Antitrust Law Daily Boston cabbies’ monopolization claim against Uber dismissed in absence of supporting facts and harm to Boston consumers
Tuesday, June 19, 2018

Boston cabbies’ monopolization claim against Uber dismissed in absence of supporting facts and harm to Boston consumers

By Robert B. Barnett Jr., J.D.

Antitrust claims by taxi medallion holders in the Boston area alleging that Uber attempted to monopolize the on-demand transportation market were dismissed where the taxi companies (1) failed to allege facts supporting a predatory pricing claim, (2) failed to allege facts demonstrating Uber’s intent to monopolize, and (3) failed to show any injury to Boston consumers, the federal district court in Boston has ruled. In granting Uber’s motion to dismiss the antitrust claims, the court cited favorably a 2018 Third Circuit opinion affirming the dismissal of a similar Sherman Act suit filed in Philadelphia by Philadelphia cab companies (Malden Transportation, Inc. v. Uber Technologies, Inc., June 18, 2018, Gorton, N.).

Between December 2016 and April 2017, seven complaints involving more than 800 Boston taxi companies were filed in the Boston federal district court alleging claims for (1) unfair competition, (2) aiding and abetting unfair competition and (3) civil conspiracy to commit unfair competition. After those seven cases were consolidated, Uber filed a motion to dismiss the claims, which was denied, although claims against two of Uber’s founders were dismissed. After the denial of Uber’s motion to dismiss, four of the taxi groups amended their complaint to add claims for violations of state and federal antitrust law. Uber then filed a motion to dismiss the new antitrust claims.

Monopoly claim. In essence, the taxi companies’ new allegations contended that Uber undertook a plan through its UberX service to reduce its prices below cost, intending to drive out competitors, at which point it would raise its prices once it had established a monopoly. When making such a predatory pricing claim, a plaintiff is required to explain the scheme with particularity because plans to reduce prices generally benefit consumers. In this claim, the court said, the taxi companies failed to allege sufficient facts to support their theory. By merely alleging nothing more than that Uber "deflated the UberX fares to below cost in order to drive out the taxi drivers," the taxi drivers failed to supply the required details. The court said that it expected to see facts such as what an average ride in Boston costs Uber or costs taxi companies. The taxi companies’ reference to a Wall Street Journal article showing that Uber’s costs exceed its revenues worldwide was irrelevant to the specific Boston market. While it was true that obtaining pricing information from Uber, a privately held company, was more difficult than with public companies, the difficulty did not excuse the taxi companies from their pleading obligations.

Intent to monopolize. When alleging an attempt to monopolize, the taxi companies were required to establish a specific intent to destroy competition. Its allegations that specific intent was made clear by public statements by its former CEO and by its advertising materials were insufficient. Without such intent, an attempt to gain market share is a normal business goal, rather than a forbidden undertaking. Lowering prices is one legitimate option for achieving that goal. The taxi companies’ allegations never established anything more than that Uber charged lower prices.

Injury. Finally, the taxi companies never demonstrated any injury to Boston consumers in the market for on-demand rides, the court said. Once again, the antitrust maxim "the antitrust laws protect competition, not competitors" was relevant. The fact that Uber’s actions may have harmed the taxi companies did not establish an antitrust violation. The complaint alleged that Uber’s entry into the market caused the market to increase and the prices to go down (which benefitted rather than harmed Boston consumers). The fact that the value of Boston taxi medallions decreased or that their revenues went down was immaterial to an antitrust claim.

Philadelphia lawsuit. In Philadelphia Taxi Ass’n, Inc. v. Uber Techs., Inc., 886 F.3d 332 (3d Cir. 2018), the Third Circuit rendered a decision that this court found "applicable and persuasive." As with this case, the taxi companies in the Philadelphia case alleged that Uber’s entry in the market violated the Sherman Act. Just as here, the taxi companies alleged that that entry was illegal because the taxi medallions lost value and their profits decreased. The Third Circuit affirmed a lower court’s dismissal of the antitrust claim on the grounds that (1) the complaint failed to state a claim for attempted monopolization and (2) they failed to allege any cognizable antitrust injury. The Third Circuit opined that Uber had actually bolstered competition, which did not violate the antitrust laws. The Boston court noted that these antitrust claims by Boston taxi companies should be dismissed for the same reasons adopted by the Third Circuit in the Philadelphia case.

The district court, therefore, granted Uber’s motion to dismiss the new antitrust claims filed by the four groups of taxi companies. The case will proceed on the remaining claims involving the unfair competition allegations.

The cases are Nos. 16-12538-MG, 17-10142-NMG, 17-10180-NMG, 17-10316-NMG, 16-12651-NMG, 17-10586-NMG, and 17-10598-NMG.

Attorneys: Thomas C. O'Konski (Prince Lobel Tye LLP) for Malden Transportation, Inc., PEGM Transportation, LLC and Medford Trans., Inc. Beatriz Mejia (Cooley LLP) for Uber Technologies, Inc. and Rasier, LLC. Christopher G. Timson (Law Offices of Christopher G. Timson, PC) for TAJ Trans., Inc.

Companies: Malden Transportation, Inc.; PEGM Transportation, LLC; Medford Trans., Inc.; Uber Technologies, Inc.; Rasier, LLC; TAJ Trans., Inc.

MainStory: TopStory Antitrust MassachusettsNews

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