The worldwide app-based ride-sharing service Uber has been accused of racketeering practices and unfair competition by 45 Philadelphia cab companies in a federal suit filed at the U.S. District Court for the Eastern District of Pennsylvania.
The class action suit, led by plaintiff Checker Cab Philadelphia, seeks injunctive relief to prevent Uber from operating its alleged illegal taxi services in the city and compensatory and punitive damages to make up for the loss in value of the valuable medallions used by properly licensed cabs in Philadelphia.
The scathing complaint claims that Uber is a criminal organization that skirts the legal obligations of operating a taxicab company by calling itself a limousine service, despite operating in manner similar to taxis.
"Not since the days of bootlegging has there been a criminal enterprise so brazen and open as to attract hundreds of millions of dollars from investment bankers and to operate in blatant violation of federal and state law as the Uber enterprise," the complaint says.
According to the complaint, state regulators have authorized Uber to operate in Pennsylvania, but the company is not permitted in Philadelphia, where taxi services are overseen by the Philadelphia Parking Authority. Cab companies are required to obtain a medallion valued at approximately $500,000, in order to provide on demand fare services.
The claim says that Uber and its creator, Travis Kalanick, and Philadelphia manager, Jon Feldman, have attempted to work around the restrictions by claiming the company is a limousine service. Uber, founded in 2009 in San Francisco, uses a smartphone app to link ride-seekers with drivers for its black-car service that will pick up the customer and provide transportation to the destination.
The company claims that use of the app creates an appointment for transportation, falling under the definition of limousine service. The plaintiffs counter that the request for pickup is through an on demand basis, with the lapse between request and pickup consisting of a few minutes. The complaint also says that fees are based on fares similar to ones used by city taxicabs, a calculation of time and distance traveled.
According to the claim, Uber's lack of regulation under the Authority allows it to charge higher fares and institute surge pricing, doubling or tripling rates during periods of higher usage. The parking authority regulates cab fares through a tariff and prohibits surge pricing, the claim says.
Operating like a taxicab service without the proper certifications constitutes the use of an illegal activity, according to the claim. The complaint says that use of Internet technology to communicate with the customers falls under the definition of wire fraud in the RICO act.
The plaintiffs are represented by attorneys from Salaman, Grayson & Henry in Philadelphia.
The federal case ID is 2:14-cv-07265-NIQA.