Uber Asks to Intervene in Price-Fixing Class Action Against CEO

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Uber has asked to intervene in a price-fixing class action lawsuit against CEO Travis Kalanick, arguing that the plaintiff cannot bypass Uber’s arbitration agreement by suing the CEO instead of the company.

Kalanick’s attempts to dismiss the price-fixing class action lawsuit have been unsuccessful so far. Last week, Uber asked to intervene in the case and enforce the arbitration clause contained in the ride-hailing service’s terms of use. Uber asserts that plaintiff Spencer Meyer can’t get around the arbitration clause by filing a class action lawsuit against the company’s CEO.

“Plaintiff seeks to wield potent legal tools – the class action procedural device and antitrust laws – to wage a broad attack on Uber’s business model,” Uber stated in its motion. “But plaintiff is contractually forbidden from utilizing the courts to resolve such disputes with Uber by virtue of the arbitration provisions in his user terms with Uber.”

Uber argues that it has a legitimate interest in preserving its arbitration agreements. Further, the ride-hailing company argues that its arbitration agreements are necessary to prevent its CEO from being targeted by class action lawsuits over its “fundamental business model.”

Earlier this year, Kalanick was unable to dismiss the Uber class action lawsuit after a judge found that the company had not filed any motions that would allow consideration of the arbitration agreement. This current motion by Uber to intervene in the price-fixing class action lawsuit, if approved, would allow Uber to file a motion to compel arbitration.

Meyer filed the Uber price-fixing class action lawsuit in December 2015, arguing that Kalanick “had orchestrated and facilitated an illegal price-fixing conspiracy” that violated federal and New York State antitrust laws.

“Drivers charge the fares set by the Uber algorithm,” Meyer alleges in the Uber price-fixing class action lawsuit. “Those fares surge at times to extraordinary levels, which are uniformly charged by drivers using the Uber app.”

According to the Uber class action lawsuit, Kalanick worked with each Uber driver to fix prices for rides, but in doing so eliminated the competition that would benefit riders. Because Uber takes a portion of the fares, Meyer claims that “Kalanick’s business plan thus generates profit through price fixing.”

“Every other driver using the Uber app – Kalanick’s direct competitors – agreed to use the identical pricing algorithm,” Meyer claims.

In March, U.S. District Judge Jed S. Rakoff determined that Meyer adequately alleged that the drivers agreed to work in a market that essentially guaranteed their rates would not be undercut by other drivers. Further, the judge found that Kalanick was part of the scheme because he occasionally drives for Uber.

Uber denies the allegations, noting that the presence of its ride-hailing service has lowered the overall rates for rides in cities.

Meyer is represented by Brian M. Feldman, Edwin M. Larkin and Jeffrey A. Wadsworth of Harter Secrest & Emery LLP and Andrew A. Schmidt of Andrew Schmidt Law PLLC.

The Uber Price-Fixing Class Action Lawsuit is Spencer Meyer v. Travis Kalanick, Case No. 1:15-cv-09796, in the U.S. District Court for the Southern District of New York.

UPDATE: On June 7, 2016, Uber’s CEO told a New York federal court judge that a rider’s proposed class action lawsuit alleging price-fixing should be forced into arbitration.

UPDATE 2: On July 14, 2016, a private investigation firm disclosed to a New York federal judge that one of it’s unlicensed detectives lied and may have illegally recorded telephone conversations in order to uncover information about the case’s lead plaintiff.

UPDATE 3: On July 29, 2016, Uber formally denied the allegations of price-fixing made in a recent class action lawsuit and is now counterclaiming for a declaratory judgment.

UPDATE 4: On Nov. 29, 2016, an Uber rider is urging the Second Circuit Appeals Court to affirm a New York federal judge’s ruling that the ride-sharing company cannot force customers to arbitrate a putative antitrust class action lawsuit.