Antitrust Law Daily Wrap Up, ANTITRUST—D. Md.: Cab companies drag Uber conspiracy claims back to state court, (Aug 20, 2015)

By Greg Hammond, J.D.

A complaint asserting Maryland antitrust law violations against Uber Technologies, Inc. was remanded to the Maryland circuit court for Baltimore City. The federal district court in Baltimore determined that Uber failed to meet its heavy burden of fraudulent joinder, noting that the plaintiffs had at least a “glimmer of hope” in succeeding on their claims against non-diverse Uber drivers (The Yellow Cab Co. v. Uber Technologies, Inc., August 19, 2015, Bennett, R.).

Cab companies, associations, and drivers claim that Uber—a company that connects consumers with taxicabs, private cars, and rideshares through a mobile phone app—is disrupting the vehicle transportation industry in Maryland by “dismantling decades of laws and regulations governing the vehicle transportation industry.” Specifically, the plaintiffs claim Uber and its drivers have conspired to violate the Maryland Antitrust Act by illegally fixing prices and requiring drivers to adhere to the pricing scheme; engaged in common law unfair competition by failing to adhere to transportation regulations in Maryland; and engaged in unfair competition under the Restatement (Second) of Torts § 874A. The case was removed to the district court in August 2014. Defendants have moved to amend/correct the Notice of Removal by adding the specific phrase “fraudulent joinder,” and the plaintiffs have moved to remand.

The court first granted Uber’s motion to amend/correct the Notice of Removal, finding that the addition of the label “fraudulent joinder” to describe the arguments already present in the notice merely corrects a technical omission, rather than adding a new jurisdictional basis.

Next, the court considered Uber’s argument that there is “no possibility” that the plaintiffs would be able to establish a cause of action against Uber drivers who are non-diverse parties. The fraudulent joinder theory looks at whether a party is included due to its genuine interest in the action, or instead as a means to defeat diversity jurisdiction. Further, the “no possibility” standard, according to the court, heavily favors plaintiffs, who need only show a “glimmer of hope” of succeeding against the non-diverse defendants—the Uber drivers in this case. The court therefore reviewed each claim for the possibility that the cab companies might succeed against the non-diverse Uber drivers.

Maryland antitrust claim. The Maryland Antitrust Act requires a showing of injury resulting from defendants’ violation of the antitrust laws, but the cab companies were only required to show a possibility of that injury to defeat a theory of fraudulent joinder. They claimed that Uber, with the participation of its drivers, conspired to set a minimum price threshold below which the drivers may not charge, a scheme that facilitated defendants’ attempted monopolization of the transportation service industry in Baltimore and Montgomery Counties. The cab companies further claimed that they suffered direct losses of profits and customers due to the defendants’ antitrust actions. These allegations were sufficient to establish a “glimmer,” which prevented the court from disregarding the citizenship of the non-diverse Uber drivers, according to the court.

Unfair competition. Under both the common law and restatement theories of unfair competition, the cab companies claimed that Uber and its drivers conspired to refuse to adhere to the laws and regulations governing transportation services, but that the cab companies did adhere to the regulations and laws, incurring significant expenses in pursuit of compliance. This discrepancy, according to the cab companies, demonstrated that Uber had a substantial competitive advantage over the plaintiffs. The court concluded that, given the expansive scope of unfair competition, the cab companies demonstrated the possibility that they could succeed on this claim against the Uber driver defendants.

The case number is RDB-14-2764.

Attorneys: George Faulkner Ritchie, IV (Gordon Feinblatt LLC) for The Yellow Cab Co., Checker Cab Association, Inc., Sun Taxicab Association, Ltd., Select Cab Company, Inc., and Superior Cab Company, Inc. Benjamin Almond O’Neil (Quinn Emanuel Urquhart and Sullivan LLP) for Uber Technologies, Inc.

Companies: The Yellow Cab Co.; Checker Cab Association, Inc.; Sun Taxicab Association, Ltd.; Select Cab Company, Inc.; Superior Cab Company, Inc.; Uber Technologies, Inc.

Cases: Antitrust MarylandNews