Firm Says Investigator Lied in Uber Price-Fixing Class Action Probe

Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.

In a recent development involving a price-fixing class action lawsuit against ride-hailing giant Uber, 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.

The security firm Ergo, headed by an ex-CIA agent and hired by the defendant, admitted to U.S. District Court Judge Jed Rakoff that it was unaware that their investigation into lead plaintiff Spencer Meyer was intended for purposes of litigation, but instead believed it was for a matter of security, according to Ergo’s counsel, David W. Bowker of WilmerHale.

According to Bowker, the investigator, who was not licensed in New York to conduct private investigations, “dissembled and used false pretenses in his duties.”

Bowker also informed the court that the detective, who allegedly posed as legal writer to probe Meyer’s attorney in the Uber price-fixing class action lawsuit, recorded phone conversations with the plaintiffs and others, which may be in violation of state laws that mandate all parties consent prior to a call being recorded.

Prompted by Meyer’s request two weeks ago that Ergo and Uber stop investigating him and that Uber be banned from using any background information obtained from the potentially illegal probe as well as pay for the costs uncovering the inquiry, Judge Rakoff ordered Uber to turn over documents to help him determine whether the company instructed the private investigator to lie in order to uncover information about Meyer.

“What a disappointment is must have been to Uber when they found out Mr. Meyer and [his attorney] Mr. [Andrew] Schmidt were pretty good guys,” Judge Rakoff said. “My tentative thinking is that the only relief against Ergo is the relief they are consenting to.”

“I don’t mean to suggest in any way that the court is not bothered and baffled by that happened at Ergo.”

However, on the issue of reimbursement, attorneys for Uber told Judge Rakoff they would consult with their client and respond to Judge Rakoff’s request in a week.

In addition to this revelation, Judge Rakoff also heard arguments regarding Uber’s motion to compel arbitration.

Central to this is whether Travis Kalanick, CEO and co-founder of the ride-sharing company, entered into an agreement to waive arbitration and if Uber’s arbitration should go before Kalanick’s case.

“Once there’s an agreement … that’s a matter to be decided by arbitration,” Judge Rakoff said. “The question of whether Mr. Meyer has entered into an agreement is a question for the court.”

Connecticut passenger Spencer Meyer, in a putative class action on behalf of all Uber passengers in the U.S., filed the antitrust lawsuit against Kalanick in December 2015. Meyer alleges that Kalanick is a key player in a price-fixing conspiracy among Uber drivers.

The reason why Meyer’s case is feasible is due to Uber drivers’ current status as independent contractors. While many pending lawsuits against Uber have recently challenged this employment classification, Meyer’s lawsuit is different as it hinges on an illegal price-fixing scheme.

Specifically, Meyer accuses Uber’s CEO of working with the company’s drivers to set prices of rides in order to ensure that drivers will not be undercut by competitors, effectively killing off healthy competition that would benefit customers.

If all of the company’s drivers really are independent contractors, then they aren’t allowed to secretly conspire over what to charge their customers, Meyer’s lawsuit reasons. And since Uber takes a share of the revenue that drivers generate, that constitutes price-fixing, the lawsuit states.

Meyer’s lawsuit seeks class action status on behalf of Uber passengers nationwide who have used the app and a subclass of passengers subjected to surge pricing.

In a decision made public in June, Judge Rakoff rejected Uber’s motion to dismiss the antitrust case, calling Uber a “necessary party” to Meyer’s lawsuit against CEO Travis Kalanick, given its interest in maintaining its surge pricing algorithm and its contracts with drivers.

Meyer is represented by Matthew L. Cantor and David A. Scupp of Constantine Cannon LLP, Bryan L. Clobes and Ellen Meriwether of Cafferty Clobes Meriwether & Sprengel LLP, Andrew Arthur Schmidt of Andrew Schmidt Law PLLC, John C. Briody, James H. Smith and Lewis T. LeClair of McKool Smith PC, and Brian M. Feldman, Jeffrey A. Wadsworth, Edwin M. Larkin and A. Paul Britton of Harter Secrest & Emery LLP.

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 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 2: 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.