Uber seeks to dismiss Philly-based antitrust lawsuit for failure to state claims

By Nicholas Malfitano | May 25, 2016

PHILADELPHIA – On May 19, Uber Technologies, Inc. filed a motion in federal court to dismiss an antitrust lawsuit filed against it, for failure to state claims.

PHILADELPHIA – On May 19, Uber Technologies, Inc. filed a motion in federal court to dismiss an antitrust lawsuit filed against it, for failure to state claims.

Defense counsel’s response stated the plaintiff, the Philadelphia Taxi Association (PTA), was “unhappy with market forces” and “have sued Uber in the hopes that a lawsuit can insulate them from the competition that has resulted from Uber’s entry into Philadelphia.”

However, defense counsel added Uber’s entry into the local market “has enhanced competition, benefiting consumers by increasing output, choice and innovation, which is precisely what the antitrust laws are designed to protect.”

Uber’s attorneys argued their increased competition had not caused the plaintiffs harm, and is not evidence of a monopoly.

“Plaintiffs have not suffered harm that the antitrust laws are designed to prevent. Indeed, plaintiffs allege that Uber increased output, which is antithetical to any claim of antitrust injury,” the defense motion read.

Moreover, the defense believed the plaintiffs’ tortious interference claim failed because “they have not alleged with specificity the ‘contractual relations’ with which Uber allegedly interfered”, and that they similarly failed to argue Uber’s alleged conduct was done to harm the plaintiffs, as oppose to further its own legitimate business interests.

Also, the defense stated the plaintiffs’ unfair competition claim is duplicative of their antitrust and tort claims and defective for the same reasons, and that the PTA lacked organizational and associational standing to pursue claims on behalf of its members.

Uber sought dismissal of the PTA's suit in its entirety, with prejudice.

The Horsham-based PTA filed an antitrust lawsuit March 15, charging San Francisco-based Uber with violating both the Sherman Antitrust Act and the Clayton Antitrust Act through operating a monopoly for public service transportation in Philadelphia, and intentional interference with contractual relationships and unfair competition.

The plaintiffs seek to recover funds they claim they have lost and continue to lose due to Uber’s alleged unfair business practices.

Uber, a transportation service, utilizes mobile app technology for users to plan and create trip routes, which are then distributed to Uber drivers. The drivers then use their own vehicles to transport the fares they pick up.

The plaintiffs charge the defendant with circumventing the City’s mandatory system of certificates of public convenience, medallions and legal compliance, which license and authorize the operation of all taxi cabs operating within the city.

Further, the lawsuit states Uber “intentionally sought to evade the statutory provisions and regulations” of the Philadelphia Parking Authority (PPA), by owning no vehicles and employing no drivers – instead, utilizing people using their own vehicles without the proper commercial insurance needed to transport members of the public.

The suit adds over the past 20 months Uber has operated in the City of Philadelphia, it has engaged in “predation” by offering monetary compensation and other bonuses to lure drivers from the plaintiffs to Uber.

The plaintiffs claim 1,200 drivers (roughly 17 percent of the city’s 7,000 drivers from medallion cab owners) have left their employ and gone to work for Uber, along with taxi medallions valued at $550,000 in October 2014 now being worth only $80,000, as a result of these same predatory business practices.

The suit says 15 percent of Uber’s competitors have now left the market due to financial harm, with the plaintiffs suffering a 33.8 percent decrease in ridership and 25 percent decrease in earnings over the preceding comparable time frame.

Uber communications representative Craig Ewer previously issued a statement on the lawsuit.

“This antitrust suit is the result of the taxi monopoly facing actual competition for the first time – not just from Uber, but from the widespread adoption of ridesharing services throughout Pennsylvania. For years, taxi medallion owners took advantage of their monopoly, leading to poor services for riders and poor conditions for drivers. The charges in this lawsuit are clearly without merit and we will vigorously contest them,” Ewer said.

The plaintiffs seek the Court to declare Uber’s business practice as a monopoly under the Sherman Act, enter judgment for damages for the plaintiffs under the Clayton Act, award other relief for the plaintiffs as deemed just and proper, award compensatory damages in excess of $75,000, plus punitive damages for an amount significant enough to prevent similar conduct from occurring in the future.

The plaintiffs are represented by John F. Innelli of Innelli Law and Stephen R. Bolden of Fell & Spalding, both in Philadelphia.

The defendant is represented by R. Brendan Fee, Steven A. Reed, Brian C. Rocca and Sujal J. Shah of Morgan Lewis & Bockius, in Philadelphia and San Francisco, Calif., respectively.

U.S. District Court for the Eastern District of Pennsylvania case 2:16-cv-01207

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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