I practice in Chicago and try to keep a close eye on Sharing Economy developments both locally and in Springfield. I previously examined a federal court decision involving legal challenges by some of Uber’s competitors here, and as you might have guessed, it wasn’t the only case pending against the company in the Northern District of Illinois.
In Manzo v. Uber Technologies, Inc.,13-C-2407, (July 14, 2014), Judge Sara Ellis had another opportunity to rule on a motion to dismiss filed by Uber in a dispute involving area taxi and livery drivers. This decision came just a few days after Judge Ellis ruled on another FRCP 12(b)(6) motion in Yellow Group LLC v. Uber Technologies.
Besides private vehicle owners, a prospective Uber passenger can use the company’s app to summon taxis and livery cars that also utilize the service. In Manzo, taxi and livery drivers sued Uber and some of its drivers, alleging violations of Illinois’ Consumer Fraud and Deceptive Business Practices Act and its Uniform Deceptive Trade Practices Act by misrepresenting its rates, misidentifying itself as a transportation company, and illegally operating in violation of Chicago ordinances regulating the taxi and livery industries. The court granted in part and denied in part Uber’s motion to dismiss. My overview here omits references to putative class allegations contained in plaintiffs’ complaint.
In Count I, plaintiff Miguel Manzo, a Chicago cab driver, alleges that Uber deceptively represented on its website that Uber taxis charge standard taxi rates when in fact they charged the meter rate plus a 20% gratuity, and that defendant taxi driver Ahmad Abudayeh (as an agent of Uber) concealed the fact that he split gratuities with Uber. The Court found plaintiff Manzo’s allegations, which included claims defendants’ statements drew customers away from Manzo’s taxi service and toward Uber, sufficiently pled a claim. The Court also concluded that allegations the defendants misrepresented that Uber provides transportation services, leading to confusion among customers as to the source or certification of taxi services procured via the Uber app, also adequately pled a cause of action.
In Count II, plaintiff Omar Alsubbah, a livery driver, alleges claims against Uber and Lucky Livery, Inc. (“Lucky”) as an agent of Uber. Lucky is a limousine company, and its drivers subscribe to Uber and provide rides and accept payment via Uber. Alsubbah alleges Uber violates the Chicago ordinances regulating taxi and livery services by using a smartphone to determine fares for Uber livery passengers (and representing to passengers that such method is legal).
Relying on the D.C. Circuit’s 1996 decision in Dial A Car, Inc. v. Transportation, Inc., Uber moved to dismiss this count, arguing plaintiff cannot use claims under the above fraud statutes to declare the defendant’s conduct unlawful under a local taxicab regulation when the taxicab commission has not yet done so. The Court agreed that the ordinance violation allegations failed to state a cause of action, directing that plaintiff cannot use the statutory fraud claims as a “backdoor method” to claim Uber violates Chicago taxi and livery regulations.
Similar to Mr. Manzo’s claims in Count I, Plaintiff Alsubbah also alleges that Uber misrepresents its livery fares as being at or below fares charged by other livery services, and its status as a transportation provider. The Court found these allegations sufficiently pled a cause of action.
Finally, in Count III, Mr. Manzo alleges the same claims against Lucky (as an agent of Uber) as Mr. Alsubbah made against it in Count II. The ordinance violation allegations were dismissed for the same reasons as stated above, while his claims of rate misrepresentation were separately dismissed because Mr. Manzo did not allege any harm to his taxi business.
An examination of the court docket shows that between August 2014 and January 2015 both plaintiffs voluntarily dismissed all pending claims against the defendants before any consideration of their putative class allegations. I did not find any reference to a settlement, and am unaware of whether either plaintiff has raised the smartphone issue with the Chicago Department of Business Affairs and Consumer Protection, or any other governing body.