California taxis sue Uber, allege false advertising, unfair competition

March 20, 2015 by Tracey Lien, Los Angeles Times

Taxi drivers in California must submit to fingerprinting for criminal background checks. UberX drivers don't have to. Yet Uber Technologies advertises itself as "the safest rides on the road" and executives tout Uber as "safer than a taxi."

That's deceptive advertising and has caused "significant harm" to the taxi industry, 19 cab companies in California claimed Wednesday morning in a lawsuit filed in federal court. The companies allege that Uber's false claims hurt the profits and reputations of the taxi business, and are seeking an injunction against what they call false claims, and unspecified damages.

The companies have suffered both financial and reputational harm to their businesses, according to the lawsuit.

"Plaintiffs' taxi cabs vie for the same customers as Uber cars, and - as a result - compete for the same dollars," reads the complaint, filed in U.S. District Court in San Francisco. Potential customers, the suit says, "mistakenly believe that they will get a safer ride by hiring an UberX ride - spurn plaintiff's taxi cabs for UberX rides, resulting in lost revenue for plaintiffs."

The plaintiffs also take issue with Uber charging "Safe Rides Fee," an additional dollar tacked onto each ride that Uber says goes toward driver and safety features. The complaint alleges that the fee has "the tendency to deceive" customers into thinking that by paying the fee, they are "receiving the safest ride possible."

Uber has not yet commented on the lawsuit.

Contrary to Uber's claims, the suit says, taxis are more rigorous about safety than Uber, and for Uber to publicly say otherwise violates federal and state laws that prohibit false advertising.

Uber's third-party background checks, plaintiffs say, don't require fingerprinting and thus are less rigorous than the electronic fingerprinting of taxi drivers and subsequent background checks required by California law.

Those prints are run through a Department of Justice criminal database. The process is superior to Uber's background checks, the suit says, because "fingerprinting helps uncover criminal history not discovered through traditional methods, offers extra protection to aid in meeting industry guidelines and helps prevent fraud."

The complaint also points out that must undergo a written exam and take driver safety training courses, while Uber requires no driver training or written exams.

The suit says taxis undergo regular vehicle inspections more thorough than what Uber requires. And the plaintiffs allege that because many Uber drivers also drive for ride-hailing competitor Lyft, their drivers are frequently distracted as they toggle between mobile apps while on the road.

"The case is really about the continued perpetuation by Uber of the myth that it offers the safest ride on the road," said plaintiffs' attorney Bruce Simon of Pearson, Simon & Warshaw in San Francisco. The plaintiffs are also represented by the Dolan Law Firm in San Francisco, which has filed a separate suit against Uber in a case in which an Uber driver ran over a 6-year-old girl and killed her on New Year's Eve.

UberX has bitten into 20 percent to 40 percent of revenues, several of the cab companies say, and they believe the company's marketing of its safety is partly to blame. Lower price is likely another factor: Depending on demand, UberX can be 40 percent cheaper than a taxi cab. But California law allows false advertising trials even if the alleged behavior is only partially responsible for financial loss.

The lawsuit is similar to one filed by the district attorneys of San Francisco and Los Angeles late last year, which also alleged that Uber misled the public by saying it uses an "industry-leading background check process" when it doesn't fingerprint its drivers.

"The company repeats this misleading statement, giving consumers a false sense of security when deciding whether to get into a stranger's car," San Francisco District Attorney George Gascon said at the time.

According to Simon, the district attorneys' lawsuit is mainly about consumers, while Wednesday's complaint is broader and on behalf of the cab companies themselves. Simon said he sees the two lawsuits as complementary.

Uber has in the past refuted claims that its driver-screening process is not thorough enough. It has detailed on its blog how its drivers are screened against county and federal court records, motor vehicle records and the national sex offender registry.

Speaking to the Los Angeles Times in early March, the company's head of global safety, Phil Cardenas, said its driver background checks - which use courthouse records - are able to capture information that the FBI database Live Scan may not capture, such as pending charges and appeals. He also noted that the FBI database isn't necessarily complete and is subject to human error, since a lot of the data is manually handled.

Cardenas said driver background checks are an element of safety, but not the "full thing."

"I think of it as the life cycle of a driver," he said. "(When) the driver signs up on our site, they provide a ton of personal info. We know their bank account, their driver's license information, their address. There's no anonymity.

"Every single trip is tracked with GPS ... and the final element is ... we have this amazing feedback system. (So even if a) background check comes back OK, if there was a challenging ride, you can still provide feedback about that user and we follow up on every single one of those feedback."

The plaintiffs are seeking damages for lost revenues and damage to reputation. If the case goes to trial, it will be up to a jury to determine how much the taxi cab companies should be awarded.

Explore further: Lawsuit says Lyft cheated new drivers out of $1,000 bonuses

Related Stories

Seattle taxi drivers sue ridesharing service

March 25, 2014

A Seattle-area taxi drivers organization has sued an app-based ridesharing service, alleging that Uber violates multiple laws and regulations, thus harming taxi drivers and the public.

Recommended for you

Technology near for real-time TV political fact checks

January 18, 2019

A Duke University team expects to have a product available for election year that will allow television networks to offer real-time fact checks onscreen when a politician makes a questionable claim during a speech or debate.

Privacy becomes a selling point at tech show

January 7, 2019

Apple is not among the exhibitors at the 2019 Consumer Electronics Show, but that didn't prevent the iPhone maker from sending a message to attendees on a large billboard.

China's Huawei unveils chip for global big data market

January 7, 2019

Huawei Technologies Ltd. showed off a new processor chip for data centers and cloud computing Monday, expanding into new and growing markets despite Western warnings the company might be a security risk.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.