California Appellate Court Affirms Dismissal Of Taxi Drivers’ Unfair Practices Act And Unfair Competition Law Claims Against Uber

In Uber Techs. Pricing Cases, 46 Cal.App.5th 963 (2020), plaintiffs—several taxi companies and taxi medallion owners—filed a class action lawsuit against Uber Technologies, Inc. (“Uber”) alleging that the ride-sharing company engaged in predatory pricing in violation of California’s Unfair Practices Act, Cal. Bus. & Prof. Code § 17043 (“UPA”) and Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq. (“UCL”).  The crux of their allegations was that Uber had been setting prices for its ride services below its average total cost for the “specific purpose of injuring and eliminating its competitors in the traditional taxi business.” 

Uber filed a demurrer, arguing that its pricing practices fell within an exemption to the UPA because it was a “public utility corporation” operating a transportation system for the public subject to the jurisdiction of the California Public Utilities Commission (“CPUC”), and thus, the UPA claim and the derivative UCL claim both fail.  Plaintiffs opposed, arguing that Uber could not avail itself of the exemption because the CPUC had not actually set Uber’s prices.  The trial court sided with Uber, sustaining its demurrer and entering a judgment of dismissal.

The Court of Appeal affirmed on appeal, holding that the CPUC need not actually exercise its rate-setting authority for the UPA statutory exemption to apply.  Reviewing the statutes at issue, the court concluded that the Legislature “intended to leave to the CPUC the field of regulating and monitoring prices of utilities under its jurisdiction.”  And since the CPUC’s rate-setting authority is discretionary, the “pivotal issue” is “whether the CPUC has the jurisdiction to establish rates, not whether it has yet chosen to exercise that jurisdiction in a particular case.”  Because Uber is within the CPUC’s ratesetting jurisdiction, the UPA’s statutory exemption applied to the ridesharing company and the plaintiffs’ claims failed. 

Uber Techs. Pricing Cases illustrates the difficulty in bringing a predatory price claim against operators of public services even under a plaintiff-friendly statute like the UPA.

Persons seeking advice regarding these, or other antitrust and unfair competition matters, should contact Wright, L’Estrange & Ergastolo’s Antitrust & Unfair Competition practice group.

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