. Transp. Trade Association v. City of Chicago, 839 F.3d 594 (7th Cir. 2016): People might prefer Uber’s “storage of payment information, so that one does not need to be carrying cash or a credit card; the ability to see a time estimate of how long a pickup will take and also a driver’s rating by past users; and the ability to request a ride from wherever one is (e.g., from the comfort of home, inside during the rain rather than by hailing on a street).”

As to the comparative advertising point, the trial court reasoned: “Plaintiffs do not show evidence that Uber made actionable comparative statements in the context of advertising. ‘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.’ ” For example, an alleged statement by Uber’s Head of Communications for the Americas to a local news affiliate that Uber was “ ‘confident that every ride on the Uber platform is safer than a taxi’ ” hadn’t been shown to have been “made as part of a coordinated advertising campaign or with the intent to influence consumer opinion.”

Uber’s claims of, for example, the “ ‘safest rides on the road’ ” and “ ‘always the safest experience,’ ” employed “ ‘an industry leading background check process,’ ” and “ ‘thoroughly screen[ing]’ ” its drivers “ ‘through a rigorous process we’ve developed using industry-leading standards’ ” weren’t comparative in the way that would trigger a presumption of injury/causation because this wasn’t a two-player market. The trial court found that Uber “exists in a complex market for personal transportation, and taxis are not its only, or even its primary, competitor” so any business gained by Uber did not necessarily mean lost business for taxi drivers. The court of appeals pointed out that “a survey that even plaintiffs’ expert relied on found that riders chose Uber over taxis and other modes of transportation for a variety of reasons, including safety, comfort, ease of use and payment, time savings, and reliability.” [This reasoning shows the value of a regulatory state that can act against false advertising that causes generalized risks to everyone in the market. Also, frankly, saying that taxis aren’t the primary competitor is less plausible than saying that it’s easy to not use Facebook.]

Plaintiffs’ proposed survey expert “failed to explain how his survey design would eventually assess the impact of the alleged misrepresentations on potential riders and distinguish it from other reasons riders might choose one mode of transportation over another.”

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