Tag: Uber

Uber Ordered to Buckle Up for Litigation: Taxicab Plaintiffs Ride out (in part) Uber’s Motion to Dismiss False Advertising Claims

A group of California taxicab companies sued Uber in federal court in San Francisco for falsely advertising the safety of Uber rides and for disparaging the safety of taxi rides. Uber moved to dismiss plaintiffs’ Lanham Actclaim, contending that the safety-related statements were non-actionable puffery and were not disseminated in a commercial context. Uber also moved to dismiss plaintiffs’ California unfair competition law (“UCL”) claim for lack of standing, and moved to strike plaintiffs’ request for restitution under the UCL and California’s false advertising law (“FAL”).

Declining to put the brakes on the lawsuit in its entirety, the court granted in part and denied in part Uber’s motion. L.A. Taxi Cooperative, Inc. v. Uber Technologies, Inc., 2015 WL 4397706 (N.D. Cal. July 17, 2015).

The court agreed that some of Uber’s statements were non-actionable puffery. For example, Uber’s claim that it was “GOING THE DISTANCE TO PUT PEOPLE FIRST” was “clearly the type of ‘exaggerated advertising’ slogans upon which consumers would not reasonably rely.” It would be impossible to measure whether or how Uber was fulfilling this promise. Likewise, Uber’s statement “BACKGROUND CHECKS YOU CAN TRUST” was puffery because it made no specific claim about Uber’s services. The court therefore dismissed plaintiffs’ claims as to these non-actionable statements.

On the other hand, the court did not agree that Uber was merely puffing when it claimed it was “setting the strictest safety standard possible,” that its safety is “already best in class,” that its “three-step screening” background check process adheres to a “comprehensive and new industry standard,” or when Uber compared its background check process to the taxi industry’s background check process. These statements were not puffery because “[a] reasonable consumer reading these statements in the context of Uber’s advertising campaign could conclude that an Uber ride is objectively and measurably safer than a ride provided by a taxi . . . .”

The court also rejected Uber’s argument that, because certain advertising claims were preceded by phrases like “Uber is committed to” or “Uber works hard to” – for example, “We are committed to improving the already best in class safety and accountability of the Uber platform . . .” – that the advertising claims were merely aspirational and therefore non-actionable. The challenged statements did more than assert that Uber was committed to safety, the court found; they included statements regarding the objective safety and accountability of Uber’s service. A reasonable consumer might rely on such statements, so the court denied Uber’s motion to dismiss in this regard.

The court found that certain advertising statements Uber made to the media were non-commercial speech and therefore not actionable under the Lanham Act or California state law. These statements were made in response to journalists’ inquiries, and were “inextricably intertwined” with the journalists’ independent – and largely critical – coverage of Uber’s safety record, which was a matter of public concern. Accordingly, the court granted Uber’s motion and dismissed plaintiffs’ claims relating to these non-actionable statements.

But the court did find Uber’s statements on ride receipts to be commercial speech. Following a completed ride, Uber emails its customers a receipt that includes a $1.00 “Safe Rides Fee.” Uber explains to customers who click on a link in the receipt that the fee was intended “to ensure the safest possible platform for Uber riders,” that Uber would put the fee towards its “continued efforts to ensure the safest possible platform,” and that “you’ll see this as a separate line item on every uberX receipt.” Uber contended that such statements related to a past transaction, rather than a prospective transaction that Uber sought to induce, and therefore did not amount to commercial speech. The court disagreed, finding that “the complaint adequately allege[d] that the statements relating to the ‘Safe Rides Fee’ [were] made for the purpose of influencing consumers to use Uber’s services again.”

On the California UCL claim, the court found that the taxicab plaintiffs lacked standing because they did not allege that they relied on Uber’s allegedly false or misleading advertising. In dismissing this claim, the court explained that it was declining to join the minority of California federal courts that have permitted UCL claims to proceed where the plaintiff pled potential consumers’ reliance rather than the plaintiff’s own reliance.

Finally, the court found that plaintiffs did not have a viable claim for restitution under California’s UCL and FAL because that remedy is limited to “money or property that defendants took directly from [a] plaintiff” or “in which [a plaintiff] has a vested interest,” and the complaint failed to allege that plaintiffs had an ownership interest in Uber’s profits that they sought to disgorge.

ARTICLE BY Lawrence I Weinstein & Jeffrey H Warshafsky of Proskauer Rose LLP

© 2015 Proskauer Rose LLP.

Uber Argues That Its Drivers Are Not Employees

In a case pending in California federal court, Uber is arguing that its drivers are not employees. O’Connor et al. v. Uber Technologies, Inc. et al., No. 3:13-cv-03826 (N.D. Cal. filed Aug. 16, 2013). Uber drivers have sued the company in a putative class action that alleges that they were short-changed because they received only a portion of the 20 percent gratuity paid by passengers.

In response, Uber recently filed a motion for summary judgment that argued that its drivers are not employees because they do not provide services to Uber. Rather, Uber provides a service to its drivers, because drivers pay for access to “leads,” or potential passengers, through the Uber application, and therefore, like passengers, drivers are customers who receive a service from the company. Uber also argued that even if drivers are deemed to provide services to Uber, they do so as independent contractors, not employees. This is because, Uber contends, the company provides drivers with a lead generation service but does not control the manner or means of how they work, and therefore, Uber is in a commercial rather than an employment relationship with its drivers.

This is not the first and likely not the last of Uber’s legal troubles in California. Passengers have also filed a proposed class action over the 20 percent gratuity, and last week, San Francisco and Los Angeles District Attorneys have hit Uber with a consumer safety suit over how it screens its drivers. There will surely be more to come as we watch what happens with Uber in California.

ARTICLE BY

Rachel T. Segal
OF
Barnes & Thornburg LLP

Uber’s Decision To “Deactivate” Driver Over Retweet of Article Goes Viral in Minutes

Allen Matkins Law Firm

It all started with a retweet. A recent story regarding the “deactivation” and subsequent reinstatement of an Uber driver in Albuquerque is a useful reminder for employers that, given the widespread use by employees of social media, employment decisions should not only be well thought out, but also should take into account potential negative publicity.

During a period while he was on hiatus from driving for Uber, Christopher Ortiz merely retweeted an article referenced as “Driving for Uber, not much safer than driving a taxi,” without commenting on the article. When he sought to resume driving for Uber a couple of months later, Ortiz received an email from Uber stating that his driver account had been “permanently deactivated due to hateful statements regarding Uber through social media.” The e-mail referenced the title of the article that Ortiz had retweeted. Ortiz immediately tweeted a screenshot of Uber’s email, and the story was picked up by websites such as Forbes and BuzzFeed.

Twitter Feed for Christopher J. Ortiz

Within hours, Uber reversed its decision and reactivated Ortiz’s driver account. Ortiz then tweeted a screenshot of Uber’s message reinstating him, which subsequently was retweeted numerous times.

In this situation, each of Uber’s communications with Ortiz was made public and broadcast within seconds of its transmission to Ortiz. It took only minutes for Uber’s termination decision to get attention from national media outlets. The fact that information regarding employers’ hiring and firing decisions can become subject to public scrutiny at such a rapid pace should serve as a reminder to employers to carefully assess how they approach these decisions and how they react to the decisions’ aftermath. For example, retracting an employment decision, particularly if it is publicized, could embolden other employees to publicize negative employment decisions affecting them in the hope those decisions too will be retracted.

As noted at the outset, employers should contemplate, as part of their decision-making process, that any employment decisions they make, and particularly those they may e-mail to their employees, potentially could be broadcast publicly and be subject to the court of public opinion through various forms of social media. As demonstrated by this incident, once a story gains traction on social media, it is very difficult, if not impossible, to control the ramifications.

ARTICLE BY

Alexander Nestor
Nisha Verma
OF
Allen Matkins Leck Gamble Mallory & Natsis LLP

New Ridesharing Legislation in California and Oregon Highlights Insurance Uncertainty in Emerging Industries

Proskauer Law firm

Managing a company’s exposure to new types of risks is often a complicated endeavor.  We’ve previously reported on the uncertainty that can arise when existing coverage models are applied to a new risk—such as losses arising from data breaches and other cyber-attacks.  Applying existing coverage models to emerging industries presents similar challenges.  These challenges were highlighted recently in the years-long dispute over insurance of ridesharing companies, like Lyft and Uber, which recently reached some degree of closure in California with the enactment of new insurance legislation for these companies.

Ridesharing companies have arisen in the past few years as an alternative to traditional forms of transportation, such as taxis.  These companies neither employ the drivers nor own the cars used for transportation; they essentially serve as an online “middleman” connecting passengers with freelance drivers for hire and expressly disavow that they provide any sort of “transportation services.”  This new business model—blurring the lines between traditional services and social media—presented many questions as to liability and, consequently, risk management.  These questions were brought to the fore earlier this year, when the family of a six year old girl killed by a ridesharing driver sued the ridesharing company.  The company disclaimed liability on the basis that it is not responsible for the acts of its drivers, especially when the drivers do not have ridesharing passengers or are not en route to pick up one.

Many ridesharing drivers have relied primarily on their personal automobile policies, eschewing business coverage altogether, reportedlyat the recommendation of the ridesharing companies themselves.  While ridesharing companies have carried excess insurance policies to cover ridesharing accidents, the insurance industry took the position that these policies did not cover such accidents because there was no primary coverage.  In other words, because the only “primary” insurance policies were personal use automobile policies that did not cover commercial livery use, the excess insurance could not be triggered.

On September 17, 2014, California AB-2293 was enacted to address this uncertainty of coverage.  The statute was the result of discussions between legislators, ridesharing companies, insurers, and traditional taxi companies.  It requires ridesharing companies in the state to provide $100,000 in coverage for their drivers that takes effect the moment a driver connects to the ridesharing company’s dispatch software and increases to $1 million once the driver agrees to pick up a passenger.  It also states that a personal automobile insurer does not have the duty to defend or indemnify claims arising out of ridesharing, unless the policy expressly provides such coverage, and it requires ridesharing companies to disclose this fact to their drivers.

Whether other states will follow California’s lead remains to be seen.  Legislation addressing ridesharing has been introduced across the country, and as one Pennsylvania state legislator observed, “By far the biggest issue is insurance.”  In other states, regulators are addressing the possible insurance gap.  Just days after California’s new statute was enacted, Oregon’s State Insurance Division issued a consumer advisory, warning of the potential unavailability of insurance coverage under personal insurance policies for ridesharing and other services provided in the peer-to-peer marketplace.

As Oregon Insurance Commissioner Laura Cali observed in connection with ridesharing, “When a new industry emerges, it often creates unique insurance situations.”  New industries may exist under insurance uncertainty for years or decades before legislation, regulation, or litigation clarifies the issue.  It is therefore critical when expanding into a nascent industry to consider how the risks of that industry may be managed, under either new or existing types of insurance coverage.

ARTICLE BY

Shawn Ledingham
OF
Proskauer Rose LLP