Uber Denies Allegations in Price-Fixing Scheme Class Action

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Uber has formally denied the allegations of price-fixing made in a recent class action lawsuit and is now counterclaiming for a declaratory judgment.

The company filed an answer in response to the Uber class action lawsuit filed in December 2015.

Plaintiff Spencer Meyer of Connecticut accused Uber of using a “surge pricing” strategy that allows Uber to charge up to 10 times the standard fare. The company increases fares at times when demand is high or when driver availability is low, Meyer alleges.

Meyer says that the pricing algorithm used by Uber is anti-competitive, allowing drivers who would otherwise compete against each other to collect significantly higher fares. He claims this strategy violates the Sherman Act, a federal antitrust law.

According to Meyer’s Uber class action lawsuit, this price-fixing strategy caused Meyer to pay higher prices for car service.

The Uber class action lawsuit describes a system by which drivers allegedly collude to rig prices, avoiding competition with each other. Meyer contends that Uber CEO Travis Kalanick, who himself has occasionally driven for Uber, is in on the alleged conspiracy.

Uber’s answer essentially denies the plaintiff’s allegations as meritless. The company argues that it has in fact behaved pro-competitively all along.

The company includes in its answer a counterclaim seeking a declaratory judgment that the company’s app and pricing algorithm do not violate Section 1 of the Sherman Act.

Earlier, U.S. District Judge Jed Rakoff denied Uber’s motion to stay the Uber class action lawsuit and send Meyer’s claims to arbitration.

Uber argued that Meyer had agreed to the arbitration provisions in the Uber Terms and Conditions when he signed up to use Uber, and that those provisions require him to take disputes with the company to arbitration rather than into court.

Uber also argued that Meyer had agreed not to bring claims against the company in the form of a class action lawsuit. Judge Rakoff denied that motion, allowing the claim to proceed in court as a class action lawsuit.

The controversy was stoked recently by revelations that Uber hired a private investigation firm to investigate Meyer and his attorney. Investigation firm Ergo admitted as much to Judge Rakoff, saying they were under the impression the investigation involved a security matter and was not commissioned for purposes of litigation.

The judge ordered Uber to turn over relevant documents that might show whether Uber instructed the investigator to lie in the course of digging up information on Meyer.

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 and Uber Technologies Inc., Case No. 1:15-cv-9796, in the U.S. District Court for the Southern District of New York.

UPDATE: 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.