Uber, Procedurally Successful Against Taxi-Cabs, Should Start Thinking of Substantive Arguments to Succeed on the Merits

Uber, a smartphone “app”,1 is noticeably changing the transportation landscape not just in the United States, but globally as well. Similar to a temp agency that connects employers and employees, Uber “[is] seamlessly connecting riders to drivers through [their] app.”2 Potential customers download the app to their phone, create an account, and within minutes can arrange for a driver to pick them up at virtually any location and drive them anywhere they want. The price is a pre-agreed upon fee preceding the acceptance of the ride. The fee for an uberX car is calculated by summing a base rate, a per minute rate, and per mile rate.3 In New Jersey, the base rate is $1.25, the per minute rate is $0.18, and the per mile rate is $1.10.4

However, like any innovation that alters or enhances the status quo, Uber is facing opposition in several jurisdictions. Who is opposing this innovative advancement? The very people that are being displaced and are unwilling to adapt to the changing transportation landscape.

Taxi-cab and limousine services in the United State and in the European Union have filed lawsuits against Uber. In addition, both state governments in the United States and foreign governments have enacted legislation requiring that Uber halt, limit, or modify operations. Wisconsin, however, is in the minority and has loosened restrictions against Uber and Uber’s counterpart, Lyft, Inc.5

One of the most recent lawsuits adjudicated against Uber is Greenwich Taxi, Inc. v. Uber Technologies, Inc.;6 thirteen separate taxicab, limousine, or livery services are listed as plaintiffs in that case. The plaintiffs alleged that Uber was in violation of several provisions of the Lanham Act because they misrepresented their services;7 that Uber is in violation of the Connecticut Unfair Trade Practices Act (“CUTPA”) because they “engaged in unfair and deceptive trade practices”;8 that Uber intentionally interfered with contractual relationships;9 and that Uber has violated several provisions of the Racketeer Influenced and Corrupt Organization Act (“RICO”).10 In their complaint, the plaintiffs requested treble damages, a temporary restraining order, preliminary injunctive relief, and permanent injunctive relief.11

Uber filed a motion to dismiss plaintiffs’ complaint in its entirety.12 When a district court is deciding a defendant’s motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), “the court must accept as true all factual allegations in the complaint and must draw inferences in a light most favorable to the plaintiff.”13 Generally, in federal court, a plaintiff’s must plead “only enough facts to state a claim to relief that is plausible on its face.”14 However, “a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”15 Moreover, “nor does a complaint suffice if it tenders naked assertions devoid of further factual enhancement.”16

However, when pleading a violation of RICO, “a plaintiff must show: (1) a violation of the RICO statute, 18 U.S.C. § 1962; (2) an injury to business or property; and (3) that the injury was caused by the violation of Section 1962.”17 A plaintiff establishes that they have a substantive RICO claim by showing the defendant has “a pattern of racketeering activity.”18

Greenwich Taxi Inc. et al. alleged that Uber’s RICO violation is in the form of wire fraud. Accordingly, Greenwich Taxi Inc. must show predicate fraudulent communications. Thus, Greenwich Taxi is subject to heightened pleading requirements of Federal Rule of Civil Procedure 9(b).”19 In addition to meeting the heightened pleading standards, “the plaintiffs must ‘provide some minimal factual basis for conclusory allegations of scienter that give rise to a strong inference of fraudulent intent.’”20

Judge Thompson ultimately granted Uber’s motion to dismiss; however, he also granted plaintiffs’ request to amend their complaint to conform to the requisite pleading requirements.21 Likewise, District Judge Gorton, in a similar lawsuit against Uber in the District of Massachusetts, dismissed several of a taxi-cab’s complaints against Uber, multiple of which were also RICO violation claims.22 However, like in Greenwich Taxi Inc., they were dismissed without prejudice.23 Although Uber has had several procedural victories, they should begin crafting arguments to also successfully obtain a final judgment.

  1. See, Understanding Mobile Apps, Fed. Trade Comm’n (Sept. 2011), http://www.consumer.ftc.gov/articles/0018-understanding-mobile-apps (discussing what an app is and how they function on smartphones).
  2. Uber (2015), Uber.com, https://www.uber.com/about (last visited Aug. 28, 2015).
  3. Uber – New Jersey (2015), Uber.com https://www.uber.com/cities/new-jersey (last visited Aug. 28, 2015).
  4. Id.
  5. Alexis Kramer, Electronic Commerce & Law Report: Uber, Cities Collide on Ride-Sharing Rules, Electronic Commerce & Law Report, Bloomberg Law Aug. 10, 2015, https://www.bloomberglaw.com/document/XEO2SILO000000.
  6. Greenwich Taxi, Inc. v. Uber Technologies, Inc., 2015 WL 4774989 (2015).
  7. Id.
  8. Id.
  9. Id.
  10. Id.
  11. Id.
  12. Id.
  13. Scheuer v. Rhodes, 416 U.S. 232, (1974).
  14. Bell Atlantic Corp. v. Twombly, 550 U.S. 550, 570.
  15. Id.
  16. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
  17. DeFalco v. Bernas, 244 F.3d 286, 305 (2d Cir.2001).
  18. Plainville Elec. Prods. Co. v. Vulcan Advanced Mobile Power Sys., LLC, 638 F.Supp.2d 245, 250 (D. Conn 2009).
  19. First Capital Asset Management, Inc. v. Satinwood, Inc., 385 F.3d 159, 178 (2d Cir.2004).
  20. Powers v. British Vita, P.L.C., 57 F.3d 176, 184 (2d Cir.1995).
  21. Greenwich Taxi, Inc. 2015 WL 4774989, at 12.
  22. Boston Cab Dispatch, Inc. v. Uber Technologies, Inc., 2014 WL 1338148 (D.Mass.2014).
  23. Id.

Author: Jason Perez

Jason Perez is a third year evening student at the Rutgers School of Law - Newark and an Associate Editor of the Rutgers Computer and Technology Law Journal. He received his B.A. in Political Science with a minor in English from the University of Delaware in 2011. Jason has also worked at Pentaurus, LLC, a property management firm in Mountainside, NJ, since 2011. Jason is an avid college basketball fan and enjoys reading in his spare time.