California taxi companies sue Uber for unfair competition

Uber Technologies calls itself the "the safest rides on the road" and advertising suggests Uber is "safer than a taxi." Taxi drivers in California are taking these claims to court.

Recently, 19 California cab companies filed a lawsuit against the mobile-app-based transportation service in San Francisco federal court. They allege that Uber's false claims hurt the reputation of those in the taxi business and have had an impact on taxi profits. The lawsuit claims Uber is violating the federal Lanham Act, which bars false advertising, and California's False Advertising Law and Unfair Competition Law. The plaintiffs are seeking an injunction against the spread of false advertising, in addition to unspecified damages.

"Plaintiffs' taxi cabs vie for the same customers as Uber cars, and — as a result — compete for the same dollars," reads the complaint. Potential customers, the suit says, "mistakenly believe that they will get a safer ride by hiring an UberX ride — spurn plaintiff's taxi cabs for UberX rides, resulting in lost revenue for plaintiffs." 

California taxi drivers are subject to thorough background checks and fingerprinting before they are employed by a company. Uber charges a "safe ride fee" that the transportation company says goes towards driver background checks and safety features. The plaintiffs in the case state that despite not being held to the same security standards as taxi drivers, Uber has the "tendency to deceive" customers into thinking they are receiving the "safest rides on the road" by charging the fee.

Uber spokeswoman Eva Behrend told the L.A. Times that the lawsuit was "frivolous." She stated that Uber utilized a multi-layered driver screening system which offered "unprecedented" transparency for both drivers and riders. According to Behrend the taxi industry has ignored the safety of employees and customers for decades and that in San Francisco especially there is limited recourse for wrongdoing.

The suit, however, argues that Uber cannot possible expect to measure up to the safety standards imposed by the taxi industry with its current system. The plaintiffs state that Uber's third-party background checks don't require fingerprinting and thus are less rigorous than the electronic fingerprinting of taxi drivers and background checks required by California law. Taxi driver fingerprints are run through the Department of Justice database, which can uncover criminal history that would not be discovered through traditional means. Taxi drivers also undergo written exams and driver safety training courses, which Uber does not require.

The complaint adds that for Uber to publicly suggest that they hold themselves to higher safety procedures than taxis violates federal and state laws that prohibit false advertising.

According to Bruce Simon, who is representing the California cab companies in this commercial litigation, this suit is about the continued perpetuation of Uber's myth that it offers the safest possible rides to the public, which harms the public and has damaged the taxi industry. Uber has eaten away 20 to 40 percent of taxi revenue, the cab companies claim, and Uber's deceptive marketing is partly to blame. 

Under California law false advertising trials are allowed even if the alleged behavior is only partially responsible for financial loss.

This lawsuit is similar to a suit filed on behalf of consumers last year by the district attorneys of San Francisco and Los Angeles. That suit also alleges that Uber misled the public by saying it uses "industry-standard background check processes" when it does not even fingerprint drivers.

In the past Uber has denied claims that it's screening process is inefficient, detailing how to verifies drivers through country and federal records, motor vehicle records and the national sex offender registry.

If you believe you have a claim against a business for false advertising or unfair competition it is important to get in touch with an experienced business attorney.

Categorised in: Business Law, Litigation

This post was written by multi_admin