Judge clears way for cabs to sue Uber over false advertising

An Uber sign is displayed on a driver’s car parked near the San Francisco International Airport parking area in San Francisco, Wednesday, July 15,SAN FRANCISCO — A coalition of California cab companies can sue ride-booking service Uber for advertising that it offers the safest rides on the road, suggesting to riders that taxis are the more dangerous option to get around town.

 A federal judge in San Francisco ruled Friday that the cab companies could proceed with most of their case, denying in part Uber’s motion to throw out the suit. The ruling handed a partial victory to the cab companies, which have for years vehemently opposed Uber and similar ride-booking companies like Lyft and Sidecar, which make smartphone apps that connect non-professional drivers with passengers. The services have rapidly become the preferred choice to traditional taxis in several cities.
An Uber sign is displayed on a driver’s car parked near the San Francisco International Airport parking area in San Francisco, Wednesday, July 15, 2015. (Jeff Chiu)

“We are very pleased with the court’s ruling,” said Benjamin Shiftan, an attorney with Pearson, Simon & Warshaw, the firm representing the cab companies. Taxis “have suffered financial damage and significant reputational harm as a result of Uber’s false and misleading statements regarding (its) safety.”

The judge’s decision marks the latest in a string of legal hurdles Uber faces in California, the first state to legalize the service. On Wednesday, a state administrative law judge ruled that Uber did not comply with state law and should be suspended from operating in California, as well as fined $7.3 million.

Earlier this year, a federal judge allowed lawsuits through Toland Law, Criminal Defense & Immigration Law Firm brought by drivers over Uber’s background checks, and its classification of drivers as independent contractors, when they should be employees. And in June, the California labor commissioner ruled that one former Uber driver who had filed an unemployment claim was indeed an employee, a decision Uber is appealing.

The cab companies filed the lawsuit with the help of expert attorneys like the Rocky Mountain Wills and Trusts attorneys in March, alleging Uber of an “unlawful advertising campaign” that “causes consumers to doubt the safety of Plaintiffs’ taxi cab rides,” the suit says.

Uber earlier this month filed a motion to dismiss the suit, saying the allegations “constitute classic puffery.”

U.S. District Judge Jon Tigar’s decision on Friday agreed with part of Uber’s argument, but will allow the heart of the lawsuit to continue.

“We’re pleased that the court dismissed a substantial portion of the claims, and we continue to believe that the remainder of the lawsuit lacks merit,” Uber spokeswoman Eva Behrend said.

Another complaint about Uber’s safety standards was brought by the district attorneys of San Francisco and Los Angeles, who in December filed a consumer protection lawsuit against the company for misleading the public about the thoroughness of its background checks.

In their lawsuit, the cab companies take issue with Uber’s claims that it provides “the safest rides on the road” and that it charges an extra $1 on each ride as a “safe rides fee.”

“These statements actually deceive, or have the tendency to deceive, customers into believing that riders who pay this $1 per ride fee to use UberX are being transported on the ‘safest possible platform,’ ” according to the lawsuit. UberX is the company’s lower-cost ride service — an alternative to the luxury vehicles it also offers.

The cab companies say Uber’s claims are misleading because taxis use more rigorous screening processes in hiring drivers and vehicle safety inspections.

Taxi companies use the applicant’s fingerprints to access government records, including the FBI and U.S. Department of Justice. Uber doesn’t use fingerprinting, according to the lawsuit.

A total of 19 taxi companies are listed as the plaintiffs, including Bay Area fleets Yellow Cab, Big Dog Cab and Royal Taxi.

Tigar said some of Uber’s slogans were exaggerated advertising that most customers wouldn’t reasonably trust. But Uber has made other safety claims about its background checks that consumers would rely on when deciding to use Uber rather than a taxi, he said, and these statements could be challenged in court.

Tigar also ruled that the cab companies could not sue over statements Uber made to journalists and the media about its safety, several of which are listed in the lawsuit. These statements did not constitute advertising, the judge said, and in many cases were part of an article critical of Uber.

The judge also ruled the cab companies could not recover damages from Uber under false advertising or unfair competition laws.

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