Uber avoids taxi suit because of causation problems

Ezeokoli v. Uber Technol., Inc., 2021 WL 247975, No. A156445
(Cal. Ct. App. Jan. 26, 2021)

Plaintiffs, a putative class of taxi drivers, lost this
Lanham Act false advertising appeal because they couldn’t show that Uber’s
allegedly false statements harmed them (as opposed to Uber’s nonfalse business
model). Uber allegedly misrepresented the availability and proximity of rides
through cartoon images of cars displayed on its consumer app; (2)
misrepresented the safety of its service; (3) misrepresented the legality of
its operations at certain airports; and (4) made false and misleading statements
about driver gratuities.

Uber won summary judgment with “evidence that (1) the
plaintiffs could not show reduced income from driving taxis during the relevant
period; and (2) they could not show that any economic harm was caused by the
alleged misrepresentations.” In particular, “as to the challenged statements
related to safety concerns, only a very small percentage—fewer than 2.5
percent—of Uber users would have seen them.”

Plaintiffs could not succeed on appeal with deposition
testimony from individual drivers that they were working more, but earning
less, once Uber became a competitor. Their speculation that this was driven by
Uber’s false advertising wasn’t enough. Although the Lanham Act expressly
authorizes suit by a person who “who believes that he or she is likely to be
damaged,” standing requires “a real possibility of … being damaged and not the
mere assertion of a belief.”

Nor was an economist’s expert report that proposed a
methodology for estimating their damages plus a promise of survey data regarding
consumer deception. The damages estimate would have been based on the full
competition from Uber; it wasn’t enough to promise to sort out the impact of
false statements later.

No presumption of injury and causation applied because
Uber’s advertising wasn’t directly comparative. In a footnote, the court
endorsed the reasoning of Il. Transp. Trade Association v. City of Chicago, 839
F.3d 594 (7th Cir. 2016): People might prefer Uber’s “storage of payment
information, so that one does not need to be carrying cash or a credit card;
the ability to see a time estimate of how long a pickup will take and also a
driver’s rating by past users; and the ability to request a ride from wherever
one is (e.g., from the comfort of home, inside during the rain rather than by
hailing on a street).”

As to the comparative advertising point, the trial court
reasoned: “Plaintiffs do not show evidence that Uber made actionable
comparative statements in the context of advertising. ‘Statements made to the
media and published in a journalist’s news article concerning a matter of
public importance are not commercial speech and are protected under the First
Amendment.’ ” For example, an alleged statement by Uber’s Head of
Communications for the Americas to a local news affiliate that Uber was “
‘confident that every ride on the Uber platform is safer than a taxi’ ” hadn’t
been shown to have been “made as part of a coordinated advertising campaign or
with the intent to influence consumer opinion.”

Uber’s claims of, for example, the “ ‘safest rides on the
road’ ” and “ ‘always the safest experience,’ ” employed “ ‘an industry leading
background check process,’ ” and “ ‘thoroughly screen[ing]’ ” its drivers “ ‘through
a rigorous process we’ve developed using industry-leading standards’ ” weren’t
comparative in the way that would trigger a presumption of injury/causation
because this wasn’t a two-player market. The trial court found that Uber
“exists in a complex market for personal transportation, and taxis are not its
only, or even its primary, competitor” so any business gained by Uber did not
necessarily mean lost business for taxi drivers. The court of appeals pointed
out that “a survey that even plaintiffs’ expert relied on found that riders
chose Uber over taxis and other modes of transportation for a variety of
reasons, including safety, comfort, ease of use and payment, time savings, and
reliability.” [This reasoning shows the value of a regulatory state that can
act against false advertising that causes generalized risks to everyone in the
market. Also, frankly, saying that taxis aren’t the primary competitor is less
plausible than saying that it’s easy to not use Facebook.]

Plaintiffs’ proposed survey expert “failed to explain how
his survey design would eventually assess the impact of the alleged
misrepresentations on potential riders and distinguish it from other reasons
riders might choose one mode of transportation over another.”

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