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A White and Yellow Cab, Inc. v. Uber Technologies, Inc.

United States District Court, N.D. California

March 31, 2017

UBER TECHNOLOGIES, INC., et al., Defendants.




         Now before the Court for consideration is the motion to dismiss and to strike, filed by Uber Technologies, Inc. (“Uber”), Rasier, LLC, and Rasier-CA, LLC (collectively “the Uber Defendants”). The Court has considered the parties' papers, including their supplemental briefs, relevant legal authority, and the record in this case.[1] For the reasons set forth below, the Court HEREBY GRANTS the Uber Defendants' motion to dismiss and DENIES AS MOOT their motion to strike.


         This case is one of several cases filed in this District that challenges the assertion of jurisdiction by the California Public Utilities Commission (“CPUC”) over “transportation network companies (TNCs)” or the manner in which the Uber Defendants conduct business. See, e.g., DeSoto Cab Company, Inc. v. Picker, 196 F.Supp.3d 1107 (N.D. Cal. 2016); Rosen v. Uber Technologies, Inc., 164 F.Supp.3d 1165 (N.D. Cal. 2016) (“Rosen II”); L.A. Taxi Cooperative, Inc. v. Uber Technologies, Inc., 114 F.Supp.3d 852 (N.D. Cal. 2015). Before the Court addresses the facts alleged in Plaintiff's Complaint in more detail, it provides a brief summary of the statutory framework and regulatory proceedings that give rise to Plaintiff's action.

         A. Statutory and Regulatory Background.

         Taxis are exempt from the CPUC's jurisdiction and generally are regulated by municipalities. See, e.g., Cal. Gov. Code § 53075.5; Cal. Pub. Util. Code § 5353(g). In contrast, the CPUC regulates “charter-party carriers” pursuant to the Charter-Party Carriers of Passengers Act. See Cal. Pub. Util. Code §§ 5351-5444. A charter-party carrier “means every person engaged in the transportation of persons by motor vehicle for compensation, whether in common or contract carriage, over any public highway in” California. Id. § 5360. Charter-party carriers must “operate on a prearranged basis, ” which means “the transportation of the prospective passenger [is] arranged with the carrier by the passenger, or a representative of the passenger, either by written contract or telephone.” Id. § 5360.5; see also Id. § 5381.5(a). “The distinction between charter-party carriers and traditional taxi companies seems to turn on this concept of ‘prearranged, '” because “[t]raditional taxicabs can provide an on-demand service - i.e., they can be hailed in the street, ” whereas charter-party carriers cannot be hailed on the street. DeSoto, 196 F.Supp.3d at 1110.[2]

         Prior to 2012, the CPUC recognized and regulated two forms of “transportation for compensation, ” charter-party carrier services and passenger stage companies. (See, e.g., Dkt. No. 18, Uber Request for Judicial Notice (“Uber RJN”), Ex. A, Decision 13-09-045, Decision Adopting Rules and Regulations to Protect Public Safety While Allowing New Entrants to the Transportation Industry (“Phase I decision”) at 11.)[3] On December 27, 2012, the CPUC instituted a rulemaking proceeding to address TNCs and sought comment on issues such as public safety and insurance, as well as “how the Commission's existing jurisdiction … should be applied to businesses like Uber, Sidecar, and Lyft.” (Uber RJN, Ex. G, Order Instituting Rulemaking (“OIR”) at 5-6, 10.)[4]

         On September 19, 2013, the CPUC issued a decision classifying companies like the Uber Defendants as TNCs.[5] (Phase I decision at 2, 71.) It defined a TNC as “an organization … operating in California that provides prearranged transportation services for compensation using an online-enabled application (app) or platform to connect passengers with drivers using their personal vehicles.” (Id. at 2.)[6] The CPUC assumed jurisdiction over TNCs, promulgated a number of rules and regulations to govern TNCs, and stated that the TNC rulemaking proceedings would carry over into a second phase (the “Phase II proceedings). (See, e.g., Id. at 3, 71-75.) On January 25, 2016, the CPUC issued a Proposed Decision on Phase II. (Uber RJN, Ex. N.)[7] In April 2016, the CPUC issued its Phase II decision and promulgated additional rules to govern TNCs, including a requirement that “every TNC shall certify...the nature of their operations, and shall also certify how the fares are calculated.” (Phase II decision at 4.)[8] The Phase II decision also permitted TNCs to split fares “subject to certain conditions.” (Id. at 4, 9 n.3, 45.) Finally, the CPUC stated additional issues would be considered in a Phase III proceeding. (Id. at 5.)

         B. Factual Background.

         Plaintiff is a traditional taxi company based in Santa Ana, California. (Compl. ¶ 10.) Plaintiff alleges that although Rasier-CA, LLC has been designated a TNC by the CPUC, the Uber Defendants operate de facto taxis. (Id. ¶¶ 14, 41.) According to Plaintiff, “[b]eginning as early as 2011, ” the Uber Defendants began to operate in Orange County even though they did not hold a taxi license or any other form of license. (Id. ¶ 38.) As of September 2013, Plaintiff had 327 traditional taxis operating in Orange County and held one of three taxi franchises in the city of Anaheim. (Id. ¶¶ 19-24, 29-30, 51.) Plaintiff alleges that although it has worked to expand its business, it has been unable to obtain a permit to operate at John Wayne Airport (“JWA”), which only allows a few taxi companies to collect fares from the airport. Plaintiff also alleges it has been unable to expand the number of taxis it is allowed to operate in Anaheim. (Id., ¶ 10, 31-33.)

         According to Plaintiff, the Uber Defendants were not subject to the same type of regulations imposed on Plaintiff by the Orange County Taxi Administrative Program (“OCTAP”). Plaintiff alleges “over time[, ] some of those deficiencies have been addressed, but the background checks on Uber drivers, safety checks of their vehicles, and rules for the maintenance of commercial liability insurance remain quite deficient.” (Id. ¶ 40; see also Id. ¶ 42.) Plaintiff alleges the Uber Defendants operate de facto taxis “in all of the areas in which [Plaintiff] operates authentic” taxis, including Anaheim and all of Orange County. (Id. ¶ 53.) “On a daily basis” the Uber Defendants compete directly with Plaintiff “for the same fares that [Plaintiff] would otherwise obtain.” (Id. ¶ 54.) According to Plaintiff, because the Uber Defendants charge more but operate with fewer overhead expenses and are exempt from limits placed on the number of vehicles that can operate in a given city, they are able to take fares away from Plaintiff. (See, e.g., Id. ¶¶ 54, 61-62.) Plaintiff also alleges the Uber Defendants market themselves “as comparable to taxis service or as offering the same services as an authentic taxi, while making false and misleading statements about its safety and background checks[.]” (Id. ¶ 47; see also Id. ¶¶ 70, 79.)

         Based on these and other allegations, which the Court shall address as necessary, Plaintiff brings claims against the Uber Defendants for: (1) alleged violations of California's unfair competition law, Business and Professions Code sections 17200, et seq. (the “UCL Claim”); (2) alleged violations of California's unfair practices act, Business and Professions Code section 17000, et seq. (the “UPA Claim”); (3) alleged violations of California's false advertising law, Business and Professions Code sections 17500, et seq. (the “FAL Claim”).


         A. Applicable Legal Standards.

         1. Federal Rule of Civil Procedure Rule 12(b)(1).

         A motion to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction may be “facial or factual.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In addition, a motion to dismiss for lack of standing is evaluated under Federal Rule of Civil Procedure 12(b)(1). See Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011); White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). Where a defendant makes a facial attack on jurisdiction, factual allegations of the complaint are taken as true. Federation of African Am. Contractors, 96 F.3d at 1207; see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (“At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion dismiss, [courts] presume that general allegations embrace those specific facts that are necessary to support the claim.”) (internal citation and quotations omitted). The plaintiff is then entitled to have those facts construed in the light most favorable to him or her. Federation of African Am. Contractors, 96 F.3d at 1207.

         In contrast, a factual attack on subject matter jurisdiction occurs when a defendant challenges the actual lack of jurisdiction with affidavits or other evidence. See Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014). “When the defendant raises a factual attack, the plaintiff must support … jurisdictional allegations with ‘competent proof, ' under the same evidentiary standard that governs in the summary judgment context.” Leite, 749 F.3d at 1121 (quoting Hertz Corp. v. Friend, 559 U.S. 77, 96-97 (2010)). The district court may resolve those factual disputes itself, unless “the existence of jurisdiction turns on disputed factual issues[.]” Id. at 1121-22 (citations omitted).

         2. Federal Rule of Civil Procedure 12(b)(6).

         On a motion to dismiss under Rule 12(b)(6), the Court's “inquiry is limited to the allegations in the complaint, which are accepted as true and construed in the light most favorable to the plaintiff.” Lazy Y Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008). Even under the liberal pleadings standard of Federal Rule of Civil Procedure 8(a)(2), “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a claim for relief will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but must allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. “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 (2009) (citing Twombly, 550 U.S. at 556). If the allegations are insufficient to state a claim, a court should grant leave to amend, unless amendment would be futile. See, e.g. Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990); Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246-47 (9th Cir. 1990).

         3. Article III Standing Requirements.

         A party seeking to invoke the federal court's jurisdiction bears the burden of demonstrating that it has standing to sue. Lujan, 504 U.S. at 561. If a plaintiff fails to satisfy the constitutional requirements to establish standing, a court lacks jurisdiction to hear the case and must dismiss the complaint. See Valley Forge Christian Col. v. Americans United for Separation of Church and State, 454 U.S. 464, 475-76 (1982). In order for a plaintiff to establish Article III standing, it must show it: “(1) suffered injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, __ U.S. __, 136 S.Ct. 1540, 1547 (2016) (citing Lujan, 504 U.S. at 560-61). “Where, as here, a case is at the pleading stage, [a plaintiff] must ‘clearly … allege facts demonstrating' each element.” Id. (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)).

         In addition, a plaintiff “must demonstrate standing separately for each form of relief sought.” Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 185 (2000) (citing City of Los Angeles v. Lyons, 461 U.S. 95, 109 (1983) (finding that although plaintiff had standing to pursue damages, he lacked standing to pursue injunctive relief)).

         B. Plaintiff Has Failed to Show It Has Standing to Seek ...

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