Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Ill.: Taxi, limousine companies state claims that ads were “uberfalse”, (Jul 14, 2014)

By Greg Hammond, J.D.

Uber Technologies, Inc.—a company that connects consumers with taxicabs, private cars, and rideshares through a mobile phone “app”—continues to face allegations that it violated the Lanham Act by allegedly engaging in false and misleading advertising. In partially denying Uber’s motion to dismiss, the federal district court in Chicago determined that various taxi and limousine companies adequately alleged that Uber misrepresented rates and licensure, and that the taxi companies alleged that Uber misrepresented its association with transportation companies (Yellow Group LLC v. Uber Technologies Inc., July 10, 2014, Ellis, S.).

Background. Uber’s mobile phone app connects customers with medallion-bearing taxis, livery vehicles, or uberX vehicles—personal vehicles that are operated as unlicensed taxicabs by non-commercially licensed drivers.

Three groups of plaintiffs filed suit against Uber in the instant case: (1) taxi affiliated companies, including Yellow Group LLC, Yellow Cab Affiliation Inc., Taxi Affiliation Services LLC, 5 Star Flash, Inc., and Taxi Medallion Management, LLC; (2) Your Private Limousine, a Chicago area livery service; and (3) 22 City of Chicago taxi medallion owners. They claimed that Uber violated the Lanham Act by: (1) falsely representing that its taxis charged “standard taxi rates,” when they charged riders the meter fare plus a 20 percent gratuity; (2) stating that all of the company’s uberX vehicles were “licensed by the city of Chicago, and driven by a licensed chauffeur;” (3) misrepresenting the scope of insurance coverage for uberX drivers and passengers; and (4) falsely representing that the company is associated with taxi and limousine companies by referring to them as its “fleet partners.” Uber moved to dismiss the claims.

Standing. In support of its motion to dismiss, Uber argued that the taxi and limousine companies failed to allege that they were direct competitors to Uber. However, the court disagreed with this requirement, noting that to succeed on their Lanham Act claim, the taxi and limousine companies would need to demonstrate that Uber’s alleged false advertising directly harmed their reputation or assets. At the current stage of litigation, the court concluded that, because the taxi and limousine companies plausibly alleged that Uber’s deceptive advertising caused customers to refrain from using their dispatch services and that it harmed the economic value of their businesses and reputations, the companies had standing. However, the medallion owners were found to not have standing to bring false advertising claims, as they failed to allege any direct injury.

Misrepresentations. The court next considered Uber’s representations regarding its rates, licensure, and insurance. According to the plaintiffs, Uber falsely claimed that it charged “standard taxi rates,” that all of its uberX vehicles were licensed by the city and driven by licensed chauffeurs; and that uberX drivers and passengers would be covered by a $1 million or $2 million insurance policy. The court concluded that the taxi and limousine companies plausibly alleged that Uber’s false rates and licensure representations caused them harm. However, it dismissed the insurance claims, finding that the taxi and limousine companies failed to allege an actual misrepresentation with regard to the insurance policies that cover uberX drivers and their passengers.

The misrepresentation of association claims also were dismissed against the limousine and medallion owner companies, but were not dismissed with regard to the taxi companies. Specifically, the court found that because the limousines in the instant case do not have any logo, trademark, or language that identifies them as being owned or operated by Your Private Limousine, customers could not be led to believe that Your Private Limousine “approves of, or endorses Uber.” In addition, because the term “fleet partners” is not a misrepresentation of fact on its own, Your Private Limousine and the Medallion owner companies failed to plausibly allege a misrepresentation of association. The taxi companies’ misrepresentation of association claims survived the motion to dismiss, however, as Uber’s ad contained a yellow taxicab that appeared similar to a particular Yellow Cab taxi, which could deceive the public as to an association between Uber and the taxi companies.

The case number is 12 C 7967.

Attorneys: Carrie A. Hall (Michael Best & Friedrich LLP) for Yellow Group LLC, Yellow Cab Affiliation Inc., Taxi Affiliation Services LLC, YC1 LLC, and 5 Star Flash, Inc. Amit B. Patel (Quinn Emanuel Urquhart & Sullivan, LLP) for Uber Technologies, Inc.

Companies: Yellow Group LLC; Yellow Cab Affiliation Inc.; Taxi Affiliation Services LLC; YC1 LLC; 5 Star Flash, Inc.; Uber Technologies, Inc.; Taxi Medallion Management, LLC

Cases: Advertising IllinoisNews