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O'Connor v. Uber Techs., Inc.

United States District Court, N.D. California

September 4, 2014

DOUGLAS O'CONNOR, et al., Plaintiffs,
v.
UBER TECHNOLOGIES, INC., et al., Defendants

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For Douglas O'Connor, individually and on behalf of all others similarly situated, Plaintiff: Monique Olivier, LEAD ATTORNEY, Duckworth Peters Lebowitz Olivier LLP, San Francisco, CA; Ben Weber, Sara Smolik, PRO HAC VICE, Lichten and Liss-Riordan, P.C., Boston, MA; Shannon Liss-Riordan, Lichten & Liss-Riordan, P.C., Boston, MA.

For Thomas Colopy, individually and on behalf of all others similarly situated, Plaintiff: Monique Olivier, LEAD ATTORNEY, Duckworth Peters Lebowitz Olivier LLP, San Francisco, CA; Sara Smolik, PRO HAC VICE, Lichten and Liss-Riordan, P.C., Boston, MA; Shannon Liss-Riordan, Lichten & Liss-Riordan, P.C., Boston, MA.

For Uber Technologies, Inc., Defendant: Robert Jon Hendricks, LEAD ATTORNEY, Morgan, Lewis & Bockius LLP, San Francisco, CA; Caitlin Victoria May, Morgan, Lewis and Bockius LLP, San Francisco, CA; John C. Fish, Jr., Littler Mendelson, PC, San Francisco, CA; Stephen A. Swedlow, PRO HAC VICE, Quinn Emanuel Urquhart & Sullivan, LLP, Chicago, IL; Stephen Luther Taeusch, Morgan Lewis & Bockius, San Francisco, CA.

For Travis Kalanick, Ryan Graves, Defendants: Robert Jon Hendricks, LEAD ATTORNEY, Morgan, Lewis & Bockius LLP, San Francisco, CA; John C. Fish, Jr., Littler Mendelson, PC, San Francisco, CA; Stephen Luther Taeusch, Morgan Lewis & Bockius, San Francisco, CA.

For Caren Ehret, Movant: Myron Milton Cherry, LEAD ATTORNEY, Myron M. Cherry & Associates LLC, Chicago, IL.

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ORDER GRANTING DEFENDANT'S MOTION FOR JUDGMENT ON THE PLEADINGS (Docket No. 116)

EDWARD M. CHEN, United States District Judge.

Plaintiffs Douglas O'Connor, Thomas Colopy, David Khan, Matthew Manahan, Wilson Rolle, Jr., and William Anderson (" Plaintiffs" ) seek to represent a nationwide class of drivers who provide passenger car service for customers who hail them through Defendant Uber Technologies, Inc.'s mobile phone application. They allege that Uber discourages passengers from tipping by falsely advertising that gratuity is included in the fare, even though the full gratuity is not passed along to the drivers. Plaintiffs allege various California statutory and common law causes of action against Uber, specifically breach of implied-in-fact contract, unfair business practices, and interference with prospective economic advantage. This Court has previously granted-in-part and denied-in-part Uber's motion to dismiss, and afforded Plaintiffs leave to amend. An amended complaint was filed, and Uber has moved for judgment on the pleading as to most of the claims in the first amended complaint.

Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby GRANTS Uber's motion.

I. FACTUAL BACKGROUND

The following allegations are contained in Plaintiffs' first amended complaint. Plaintiffs are drivers from California, Georgia, and Washington who have participated in the Uber service who bring this action on behalf of a putative class of " Uber drivers anywhere in the United States (other than Massachusetts)." First Amended Complaint (" FAC" ) ¶ ¶ 1, 4-9. Uber provides a service that gives consumers the ability to hail a participating car service driver " on demand" using their mobile phone. Id. ¶ ¶ 14-15. Plaintiffs allege that Uber advertises on its website (and in its marketing materials) that a gratuity is included in the total cost of the car service and that the customer does not need to provide a tip to the driver. Id. ¶ 16. Sometimes, Uber has advertised the gratuity is a set amount (such as 20%) of the fair charged, while in other instances, the amount of the gratuity is not specified. Id. ¶ ¶ 19-20.[1] Notwithstanding these representations, Plaintiffs allege that Uber does not provide its drivers with the total proceeds of the gratuity, but rather retains a portion of it for itself. Id. ¶ ¶ 17-18. This failure to provide the full amount of the gratuity, Plaintiffs allege, violates various California statutes and common law principles. Id. ¶ ¶ 22-23.

Uber drivers, including Plaintiffs, operate under a Licensing Agreement with Uber.[2] Docket No. 39-2. The Licensing Agreement contains a " Governing Law and Jurisdiction" section which provides, in relevant part:

This Agreement shall be governed by California law, without regard to the

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choice of conflicts of law provisions of any jurisdiction, and any disputes, actions, claims or causes of action arising out of or in connection with the Agreement of the Uber Service or Software shall be subject to the exclusive jurisdiction of the state and federal courts located in the City and County of San Francisco, California.

Id. at 11. Substantively, the Licensing Agreement refers to the drivers as " independent contractors" and not employees. See id. a 7-8. The Licensing Agreement generally describes how the fares and fees will be calculated and disbursed, and does not contain any reference to gratuities. Id. at 5-6. Notwithstanding the " independent contractor" label in the Licensing Agreement, Plaintiffs allege they are, in fact, employees as evidenced by the " litany of detailed requirements imposed on them by Uber" and the fact they are " graded, and are subject to termination, based on their failure to adhere to these requirements." FAC ¶ 24. Included in these requirements are ones regarding their conduct with customers, the cleanliness of their vehicles, the timeliness with which they pick up and deliver customers, and what they are permitted to say to customers. Id. Additionally, Plaintiffs allege that their services are " fully integrated" into Uber's business of " providing car service to customers." Id. ¶ 25. Accordingly, as employees, Plaintiffs allege that they are entitled to reimbursed for employment related expenses under California law. Id. ¶ ¶ 26.

Plaintiffs assert five causes of action in their FAC.

& First, Plaintiffs allege in Count 1 that Uber has tortiously interfered with the prospective economic relationship between drivers and Uber customers by (1) failing to remit all of the collected gratuities to drivers; and (2) informing customers that there was no need to tip drivers. Id. ¶ 38.
& Second, Count 2 asserts that Uber had an implied-in-fact contract with its customers pursuant to which the customers agreed to pay gratuity for the benefit of the drivers and that, by failing to pay the drivers their full gratuity, Uber has violated this agreement. Id. ¶ 39.
& The third cause of action is entitled " Statutory Gratuity Violation (Enforced Through UCL) and alleges that Uber had failed to remit all gratuities to the drivers and therefore violated California Labor Code Section 351, enforceable pursuant to " UCL § 17200." Id. ¶ 40.
& Fourth, in Count 4 Plaintiffs assert that Uber's misclassification of drivers as independent contractors and failure to reimburse them for incurred expenses violates California Labor Code Section 2802. Id. ¶ 41.
& Finally, Count 5 alleges unfair competition in violation of California Business and Professions Code § 17200. Specifically Plaintiffs allege that Uber has engaged in " unlawful or fraudulent business acts or practices" by (1) committing the tort of breach of tortious interference with prospective economic advantage; (2) breaching an implied-in-fact contract between Uber and its customers for which the drivers were third-party beneficiaries; and (3) violating California Labor Codes Sections 351 and 2802. Id. ¶ 42.

II. DISCUSSION

A. Legal Standard

Under Federal Rule of Civil Procedure 12(c), " [j]udgment on the pleadings is

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properly granted when there is no material fact in dispute, and the moving party is entitled to judgment as a matter of law." Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009)). " Rule 12(c) is 'functionally identical' to Rule 12(b)(6) and . . . 'the same standard of review' applies to motions brought under either rule." Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 n.4 (9th Cir. 2001). Accordingly, in considering such a motion a court must take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party, although " conclusory allegations of law and unwarranted inferences are insufficient to avoid" dismissal. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009).

While " a complaint need not contain detailed factual allegations . . . it must plead 'enough facts to state a claim to relief that is plausible on its face.'" Id.; see also Lewis v. City & County of San Francisco, No. C 11-5273 PJH, 2012 WL 909801, at *1 (N.D. Cal. Mar. 2012) (stating that to survive a Rule 12(c) motion, a plaintiff must allege " 'enough facts to state a claim to relief that is plausible on its face.'" (citation omitted)). " A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Bell A. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). " The plausibility standard is not akin to a 'probability requirement,' but it asks for more than sheer possibility that a defendant acted unlawfully." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

In the context of ruling on both a Rule 12(b)(6) and Rule 12(c), motion, the Court is generally limited to the contents of the complaint. However, in addition, the Court may consider " documents referenced extensively in the complaint, documents that form the basis of plaintiff's claims, and matters of judicial notice when determining whether the allegations of the complaint state a claim upon which relief can be granted." Mendelsohn v. Intalco Aluminum Corp., No. C06-0190RSL, 2006 ...


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