Uber Wins Labor Lawsuits-but Could Price Fixing Lawsuit Be Their End?
Uber argued that it’s simply not plausible to claim hundreds of thousands of drivers assented to a price-fixing conspiracy. (Uber does not disclose an actual number of drivers.) According to the company, the most plausible explanation is that each driver made an independent decision to sign up with Uber, not that these strangers conspired with each other and with Uber to inflate charges for customers. In the company’s depiction, it has increased competition by offering customers an alternative to taxis, car services, mass transit and even walking.
“Antitrust law has long appreciated the procompetitive benefits that come along with technological innovation and new market entry,” the company said in its motion to dismiss. “This lawsuit, if allowed to proceed, would strangle innovation, decrease competition, and increase prices – defeating precisely the behavior antitrust law is designed to encourage.”
But the plaintiffs said Uber can’t enjoy the benefits of its disruptive business model without suffering the consequences. Because Uber drivers aren’t traditional employees, but independent contractors who assented to Uber’s anticompetitive terms, they are plausibly co-conspirators under the U.S. Supreme Court’s 1939 ruling in Interstate Circuit v. U.S., according to the plaintiffs. And by insisting that it is not a taxi company or car service, they argued, Uber cannot claim it competes with those businesses. According to the plaintiffs, the relevant market for antitrust claims against Uber is mobile app-generated ride-share services – and Uber controls 80 percent of that market.
Rakoff found those points persuasive. “Uber’s digitally decentralized nature does not prevent the app from constituting a ‘marketplace’ through which Mr. Kalanick organized a horizontal conspiracy among drivers,” he said, citing (as plaintiffs did) a ruling by his Manhattan federal court colleague Katherine Forrest that held online narcotics sales at the Silk Road site to be part of a single, overarching conspiracy. “The fact that Uber goes to such lengths to portray itself – one might even say disguise itself – as the mere purveyor of an ‘app’ cannot shield it from the consequences of its operating as much more.”