Antitrust Law Daily Wrap Up, ADVERTISING—D. Conn.: Uber drives away taxi companies’ Lanham Act, RICO and CUTPA claims, (Aug 14, 2015)

By Michael Menzhuber, J.D., LL.M.

Uber Technologies, Inc. steered clear of taxi companies’ claims that it: (1) misrepresented its services, in violation of the Lanham Act; (2) engaged in unfair and deceptive trade practices, in violation of the Connecticut Unfair Trade Practices Act (CUTPA); and (3) violated the prohibitions in the Racketeer Influenced and Corrupt Organizations Act (RICO) against “use or invest”, “interest and control over”, and “conduct of enterprise”. In granting Uber’s motion to dismiss, the federal district court in Hartford, Connecticut determined that the plaintiffs failed to adequately plead claims under the Lanham Act; RICO, and CUTPA (Greenwich Taxi, Inc. v. Uber Technologies, Inc., August 13, 2015, Thompson, A.).

Background. In April 2014, transportation network provider Uber began communicating with consumers in Connecticut through a free smart phone application which allowed them to summon a low-cost everyday vehicle or a more expensive livery vehicle. Uber did not own any cars, taxicab certificates, or livery permits or plates, and did not employ any drivers.

In filing suit against Uber, several tax companies alleged that: (1) Uber was providing taxicab and livery services in Connecticut and doing so without complying with state laws and regulations concerning such operations; (2) Uber partnered with its drivers to drive Uber customers while simultaneously working their normal shift; (3) Uber misrepresented to customers its compliance with Connecticut laws and regulations, its insurance coverage, the safety of its drivers, its affiliation with lawfully operating taxicab and livery companies, and its fares; and (4) Uber unfairly competed with them by not complying with Connecticut laws and regulations which taxis must follow.

False advertising. Uber argued that the plaintiffs’ allegations did not create an actionable offense for false advertising. Relying on Dial A Car, Inc. v. Transp., Inc., 82 F.3d 484 (1996), Uber contended that the plaintiffs could not use the Lanham Act to enforce their subjective interpretation of local transportation law when it was not clear whether Connecticut’s transportation laws applied to a technology company like Uber. The court agreed and dismissed the plaintiffs’ false advertising claim based on allegations that Uber misrepresented to customers that it was complying with Connecticut laws and regulations governing taxicabs and livery vehicles.

The plaintiffs asserted that the Dial A Car decision only applied to Uber’s alleged misrepresentations concerning the legality of its services and that they, otherwise, adequately pleaded other misrepresentations concerning: (1) “ridesharing”; (2) “driver partners”, (3) “operating legally”; (4) “insurance coverage”; (5) “safety”; and (6) “pricing”. The court concluded that the plaintiffs did not adequately plead that these representations were false or misleading after finding that: (1) the complaint did not allege that Uber was a “ride-sharing” service; (2) the plaintiffs did not plead what it meant to be an Uber “partner” and why that representation was false or misleading; (3) the alleged misrepresentation that Uber “operated legally” was not actionable; (4) there were no allegations that Uber made representations regarding insurance coverage for its drivers or about its liability insurance; (5) Uber did not misrepresent the safety maintenance of its vehicles, the background of its drivers, or deceptively require its first-time customers to execute a waiver of liability; and (6) it was not sufficiently alleged that Uber misrepresented to customers that its pricing was simple.

RICO. The court noted that the plaintiffs appeared to rely on the same alleged misrepresentations that formed the bases for their Lanham Act claims to assert that they adequately pleaded RICO predicate communications. Consequently, the court determined that, for the same reasons that these alleged misrepresentations failed to support their Lanham Act claims, the plaintiffs failed to adequately state RICO claims. Also, the plaintiffs’ allegations did not support an inference that any alleged misrepresentation was communicated to customer via Uber’s smart phone app.

CUTPA. Uber argued that the plaintiffs failed state a claim under CUTPA, which prohibits persons from engaging in “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” The court agreed and noted that the plaintiffs could not show that Uber’s conduct violated the public policy established by Connecticut laws and regulations pertaining to taxicabs and livery vehicles. The plaintiffs’ allegations did not establish the Uber’s actions were “immoral, unethical, oppressive or unscrupulous.” Furthermore, assuming that the plaintiffs had adequately pleaded substantial injury, they did not plead any allegation concerning the absence or presence of countervailing benefits to consumers or competition; or whether the injury was one the consumers themselves could have reasonably avoided, the court concluded.

The case is No. 14cv733 (AWT).

Attorneys: Glenn E. Coe (Rome McGuigan, PC) for Greenwich Taxi, Inc., Curtin Motor Livery Service, Inc., East Hartford Cab Company, Inc., Executive 2000 Transportation, LLC, and Farmington Valley Cab, LLC. Amit B. Patel (Quinn Emanuel Urquhart & Sullivan, LLP) for Uber Technologies, Inc.

Companies: Greenwich Taxi, Inc.; Curtin Motor Livery Service, Inc.; East Hartford Cab Company, Inc.; Executive 2000 Transportation, LLC; Farmington Valley Cab, LLC; Uber Technologies, Inc.

Cases: Advertising StateUnfairTradePractices ConnecticutNews